GLOBAL BUSINESS STRATEGIES • It shows that the product and information

flows between the parent and the subsidiaries

– Some MNCs entry into an international travel in one direction-toward the subsidiaries
marketplace is a new adventure.
• The global strategy localizes control within the
– We have already recognized that MNCs can parent.
adopt different organizational structures. They
also have a choice as to the strategies that they • The firm seeks to meet the needs of its
pursue. worldwide customers with standardized
products. The products for all the world markets
• Bartlett and Ghoshal identified 4 main strategic are manufactured centrally and shipped to the
ways that MNCs can use information to subsidiaries.
coordinate the activities of a parent company
with its subsidiaries
(see Figs. 2.10-13):
1. Decentralized control strategy
2. Centralized control strategy
3. Centralized expertise strategy
4. Centralized control and distributed expertise
strategy

• It shows that the two way flow of information

• It shows that the information flows are
primarily from the subsidiaries to the parent in
the form of financial reports. Many MNCs still
follow this strategy and it consist of standalone
databases and processes.
Decentralized Control Strategy
• Is known as the oldest of the strategies.
• These firms gave their subsidiaries much
leeway/freedom in meeting the needs of the
customers inside their own boundaries.
• A hands-of strategy in which the parent
allowed the subsidiaries to develop their own
products and practices.
between the parent and the subsidiaries.
Expertise flows to the subsidiaries and financial
information flows to the parent
• A blending of the centralized control and the
decentralized control strategy.
• Calls for a management team at the parent
location that is knowledgeable and skilled at
penetrating global markets.
• The subsidiaries use this expertise to adapt
firm’s products, processes, and strategies to their
own markets.
• This business strategy employs databases and
processes of the parent with those of the
subsidiaries.

• Recognizes the intricate control systems that

are required as well as the flows of resources
from node to node as the firm functions as a
coordinated system.
•It shows also the information-processing the information services plan will reflects the
capacity that is made available at the subsidiary future demands for systems support
level.
• Figure 2.7 illustrates the manner these two
• This became popular in the 1980s as firms planning processes influence each other
recognized that they had to be more responsive
at the subsidiary level.
• The parent and all of the subsidiaries work
together in formulating strategies and operating
policies, as well as in coordinating the logistics of
getting the products to the right markets.

Global Information Systems

Core Content of a Strategic
• The information system used by the MNCs as
they pursue these four business strategies are • Figure 2.8 shows the basic framework for a
called global information systems. strategic plan for information resource
management
• It can be defined as a system that consists of
networks that across national boundaries. • Two core topics that should be in every firm’s
strategic plan for information resources are:
1. The objectives to be achieved by each
STRATEGIC PLANNING FOR INFORMATION
category of information system during the
RESOURCES
time period covered by the plan
• The chief information officer (CIO) provides the
2. The information resources necessary to
strategic direction for a firm’s information
meet those objectives
resources; and
• The CIO also coordinates the IS department’s
strategic effort with the firm’s overall strategic
business plan
• As strategic planning in specific business areas
is also developed, the firm’s information
resources must also be coordinated with these
efforts (see Figure 2.6)

