Transcript Chapter 9

Management Information Systems,
Sixth Edition
Chapter 9:
Challenges of Global Information Systems
Objectives
• Explain why multinational corporations must use
global information systems
• Provide elementary advice for designing Web
sites for an international audience
• Cite the cultural, legal, and other challenges to
implementing international information systems
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Multinational Organizations
• An increasing number of corporations are
becoming multinational
• Global information system: a system that
serves organizations in multiple countries
– Used by multinational corporations
• Overseas operations must abide by local laws,
yet be sensitive to local cultures and standards
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The Web and International Commerce
• The Web has become an important vehicle for
B2B and B2C commerce
• The ratio of non-English speakers to English
speakers on the Web is growing
• Internet opens enormous global opportunities
• Chinese market is expected to be the largest in
the future
• The Web offers opportunities to increase
revenue and to save on costs
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The Web and International Commerce
(continued)
• Online manuals with animation replace paper
documents
• Web sites and documentation are presented in
many languages
• Global businesses must be sensitive to local
audiences
• Globalization: designing global sites to cater to
local needs and preferences
– Example: McDonalds menu changes to appeal to
local palates
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Think Globally, Act Locally
• International companies must “think globally,
act locally”
• Acting locally means being sensitive to
regional customs and language nuances
• Control must be decentralized
• Strategic planning should be global, but can
be followed with a local flavor
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Think Globally, Act Locally (continued)
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Challenges of
Global Information Systems
• Global information systems face challenges
such as:
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Technological barriers
Regulations and tariffs
Electronic payment mechanisms
Different languages and cultures
Economic and political considerations
Different measurement and notation standards
Legal barriers
Different time zones
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Technological Challenges
• Not all countries have adequate information
technology infrastructure to allow companies to
build an international IS
• Broadband communication lines are needed to
support today’s graphics-rich Web pages
• Companies can offer two versions of their Web
sites to compensate for slower bandwidth
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Technological Challenges (continued)
• Language is another technological challenge
– Eight-bit byte code is not sufficient for languages
with large character sets
– Unicode allows for 65,536 characters
– Must coordinate with databases and applications
• Telephone number and postal code formats are
different in different countries
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Regulations and Tariffs
• Countries have different import regulations and
tariffs
• Executives may be reluctant because of hassles
of learning the laws, taxes, tariffs, and
regulations of other countries
• Companies must comply with the laws of
destination countries
• NextLinx help importers and exporters for Web
commerce by providing tariffs, customs delay
information, license requirements, etc.
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Differences in Payment Mechanisms
• E-commerce allows easy payment for online
purchases
• Credit cards are the preferred payment method
in North America
• Not all countries have adopted this preference
– High level of stolen credit cards in Eastern
Europe
– Europeans prefer debit cards
– Most Japanese reluctant to use credit cards
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Language Differences
• International parties must agree on a common
language for communication
• Data might not be transmittable internationally in
real time because it must first be translated
• English is considered the de facto international
language
• Large companies translate their Web sites into
local languages
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Cultural Differences
• People from different countries vary in their:
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Tastes
Gestures
Preferred colors
Treatment of people of certain gender or age
Attitudes about work
Opinions about ethical issues
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Cultural Differences (continued)
• Conservative groups in other countries may
dislike the “Americanization” of their cultures
• Web designers must be sensitive to cultural
differences
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Conflicting Economic, Scientific, and
Security Interests
• Goal of corporate management is to seize a
large market share and maximize organization
profits
• Goal of a national government is to protect its
economic, scientific, and security interests
• Scientific information is an important national
resource as well as a great source of income for
foreign corporations
– Occasionally interests conflict
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Conflicting Economic, Scientific, and
Security Interests (continued)
• Weapons manufacturers have technical
drawings that are valuable to both the company
and the security of country
– Governments may not allow the exchange of
weapon designs
• PGP encryption application was opposed by the
U.S. government
– Thought to compromise national security
– Used by the 9/11 terrorists to encrypt their
communication
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Conflicting Economic, Scientific, and
Security Interests (continued)
• Countries treat trade secrets, patents, and
copyrights differently
– May hinder the transfer of documents to certain
divisions of a multinational corporation
• Intellectual property is tightly protected in the
U.S. and Western Europe, but less so in other
countries
