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

2. 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

3. 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

4. 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
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6. 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

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9. 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

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

11. 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

12. 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

13. 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

14. 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

15. 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

16. 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

17. 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

18. Cultural Differences (continued)
Conservative groups in other countries may dislike the “Americanization” of their cultures
Web designers must be sensitive to cultural differences
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20. 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

21. 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

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23. 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

24. 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

25. 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

26. 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

27. 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
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29. 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

30. 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

31. 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

32. 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

33. 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

34. 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

35. 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

36. 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

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38. 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

39. 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

40. 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

41. 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