1 MIS, Chapter 9 ©2011 Course Technology, a part of Cengage Learning GLOBAL INFORMATION SYSTEMS...

1MIS, Chapter 9

©2011 Course Technology, a part of Cengage Learning

GLOBAL INFORMATION SYSTEMS

CHAPTER 9

Hossein BIDGOLI

MIS

2MIS, Chapter 9

©2011 Course Technology, a part of Cengage Learning

Chapter 9 Global Information Systems

LO1 Discuss reasons for globalization and using global information systems, including e-business and Internet growth.

LO2 Describe global information systems and their requirements and components.

LO3 Explain the types of organizational structures used with global information systems.

LO4 Discuss obstacles to using global information systems.

l e a r n i n g o u t c o m e s

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©2011 Course Technology, a part of Cengage Learning

Chapter 9 Global Information Systems

Why Go Global?

• Customers demand integrated worldwide services

• Example: shoe company– Produces leather and uppers in Italy– Upper shipped to China– Tested in Ireland– Sold in United States– Supply chain logistics managed and

coordinated in US

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Chapter 9 Global Information Systems

Why Go Global? (cont’d.)

• 2008 Coca-Cola Company – Generated more than 80% of its revenue from

outside United States

• Prerequisites to the success of a global information system:– Clear understanding of factors such as

customs, laws, technological issues, and local business needs and practices

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Chapter 9 Global Information Systems

Why Go Global? (cont’d.)

• Airline reservation systems– First large-scale interactive global system

• Global products– Products or services that have been

standardized for all markets

• Manufacturer might “regionalize” operations

• Globalization – Important factor in purchasing and supply

chain

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Chapter 9 Global Information Systems

Global Information Systems at Rohm & Haas

• Part of Dow Chemical• Production units in many different

countries• Overhauled its global information system

– By upgrading the order entry system – Installed a companywide materials

management system tied in with a global demand planning system

• Can now provide better service to its customers

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Chapter 9 Global Information Systems

E-Business: A Driving Force

• E-business – Major factor in the widespread use of global

information systems– Builds on the advantages and structures of

traditional business

• The Internet– Simplify communication– Change business relationships– Consumers can engage in comparison

shopping more easily

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Chapter 9 Global Information Systems

E-Business: A Driving Force (cont’d.)

• Small companies can conduct business online just as large companies

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©2011 Course Technology, a part of Cengage Learning

Chapter 9 Global Information Systems

Global Information Systems: An Overview

• Global information system (GIS) – Information system that works across national

borders– Facilitates communication between

headquarters and subsidiaries in other countries

– Incorporates all the technologies and applications found in a typical information system

– Stores, manipulates, and transmits data across cultural and geographic boundaries

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Chapter 9 Global Information Systems

Global Information Systems: An Overview (cont’d.)

• International company– Can increase control and enhance coordination

of its subsidiaries and be able to access new global markets

• Strategic planning is a core function• Defined in terms of two dimensions:

– Control and coordination

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Chapter 9 Global Information Systems

Global Information Systems: An Overview (cont’d.)

• Control requires: – Centralized architecture for data, standardized

definitions used across the organization– Standard formats for reports– Defined behaviors for different processes – Performance-tracking system

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Chapter 9 Global Information Systems

Global Information Systems: An Overview (cont’d.)

• Coordination requires:– Decentralized architecture for data– Standardization within departments– Ability to communicate these standards to

other departments– Collaboration systems– Technologies that support informal

communication and socialization

• Many advantages of high coordination

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Chapter 9 Global Information Systems

Components of a Global Information System

• Basic components:– Network capable of global communication,

including transmission equipment and communication media

– Global database– Information-sharing technologies

• Large versus small companies:– Custom applications or outsourcing

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Chapter 9 Global Information Systems

Components of a Global Information System (cont’d.)

• Information system manager – Faces design and implementation issues when

developing a global network– Determines the best communication media to

meet global performance and traffic needs– Chooses the best transmission technology for the

global network’s needs– Considers the company’s objectives when

determining the network architecture– Keeps in mind that standardized software and

hardware are always ideal but not always feasible

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Chapter 9 Global Information Systems

Components of a Global Information System (cont’d.)

• Technical challenges in GIS design:– Designing and implementing global databases

• Transborder data flow (TDF)– Restricts what type of data can be captured

and transmitted

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Chapter 9 Global Information Systems

Requirements of Global Information Systems

• Must be capable of supporting complex global decisions

• Multinational corporations (MNCs) environment includes many variations in different forces– Legal– Cultural– Economic– Political

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Chapter 9 Global Information Systems

Requirements of Global Information Systems (cont’d.)

