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3. Chapter. Information Systems and Globalization. “The global economic playing field is being leveled.” Nandan Nilekani , Infosys Technologies Ltd. Learning Objectives. 2- 2. Learning Objectives. 2- 3. Globalization. Integration of economies

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  1. 3 Chapter Information Systems and Globalization “The global economic playing field is being leveled.” NandanNilekani, Infosys Technologies Ltd. Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

  2. Learning Objectives 2-2 Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

  3. Learning Objectives 2-3 Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

  4. Globalization • Integration of economies • Globalization enabled by innovation and technologies progress • Globalization created a new world characterized by: • Worldwide communication • Collaboration without barriers • Three distinct phases (Thomas L. Friedman) Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

  5. Evolution of Globalization Globalization 1.0 Primary entities globalizing (countries) Mainly European countries are globalizing (extend their territories) Power is the primary driver (steam) Industries changed (apparel) Slow pace of change Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

  6. Evolution of Globalization (cont’d) Globalization 2.0 Companies are globalizing Reduction in transportation and telecommunications costs Mainly Europe & America involved People felt the effect of industrial revolution Interrupted by the Great Depression & the two world wars. Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

  7. Evolution of Globalization (cont’d) Globalization 3.0 Worldwide globalizing Individuals and small groups are globalizing Faster pace of change Emergence of new industries (i.e. Google). Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

  8. Evolution of Globalization: Summary • The World Is Flat (Thomas L. Friedman) • “10 Enablers” • Numbers of technological & Societal took place • Key factors enabling globalization 3.0 Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

  9. Enabler #1: The Fall of the Berlin Wall November 9, 1989 Fall of communism People from the former communist countries gained more freedom End of the cold wars between communist & capitalist Increase companies potential customer Access to talented Labor Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

  10. Enabler #2: Netscape Browser THEN NOW August 9, 1995 First mainstream browser Gave individuals access to the Internet Enable companies to interconnect Entrepreneurs envisioned a new business models Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

  11. Enabler #3: Work Flow Software Applications that allow people worldwide to communicate XML allows computer program to “talk” to each other New possibilities for information sharing (SCMS) Online payment (PayPal) provide global currency to fuel commerce Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

  12. Enabler #4: Uploading Individuals and companies actively participate in content generation on the Web Ability to upload was catalyst for popularity of open-source software products Wikipedia a huge success Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

  13. Enabler #5: Outsourcing Outsourcing companies profited from the drop in telecommunications costs Companies can now use talented engineers from anywhere Companies can outsource business process on global scale (offshore outsourcing) Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

  14. Enabler #6: Offshoring • Companies set up entire factories in countries such as China • Mass production • Low costs Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

  15. Enabler #7: Supply Chaining • Integration of retailers, suppliers, and customers • Wal-Mart became an early leader • RFID tags used Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

  16. Enabler #8: In-Sourcing • Refer to Delegation of company’s logistics ( key) operations to a subcontractor • Example: UPS provides complete supply chain solutions to companies Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

  17. Enabler #9: In-Forming • Allows individuals to utilize powerful search engine on the Internet (i.e. google, yahoo) • In-forming is to individuals what outsourcing, offshoring, and in-sourcing is to companies • Individuals have access to massive amounts of information • People depend less on propaganda & censored media Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

  18. Enabler #10: The Steroids • Technologies that support different types of collaboration by digitizing the content • Greater mobility • Convergence Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

  19. Learning Objectives Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

  20. Opportunities for Operating in the Digital World • Opportunities for reaching new markets • Former Eastern Bloc countries provide new opportunities for international companies to reach new customers Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

  21. Opportunities for Operating in the Digital World (cont’d) Engineering Graduates in the United States, Europe, and India Based on: Mallaby, 2006 • Opportunities of a global workforce: • Low communications costs • Highly-skilled labor pool Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

  22. Learning Objectives Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

  23. Challenges of Operating in the Digital World • Globalization also created a set of unprecedented challenges: • Governmental • Geoeconomical • Demographic • Cultural Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

  24. Governmental Challenges • Political System Challenges • Market vesus planned economy • Political stability • Regulatory Challenges • Tariffs • Embargoes • Export regulations • Quotas Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

  25. Governmental Challenges (cont’d) • Data-Sharing Challenges • Transborder data flow regulations • Few countries have data protection laws • 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 Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

  26. Geoeconomic Challenges • Time Zone Challenges • Real time meetings across continents difficult • Working around the clock possible Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

  27. Geoeconomic Challenges (cont’d) • Infrastructure-Related Challenges • Traditional infrastructure—roads, electricity • Connectivity—reliable Internet connections • Challenges Related to Economic Welfare • GDP growth not distributed evenly throughout the world Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

  28. Geoeconomic Challenges (cont’d) World Population, 1950-2050 (in billions) • Demographic Challenges • Differing rates of population growth Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

  29. Geoeconomic Challenges (cont’d) • Demographic Challenges (cont’d) • Expertise related challenges • Different concentration of skilled workers • Different costs of workers Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

  30. Cultural Challenges • National Cultures (Hofstede, 2001) • 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 (Assertiveness/nurturance ) • Concept of Time—long term orientation vs. short term • Life Focus—quantity vs. quality of life Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

  31. Cultural Challenges (cont’d) • 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 Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

  32. Cultural Challenges (cont’d) • Other Challenges • Differences in what is regarded as appropriate • Standards of dealing with intellectual property • Different standards Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

  33. Learning Objectives Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

  34. Going Global: International Business Strategies in the Digital World Depending on the degree of Supply Chain Integration and degree of local customer responsiveness. • Home-Replication Strategy • Global Business Strategy • Multidomestic Business Strategy • Transnational Business Strategy Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

  35. Home-Replication Strategy • 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 Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

  36. Global Business Strategy • Companies attempt to achieve economies of scale(large Quantities) • Work Centralized fashion • Example: Coca-Cola • Same core product • Some different tastes made for local markets Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

  37. Multidomestic Business Strategy • 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 • Very little data and control information flows between the home and subsidiary locations Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

  38. Transnational Business Strategy • Some operations centralized while others decentralized • Flexibility • Economies of scale • Difficult to manage • Example: Unilever Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

  39. Business Strategies: Summary Different types of information systems can support these organizational forms Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

  40. End of Chapter Content 3-40 Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

  41. Opening Case—Managing in the Digital World: Infosys Technologies Ltd. • Companies like Infosys are “flattening” the world. • Does business in new ways • Outsourcing • Supply Chains • Consulting • Employment Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

  42. Netscape’s James H. Clark and Marc Andreessen James H. Clark (left) Marc Andreessen (right) Founded Mosaic Communications Corporation 75 percent of Web surfers used Netscape in 1996 AOL acquired Netscape in 1999 for $10 billion in stock Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

  43. Online Searching • To “Google” has become a household verb meaning search Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

  44. IT Globalization: Accenture in India • Accenture • Provides consulting, technology, and outsourcing • Global before other companies were just “waking up” to globalization • Accenture growing • Announced plans for doubling its thirteen thousand business consultants between 2008 and 2011 Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

  45. Underground Gaming Economy • 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 Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

  46. Learning Languages in Context • 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 Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

  47. e-Waste • 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 Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

  48. 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 Dr. Ali Zolait - Information Systems Today: Managing in the Digital World

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