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By: M.Nadeem Akhtar 1

Computer use in International

Marketplace

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The Multinational Corporation

The Multinational Corporation (MNC) is a firm that operates across products, markets nations & cultures.

It consists of the parent company and a group of subsidiaries .

The subsidiaries are geographically dispersed and each one may have its own unique goals, policies and procedures.


Global Business Strategies

Multinational Strategy.Global Strategy. International Strategy Transnational Strategy


Multinational Strategy.

It is the oldest strategies, having been pursued by European –Based firms prior to World War II

These firms gave their subsidiaries much ice way in meting the needs of customers inside their own boundaries.

It was a type of hands -off strategy in which parent allowed the subsidiaries to develop their own products and practices.

In this setting the information systems facilitate decentralized decision making, and they consist of stand alone databases and processes


Global Strategy Where Multinational Strategy is one of

decentralization, the Global Strategy localizes control within the parent.

The firm seeks to meet the needs of its world wide customers with standardized products.

The products for all over the world markets are manufactured centrally and shipped to subsidiaries.

When MNCs pursue this strategy, its information systems place the majority of the capacity at the parent location & features centralized databases and processes.


International Strategy

This is a blending of the centralized control of the global strategy and the decentralized control of the multinational strategy.

The international strategy calls for a management team at the parent location that is Knowledgeable and skilled at penetrating global markets.

This expertise is made available to the subsidiaries. The subsidiaries use this expertise to adopt the firm’s products, processes and strategies to their own markets.

Firms that pursue this business strategy employ IOS that link database and processes of the parent with those of subsidiaries.


Transnational Strategy.

This become more popular in 1980s, as firms recognized that they had to be more responsive at subsidiary level.

The parent and all subsidiaries work together in formulating strategies and operating policies.

The firm seeks to achieve global integration and efficiencies yet provide for flexibility at local levels.


Global Information System (GIS.)

The information System used by the MNCs as they pursue these four business strategies are called GIS.

A GIS can be defined as a system that consists of networks that cross national boundaries.


PROBLEMS IN IMPLEMENTING GLOBAL INFORMATION SYSTEMS

The MNC embarking on a project to establish a GIS can anticipate a number of problems.


Politically Imposed Constraints

That national government where the subsidiaries are located can impose a variety of restrictions that make it difficult for the parent to include the subsidiaries in the network.


Restrictions on hardware purchases and imports.

National government seek to protect local manufacturers and stimulate foreign investment in local manufacturing by specifying that only equipment produced or assembled in that country is to be used.


Restrictions on data Processing

National policy may dictate that data be processed within the country rather then transmitted out of the country and processed elsewhere.


Restrictions on data communication.

The most publicized data communications restriction is that put on Transborder data flows. Transborder data flow’s or TDFs, are the movements of machine readable data across national boundaries. They have been classified into four type.


Restrictions on data communication

1. Operational data, such as transaction data used in accounting information systems.

2. Personal data that identified specific individuals. Examples are hotel and airline reservation and employee personnel records.

3. Electronic funds transfers from one country to another.4. Technical and scientific data.TDF legislation, which began in the 1970s, has been enactedby many countries as a way to protect the personal privacy of their citizen.


TECHNOLOGICAL PROBLEMS

MNCs are often plagued (in great trouble) with problems related to the level of technology that exists in subsidiary countries.

In some countries, reliable power sources are not available, resulting in frequent power outages

telecommunications circuits often can only transmit data at slow speed, and the transmission quality may be poor.

Software can also be a problem. Because many countries do not honor software copyright and condone/ allow black-market software, some software vendors refuse to do business in those countries.


LACK OF SUPPORT FROM SUBSIDIARY MANAGERS

The managers of subsidiary offices often are part of the problems. Some are convinced that they can run their subsidiaries without help, and they view headquarters-imposed regulations as unnecessary.

Some subsidiary managers are paid based on profitability, and they will drag their feet when they think that corporate solutions will reduce their earnings.

Foreign office management can also view the GIS as a “big brother” type of surveillance.

Middle-level managers may fear being bypassed by the new information links that funnel/move operational data to the parent.


LACK OF SUPPORT FROM SUBSIDIARY MANAGERS

With all of these potential problems, it is a minor miracle that MNCs ever attempt GISs.

Although it is impossible to eliminate the problems completely, their effects can be minimized by following a well-thought-out strategy.


GIS IMPLEMENTION STRATEGIES

When an MNC follows a multinational (decentralized) strategy , several development teams usually are required , which work out of the subsidiaries.

When a global (centralized) strategy is pursued, the GIS development team does most or all of its work at the parent location.


GIS IMPLEMENTION STRATEGIES

When an international (combination of centralized and decentralized) strategy is pursued, one or more development teams can travel from the parent to the subsidiaries.

In the case of a transnational (integrated) strategy , the team includes representatives from both the parent and subsidiaries.


A Transnational Strategy for GIS Implementation

Because the transnational strategy is the most complex of the four-it attempts to integrate the entire MNC into a smoothly working system- the MNC ‘s implementation strategy can serve as a model for avoiding the potential pitfalls, (unsuspected danger/ drawback).

