Ch.9 - Global Information Systems

global structure

(also known as a franchiser) uses highly centralized information systems. Subsidiaries have little autonomy and rely on headquarters for all process and control decisions as well as system design and implementation. - Consequently, an extensive communication network is necessary to manage this type of organization, and a GIS fits well into this structure - Unfortunately, the integration needed to manage production, marketing, and human resources is difficult to achieve with a global structure because of the heavy reliance on headquarters. - To achieve organizational efficiency, duplicate information systems have to be developed. - Products are usually created, financed, and produced in the headquarters' country, and subsidiaries have the responsibility of selling, marketing, and tailoring the products to their countries' requirements and tastes - a one-way flow of services, goods, information, and other resources.

Requirements of Global Information Systems

- A GIS must be capable of supporting complex global decisions. This complexity stems from the global environment in which multinational corporations (MNCs) operate. - Global data access (operational)—Online access to information from locations around the world allows management to monitor global operations from the company headquarters. Ideally, global networks provide a real-time communication link with global subsidiaries by integrating voice, data, and video. - Consolidated global reporting (operational)—This is a crucial tool for managing overseas subsidiaries. These reports should include accounting and financial data, manufacturing updates, inventory, and so forth, and they enable management to compare financial information in all the subsidiaries. - Communication between headquarters and subsidiaries (operational)—To facilitate decision-making and planning processes, a GIS should provide an effective means of communication between the MNC's headquarters and its subsidiaries - Management of short-term foreign exchange risks (operatioanl)—A mix of free-floating (no government intervention), managed-floating, and fixed-exchange rates characterizes today's international monetary system. Currency rates can change daily, so management must minimize the impact of currency fluctuations in countries where the parent company and the subsidiaries are located. To manage foreign exchange risks, many companies have developed expert systems and decision support systems - Strategic planning support (strategic)t—This is the core of any GIS, a focus on regionalizing resources more effectively and responding to rapid environmental changes, such as increased political and foreign exchange risks and global competition. - Management of global tax risks (strategic)—Designing tax-risk management systems requires detailed knowledge of international finance, international monetary systems, and international tax law.

In international business planning, it is critical to understand the global risks of operating an MNC—specifically, the political, foreign exchange, and market risks.

- Political risks include the problems caused by an unstable government, which is an important consideration given the many political uprisings of recent years. - can result in currency rates fluctuating, power changing hands rapidly and unpredictably, and other issues that affect company operations. - In addition, managing global operations requires considering potential conflicts between the governments of the country where the company is based (the parent government) and the country where the subsidiary is located (the host government).

A GIS, like any information system, can be classified according to the different kinds of managerial support it provides: operational, tactical, and/or strategic.

- Strategic support involves broad and long-term goals - tactical support concentrates on medium-range activities that move the organization toward achieving long-term goals - operational support involves day-to-day activities - Based on this classification, a GIS should collect, process, and generate different types of information in formats that are suitable for each type of support.

most GISs have two basic components:

- a global database - information-sharing technologies.

A global environment includes four kinds of factors:

- legal (intellectual property laws, patent and trademark laws, TDF regulations, and so forth) - cultural (languages, ethical issues, and religious beliefs) - economic (currency, tax structure, interest rates, monetary and fiscal policies) - political (government type and stability, policies toward MNCs, and so on)

Cultural Differences (obstacles to using GISs)

Cultural differences in values, attitudes, and behaviors play an important role in using GISs. For example, in some cultures, using technology is considered a boring, low-level task; in others, being technologically knowledgeable is seen as a sign of social importance. - Organizations might also need to look at changing content or images on their Web sites -Cultural issues are best addressed with education and training.