An Example Strategic Plan for Information

Strategic Planning for Information Resources
(SPIR)
• SPIR is the concurrent development of
strategic plans for both the firm and its
information services • Developing the two plans
together means that the firm’s plan will reflect
the support provided by information services and
Resources Figure 2.9 (see text) is an example of
an SPIR report. It includes the following aspects:
• An executive summary, spelling out the goals
of the firm's information services unit;
• Definitions of the scope of IT services in three
organizational units; and
• A summary of the work plan for implementing Environmental Interface of The Business Areas
systems enabling the firm to meet its information
services goals.
• Electronic commerce, commonly known as e-
commerce or e-comm, is the buying and selling of
products or services over electronic systems such
as the Internet and other computer networks.
• Electronic commerce draws on such
technologies as electronic funds transfer,
Internet marketing, online transaction
processing, electronic data interchange (EDI),
and automated data collection systems.
• Originally, electronic commerce was identified Anticipated Benefits from Electronic Commerce
as an aid of any commercial transactions There are three main benefits of e-Commerce:
electronically, using technology such as
1. Improved customer service before, during, and
Electronic Data Interchange (EDI) and Electronic
after the sale
Funds Transfer (EFT).
2. Improved relationships with suppliers and the
• The growth and acceptance of credit cards,
financial community
automated teller machines (ATM) and telephone
banking in the 1980s were also forms of 3. Increased economic return on stockholder and
electronic commerce owner investments These benefits contribute to
the firm’s financial stability and enable it to better
• Electronic commerce (or e-commerce), uses
compete in a business world that is using more
communications networks and computers to
and more computer technology
accomplish business processes
• Most electronic commerce is between
businesses (B2B), rather than between a business Electronic Commerce Constraints Three
and a consumer, but B2C still has many constraints on e-commerce are as follows:
opportunities for growth and profit
1. High costs
2. Security concerns
ELECTRONIC COMMERCE
3. Immature or unavailable software Each of
• Here, we shall treat “electronic business” and these constraints is being challenged as IT and IS
“electric commerce” as synonyms needs for e-commerce become increasingly
popular and the cost of the required computing
• Thus, any business transaction that uses
resources keeps falling
network access, computer-based systems, and a
Web browser interface qualifies as electronic Scope of Electronic Commerce
commerce
• The amount of economic impact varies from
Electronic Commerce Beyond the Boundary of industry to industry but about 94% of electronic
the Firm commerce is B2B leaving 6% for B2C
• Business-to-customer (B2C) electronic • E-commerce is estimated to be growing at
commerce refers to transactions between a between 5% and 15% each year, though may slow
business and the final consumer of the product down, high growth in eCommerce will likely
continue for the next several years
• Business-to-business (B2B) electronic
commerce refers to transactions between • Table 3.2 gives examples of the extent of the
businesses in which neither is the final consumer. use of e-commerce in certain areas of the
These may involve relatively few people, economy
generally the information systems groups of the
companies are most affected

