Chapter 2Chapter 2Fueling Globalization Through Information Systems
2-1
Information Systems
“The global economic playing field is being leveled.”
NandanNandan NilekaniNilekani, , Infosys Technologies Infosys Technologies Infosys Technologies Infosys Technologies Ltd.Ltd.
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Learning Objectives2-2
1. Define globalization, describe how it evolved over time, and describe the key drivers of globalization.
2 D ib h i i i f 2. Describe the emerging opportunities for companies operating in the digital world.
3. Explain the factors companies have to consider h i i h di i l ldwhen operating in the digital world.
4. Describe international business and information systems strategies used by companies operating in the digital world.digital world.
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In-Class Activity
Pair up with one other person
2-3
p p
The instructor will give each team copies of one or more slides from the slide presentation
Each team writes a script for the verbal message that will be delivered with each slide
Each slide’s script can consume no more than 1 minute of delivery time
Each team delivers its content verballyEach team delivers its content verbally
There is an assignment dropbox named IC 03wk in Blackboard – extra points will be earned for entering
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p gyour “script” digitally using the dropbox
Learning Objectives2-4
1. Define globalization, describe how it evolved over time, and describe the key drivers of globalization.
2 D ib h i i i f 2. Describe the emerging opportunities for companies operating in the digital world.
3. Explain the factors companies have to consider h i i h di i l ldwhen operating in the digital world.
4. Describe international business and information systems strategies used by companies operating in the digital world.digital world.
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Globalization2-5
Globalization dcreated a new
world characterized by:characterized by:
Worldwide communication
Collaboration without barriers
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Evolution of Globalization2-6
Mainly European t i
Globalization 1.0
countries are globalizing
Power is the primary Power is the primary driver
Industries changed
Slow pace of change
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Evolution of Globalization (cont’d)2-7
Companies are globalizing
Globalization 2.0
globalizingReduction in transportation
d land telecom-munications costsMainly Europe and America involved
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Evolution of Globalization (cont’d)2-8
Individuals and ll
Globalization 3.0
small groups are globalizing
Faster pace of Faster pace of change
Emergence of new industries
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Evolution of Globalization: Summary2-9
Th W ld I Fl t (Th L F i d )The World Is Flat (Thomas L. Friedman)
“ E bl ”“10 Enablers”Key factors enabling Globalization 3.0
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Enabler #1: The Fall of the Berlin Wall2-10
November 9, 1989
F ll f Fall of communism
People from the People from the former communist countries gained more freedommore freedom
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Enabler #2: Netscape Browser2-11
August 9, 1995“Killer app”First mainstream browser browser Gave individuals access to the Internet & set standards
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standards
Enabler #3: Work Flow Software2-12
Applications that allow people worldwide to worldwide to communicate
XML: applications “talk” to each other
New possibilities for information for information sharing
Global currency to
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fuel commerce
Enabler #4: Uploading2-13
Individuals and companies actively companies actively participate in content generation gon the Web
Wikipedia a huge success
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Enabler #5: Outsourcing2-14
Outsourcing i companies
profited from the drop in
l itelecommuni-cations costsCompanies can pnow use talented engineers from anywhere
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y
Enabler #6: Offshoring2-15
Companies set up entire factories in
t i h countries such as China
Mass productionMass production
Low costs
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Enabler #7: Supply Chaining2-16
Integration of retailers, suppliers, and customers
Wal-Mart became an
l l dearly leaderUse of RFID tags
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tags
Enabler #8: In-Sourcing2-17
Delegation of company’s key p y yoperations to a subcontractor
Example: UPS provides complete supply complete supply chain solutions to companies
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Enabler #9: In-Forming2-18
In-forming is to individuals what outsourcing outsourcing, offshoring, and in-sourcing is to gcompaniesIndividuals have
t i access to massive amounts of information
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o o
Enabler #10: The Steroids2-19
Technologies that support different types of
ll b ticollaborationGreater mobility
Triple convergenceTriple convergence
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Learning Objectivesg j2-20
1. Define globalization, describe how it evolved over time, and describe the key drivers of globalization.
2 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 worlddigital world.
