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

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, Sixth Edition

Multinational Organizations An increasing number of corporations are becoming multinational Global information system: a system that serves organizations in multiple countries Used by multinational corporations Overseas operations must abide by local laws, yet be sensitive to local cultures and standards Management Information Systems, Sixth Edition

The Web and International Commerce The Web has become an important vehicle for B2B and B2C commerce The ratio of non-English speakers to English speakers on the Web is growing Internet opens enormous global opportunities Chinese market is expected to be the largest in the future The Web offers opportunities to increase revenue and to save on costs Management Information Systems, Sixth Edition

Management Information Systems, Sixth Edition

The Web and International Commerce (continued) Online manuals with animation replace paper documents Web sites and documentation are presented in many languages Global businesses must be sensitive to local audiences Globalization: designing global sites to cater to local needs and preferences Example: McDonalds menu changes to appeal to local palates Management Information Systems, Sixth Edition

Management Information Systems, Sixth Edition

Management Information Systems, Sixth Edition

Think Globally, Act Locally International companies must “think globally, act locally” Acting locally means being sensitive to regional customs and language nuances Control must be decentralized Strategic planning should be global, but can be followed with a local flavor Management Information Systems, Sixth Edition

Think Globally, Act Locally (continued) Management Information Systems, Sixth Edition

Challenges of Global Information Systems Global information systems face challenges such as: Technological barriers Regulations and tariffs Electronic payment mechanisms Different languages and cultures Economic and political considerations Different measurement and notation standards Legal barriers Different time zones Management Information Systems, Sixth Edition

Technological Challenges Not all countries have adequate information technology infrastructure to allow companies to build an international IS Broadband communication lines are needed to support today’s graphics-rich Web pages Companies can offer two versions of their Web sites to compensate for slower bandwidth Management Information Systems, Sixth Edition

Technological Challenges (continued) Language is another technological challenge Eight-bit byte code is not sufficient for languages with large character sets Unicode allows for 65,536 characters Must coordinate with databases and applications Telephone number and postal code formats are different in different countries Management Information Systems, Sixth Edition

Regulations and Tariffs Countries have different import regulations and tariffs Executives may be reluctant because of hassles of learning the laws, taxes, tariffs, and regulations of other countries Companies must comply with the laws of destination countries NextLinx help importers and exporters for Web commerce by providing tariffs, customs delay information, license requirements, etc. Management Information Systems, Sixth Edition

Differences in Payment Mechanisms E-commerce allows easy payment for online purchases Credit cards are the preferred payment method in North America Not all countries have adopted this preference High level of stolen credit cards in Eastern Europe Europeans prefer debit cards Most Japanese reluctant to use credit cards Management Information Systems, Sixth Edition

Language Differences International parties must agree on a common language for communication Data might not be transmittable internationally in real time because it must first be translated English is considered the de facto international language Large companies translate their Web sites into local languages Management Information Systems, Sixth Edition

Cultural Differences People from different countries vary in their: Tastes Gestures Preferred colors Treatment of people of certain gender or age Attitudes about work Opinions about ethical issues Management Information Systems, Sixth Edition

Cultural Differences (continued) Conservative groups in other countries may dislike the “Americanization” of their cultures Web designers must be sensitive to cultural differences Management Information Systems, Sixth Edition 18 18

Management Information Systems, Sixth Edition

Conflicting Economic, Scientific, and Security Interests Goal of corporate management is to seize a large market share and maximize organization profits Goal of a national government is to protect its economic, scientific, and security interests Scientific information is an important national resource as well as a great source of income for foreign corporations Occasionally interests conflict Management Information Systems, Sixth Edition

Conflicting Economic, Scientific, and Security Interests (continued) Weapons manufacturers have technical drawings that are valuable to both the company and the security of country Governments may not allow the exchange of weapon designs PGP encryption application was opposed by the U.S. government Thought to compromise national security Used by the 9/11 terrorists to encrypt their communication Management Information Systems, Sixth Edition

Management Information Systems, Sixth Edition

Conflicting Economic, Scientific, and Security Interests (continued) Countries treat trade secrets, patents, and copyrights differently May hinder the transfer of documents to certain divisions of a multinational corporation Intellectual property is tightly protected in the U.S. and Western Europe, but less so in other countries Management Information Systems, Sixth Edition

