Unit 5 Managing Global Systems

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Management Information Systems:

Managing the Digital Firm


Seventeenth Edition, Global Edition

Chapter 15
Managing Global Systems

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Learning Objectives
15.1 What major factors are driving the internationalization of business?
15.2 What are the alternative strategies for developing global
businesses?
15.3 What are the challenges posed by global information systems and
management solutions for these challenges?
15.4 What are the issues and technical alternatives to be considered
when developing international information systems?
15.5 How will MI S help my career?

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Video Cases
• Case 1: Daum Runs Oracle Apps on Linux.
• Case 2: Lean Manufacturing and Global ER P: Humanetics and Global
Shop

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The Bel Group: Laughing All the Way to
Success (1 of 2)
• Problem
– Potential expansion
– Untouched market potential globally
• Solutions
– Design global strategy and business model
– Redesign business processes
– Deploy Salesforce’s Sales Cloud software

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The Bel Group: Laughing All the Way to
Success (2 of 2)

• Global CRM System


• Demonstrates I T’s role in helping organizations pursue a
global growth strategy
• Illustrates the ability of I T systems to standardize global
processes and rules

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What Major Factors Are Driving the
Internationalization of Business?
• Global economic system and global world order driven by
advanced networks and information systems
• The growth of international trade has radically altered
domestic economies around the globe
• For example, production of many high-end electronic
products parceled out to multiple countries
– For example: Apple iPhone’s global supply chain

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Figure 15.1: Apple iPhone’s Global Supply
Chain

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Developing an International Information
Systems Architecture
• Understand global environment
– Business drivers for global competition
– Inhibitors creating management challenges
• Develop corporate strategy for global competition
• Develop organizational structure and division of labor
• Consider management issues
– Design of business procedures, reengineering, managing change
• Consider technology platform
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Figure 15.2 International Information
Systems Architecture

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The Global Environment: Business Drivers
and Challenges
• Business drivers
– General cultural factors
– Specific business factors
• Challenges
– Global
– Specific

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Table 15.1: The Global Environment:
Business Drivers and Challenges
General Cultural Factors Specific Business Factors

Global communication and Global markets


transportation technologies
Development of global culture Global production and operations
Emergence of global social norms Global coordination
Political stability Global workforce
Global knowledge base Global economies of scale

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Table 15.2 Challenges and Obstacles to
Global Business Systems
Global Specific

Cultural particularism: Regionalism, Standards: Different Electronic Data


nationalism, language differences Interchange (ED I), e-mail,
telecommunications standards
Social expectations: Brand-name Reliability: Phone networks not
expectations, work hours uniformly reliable
Political laws: Transborder data and Speed: Different data transfer speeds,
privacy laws, commercial regulations many slower than United States
Blank Personnel: Shortages of skilled
consultants

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Interactive Session: Management:
Rethinking Global Supply Chains
• Class discussion
– What factors have contributed to the growth of global supply
chains?
– What are the advantages and disadvantages of global supply
chains?
– What measures can companies take to mitigate supply chain risk?
– Should companies continue to maintain global supply chains?
Explain your answer.

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State of the Art
• Most companies have inherited a patchwork international
system using traditional batch-oriented reporting, manual data
entry, legacy systems, and little online control
• Significant difficulties in building appropriate international
architectures
– Planning a system appropriate to firm’s global strategy
– Structuring organization of systems and business units
– Solving implementation issues
– Choosing right technical platform

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Global Strategies and Business Organization
• Three main kinds of organizational structure
– Centralized: In the home country
– Decentralized/dispersed: To local foreign units
– Coordinated: All units participate as equals
• Four main global strategies
– Domestic exporter
– Multinational
– Franchisers
– Transnational

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Table 15.3 Global Business Strategy and
Structure

Business Function Domestic Multinational Franchiser Transnational


Exporter

Production Centralized Dispersed Coordinated Coordinated


Finance/accounting Centralized Centralized Centralized Coordinated
Sales/marketing Mixed Dispersed Coordinated Coordinated
Human resources Centralized Centralized Coordinated Coordinated
Strategic Centralized Centralized Centralized Coordinated
management

