Transcript IST4e Chapter 2 - IST Akprind Yogyakarta

Chapter 2
Fueling Globalization Through
Information Systems
2-1
“The global economic playing
field is being leveled.”
Nandan Nilekani,
Infosys Technologies
Ltd.
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Learning Objectives
2-2
1. Define globalization, describe how it evolved over
time, and describe the key drivers of globalization.
2. Describe the emerging opportunities for
companies operating in the digital world.
3. Explain the factors companies have to consider
when operating in the digital world.
4. Describe international business and information
systems strategies used by companies operating in the
digital world.
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7/21/2015
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Learning Objectives
2-3
1. Define globalization, describe how it evolved over
time, and describe the key drivers of globalization.
2. Describe the emerging opportunities for
companies operating in the digital world.
3. Explain the factors companies have to consider
when operating in the digital world.
4. Describe international business and information
systems strategies used by companies operating in the
digital world.
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Globalization
2-4
 Globalization
created a new
world
characterized by:
Worldwide
communication
 Collaboration
without barriers

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Evolution of Globalization
2-5
Globalization 1.0
 Mainly European
countries are
globalizing
 Power is the primary
driver
 Industries changed
 Slow pace of change
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Evolution of Globalization (cont’d)
2-6
Globalization 2.0
 Companies are
globalizing
 Reduction in
transportation
and telecommunications
costs
 Mainly Europe
and America
involved
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Evolution of Globalization (cont’d)
2-7
Globalization 3.0
 Individuals and
small groups are
globalizing
 Faster pace of
change
 Emergence of new
industries
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Evolution of Globalization: Summary
2-8
 The World Is Flat (Thomas L. Friedman)
 “10 Enablers”
 Key factors enabling Globalization 3.0
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Enabler #1: The Fall of the Berlin Wall
2-9
 November 9, 1989
 Fall of
communism
 People from the
former communist
countries gained
more freedom
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Enabler #2: Netscape Browser
2-10
 August 9, 1995
 “Killer app”
 First
mainstream
browser
 Gave
individuals
access to the
Internet & set
standards
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Enabler #3: Work Flow Software
2-11
 Applications that
allow people
worldwide to
communicate
 XML: applications
“talk” to each other
 New possibilities
for information
sharing
 Global currency to
fuel commerce
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Enabler #4: Uploading
2-12
 Individuals and
companies actively
participate in
content generation
on the Web
 Wikipedia a huge
success
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Enabler #5: Outsourcing
2-13
 Outsourcing
companies
profited from the
drop in
telecommunications costs
 Companies can
now use talented
engineers from
anywhere
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Enabler #6: Offshoring
2-14
 Companies set
up entire
factories in
countries such as
China
Mass production
 Low costs

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Enabler #7: Supply Chaining
2-15
 Integration of
retailers,
suppliers, and
customers
 Wal-Mart
became an
early leader

Use of RFID
tags
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Enabler #8: In-Sourcing
2-16
 Delegation of
company’s key
operations to a
subcontractor

Example: UPS
provides
complete supply
chain solutions
to companies
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Enabler #9: In-Forming
2-17
 In-forming is to
individuals what
outsourcing,
offshoring, and
in-sourcing is to
companies
 Individuals have
access to massive
amounts of
information
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Enabler #10: The Steroids
2-18
 Technologies that
support different
types of
collaboration
Greater mobility
 Triple convergence

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Learning Objectives
2-19
1. Define globalization, describe how it evolved over
time, and describe the key drivers of globalization.
2. Describe the emerging opportunities for
companies operating in the digital world.
3. Explain the factors companies have to consider
when operating in the digital world.
4. Describe international business and information
systems strategies used by companies operating in the
digital world.
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Opportunities for Operating in the Digital World
2-20
 Opportunities for
reaching new
markets

Former Eastern
Bloc countries
provide new
opportunities for
international
companies to reach
new customers
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Opportunities for Operating in the
Digital World (cont’d)
2-21
 Opportunities of
Engineering Graduates in the
United States, Europe, and India
a global
workforce:


Low
communications
costs
Highly-skilled
labor pool
Based on: Mallaby, 2006
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Learning Objectives
2-22
1. Define globalization, describe how it evolved over
time, and describe the key drivers of globalization.
2. Describe the emerging opportunities for
companies operating in the digital world.
3. Explain the factors companies have to consider
when operating in the digital world.
4. Describe international business and information
systems strategies used by companies operating in the
digital world.
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Challenges of Operating in the Digital World
2-23
 Globalization also created a set of unprecedented
challenges:




Governmental
Geoeconomic
Demographic
Cultural
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Governmental Challenges
2-24
 Political System Challenges
 Political stability
 Regulatory Challenges
 Tariffs
 Embargoes
 Export regulations
 Quotas
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Governmental Challenges (cont’d)
2-25
 Data-Sharing Challenges
 Transborder data flow regulations
 Differences in standards
 UPC vs. EAN
 Measurement units
 Postal codes, phone numbers, etc.
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Governmental Challenges (cont’d)
2-26
 Internet Access and Individual Freedom
 Content blocking by governments/censorship
China—Use of VoIP restricted
 Germany—Sites with fascist symbols prohibited


Internet access blocking

Cuba, North Korea
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Geoeconomic Challenges
2-27
 Time Zone Challenges
 Real time meetings across continents difficult
 Working around the clock possible
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Geoeconomic Challenges (cont’d)
2-28
 Infrastructure-Related Challenges
 Traditional infrastructure—roads, electricity
 Connectivity—reliable Internet connections
 Challenges Related to Economic Welfare
 GDP growth not distributed evenly throughout the world
 Migration
 Some companies used to deal with low margins and tough
competition
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Geoeconomic Challenges (cont’d)
2-29
 Demographic Challenges
 Differing rates of population growth
World Population,
1950-2050
(in billions)
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Geoeconomic Challenges (cont’d)
2-30
 Demographic Challenges (cont’d)
 Expertise
related
challenges
Different
concentration
of skilled
workers
 Different costs
of workers