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Opportunities for Operating in the Digital World2-21
Opportunities for reaching new reaching new markets
Former Eastern Former Eastern Bloc countries provide new opportunities for opportunities for international companies to reach new customers
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new customers
Opportunities for Operating in the Digital World (cont’d)
2-22
Opportunities of a global
Engineering Graduates in the United States, Europe, and India
a global workforce:
Low communications costs
Highly-skilled Highly skilled labor pool
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Based on: Mallaby, 2006
Learning Objectivesg j2-23
1. Define globalization, describe how it evolved over time, and describe the key drivers of globalization.
2 D ib h i i i f 2. Describe the emerging opportunities for companies operating in the digital world.
3. Explain the factors companies have to consider h i i h di i l ldwhen operating in the digital world.
4. Describe international business and information systems strategies used by companies operating in the digital world.digital world.
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Challenges of Operating in the Digital Worldg p g g2-24
Globalization also created a set of unprecedented Globalization also created a set of unprecedented challenges:
Governmental
Geoeconomic
Demographic
CulturalCultural
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Governmental Challengesg2-25
Political System ChallengesPolitical stability
Regulatory ChallengesTariffsTariffsEmbargoesExport regulationsQuotas
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Governmental Challenges (cont’d)2-26
Data-Sharing ChallengesTransborder data flow regulations
Differences in standardsUPC vs. EAN
Measurement units
Postal codes phone numbers etcPostal codes, phone numbers, etc.
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Governmental Challenges (cont’d)2-272-27
Internet Access and Individual FreedomContent blocking by governments/censorship
hi f i dChina—Use of VoIP restricted
Germany—Sites with fascist symbols prohibited
Internet access blockingte et access b oc gCuba, North Korea
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Geoeconomic Challengesg2-28
i h llTime Zone ChallengesReal time meetings across continents difficult
Working around the clock possibleWorking around the clock possible
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Geoeconomic Challenges (cont’d)g ( )2-29
Infrastructure-Related ChallengesTraditional infrastructure—roads, electricity
Connectivity—reliable Internet connections
Ch ll R l d E i W lfChallenges Related to Economic WelfareGDP growth not distributed evenly throughout the world
MigrationMigration
Some companies used to deal with low margins and tough competition
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Geoeconomic Challenges (cont’d)g ( )2-30
Demographic ChallengesDiffering rates of population growth
World Population, 1950-2050 (in billions)
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Geoeconomic Challenges (cont’d)g ( )2-31
Demographic Challenges (cont’d) Demographic Challenges (cont d) Expertise related challenges
Different concentration concentration of skilled workers
Different costs e e t costs of workers
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Cultural Challengesg2-32
National CulturesPower Distance—differences in how societies h dl h i f h i lihandle the issues of human inequalityUncertainty Avoidance—risk taking natureIndividualism/Collectivism value placed on an Individualism/Collectivism—value placed on an individual vs. a groupMasculinity/Femininity—degree to which a y y gsociety is characterized as masculine/feminineConcept of Time—long term vs. short termLif F tit lit f lif
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Life Focus—quantity vs. quality of life
Cultural Challenges (cont’d)g ( )2-33
Cultural BarriersLanguage—communication language and norms
Work Culture—work skills, habits, and attitudes
Aesthetics—art, music, and culture
Education attitudes toward education and literacyEducation—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)g ( )2-34
Environmental challengesEnergy consumption, pollution, workers health
Shipping
Other ChallengesDifferences in what is regarded as appropriate
Standards of dealing with intellectual property
Network readinessNetwork readinessNot every country has access to the global networked economy
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Learning Objectives2-35
1. Define globalization, describe how it evolved over time, and describe the key drivers of globalization.
2 D ib h i i i f 2. Describe the emerging opportunities for companies operating in the digital world.
3. Explain the factors companies have to consider h i i h di i l ldwhen operating in the digital world.
4. Describe international business and information systems strategies used by companies operating in the digital world.digital world.
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Going Global: International Business Strategies in the Digital Worldg
2-36
Home-Replication Strategy
Global Business Global Business Strategy
Multidomestic Multidomestic Business Strategy
Transnational Business Strategy
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Home-Replication Strategy2-37
Most basic form of going globalg g gCompanies view international operations as secondary to, or extension of home operations.