Diverse Regulatory Practices (obstacles to using GISs)

Diverse regulatory practices also impede the integration process. This obstacle does not necessarily apply to transborder data flow (TDF) regulations; it applies to policies on business practices and technological use. Many countries also restrict the type of hardware and software that can be imported or used, and the vendors that an organization normally deals with might not service certain countries - Adopting open-source systems could eliminate part of this problem. However, as mentioned, few organizations are capable of adopting these systems. - Jurisdiction issues regarding the contents of a GIS can also be challenging. ISPs, content providers, servers, and organizations owning these entities might be scattered throughout the world and operating under different rules and regulations. - The nature of intellectual property laws and how they are enforced in different countries also varies. Software piracy is a problem in all countries, but several have piracy rates higher than 90 percent. - The General Data Protection Regulation covers a series of laws in order to protect EU citizens' personal data, including genetic information, health, racial or ethnic origin, and religious beliefs. The goal is to create more consistent protection of consumer and personal data across EU nations and it applies to each member state of the European Union. Companies that sell products or services to EU residents must be aware of this law and its consequences regardless of their locations - Interesting enough, GDPR is already playing a role on the privacy issues on U.S.-based MNCs. As an example, more than likely, GDPR is part of the reason why companies such as Facebook is asking its users to review their privacy settings. It is up to the users what to share and what not to share.

High coordination in a GIS has the following advantages:

Flexibility in responding to competitors in different countries and markets Ability to respond in one country to a change in another country Ability to maintain control of market needs around the world Ability to share and transfer knowledge between departments and international branches Increased efficiency and effectiveness in meeting customers' needs Reduced operational costs

Lack of Skilled Analysts and Programmers (obstacles to using GISs)

Having skilled analysts and consultants with the knowledge to implement a GIS is critical, particularly with the severe shortage of qualified information systems professionals in the United States and Western Europe. When forming integrated teams, companies must consider the nature of each culture and differences in skills in other countries - Ideally, an organization would link the skills of people from different countries to form a "dream team." However, cultural and political differences can affect the cooperative environment needed for global integration. - Training and certification programs, many of which are offered through the Internet, are one possible solution for narrowing this skills gap in developing nations.

2. Information-Sharing Technologies

International companies can use a variety of technologies for an integrated GIS - Small companies might outsource to take advantage of expertise that is not available inside the company. On the other hand, large companies with the resources and technical expertise might develop custom applications to be shared across borders. - Depending on the system's use, a GIS might consist of a network for e-mail, remote data entry, audio, video, computer conferencing, and distributed databases. - However, small companies might take advantage of existing public network providers, such as the Internet or value-added networks, for multicountry communication.* - Value-added networks are private multipoint networks managed by a third party and used by organizations on a subscription basis. They offer electronic data interchange standards, encryption, secure e-mail, data synchronization, and other services. - However, with the popularity of the Internet, they are not used as much anymore; today, businesses of all sizes typically use the Internet to conduct international business.

suggestions for making a company Web site global

Language—Present your Web site in one of the seven most-used languages: English, French, Italian, German, Spanish, Japanese, or Chinese. Font—Make sure the Web site's main features are readable in different languages, depending on which font is selected. Cultural differences—Keep cultural variation in mind. For example, although white is the color of purity in the United States, it is the color of mourning in Eastern cultures. Also, a woman smiling without covering her mouth would be considered sexually suggestive in Japan. Currency—Make sure the Web site includes a currency conversion feature. Date format—This varies around the world. Many countries use day/month/year instead of month/day/year. Spare use of graphics and flash features—Because of bandwidth limitations in many parts of the world, you may want to keep the Web site rather simple. E-mail—Be prepared to send and receive e-mails in foreign languages. Payments—Not everybody uses credit cards. In Germany, for example, bank transfers are popular, whereas in Japan, both cash on delivery (COD) and bank transfers are popular. International logistics—To ship internationally, you must address the various regulations that pertain to each country. International listing—List your Web site with international search engines and indexes. Local involvement—Invite local people to review the Web site before you launch it to the global market. International marketing—Promote your Web site in specific languages.

The following four types of organizations do business across national borders:

Multinational organizations Global organizations International organizations Transnational organizations

issues to address before implementing GIS

The organization must identify its business opportunities in the global marketplace. Decision makers must justify the organization's investment in a GIS, given the substantial commitment of resources that will have to be made, usually years in advance. The organization's personnel need to be screened for technical and business expertise, because implementing a GIS is more challenging than implementing a domestic information system. Migration to the GIS needs to be coordinated carefully to help personnel move from the old familiar system to the new one.

global information system (GIS)

an information system that works across national borders, facilitates communication between headquarters and subsidiaries in other countries, and incorporates all the technologies and applications found in a typical information system to gather, store, manipulate, and transmit data across cultural and geographic boundaries. - is an information system for managing global operations, supporting an international company's decision-making processes, and dealing with complex variables in global operations and decision making. - an international company can increase its control over its subsidiaries and better coordinate their activities, thereby gaining access to new global markets - Strategic planning is also a core function. - By being able to efficiently share information among subsidiaries, international companies can track performance, production schedules, shipping alternatives, and accounting items.

