QUESTIONS
1. What are the five major factors to consider when building an international information systems infrastructure ?
2. Describe the five general cultural factors leading toward growth in the global business and the four specific business factors. Describe the interconnection among these factors.
3. What is meant by a global culture ?
4. What are the major challenges to the development of global systems ?
5. Why have firms not planned for the development of international systems ?
6. Describe the four main strategies for global business and organizational structure.
7. Describe the four different systems configurations that can be used to support different global strategies.
ANSWERS
1. The five major factors to consider when building an international information systems infrastructure are :
a) The global environment.
b) The corporate global strategies.
c) The structure of the organization.
d) The management and business processes.
e) The technology platform.
2. The five general cultural factors leading toward growth in the global business :
a) Global communication and transportation technologies.
b) Development of global culture.
c) Emergence of global social norms.
d) Political stability.
e) Global knowledge base.
Information, communication, and transportation technologies have created a global village in which communication (by telephone, television, radio, or computer network) around the globe is no more difficult and not much more expensive than communication down the block. The cost of moving goods and services to and from geographically dispersed locations has fallen dramatically. The development of global communications has created a global village in a second sense: A global culture created by television and other globally shared media such as movies now permits different cultures and peoples to develop common expectations about right and wrong, desirable and undesirable, heroic and cowardly. The collapse of the Eastern bloc has speeded the growth of a world culture enormously, increased support for capitalism and business, and reduced the level of cultural conflict considerably. A last factor to consider is the growth of a global knowledge base. At the end of World War II, knowledge, education, science, and industrial skills were highly concentrated in North America, western Europe, and Japan, with the rest of the world euphemistically called the Third World. This is no longer true. Latin America, China, southern Asia, and eastern Europe have developed powerful educational, industrial, and scientific centers, resulting in a much more democratically and widely dispersed knowledge base.
The four specific business factors :
a) Global markets.
b) Global production and operations.
c) Global coordination.
d) Global workforce.
e) Global economies of scale.
Global production and operations have emerged with precise online coordination between far-flung production facilities and central headquarters thousands of miles away. At Sealand Transportation, a major global shipping company based in Newark, New Jersey, shipping managers in Newark can watch the loading of ships in Rotterdam online, check trim and ballast, and trace packages to specific ship locations as the activity proceeds. This is all possible through an international satellite link.
The new global markets and pressure toward global production and operation have
called forth whole new capabilities for global coordination of all factors of production. Not only production but also accounting, marketing and sales, human resources, and systems development (all the major business functions) can be coordinated on a global scale. Frito Lay, for instance, can develop a marketing sales force automation system in the United States and, once provided, may try the same techniques and technologies in Spain. Micromarketing—marketing to very small geographic and social units—no longer means marketing to neighborhoods in the United States, but to neighborhoods throughout the world! These new levels of global coordination permit for the first time in history the location of business activity according to comparative advantage. Design should be located where it is best accomplished, as should marketing, production, and finance. Finally, global markets, production, and administration create the conditions for powerful, sustained global economies of scale. Production driven by worldwide global demand can be concentrated where it can best be accomplished, fixed resources can be allocated over larger production runs, and production runs in larger plants can be scheduled more efficiently and precisely estimated. Lower cost factors of production can be exploited wherever they emerge. The result is a powerful strategic advantage to firms that can organize globally. These general and specific business drivers have greatly enlarged world trade and commerce.
The interconnection among these factors :
These general cultural factors leading toward internationalization result in specific business globalization factors that affect most industries. The growth of powerful communications technologies and the emergence of world cultures create the condition for global markets—global consumers interested in consuming similar products that are culturally approved. Coca-Cola, American sneakers (made in Korea but designed in Los Angeles), and Cable News Network (CNN) programming can now be sold in Latin America, Africa, and Asia.
3. Global culture created by television and other globally shared media such as movies now permits different cultures and peoples to develop common expectations about right and wrong, desirable and undesirable, heroic and cowardly.
4. The major challenges to the development of global systems :
a) Agreeing on common user requirements.
b) Introducing changes in business processes.
c) Coordinating applications development.
d) Coordinating software releases.
e) Encouraging local users to support global systems.
5. The firms not planned for the development of international systems, because many different kinds of challenges in developing an international system. The challenge are :
GENERAL
a) Cultural particularism: Regionalism, nationalism, language differences.
b) Social expectations: Brand-name expectations, work hours.
c) Political laws: Transborder data and privacy laws, commercial regulations.
SPECIFIC
a) Standards: Different Electronic Data Interchange (EDI), e-mail, telecommunications standards.
b) Reliability: Phone networks not uniformly reliable.
c) Speed: Different data transfer speeds, many slower than United States.
d) Personnel: Shortages of skilled consultants.
6. The four main strategies for global business and organizational structure :
a) The domestic exporter strategy is characterized by heavy centralization of corporate activities in the home country of origin. Nearly all international companies begin this way, and some move on to other forms. Production, finance/accounting, sales/marketing, human resources, and strategic management are set up to optimize resources in the home country. International sales are sometimes dispersed using agency agreements or subsidiaries, but even here foreign marketing is totally reliant on the domestic home base for marketing themes and strategies. Caterpillar Corporation and other heavy capital-equipment manufacturers fall into this category of firm.
b) The multinational strategy concentrates financial management and control out of a central home base while decentralizing production, sales, and marketing operations to units in other countries. The products and services on sale in different countries are adapted to suit local market conditions. The organization becomes a far-flung confederation of production and marketing facilities in different countries. Many financial service firms, along with a host of manufacturers, such as General Motors, Chrysler, and Intel, fit this pattern.
c) Franchisers are an interesting mix of old and new. On the one hand, the product is created, designed, financed, and initially produced in the home country, but for product-specific reasons must rely heavily on foreign personnel for further production, marketing, and human resources. Food franchisers such as McDonald’s, Mrs. Fields Cookies, and KFC fit this pattern. McDonald’s created a new form of fast-food chain in the United States and continues to rely largely on the United States for inspiration of new products, strategic management, and financing. Nevertheless, because the product must be produced locally—it is perishable—extensive coordination and dispersal of production, local marketing, and local recruitment of personnel are required.
d) Transnational firms are the stateless, truly globally managed firms that may represent a larger part of international business in the future. Transnational firms have no single national headquarters but instead have many regional headquarters and perhaps a world headquarters. In a transnational strategy, nearly all the value-adding activities are managed from a global perspective without reference to national borders, optimizing sources of supply and demand wherever they appear, and taking advantage of any local competitive advantages. Transnational firms take the globe, not the home country, as their management frame of reference. The governance of these firms has been likened to a federal structure in which there is a strong central management core of decision making, but considerable dispersal of power and financial muscle throughout the global divisions.
7. The four different systems configurations that can be used to support different global strategies :
a) Transnational firms must develop networked system configurations and permit considerable decentralization of development and operations.
b) Franchisers almost always duplicate systems across many countries and use centralized financial controls.
c) Multinationals typically rely on decentralized independence among foreign units with some movement toward development of networks.
d) Domestic exporters typically are centralized in domestic headquarters with some decentralize
