3 Chapter Information Systems and GlobalizationGlobalization “The global economic playing field is being leveled.” Nandan Nilekani, Infosys Technologies Ltd. “The global economic playing field is being leveled.” Nandan Nilekani, Infosys Technologies Ltd. 3-1 Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

Learning Objectives 1. Define globalization, describe how it evolved over time, and describe the key drivers of globalization. 2. Describe the emerging opportunities for companies operating in the digital world. 3. Explain the factors companies have to consider when operating in the digital world. 4. Describe international business and information systems strategies used by companies operating in the digital world Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

Learning Objectives 1. Define globalization, describe how it evolved over time, and describe the key drivers of globalization. 2. Describe the emerging opportunities for companies operating in the digital world. 3. Explain the factors companies have to consider when operating in the digital world. 4. Describe international business and information systems strategies used by companies operating in the digital world Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

Globalization Integration of economies Globalization enabled by innovation and technologies progress Globalization created a new world characterized by: o Worldwide communication o Collaboration without barriers Three distinct phases (Thomas L. Friedman) 3-4 Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

Evolution of Globalization Primary entities globalizing (countries) Mainly European countries are globalizing (extend their territories) Power is the primary driver (steam) Industries changed (apparel) Slow pace of change Globalization Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

Evolution of Globalization (cont’d) Companies are globalizing Reduction in transportation and telecommunications costs Mainly Europe & America involved People felt the effect of industrial revolution Interrupted by the Great Depression & the two world wars. Globalization Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

Evolution of Globalization (cont’d) Worldwide globalizing Individuals and small groups are globalizing Faster pace of change Emergence of new industries (i.e. Google). Globalization Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

Evolution of Globalization: Summary “ 10 Enablers” o Numbers of technological & Societal took place o Key factors enabling globalization 3.0 The World Is Flat (Thomas L. Friedman) 3-8 Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

Enabler #1: The Fall of the Berlin Wall November 9, 1989 Fall of communism People from the former communist countries gained more freedom End of the cold wars between communist & capitalist Increase companies potential customer Access to talented Labor 3-9 Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

Enabler #2: Netscape Browser 3-10 August 9, 1995 First mainstream browser Gave individuals access to the Internet Enable companies to interconnect Entrepreneurs envisioned a new business models THEN NOW Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

Enabler #3: Work Flow Software 3-11 Applications that allow people worldwide to communicate XML allows computer program to “talk” to each other New possibilities for information sharing (SCMS) Online payment (PayPal) provide global currency to fuel commerce Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

Enabler #4: Uploading 3-12 Individuals and companies actively participate in content generation on the Web Ability to upload was catalyst for popularity of open-source software products Wikipedia a huge success Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

Enabler #5: Outsourcing Outsourcing companies profited from the drop in telecommunications costs Companies can now use talented engineers from anywhere Companies can outsource business process on global scale (offshore outsourcing) 3-13 Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

Enabler #6: Offshoring Companies set up entire factories in countries such as China o Mass production o Low costs 3-14 Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

Enabler #7: Supply Chaining Integration of retailers, suppliers, and customers Wal-Mart became an early leader o RFID tags used 3-15 Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

Enabler #8: In-Sourcing Refer to Delegation of company’s logistics ( key) operations to a subcontractor o Example: UPS provides complete supply chain solutions to companies 3-16 Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

Enabler #9: In-Forming Allows individuals to utilize powerful search engine on the Internet (i.e. google, yahoo) In-forming is to individuals what outsourcing, offshoring, and in- sourcing is to companies Individuals have access to massive amounts of information People depend less on propaganda & censored media 3-17 Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

Enabler #10: The Steroids Technologies that support different types of collaboration by digitizing the content Greater mobility Convergence 3-18 Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

Learning Objectives 1. Define globalization, describe how it evolved over time, and describe the key drivers of globalization. 2. Describe the emerging opportunities for companies operating in the digital world. 3. Explain the factors companies have to consider when operating in the digital world. 4. Describe international business and information systems strategies used by companies operating in the digital world Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

Opportunities for Operating in the Digital World Opportunities for reaching new markets o Former Eastern Bloc countries provide new opportunities for international companies to reach new customers 3-20 Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

Opportunities of a global workforce: o Low communications costs o Highly-skilled labor pool Engineering Graduates in the United States, Europe, and India Opportunities for Operating in the Digital World (cont’d) Based on: Mallaby, Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

Learning Objectives 1. Define globalization, describe how it evolved over time, and describe the key drivers of globalization. 2. Describe the emerging opportunities for companies operating in the digital world. 3. Explain the factors companies have to consider when operating in the digital world. 4. Describe international business and information systems strategies used by companies operating in the digital world Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

Challenges of Operating in the Digital World Globalization also created a set of unprecedented challenges: o Governmental o Geoeconomical o Demographic o Cultural 3-23 Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

Governmental Challenges Political System Challenges o Market vesus planned economy o Political stability Regulatory Challenges o Tariffs o Embargoes o Export regulations o Quotas 3-24 Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

Governmental Challenges (cont’d) Data-Sharing Challenges o Transborder data flow regulations o Few countries have data protection laws Internet Access and Individual Freedom o Content blocking by governments/censorship China—Use of VoIP restricted Germany—Sites with fascist symbols prohibited o Internet access blocking Cuba, North Korea 3-25 Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

