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Management Information Systems

Chapter 15 Chapter 15 Managing Global Systems
LEARNING OBJECTIVES

• Identify the major factors driving the internationalization

of business.

• Compare strategies for developing global businesses.

• Demonstrate how information systems can support

Managing different global business strategies.

Global Systems • Identify the challenges posed by global information

systems and management solutions.

• Evaluate the issues and technical alternatives to be

considered when developing international information
systems.

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Management Information Systems Management Information Systems

Chapter 15 Managing Global Systems Chapter 15 Managing Global Systems

Severstal Creates an IT Infrastructure for Global Steelmaking The Growth of International Information Systems

• Problem: Needed global production platform; existing • Global economic system and global world order
infrastructure was a hodge-podge of different systems, driven by advanced networks and information
platforms; data did not flow between systems
systems
• Solutions: Standardized on Oracle E-Business Suite 12,
an enterprise application with modules for multiple • Growth of international trade has radically altered
functions
domestic economies around the globe
• With integrated system, Severstal NA is able to optimize
end-to-end processes instead of individual processes; to • For example, production of many high-end electronic
deliver higher quality and timelier reporting to parent
products parceled out to multiple countries
company
• Illustrates digital technology being used by global firms • E.g., Hewlett-Packard laptop computer
adjusting their systems to support rapid growth in world
trade

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Management Information Systems Management Information Systems

Chapter 15 Managing Global Systems Chapter 15 Managing Global Systems

The Growth of International Information Systems The Growth of International Information Systems

An HP Laptop’s Path to Market

• Strategy when building international systems
1. Understand global environment
• Business drivers pushing your industry toward global competition
• Inhibitors creating management challenges
2. Develop corporate strategy for competition
• How firm should respond to global competition
3. Develop organization structure and division of labor
• Where will production, marketing, sales, etc., be located
4. Consider management issues
• Design of business procedures, reengineering, managing change
Hewlett-Packard and other electronics companies assign
distribution and production of high-end products to a 5. Consider technology platform
number of different countries.

Figure 15-1
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Management Information Systems Management Information Systems

Chapter 15 Managing Global Systems Chapter 15 Managing Global Systems

The Growth of International Information Systems The Growth of International Information Systems

International Information Systems Architecture

• Global business drivers:
• General cultural factors lead toward internationalization and result in
specific business globalization factors

GENERAL CULTURAL FACTORS SPECIFIC BUSINESS FACTORS

Global communication and Global markets
transportation technologies Global production and operations
Development of global culture Global coordination
Emergence of global social norms Global workforce
Political stability Global economies of scale
The major dimensions for developing an international information systems architecture
Global knowledge base
are the global environment, the corporate global strategies, the structure of the
organization, the management and business processes, and the technology platform.

Figure 15-2
15.7 © 2010 by Prentice Hall 15.8 © 2010 by Prentice Hall

Management Information Systems Management Information Systems

Chapter 15 Managing Global Systems Chapter 15 Managing Global Systems

The Growth of International Information Systems The Growth of International Information Systems

• Challenges and obstacles to global business • Challenges and obstacles to global business systems (cont.)
systems • Specific challenges
• General cultural challenges • Standards
• Cultural particularism • Different EDI, e-mail, telecommunication standards
• Regionalism, nationalism, language differences • Reliability
• Social expectations: • Phone networks not uniformly reliable
• Brand-name expectations, work hours • Speed
• Political laws • Different data transfer speeds, many slower than U.S.
• Transborder data flow • Personnel
• Transborder data and privacy laws, commercial regulations • Shortages of skilled consultants

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Management Information Systems Management Information Systems

Chapter 15 Managing Global Systems Chapter 15 Managing Global Systems

The Growth of International Information Systems Organizing International Information Systems

• State of the art • Global strategies and business organization

• Most companies have inherited patchwork international systems • Three main kinds of organizational structure
using 1960s-era batch-oriented reporting, manual entry of data • Centralized: In the home country
from one legacy system to another, and little online control and
• Decentralized/dispersed: To local foreign units
communication
• Coordinated: All units participate as equals
• Significant difficulties in building appropriate international
architectures • Four main global strategies

• Planning a system appropriate to firm’s global strategy • Domestic exporter

• Structuring organization of systems and business units • Multinational

• Solving implementation issues • Franchisers

• Choosing right technical platform • Transnational

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Management Information Systems Management Information Systems

Chapter 15 Managing Global Systems Chapter 15 Managing Global Systems

Organizing International Information Systems Organizing International Information Systems

Global Business Strategy and Structure

• Global systems to fit the strategy
BUSINESS DOMESTIC MULTINATIONAL FRANCHISER TRANSNATIONAL
FUNCTION EXPORTER • Configuration, management, and development of systems tend
Production Centralized Dispersed Coordinated Coordinated to follow global strategy chosen
• Four main types of systems configuration
Finance/ Centralized Centralized Centralized Coordinated • Centralized: Systems development and operation occur totally at
Accounting domestic home base
Sales/ Mixed Dispersed Coordinated Coordinated • Duplicated: Development occurs at home base but operations
Marketing are handed over to autonomous units in foreign locations
Human Centralized Centralized Coordinated Coordinated • Decentralized: Each foreign unit designs own solutions and
Resources systems
• Networked: Development and operations occur in coordinated
Strategic Centralized Centralized Centralized Coordinated
fashion across all units
Management

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Management Information Systems Management Information Systems

Chapter 15 Managing Global Systems Chapter 15 Managing Global Systems

Organizing International Information Systems Organizing International Information Systems

