Chapter 9: Challenges of Global Information Systems Oz (5 th edition)

Chapter 9: Challenges of Chapter 9: Challenges of Global Information Global Information

SystemsSystems

Oz (5Oz (5thth edition) edition)

Multinational Organizations and ISMultinational Organizations and IS

► A multinational firm (MNF) is a firm that operates A multinational firm (MNF) is a firm that operates in many countries. The firm may or may not have in many countries. The firm may or may not have a headquarters in a single country, but operates a headquarters in a single country, but operates divisions and subsidiaries in different countries to divisions and subsidiaries in different countries to take advantage of local benefits (i.e., cheap labor)take advantage of local benefits (i.e., cheap labor)

► MNFs must use global information systems which MNFs must use global information systems which are systems that serve individuals and firm units are systems that serve individuals and firm units in multiple countries.in multiple countries.

► Global information systems are different than Global information systems are different than other IS because these systems must conform to other IS because these systems must conform to laws, cultures, and standards etc. in many laws, cultures, and standards etc. in many countriescountries

The Web and International The Web and International CommerceCommerce

► Web has become important vehicle for B2B Web has become important vehicle for B2B and B2C commerceand B2C commerce

► Ratio of non-English speakers to English Ratio of non-English speakers to English speakers growingspeakers growing

► Internet opens enormous global opportunitiesInternet opens enormous global opportunities► Chinese market expected to be largest in Chinese market expected to be largest in

futurefuture► Web offers opportunities to save on costs Web offers opportunities to save on costs

(see subsequent slides)(see subsequent slides)

The Web and International The Web and International Commerce (continued)Commerce (continued)

Figure 9.1: Two-thirds of Internet users come from non-English-speaking countries

The Web and International The Web and International Commerce (continued)Commerce (continued)

► An example of cost savings: printing product and An example of cost savings: printing product and service manualsservice manuals Put on Web as opposed to shipping with productPut on Web as opposed to shipping with product Downloaded at customerDownloaded at customer’’s conveniences convenience Inclusion of animation, sound, hypertext, Inclusion of animation, sound, hypertext,

graphics, and video clipsgraphics, and video clips Reduce customer service costs by 50 %Reduce customer service costs by 50 % Multiple language versions are easier on the WebMultiple language versions are easier on the Web

► Global businesses must be sensitive to audiencesGlobal businesses must be sensitive to audiences► Glocalization: design global sites to cater to local Glocalization: design global sites to cater to local

needsneeds McDonalds menu changes to appeal to local McDonalds menu changes to appeal to local

palatespalates

The Web and International The Web and International Commerce (continued)Commerce (continued)

Figure 9.2: Imperatives to heed when designing Web sites for an international audience

Think Globally, Act LocallyThink Globally, Act Locally

► International companies International companies ““think globally, think globally, act locallyact locally”” Be sensitive to regional customsBe sensitive to regional customs Control must be decentralizedControl must be decentralized Strategic planning should be globalStrategic planning should be global Can be followed with local flavorCan be followed with local flavor

Challenges of Global Information Challenges of Global Information SystemsSystems

► Global information systems face challengesGlobal information systems face challenges Technological barriersTechnological barriers Regulations and tariffsRegulations and tariffs Electronic payment mechanismsElectronic payment mechanisms Different language and cultureDifferent language and culture Economic and political considerationsEconomic and political considerations Different measurement standardsDifferent measurement standards Legal barriersLegal barriers Different time zonesDifferent time zones

► Challenges involve both the firm’s Web site and Challenges involve both the firm’s Web site and other information systemsother information systems

Technological ChallengesTechnological Challenges

► ChallengesChallenges Not all countries have adequate Not all countries have adequate

information technology infrastructuresinformation technology infrastructures Unable to build international ISUnable to build international IS Broadband communication lines neededBroadband communication lines needed

► SolutionsSolutions Offer two versions of Websites to Offer two versions of Websites to

compensate for slower bandwidthcompensate for slower bandwidth Use low earth orbit satellite systems to Use low earth orbit satellite systems to

build network for voice and databuild network for voice and data

Technological Challenges Technological Challenges (continued)(continued)

