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Week 2: Globalization and Information SystemsMIS 2101: Management Information Systems
Based on material from Information Systems Today: Managing in the Digital World, Leonard Jessup and Joseph Valacich, Pearson Prentice Hall, 2007
Also includes material from The World Is Flat: A Brief History of the Twenty-first Century, Thomas L. Friedman, Farrar, Straus and Giroux, 2007
Also includes material by David Schuff, Paul Weinberg, and Cindy Joy Marselis.
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“The idea of charging for calls belongs to the last century.”
Niklas Zennström, Skype
The integration of systems and business processes is now a global issue and opportunity
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Learning Objectives
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Learning Objectives
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Globalization
Globalization created a new world characterized by: Worldwide
communication Collaboration
without barriers
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Tom Friedman
Tom Friedman . . . Pulitzer Prize-winning New York Times foreign affairs columnist and author of the renowned book on globalization, “The World is Flat”
Tom’s book discusses the factors that have contributed to the increasing connectedness — or “flattening”— of the world
Information Technology is playing a key role
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Tom Friedman’s “The World is Flat” Video
As you watch the video, take notes and be ready to discuss:
• What was the Overall Point of the video (and the book)?
• What are the 10 Flatteners --- What are their implications according to Friedman?
• Based on the video, what does someone need to do to be successful in the 21st Century
You can also view the video on the Internet at http://mitworld.mit.edu/stream/264/
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Evolution of Globalization
Mainly European countries are globalizing
Power is the primary driver
Industries changed
Slow pace of change
Globalization 1.0
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Evolution of Globalization
Globalization 2.0 Companies are
globalizing Reduction in
transportation and telecom-munications costs
Mainly Europe and America involved
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Evolution of Globalization
Individuals and small groups are globalizing
Fast changes
Emergence of new industries
Globalization 3.0
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The overall idea
The global economic playing field has been leveled
Competition is worldwide Few jobs or markets are constrained
by geographic boundaries There are steps you can take to
succeed in this world
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Flattener #1: 11/9/1989: The Fall of the Berlin WallWindows 3.1 released
The Wall was a physical and symbolic barrier to a flat economy
Windows removed a barrier to the creation of digital content
Started a major change from large centralized systems to small decentralized systems on a mass scale.
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Flattener #2: Netscape went public
Triggered New services Dot com boom Overbuild of fibre optics
Boston, Bethesda, and Bangalore are now neighbors.
Companies no longer control collaborative development of technology products
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Flattener #3: Hardware and software interoperability
Easier for applications to work with other applications (with some exceptions)
“Smokestacks” like AOL and CompuServe replaced or redesigned
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Flattener #4: Outsourcing
Outsourcing: Moving Jobs
Outsourcing companies profited from the drop in telecommunications costs
Companies can now use talented staff from anywhere
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Flattener #5: Offshoring
Offshoring: Moving entire operations
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Flattener #6: Uploading* Open source products:
developed collaboratively and free Wikipedia Open office
Creation/distribution of material by anyone
Potentially threatening to Microsoft, The New York Times, Record Labels, and others
* Listed as “Open Sourcing” in the book
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Flattener #7: Supply Chaining
Integration of retailers, suppliers, and customers
Increases efficiency. (Why?)
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Flattener #8: In-Sourcing
Delegation of company’s key operations to a subcontractor
What does UPS do in this area?
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Flattener #9: Informing
Individuals have access to massive amounts of information
What types of information are easily available to you now that weren’t 10 years ago?
How has this affected car dealers?
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Flattener #10: The Steroids
Technologies that support different types of collaboration Greater
mobility Convergence
of media and technoloigies
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Discussion
What does someone need to do to be successful in the 21st century?
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Learning Objectives
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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
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Opportunities of Operating in the Digital World
Opportunities of a Global Workforce Low
communications costs
Highly-skilled labor pool
Engineering Graduates in the US, Europe and India
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Learning Objectives
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Challenges of Operating in the Digital World
Globalization also created a set of unprecedented challenges:
Governmental challengesGeoeconomical challengesDemographic challengesCultural challenges
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Governmental Challenges
Political System Regulatory Internet Access and Individual
Freedom
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Geoeconomic Challenges
Time Zone Challenges Real time meetings across continents difficult But working around the clock possible
Infrastructure-Related Challenges Roads, electricity, communications services
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Demographic Challenges
Expertise related challenges Different
concentration of skilled workers
Different costs of workers
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Cultural Challenges
Risk taking Language Work skills/habits Intellectual property concepts
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Learning Objectives
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Going Global: International Business Strategy in the Digital World
Multidomestic Business Strategy
Global Business Strategy
Transnational Business Strategy
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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
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Global Business Strategy
Centralized Used to achieve
economies of scale E.g.: Coca-Cola
Same core product Some different
tastes made for local markets
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Transnational Business Strategy
Some operations centralized while others decentralizedFlexibilityEconomies of scale
Difficult to manage E.g.: Unilever
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Information Systems Strategies
Multinational Information Systems StrategyOften used by multidomestic companiesDecentralized systemsCommunication between home office and
subsidiariesNo focus on communication between different
subsidiariesDecentralized local data processing centers
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Information Systems Strategies Global Information Systems Strategy
Used by companies with global business strategy
Centralized infrastructureHome office coordinates most of the
strategic decisionsCommunication and data sharing networks
between home office and subsidiariesData does not stay with local subsidiaries
but flows back to the home office
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Information Systems Strategies
Transnational Information Systems StrategyPursued by transnational businessesExtensive communication between
home office and subsidiaries as well as among subsidiaries
Key data shared throughout the company
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Cases
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Niklas Zennström: Cofounder and Chief Executive Officer, Skype
“The idea of charging for calls belongs to the last century.”
Skype has 28 million subscribers
Among the 100 most influential people transforming the world
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Transnational Development
Wrigley Company World’s largest manufacturer of chewing gum Sold in 150 countries
Good information systems key to conducting marketing research Russian marketing research branch initiated the
development of a marketing research work flow automation system
After successful testing, system was implemented in other marketing research branches
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The Automobile Industry
The automobile industry is feeling the pressure of globalization
Failed attempts at making a “world car”Consumers have different tastesDifferences in infrastructures derive needsThe price of gasolineVariations in emission standards
Cultural and economic conditions need to undergo more globalization to make a world car successful