Week 2: Globalization and Information Systems MIS 2101: Management Information Systems Based on material from Information Systems Today: Managing in the Digital World, Leonard Jessup and Joseph Valacich, Pearson Prentice Hall, 2007 Also includes material from The World Is Flat: A Brief History of the Twenty-first Century, Thomas L. Friedman, Farrar, Straus and Giroux, 2007The World Is Flat: A Brief History of the Twenty-first Century Also includes material by David Schuff, Paul Weinberg, and Cindy Joy Marselis.

2 2-2 “The idea of charging for calls belongs to the last century.” Niklas Zennström, Skype The integration of systems and business processes is now a global issue and opportunity

3 Learning Objectives

4

5 Globalization Globalization created a new world characterized by: Worldwide communication Collaboration without barriers

6 Tom Friedman Tom Friedman... Pulitzer Prize- winning New York Times foreign affairs columnist and author of the renowned book on globalization, “The World is Flat” Tom’s book discusses the factors that have contributed to the increasing connectedness — or “flattening”— of the world Information Technology is playing a key role

7 Tom Friedman’s “The World is Flat” Video As you watch the video, take notes and be ready to discuss: What was the Overall Point of the video (and the book)? What are the 10 Flatteners --- What are their implications according to Friedman? Based on the video, what does someone need to do to be successful in the 21st Century You can also view the video on the Internet at

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

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

10 Evolution of Globalization Individuals and small groups are globalizing Fast changes Emergence of new industries Globalization 3.0

11 The overall idea The global economic playing field has been leveled Competition is worldwide Few jobs or markets are constrained by geographic boundaries There are steps you can take to succeed in this world

12 Flattener #1: 11/9/1989: The Fall of the Berlin Wall Windows 3.1 released The Wall was a physical and symbolic barrier to a flat economy Windows removed a barrier to the creation of digital content Started a major change from large centralized systems to small decentralized systems on a mass scale.

13 Flattener #2: Netscape went public Triggered New services Dot com boom Overbuild of fibre optics Boston, Bethesda, and Bangalore are now neighbors. Companies no longer control collaborative development of technology products

14 Flattener #3: Hardware and software interoperability Easier for applications to work with other applications (with some exceptions) “Smokestacks” like AOL and CompuServe replaced or redesigned

15 Flattener #4: Outsourcing Outsourcing: Moving Jobs Outsourcing companies profited from the drop in telecommunications costs Companies can now use talented staff from anywhere

16 Flattener #5: Offshoring Offshoring: Moving entire operations

17 Flattener #6: Uploading* Open source products: developed collaboratively and free Wikipedia Open office Creation/distribution of material by anyone Potentially threatening to Microsoft, The New York Times, Record Labels, and others * Listed as “Open Sourcing” in the book

18 Flattener #7: Supply Chaining Integration of retailers, suppliers, and customers Increases efficiency. (Why?)

19 Flattener #8: In-Sourcing Delegation of company’s key operations to a subcontractor What does UPS do in this area?

20 Flattener #9: Informing Individuals have access to massive amounts of information What types of information are easily available to you now that weren’t 10 years ago? How has this affected car dealers?

21 Flattener #10: The Steroids Technologies that support different types of collaboration Greater mobility Convergence of media and technoloigies

22 Discussion What does someone need to do to be successful in the 21 st century?

23 Learning Objectives

24 Opportunities of Operating in the Digital World Opportunities of Reaching New Markets Former Eastern Bloc countries provide new opportunities for international companies to reach new customers

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

26 Learning Objectives

27 Challenges of Operating in the Digital World Globalization also created a set of unprecedented challenges: Governmental challenges Geoeconomical challenges Demographic challenges Cultural challenges

28 Governmental Challenges Political System Regulatory Internet Access and Individual Freedom

29 Geoeconomic Challenges Time Zone Challenges Real time meetings across continents difficult But working around the clock possible Infrastructure-Related Challenges Roads, electricity, communications services

30 Demographic Challenges Expertise related challenges Different concentration of skilled workers Different costs of workers

31 Cultural Challenges Risk taking Language Work skills/habits Intellectual property concepts

32 Learning Objectives

33 Going Global: International Business Strategy in the Digital World  Multidomestic Business Strategy  Global Business Strategy  Transnational Business Strategy

34 Multidomestic Business Strategy Low degree of integration between subunits Flexible and responsive to the needs and demands of local markets E.g.: General Motors Opel in Germany Vauxhall in Great Britain

35 Global Business Strategy Centralized Used to achieve economies of scale E.g.: Coca-Cola Same core product Some different tastes made for local markets

36 Transnational Business Strategy Some operations centralized while others decentralized Flexibility Economies of scale Difficult to manage E.g.: Unilever

37 Information Systems Strategies Multinational Information Systems Strategy Often used by multidomestic companies Decentralized systems Communication between home office and subsidiaries No focus on communication between different subsidiaries Decentralized local data processing centers

38 Information Systems Strategies Global Information Systems Strategy Used by companies with global business strategy Centralized infrastructure Home office coordinates most of the strategic decisions Communication and data sharing networks between home office and subsidiaries Data does not stay with local subsidiaries but flows back to the home office

39 Information Systems Strategies Transnational Information Systems Strategy Pursued by transnational businesses Extensive communication between home office and subsidiaries as well as among subsidiaries Key data shared throughout the company

40 Cases

Niklas Zennström: Cofounder and Chief Executive Officer, Skype “The idea of charging for calls belongs to the last century.” Skype has 28 million subscribers Among the 100 most influential people transforming the world

Transnational Development Wrigley Company World’s largest manufacturer of chewing gum Sold in 150 countries Good information systems key to conducting marketing research Russian marketing research branch initiated the development of a marketing research work flow automation system After successful testing, system was implemented in other marketing research branches

The Automobile Industry 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 Cultural and economic conditions need to undergo more globalization to make a world car successful