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Political Challenges
• Information is power
• Some countries oppose the policy of free access
to information as a threat to their sovereignty
– They believe it might give other nations an
opportunity to control indigenous resources
• Governments may require that only open source
software is used in government operations
• Global corporations must ensure compatibility
with software adopted by local governments
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Political Challenges (continued)
• Some governments limit how the Internet is used
– Free speech is not a universal principle
– Web content restrictions are common in many
countries
• Global companies must obey local laws
– May require collaboration with the government,
resulting in arrest and prosecution of local users
– Ethical dilemma: how to balance the business
interest with moral principles, and not help
dictatorships violate civil rights
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Different Standards
• Differences in standards must be considered
when integrating ISs internationally
• Records may be incompatible
• United States uses the English system of
weights and measures; the rest of the world
uses the metric system
• NASA lost a $125 million Mars orbiter mission
due to an error in a data transfer, caused by a
mismatch between U.S. and metric
measurements
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Different Standards (continued)
• Different standards also exist for:
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Dates
Times
Temperatures
Addresses
• United States uses month/day/year format; the
rest of the world uses day/month/year
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Different Standards (continued)
• Companies must adapt their ISs to changing
formal or de facto standards
• European Article Number (EAN): bar code that
includes an extra number to identify country
• Universal Product Code (UPC): American
standard without the last extra number
• American Uniform Code Council (UCC):
promoted the use of European standard
– U.S. companies had to adapt ISs to recognize,
record, and process the new bar code standard
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Different Standards (continued)
• UCC is now trying to expand product codes to
the 14-digit Global Trade Item Numbers
(GTINs)
• GTINs support global supply chains by allowing
many more product ID values
• The major push to use RFID tags in the U.S.
could expand to the rest of the world
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Legal Barriers
• Countries have different laws that affect global
business in general and e-commerce in particular
• Differing laws pose challenges to:
– International transfer of data
– Free speech
– Location of legal proceedings when disputes arise
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Legal Barriers (continued)
• Privacy laws
– Respect for privacy in international business is an
unresolved challenge
– The majority of democratic nations try to protect
individual privacy
– Laws reflect a difference in approach to issue of
privacy
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Legal Barriers (continued)
• European Union practices may conflict with U.S.
practices
– Personal data may be collected only for specified
purposes
– Personal data cannot be processed without the
unambiguous consent of the subject
– Collecting organizations must identify themselves
– Subjects have the right to know to whom their
data is disclosed
– Subjects have the right to object to processing of
their personal data
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Legal Barriers (continued)
• American companies are busy collecting,
buying, and selling data for marketing and
decision making
• This discrepancy between the European and
American approaches prevents unrestricted flow
of information
• EU directive is only a framework; EU countries
may have more restrictive laws
• Safe Harbor: arrangement for U.S. companies
that have agreed to comply with the EU directive
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Legal Barriers (continued)
• Privacy laws regarding employees are also
different in the U.S. and EU
• Other applicable laws affecting online business
include those that address:
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Free speech
What can or cannot be displayed online
Gambling
Auctioning
Sale of alcoholic beverages and drugs
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Different Time Zones
• Different global regions require policies for work
and information systems
• Teleconferencing systems must be available
most of the day, sometimes 24 hours per day
– Allows employees from different time zones to
discuss problems that need immediate resolution
• Teams in support centers may work shifts to
accommodate clients worldwide
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Different Time Zones (continued)
• Managers must be aware of incorrect time
stamping in different locales
• Systems at both locations can be designed to
record local times of both locations, or record a
single time (that of the company headquarters)
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Summary
• Companies using the Web for business must
accommodate non-English speaking audiences
• Companies must tailor to local preferences
• They must be aware of cultural differences and
payment preferences
• They must be aware of tariff and legal issues
• Linguistic, cultural, economic, and political
challenges must be addressed
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Summary (continued)
• Laws governing the collection and manipulation
of personal data in the U.S. and European Union
are different
• The U.S. and EU have incompatible data privacy
laws, which restrict the flow of personal data
between the U.S. and EU
• Safe Harbor arrangement enables EU
companies to do business with U.S. companies
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Summary (continued)
• The old legal approach of territorial jurisdiction is
inadequate for business conducted on the Web
• Free speech and consumer litigation of e-tailers
have brought to light the need for international
legal reform for cyberspace
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