Summary:
In the final chapter of our textbook we take a look into how
the advent of information systems is a driving force behind international
business. In many instances, nationalized organizations have been overcome by competitors
that have fast-paced network capabilities on global scales. This explosion of
global commerce is possible because of the ever decreasing cost of
international communication and transportation brought about by information
systems. Also, the relative equality of information available through the
presence of the internet and World Wide Web creates a growing knowledge base of
world culture, shared by all, which allows for the creation of world-wide
standards in global markets, production, coordination, distribution, and global
economies of scale.
When developing a global business, there are four basic
strategies available. Domestic exporter strategy
is when an organization completes most activities in its country of origin and
products are shipped out of the country for international sales. Multinational companies concentrate
financial and strategy decisions on the country of origin, but decentralize
other activities such as production, marketing, and sales to foreign countries.
Franchiser strategy is when the
origination of an idea or product takes place in a home country, with licensed “clones”
being operated on foreign soil with local resources and personnel. Finally, transnational strategy operates all
activities on a coordinated global scale. Their management structure closely
resembles that of a federal entity, with strong centralized decision making,
yet with extensive diffusion of power throughout the global divisions. There is
a direct relation between the strategy a firm employs and the information
systems design it requires. Please see figure
15-3 below, taken from our textbook, that explains this relation.
As all information systems have challenges associated with
them, global information systems have challenges on a somewhat larger scale
based upon their own inherent scope of operations. Some of these challenges
include cultural, political, lingual (language diversity), and local
information systems that are difficult to integrate. Management solutions for
these issues should focus on core
systems, those that are absolutely critical for organizational function,
and ensure that systems are built and implemented for those business processes that
are essential. Furthermore, recalling the key lesson from the previous chapter,
managers must manage implementation effectively,
especially when dealing with global information systems. For example, legitimacy can be difficult to
establish and maintain when you are thousands of miles from your subordinates
and have never personally met them. Legitimacy is the authority you derive from
your position, experience, and ability to influence others in the design change
process. Cultural differences specifically can have a great effect on a change
agent’s legitimacy.
These global enterprises and systems would not be possible
on such scales without technology. As such, technology platforms must be kept
forefront in development of global system requirements. As discussed previously,
system integration is one of the main hardware issues that will arise, and to
maintain integration, connectivity is essential. A solution for integration
issues is to operate with open systems technology, while connectivity problems
can be solved by building global networks based upon the Internet, which is
exponentially becoming more widespread and reliable.
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