Offshore outsourcing

an organization chooses an outsourcing firm in another country that can provide needed services and products. - is an alternative for developing information systems. - initially, offshore outsourcing was used mostly in manufacturing to find cheap labor, but now it is used for many information technology tasks - The widespread availability of the Internet, improved telecommunication systems, the reduced cost of communication, and increased bandwidth have made offshore outsourcing more attractive for all types of organizations - GIS plays an important role in supporting offshore outsourcing by providing a global network that all participants can use for coordinating development activities, such as product design and global marketing campaigns.

multinational corporations (MNCs)

an organization with assets and operations in at least one country other than its home country. - An MNC delivers products and services across national borders and is usually centrally managed from its headquarters.

Poor Telecommunication Infrastructures (obstacles to using GISs)

before adding a GIS, international companies must take into consideration the telecommunication infrastructures of the countries where subsidiaries are located. - An organization might have the resources and skills to implement a worldwide integrated system but not be able to change an existing telecommunication infrastructure. - Furthermore, the differences in telecommunication systems make consolidating them difficult. Implementing a GIS that encompasses 25 countries, for instance, is expensive and cumbersome when each country has different service offerings, price schedules, and policies. - In countries where Internet access is slower or more costly, Web pages should not have content with lots of graphics and animation that require more bandwidth - Even when the telecommunication infrastructure in two countries is comparable, differences in standards can cause problems

Lack of Standardization (obstacles to using GISs)

can impede the development of a cohesive GIS that is capable of sharing information resources across borders. Electronic data interchange, e-mail, and telecommunication standards vary throughout the world and trying to work with all the various standards is impractical. And although open-source systems are increasing in popularity and the technology to link diverse systems is available, few organizations can meet the costs of integrating different platforms. - Too much standardization can be a problem as well, decreasing an organization's flexibility in responding to local preferences—even time differences - an organization should not insist that all its subsidiaries use the metric system. It should allow them to use the measuring systems they are familiar with, converting from one system to the other when necessary. - Time zones can also pose difficulties in managing a GIS - A balance between international system development standards—allowing ease of integration, modularization, custom tailoring of systems, and applications for local responsiveness—is needed. - Sharing software is difficult and impractical when these factors are considered. Only 5-15 percent of a company's applications are truly global in nature. Most applications are local in nature and cannot be integrated into a GIS infrastructure. Even if the software can be integrated globally, support and maintenance problems might result. - coordination and planning for variations in local needs are critical for using a GIS

A GIS can be defined along two dimensions:

control and coordination - Control consists of using managerial power to ensure adherence to the organization's goals. - requires a centralized architecture for data, standardized definitions used across the organization, standard formats for reports, defined behaviors for different processes (such as how to respond when a customer has a complaint), and performance-tracking systems. - Coordination is the process of managing the interaction among activities in different, specialized parts of an organization - requires a decentralized architecture for data, standardization within departments, the ability to communicate these standards to other departments, collaboration systems, and technologies that support informal communication and socialization.

video conferencing/apps

have been growing rapidly in recent years. Organizations usually have two choices for the deployment of this technology: on-premise or cloud based. The driving force behind this growth is the increase in globalization and workforce mobility. Video conferencing is the next best alternative to conducting face-to-face business meetings, for a fraction of the cost, and it can be used in different time zones and locations around the world - Video-conferencing systems provide a more effective environment for business meetings compared to e-mail and telephone conversations. Therefore, they are being increasingly used by global companies to maintain business relationships between headquarters and regional offices spread across the globe.

1. Global Database

is a technical challenge, mainly because of the different character sets required for the names of people and places and the different formats required for phone numbers and postal codes. - Currency conversion is also a challenge in database development, although some software is available for this task. - For example, SAP (originally called Systems Applications and Products in Data Processing) offers valuable features and capabilities for GISs.