Geoeconomic Challenges 3-26 Time Zone Challenges o Real time meetings across continents difficult o Working around the clock possible Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

Geoeconomic Challenges (cont’d) 3-27 Infrastructure-Related Challenges o Traditional infrastructure—roads, electricity o Connectivity—reliable Internet connections Challenges Related to Economic Welfare o GDP growth not distributed evenly throughout the world Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

Geoeconomic Challenges (cont’d) Demographic Challenges o Differing rates of population growth World Population, (in billions) 3-28 Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

Geoeconomic Challenges (cont’d) o Expertise related challenges Different concentration of skilled workers Different costs of workers Demographic Challenges (cont’d) 3-29 Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

Cultural Challenges National Cultures (Hofstede, 2001) o Power Distance—differences in how societies handle the issues of human inequality o Uncertainty Avoidance—risk taking nature o Individualism/Collectivism—value placed on an individual vs. a group o Masculinity/Femininity—degree to which a society is characterized as masculine/feminine (Assertiveness/nurturance ) o Concept of Time—long term orientation vs. short term o Life Focus—quantity vs. quality of life 3-30 Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

Cultural Challenges (cont’d) Cultural Barriers o Language—communication language and norms o Work Culture—work skills, habits, and attitudes o Aesthetics—art, music, and culture o Education—attitudes toward education and literacy o Religion, Beliefs, and Attitudes—spiritual institutions and values o Social Organizations—family and social cohesiveness 3-31 Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

Cultural Challenges (cont’d) Other Challenges o Differences in what is regarded as appropriate o Standards of dealing with intellectual property o Different standards 3-32 Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

Learning Objectives 1. Define globalization, describe how it evolved over time, and describe the key drivers of globalization. 2. Describe the emerging opportunities for companies operating in the digital world. 3. Explain the factors companies have to consider when operating in the digital world. 4. Describe international business and information systems strategies used by companies operating in the digital world Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

Going Global: International Business Strategies in the Digital World  Home-Replication Strategy  Global Business Strategy  Multidomestic Business Strategy  Transnational Business Strategy 3-34 Dr. Ali Zolait - Information Systems Today: Managing in the Digital World Depending on the degree of Supply Chain Integration and degree of local customer responsiveness.

Home-Replication Strategy Most basic form of going global o Companies view international operations as secondary to, or extension of home operations. o Focus on core competencies in home market o Inability to react to local market conditions o Homogeneous markets 3-35 Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

Global Business Strategy Companies attempt to achieve economies of scale(large Quantities) Work Centralized fashion Example: Coca-Cola o Same core product o Some different tastes made for local markets 3-36 Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

Multidomestic Business Strategy Low degree of integration between subunits Flexible and responsive to the needs and demands of local markets Example: General Motors o Opel in Germany o Vauxhall in Great Britain Very little data and control information flows between the home and subsidiary locations 3-37 Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

Transnational Business Strategy Some operations centralized while others decentralized o Flexibility o Economies of scale Difficult to manage Example: Unilever 3-38 Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

Business Strategies: Summary Different types of information systems can support these organizational forms 3-39 Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

End of Chapter Content 3-40 Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

Opening Case— Managing in the Digital World: Infosys Technologies Ltd. Companies like Infosys are “flattening” the world. Does business in new ways o Outsourcing o Supply Chains o Consulting o Employment 3-41 Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

Netscape’s James H. Clark and Marc Andreessen Founded Mosaic Communications Corporation 75 percent of Web surfers used Netscape in 1996 AOL acquired Netscape in 1999 for $10 billion in stock James H. Clark (left) Marc Andreessen (right) 3-42 Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

Online Searching To “Google” has become a household verb meaning search 3-43 Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

IT Globalization: Accenture in India Accenture o Provides consulting, technology, and outsourcing o Global before other companies were just “waking up” to globalization Accenture growing o Announced plans for doubling its thirteen thousand business consultants between 2008 and Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

Underground Gaming Economy Massive Multiplayer Online Role-Playing Game—MMORPG o Virtual world—players live through avatars Players started selling virtual tools for real money —farmers o Banned from various gaming sites due to behavior being unethical and fear of turning users away 3-45 Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

Learning Languages in Context Livemocha o Online language instruction using social networking Structured lessons Help with grammar Canned pronunciation guides Most valuable asset o Conversation with native speaker o Using social community to increase understanding 3-46 Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

e-Waste Disposal of electronics containing hazardous materials is a rising issue U.S. exports much of its e-waste to third world countries o China banned the import in 2002 o Other countries to follow In mid 2006, EU banned toxic ingredients o Production of “green” hardware U.S. government working on making changes— currently state-level legislation most effective 3-47 Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

The Automobile Industry The automobile industry is feeling the pressure of globalization Failed attempts at making a “world car” o Consumers have different tastes o Differences in infrastructures derive needs o The price of gasoline o Variations in emission standards Cultural and economic conditions need to undergo more globalization to make a world car successful 3-48 Dr. Ali Zolait - Information Systems Today: Managing in the Digital World