Week 2: Globalization and Information Systems MIS 2101: Management Information Systems

Week 2:
Globalization and
Information Systems
MIS 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.
The integration of systems and business
processes is now a global issue and
opportunity
“The idea of charging for calls belongs to the last
century.”
Niklas Zennström, Skype
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Learning Objectives
3
Learning Objectives
4
Globalization
Globalization created a
new world
characterized by:
 Worldwide
communication
 Collaboration
without barriers
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Tom Friedman



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Tom Friedman . . . Pulitzer Prizewinning 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
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

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You can also view the video on the Internet at
http://mitworld.mit.edu/stream/264/
Evolution of Globalization
 Mainly
European
countries are
globalizing
 Power is the
primary driver
 Industries
changed
 Slow pace of
change
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Globalization 1.0
Evolution of Globalization
Globalization 2.0



Companies are
globalizing
Reduction in
transportation
and telecommunications costs
Mainly Europe
and America
involved
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Evolution of Globalization
Globalization 3.0



Individuals
and small
groups are
globalizing
Fast
changes
Emergence
of new
industries
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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 Wall
Windows 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



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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
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

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Offshoring:
Moving entire
operations
Flattener #6: Uploading*



* Listed as “Open Sourcing” in the book
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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
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



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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?
Flattener #10: The Steroids

Technologies
that support
different types
of collaboration


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Greater
mobility
Convergence
of media and
technoloigies
Discussion

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What does someone need to do to be
successful in the 21st century?
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
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Engineering Graduates in the US,
Europe and India
Learning Objectives
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Challenges of Operating in
the Digital World
Globalization also created a set of
unprecedented challenges:
Governmental challenges
Geoeconomical challenges
Demographic challenges
Cultural 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 decentralized
Flexibility
 Economies of scale

Difficult to manage
 E.g.: Unilever

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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

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Information Systems Strategies

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

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Information Systems Strategies

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

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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 tastes
 Differences in infrastructures derive needs
 The price of gasoline
 Variations in emission standards


Cultural and economic conditions need to
undergo more globalization to make a world
car successful
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