Obstacles to Using Global Information Systems

lack of standardization (including differences in time zones, taxes, language, and work habits), cultural differences, diverse regulatory practices, poor telecommunication infrastructures, lack of skilled analysts and programmers, and the organization's unwillingness to delegate control of information systems to host countries

international structure

operates much like a multinational corporation, but subsidiaries depend on headquarters more for process and production decisions. - Information systems personnel are regularly exchanged among locations to encourage joint development of applications for marketing, finance, and production. - This exchange encourages a cooperative culture in geographically dispersed personnel, and using a GIS to support an international structure is more feasible because of this cooperative nature. - Subsidiaries' GISs can be centralized or decentralized, depending on the extent to which they cooperate. - uses two-way communication

multinational structure

production, sales, and marketing are decentralized, and financial management remains the parent's responsibility. - the company's subsidiaries operate autonomously but regularly report to the parent company - it reduces the need for communication between subsidiaries and headquarters, allowing subsidiaries to make many decisions on their own - Local hardware and software vendors influence which applications a multinational company chooses. Inevitably, each subsidiary operates on a different platform, and uniform connections are economically impractical.

Global products

products or services that have been standardized for all markets, are becoming increasingly important in international marketing efforts

transborder data flow (TDF)

restricts what type of data can be captured and transmitted in foreign countries. - consists of national laws and international agreements on privacy protection and data security.

transnational structure

the parent and all the subsidiaries work together in designing policies, procedures, and logistics for delivering products and services to the right market. - This type of organization might have several regional divisions that share authority and responsibility, but in general it does not have its headquarters in a particular country. - usually focuses on optimizing supply sources and using advantages available in subsidiary locations. - Many companies do this when they look for manufacturing facilities in countries where labor is less expensive than it is in the parent country. - Again, a GIS fits into this structure well by integrating global activities through cooperation and information sharing between headquarters and subsidiaries. - architecture of GIS requires a higher level of standardization and uniformity for global efficiency, and yet it must maintain local responsiveness. Universal data dictionaries and standard databases, for example, enhance the integration of GISs. - level of cooperation and worldwide coordination needed for a transnational structure does not fully exist in today's global environment. However, with increasing cooperation between nations, this structure is becoming more feasible -with cooperation between headquarters and subsidiaries as well as between subsidiaries. Foreign exchange systems that allow traders and brokers from around the world to interact are an example of information systems that support this structure.

(t/f) A GIS helps an organization improve its global coordination, manage the factors that promote globalization, and maintain a competitive edge by supporting strategic planning.

true

(t/f) A network's main function is to allow users to share information. After a global network is in place, therefore, an international company must decide which types of information-sharing technology it will be using, such as electronic meeting systems or video conferencing, group support systems, FTP, data synchronization, and application sharing

true

(t/f) Airline reservation systems are considered the first large-scale interactive global system

true

(t/f) An information system manager faces design and implementation issues when developing a global network. In addition to the usual components of a domestic network, a global network requires bridges, routers, and gateways that allow several networks to connect worldwide. In addition, a global network must have switching nodes to guide packets to their destinations.

true

(t/f) As e-business matures and more companies conduct business online, consumers can engage in comparison shopping more easily

true

(t/f) Because today's multinational corporations operate in a variety of markets and cultures, a clear understanding of factors such as customs, laws, technological issues, and local business needs and practices is a prerequisite to the success of a global information system.

true

(t/f) In addition, an information system manager must choose the best transmission technology for the global network's needs. Without reliable transmission, a network has no value. Current transmission technologies are synchronous, asynchronous, multiplexing, digital (baseband), and analog (broadband). With synchronous transmission, both parties are connected at the same time, as in a phone call. With asynchronous transmission, they do not have to be connected at the same time, as is true of e-mail. However, an international company is restricted to the transmission technologies that are supported by the telecommunication infrastructures of the countries where its subsidiaries are located. Information system managers must select the right network and protocol to manage connections and minimize error rates.

