1. LECTURE NOTES 2
CHAPTER 2

2. Information Systems Today: Managing in the Digital World
Globalization
Globalization created a new world characterized by:
Worldwide communication
Collaboration without barriers
Information Systems Today: Managing in the Digital World
2-2

3. Evolution of Globalization
Mainly European countries are globalizing
Power is the primary driver
Industries changed
Slow pace of change
Information Systems Today: Managing in the Digital World

4. Evolution of Globalization
Companies are globalizing
Reduction in transportation and telecom-munications costs
Mainly Europe and America involved
Information Systems Today: Managing in the Digital World

5. Evolution of Globalization
Individuals and small groups are globalizing
Fast changes
Emergence of new industries
Information Systems Today: Managing in the Digital World

6. Evolution of Globalization: Summary
The World is Flat (Thomas Friedman)
“10 Flatteners”
Key factors enabling globalization 3.0
Information Systems Today: Managing in the Digital World

7. Flattener #1: The Fall of the Berlin Wall
November 9, 1989
Fall of communism
People from the former communist countries gained more freedom
Information Systems Today: Managing in the Digital World

8. Flattener #2: Netscape Browser
August 9, 1995
First mainstream browser
Gave individuals access to the Internet
THEN
NOW
Information Systems Today: Managing in the Digital World

9. Flattener #3: Work Flow Software
Applications that allow people worldwide to communicate
XML allows applications to “talk” to each other
New possibilities for information sharing
Information Systems Today: Managing in the Digital World

10. Flattener #4: Supply Chaining
Integration of retailers, suppliers, and customers
RFID tags used
Wal-Mart became an early leader
Information Systems Today: Managing in the Digital World

11. Flattener #5: Open Sourcing
Software and source code freely available to everyone
Wikipedia a huge success
Information Systems Today: Managing in the Digital World

12. Flattener #6: Outsourcing
Outsourcing companies profited from the drop in telecommuni-cations costs
Companies can now use talented engineers from anywhere
Information Systems Today: Managing in the Digital World

13. Flattener #7: Offshoring
Companies set up entire factories in countries such as China
Mass production
Low Costs
Information Systems Today: Managing in the Digital World

14. Flattener #8: In-Sourcing
Delegation of company’s key operations to a subcontractor
E.g.: UPS provides complete supply chain solutions to companies
Information Systems Today: Managing in the Digital World

15. Flattener #9: In-Forming
In-Forming is to individuals what outsourcing, offshoring, and in-sourcing is to companies
Individuals have access to massive amounts of information
Information Systems Today: Managing in the Digital World

16. Flattener #10: The Steroids
Technologies that support different types of collaboration
Greater mobility
Convergence
Information Systems Today: Managing in the Digital World

17. 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
Information Systems Today: Managing in the Digital World

18. 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
Information Systems Today: Managing in the Digital World

19. Challenges of Operating in the Digital World
Globalization also created a set of unprecedented challenges:
Governmental challenges
Geoeconomical challenges
Demographic challenges
Cultural challenges
Information Systems Today: Managing in the Digital World

20. Governmental Challenges
Political System Challenges
Political stability
Regulatory Challenges
Tariffs
Embargoes
Export regulations
Quotas
Information Systems Today: Managing in the Digital World

21. Governmental Challenges II.
Data-Sharing Challenges
Transborder data flow regulations
Internet Access and Individual Freedom
Content blocking by governments/censorship
China – Use of VoIP restricted
Germany – Sites with fascist symbols prohibited
Internet access blocking
Cuba, North Korea
Information Systems Today: Managing in the Digital World

22. Geoeconomic Challenges
Time Zone Challenges
Real time meetings across continents difficult
Working around the clock possible
Information Systems Today: Managing in the Digital World

23. Geoeconomic Challenges II.
Infrastructure-Related Challenges
Traditional infrastructure – roads, electricity
Connectivity – reliable Internet connections
Challenges Related to Economic Welfare
GDP growth not distributed evenly throughout the world
Information Systems Today: Managing in the Digital World

24. Demographic Challenges
Differing rates of population growth
Information Systems Today: Managing in the Digital World

25. Demographic Challenges II.
Expertise related challenges
Different concentration of skilled workers
Different costs of workers
Information Systems Today: Managing in the Digital World

26. Information Systems Today: Managing in the Digital World
Cultural Challenges
National Cultures
Power Distance – differences in how societies handle the issues of human inequality
Uncertainty Avoidance – risk taking nature
Individualism/Collectivism – value placed on an individual vs. a group
Masculinity/Femininity – degree to which a society is characterized as masculine/feminine
Concept of Time – long term vs. short term
Life Focus – quantity vs. quality of life
Information Systems Today: Managing in the Digital World

27. Cultural Challenges II.
Cultural Barriers
Language – communication language and norms
Work Culture – work skills, habits and attitudes
Aesthetics – art, music and culture
Education – attitudes towards education and literacy
Religion, Beliefs and Attitudes – spiritual institutions and values
Social Organizations – family and social cohesiveness
Information Systems Today: Managing in the Digital World

28. Cultural Challenges III.
Other Challenges
Differences in what is regarded as appropriate
Standards of dealing with intellectual property
Different standards
E.g., writing paper, pillowcases
Information Systems Today: Managing in the Digital World

29. Going Global: International Business Strategy in the Digital World
Multidomestic Business Strategy
Global Business Strategy
Transnational Business Strategy
Information Systems Today: Managing in the Digital World

30. 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 Today: Managing in the Digital World

31. 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 Today: Managing in the Digital World

32. Transnational Business Strategy
Some operations centralized while others decentralized
Flexibility
Economies of scale
Difficult to manage
E.g.: Unilever
Information Systems Today: Managing in the Digital World

33. Business Strategies: Summary
Different types of information systems can support these organizational forms
Information Systems Today: Managing in the Digital World

34. Information Systems Strategies
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
Information Systems Today: Managing in the Digital World

35. Information Systems Strategies II.
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
Information Systems Today: Managing in the Digital World

36. Information Systems Strategies III.
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
Information Systems Today: Managing in the Digital World

37. IS Strategies: Summary
Information Systems Today: Managing in the Digital World