► ChallengesChallenges Language is technological challenge Language is technological challenge

because eight-bit bytes not sufficient for because eight-bit bytes not sufficient for languages with large character sets (e.g., languages with large character sets (e.g., ChineseChinese

Fields such as telephone numbers Fields such as telephone numbers present problems for databases in MNFspresent problems for databases in MNFs

► SolutionsSolutions Use double-byte characters (e.g., unicode Use double-byte characters (e.g., unicode

allows for 65,536 characters)allows for 65,536 characters) Fields for telephone numbers must be Fields for telephone numbers must be

variable length to allow flexibilityvariable length to allow flexibility

Regulations and TariffsRegulations and Tariffs► ChallengesChallenges

Countries have different importing Countries have different importing regulationsregulations

Executives reluctant because of hasslesExecutives reluctant because of hassles Even with research there are fears that Even with research there are fears that

employees will not know how to comply with employees will not know how to comply with laws of destination countrieslaws of destination countries

► SolutionsSolutions There are programs such as NextLinx to help There are programs such as NextLinx to help

importers and exporters for Web commerceimporters and exporters for Web commerce►NextLinx is integrated within the firmNextLinx is integrated within the firm’’s s

systemssystems►When an international order is placed the When an international order is placed the

software determines tariffs, cost of software determines tariffs, cost of delivery, provides forms, and logisticsdelivery, provides forms, and logistics

Differences in Payment MechanismsDifferences in Payment Mechanisms

► ChallengesChallenges E-commerce allows easy payment for E-commerce allows easy payment for

online purchasesonline purchases Credit cards preferred payment method Credit cards preferred payment method

in North Americain North America Not all countries adopt this preferenceNot all countries adopt this preference

►Japanese avoid using credit cards Japanese avoid using credit cards ► SolutionsSolutions

Web sites for international firms must Web sites for international firms must have multiple payment mechanismshave multiple payment mechanisms

Konbini example in JapanKonbini example in Japan

Language DifferencesLanguage Differences

► ChallengesChallenges International parties must agree on common International parties must agree on common

languagelanguage Data not transmittable internationally because Data not transmittable internationally because

information must be translated; computers still information must be translated; computers still cannot accurately translate cannot accurately translate ““on the flyon the fly””

English considered de facto international languageEnglish considered de facto international language Many countries require accounting systems to be in Many countries require accounting systems to be in

the local languagethe local language

► SolutionsSolutions Largest companies translate Web sites into local Largest companies translate Web sites into local

languageslanguages Web site design and translation should be done in Web site design and translation should be done in

overseas offices although the server may be located overseas offices although the server may be located in another country; lack of uniformity in languagesin another country; lack of uniformity in languages

Multiple accounting systems in different languagesMultiple accounting systems in different languages

Cultural DifferencesCultural Differences

► ChallengesChallenges Different countries varyDifferent countries vary

►TastesTastes►GesturesGestures►Treatment of peopleTreatment of people►Ethical issuesEthical issues

Conservative groups against Conservative groups against ““AmericanizationAmericanization””

► SolutionsSolutions MNFs should employ local personnel to MNFs should employ local personnel to

design their Web sites or version of a Web design their Web sites or version of a Web site that will appeal to a particular countrysite that will appeal to a particular country

Conflicting Economic, Scientific, and Conflicting Economic, Scientific, and Security InterestsSecurity Interests

► ChallengesChallenges Goal of corporate managementGoal of corporate management

►Seize large market share and maximize organization Seize large market share and maximize organization profitsprofits

Goal of governments is to protect economic, scientific, Goal of governments is to protect economic, scientific, and security interests of its peopleand security interests of its people

Occasionally interests conflictOccasionally interests conflict►Drawings related to the design and manufacture of Drawings related to the design and manufacture of

weaponsweapons►Software packagesSoftware packages►Encryption softwareEncryption software

Differences in treatment of trade secrets, patents, and Differences in treatment of trade secrets, patents, and copyright lawcopyright law

