Fueling Globalization Through Information Systems

Chapter
2 Fueling Globalization Through

Information Systems
2-1
The global economic playing

field is being leveled.
Nandan Nilekani,
Infosys Technologies
Ltd.
IS Today (Valacich & Schneider) Copyright 2010 Pearson Education, Inc. Published as Prentice Hall 04/03/17
Learning Objectives
2-2
Learning Objectives
2-3
Globalization
2-4
Globalization
created a new world
characterized by:
Worldwide
communication
Collaboration
without barriers
Evolution of Globalization
2-5
Globalization 1.0
Mainly European
countries are
globalizing
Power is the primary
driver
Industries changed
Slow pace of change
Evolution of Globalization (contd)
2-6
Globalization 2.0
Companies are
globalizing
Reduction in
transportation
and telecom-
munications
costs
Mainly Europe
and America
involved
Evolution of Globalization (contd)
2-7
Globalization 3.0
Individuals and
small groups are
globalizing
Faster pace of
change
Emergence of new
industries
Evolution of Globalization: Summary
2-8
The World Is Flat (Thomas L. Friedman)
10 Enablers
Key factors enabling Globalization 3.0
Enabler #1: The Fall of the Berlin Wall
2-9
November 9, 1989
Fall of
communism
People from the
former communist
countries gained
more freedom
Enabler #2: Netscape Browser
2-10
August 9, 1995
Killer app
First
mainstream
browser
Gave
individuals
access to the
Internet & set
standards
Enabler #3: Work Flow Software
2-11
Applications that
allow people
worldwide to
communicate
XML: applications
talk to each other
New possibilities
for information
sharing
Global currency to
fuel commerce
Enabler #4: Uploading
2-12
Individuals and
companies actively
participate in
content generation
on the Web
Wikipedia a huge
success
Enabler #5: Outsourcing
2-13
Outsourcing
companies
profited from the
drop in
telecommuni-
cations costs
Companies can
now use talented
engineers from
anywhere
Enabler #6: Offshoring
2-14
Companies set
up entire
factories in
countries such as
China
Mass production
Low costs
Enabler #7: Supply Chaining
2-15
Integration of
retailers,
suppliers, and
customers
Wal-Mart
became an
early leader
Use of RFID
tags
Enabler #8: In-Sourcing
2-16
Delegation of
companys key
operations to a
subcontractor
Example: UPS
provides
complete supply
chain solutions
to companies
Enabler #9: In-Forming
2-17
In-forming is to
individuals what
outsourcing,
offshoring, and
in-sourcing is to
companies
Individuals have
access to massive
amounts of
information
Enabler #10: The Steroids
2-18
Technologies that
support different
types of
collaboration
Greater mobility
Triple convergence
Learning Objectives
2-19
Opportunities for Operating in the Digital World
2-20
Opportunities
for reaching new
markets
Former Eastern
Bloc countries
provide new
opportunities for
international
companies to reach
new customers
Opportunities for Operating in the
Digital World (contd)
2-21
Engineering Graduates in the

Opportunities of United States, Europe, and India
a global
workforce:
Low
communications
costs
Highly-skilled
labor pool
Based on: Mallaby, 2006
Learning Objectives
2-22
Challenges of Operating in the Digital World
2-23
Globalization also created a set of unprecedented

challenges:
Governmental
Geoeconomic
Demographic
Cultural
Governmental Challenges
2-24
Political System Challenges

Political stability
Regulatory Challenges
Tariffs
Embargoes
Export regulations
Quotas
Governmental Challenges (contd)
2-25
Data-Sharing Challenges
Transborder data flow regulations
Differences in standards
UPC vs. EAN
Measurement units
Postal codes, phone numbers, etc.
Governmental Challenges (contd)
2-26
Internet Access and Individual Freedom

Content blocking by governments/censorship
ChinaUse of VoIP restricted
GermanySites with fascist symbols prohibited
Internet access blocking
Cuba, North Korea
Geoeconomic Challenges
2-27
Time Zone Challenges

Real time meetings across continents difficult
Working around the clock possible
Geoeconomic Challenges (contd)
2-28
Infrastructure-Related Challenges
Traditional infrastructureroads, electricity
Connectivityreliable Internet connections
Challenges Related to Economic Welfare

GDP growth not distributed evenly throughout the world
Migration
Some companies used to deal with low margins and tough
competition
2-29
Demographic Challenges
Differing rates of population growth
World Population,
1950-2050
(in billions)
2-30
Demographic Challenges (contd)