• Industry Segment Information
Ecommerce updates
• E-commerce sales rise 14.8% in 2010
– The U.S. Commerce Department says online
shoppers spent $165.4 billion in 2010.
– U.S. e-commerce sales totaled $165.4 billion in
2010, up 14.8% from $144.1 billion 2009, according
to non-adjusted estimates released today by the
U.S. Commerce Department.
– The numbers also show that e-commerce is
taking a bigger slice of the overall retail sales pie
and is growing far faster than retail sales
• 4.2% of total retail spending took place online
during 2010, up from 3.9% in 2009, according to
Commerce Department estimates.
• When excluding sales in categories not
commonly bought online—automobiles, fuel,
grocery and foodservice sales—Internet Retailer
calculates that e-commerce accounted for 7.6% of
total retail sales during the year, up from 7.0% in
2009.
• Total retail sales, which includes e-commerce
sales, increased 7.0% in 2010 and totaled $3.92
trillion.
• Seasonally adjusted, 2010 e-commerce sales
were $164.6 billion and represented 4.2% of total
retail spending.
The Path to Electronic Commerce
• Implementing an e-commerce system includes
a significant risk of failure
• The first step is a commitment to implement
the system as part of a strategic business plan to
use e-commerce to achieve competitive
advantage
• The firm then gathers business intelligence to
understand the potential role each environmental
element will play
BUSINESS INTELLIGENCE
• Before engaging in e-commerce managers
must understand their firm’s relationships with
customers, competitors, suppliers, and other
external entities
• Business Intelligence (BI) is the gathering of
information about the environmental elements
that interact with your firm
External Databases
• Companies can also use commercial databases
that provide environmental information instead
of gathering it themselves
• Firms use these databases because it is faster
and less expensive than trying to research the
information on their own
• Figure 3.1 illustrates the use of external
databases and Web searches for business
intelligence
 Search Engines
• A search engine is a special program that
provides links to Web sites based on a keyword
or group of words supplied by the user
• Search engines then look through their
database of Web site content to see which Web
sites use that word or phrase
• Other specialized indexing programs create
directories of Web site categories, working on
the “backend” of the search engine
Electronic Data Interchange (EDI)
• EDI is essentially electronic forms that can be
sent over networks
• It involves transmitting data in a machine-
readable, structured format, enabling the data to
be received without the need for re-keying
• Two major standards for EDI are the American
National Standards Institute standard ASC X12 is
used in North America and the EDIFACT
international standards are used in Europe
Extranet
• Another way of establishing an IOS is by using a
secure form of Internet technology called an
extranet
• Firms use them in collaboration with trusted
suppliers and large customers to share sensitive
information
• Security and privacy are serious concerns so the
extranets are generally secured behind a firewall
Electronic Funds Transfer (EFT)
• When data representing money is transmitted
over a computer network, it is called electronic
funds transfer
• EFT is used by firms and individuals who have
their payroll checks deposited into their bank
accounts or who pay bills using electronic
payments
• EFT also plays a major role in electronic
commerce
THE INTERORGANIZATIONAL SYSTEM (IOS)
• An IOS is created through linkages with other
firms so they can work together as a coordinated
unit
• This allows them to achieve benefits that each
could not achieve alone
• Inter organizational systems are fundamental
to electronic commerce
IOS Benefits
• The trading partners enter into an IOS venture
with the expectation of realizing benefits such as:
A. Comparative Efficiency
• By joining IOS, the trading partners can
produce their goods and services with
greater efficiency and in turn, provide their
goods and services at lower cost to their
customers.
• This gives the partners in an IOS a price
advantage over their competitors.
• Internal efficiency – Consists of
improvements in the firm’s own
operations, thus enabling the firm to
gather data transfer, analyze it faster, and
make decision faster
• Inter organizational efficiency – Includes
improvement that are gained by working
with other firms. These enable the firms to
offer more products and services, serve
more customers, and gather
environmental data more easily.
B. Bargaining Power
• The ability of a firm to resolve disagreements
with its suppliers and customer to its own
advantage.
• The power is derived from three basic areas.
– Unique product features
– Reduced search-related costs
– Increased switching costs
Unique product features
• The electronic linkages of the IOS enable firms
to offer better service to their customers in the
form of easier ordering, quicker shipments and
 faster request time to request for information.
Reduced search-related costs
• By belonging to IOS, a firm can reduce the
Indirect IOS Benefits
“shopping” cost that its customer incur in
searching for a supplier, identifying alternative • The indirect benefits of participating in an IOS
products and getting the lowest price. include:
Increased switching costs – increased ability to compete;
• A firm would like to make it expensive, in – improved relationships with trading partners;
cost/or convenience, for customer to switch to a
– and improved customer service
competitor. IOS achieved this benefit by
providing customers with such information • Figure 3.4 shows this relationship between
resources, as hardware, software, and data direct and indirect benefits
communication channels that would have to
replace if products were purchased from another
firm.
• Vendor stock replenishment is a special type of
IOS where the supplier can initiate the
replenishment process by electronically
monitoring the firm’s inventory levels.
Proactive and Reactive Business Partners
• The IOS sponsor typically takes a proactive