► SolutionsSolutions No easy onesNo easy ones Pressure from America for stronger copyright lawsPressure from America for stronger copyright laws International trade groups International trade groups

Political ChallengesPolitical Challenges

► ChallengeChallenge Information is power and some countries oppose Information is power and some countries oppose

policy of free access to information and limit use of policy of free access to information and limit use of InternetInternet

Governments recognize that software is an economic Governments recognize that software is an economic resource and require firms to purchase local software resource and require firms to purchase local software to build local industry; problems for firms trying to to build local industry; problems for firms trying to standardizestandardize

► SolutionsSolutions MNFs may have to cut some content from their sites MNFs may have to cut some content from their sites

to limit risks of offending local governmentto limit risks of offending local government Limit use of employee blogsLimit use of employee blogs International human rights pressure may help in the International human rights pressure may help in the

long runlong run Use open source software (e.g., Linux, MySQL) can Use open source software (e.g., Linux, MySQL) can

helphelp

Different StandardsDifferent Standards► ChallengeChallenge

No international accounting standardsNo international accounting standards United States uses English system of United States uses English system of

weights and measures; rest of world uses weights and measures; rest of world uses metric systemmetric system

Different standards for dates, Different standards for dates, temperatures, time, telephone numbers, temperatures, time, telephone numbers, and addressesand addresses

Different standards for product codesDifferent standards for product codes► SolutionSolution

Multiple accounting systemsMultiple accounting systems Multiple versions of data where user can Multiple versions of data where user can

request version needed (i.e., software must request version needed (i.e., software must be flexible and give users choice)be flexible and give users choice)

Promotion of universal product codesPromotion of universal product codes

Legal BarriersLegal Barriers

► ChallengesChallenges Countries have different laws that affect Countries have different laws that affect

global business in general and in global business in general and in particular areas such as particular areas such as ►Privacy with respect to data collectionPrivacy with respect to data collection►International transfer of dataInternational transfer of data►Free speechFree speech►Location of legal proceedingsLocation of legal proceedings

Other differences in lawOther differences in law►AuctionsAuctions►GamblingGambling►Sale of liquor and prescription drugsSale of liquor and prescription drugs

Legal Barriers: Privacy and Data Legal Barriers: Privacy and Data Collection Collection

► Privacy laws in generalPrivacy laws in general Respect for privacy in international business Respect for privacy in international business

is unresolved challengeis unresolved challenge Majority of democratic nations protect Majority of democratic nations protect

individual privacyindividual privacy► How privacy laws differ with respect to data How privacy laws differ with respect to data

collectioncollection Does the law apply to data collected by a Does the law apply to data collected by a

company or the government?company or the government? Does the law apply to manual data, digital Does the law apply to manual data, digital

data, or both?data, or both? Does the law protect data concerning human Does the law protect data concerning human

beings or does the law also protect legal beings or does the law also protect legal entities such as corporations?entities such as corporations?

Legal Barriers: US versus EU Legal Barriers: US versus EU Approach to Privacy with Respect Approach to Privacy with Respect

to Data Collectionto Data Collection► US privacy lawsUS privacy laws

Slanted toward the public sector (government)Slanted toward the public sector (government) Over 50 % encompass manual and computerized Over 50 % encompass manual and computerized

systemssystems Limited provisions for individuals versus legal Limited provisions for individuals versus legal

entities (corporations)entities (corporations)

► EU privacy lawsEU privacy laws Covers both public and private sectorCovers both public and private sector Stronger protection regarding computerized Stronger protection regarding computerized

decision makingdecision making Variance in EU with respect to coverage of entities; Variance in EU with respect to coverage of entities;

strong coverage with respect to individualsstrong coverage with respect to individuals

Legal Barriers: EU Practices with Legal Barriers: EU Practices with Respect to Data Collected on Respect to Data Collected on

IndividualsIndividuals► European Union practices (Directive on Data European Union practices (Directive on Data