Expertise
related
challenges
Different
concentration
of skilled
workers
Different costs
of workers
Cultural Challenges
2-31
National Cultures
Power Distancedifferences in how societies
handle the issues of human inequality
Uncertainty Avoidancerisk taking nature
Individualism/Collectivismvalue placed on an
individual vs. a group
Masculinity/Femininitydegree to which a
society is characterized as masculine/feminine
Concept of Timelong term vs. short term
Life Focusquantity vs. quality of life
Cultural Challenges (contd)
2-32
Cultural Barriers
Languagecommunication language and norms
Work Culturework skills, habits, and attitudes
Aestheticsart, music, and culture
Educationattitudes toward education and literacy
Religion, Beliefs, and Attitudesspiritual institutions

and values
Social Organizationsfamily and social cohesiveness
Cultural Challenges (contd)
2-33
Environmental challenges
Energy consumption, pollution, workers health
Shipping
Other Challenges
Differences in what is regarded as appropriate
Standards of dealing with intellectual property
Network readiness
Not every country has access to the global networked
economy
Learning Objectives
2-34
Going Global: International Business Strategies
in the Digital World
2-35
Home-Replication
Strategy
Global Business
Strategy
Multidomestic
Business Strategy
Transnational
Business Strategy
Home-Replication Strategy
2-36
Most basic form of going global

Companies view international operations as secondary to, or
extension of home operations.
Focus on core competencies in home market
Inability to react to local market conditions
Homogeneous markets
Information systems play minor role in facilitating this
strategy
Global Business Strategy
2-37
Centralized
Used to achieve
economies of scale
Example: Coca-Cola
Same core product
Some different tastes
made for local
markets
Global Business Strategy
2-38
The role and characteristics of IS

Centralized information systems
Data flows from subsidiaries to home location
Multiple networks between home office and subsidiaries
Data does not stay at subsidiaries
Multidomestic Business Strategy
2-39
Low degree of
integration between
subunits
Flexible and
responsive to the
needs and demands of
local markets
Example: General
Motors
Opel in Germany
Vauxhall in Great
Britain
Multidomestic Business Strategy
2-40

Each subsidiary has own, decentralized information
systems
No centralized infrastructure
Data sharing primarily between subsidiaries and home
office
Limited data sharing among subsidiaries
Loose integration of information systems
Transnational Business Strategy
2-41
Some operations
centralized while
others decentralized
Flexibility
Economies of scale
Difficult to manage
Example: Unilever
Transnational Business Strategy
2-42

Integrated networks between home office and local
subsidiaries
Much communication among subunits AND between
home office and subunits
Key data is shared throughout company
Enabled by intranet, extranet, and Web based
applications
Business Strategies: Summary
2-43
End of Chapter Content
2-44
Opening CaseManaging in the Digital World:
Infosys Technologies Ltd.
2-45
Companies like
Infosys are
flattening the world.
Does business in new
ways
Outsourcing
Supply Chains
Consulting
Employment
Netscapes James H. Clark and Marc Andreessen
2-46
Founded Mosaic James H. Clark
Communications
Corporation
75 percent of Web
surfers used Netscape
in 1996
AOL acquired
Netscape in 1999 for
$10 billion in stock
Both founded several Marc Andreessen
start-ups
Online Searching
2-47
To Google has become a household verb

meaning search
IT Globalization: Accenture in India
2-48
Accenture
Provides consulting, technology, and outsourcing

Global before other companies were just waking up

to globalization
Accentures growth
Announced plans for doubling its thirteen thousand
business consultants between 2008 and 2011
Underground Gaming Economy
2-49
Massive Multiplayer Online Role-Playing Game

MMORPG
Virtual worldplayers live through avatars
Players started selling virtual tools for real money
farmers
Banned from various gaming sites due to behavior being
unethical and fear of turning users away
Whats your take on farmers and people buying
tools and advancement without mastering the skills?
Learning Languages in Context
2-50
Livemocha
Online language instruction using social networking
Structured lessons
Help with grammar
Canned pronunciation guides
Most valuable asset
Conversation with native speaker
Using social community to increase understanding
e-Waste
2-51
Disposal of electronics containing hazardous

materials is a rising issue
U.S. exports much of its e-waste to third world
countries
China banned the import in 2002

Other countries to follow
In mid 2006, EU banned toxic ingredients

Production of green hardware
U.S. government working on making changes
currently state-level legislation most effective
Pace of technological changes increases problem
The Automobile Industry
2-52
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
Globalization is already there
Foreign manufacturers producing in US
US companies producing worldwide
Global network of suppliers
Ripple effects resulting from any crisis

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Chapter

2 Fueling Globalization Through

The global economic playing

The World Is Flat (Thomas L. Friedman)

Engineering Graduates in the

Based on: Mallaby, 2006

Globalization also created a set of unprecedented

Political System Challenges

Postal codes, phone numbers, etc.

Internet Access and Individual Freedom

Time Zone Challenges

Challenges Related to Economic Welfare

Demographic Challenges (contd)

Aestheticsart, music, and culture

Educationattitudes toward education and literacy

Religion, Beliefs, and Attitudesspiritual institutions

Most basic form of going global

The role and characteristics of IS

Multiple networks between home office and subsidiaries

Data does not stay at subsidiaries

The role and characteristics of IS

The role and characteristics of IS

Enabled by intranet, extranet, and Web based

Founded Mosaic James H. Clark

To Google has become a household verb

Global before other companies were just waking up

Massive Multiplayer Online Role-Playing Game

Disposal of electronics containing hazardous

In mid 2006, EU banned toxic ingredients

The automobile industry is feeling the pressure of

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