Focus on core competencies in home marketFocus on core competencies in home market
Inability to react to local market conditions
Homogeneous marketsg
Information systems play minor role in facilitating this strategy
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Global Business Strategy2-38
Centralized
Used to achieve Used to achieve economies of scale
Example: Coca-ColaExample: Coca ColaSame core product
Some different tastes made for local markets
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Global Business Strategy2-392-39
The role and characteristics of ISCentralized information systemsCentralized information systems
Data flows from subsidiaries to home location
Multiple networks between home office and subsidiariesp
Data does not stay at subsidiaries
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Multidomestic Business Strategy2-40
Low degree of i i bintegration between subunitsFlexible and Flexible and responsive to the needs and demands of local marketsExample: General Moto sMotors
Opel in GermanyVauxhall in Great
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Vauxhall in Great Britain
Multidomestic Business Strategy2-412-41
The role and characteristics of ISEach subsidiary has own, decentralized information y ,systemsNo centralized infrastructureData sharing primarily between subsidiaries and home Data sharing primarily between subsidiaries and home officeLimited data sharing among subsidiariesLoose integration of information systems
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Transnational Business Strategy2-42
iSome operations centralized while others decentralizedothers decentralized
Flexibility
Economies of scale
Difficult to manage
Example: Unileverp
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Transnational Business Strategy2-432-43
The role and characteristics of ISIntegrated networks between home office and local Integrated networks between home office and local subsidiaries
Much communication among subunits AND between ghome office and subunits
Key data is shared throughout company
Enabled by intranet, extranet, and Web based applications
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Business Strategies: Summary2-44
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End of Chapter Contentp2-452-45
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Opening Case—Managing in the Digital World:
Infosys Technologies LtdInfosys Technologies Ltd.2-46
Companies like Infosys are y“flattening” the world.Does business in new waysways
OutsourcingSupply ChainsConsultingConsultingEmployment
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Netscape’s James H. Clark and Marc Andreessen2-47
F d d M i J H Cl kFounded Mosaic Communications Corporation
James H. Clark
Corporation75 percent of Web surfers used Netscape in 1996AOL acquired Netscape in 1999 for Netscape in 1999 for $10 billion in stockBoth founded several Marc Andreessen
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Both founded several start-ups
Marc Andreessen
Online SearchingOnline Searching2-48
To “Google” has become a household verb meaning search
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IT Globalization: Accenture in India2-49
AccentureProvides consulting, technology, and outsourcing
Gl b l b f th i j t “ ki ” Global before other companies were just “waking up” to globalization
Accenture’s growthAccenture s growthAnnounced plans for doubling its thirteen thousand business consultants between 2008 and 2011
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Underground Gaming Economyg g y2-50
Massive Multiplayer Online Role-Playing Game—MMORPG
Virtual world—players live through avatars
Players started selling virtual tools for real money farmersmoney—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 kill ?
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skills?
Learning Languages in Context
Livemocha
2-51
Online language instruction using social networkingStructured lessons
Help with grammarHelp with grammar
Canned pronunciation guides
Most valuable assetConversation with native speaker
Using social community to increase understanding
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e-Waste2-52
Disposal of electronics containing hazardous materials is a rising issueU.S. exports much of its e-waste to third world co ntriescountries
China banned the import in 2002Other countries to followOther countries to follow
In mid 2006, EU banned toxic ingredientsProduction of “green” hardware
U.S. government working on making changes—currently state-level legislation most effectiveP f h l i l h i bl
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Pace of technological changes increases problem
The Automobile Industryy2-53
h bil i d i f li h f The automobile industry is feeling the pressure of globalizationFailed attempts at making a “world car”Failed attempts at making a world car
Consumers have different tastesDifferences in infrastructures derive needsThe price of gasolineThe price of gasolineVariations in emission standards
Globalization is already thereF i f t d i i USForeign manufacturers producing in USUS companies producing worldwideGlobal network of suppliers
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Ripple effects resulting from any crisis