The Global Economy David Kroenke Using MIS 3e Part Using MIS 3e Part 1: The International Dimension

00:09 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall ID1-2 Q1 Why is the global economy important today? Q2 How does the global economy change the competitive environment? Q3 How does the global economy change competitive strategy? Q4 How does the global economy change value chains and business processes? Q5 How does the global economy change information systems? Study Questions

00:09 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall ID1-3 Businesses compete in a global market. Rise of Japanese auto industry and the semiconductor industry Economies of North America and Europe closely integrated Fall of Soviet Union opened economies of Russia and Eastern Europe Telecommunications boom during dot-com boom  Cheap telecommunications enabled people worldwide to participate in global economy. 300 million people added to world economy in last 15 years! Why Is the Global Economy Important Today?

00:09 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall ID1-4 Q1 Why is the global economy important today? Q2 How does the global economy change the competitive environment? Q3 How does the global economy change competitive strategy? Q4 How does the global economy change value chains and business processes? Q5 How does the global economy change information systems? Study Questions

00:09 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall ID1-5 Internet-equipped world economy has altered every one of the five competitive forces. Suppliers have to reach a wider range of customers, and customers have to consider a wider range of vendors. Internet customers can easily learn of substitutions. Internet made it easier for new market entrants. Global economy intensified rivalry by increasing product and vendor choices and by accelerating the flow of information about price, product, availability, and service. How Does the Global Economy Change the Competitive Environment?

00:09 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall ID1-6 Q1 Why is the global economy important today? Q2 How does the global economy change the competitive environment? Q3 How does the global economy change competitive strategy? Q4 How does the global economy change value chains and business processes? Q5 How does the global economy change information systems? Study Questions

00:09 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall ID1-7 Global competitive strategies require considering two changing factors: 1.Strategy to compete industry-wide means competing in many different countries, with products localized to language and culture of those countries, is an enormous and expensive task. 2.Size of global market, combined with Internet, enables unprecedented product differentiation. How Does the Global Economy Change Competitive Strategy?

00:09 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall ID1-8 Q1 Why is the global economy important today? Q2 How does the global economy change the competitive environment? Q3 How does the global economy change competitive strategy? Q4 How does the global economy change value chains and business processes? Q5 How does the global economy change information systems? Study Questions

00:09 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall ID1-9 Products, subassemblies, parts, and other items are produced at factories worldwide and delivered to customers worldwide. Global sales change marketing, sales, and service activities. Value chain activities and processes span the globe and need to address differences in language, culture, and economic environments. How Does the Global Economy Change Value Chains and Business Processes?

00:09 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall ID1-10 Q1 Why is the global economy important today? Q2 How does the global economy change the competitive environment? Q3 How does the global economy change competitive strategy? Q4 How does the global economy change value chains and business processes? Q5 How does the global economy change information systems? Study Questions

00:09 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall ID1-11 Computer hardware is sold worldwide, and most vendors provide documentation in major languages, so internationalization has little impact on hardware. User interfaces for an international information system software highly impacted  Can an information system use a localized programming language? What language to use for recording data and remarks? How to translate all that into other languages? Information systems procedures need to reflect local cultural values and norms. How Does the Global Economy Change Information Systems?

00:09 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall ID1-12 Q1 Why is the global economy important today? Q2 How does the global economy change the competitive environment? Q3 How does the global economy change competitive strategy? Q4 How does the global economy change value chains and business processes? Q5 How does the global economy change information systems? Active Review

00:09 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall ID1-13 Founded in 1995 with the goal of consolidating fragmented photography market by acquiring many small companies, applying business discipline to merged entity, and developing modern information systems. Advent of the Web drove the company to e-commerce and in process enabled Getty to change the workflow and business practices of professional visual-content industry. Getty Images grew from a startup to a $600 million plus, publicly traded, very profitable company by By 2007, Getty had increased its revenue to more than $880 million. 2008, Getty purchased by private equity firm Hellman & Friedman, LLC for $2.4 billion. Case 1: Getty Images Serves up Profit and YouTube Grows

00:09 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall ID Subscription—Customers contract to use as many images as they want as often as they want (this applies to the news, sport, and entertainment imagery). 2.Royalty-free—Customers pay a fee based on file size of the image and can use image any way they want and as many times as they want. However, under this model, customers have no exclusivity or ability to prevent a competitor from using the same image at the same time. 3.Rights managed—Licenses creative imagery to users who pay fees according to rights that they wish to use—size, industry, geography, prominence, frequency, exclusivity, and so forth. Getty Images Uses Three Licensing Models

00:09 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall ID1-15 Hellman & Friedman, “focuses on investing in businesses with strong, defensible franchises and predictable revenue and earnings growth and which generate high levels of free cash flow or attractive returns on the capital reinvested in the business.” With a near zero cost of production, it is likely that Getty Images does indeed generate high levels of free cash flow! Why Did Hellman & Friedman Purchase Getty Images?

00:09 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall ID , posted their first video. Nine months later, 200,000 registered users and was showing 2 million videos per day. By January 2006, YouTube was showing 25 million videos per day. By May 2006, YouTube was showing 43 percent of all videos viewed over the Internet. By July 2006, users were viewing 100 million videos and uploading 65,000 new videos per day. YouTube had a total of 30 employees. October 2006, Google acquired YouTube for $1.65 billion YouTube

00:09 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall ID1-17 The opportunities were there in 1995, in 2005, and they are still there today. Although it is unlikely that you, too, will have such success, think about it: How can you use free data communications and data storage in your business? Or, in a job interview, how might you suggest that your prospective employer use such resources? What’s the Point of These Examples?

00:09 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall ID1-18 Near zero variable costs Near zero data storage costs Near zero data transmission costs Fives Forces Analysis 1.Weak customer bargaining power 2.Weak supplier bargaining power 3.Weak threat for ease of new entrants 4.Few substitutes 5.Relatively strong rivalry Business Model Advantages 2-18

00:09 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall ID1-19 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2011 Pearson Education, Inc. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall