1. 21. IS Globalization Issues Rev: Feb, 2013 Euiho (David) Suh, Ph.D. POSTECH Strategic Management of Information and Technology Laboratory (POSMIT: http://posmit.postech.ac.kr) Dept. of Industrial & Management Engineering POSTECH

2. Contents 1The International Dimension 2Global IT Management 3Global business Strategies & Applications 4Global IT Platforms 5Global Data Access Issues 6Global Systems Development 7Case Study

3. 3 The International Dimension To operate competitively in a digital economy Developing new models: structured, yet agile, global, yet local concentrating on maximizing risk-adjusted return from both knowledge and technology asset The major dimensions of global e-business technology management 1. The International Dimension

4. 4 Global IT management Challenges Political Challenges –Regulate or prohibit the transfer of data across national boundaries –Restrict, tax, or prohibit imports of hardware and software –Local content laws that specify the portion of the value of a product that must be added in that country if it is to be sold there –Require a business to spend part of the revenue they earn in a country in that nations economy Geo-economic Challenges –Physical distances Too long to fly in specialists Hard to communicate in real time across time zones Poor telephone and telecommunications services –Hard to find skilled local workers –Differences in the cost of living and labor costs Cultural Challenges –Differences in language, cultural interests, religions, customs, social attitudes, and political philosophies –Cultural training needed before assignments 2. Global IT Management

5. 5 Global Business/IT Strategies (1/2) Comparing Global Business/IT Strategies InternationalGlobalTransnational Autonomous operationsGlobal sourcing Virtual business operations via global alliances Region specificMultiregional World markets and mass customization Vertical integrationHorizontal integration Global e-commerce and customer service Specific customers Some transparency of customers and production Transparent manufacturing Captive manufacturingSome cross regionalization Global supply chain and logistics Customer segmentation and dedication by region and plant Dynamic resource management Differences among international, global, transnational business and IT strategies 3. Global business Strategies & Applications Moving toward a transnational strategy

6. 6 Global Business/IT Strategies (2/2) Differences among international, global, transnational business and IT strategies (Contd) Information Technology Characteristics InternationalGlobalTransnational Stand-alone systemsRegional decentralization Logically consolidated, physically distributed, Internet connected Decentralized/no standardInterface dependent Common global data resources Heavy reliance on interfaces Some consolidation of applications and use of common systems Integrated global enterprise systems Multiple systems, high redundancy, and duplication of services and operations Reduced duplication of operations Internet, intranet, extranet, and Web-based applications Lack of common systems and data Some worldwide IT standards Transnational IT policies and standards 3. Global business Strategies & Applications Moving toward a transnational strategy

7. 7 Drivers for applications of Global Business Customers –Travel anywhere or companies with global operations Products –The same throughout the world or assembled by subsidiaries throughout the world Operations –Parts of a productions or assembly process assigned to subsidiaries based on changing Resources –The use and cost of common equipment, facilities, and people shared by subsidiaries of a global company Collaboration –The knowledge and expertise of colleagues in a global company –Accessed, shared, and organized to support individual or group effeort 3. Global business Strategies & Applications

8. 8 Global IT Platforms Management of a global IT platform –Technically complex –Major political and cultural implications Difficulties of hardware choices –High prices –High tariffs –Import restrictions –Long lead times for government approvals –No local service or spare parts –Lack of localized documentation Difficulties of software choices –Packages developed in Europe may be incompatible with American or Asian versions –Software publisher may refuse to supply markets that disregard software licensing and copyright agreements 4. Global IT Platforms

9. 9 International Data Communications Issues Key global IT challenge International Data Communications Issues Network Management Issues Improving the operational efficiency of networks Dealing with different networks Controlling data communication security Regulatory Issues Dealing with transborder data flow restrictions Managing international telecommunication regulations Handling international politics Technology Issues Managing network infrastructure across countries Managing international integration of technologies Country-Oriented Issues Reconciling national differences Dealing with international tariff structures 4. Global IT Platforms

