Week 2: Globalization and Information Systems MIS 2101: Management Information Systems

Agenda for the Week Role of IT in Globalization Opportunities for Globalization Operating in a Digital World Global IT Strategy

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

Tom Friedman Tom Friedman . . . Pulitzer Prize-winning New York Times foreign affairs columnist and author of the renowned book on globalization, “The World is Flat” Tom’s book discusses the factors that have contributed to the increasing connectedness — or “flattening”— of the world Information Technology is playing a key role

Tom Friedman’s “The World is Flat” Video As you watch the video, take notes and be ready to discuss: What was the Overall Point of the video (and the book)? What are the 10 Flatteners --- What are their implications according to Friedman? Based on the video, what does someone need to do to be successful in the 21st Century You can also view the video on the Internet at http://mitworld.mit.edu/stream/264/

Evolution of Globalization Mainly European countries are globalizing Power is the primary driver Industries changed Slow pace of change

Evolution of Globalization Companies are globalizing Reduction in transportation and telecom-munications costs Mainly Europe and America involved

Evolution of Globalization Individuals and small groups are globalizing Fast changes Emergence of new industries

The overall idea The global economic playing field has been leveled Competition is worldwide Few jobs or markets are constrained by geographic boundaries There are steps you can take to succeed in this world

Flattener #1: 11/9/1989: The Fall of the Berlin Wall Windows 3 Flattener #1: 11/9/1989: The Fall of the Berlin Wall Windows 3.1 released The Wall was a physical and symbolic barrier to a flat economy Windows removed a barrier to the creation of digital content Started a major change from large centralized systems to small decentralized systems on a mass scale.

Flattener #2: Netscape went public Triggered New services Dot com boom Overbuild of fibre optics Boston, Bethesda, and Bangalore are now neighbors. Companies no longer control collaborative development of technology products

Flattener #3: Hardware and software interoperability Easier for applications to work with other applications (with some exceptions)

Flattener #4: Outsourcing Moving Jobs Outsourcing companies profited from the drop in telecommunications costs Companies can now use talented staff from anywhere

Flattener #5: Offshoring Offshoring: Moving entire operations

Flattener #6: Uploading* Open source products: developed collaboratively and free Wikipedia Open office Creation/distribution of material by anyone Potentially threatening to Microsoft, The New York Times, Record Labels, and others * Listed as “Open Sourcing” in the book

Flattener #7: Supply Chaining Integration of retailers, suppliers, and customers Increases efficiency. (Why?)

Flattener #8: In-Sourcing Delegation of company’s key operations to a subcontractor What does UPS do in this area?

Flattener #9: Informing Individuals have access to massive amounts of information What types of information are easily available to you now that weren’t 10 years ago? How has this affected car dealers?

Flattener #10: The Steroids Technologies that support different types of collaboration Greater mobility Convergence of media and technoloigies

Discussion What does someone need to do to be successful in the 21st century?

Agenda for the Week Role of IT in Globalization Opportunities for Globalization Operating in a Digital World Global IT Strategy

Opportunities of Operating in the Digital World Opportunities of Reaching New Markets Former Eastern Bloc countries provide new opportunities for international companies to reach new customers

Opportunities of Operating in the Digital World Engineering Graduates in the US, Europe and India Opportunities of a Global Workforce Low communications costs Highly-skilled labor pool

Agenda for the Week Role of IT in Globalization Opportunities for Globalization Operating in a Digital World Global IT Strategy

Challenges of Operating in the Digital World Globalization also created a set of unprecedented challenges: Governmental challenges Geoeconomical challenges Demographic challenges Cultural challenges

Governmental Challenges Political System Regulatory Internet Access and Individual Freedom

Geoeconomic Challenges Time Zone Challenges Real time meetings across continents difficult But working around the clock possible Infrastructure-Related Challenges Roads, electricity, communications services

Demographic Challenges Expertise related challenges Different concentration of skilled workers Different costs of workers

Cultural Challenges Risk taking Language Work skills/habits Intellectual property concepts

Agenda for the Week Role of IT in Globalization Opportunities for Globalization Operating in a Digital World Global IT Strategy

Going Global: International Business Strategy in the Digital World Multidomestic Business Strategy Global Business Strategy Transnational Business Strategy

Multidomestic Business Strategy Low degree of integration between subunits Flexible and responsive to the needs and demands of local markets E.g.: General Motors Opel in Germany Vauxhall in Great Britain

Information Systems Strategy Multinational Information Systems Strategy Often used by multidomestic companies Decentralized systems Communication between home office and subsidiaries No focus on communication between different subsidiaries Decentralized local data processing centers

Global Business Strategy Centralized Used to achieve economies of scale E.g.: Coca-Cola Same core product Some different tastes made for local markets

Information Systems Strategies Global Information Systems Strategy Used by companies with global business strategy Centralized infrastructure Home office coordinates most of the strategic decisions Communication and data sharing networks between home office and subsidiaries Data does not stay with local subsidiaries but flows back to the home office

Transnational Business Strategy Some operations centralized while others decentralized Flexibility Economies of scale Difficult to manage E.g.: Unilever

Information Systems Strategies Transnational Information Systems Strategy Pursued by transnational businesses Extensive communication between home office and subsidiaries as well as among subsidiaries Key data shared throughout the company

Transnational Development Wrigley Company World’s largest manufacturer of chewing gum Sold in 150 countries Good information systems key to conducting marketing research Russian marketing research branch initiated the development of a marketing research work flow automation system After successful testing, system was implemented in other marketing research branches

Questions!!!