chapter

3Chapter

Information Systems and Globalization

“The global economic playing field is being leveled.”

Nandan Nilekani, Infosys Technologies Ltd.

3-1Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

http://www.youtube.com/watch?v=LtmvksvSvtc&feature=related

http://www.youtube.com/watch?v=ix9h-hcCHkc&feature=related

Learning Objectives

1. Define globalization, describe how it evolved over time, and describe the key drivers of globalization.2. Describe the emerging opportunities for companies operating in the digital world.3. Explain the factors companies have to consider when operating in the digital world.4. Describe international business and information systems strategies used by companies operating in the digital world.

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Learning Objectives

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

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

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

4. Describe international business and information systems strategies used by companies operating in the digital world.

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Globalization• Integration of economies• Globalization enabled by

innovation and technologies progress

• Globalization created a new world characterized by:o Worldwide communication o Collaboration without

barriers• Three distinct phases

(Thomas L. Friedman) 3-4Dr. Ali Zolait - Information Systems Today: Managing in the

Digital World

http://www.youtube.com/watch?v=obwcKETqv1o&feature=related

Evolution of Globalization• Primary entities

globalizing (countries)• Mainly European

countries are globalizing (extend their territories)

• Power is the primary driver (steam)

• Industries changed (apparel)

• Slow pace of change

Globalization 1.0


Evolution of Globalization (cont’d)• Companies are

globalizing• Reduction in

transportation and telecommunications costs

• Mainly Europe & America involved

• People felt the effect of industrial revolution

• Interrupted by the Great Depression & the two world wars.

Globalization 2.0


Evolution of Globalization (cont’d)• Worldwide globalizing

• Individuals and small groups are globalizing

• Faster pace of change

• Emergence of new industries (i.e. Google).

Globalization 3.0


Evolution of Globalization: Summary

• “10 Enablers”o Numbers of technological & Societal took place o Key factors enabling globalization 3.0

• The World Is Flat (Thomas L. Friedman)


Enabler #1: The Fall of the Berlin Wall• November 9, 1989• Fall of communism• People from the former

communist countries gained more freedom

• End of the cold wars between communist & capitalist

• Increase companies potential customer

• Access to talented Labor 3-9Dr. Ali Zolait - Information Systems Today: Managing in the

Digital World

Enabler #2: Netscape Browser

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• August 9, 1995• First mainstream

browser • Gave individuals

access to the Internet

• Enable companies to interconnect

• Entrepreneurs envisioned a new business models

THEN

NOW

Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

Enabler #3: Work Flow Software

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• Applications that allow people worldwide to communicate

• XML allows computer program to “talk” to each other

• New possibilities for information sharing (SCMS)

• Online payment (PayPal) provide global currency to fuel commerce


Enabler #4: Uploading

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• Individuals and companies actively participate in content generation on the Web

• Ability to upload was catalyst for popularity of open-source software products

• Wikipedia a huge success


Enabler #5: Outsourcing• Outsourcing companies

profited from the drop in telecommunications costs

• Companies can now use talented engineers from anywhere

• Companies can outsource business process on global scale (offshore outsourcing)


Enabler #6: Offshoring

• Companies set up entire factories in countries such as Chinao Mass productiono Low costs


Enabler #7: Supply Chaining

• Integration of retailers, suppliers, and customers

• Wal-Mart became an early leadero RFID tags used


Enabler #8: In-Sourcing

• Refer to Delegation of company’s logistics ( key) operations to a subcontractoro Example: UPS provides

complete supply chain solutions to companies


Enabler #9: In-Forming

• Allows individuals to utilize powerful search engine on the Internet (i.e. google, yahoo)

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

• Individuals have access to massive amounts of information

• People depend less on propaganda & censored media


Enabler #10: The Steroids

• Technologies that support different types of collaboration by digitizing the content

• Greater mobility• Convergence


Learning Objectives






Opportunities for Operating in the Digital World

• Opportunities for reaching new marketsoFormer Eastern

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


• Opportunities of a global workforce:oLow

communications costs

oHighly-skilled labor pool

Engineering Graduates in the United States, Europe, and India

Opportunities for Operating in the Digital World (cont’d)

Based on: Mallaby, 2006


Learning Objectives






Challenges of Operating in the Digital World

• Globalization also created a set of unprecedented challenges:oGovernmental oGeoeconomical oDemographic oCultural


Governmental Challenges

• Political System ChallengesoMarket vesus planned economy oPolitical stability

• Regulatory ChallengesoTariffsoEmbargoesoExport regulationsoQuotas


Governmental Challenges (cont’d)• Data-Sharing Challenges

o Transborder data flow regulationso Few countries have data protection laws

• 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


Geoeconomic Challenges

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• Time Zone ChallengesoReal time meetings across continents difficultoWorking around the clock possible