The strategy focuses on key issues that relate to (1) The GIS business strategy linkage ,(2) Information resources , (3) International data sharing , and the (4) cultural environment


(1) Link the GIS to business strategy

Below are listed key issue that link the GIS to business strategy. The development team should address these issues early in the project. The team should :

1. Work closely with firm’s executives to gain an understanding of the potential impue’s of the GIS on global business strategy.

2. Understand each business unit's global business strategy.


(1)Link the GIS to business strategy( Continue

3 determine the GIS is appropriate for each unit’s global business strategy

4 Define objectives for each GIS strategy.5 Identify applications necessary to achieve each

GIS strategy and prioritize them.6 Assign responsibilities for implementing the

applications.The first issue, which involves working with the

firm’s executives, should be kept in mind throughout the project.


(2) Define the information resources

The GIS will employ all types of information resources-hardware, software, personnel, data and information, and facilities. Listed below are the key tasks of the development team in the area of resources. The team should:

1. determine the number and location of regional data centers.

2. identify vendors who can provide products and services for each subsidiary site


(2) Define the information resources ( Continue

3. Specify standard hardware and software that can be used at all sites.

4. Make planes for one or more help desks to assist subsidiaries on & 24-hours-a-day, seven-days-a-week basis.

5. Be prepared for implementation delays that are not experienced in the parent country

The second and third tasks are tightly coupled. The availability of vendors will influence the specification for hardware and software.


(3)Provide for Data Sharing.

The key to achieving standardization in operation lies with the data rather than the processes.

Planning for the GIS should be focused on entire firm or enterprise.

In the case of GIS the enterprise is an MNC.


(3) Provide for Data Sharing (continue)

Several tasks are involved in setting up a system for data sharing .The development team should:

1. Develop a global data model that supports the global business objectives.

2. Form a group consisting of representatives from both the parent and subsidiaries for the purpose of establishing data standards to be applied through out MNC.


(3) Provide for Data Sharing (continue.)

3 Study legislation in the various countries of operation to define limitations on processing and telecommunication.

4 Based on the study determine whether to transmit data across country borders or process it in the subsidiary countries.

5 Implement the data bases. The first issue consist of data modeling and the second

issue uses model as the basis for specifying enterprise-wide data standard. The third and fourth issues are primarilly concerned with data transmission.


(4) Consider the Cultural Environment

Throughout the development process the MNCs executives and multinational development team should pay attention to cultural issues in particular, the development team should:

1. Be alert to cultural differences that exit among subsidiary countries and formulate system solutions that are mutually acceptable to concerned.

2. Conduct a skill survey of information specialists within the subsidiaries for the purpose of making maximum use of those skills during implementation.


(4) Consider the Cultural Environment n( Continue)

3 Provide educational and training opportunities to the subsidiaries so that their personnel can acquire skills in areas where they are deficient and sharpen skills in areas where they have strength.

4 Establish formal programs for preparing managers at the parent location to work with managers in the subsidiaries, and vice versa. Such programs should address the cultural differences that can be expected and how to respond to them.


GLOBAL BUSINESS DRIVERS

As firms began to apply their computers in a global way, they quickly become aware of the breadth of benefits that was possible.

These benefits become known as global business drivers. A global business driver (GBD) is an entity that benefits

from global economies of scale and scope and thus contributes to the global business strategy.

GBDs focus on such broad entities of the business as suppliers, customers, and products, and they spell out the information that is needed to support each one.

Once established, GBDs serve as the basis for the firm’s strategic plan for information resources



Listed below are seven drivers that were identified in a survey of 105 MNCs with headquarters in the United states.

1 JOINT RESOUCES : several of an MNCs subsidiaries share the same resources as a way to keep expenses down. Example of such resources are tanker fleets and distribution centers.

2. FLEXIBLE OPRATIONS: production can be moved from one plant another in response to changing conditions. For example, a strike by a labor union shuts down the manufacturing plant of subsidiary or a supplier raises the price of raw materials.



3. RATIONALIZED OPERATIONS: The components and subassemblies that go into MNCs finished

products, are produced around the world. This driver capitalizes on such local advantages as a availability of raw materials, labor skills, and economic transportation.

4. RISK REDUCTION: MNCs hedge/protect against the risks inherent in operating in a single

country by operating multiple countries. An example of such a risk is deflation in the value of the country’s currency.

5. GLOBAL PRODUCTS:The firm’s markets the same products around the world, or subsidiaries around the world assemble their own products from common subsidiaries.



6. SCARCE SUPPLIES: certain resources are so scare or expensive that they

cannot be provided at each location. Instead, they are stored centrally and made available when needed. Examples are specialized production machines and test instruments.

7. CORPORATE CUSTOMERS: The firm’s customers are located around the world.

Typical of firm’s with such need are airlines, rental car companies, and hotels. Also included in this driver are other firm’s that operate globally. For example, Compaq sells computers to firm’s that use them in their global operations.

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Documents

nadeem akhtar

global strategy

business strategy

personal data

transaction data

scientific data

group of subsidiaries

transborder data flows