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Chapter 9: Challenges of

Global Information
Systems
Oz (5th edition)

Multinational Organizations and IS

A multinational firm (MNF) is a firm that operates


in many countries. The firm may or may not have
a headquarters in a single country, but operates
divisions and subsidiaries in different countries to
take advantage of local benefits (i.e., cheap labor)
MNFs must use global information systems which
are systems that serve individuals and firm units
in multiple countries.
Global information systems are different than
other IS because these systems must conform to
laws, cultures, and standards etc. in many
countries

The Web and International


Commerce

Web has become important vehicle for B2B


and B2C commerce
Ratio of non-English speakers to English
speakers growing
Internet opens enormous global opportunities
Chinese market expected to be largest in
future
Web offers opportunities to save on costs
(see subsequent slides)

The Web and International


Commerce (continued)

Figure 9.1: Two-thirds of Internet users come from non-English-speaking countries

The Web and International


Commerce (continued)

An example of cost savings: printing product and


service manuals
Put on Web as opposed to shipping with product
Downloaded at customers convenience
Inclusion of animation, sound, hypertext,
graphics, and video clips
Reduce customer service costs by 50 %
Multiple language versions are easier on the Web
Global businesses must be sensitive to audiences
Glocalization: design global sites to cater to local
needs
McDonalds menu changes to appeal to local
palates

The Web and International


Commerce (continued)

Figure 9.2: Imperatives to heed when designing Web sites for an international audience

Think Globally, Act Locally

International companies think globally,


act locally
Be sensitive to regional customs
Control must be decentralized
Strategic planning should be global
Can be followed with local flavor

Challenges of Global Information


Systems

Global information systems face challenges


Technological barriers
Regulations and tariffs
Electronic payment mechanisms
Different language and culture
Economic and political considerations
Different measurement standards
Legal barriers
Different time zones
Challenges involve both the firms Web site and
other information systems

Technological Challenges

Challenges
Not all countries have adequate
information technology infrastructures
Unable to build international IS
Broadband communication lines needed
Solutions
Offer two versions of Websites to
compensate for slower bandwidth
Use low earth orbit satellite systems to
build network for voice and data

Technological Challenges
(continued)

Challenges
Language is technological challenge
because eight-bit bytes not sufficient for
languages with large character sets (e.g.,
Chinese
Fields such as telephone numbers present
problems for databases in MNFs
Solutions
Use double-byte characters (e.g., unicode
allows for 65,536 characters)
Fields for telephone numbers must be
variable length to allow flexibility

Regulations and Tariffs

Challenges
Countries have different importing
regulations
Executives reluctant because of hassles
Even with research there are fears that
employees will not know how to comply with
laws of destination countries
Solutions
There are programs such as NextLinx to help
importers and exporters for Web commerce
NextLinx is integrated within the firm s
systems
When an international order is placed the
software determines tariffs, cost of
delivery, provides forms, and logistics

Differences in Payment Mechanisms

Challenges
E-commerce allows easy payment for
online purchases
Credit cards preferred payment method in
North America
Not all countries adopt this preference
Japanese avoid using credit cards
Solutions
Web sites for international firms must
have multiple payment mechanisms
Konbini example in Japan

Language Differences

Challenges
International parties must agree on common language
Data not transmittable internationally because
information must be translated; computers still cannot
accurately translate on the fly
English considered de facto international language
Many countries require accounting systems to be in
the local language

Solutions
Largest companies translate Web sites into local
languages
Web site design and translation should be done in
overseas offices although the server may be located in
another country; lack of uniformity in languages
Multiple accounting systems in different languages

Cultural Differences

Challenges
Different countries vary
Tastes
Gestures
Treatment of people
Ethical issues
Conservative groups against
Americanization
Solutions
MNFs should employ local personnel to
design their Web sites or version of a Web
site that will appeal to a particular country

Conflicting Economic, Scientific, and


Security Interests

Challenges
Goal of corporate management
Seize large market share and maximize organization
profits
Goal of governments is to protect economic, scientific, and
security interests of its people
Occasionally interests conflict
Drawings related to the design and manufacture of
weapons
Software packages
Encryption software
Differences in treatment of trade secrets, patents, and
copyright law
Solutions
No easy ones
Pressure from America for stronger copyright laws
International trade groups