10. 10 The Internet as a Global IT Platform An interconnected matrix that reaches tens of millions of users in over 100 countries Business environment free of traditional boundaries and limits The Internet Expand markets Reduce communications and distribution costs Without incurring massive cost outlays for telecommunications, companies can… Improve profit margins 4. Global IT Platforms

11. 11 Key Questions for Global Websites Key Questions for companies establishing global Internet Web sites Key Questions Will you have to develop a new navigational logic to accommodate cultural preferences? What content will you translate, and what content will you create from scratch to address regional competitors or products that differ from those in the U.S.? Should your multilingual effort be an adjunct to your main site, or will you make it a separate site, perhaps with a country-specific domain? What kinds of traditional and new media advertising will you have to do in each country to draw traffic to your site? Will your site get so many hits that youll need to set up a server in a local country? What are the legal ramifications of having your website targeted at a particular country, such as laws on competitive behavior, treatment of children, or privacy? 4. Global IT Platforms

12. 12 Internet Users by World Region Continued expansion of the Internet as it becomes a pervasive IT platform for global business World Internet Usage and Population Statistics World Regions Population (2005 Est.) Population % of World Internet Usage, Latest Data Usage Growth 2000 ~ 2005 Penetration (% Population) World Users (%) Africa 900,465,41114,013,468,600198.31.5 Asia 3,612,363,16556.3302,257,003164.48.434.0 Europe 730,991,13811.4259,653,144151.935.529.2 Middle East 259,499,7724.019,370,700266.57.52.2 North America 328,387,0595.1221,437,647104.967.424.9 Latin America/Caribbean 546,917,1928.556,224,957211.210.36.3 Oceania/Australia 33,443,4480.516,269,080113.548.61.8 WORLD TOTAL6,412,067,185100.0888,681,131146.213.9100 4. Global IT Platforms

13. 13 Global Data Access Issues Subject of political controversy and technology barriers in global business operations for many years More visible with the growth of the Internet and the pressures of e-commerce Transborder Data Flows (TDF) –Business data flow across international borders over the telecommunications networks of global information systems Transborder Data Flows may be seen as violating A nations sovereignty because it avoids customs duties and regulations Laws protecting the local IT industry from competition Laws protecting local jobs Privacy legislation 5. Global Data Access Issues

14. 14 Internet Access in Restrictive Countries The struggle between Internet censorship and openness at the national level relates to –Controlling the conduits –Filtering the flows –Punishing the purveyors Most of the world has decided that restricting Internet access is not a viable policy –Restricting access also hurts a countrys opportunities for economic growth and prosperity Global Government Internet Restrictions –High Government Access Fees Kazakhstan, Kyrgyzstan –Government Monitored Access China, Iran, Saudi Arabia, Azerbaijan, Uzbekistan –Government Filtered Access Belarus, Cuba, Iraq, Tunisia, Sierra Leone, Tajikistan, Turkmenistan, Vietnam –No Public Access Allowed Burma, Libya, North Korea 5. Global Data Access Issues

15. 15 Global Systems Development Key development strategies –Transform an application used by the home office or a subsidiary into a global application –Set up a multinational development team –Parallel development –Centers of excellence –Offshore development Requirement of all of these strategies –Development team collaboration and managerial oversight to meet the global needs of a business Key Development Issues Local versus global system requirements Getting agreement on system features Global standardization of data definitions Disturbances caused by systems implementation and maintenance activities 6. Global Systems Development

16. 16 Internet-Enabled IT Development Example of Internet-enabled collaboration in global IT systems development 6. Global Systems Development

17. 17 Reference OBrien & Marakas, Introduction to Information Systems – Sixteenth Edition, McGraw – Hill, Chapter 14OBrien & Marakas, Introduction to Information Systems – Sixteenth Edition, McGraw – Hill, Chapter 14