MIS COURSE: CHAPTER 15 MANAGING GLOBAL SYSTEMS Composed by DUONG TO DUNG, JUNE 2017

CONTENT What major factors are driving the internationalization of business? What are the alternative strategies for developing global businesses? What are the challenges posed by global ISs and management solutions for these challenges? What are the issues and technical alternatives to be considered when developing international ISs?

What major factors are driving the internationalization of business? Globalization is possible even with very small businesses because of the technological advances in computer networks and telecommunications. Is your organization developing a Web site for e-commerce? You might want to consider publishing it in four or five foreign languages. That’s what it takes today to compete. DEVELOPING AN INTERNATIONAL IS ARCHITECTURE You must have an information system in place that will support the communications, coordination of people and products, and order processing for both domestic and foreign markets. You have to understand the characteristics and individual needs of foreign markets, just as you need to understand your domestic markets.

What major factors are driving the internationalization of business? Figure 15.2 depicts five major dimensions of an international information systems infrastructure that should be the basic framework of a global digital firm.

What major factors are driving the internationalization of business? Managers need to: Understand the global environment, including which business driver is most prominent. Determine the negative factors that create management challenges. Consider a corporate strategy. Consider the appropriate organizational structure. Know how you will implement your strategy. Consider the technology platform.

What major factors are driving the internationalization of business? THE GLOBAL ENVIRONMENT: BUSINESS DRIVES AND CHALLENGES Table 15.1 gives you an idea of some of the global business drivers, factors influencing the direction of businesses, that organizations must consider in today’s environment.

What major factors are driving the internationalization of business? THE GLOBAL ENVIRONMENT: BUSINESS DRIVES AND CHALLENGES Business Challenges: + Particularism: at a cultural level, particularism means making judgments and taking action on the basis of narrow or personal characteristics, in all its forms (religious, nationalistic, ethnic, regionalism, geopolitical position) rejects the penetration of domestic markets by foreign goods and services. + Different Cultures produce different political regimes. + Different Laws: such as laws on governing the movement of info., telecommunications… Transborder data flow: some European countries prohibit the processing of financial info. outside their boundaries or the movement of personal info. to foreign countries. + Accounting Practices, Languages, Currency Fluctuations

What major factors are driving the internationalization of business? THE GLOBAL ENVIRONMENT: BUSINESS DRIVES AND CHALLENGES State of the art (sometimes cutting edge) refers to the highest level of general development, as of a device, technique, or scientific field achieved at a particular time. It also refers to such a level of development reached at any particular time as a result of the common methodologies employed at the time. There are significant difficulties in building appropriate international architectures. The difficulties involve planning a system appropriate to the firm’s global strategy, structuring the org. of systems and business units, solving implementation issues, and choosing the right technical platform.

What are the alternative strategies for developing global businesses? There are 3 org. issues to be faced in seeking a global position: + choosing a strategy + organizing the business + organizing the systems management area GLOBAL STRATEGY & BUSINESS ORGANIZATION

What are the alternative strategies for developing global businesses? GLOBAL STRATEGY & BUSINESS ORGANIZATION Domestic exporter: Most operations are located in the domestic country and the company exports products to foreign companies. A company located in India that exports rugs to the United States would fit this category. All corporate offices are in India, and products are sent to distributors in the United States. Multinational: Part of the company is located in the domestic country and other parts are located in foreign countries. Japanese automobile manufacturers might be in this category. Years ago we complained loudly in the United States about cheaper Japanese-made cars flooding our markets and demanded that they produce vehicles in our country if they wanted to sell them in our country. So they left their corporate operations in Japan, built some factories in America, and satisfied our concerns.

What are the alternative strategies for developing global businesses? GLOBAL STRATEGY & BUSINESS ORGANIZATION Franchiser: Some operations are located in the domestic homeland while extended activities associated with the product are conducted in foreign countries. Starbucks Coffee Company is a primary example of this type of global business. Its corporate headquarters are located in Seattle, Washington. Recipes for products are developed in Seattle. Some coffee beans are roasted in Seattle and then shipped to coffee shops in England. These operations are franchised to keep quality controls in place, and the final product is made in the local area.

What are the alternative strategies for developing global businesses? GLOBAL SYSTEMS TO FIT THE STRATEGY Centralized: Everything is located at the domestic home base. Duplicated: Development occurs at the home base; operations are located at foreign branches. Decentralized: Each business unit, regardless of location, has its own system. Networked: All business units participate in development and operations.

What are the alternative strategies for developing global businesses? REORGANIZING THE BUSINESS You have to decide what your overall business goals are and what makes sense for your org., fit the IS structure to your needs, and never lose sight of new opportunities. Organize value-adding activities along lines of comparative advantage. Starbucks has to decide where to locate the marketing function to maximize its potential. Perhaps it can centralize this function in Seattle so the theme of the current marketing campaign is the same in every coffee shop. It is very picky about maintaining quality control over the coffee bean roasting processes. Is this process better left in Seattle, or should it be moved to England to maintain freshness and high quality? Develop and operate systems units at each level of corporate activity—national, regional, and international. Walmart would probably maintain small ISs in each foreign country to support its local operations. A regional IS would support entire geographic areas such as Southern Europe. Each of these regions would be connected to the main system in the US that supports activities on a global scale. Establish a world headquarters, a global chief information officer (CIO) position.