Geoeconomic Challenges (cont’d)

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• Infrastructure-Related ChallengesoTraditional infrastructure—roads, electricityoConnectivity—reliable Internet connections

• Challenges Related to Economic WelfareoGDP growth not distributed evenly

throughout the world



• Demographic Challengeso Differing rates of population growth

World Population, 1950-2050 (in billions)



o Expertise related challenges•Different

concentration of skilled workers

•Different costs of workers

Demographic Challenges (cont’d)


Cultural Challenges•National Cultures (Hofstede, 2001)

o Power Distance—differences in how societies handle the issues of human inequality

o Uncertainty Avoidance—risk taking natureo Individualism/Collectivism—value placed on

an individual vs. a groupo Masculinity/Femininity—degree to which a

society is characterized as masculine/feminine (Assertiveness/nurturance ) o Concept of Time—long term orientation vs.

short termo Life Focus—quantity vs. quality of life


Cultural Challenges (cont’d)• Cultural Barriers

o Language—communication language and normso Work Culture—work skills, habits, and attitudeso Aesthetics—art, music, and cultureo Education—attitudes toward education and literacyo Religion, Beliefs, and Attitudes—spiritual

institutions and valueso Social Organizations—family and social

cohesiveness


Cultural Challenges (cont’d)

• Other ChallengesoDifferences in what is regarded as

appropriateoStandards of dealing with intellectual

propertyoDifferent standards


Learning Objectives






Going Global: International Business Strategies in the Digital World

Home-Replication Strategy

Global Business Strategy

Multidomestic Business Strategy

Transnational Business Strategy


Depending on the degree of Supply Chain Integration and degree of local customer responsiveness.

Home-Replication Strategy• Most basic form of going global

oCompanies view international operations as secondary to, or extension of home operations.

oFocus on core competencies in home marketo Inability to react to local market conditionsoHomogeneous markets


Global Business Strategy

• Companies attempt to achieve economies of scale(large Quantities)

• Work Centralized fashion• Example: Coca-Cola

o Same core producto Some different tastes made for

local markets


Multidomestic Business Strategy• Low degree of

integration between subunits

• Flexible and responsive to the needs and demands of local markets

• Example: General Motorso Opel in Germanyo Vauxhall in Great Britain

• Very little data and control information flows between the home and subsidiary locations


Transnational Business Strategy• Some operations

centralized while others decentralizedoFlexibilityoEconomies of scale

• Difficult to manage• Example: Unilever


Business Strategies: Summary

• Different types of information systems can support these organizational forms


End of Chapter Content3-40


Opening Case—Managing in the Digital World: Infosys Technologies Ltd.

• Companies like Infosys are “flattening” the world.

• Does business in new wayso Outsourcingo Supply Chainso Consultingo Employment


Netscape’s James H. Clark and Marc Andreessen

• Founded Mosaic Communications Corporation

• 75 percent of Web surfers used Netscape in 1996

• AOL acquired Netscape in 1999 for $10 billion in stock

James H. Clark (left)

Marc Andreessen (right)


Online Searching

• To “Google” has become a household verb meaning search


IT Globalization: Accenture in India

• Accentureo Provides consulting, technology, and outsourcingo Global before other companies were just “waking

up” to globalization

• Accenture growingo Announced plans for doubling its thirteen thousand

business consultants between 2008 and 2011


Underground Gaming Economy

• Massive Multiplayer Online Role-Playing Game—MMORPGoVirtual world—players live through avatars

• Players started selling virtual tools for real money —farmersoBanned from various gaming sites due to

behavior being unethical and fear of turning users away


Learning Languages in Context• Livemocha

oOnline language instruction using social networking•Structured lessons•Help with grammar•Canned pronunciation guides

• Most valuable assetoConversation with native speakeroUsing social community to increase

understanding3-46Dr. Ali Zolait - Information Systems Today: Managing in the

Digital World

e-Waste• Disposal of electronics containing hazardous

materials is a rising issue• U.S. exports much of its e-waste to third world

countrieso China banned the import in 2002o Other countries to follow

• In mid 2006, EU banned toxic ingredientso Production of “green” hardware

• U.S. government working on making changes—currently state-level legislation most effective


The Automobile Industry

• The automobile industry is feeling the pressure of globalization

• Failed attempts at making a “world car”oConsumers have different tastesoDifferences in infrastructures derive needsoThe price of gasolineoVariations in emission standards

• Cultural and economic conditions need to undergo more globalization to make a world car successful


chapter

Documents

digital world enabler

new world

world wars

chapterinformation systems

internetenable companies

individuals access

communist countries

learning objectives2