Global Strategy and Systems Configurations

• To develop a global company and information
systems support structure:
1. Organize value-adding activities along lines of comparative
advantage
• E.g., Locate functions where they can best be performed, for least
cost and maximum impact
2. Develop and operate systems units at each level of corporate
activity—regional, national, and international
3. Establish at world headquarters:
The large Xs show the dominant patterns, and the small Xs show the
emerging patterns. For instance, domestic exporters rely predominantly • Single office responsible for development of international systems
on centralized systems, but there is continual pressure and some
development of decentralized systems in local marketing regions.
• Global CIO position

Figure 15-3
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Management Information Systems Management Information Systems

Chapter 15 Managing Global Systems Chapter 15 Managing Global Systems

Managing Global Systems Managing Global Systems

• Principle management challenges in developing • Typical scenario: Disorganization on a global scale

global systems • Traditional multinational consumer-goods company based in
• Agreeing on common user requirements U.S. and operating in Europe would like to expand into Asian
markets
• Introducing changes in business processes • World headquarters and strategic management in U.S.
• Coordinating application development • Only centrally coordinated system is financial controls and reporting

• Coordinating software releases • Separate regional, national production and marketing centers
• Foreign divisions have separate IT systems
• Encouraging local users to support global systems
• E-mail systems are incompatible
• Each production facility uses different ERP system, different
hardware and database platforms, etc.

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Management Information Systems Management Information Systems

Chapter 15 Managing Global Systems Chapter 15 Managing Global Systems

Managing Global Systems Managing Global Systems

Local, Regional, and Global Systems

• Global systems strategy
• Share only core systems
• Core systems support functionality critical to firm
• Partially coordinate systems that share some key
Agency and other coordination costs
elements increase as the firm moves from local
option systems toward regional and global
systems. However, transaction costs of

• Do not have to be totally common across national participating in global markets probably
decrease as firms develop global systems.
A sensible strategy is to reduce agency
boundaries costs by developing only a few core global
systems that are vital for global

•
operations, leaving other systems in the
Local variation desirable hands of regional and local units.
Source: From Managing Information

• Peripheral systems Technology in Multinational Corporations by

Edward M. Roche, © 1993. Adapted by
permission of Prentice Hall, Inc., Upper

•
Saddle River, N.J.
Need to suit local requirements only
Figure 15-4

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Management Information Systems Management Information Systems

Chapter 15 Managing Global Systems Chapter 15 Managing Global Systems

Managing Global Systems Managing Global Systems

1. Define core business processes • The management solution

2. Identify core systems to coordinate centrally
3. Choose an approach
• Piecemeal and grand design approaches tend to fail
• Evolve transnational applications incrementally from
existing applications
4. Make benefits clear
• Global flexibility
• Gains in efficiency
• Global markets and larger customer base unleash new
economies of scale at production facilities
• Optimizing corporate funds over much larger capital base
15.21
• Agreeing on common user requirements
• Short list of core business processes
• Develop common language, understanding of common
elements and unique local qualities
• Introducing changes in business processes
• Success depends on legitimacy, authority, ability to involve
users in change design process
• Coordinating applications development
• Coordinate change through incremental steps
• Reduce set of transnational systems to bare minimum
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Management Information Systems Management Information Systems

Chapter 15 Managing Global Systems Chapter 15 Managing Global Systems

Managing Global Systems Organizing International Information Systems

Colgate-Palmolive Keeps the World Smiling

• The management solution (cont.)
• Read the Interactive Session: Management, and then
• Coordinating software releases
discuss the following questions:
• Institute procedures to ensure all operating units update at
same time • Why was the traditional method of allocating IT resources to profits
no longer effective?
• Encouraging local users to support global systems
• Why is it important for central U.S. management to understand the
• Cooptation: Bringing the opposition into design and global disposition of IT personnel and funds?
implementation process without giving up control over direction and
nature of the change • Which of the four global business strategies described in this
chapter is Colgate pursuing, and how has this affected its selection
• Permit each country unit to develop one transnational application
of an IT resource management system?
• Develop new transnational centers of excellence
• What elements of “The Management Solution,” described in this
chapter, are mentioned in the case study? What elements are
missing?

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Management Information Systems Management Information Systems

Chapter 15 Managing Global Systems Chapter 15 Managing Global Systems

Technology Issues and Opportunities for Global Value Chains Technology Issues and Opportunities for Global Value Chains

• Technology challenges of global systems • Technology challenges of global systems (cont.)

• Computing platforms and systems integration • Software
• How new core systems will fit in with existing suite of applications • Integrating new systems with old
developed around globe by different divisions • Human interface design issues, languages
• Standardization: Data standards, interfaces, software, etc . • Software localization: converting software to operate in second
language
• Connectivity
• Most important software applications:
• Internet does not guarantee any level of service
• TPS and MIS
• Many firms use private networks and VPNs • Increasingly, SCM and enterprise systems to standardize business
processes
• Low penetration of PCs, outdated infrastructures in developing
countries • Applications that enhance productivity of international teams

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Management Information Systems Management Information Systems

Chapter 15 Managing Global Systems Chapter 15 Managing Global Systems

Technology Issues and Opportunities for Global Value Chains Technology Issues and Opportunities for Global Value Chains

Internet Penetration by Region Can Cell Phones Close the Global Digital Divide?
• Read the Interactive Session: Organizations, and then discuss
the following questions:
• What strategies are cell phone companies using to “close the digital
divide” and market phones to the poorest segment of the world’s
population?

• Why do economists predict that widespread cell phone usage in

developing countries would have an unprecedented effect on the
growth of those countries?
The percentage of the total
population using the Internet in
developing countries is much
• What are some examples of how cell phones might increase quality
smaller than in the United States
and Europe. of life for residents of developing countries?
Source: CIA World Factbook, 2008.
• Do you believe that cell phones will proliferate widely through Africa
Figure 15-5
and Asia? Why?

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