approach, stimulating interest in the IOS and
encouraging participation in the network
A Challenge to EDI
• The participants, on the other hand, typically
respond in a reactive manner—accepting or • Newer approaches to inter organizational
rejecting the sponsor’s offer to adopt IOS systems for B2B data transfer XML, DHTML, and
CORBA
• For example, the proactive approach taken by
the large automobile manufacturers forced – Extensible markup language (XML) is an
suppliers to react by either adopting an EDI extension of the hypertext markup language
system or risk losing participation in the supply used to code Web pages
chain 31
– Dynamic hypertext markup language (DHTML)
Adoption Influences adds features such as scripting and active
controls so the content of the displayed Web
• Premkumar and Ramamurthy identified four
page can be dynamically generated
critical factors in determining if a firm will be
proactive or reactive: – Common Object Request Broker Architecture
(CORBA) grew as a standard as the software
– 1. Competitive pressure
industry embraced object-oriented programming
– 2. Exercised power and databases
– 3. Internal need B2C STRATEGIES FOR ELECTRONIC COMMERCE
– 4. Top management support • Reasons why it’s important to understand B2C
business include:
• The second two are internal factors while the
first two are environmental – More products and services are becoming
available for digital delivery
– Consumers are overcoming their reluctance to
purchase using the Web
– Higher communications speeds have made the
delivery of digital products practical
– Fear of information theft (such as credit card
info), is being replaced with greater confidence
that sensitive information will be safeguarded
Products and Services to Be Delivered to the
Consumer Over the Internet
• Digital Products: such as songs, albums,
movies, computer programs and their updates
and services • Physical Products: Sales can be
made over the Web, but shipping has to be
arranged. The growth of private mail/shipping
companies has indirectly aided retail e-Commerce
• A key difference between digital and physical
products is that digital products can be
consumed as soon as they are downloaded
Virtual Versus Hybrid Sales
• Virtual sales are those made by a firm that does
not operate a physical storefront
• Hybrid sales occur when firms have both a
physical storefront and a Web site where
customers can purchase products
• Office Depot’s Web site
(www.officedepot.com) shows an example of the
strategy restricting the number of images
displayed until the customer has focused his/her
search to a relatively few choices
EVOLUTION OF THE INTERNET
• Understanding the Internet's evolution can
help forecast future opportunities
• ARPANET makes it possible for military
personnel and civilian researchers to exchange
information relating to military matters. It forms
a major portion of what has come to be known
today known as the Internet
• In 1989, Tim Berners-Lee, working at CERN,
came up with a way for physicists to
communicate using hypertext electronically
linked documents.
• This system quickly evolved into what is now
known as the World Wide Web
CYBERSPACE AND THE INFORMATION
SUPERHIGHWAY
• The term cyberspace is from William Gibson’s
1984 book Neuromancer to describe a society
that had become a slave to its technology
• The information superhighway describes a
system that gives everyone access to the wealth
of information that exists in our modern society
• The two main organizations in leadership roles
in establishing Internet and Web standards are
The Internet Society and the IETF (Internet
Engineering Task Force)
• Web standards come from the World Wide
Web Consortium (W3C)
BUSINESS APPLICATIONS OF THE INTERNET
• The Internet can be used for any business
application that involves data communication,
including both communication inside the firm and
with the environment
• Unlike proprietary networks, the Internet can
be used with any computer platform without any
special effort to access the network
• The Internet also makes it possible to transmit
a wider variety of media than can be handled
over most conventional networks
Marketing Research and Retailing Applications
• By taking advantage of this new source of
customer information, industrial marketers have
gained new inroads to their markets
• The Web business application with which the
general public is most familiar is retailing
– most large retail chains now have an
established Web presence
Suggestions for Successful Internet Use
1. Make sure your Web site is robust
2. Make sure your browser and database
structure are both flexible and intuitive
3. Emphasize content
4. Update often
5. Look beyond customers
6. Target content to specific users’ needs
7. Make the interface intuitive
8. Be in the right Web location
9. Create a sense of community
10.Get help if you need it  Marketing Information System
 Manufacturing Information System
Future Impact of the Internet on Business
 Financial “”
• The Internet is seen as the precursor to a  Human Resources “”
National Information Infrastructure  Information Resources “”
• Each country will have its own NII, all linked OFFICE AUTOMATION
together in some manner that is yet to be defined
• OA includes all of the formal and informal
• Having an NII will affect commerce in the electronic systems primarily concerned with the
different countries in different ways. communication of information to and from
Industrialized countries that make quick use of persons inside and outside the firm
innovations in technology, the effect can be swift
and dramatic • Figure 4.2 shows an OA model of computer and
non computer-based applications used by a firm
• Important new issues are also emerging,
especially the issue of circulating customers’ • Innovations in IT made it possible for many firm
personal information activities to be conducted independent of their
location
Introduction
• This is called a virtual organization, and evolved
• The first office automation applications were out of office automation
mostly designed for secretarial and clerical tasks;
but soon spread to managerial and professional