What are the challenges posed by global ISs and management solutions for these challenges? A TYPICAL SCENARIO: DISORGANIZATION ON A GLOBAL SCALE Let’s look at a common scenario: A traditional multinational consumer-goods company based in the US and operating in EU would like to expand into Asian markets  need & must develop a transnational strategy and a supportive IS structure. Like most multinationals, it has dispersed production and MKT to regional and national centers while maintaining a world headquarters and strategic management in the US. Historically, it has allowed each of the subsidiary foreign divisions to develop its own systems. The only centrally coordinated system is financial controls and reporting. The central systems group in the US focuses only on domestic functions and production.

What are the challenges posed by global ISs and management solutions for these challenges? A TYPICAL SCENARIO: DISORGANIZATION ON A GLOBAL SCALE Let’s look at a common scenario: The result is a confused mixture of hardware, software, and telecom.. The email sys. between EU and US are incompatible. Each production facility uses a different MRP (manufacturing resources planning) or a different version of the same ERP sys., and different MKT, sales, HR sys.. Hardware and DB platforms are wildly different. Comm. between different sites are poor, given the high cost of EU inter-country comm.. The central systems group at headquarters in the US recently was dispersed to the US local sites in the hope of serving local needs better and reducing cost. So, what to do?

What are the challenges posed by global ISs and management solutions for these challenges? A TYPICAL SCENARIO: DISORGANIZATION ON A GLOBAL SCALE So, what to do?

What are the challenges posed by global ISs and management solutions for these challenges? GLOBAL SYSTEM STRATEGY Solution to the mentioned scenario: + consider that not all systems would be coordinated on a transnational basis, only some core systems are truly worth sharing from a cost and feasibility point of view. + other systems should be partially coordinated because they share key elements, for such systems, a good deal of local variation is possible and desirable. So: DEFINE CORE BUSINESS PROCESSES IDENTIFY THE CORE SYSTEMS TO COORDINATE CENTRALLY CHOOSE AN APPROACH: INCREMENTAL, GRAND DESIGN, EVOLUTIONARY MAKE THE BENEFITS CLEAR

What are the challenges posed by global ISs and management solutions for these challenges? GLOBAL SYSTEM STRATEGY APPROACHES: INCREMENTAL, GRAND DESIGN, EVOLUTIONARY Don’t bite off more than you can chew. If you try to fulfill your development and implementation plan all at once, combining every task into one huge project, you’re setting yourself up for failure. It may indeed be cheaper to do it that way, but you have lots of considerations other than cost. There are political, cultural, and historical biases to overcome. Remember, change is extremely difficult for people to accept. You have to convince everyone, especially the executive branch, that your plan is possible and best for the company. Many companies choose to take an evolutionary approach to merging disparate information systems. That is, they pick the most critical areas, such as finance, to merge first. Then they move on to perhaps sales and marketing. Corporate strategic planning may be next, and last might be human resources systems. The point is, you can’t do it all at once.

What are the challenges posed by global ISs and management solutions for these challenges? GLOBAL SYSTEM STRATEGY APPROACHES: INCREMENTAL, GRAND DESIGN, EVOLUTIONARY Grand Design often called 'big-bang'. Essentially a 'once-through, do-each-step-once' approach: determine user needs, define requirements, design the system, implement the system, test, fix, deliver. The Grand Design strategy is only suitable for small, clearly defined development products that will be used in known ways by a known user community. Incremental: Determines user needs and defines the system requirements upfront, then performs the rest of the development in a sequence of builds. In general, the incremental strategy is used to reduce risk in the development phase, whereas the evolutionary strategy is used to reduce risk in the operational phase. Evolutionary: Develops the system in builds; user needs and system requirements are partially defined upfront, then refined in each succeeding build.

What are the challenges posed by global ISs and management solutions for these challenges? THE MANAGEMENT SOLUTION: IMPLEMENTATION + Agreeing on Common User Requirements + Introducing Changes in Business Processes + Coordinating Applications Development + Coordinating Software Releases + Encouraging Local Users to Support Global Systems Cooptation: bringing the opposition into the process of designing and implementing the solution w/o giving up control over the direction and nature of the change.

What are the issues and technical alternatives to be considered when developing international ISs? + COMPUTING PLATFORMS AND SYSTEMS INTEGRATION + CONNECTIVITY + SOFTWARE LOCALIZATION + WEB-BASED SYSTEMS

REVIEW QUESTIONS What major factors are driving the internationalization of business? What are the alternative strategies for developing global businesses? What are the challenges posed by global ISs and management solutions for these challenges? What are the issues and technical alternatives to be considered when developing international ISs?

LET’S GO THROUGH THEM TOGETHER! END! THANK YOU! REVIEW QUESTIONS LET’S GO THROUGH THEM TOGETHER! END! THANK YOU!