fueling globalization through information systems international business and information ......

Chapter 2Chapter 2Fueling Globalization Through Information Systems

2-1

Information Systems

“The global economic playing field is being leveled.”

NandanNandan NilekaniNilekani, , Infosys Technologies Infosys Technologies Infosys Technologies Infosys Technologies Ltd.Ltd.

IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall1/29/2012

Learning Objectives2-2

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

2 D ib h i i i f 2. Describe the emerging opportunities for companies operating in the digital world.

3. Explain the factors companies have to consider h i i h di i l ldwhen operating in the digital world.

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


In-Class Activity

Pair up with one other person

2-3

p p

The instructor will give each team copies of one or more slides from the slide presentation

Each team writes a script for the verbal message that will be delivered with each slide

Each slide’s script can consume no more than 1 minute of delivery time

Each team delivers its content verballyEach team delivers its content verbally

There is an assignment dropbox named IC 03wk in Blackboard – extra points will be earned for entering

IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall1/29/2012IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall1/29/2012

p gyour “script” digitally using the dropbox

Globalization2-5

Globalization dcreated a new

world characterized by:characterized by:

Worldwide communication

Collaboration without barriers


Evolution of Globalization2-6

Mainly European t i

Globalization 1.0

countries are globalizing

Power is the primary Power is the primary driver

Industries changed

Slow pace of change


Evolution of Globalization (cont’d)2-7

Companies are globalizing

Globalization 2.0

globalizingReduction in transportation

d land telecom-munications costsMainly Europe and America involved


Evolution of Globalization (cont’d)2-8

Individuals and ll

Globalization 3.0

small groups are globalizing

Faster pace of Faster pace of change

Emergence of new industries


Evolution of Globalization: Summary2-9

Th W ld I Fl t (Th L F i d )The World Is Flat (Thomas L. Friedman)

“ E bl ”“10 Enablers”Key factors enabling Globalization 3.0


Enabler #1: The Fall of the Berlin Wall2-10

November 9, 1989

F ll f Fall of communism

People from the People from the former communist countries gained more freedommore freedom


Enabler #2: Netscape Browser2-11

August 9, 1995“Killer app”First mainstream browser browser Gave individuals access to the Internet & set standards


standards

Enabler #3: Work Flow Software2-12

Applications that allow people worldwide to worldwide to communicate

XML: applications “talk” to each other

New possibilities for information for information sharing

Global currency to


fuel commerce

Enabler #4: Uploading2-13

Individuals and companies actively companies actively participate in content generation gon the Web

Wikipedia a huge success


Enabler #5: Outsourcing2-14

Outsourcing i companies

profited from the drop in

l itelecommuni-cations costsCompanies can pnow use talented engineers from anywhere


y

Enabler #6: Offshoring2-15

Companies set up entire factories in

t i h countries such as China

Mass productionMass production

Low costs


Enabler #7: Supply Chaining2-16

Integration of retailers, suppliers, and customers

Wal-Mart became an

l l dearly leaderUse of RFID tags


tags

Enabler #8: In-Sourcing2-17

Delegation of company’s key p y yoperations to a subcontractor

Example: UPS provides complete supply complete supply chain solutions to companies


Enabler #9: In-Forming2-18

In-forming is to individuals what outsourcing outsourcing, offshoring, and in-sourcing is to gcompaniesIndividuals have

t i access to massive amounts of information


o o

Enabler #10: The Steroids2-19

Technologies that support different types of

ll b ticollaborationGreater mobility

Triple convergenceTriple convergence


Learning Objectivesg j2-20


2 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 worlddigital world.


Opportunities for Operating in the Digital World2-21

Opportunities for reaching new reaching new markets

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


new customers

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

2-22

Opportunities of a global

Engineering Graduates in the United States, Europe, and India

a global workforce:

Low communications costs

Highly-skilled Highly skilled labor pool


Based on: Mallaby, 2006

Learning Objectivesg j2-23






Challenges of Operating in the Digital Worldg p g g2-24

Globalization also created a set of unprecedented Globalization also created a set of unprecedented challenges:

Governmental

Geoeconomic

Demographic

CulturalCultural


Governmental Challengesg2-25

Political System ChallengesPolitical stability

Regulatory ChallengesTariffsTariffsEmbargoesExport regulationsQuotas


Governmental Challenges (cont’d)2-26

Data-Sharing ChallengesTransborder data flow regulations

Differences in standardsUPC vs. EAN

Measurement units

Postal codes phone numbers etcPostal codes, phone numbers, etc.


Governmental Challenges (cont’d)2-272-27

Internet Access and Individual FreedomContent blocking by governments/censorship

hi f i dChina—Use of VoIP restricted

Germany—Sites with fascist symbols prohibited

Internet access blockingte et access b oc gCuba, North Korea


Geoeconomic Challengesg2-28

i h llTime Zone ChallengesReal time meetings across continents difficult

Working around the clock possibleWorking around the clock possible


Geoeconomic Challenges (cont’d)g ( )2-29

Infrastructure-Related ChallengesTraditional infrastructure—roads, electricity

Connectivity—reliable Internet connections

Ch ll R l d E i W lfChallenges Related to Economic WelfareGDP growth not distributed evenly throughout the world

MigrationMigration

Some companies used to deal with low margins and tough competition



Demographic ChallengesDiffering rates of population growth

World Population, 1950-2050 (in billions)



Demographic Challenges (cont’d) Demographic Challenges (cont d) Expertise related challenges

