1 mis, chapter 9 ©2014 cengage learning global information systems chapter 9 hossein bidgoli mis

1MIS, Chapter 9

©2014 Cengage Learning

GLOBAL INFORMATION SYSTEMS

CHAPTER 9

Hossein BIDGOLI

MIS

2MIS, Chapter 9


Chapter 9 Global Information Systems

LO1 Discuss reasons for globalization and for 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 structure used with global information systems.

LO4 Discuss obstacles to using global information systems.

l e a r n i n g o u t c o m e s

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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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Why Go Global? (cont’d.)

• 2010 Coca-Cola Company – Generated more than 75% 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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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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Global Information Systems at Rohm & Haas

• Part of Dow Chemical• Production units in many countries• Overhauled its global information system

– By upgrading the order entry system – Installed a company-wide materials

management system tied in with a global demand planning system

• Can now provide better service to its customers

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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– Improve business relationships– Consumers can engage in comparison

shopping more easily

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E-Business: A Driving Force (cont’d.)

• Small companies can conduct business on-line just as large companies

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Growth of the Internet

• Part of daily life in most parts of the world• 2000-2011: highest growth has occurred in

the Middle East; the lowest in North America• “Localization of a Web site”• Making a company Web site global

– Language, font, cultural differences, currency, date format, spare use of graphics and flash features, e-mail, payments, international logistics, listing, marketing, and local involvement

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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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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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• 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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• 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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Components of a Global Information System

• GIS can vary quite a bit depending on a company’s size and business needs

• Basic components:– Global database

• Designing and implementing is a technical challenge

– Information-sharing technologies• Large versus small companies:

– Custom applications or outsourcing

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Components of a Global Information System (cont’d.)

• Information system manager – Faces design and implementation issues when

developing a global network– Determine the best communication media to

meet global performance and traffic needs– Choose the best transmission technology for the

global network’s needs– Consider the company’s objectives when

determining the network architecture– Keep in mind that standardized software and

hardware are always ideal but not always feasible

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Components of a Global Information System (cont’d.)

• Transborder data flow (TDF)– Restricts what type of data can be captured

and transmitted

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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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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 global tax risks

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Implementation of Global Information Systems

• Implementing a GIS is difficult– Countries differ in culture, politics, social and economic

infrastructures, and business methods

• Issues:– Identify business opportunities in global marketplace– Justify investment in GIS– Personnel must have technical and business expertise– Coordinate migration carefully

• Using information systems on a global scale is more challenging than doing so on a local scale

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Organizational Structures and Global Information Systems

• Four commonly accepted types of global organizations:– Multinational– Global– International– Transnational

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Multinational Structure

• Production, sales, and marketing are decentralized

• Financial management remains the parent company’s responsibility

• Tyco Corporation– Focus on local responsiveness

• Nestle– Reduces the need for communication between

subsidiaries and headquarter

• Each subsidiary operates on a different platform

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Exhibit 9.1 A Multinational Structure

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Global Structure

• Highly centralized information system• Subsidiaries have little autonomy• Sometimes called a “franchiser”• Extensive communication network necessary• Integration needed to manage production,

marketing, and human resources is difficult – Heavy reliance on headquarters

• McDonald’s, Mrs. Fields’ Cookies, and Kentucky Fried Chicken

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Exhibit 9.2 A Global Structure

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International Structure

• Operates much like a multinational corporation– However, 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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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 – However, must maintain local responsiveness

• Examples: Citigroup, Sony, and 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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Obstacles to Using Global Information Systems

• Lack of standardization – Including differences in time zones, taxes,

language, and work habits, etc.

• Cultural differences• Diverse regulatory practices• Poor telecommunication infrastructures• Lack of skilled analysts and programmers

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Lack of Standardization

• Impedes the development of a cohesive GIS that is 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

• 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 contributing to the globalization trend

• Global information systems – Components – Requirements– Uses in multinational structures– Applications– Obstacles

1 mis, chapter 9 ©2014 cengage learning global information systems chapter 9 hossein bidgoli mis

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