© Pearson Prentice Hall 2009 Part 1-1 Using MIS 2e Part 1 The International Dimension: The Global Economy David Kroenke

© Pearson Prentice Hall 2009 Part 1-2 Study Questions Q1 – Why is the global economy important today? Q2 – How does the global economy change the competitive environment? Q3 – How does the global economy change competitive strategy? Q4 – How does the global economy change value chains and business processes? Q5 – How does the global economy change information systems?

© Pearson Prentice Hall 2009 Part 1-3 Q1 – Why is the global economy important today? Q2 – How does the global economy change the competitive environment? Q3 – How does the global economy change competitive strategy? Q4 – How does the global economy change value chains and business processes? Q5 – How does the global economy change information systems?

© Pearson Prentice Hall 2009 Part 1-4 Q1 – Why is the global economy important today? International business has sharply increased since the middle of the twentieth century because of these predominant factors:  The rise of the Japanese auto industry and the rise of semiconductor industry in southern Asia expanded international trade.  The North American and European economies became more closely integrated. Other factors that helped increase the amount of international business include:  The fall of the Soviet Union which opened up new markets.  The telecommunications boom that increased the amount of fiber optic cable available around the world.  Plentiful, cheap telecommunications, increasing the number of people that can participate in a global economy.  The Chinese economy opening up and creating new business opportunities. Between 1991 and the present, 3 billion people have been added to the world economy.

© Pearson Prentice Hall 2009 Part 1-5 Q1 – Why is the global economy important today? Q2 – How does the global economy change the competitive environment? Q3 – How does the global economy change competitive strategy? Q4 – How does the global economy change value chains and business processes? Q5 – How does the global economy change information systems?

© Pearson Prentice Hall 2009 Part 1-6 Q2 – How does the global economy change the competitive environment? Here is the impact these economic changes have made on Porter’s five competitive forces.  Suppliers can reach a wider range of customers.  Customers can consider a wider range of vendors.  Substitutions for products and services are easier to find.  New market entrants have an easier time and more opportunities to break into established marketplaces.  An intensified rivalry has resulted from increased: product and vendor choices, and available information about prices, products, availability, and service.

© Pearson Prentice Hall 2009 Part 1-7 Q1 – Why is the global economy important today? Q2 – How does the global economy change the competitive environment? Q3 – How does the global economy change competitive strategy? Q4 – How does the global economy change value chains and business processes? Q5 – How does the global economy change information systems?

© Pearson Prentice Hall 2009 Part 1-8 Q3 – How does the global economy change competitive strategy? The new global economy forces two major changes in the analysis of a business’s competitive strategies:  The sheer size and complexity of the global economy can force a company to reconsider competing on an industry-wide basis. The industry base may very well have expanded from one city to a hundred cities across the globe.  Unprecedented product differentiation is available over the Internet and around the world. A business is no longer competing with a company across town, but across the world. Products may have expanded from a dozen to a thousand.

© Pearson Prentice Hall 2009 Part 1-9 Q1 – Why is the global economy important today? Q2 – How does the global economy change the competitive environment? Q3 – How does the global economy change competitive strategy? Q4 – How does the global economy change value chains and business processes? Q5 – How does the global economy change information systems?

© Pearson Prentice Hall 2009 Part 1-10 Q4 – How does the global economy change value chains and business processes? World economic growth impacts every value chain activity.  Primary and support activities, supported by business processes, now have to account for multiple languages, cultures, and economic environments.  Those business processes that work well for one country and its culture may not work so well in a different country and culture.  Global companies may have to adapt or change some or all of their value chain activities and business processes to accommodate multiple geographic locations around the world.

© Pearson Prentice Hall 2009 Part 1-11 Q1 – Why is the global economy important today? Q2 – How does the global economy change the competitive environment? Q3 – How does the global economy change competitive strategy? Q4 – How does the global economy change value chains and business processes? Q5 – How does the global economy change information systems?

© Pearson Prentice Hall 2009 Part 1-12 Q5 – How does the global economy change information systems? Internationalization impacts all five components of information systems:  Hardware—not much impact since most hardware is built the same. However, user manuals may have to be written in multiple languages.  Software—user interfaces for operating systems and applications, and programming code must accommodate multiple languages, customs, and cultures.  Data—integrating data from users with multiple languages and skill levels can be problematic if not impossible.  Procedures—multiple languages, customs, and cultures need to be incorporated.  People—employees, suppliers, customers, and business partners may have different languages, customs, cultures, and expectations that the information system must accommodate.