MIS

CHAPTER 9

GLOBAL INFORMATION
SYSTEMS
Hossein BIDGOLI

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©2011 Course Technology, a part of Cengage Learning
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 Chapter 9 Global Information Systems

learning outcomes
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.

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 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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 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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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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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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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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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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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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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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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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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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Summary
• Factors contribute to the globalization trend
• Global information systems:
– Components
– Requirements
– Uses in multinational structures
– Applications
– Obstacles

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