• Operational requirements:– Global data access– Consolidated global reporting– Communication between headquarters and

subsidiaries– Management of short-term foreign exchange risks

• Strategic requirements:– Strategic planning support– Management of conflicts and political risks– Management of long-term foreign exchange risks– Management of global tax risks

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Chapter 9 Global Information Systems

Goals of Global Information Systems

• Issues:– Identify business opportunities in global

marketplace– Justify investment in GIS– Information systems personnel must have

technical and business expertise– Coordinate migration carefully

• Categories:– Intelligent systems– Transnational management support systems– Global competitive intelligent systems

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Chapter 9 Global Information Systems

Organizational Structures and Global Information Systems

• Four commonly accepted types of global organizations:– Multinational– Global– International– Transnational

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Chapter 9 Global Information Systems

Multinational Structure

• Production, sales, and marketing are decentralized

• Financial management remains the parent’s responsibility

• Example: Tyco Corporation• Focus on local responsiveness

– Reduces the need for communication between subsidiaries and headquarters

• Each subsidiary operates on a different platform

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Exhibit 9.1 A Multinational Structure

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Chapter 9 Global Information Systems

Global Structure

• Highly centralized information system• Subsidiaries have little autonomy• Sometimes called a “franchiser”• Extensive communication network necessary• Difficult and impractical

– Heavy reliance on headquarters for new products and ideas

• Examples: – McDonald’s, Mrs. Fields’ Cookies, General Motors

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Exhibit 9.2 A Global Structure

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Chapter 9 Global Information Systems

International Structure

• Operates much like a multinational corporation– But subsidiaries depend on headquarters more

for process and production decisions

• Information systems personnel are regularly exchanged among locations– Encourages a cooperative culture in

geographically dispersed personnel

• Example: Caterpillar Corporation

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Exhibit 9.3 An International Structure

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Chapter 9 Global Information Systems

Transnational Structure

• Parent and all subsidiaries work together in designing policies, procedures, and logistics

• Usually focuses on optimizing supply sources and using advantages available in subsidiary locations

• Architecture requires a higher level of standardization and uniformity for global efficiency – But must maintain local responsiveness

• Examples: Citigroup, Sony, Ford

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Exhibit 9.4 A Transnational Structure

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Chapter 9 Global Information Systems

Global Information Systems Supporting Offshore Outsourcing

• Offshore outsourcing – Alternative for developing information systems

• Organization chooses an outsourcing firm in another country

• Used for many information technology tasks

• GIS plays an important role in supporting offshore outsourcing

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Table 9.1 Top Offshoring Countries in 2008

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Chapter 9 Global Information Systems

The Internet and Globalization in Action

• The Internet allows entrepreneurs in developing countries to start and expand businesses without making large investments

• Muhammad Hassaan Khan, a young entrepreneur, established a design and consulting business called Zuha Innovation that is based in Faisalabad, Pakistan

• As Adam Toren, president of YoungEntrepreneur.com, puts it, “The Internet brings all continents, races, cities, and villages together into a global network of trade and communications”

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Chapter 9 Global Information Systems

Obstacles to Using Global Information Systems

• Lack of standardization – Can also include differences in time zones,

taxes, language, work habits, etc.

• Cultural differences• Diverse regulatory practices• Poor telecommunication infrastructures• Lack of skilled analysts and programmers

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Chapter 9 Global Information Systems

Lack of Standardization

• Lack of international standards impedes developing a cohesive system that’s capable of sharing information resources across borders

• Too much standardization can prevent flexibility in responding to local preferences and even time differences

• Only 5% to 15% of a company’s applications are truly global in nature

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Chapter 9 Global Information Systems

Cultural Differences

• Include differences in values, attitudes, and behaviors

• Views on using technology• Cultural issues

– Best addressed with education and training

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Chapter 9 Global Information Systems

Diverse Regulatory Practices

• Applies to policies on business practices and technological use

• Many countries restrict the type of hardware and software

• Jurisdiction issues on contents of a GIS• Nature of intellectual property laws

– Software piracy

• Privacy and cybercrime laws• Censorship and government control

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Chapter 9 Global Information Systems

Poor Telecommunication Infrastructures

• Consider telecommunication infrastructures of the countries where subsidiaries are located

• Differences in telecommunication systems make consolidating them difficult

• Differences in standards

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Chapter 9 Global Information Systems

Lack of Skilled Analysts and Programmers

• Severe shortage of qualified information systems professionals in the United States and Western Europe

• Companies must consider the nature of each culture and differences in skills in other countries

• Training and certification programs

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©2011 Course Technology, a part of Cengage Learning

Chapter 9 Global Information Systems

Summary

• Factors contribute to the globalization trend

• Global information systems: – Components – Requirements– Uses in multinational structures– Applications– Obstacles