2-1 “The idea of charging for calls belongs to the last century” Niklas Zennström, Skype Fueling Globalization through Information Systems

2-2 Learning Objectives Define globalization, describe how it evolved over time, and describe the key drivers of globalization. Describe the emerging opportunities for companies operating in the digital world. Explain the factors companies have to consider when operating in the digital world.

2-3 Learning Objectives Define globalization, describe how it evolved over time, and describe the key drivers of globalization. Describe the emerging opportunities for companies operating in the digital world. Explain the factors companies have to consider when operating in the digital world.

World is Flat Video Friedman-1.wmv Friedman-1.wmv

2-5 Globalization Globalization created a new world characterized by: oWorldwide communication oCollaboration without barriers

2-6 Evolution of Globalization Mainly European countries are globalizing Power is the primary driver Industries changed Slow pace of change Globalization 1.0

2-7 Evolution of Globalization Globalization 2.0 Companies are globalizing Reduction in transportation and telecom- munications costs Mainly Europe and America involved

2-8 Evolution of Globalization Individuals and small groups are globalizing Fast changes Emergence of new industries Globalization 3.0

2-9 Evolution of Globalization: Summary The World is Flat (Thomas Friedman) o “10 Flatteners” o Key factors enabling globalization 3.0

2-10 Flattener #1: The Fall of the Berlin Wall November 11, 1989 Fall of communism People from the former communist countries gained more freedom

2-11 Flattener #2: Netscape Browser November 9, 1995 First mainstream browser Gave individuals access to Internet THEN NOW

2-12 Flattener #3: Work Flow Software Applications that allow people worldwide to communicate XML allows applications to “talk” to each other New possibilities for information sharing

2-13 Flattener #4: Supply Chaining Integration of retailers, suppliers, and customers RFID tags used Wal-Mart became an early leader

2-14 Flattener #5: Open Sourcing Software and source code freely available to everyone Wikipedia a huge success

2-15 Flattener #6: Outsourcing Outsourcing companies profited from the drop in telecommuni- cations costs Companies can now use talented engineers from anywhere

2-16 Flattener #7: Offshoring Companies set up entire factories in countries such as China o Mass production o Low Costs

2-17 Flattener #8: In-Sourcing Delegation of company’s key operations to a subcontractor o E.g.: UPS provides complete supply chain solutions to companies

2-18 Flattener #9: In-Forming In-Forming is to individuals what outsourcing, offshoring, and in-sourcing is to companies Individuals have access to massive amounts of information

2-19 Flattener #10: The Steroids Technologies that support different types of collaboration o Greater mobility o Convergence

2-20 Learning Objectives Define globalization, describe how it evolved over time, and describe the key drivers of globalization. Describe the emerging opportunities for companies operating in the digital world. Explain the factors companies have to consider when operating in the digital world.

2-21 Opportunities of Operating in the Digital World Opportunities of Reaching New Markets o Former Eastern Block countries provide new opportunities for international companies to reach new customers

2-22 Opportunities of Operating in the Digital World Opportunities of a Global Workforce o Low communications costs o Highly-skilled labor pool Engineering Graduates in the US, Europe and India

We are at the beginning of the IT Revolution! All products that can be digitized can be broken apart and reassembled Work (and jobs) will flow to where it can be done cheapest (e.g., China) NO career or industry is immune! New technologies and improving infrastructure will fuel great change Learn to be “horizontal” for success – who / how you collaborate

2-24 Learning Objectives Define globalization, describe how it evolved over time, and describe the key drivers of globalization. Describe the emerging opportunities for companies operating in the digital world. Explain the factors companies have to consider when operating in the digital world.

2-25 Challenges of Operating in the Digital World Globalization also created a set of unprecedented challenges: oGovernmental challenges oGeoeconomical challenges oDemographic challenges oCultural challenges

2-26 Governmental Challenges Political System Challenges o Political stability Regulatory Challenges o Tariffs o Embargoes o Export regulations o Quotas

2-27 Governmental Challenges II. Data-Sharing Challenges o Transborder data flow regulations Internet Access and Individual Freedom o Content blocking by governments/censorship China – Use of VoIP restricted Germany – Sites with fascist symbols prohibited o Internet access blocking Cuba, North Korea

1-28 Worldwide Internet Usage In 2006 about 20% of active Internet users located in the US The Internet usage o Highest - North America: 70% of population o Lowest – Africa: 2.6% penetration of use

2-29 Geoeconomic Challenges Time Zone Challenges o Real time meetings across continents difficult o Working around the clock possible

2-30 Geoeconomic Challenges II. Infrastructure-Related Challenges o Traditional infrastructure – roads, electricity o Connectivity – reliable Internet connections Challenges Related to Economic Welfare o GDP growth not distributed evenly throughout the world

2-31 Demographic Challenges Differing rates of population growth

2-32 Demographic Challenges II. Expertise related challenges o Different concentration of skilled workers o Different costs of workers

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2-34 Cultural Challenges National Cultures o Power Distance – differences in how societies handle the issues of human inequality o Uncertainty Avoidance – risk taking nature Individualism/Collectivism – value placed on an individual vs. a group o Masculinity/Femininity – degree to which a society is characterized as masculine/feminine o Concept of Time – long term vs. short term o Life Focus –quantity vs. quality of life

2-35 Cultural Challenges II. Cultural Barriers o Language – communication language and norms o Work Culture – work skills, habits and attitudes o Aesthetics – art, music and culture o Education – attitudes towards education and literacy o Religion, Beliefs and Attitudes – spiritual institutions and values o Social Organizations – family and social cohesiveness

2-36 Cultural Challenges III. Other Challenges o Differences in what is regarded as appropriate o Standards of dealing with intellectual property o Different standards E.g., writing paper, pillowcases

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