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Cultural Challenges
2-31
 National Cultures
 Power
Distance—differences in how societies
handle the issues of human inequality
 Uncertainty Avoidance—risk taking nature
 Individualism/Collectivism—value placed on an
individual vs. a group
 Masculinity/Femininity—degree to which a
society is characterized as masculine/feminine
 Concept of Time—long term vs. short term
 Life Focus—quantity vs. quality of life
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Cultural Challenges (cont’d)
2-32
 Cultural Barriers
Language—communication language and norms
 Work Culture—work skills, habits, and attitudes
 Aesthetics—art, music, and culture
 Education—attitudes toward education and literacy
 Religion, Beliefs, and Attitudes—spiritual institutions
and values
 Social Organizations—family and social cohesiveness

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Cultural Challenges (cont’d)
2-33
 Environmental challenges
 Energy consumption, pollution, workers health
 Shipping
 Other Challenges
 Differences in what is regarded as appropriate
 Standards of dealing with intellectual property
 Network readiness
 Not every country has access to the global networked
economy
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Learning Objectives
2-34
1. Define globalization, describe how it evolved over
time, and describe the key drivers of globalization.
2. Describe the emerging opportunities for
companies operating in the digital world.
3. Explain the factors companies have to consider
when operating in the digital world.
4. Describe international business and information
systems strategies used by companies operating in the
digital world.
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Going Global: International Business Strategies
in the Digital World
2-35
Home-Replication
Strategy
Global Business
Strategy
Multidomestic
Business Strategy
Transnational
Business Strategy
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Home-Replication Strategy
2-36
 Most basic form of going global
 Companies view international operations as secondary to, or
extension of home operations.
 Focus on core competencies in home market
 Inability to react to local market conditions
 Homogeneous markets
 Information systems play minor role in facilitating this
strategy
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Global Business Strategy
2-37
 Centralized
 Used to achieve
economies of scale
 Example: Coca-Cola
Same core product
 Some different tastes
made for local
markets

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Global Business Strategy
2-38
 The role and characteristics of IS
 Centralized information systems
 Data flows from subsidiaries to home location
 Multiple networks between home office and subsidiaries
 Data does not stay at subsidiaries
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Multidomestic Business Strategy
2-39
 Low degree of
integration between
subunits
 Flexible and
responsive to the
needs and demands
of local markets
 Example: General
Motors
Opel in Germany
 Vauxhall in Great
Britain

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Multidomestic Business Strategy
2-40
 The role and characteristics of IS
 Each subsidiary has own, decentralized information
systems
 No centralized infrastructure
 Data sharing primarily between subsidiaries and home
office
 Limited data sharing among subsidiaries
 Loose integration of information systems
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Transnational Business Strategy
2-41
 Some operations
centralized while
others decentralized


Flexibility
Economies of scale
 Difficult to manage
 Example: Unilever
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Transnational Business Strategy
2-42
 The role and characteristics of IS
 Integrated
networks between home office and local
subsidiaries
 Much communication among subunits AND between
home office and subunits
 Key data is shared throughout company
 Enabled by intranet, extranet, and Web based
applications
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Business Strategies: Summary
2-43
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End of Chapter Content
2-44
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Opening Case—Managing in the Digital World:
Infosys Technologies Ltd.
2-45
 Companies like
Infosys are
“flattening” the world.
 Does business in new
ways




Outsourcing
Supply Chains
Consulting
Employment
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Netscape’s James H. Clark and Marc Andreessen
2-46
 Founded Mosaic
Communications
Corporation
 75 percent of Web
surfers used Netscape
in 1996
 AOL acquired
Netscape in 1999 for
$10 billion in stock
 Both founded several
start-ups
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James H. Clark
Marc Andreessen
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Online Searching
2-47
 To “Google” has become a household verb
meaning search
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IT Globalization: Accenture in India
2-48
 Accenture
 Provides consulting, technology, and outsourcing
 Global before other companies were just “waking up”
to globalization
 Accenture’s growth
 Announced plans for doubling its thirteen thousand
business consultants between 2008 and 2011
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Underground Gaming Economy
2-49
 Massive Multiplayer Online Role-Playing Game—
MMORPG

Virtual world—players live through avatars
 Players started selling virtual tools for real
money—farmers

Banned from various gaming sites due to behavior being
unethical and fear of turning users away
 What’s your take on farmers and people “buying”
tools and advancement without mastering the
skills?
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Learning Languages in Context
2-50
 Livemocha
 Online language instruction using social networking
Structured lessons
 Help with grammar
 Canned pronunciation guides

 Most valuable asset
 Conversation with native speaker
 Using social community to increase understanding
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e-Waste
2-51
 Disposal of electronics containing hazardous
materials is a rising issue
 U.S. exports much of its e-waste to third world
countries
China banned the import in 2002
 Other countries to follow

 In mid 2006, EU banned toxic ingredients
 Production of “green” hardware
 U.S. government working on making changes—
currently state-level legislation most effective
 Pace of technological changes increases problem
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The Automobile Industry
2-52
 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
 Globalization is already there
 Foreign manufacturers producing in US
 US companies producing worldwide
 Global network of suppliers
 Ripple effects resulting from any crisis
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