Political Challenges Information is power Some countries oppose the policy of free access to information as a threat to their sovereignty They believe it might give other nations an opportunity to control indigenous resources Governments may require that only open source software is used in government operations Global corporations must ensure compatibility with software adopted by local governments Management Information Systems, Sixth Edition

Political Challenges (continued) Some governments limit how the Internet is used Free speech is not a universal principle Web content restrictions are common in many countries Global companies must obey local laws May require collaboration with the government, resulting in arrest and prosecution of local users Ethical dilemma: how to balance the business interest with moral principles, and not help dictatorships violate civil rights Management Information Systems, Sixth Edition

Different Standards Differences in standards must be considered when integrating ISs internationally Records may be incompatible United States uses the English system of weights and measures; the rest of the world uses the metric system NASA lost a $125 million Mars orbiter mission due to an error in a data transfer, caused by a mismatch between U.S. and metric measurements Management Information Systems, Sixth Edition

Different Standards (continued) Different standards also exist for: Dates Times Temperatures Addresses United States uses month/day/year format; the rest of the world uses day/month/year Management Information Systems, Sixth Edition

Management Information Systems, Sixth Edition

Different Standards (continued) Companies must adapt their ISs to changing formal or de facto standards European Article Number (EAN): bar code that includes an extra number to identify country Universal Product Code (UPC): American standard without the last extra number American Uniform Code Council (UCC): promoted the use of European standard U.S. companies had to adapt ISs to recognize, record, and process the new bar code standard Management Information Systems, Sixth Edition

Different Standards (continued) UCC is now trying to expand product codes to the 14-digit Global Trade Item Numbers (GTINs) GTINs support global supply chains by allowing many more product ID values The major push to use RFID tags in the U.S. could expand to the rest of the world Management Information Systems, Sixth Edition

Legal Barriers Countries have different laws that affect global business in general and e-commerce in particular Differing laws pose challenges to: International transfer of data Free speech Location of legal proceedings when disputes arise Management Information Systems, Sixth Edition

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

Legal Barriers (continued) European Union practices may conflict with U.S. practices Personal data may be collected only for specified purposes Personal data cannot be processed without the unambiguous consent of the subject Collecting organizations must identify themselves Subjects have the right to know to whom their data is disclosed Subjects have the right to object to processing of their personal data Management Information Systems, Sixth Edition

Legal Barriers (continued) American companies are busy collecting, buying, and selling data for marketing and decision making This discrepancy between the European and American approaches prevents unrestricted flow of information EU directive is only a framework; EU countries may have more restrictive laws Safe Harbor: arrangement for U.S. companies that have agreed to comply with the EU directive Management Information Systems, Sixth Edition

Legal Barriers (continued) Privacy laws regarding employees are also different in the U.S. and EU Other applicable laws affecting online business include those that address: Free speech What can or cannot be displayed online Gambling Auctioning Sale of alcoholic beverages and drugs Management Information Systems, Sixth Edition

Different Time Zones Different global regions require policies for work and information systems Teleconferencing systems must be available most of the day, sometimes 24 hours per day Allows employees from different time zones to discuss problems that need immediate resolution Teams in support centers may work shifts to accommodate clients worldwide Management Information Systems, Sixth Edition

Management Information Systems, Sixth Edition

Different Time Zones (continued) Managers must be aware of incorrect time stamping in different locales Systems at both locations can be designed to record local times of both locations, or record a single time (that of the company headquarters) Management Information Systems, Sixth Edition

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

Summary (continued) Laws governing the collection and manipulation of personal data in the U.S. and European Union are different The U.S. and EU have incompatible data privacy laws, which restrict the flow of personal data between the U.S. and EU Safe Harbor arrangement enables EU companies to do business with U.S. companies Management Information Systems, Sixth Edition

Summary (continued) The old legal approach of territorial jurisdiction is inadequate for business conducted on the Web Free speech and consumer litigation of e-tailers have brought to light the need for international legal reform for cyberspace Management Information Systems, Sixth Edition