GIS

GLOBAL INFORMATION SYSTEM

Learning Objectives

1 Discuss the reasons for globalization and for

using global information systems, including e-
business and Internet growth
2 Describe global information systems and their
requirements and components
3 Explain the types of organizational structures
used with global information systems
4 Discuss obstacles to using global information
systems
Why Go Global?
• Customers demand integrated worldwide services
• Expansion of global markets is a major factor in
developing global information systems
• Requires understanding customs, laws, technological
issues, and local business needs and practices
Why Go Global?

• Customers demand integrated worldwide

services
• Example: shoe company
• Produces leather and uppers in Italy
• Upper shipped to China
• Tested in Ireland
• Sold in United States
• Supply chain logistics managed and coordinated in US
Why Go Global?

• 2008 Coca-Cola Company

• Generated more than 80% of its revenue from
outside United States
• Prerequisites to the success of a global information
system:
• Clear understanding of factors such as customs,
laws, technological issues, and local business needs
and practices
Why Go Global?

• Airline reservation systems

• First large-scale interactive global system
• Global products
• Products or services that have been standardized for
all markets
• Manufacturer might “regionalize” operations
• Globalization
• Important factor in purchasing and supply chain
Why Go Global?

• Part of Dow Chemical

• Production units in many different countries
• Overhauled its global information system
• By upgrading the order entry system
• Installed a companywide materials management
system tied in with a global demand planning system
• Can now provide better service to its customers
Why Go Global?
• Global products are becoming increasingly important
in international marketing efforts
• Manufacturers regionalize operations to make use of
advantages available in certain regions
• Global organizations reduce costs in purchasing,
manufacturing, and distribution
• Gain access to cheaper labor
• Sell products and services locally and internationally
E-Business
• Includes revenue generating transactions and buying
and selling goods and services
• Creates new opportunities for conducting
commercial activities
• Provides new opportunities for intermediaries
• Small businesses can lower costs by replacing
internal networks with Internet
Growth of the Internet
• Part of daily life in most parts of the world
• Businesses in the global market create websites
appealing to global customers
• Separate websites are created for each country they
operate in
Growth of the Internet
• Simplify communication
• Change business relationships
• Consumers can engage in comparison shopping
more easily
• Small companies can conduct business online just as
large companies
Global Information Systems (GIS)
• Facilitates communication between headquarters
and subsidiaries in other countries
• Incorporates technologies and applications found in
a typical information system
• Gathers, stores, manipulates, and transmits data across
cultural and geographic boundaries
Global Information Systems (GIS)
• Helps international companies:
• Increase control over its subsidiaries
• Better coordinate their activities and access new global
markets
• Core function: Strategic planning
• Includes control and coordination dimensions
• Organizations may use different combinations of the
dimensions
Global Information Systems (GIS)

Control Coordination
Centralized architecture for data Decentralized architecture for data

