2-1 “The idea of charging for calls belongs to the last century” Niklas Zennström, Skype Fueling Globalization through Information Systems.

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“The idea of charging for calls belongs to the last century”

Niklas Zennström, Skype

Fueling Globalization through Information Systems

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Learning Objectives

• Define globalization, describe how it evolved over time, and describe the key drivers of globalization.

• Describe the emerging opportunities for companies operating in the digital world.

• Explain the factors companies have to consider when operating in the digital world.

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Learning Objectives

• Define globalization, describe how it evolved over time, and describe the key drivers of globalization.

• Describe the emerging opportunities for companies operating in the digital world.

• Explain the factors companies have to consider when operating in the digital world.

World is Flat Video

• www.cb.wsu.edu/~pclay/CSPAN Friedman-1.wmv

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Globalization

• Globalization created a new world characterized by:o Worldwide

communication

o Collaboration without barriers

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Evolution of Globalization

• Mainly European countries are globalizing

• Power is the primary driver

• Industries changed

• Slow pace of change

Globalization 1.0

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Evolution of GlobalizationGlobalization 2.0

• Companies are globalizing

• Reduction in transportation and telecom-munications costs

• Mainly Europe and America involved

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Evolution of Globalization

• Individuals and small groups are globalizing

• Fast changes

• Emergence of new

industries

Globalization 3.0

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Evolution of Globalization: Summary

• The World is Flat (Thomas Friedman)o “10 Flatteners”o Key factors enabling globalization 3.0

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Flattener #1: The Fall of the Berlin Wall

• November 11, 1989

• Fall of communism

• People from the former communist countries gained more freedom

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Flattener #2: Netscape Browser

• November 9, 1995

• First mainstream browser

• Gave individuals access to Internet

THEN

NOW

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Flattener #3: Work Flow Software

• Applications that allow people worldwide to communicate

• XML allows applications to “talk” to each other

• New possibilities for information sharing

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Flattener #4: Supply Chaining

• Integration of retailers, suppliers, and customers

• RFID tags used

• Wal-Mart became an early leader

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Flattener #5: Open Sourcing

• Software and source code freely available to everyone

• Wikipedia a huge success

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Flattener #6: Outsourcing

• Outsourcing companies profited from the drop in telecommuni-cations costs

• Companies can now use talented engineers from anywhere

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Flattener #7: Offshoring

• Companies set up entire factories in countries such as Chinao Mass production

o Low Costs

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Flattener #8: In-Sourcing

• Delegation of company’s key operations to a subcontractoro E.g.: UPS

provides complete supply chain solutions to companies

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Flattener #9: In-Forming

• In-Forming is to individuals what outsourcing, offshoring, and in-sourcing is to companies

• Individuals have access to massive amounts of information

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Flattener #10: The Steroids

• Technologies that support different types of collaborationo Greater mobility

o Convergence

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Learning Objectives

• Define globalization, describe how it evolved over time, and describe the key drivers of globalization.

• Describe the emerging opportunities for companies operating in the digital world.

• Explain the factors companies have to consider when operating in the digital world.

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Opportunities of Operating in the Digital World

• Opportunities of Reaching New Marketso Former Eastern

Block countries provide new opportunities for international companies to reach new customers

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Opportunities of Operating in the Digital World

• Opportunities of a Global Workforceo Low

communications costs

o Highly-skilled labor pool

Engineering Graduates in the US, Europe and India

We are at the beginning of the IT Revolution!• All products that can be digitized can be

broken apart and reassembled

• Work (and jobs) will flow to where it can be done cheapest (e.g., China)

• NO career or industry is immune!

• New technologies and improving infrastructure will fuel great change

• Learn to be “horizontal” for success – who / how you collaborate

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Learning Objectives

• Define globalization, describe how it evolved over time, and describe the key drivers of globalization.

• Describe the emerging opportunities for companies operating in the digital world.

• Explain the factors companies have to consider when operating in the digital world.

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Challenges of Operating in the Digital World

• Globalization also created a set of unprecedented challenges:o Governmental challenges

o Geoeconomical challenges

o Demographic challenges

o Cultural challenges

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Governmental Challenges

• Political System Challengeso Political stability

• Regulatory Challengeso Tariffso Embargoeso Export regulationso Quotas

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Governmental Challenges II.

• Data-Sharing Challengeso Transborder data flow regulations

• Internet Access and Individual Freedomo Content blocking by governments/censorship

• China – Use of VoIP restricted

• Germany – Sites with fascist symbols prohibited

o Internet access blocking

• Cuba, North Korea

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Worldwide Internet Usage• In 2006 about 20% of active Internet users located in

the US• The Internet usage

o Highest - North America: 70% of populationo Lowest – Africa: 2.6% penetration of use

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Geoeconomic Challenges• Time Zone Challenges

o Real time meetings across continents difficult

o Working around the clock possible

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Geoeconomic Challenges II.

• Infrastructure-Related Challengeso Traditional infrastructure – roads, electricity

o Connectivity – reliable Internet connections

• Challenges Related to Economic Welfareo GDP growth not distributed evenly

throughout the world

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Demographic Challenges

• Differing rates of population growth

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Demographic Challenges II.

• Expertise related challengeso Different

concentration of skilled workers

o Different costs of workers

Shift Happens

• http://www.youtube.com/watch?v=ljbI-363A2Q

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Cultural Challenges

•National Cultureso Power Distance – differences in how societies

handle the issues of human inequalityo Uncertainty Avoidance – risk taking nature

Individualism/Collectivism – value placed on an individual vs. a group

o Masculinity/Femininity – degree to which a society is characterized as masculine/feminine

o Concept of Time – long term vs. short termo Life Focus –quantity vs. quality of life

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Cultural Challenges II.

• Cultural Barrierso Language – communication language and norms

o Work Culture – work skills, habits and attitudes

o Aesthetics – art, music and culture

o Education – attitudes towards education and literacy

o Religion, Beliefs and Attitudes – spiritual institutions and values

o Social Organizations – family and social cohesiveness

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Cultural Challenges III.

• Other Challengeso Differences in what is regarded as

appropriate

o Standards of dealing with intellectual property

o Different standards

•E.g., writing paper, pillowcases

The Face of Globalization

• http://www.youtube.com/watch?v=8Bhodyt4fmU&mode=related&search=