“The idea of charging for calls belongs to the last century.” Niklas Zennstr öm, Skype

1. 2 Chapter Fueling Globalization through Information Systems “The idea of charging for calls belongs to the last century.” Niklas Zennström, Skype Information Systems Today: Managing in the Digital World

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

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

4. Globalization • Globalization created a new world characterized by: • Worldwide communication • Collaboration without barriers Information Systems Today: Managing in the Digital World

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

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

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

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

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

10. Flattener #2: Netscape Browser • August 9, 1995 • First mainstream browser • Gave individuals access to the Internet THEN NOW Information Systems Today: Managing in the Digital World

11. Flattener #3: Work Flow Software • Applications that allow people worldwide to communicate • XML allows applications to “talk” to each other • New possibilities for information sharing Information Systems Today: Managing in the Digital World

12. Flattener #4: Supply Chaining • Integration of retailers, suppliers, and customers • RFID tags used • Wal-Mart became an early leader Information Systems Today: Managing in the Digital World

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

14. 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

15. Flattener #7: Offshoring • Companies set up entire factories in countries such as China • Mass production • Low Costs Information Systems Today: Managing in the Digital World

16. Flattener #8: In-Sourcing • Delegation of company’s key operations to a subcontractor • E.g.: UPS provides complete supply chain solutions to companies Information Systems Today: Managing in the Digital World

17. Flattener #9: In-Forming • In-Forming is to individuals what outsourcing, offshoring, and in-sourcing is to companies • Individuals have access to massive amounts of information Information Systems Today: Managing in the Digital World

18. Flattener #10: The Steroids • Technologies that support different types of collaboration • Greater mobility • Convergence Information Systems Today: Managing in the Digital World

19. Learning Objectives Information Systems Today: Managing in the Digital World

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

21. Opportunities of Operating in the Digital World • Opportunities of a Global Workforce • Low communications costs • Highly-skilled labor pool Engineering Graduates in the US, Europe and India Information Systems Today: Managing in the Digital World

22. Learning Objectives 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 challenges • Geoeconomical challenges • Demographic challenges • Cultural challenges Information Systems Today: Managing in the Digital World

24. Governmental Challenges • Political System Challenges • Political stability • Regulatory Challenges • Tariffs • Embargoes • Export regulations • Quotas Information Systems Today: Managing in the Digital World

25. Governmental Challenges II. • Data-Sharing Challenges • Transborder data flow regulations • 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 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 Information Systems Today: Managing in the Digital World

27. Geoeconomic Challenges II. • Infrastructure-Related Challenges • Traditional infrastructure – roads, electricity • Connectivity – reliable Internet connections • Challenges Related to Economic Welfare • GDP growth not distributed evenly throughout the world Information Systems Today: Managing in the Digital World

28. Demographic Challenges • Differing rates of population growth Information Systems Today: Managing in the Digital World

29. Demographic Challenges II. • Expertise related challenges • Different concentration of skilled workers • Different costs of workers Information Systems Today: Managing in the Digital World

30. Cultural Challenges • 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 Information Systems Today: Managing in the Digital World

31. Cultural Challenges II. • Cultural Barriers • Language – communication language and norms • Work Culture – work skills, habits and attitudes • Aesthetics – art, music and culture • Education – attitudes towards education and literacy • Religion, Beliefs and Attitudes – spiritual institutions and values • Social Organizations – family and social cohesiveness Information Systems Today: Managing in the Digital World

32. Cultural Challenges III. • Other Challenges • Differences in what is regarded as appropriate • Standards of dealing with intellectual property • Different standards • E.g., writing paper, pillowcases Information Systems Today: Managing in the Digital World

33. Learning Objectives Information Systems Today: Managing in the Digital World

34. 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

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

36. Global Business Strategy • Centralized • Used to achieve economies of scale • E.g.: Coca-Cola • Same core product • Some different tastes made for local markets Information Systems Today: Managing in the Digital World

37. Transnational Business Strategy • Some operations centralized while others decentralized • Flexibility • Economies of scale • Difficult to manage • E.g.: Unilever Information Systems Today: Managing in the Digital World

38. Business Strategies: Summary • Different types of information systems can support these organizational forms Information Systems Today: Managing in the Digital World

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

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

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

42. IS Strategies: Summary Information Systems Today: Managing in the Digital World

43. End of Chapter Content

44. Opening Case: Managing in the Digital World: Casino Gaming • RFID tags will revolutionize the gambling industry by providing real time information such as the amount held in chips • Mobile gambling using PDAs • Online gambling on the rise Information Systems Today: Managing in the Digital World

45. Detecting Intermittent Electrical Faults • Hard to find intermittent electrical faults caused by small damage to wires • Pulse arrested sparks discharge (PASD) – developed to help find these faults • Nanosecond bursts of high voltage sent through wires • Problem areas light up and are identified • Boeing uses the technique • U.S. military is interested in the technology Information Systems Today: Managing in the Digital World

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

47. Niklas Zennström: Cofounder and Chief Executive Officer, Skype • “The idea of charging for calls belongs to the last century.” • Skype has 28 million subscribers • Among the 100 most influential people transforming the world Information Systems Today: Managing in the Digital World

48. 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 Information Systems Today: Managing in the Digital World

49. 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 • US government working on making changes – currently state-level legislation most effective Information Systems Today: Managing in the Digital World

50. Transnational Development • Wrigley Company • World’s largest manufacturer of chewing gum • Sold in 150 countries • Good information systems key to conducting marketing research • Russian marketing research branch initiated the development of a marketing research work flow automation system • After successful testing, system was implemented in other marketing research branches Information Systems Today: Managing in the Digital World