Standardized definitions Standardization within departments

Standard formats for reports Ability to communicate standards to

other departments
Defined behaviors for different Collaboration systems
processes
Performance-tracking system Technologies that support informal
communication and socialization
Components of a Global Information System
• Global database
• Challenges
- Designing and implementing global database
- Currency conversion
• Information-sharing technologies
• Companies can outsource or customize technologies
Components of a Global Information System
• Information system manager must:
- Determine the best communication media to meet
global performance and traffic needs
- Choose the best transmission technology for the global
network’s needs
- Consider the company’s objectives when determining
the network architecture
- Decide on the type of information-sharing technology
they will be using
Components of a Global Information System
• Differences in language, business methods, and
transborder data flow complicates the use of same
software in other countries
- Transborder data flow (TDF): Restricts types of data that
can be captured and transmitted in foreign countries
Multinational Corporations (MNCs)
• Private organization with assets and operations in at
least one country other than its home country
• Delivers products and services across national
borders
• Centrally managed from its headquarters
• Operating an MNC globally includes political, foreign
exchange, and market risks
Requirements of Global Information Systems
• Understanding global risks of operating an MNC is
critical in international business planning
• Classification of GIS based on managerial support
• Operational
• Tactical
• Strategic
Requirements of Global Information Systems
• GIS should collect, process, and generate
information in formats suitable for each type of
support
• Operational
- Global data access
- Consolidated global reporting
- Communication between headquarters and subsidiaries
- Management of short-term foreign exchange risks
Requirements of Global Information Systems
• Strategic
- Strategic planning support
- Management of global tax risks
Implementation of Global Information Systems
• Difficult to implement because:
• Countries differ in culture, politics, social and economic
infrastructures, and business methods
• International policies affect communication and
standardization processes
• Issues to be addressed by the organization
• Business opportunities should be identified in the global
marketplace
• Organization’s investment in a GIS should be justified
Implementation of Global Information Systems
• Personnel need to be screened for technical and business
expertise
• Migration to GIS needs to be coordinated carefully
• To design a successful GIS, management has to:
• Determine the kind of information global companies need
to share
• Take into account possible changes in customers’ needs and
preferences and global competition
Organizational Structures and GIS
• Types of organizations
• Multinational
• Global
• International
• Transnational
• Organization’s structure determines the architecture
of its GIS
Multinational Structure
• Production, sales, and marketing are decentralized
• Financial management remains the parent company’s
responsibility
• Advantage
• Reduces the need for communication between subsidiaries
and headquarters
- Subsidiaries make decisions on their own
A Multinational Structure
Global Structure (Franchiser)
• Uses highly centralized information system
• Subsidiaries have less autonomy
• Rely on headquarters for all process, control decisions and
system design and implementation
• Requires extensive communication network
• Integration needed to manage production,
marketing, and human resources is difficult
• Duplicate information systems have to be developed
A Global Structure
International Structure
• Organization operates like a multinational corporation
• Subsidiaries depend on headquarters for process and production
decisions
• Information systems personnel are regularly exchanged
among locations
• Encourages cooperative culture
• Centralization of subsidiaries’ GISs depend on the extent to
which they cooperate
An International Structure
Transnational Structure
• Parent company and subsidiaries work together
• Design policies, procedures, and logistics for delivering
products and services to the right market
• Headquarters is not set up in a particular country
• Regional divisions share authority and responsibility
Transnational Structure
• Focuses on optimizing supply sources using
advantages available in subsidiary locations
• GIS requires high standardization and uniformity for
global efficiency
• Local responsiveness should be maintained
Transnational structure
Offshore Outsourcing
• Organization chooses an outsourcing firm in another
country that can provide services and products
• Used for information technology tasks
• Attractive for all organizations due to:
• Widespread availability of the Internet
• Improved telecommunication systems
• Reduced cost of communication
• Increased bandwidth
Offshore Outsourcing
• Supported by GIS by providing a global network
• Used by all participants for coordinating development
activities
Obstacles to Using Global Information Systems

Lack of standardization

Cultural differences

Diverse regulatory practices

Poor telecommunication infrastructures

Lack of skilled analysts and programmers

Lack of Standardization
• Impedes the development of a cohesive GIS that is
capable of sharing information resources across
borders
• Too much standardization decreases an
organization’s flexibility in responding to local
preferences
• Time zones can pose difficulties
• Coordination and planning for variations in local
needs are critical for using a GIS
Cultural Differences
• Differences in values, attitudes, and behaviors
• Organizations need to look at changing content or images
on their websites suiting a particular country
• Best addressed with education and training
Diverse Regulatory Practices
• Applies to policies on business practices and
technological use
• Problem can be eliminated partly by adopting open-
source systems
• Involves jurisdiction issues regarding the contents of
a GIS
• Nature of intellectual property laws and way of
enforcement in different countries varies
Poor Telecommunication Infrastructures
• Companies must consider telecommunication
infrastructures of subsidiary countries
• Differences in telecommunication systems make
consolidation difficult
• Web page content with many graphics and animation
should be avoided in countries with slow or costly internet
access
- Differences in standards can cause problems as well
Lack of Skilled Analysts and Programmers
• Nature of culture and differences in skills in other
countries must be considered when forming teams
• Cultural and political differences affect cooperative
environment needed for global integration
• Training and certification programs offered through
the Internet can reduce skills gap in developing
nations
Revision

• Global information system (GIS)

• Global structure
• International structure
• Multinational corporations (MNCs)
• Multinational structure
• Offshore outsourcing
• Transborder data flow (TDF)
• Transnational structure
Advantage GIS

• Expansion of global markets is a major factor in

developing global information systems to handle
integrated services
• GIS helps an international company increase its
control over its subsidiaries and better coordinate
activities, gains access to new global markets
• Global database and information-sharing technologies
form the components of GIS
Obstacles

• Types of organizations which do business across

national borders
• Multinational organizations
• Global organizations
• International organizations
• Transnational organizations
• Obstacles to GIS include:
• Lack of standardization, and skilled workforce
• Differences in culture, and regulatory practices
• Poor telecommunication infrastructures