Information Systems Today: Managing in the Digital World “The idea of charging for calls belongs to the last century.” Niklas Zennström, Skype Fueling Globalization through Information Systems Chapter

Information Systems Today: Managing in the Digital World 2-2 Learning Objectives

Information Systems Today: Managing in the Digital World 2-3 Learning Objectives

Information Systems Today: Managing in the Digital World 2-4 Globalization Globalization created a new world characterized by: oWorldwide communication oCollaboration without barriers

Information Systems Today: Managing in the Digital World 2-5 Evolution of Globalization Mainly European countries are globalizing Power is the primary driver Industries changed Slow pace of change Globalization 1.0

Information Systems Today: Managing in the Digital World 2-6 Evolution of Globalization Globalization 2.0 Companies are globalizing Reduction in transportation and telecom- munications costs Mainly Europe and America involved

Information Systems Today: Managing in the Digital World 2-7 Evolution of Globalization Individuals and small groups are globalizing Fast changes Emergence of new industries Globalization 3.0

Information Systems Today: Managing in the Digital World 2-8 Evolution of Globalization: Summary “10 Flatteners” o Key factors enabling globalization 3.0 The World is Flat (Thomas Friedman)

Information Systems Today: Managing in the Digital World 2-9 Flattener #1: The Fall of the Berlin Wall November 9, 1989 Fall of communism People from the former communist countries gained more freedom

Information Systems Today: Managing in the Digital World 2-10 Flattener #5: Open Sourcing Software and source code freely available to everyone Wikipedia a huge success

Information Systems Today: Managing in the Digital World 2-11 Flattener #6: Outsourcing Outsourcing companies profited from the drop in telecommuni- cations costs Companies can now use talented engineers from anywhere

Information Systems Today: Managing in the Digital World 2-12 Flattener #7: Offshoring Companies set up entire factories in countries such as China o Mass production o Low Costs

Information Systems Today: Managing in the Digital World 2-13 Learning Objectives

Information Systems Today: Managing in the Digital World 2-14 Opportunities of Operating in the Digital World Opportunities of Reaching New Markets o Former Eastern Bloc countries provide new opportunities for international companies to reach new customers

Information Systems Today: Managing in the Digital World 2-15 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

Information Systems Today: Managing in the Digital World 2-16 Learning Objectives

Information Systems Today: Managing in the Digital World 2-17 Challenges of Operating in the Digital World Globalization also created a set of unprecedented challenges: oGovernmental challenges oGeoeconomical challenges oCultural challenges

Information Systems Today: Managing in the Digital World 2-18 Governmental Challenges Political System Challenges o Political stability Internet Access and Individual Freedom o Content blocking by governments/censorship China – Use of VoIP restricted Internet access blocking

Information Systems Today: Managing in the Digital World 2-19 Geoeconomic Challenges Time Zone Challenges o Real time meetings across continents difficult o Working around the clock possible

Information Systems Today: Managing in the Digital World 2-20 Geoeconomic Challenges II. Infrastructure-Related Challenges o Traditional infrastructure – roads, electricity o Connectivity – reliable Internet connections

Information Systems Today: Managing in the Digital World 2-21 Cultural Challenges National Cultures o Concept of Time – long term vs. short term o Language o Work Culture – work skills, habits and attitudes o Education o Religion and Beliefs o Standards of dealing with intellectual property

Information Systems Today: Managing in the Digital World 2-22 Learning Objectives

Information Systems Today: Managing in the Digital World 2-23 Going Global: International Business Strategy in the Digital World  Multidomestic Business Strategy  Global Business Strategy  Transnational Business Strategy

Information Systems Today: Managing in the Digital World 2-24 Multidomestic Business Strategy Low degree of integration between subunits Flexible and responsive to the needs and demands of local markets E.g.: General Motors o Opel in Germany o Vauxhall in Great Britain

Information Systems Today: Managing in the Digital World 2-25 Global Business Strategy Centralized E.g.: Coca-Cola o Same core product

Information Systems Today: Managing in the Digital World 2-26 Transnational Business Strategy Some operations centralized while others decentralized o Flexibility Difficult to manage E.g.: Unilever

Information Systems Today: Managing in the Digital World 2-27 Business Strategies & ISs Different types of information systems can support these Business Strategies

Information Systems Today: Managing in the Digital World 2-28 Information Systems Strategies Multinational Information Systems Strategy o Often used by multidomestic companies o Decentralized systems o Communication between home office and subsidiaries o No focus on communication between different subsidiaries o Decentralized local data processing centers

Information Systems Today: Managing in the Digital World 2-29 Information Systems Strategies II. Global Information Systems Strategy o Used by companies with global business strategy o Centralized infrastructure o Home office coordinates most of the strategic decisions o Communication and data sharing networks between home office and subsidiaries o Data does not stay with local subsidiaries but flows back to the home office

Information Systems Today: Managing in the Digital World 2-30 Information Systems Strategies III. Transnational Information Systems Strategy o Pursued by transnational businesses o Extensive communication between home office and subsidiaries as well as among subsidiaries o Key data shared throughout the company

Information Systems Today: Managing in the Digital World 2-31 IS Strategies: Summary

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