ranks, leading eventually to the virtual office
• As firms evaluated the advantages and
disadvantages of centralized and decentralized IS
organizations, three structures were identified:
the partner, platform, and scalable models
• Systems development is an evolving activity,
with the organizational setting and the roles
played by the users and information specialists
constantly changing
THE BUSINESS ORGANIZATION
• Information systems have been developed to A Shift from Clerical to Managerial Problem
support all organizational levels (Figure 4.1) Solving
• At the strategic level, executive information • The first OA applications supported secretarial
systems are used by the firm's top managers and clerical personnel
• An MIS is designed to meet the information • As managers and professionals became more
needs of managers throughout the firm computer literate they learned to use the
• At the lowest, operational level systems are computer applications in problems solving
designed to meet the firm’s day-to-day • They began using e-mail to communicate,
information needs in those business areas electronic calendaring to schedule meetings,
video conferencing to link problem solvers over a – Reduced work stoppages
wide geographical area, and so on
– Social contribution
• OA applications have also been extended by
• Disadvantages
such technologies as hand held computers and
PDAs – Low morale
THE VIRTUAL OFFICE – Fear of security risks
• Evidence of the virtual office began to emerge • The virtual office demands cooperation by both
during the 1970s as low-priced microcomputers the firm and the employees if it is to succeed
and communications equipment made it possible
THE VIRTUAL ORGANIZATION
for individuals to work at home
• In a virtual organization, firm operations are
• At the time, the term teleprocessing was used,
designed so they are not tied to physical
later the term telecommuting was introduced to
locations
describe how employees could electronically
“commute” to work • Industries that are the most attracted to these
concepts are those that add value in the form of:
Advantages and Disadvantages of
information, ideas and intelligence
Telecommuting
• Such as: education, health care, entertainment,
• Advantages:
travel, sports, and consulting
– Provides employees with scheduling flexibility
• Workers in this “3I Economy” need to have the
so that personal tasks can also be accommodated
knowledge and skills required to succeed as IT
– Firms typically pay more attention to and information systems are included in business
communications needs of telecommuters processes
• Disadvantages: THE INFORMATION SERVICES ORGANIZATION
– Employees can develop a sense of not • Information services organizations usually
belonging – Employees can get the idea that they require:
are expendable
– The Information Resources
– The division between home and office
– The Information Specialists
responsibilities can become blurred
– Systems Analysts
Hoteling
– Database Administrators
• The concept of “hoteling” is for the firm to
provide a “sharable” central facility that – A Webmaster
employees can use as the need for office space
– Network Specialists
and support rises and falls
– Programmers
• The guiding principles for hoteling include:
– Operators
• Design the spaces for functional needs
• Figure 4.4 shows the structure of a typical
• Similar sized offices are built
information services organization
• Centralized storage space is provided
• Fewer enclosed office spaces
• Assigned offices spaces are eliminated
Advantages and Disadvantages of
Telecommuting
• Advantages:
– Reduced facility cost
– Reduced equipment cost
 Innovative Organizational Structures
• During the 1990s, large firms sought to achieve
a "centrally decentralized" organizational
structure
• Three innovative organizational structures that
have since been identified are:
– the partner model;
– the platform model; and
– the scalable model
• Whereas the organizational structure in Figure
4.4 illustrates how the information specialists are
grouped, the innovative structures show how the
IT functions are grouped
Three Innovative Structures
• The Partner Model (Figure 4.5): IT coordinates
business areas to achieve value innovation and
accomplish delivery of solutions
• The Platform Model (Figure 4.6): IT provides
the networks so that innovation can be
accomplished by the business areas
• The Scalable Model (Figure 4.7): shows that
two sourcing networks are utilized to interface
with vendors when engaging in infrastructure
management and solutions delivery within a
flexible structure
What All Three Models Share
• All three models recognize that the IT function
is not a self-contained unit, but interfaces with
both users and vendors
• Responsibilities for certain functions must be
allocated to specialists such as divisional
information officers and account managers
• All three models reflect an effort to make the IT
unit a team player in the firm's use of information
resources sharing and delegating functions when
it is best for the firm
End User Computing
• End user is synonymous with user; she/he uses
the end product of computer-based system.
• End-user computing is refers to the
development by users of all or part of their
computer based system. – It refers to systems in
which non-programmers can create working
applications. – EUC is a group of approaches to
computing that aim at better integrating end
users into the computing environment.
END-USER COMPUTING
• The first Information Systems were developed
with IT specialists doing all of the work for the
users (Figure 4.8)
• In the late 1970s, users began developing their
own computer applications
• End-user computing evolved out of four main
influences
1. The impact of computer education
2. The information services backlog
3. Low-cost hardware
4. Prewritten software
• In Figure 4.9 the end-user relies on the
information specialists for some degree of
support
• Table 4.1 identifies the types of knowledge
needed and whether they are of major,
intermediate, or minor importance
• In the same way, we can identify different
types of skills and their relative importance (Table
4.2)