Different concentration concentration of skilled workers

Different costs e e t costs of workers


Cultural Challengesg2-32

National CulturesPower Distance—differences in how societies h dl h i f h i lihandle the issues of human inequalityUncertainty Avoidance—risk taking natureIndividualism/Collectivism value placed on an Individualism/Collectivism—value placed on an individual vs. a groupMasculinity/Femininity—degree to which a y y gsociety is characterized as masculine/feminineConcept of Time—long term vs. short termLif F tit lit f lif


Life Focus—quantity vs. quality of life

Cultural Challenges (cont’d)g ( )2-33

Cultural BarriersLanguage—communication language and norms

Work Culture—work skills, habits, and attitudes

Aesthetics—art, music, and culture

Education attitudes toward education and literacyEducation—attitudes toward education and literacy

Religion, Beliefs, and Attitudes—spiritual institutions and values

Social Organizations—family and social cohesiveness


Cultural Challenges (cont’d)g ( )2-34

Environmental challengesEnergy consumption, pollution, workers health

Shipping

Other ChallengesDifferences in what is regarded as appropriate

Standards of dealing with intellectual property

Network readinessNetwork readinessNot every country has access to the global networked economy


Going Global: International Business Strategies in the Digital Worldg

2-36

Home-Replication Strategy

Global Business Global Business Strategy

Multidomestic Multidomestic Business Strategy

Transnational Business Strategy


Home-Replication Strategy2-37

Most basic form of going globalg g gCompanies view international operations as secondary to, or extension of home operations.

Focus on core competencies in home marketFocus on core competencies in home market

Inability to react to local market conditions

Homogeneous marketsg

Information systems play minor role in facilitating this strategy


Global Business Strategy2-38

Centralized

Used to achieve Used to achieve economies of scale

Example: Coca-ColaExample: Coca ColaSame core product

Some different tastes made for local markets


Global Business Strategy2-392-39

The role and characteristics of ISCentralized information systemsCentralized information systems

Data flows from subsidiaries to home location

Multiple networks between home office and subsidiariesp

Data does not stay at subsidiaries


Multidomestic Business Strategy2-40

Low degree of i i bintegration between subunitsFlexible and Flexible and responsive to the needs and demands of local marketsExample: General Moto sMotors

Opel in GermanyVauxhall in Great


Vauxhall in Great Britain

Multidomestic Business Strategy2-412-41

The role and characteristics of ISEach subsidiary has own, decentralized information y ,systemsNo centralized infrastructureData sharing primarily between subsidiaries and home Data sharing primarily between subsidiaries and home officeLimited data sharing among subsidiariesLoose integration of information systems


Transnational Business Strategy2-42

iSome operations centralized while others decentralizedothers decentralized

Flexibility

Economies of scale

Difficult to manage

Example: Unileverp


Transnational Business Strategy2-432-43

The role and characteristics of ISIntegrated networks between home office and local Integrated networks between home office and local subsidiaries

Much communication among subunits AND between ghome office and subunits

Key data is shared throughout company

Enabled by intranet, extranet, and Web based applications


Business Strategies: Summary2-44


End of Chapter Contentp2-452-45


Opening Case—Managing in the Digital World:

Infosys Technologies LtdInfosys Technologies Ltd.2-46

Companies like Infosys are y“flattening” the world.Does business in new waysways

OutsourcingSupply ChainsConsultingConsultingEmployment


Netscape’s James H. Clark and Marc Andreessen2-47

F d d M i J H Cl kFounded Mosaic Communications Corporation

James H. Clark

Corporation75 percent of Web surfers used Netscape in 1996AOL acquired Netscape in 1999 for Netscape in 1999 for $10 billion in stockBoth founded several Marc Andreessen


Both founded several start-ups

Marc Andreessen

Online SearchingOnline Searching2-48

To “Google” has become a household verb meaning search


IT Globalization: Accenture in India2-49

AccentureProvides consulting, technology, and outsourcing

Gl b l b f th i j t “ ki ” Global before other companies were just “waking up” to globalization

Accenture’s growthAccenture s growthAnnounced plans for doubling its thirteen thousand business consultants between 2008 and 2011


Underground Gaming Economyg g y2-50

Massive Multiplayer Online Role-Playing Game—MMORPG

Virtual world—players live through avatars

Players started selling virtual tools for real money farmersmoney—farmers

Banned from various gaming sites due to behavior being unethical and fear of turning users away

What’s your take on farmers and people “buying” tools and advancement without mastering the kill ?


skills?

Learning Languages in Context

Livemocha

2-51

Online language instruction using social networkingStructured lessons

Help with grammarHelp with grammar

Canned pronunciation guides

Most valuable assetConversation with native speaker

Using social community to increase understanding


e-Waste2-52

Disposal of electronics containing hazardous materials is a rising issueU.S. exports much of its e-waste to third world co ntriescountries

China banned the import in 2002Other countries to followOther countries to follow

In mid 2006, EU banned toxic ingredientsProduction of “green” hardware

U.S. government working on making changes—currently state-level legislation most effectiveP f h l i l h i bl


Pace of technological changes increases problem

The Automobile Industryy2-53

h bil i d i f li h f The automobile industry is feeling the pressure of globalizationFailed attempts at making a “world car”Failed attempts at making a world car

Consumers have different tastesDifferences in infrastructures derive needsThe price of gasolineThe price of gasolineVariations in emission standards

Globalization is already thereF i f t d i i USForeign manufacturers producing in USUS companies producing worldwideGlobal network of suppliers


Ripple effects resulting from any crisis

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