Chapter 9: Challenges of Global Information Systems Management Information Systems, Fifth Edition

Objectives Explain why multinational corporations must use global information systems Provide elementary advice for designing Web sites for an international audience Cite the cultural, legal, and other challenges to implementing international information systems Management Information Systems, Fifth Edition

Multinational Organizations Increasing number of corporations becoming multinational Global information system: serves organizations in multiple countries Used by multinational corporations Overseas operations must abide by local laws Management Information Systems, Fifth Edition

The Web and International Commerce Web became important vehicle for B2B and B2C commerce Ratio of non-English speakers to English speakers growing Internet opens enormous global opportunities Chinese market expected to be largest in future Web offers opportunities to save on costs Management Information Systems, Fifth Edition

The Web and International Commerce (continued) Figure 9.1: Two-thirds of Internet users come from non-English-speaking countries Management Information Systems, Fifth Edition

The Web and International Commerce (continued) Manuals prepared with animation Presented in many languages Global businesses must be sensitive to audiences Glocalization: design global sites to cater to local needs McDonalds menu changes to appeal to local palates Management Information Systems, Fifth Edition

The Web and International Commerce (continued) Figure 9.2: Imperatives to heed when designing Web sites for an international audience Management Information Systems, Fifth Edition

Think Globally, Act Locally International companies “think globally, act locally” Be sensitive to regional customs Control must be decentralized Strategic planning should be global Can be followed with local flavor Management Information Systems, Fifth Edition

Think Globally, Act Locally (continued) Businesses that cater to international audiences must “glocalize” their Web sites Management Information Systems, Fifth Edition

Think Globally, Act Locally (continued) Businesses that cater to international audiences must “glocalize” their Web sites Management Information Systems, Fifth Edition

Challenges of Global Information Systems Global information systems face challenges Technological barriers Regulations and tariffs Electronic payment mechanisms Different language and culture Economic and political considerations Different measurement standards Legal barriers Management Information Systems, Fifth Edition

Technological Challenges Not all countries have adequate information technology infrastructures Unable to build international IS Broadband communication lines needed Can offer two versions of Websites to compensate for slower bandwidth Management Information Systems, Fifth Edition

Technological Challenges (continued) Language is technological challenge Eight-bit bytes not sufficient for languages with large character sets Unicode allows for 65,536 characters Must coordinate with databases and applications Telephone numbers different in different countries Management Information Systems, Fifth Edition

Regulations and Tariffs Countries have different importing regulations Executives reluctant because of hassles Comply with laws of destination countries NextLinx help importers and exporters for Web commerce Management Information Systems, Fifth Edition

Differences in Payment Mechanisms E-commerce allows easy payment for online purchases Credit cards preferred payment method in North America Not all countries adopt this preference Japanese avoid using credit cards Management Information Systems, Fifth Edition

Language Differences International parties must agree on common language Data not transmittable internationally because information must be translated English considered de facto international language Largest companies translate Web sites into local languages Management Information Systems, Fifth Edition

Cultural Differences Different countries vary Tastes Gestures Treatment of people Ethical issues Conservative groups against “Americanization” Web designers must be sensitive to cultural differences Management Information Systems, Fifth Edition

Cultural Differences (continued) Some nations are afraid that cross-border information flow promotes cultural imperialism Management Information Systems, Fifth Edition

Conflicting Economic, Scientific, and Security Interests Goal of corporate management Seize large market share Maximize organization profits Scientific information important national resource Occasionally interests conflict Management Information Systems, Fifth Edition

Conflicting Economic, Scientific, and Security Interests (continued) Weapons manufacturers have technical drawings Valuable to both company and security of country Governments may not allow exchange of weapon designs PGP encryption application was opposed by government Thought to compromise national security Management Information Systems, Fifth Edition

Conflicting Economic, Scientific, and Security Interests (continued) The U.S. government controls the export of encryption software Management Information Systems, Fifth Edition

Political Challenges Information is power Some countries oppose policy of free access to information Gives other nations opportunity to control indigenous resources Government may require software to be purchased within borders Government may limit Internet use Management Information Systems, Fifth Edition

Different Standards Standards considered when integrating ISs internationally Records may be incompatible United States uses English system of weights and measures Rest of world uses metric system Management Information Systems, Fifth Edition

Different Standards (continued) Communicating dates Times Temperatures Addresses United States uses month/day/year format Rest of world uses day/month/year Management Information Systems, Fifth Edition

Different Standards (continued) Differences in standards pose a challenge to companies that wish to integrate their information systems across national borders Management Information Systems, Fifth Edition

Different Standards (continued) Different standards very costly NASA lost spacecraft because of measurement unit discrepancy European Article Number (EAN): barcode that includes an extra number to identify country Universal Product Code (UPC): American standard without last extra number Uniform Code Council (UCC): promoted use of European standard Management Information Systems, Fifth Edition

Different Standards (continued) Companies must adapt ISs to de facto (formal) standards Global Trade Item Numbers (GTINs): large enough to identify much larger set of items Support global supply chains Major push for using RFID tags Management Information Systems, Fifth Edition

Legal Barriers Countries have different laws Affects global business in general Poses challenges International transfer of data Free speech Location of legal proceedings Management Information Systems, Fifth Edition

Legal Barriers (continued) Privacy laws Respect for privacy in international business is unresolved challenge Majority of democratic nations protect individual privacy Laws reflect difference in approach to issue of privacy Management Information Systems, Fifth Edition

Legal Barriers (continued) Data protection laws described by three criteria Apply to private or public sector Manual or automated data Concern human beings or legal entities US privacy laws Both public and private Mostly encompass manual and computerized systems Management Information Systems, Fifth Edition

Legal Barriers (continued) European Union practices may conflict with U.S. practices Personal data collected only for specified purposes Personal data must be given consent to be processed Collecting organizations must identify themselves People have right to object to processing of personal data Management Information Systems, Fifth Edition

Legal Barriers (continued) American companies busy collecting data for marketing Discrepancy between European and American approaches prevents unrestricted flow of information EU directive just a framework Safe Harbor: arrangement for U.S. companies complying with EU directive to trade Management Information Systems, Fifth Edition

Legal Barriers (continued) Applicable law Free speech laws different in other countries Impacts what can or cannot be displayed online Other laws Gambling Auctioning Sale of alcohol and drugs Management Information Systems, Fifth Edition

Different Time Zones Different global regions require policies for work and information systems Teleconferencing available most of day Sometimes 24 hours per day Allow employees from different time zones to discuss problems Teams in support centers may work shifts Management Information Systems, Fifth Edition

Different Time Zones (continued) Different time zones must be considered by all organizations that do business in multiple countries Management Information Systems, Fifth Edition

Different Time Zones (continued) Managers must be aware of incorrect time stamping Systems at both locations can be designed to record local times of both locations Or record single time (company headquarters) Management Information Systems, Fifth Edition

Summary Companies using Web for business must accommodate non-English speaking audiences Companies must tailor to local preferences Must be aware of cultural differences and payment preferences Tariff and legal issues Linguistic, cultural, economic, and political challenges must be addressed Management Information Systems, Fifth Edition

Summary (continued) Laws governing collection of data in United States and European Union are different Incompatible data privacy laws Restricted flow of personal data between United States and EU Safe Harbor arrangement enables EU to do business with US Management Information Systems, Fifth Edition

Summary (continued) Old legal approach of territorial jurisdiction inadequate Too much information communicated and business conducted on Internet Free speech and consumer litigation of e-tailers brought need for legal reform for cyberspace Management Information Systems, Fifth Edition