USERS AS AN INFORMATION RESOURCE
• In deciding how the firm will use its information
resources, management must consider how end-
user computing will be conducted, so as to
maximize the benefits and minimize the risks
Knowledge Management
• This knowledge relates to the firm's processes,
technology, management, and interactions with
its environmental elements
• Firms are embarking on projects to develop
knowledge management systems for the purpose
of achieving a competitive advantage

Benefits and Risks of End-User Computing
• Benefits:
– Match Capabilities and Challenges
• Firms typically regard KM as another type of
system to be developed as an IS that gathers
knowledge, stores it and makes it available to
users

– Reduce Communications Gap • Table 4.3 lists the challenges that must be
faced by firms in developing KM systems
• Risks:
– Poorly Aimed Systems
– Poorly Designed and Documented Systems
– Inefficient Use of Information Resources
– Loss of Data Integrity
– Loss of Security
– Loss of Control
SYSTEMS DEVELOPMENT KNOWLEDGE AND
SKILL
• The development of information systems
requires certain knowledge and skills
• It is possible to identify not only the types of
knowledge and skill needed by information
specialists and users, but also how users can be CHALLENGES IN DEVELOPING GLOBAL
divided into general management and their staff INFORMATION SYSTEMS
• GIS describes the information system used by
multinational companies (MNC)

• GIS developers must address the following

constraints:
– Politically Imposed Constraints
– Cultural and Communications Barriers
– Restrictions on Hardware Purchases and
Imports – Restrictions on Data Processing
– Restrictions on Data Communications
– Technological Problems
– Lack of Support from Subsidiary Managers
PUTTING THE SYSTEM USERS AND
INFORMATION SPECIALISTS IN PERSPECTIVE
• Early systems development was accomplished
solely by information specialists, but over time
the users have played increasingly important
roles
• Not only has systems development work
changed, but the setting in which the work is
performed has changed as well
• Electronic communication networks enable
firms to become virtual organizations, so now
their development work can be done almost
anywhere