Privacy) for data collected by corporations on Privacy) for data collected by corporations on consumers follows the Fair Information consumers follows the Fair Information Practices mentioned in chapter 11Practices mentioned in chapter 11 Personal data collected only for specified Personal data collected only for specified

purposespurposes Personal data must be given consent to be Personal data must be given consent to be

processedprocessed Collecting organizations must identify Collecting organizations must identify

themselvesthemselves People have right to object to processing of People have right to object to processing of

personal datapersonal data

Legal Barriers Between US and EULegal Barriers Between US and EU

► ChallengeChallenge American companies collect data for American companies collect data for

marketing purposes on all their customers, marketing purposes on all their customers, but differences between European and but differences between European and American approaches prevent unrestricted American approaches prevent unrestricted flow of information with respect to data flow of information with respect to data collection on EU customerscollection on EU customers

For example, EU agents monitor US companies For example, EU agents monitor US companies that collect data on EU citizensthat collect data on EU citizens

► SolutionSolution The EU has worked with the US Dept of The EU has worked with the US Dept of

Commerce to enable US companies who Commerce to enable US companies who comply with EU’s Directive on Data Privacy to comply with EU’s Directive on Data Privacy to carry on trade without fear of violating the carry on trade without fear of violating the directive (Safe Harbor arrangement) directive (Safe Harbor arrangement)

Legal Barriers: Legal Proceedings Legal Barriers: Legal Proceedings ► ChallengeChallenge

Suppose you purchased an item from a site Suppose you purchased an item from a site located in another country, and the item has located in another country, and the item has a defect or arrived after the time promised. a defect or arrived after the time promised. Because your request for compensation or Because your request for compensation or other remedies has not been answered, you other remedies has not been answered, you decide to sue. Where do you file the lawsuit?decide to sue. Where do you file the lawsuit?

► SolutionSolution Country- of-origin principle whereby all legal Country- of-origin principle whereby all legal

matters are confined to the country where matters are confined to the country where the site operatesthe site operates

Country-of-destination principle whereby the Country-of-destination principle whereby the laws of the country to which the site caters laws of the country to which the site caters apply regarding dealings with the site, apply regarding dealings with the site, regardless of the site’s country (EU’s regardless of the site’s country (EU’s approach)approach)

Different Time ZonesDifferent Time Zones► Challenge Challenge

MNFs must craft policies that work for MNFs must craft policies that work for employees, customers, and IS for all time employees, customers, and IS for all time zoneszones

Time stampingTime stamping► SolutionsSolutions

Teleconferencing systems can help; but huge Teleconferencing systems can help; but huge time differences require accommodations for time differences require accommodations for employees in other time zonesemployees in other time zones

Chat rooms and bulletin boards for Chat rooms and bulletin boards for asynchronous communicationasynchronous communication

Opportunity to work on projects 24 hours a Opportunity to work on projects 24 hours a dayday

Enable customer support personnel to be Enable customer support personnel to be available 24/7 without requiring night shift available 24/7 without requiring night shift workwork

Standard policy for time stamping documentsStandard policy for time stamping documents

SummarySummary

► Companies using Web for business must Companies using Web for business must accommodate non-English speaking accommodate non-English speaking audiencesaudiences

► Companies must tailor to local preferencesCompanies must tailor to local preferences► Must be aware of cultural differences and Must be aware of cultural differences and

payment preferencespayment preferences► Tariff and legal issuesTariff and legal issues► Linguistic, cultural, economic, and political Linguistic, cultural, economic, and political

challenges must be addressedchallenges must be addressed

Summary (continued)Summary (continued)

► Laws governing collection of data in United Laws governing collection of data in United States and European Union are differentStates and European Union are different

► Incompatible data privacy lawsIncompatible data privacy laws► Restricted flow of personal data between Restricted flow of personal data between

United States and EUUnited States and EU► Safe Harbor arrangement enables EU to do Safe Harbor arrangement enables EU to do

business with USbusiness with US► Old legal approach of territorial jurisdiction Old legal approach of territorial jurisdiction

inadequateinadequate► Free speech and consumer litigation of e-tailers Free speech and consumer litigation of e-tailers

brought need for legal reform for cyberspacebrought need for legal reform for cyberspace