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Global Systems to Fit the Strategy
• Configuration, management, and development of systems tend to
follow global strategy chosen
• Four main types of systems configuration
– Centralized: Systems development and operation occur totally at
domestic home base
– Duplicated: Development occurs at home base but operations are
handed over to autonomous units in foreign locations
– Decentralized: Each foreign unit designs own solutions and
systems
– Networked: Development and operations occur in coordinated
fashion across all units
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Figure 15.3 Global Strategy and Systems
Configurations

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Reorganizing the Business
• To develop a global company and information systems support structure:

1. Organize value-adding activities along lines of comparative advantage-

 For example: Locate functions where they can best be performed, for
least cost and maximum impact and reliability (with safeguards for
supply chain resiliency)

2. Develop and operate systems units at each level of corporate activity—


regional, national, and international
3. Establish at world headquarters:
 Single office responsible for development of international systems
 Global CI O position
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A Typical Scenario: Disorganization on a
Global Scale
• Traditional multinational consumer-goods company based in United
States and operating in Europe would like to expand into Asia
• World headquarters and strategic management in United States
• Separate regional, national production and marketing centers
• Foreign divisions have separate I T systems
• E-mail systems are incompatible
• Each production facility uses different ER P system, different hardware
and database platforms, and so on

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Global Systems Strategy (1 of 2)
• Share only core systems
– Core systems support functionality critical to firm
• Partially coordinate systems that share some key elements
– Do not have to be totally common across national boundaries
– Local variation desirable
• Peripheral systems
• Need to suit local requirements only

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Global Systems Strategy (2 of 2)
• Define core business processes
• Identify core systems to coordinate centrally
• Choose an approach
– Piecemeal and grand design approaches tend to fail

• Make benefits clear


– Global flexibility
– Gains in efficiency (but more emphasis now on supply chain resiliency)
– Fixed costs amortized over a larger customer base; creates new
economies of scale
– Ability to optimize corporate funds over much larger capital base

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The Management Solution:
Implementation (1 of 2)
• Agreeing on common user requirements
– Short list of core business processes
– Develop common language, understanding of common elements and
unique local qualities
• Introducing changes in business processes
– Success depends on legitimacy, authority, ability to involve users in
change design process
• Coordinating applications development
– Coordinate change through incremental steps
– Reduce set of transnational systems to bare minimum

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Figure 15.4 Local, Regional, and Global
Systems

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The Management Solution:
Implementation (2 of 2)
• Coordinating software releases
– Institute procedures to ensure all operating units update at same
time
• Encouraging local users to support global systems
– Cooptation: Bringing the opposition into design and
implementation process without giving up control over direction
and nature of the change
 Permit each country unit to develop one transnational
application
 Develop new transnational centers of excellence
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Issues and Technical Alternatives When
Developing International Information
Systems (1 of 2)
• Computing platforms and systems integration
– How new core systems will fit in with existing suite of applications
developed around globe by different divisions
– Standardization: Data standards, interfaces, software, and so on

• Connectivity
– Internet does not guarantee any level of service
– Many firms use private networks and VPN s
– Low penetration of PC s, outdated infrastructures in developing countries

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Issues and Technical Alternatives When
Developing International Information
Systems (2 of 2)
• Software
– Integrating new systems with old
– Human interface design issues, languages

• Software localization
– Converting software to operate in second language

• Most important software applications:


– TP S and MI S
– SC M, ED I, and enterprise systems
– Collaboration tools, e-mail, videoconferencing
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Figure 15.5 Internet Population in
Selected Countries

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Interactive Session: Organizations: Digital
Nationalism
• Class discussion
– What is digital nationalism? Give two examples.
– What problems does digital nationalism pose for conducting
business globally?

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How Will MIS Help My Career?
• The Company: Global Online Stats
• Position Description: Entry-level sales and marketing trainee
• Job Requirements
• Interview Questions
• Author Tips

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