Political Challenges

Challenge
Information is power and some countries oppose policy
of free access to information and limit use of Internet
Governments recognize that software is an economic
resource and require firms to purchase local software
to build local industry; problems for firms trying to
standardize

Solutions
MNFs may have to cut some content from their sites to
limit risks of offending local government
Limit use of employee blogs
International human rights pressure may help in the
long run
Use open source software (e.g., Linux, MySQL) can
help

Different Standards

Challenge
No international accounting standards
United States uses English system of weights
and measures; rest of world uses metric
system
Different standards for dates, temperatures,
time, telephone numbers, and addresses
Different standards for product codes
Solution
Multiple accounting systems
Multiple versions of data where user can
request version needed (i.e., software must
be flexible and give users choice)
Promotion of universal product codes

Legal Barriers

Challenges
Countries have different laws that affect
global business in general and in
particular areas such as
Privacy with respect to data collection
International transfer of data
Free speech
Location of legal proceedings
Other differences in law
Auctions
Gambling
Sale of liquor and prescription drugs

Legal Barriers: Privacy and Data


Collection
Privacy laws in general
Respect for privacy in international business is
unresolved challenge
Majority of democratic nations protect
individual privacy
How privacy laws differ with respect to data
collection
Does the law apply to data collected by a
company or the government?
Does the law apply to manual data, digital data,
or both?
Does the law protect data concerning human
beings or does the law also protect legal
entities such as corporations?

Legal Barriers: US versus EU


Approach to Privacy with Respect
to Data Collection

US privacy laws
Slanted toward the public sector (government)
Over 50 % encompass manual and computerized
systems
Limited provisions for individuals versus legal
entities (corporations)

EU privacy laws
Covers both public and private sector
Stronger protection regarding computerized
decision making
Variance in EU with respect to coverage of entities;
strong coverage with respect to individuals

Legal Barriers: EU Practices with


Respect to Data Collected on
Individuals

European Union practices (Directive on Data


Privacy) for data collected by corporations on
consumers follows the Fair Information Practices
mentioned in chapter 11
Personal data collected only for specified
purposes
Personal data must be given consent to be
processed
Collecting organizations must identify
themselves
People have right to object to processing of
personal data

Legal Barriers Between US and EU

Challenge
American companies collect data for marketing
purposes on all their customers, but differences
between European and American approaches
prevent unrestricted flow of information with
respect to data collection on EU customers
For example, EU agents monitor US companies
that collect data on EU citizens
Solution
The EU has worked with the US Dept of
Commerce to enable US companies who comply
with EUs Directive on Data Privacy to carry on
trade without fear of violating the directive
(Safe Harbor arrangement)

Legal Barriers: Legal Proceedings

Challenge
Suppose you purchased an item from a site
located in another country, and the item has
a defect or arrived after the time promised.
Because your request for compensation or
other remedies has not been answered, you
decide to sue. Where do you file the lawsuit?
Solution
Country- of-origin principle whereby all legal
matters are confined to the country where
the site operates
Country-of-destination principle whereby the
laws of the country to which the site caters
apply regarding dealings with the site,
regardless of the sites country (EUs
approach)

Different Time Zones

Challenge
MNFs must craft policies that work for
employees, customers, and IS for all time
zones
Time stamping
Solutions
Teleconferencing systems can help; but huge
time differences require accommodations for
employees in other time zones
Chat rooms and bulletin boards for
asynchronous communication
Opportunity to work on projects 24 hours a
day
Enable customer support personnel to be
available 24/7 without requiring night shift
work
Standard policy for time stamping documents

Summary

Companies using Web for business must


accommodate non-English speaking
audiences
Companies must tailor to local preferences
Must be aware of cultural differences and
payment preferences
Tariff and legal issues
Linguistic, cultural, economic, and political
challenges must be addressed

Summary (continued)

Laws governing collection of data in United


States and European Union are different
Incompatible data privacy laws
Restricted flow of personal data between
United States and EU
Safe Harbor arrangement enables EU to do
business with US
Old legal approach of territorial jurisdiction
inadequate
Free speech and consumer litigation of e-tailers
brought need for legal reform for cyberspace

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