true

(t/f) Information system managers must also consider the company's objectives when determining the network architecture. For example, if the company's international communication requirements only entail simple file sharing and if response time is not a critical factor, half-duplex transmission (one direction at a time) used with a value-added network is probably adequate. However, if the company uses multimedia applications (such as video conferencing and electronic meeting systems) in addition to normal file and database sharing, full-duplex transmission (both directions simultaneously) is more efficient. Furthermore, a private network or a dedicated leased line provides stability in transmission protocols when there are inadequate telecommunication infrastructures

true

(t/f) No matter what the organization's size or scope, an integrated network for global control over the organization's resources is the foundation of any GIS.

true

(t/f) The Internet can simplify communication, improve business relationships, and offer new opportunities to both consumers and businesses.

true

(t/f) The global economy is creating customers who demand integrated worldwide services, and the expansion of global markets is a major factor in developing global information systems to handle these integrated services.

true

(t/f) The organization's structure usually determines the architecture of its GIS

true

(t/f) The trade-off between the amount of control needed and the amount of coordination needed defines the organization's globalization strategy.

true

(t/f) With the explosive growth of the Internet and e-commerce, businesses that are active in the global market should make their Web sites more appealing to global customers. Some companies create separate Web sites for each country in which they do business. This is called "localization of a Web site." When this is the case, the company's main Web site needs to make a clear and specific reference to these additional Web sites, preferably through drop-down menus.

true

(t/f) information system managers should keep in mind that standardized software and hardware are the ideal but are not always feasible. For example, using the same hardware in another country might be desirable, but it is not as simple as shipping the system to the other country and plugging it in. Vendors might not offer technical support in that country, or the other country's electrical standards may differ. As for using the same software in other countries, that becomes more complicated because of differences in language, business methods, and transborder data flow (TDF), which is subject to restrictions on how the data can be captured and transmitted.

true

(t/f) The number of non-English speakers on the Internet is on the rise.

true - More content is also being developed in other languages - This growing diversity of language on the Internet, both for developing content and the number of users, offers great opportunities and some challenges for global companies. Global companies must respond by offering content in multiple languages and making Web sites accessible in multiple languages

(t/f) To design a successful GIS, management must first determine the kind of information that global companies need to share. In addition, management cannot assume the company's products or services will continue selling the same way because of possible changes in customers' needs and preferences and global competition

true - Considering the entire organization's operational efficiency is critical in coordinating international business activities, so global companies need to change their production and marketing strategies in an effort to respond to the global market

(t/f) Mobile computing and mobile apps play a major role in further globalization and in bringing more people online. Because many developing nations do not have an established communication network in place, mobile networks are an attractive alternative for many of these countries

true - Mobile apps play a major role in globalization by offering basic social services and commerce such as banking, payment, and agricultural information for developing nations.

(t/f) The Internet allows entrepreneurs in developing countries to start and expand businesses without making large investments.

true - The Internet has lowered the barriers for small businesses all over the world, and entrepreneurs have responded, including ones from India, China, Mexico, and Brazil. Online businesses can be created regardless of where the creator is located; all that is needed is Internet access.

(t/f) An information system manager must determine the best communication media to meet global performance and traffic needs, such as fiber optics, satellite, microwave, or conventional phone lines. Factors to consider include bandwidth, range, noise, and cost.

true - The noise factor involves how immune a medium is to outside electronic interference. - As always, component, installation, and leasing costs must be balanced with these other factors.

(t/f) the growing trend toward global customers and products means globalization has also become an important factor in purchasing and the supply chain.

true - Worldwide purchasing gives suppliers the incentive to consider foreign competition as well as domestic competition. Furthermore, large global organizations can reduce costs in purchasing, manufacturing, and distribution because they have access to cheaper labor and can sell products and services locally as well as internationally

(t/f) E-business is a major factor in the widespread use of global information systems

true - includes transactions that support revenue generation as well as those that focus on buying and selling goods and services. These revenue-generating transactions include generating demand for goods and services, offering sales support and customer service, and facilitating communication between business partners. An effective global information system can support all these activities. -builds on the advantages and structures of traditional business by adding the flexibility that networks offer. By generating and delivering timely and relevant information supported by networks, e-business creates new opportunities for conducting commercial activities. - it is the Internet that makes e-business possible