Globalization Challenges and Opportunities:

A Flattened World
• This “globalization” presents both challenges and
opportunities for business firms.
• A significant percentage of the global economy
depends on imports and exports.
• It’s not just goods that move across borders; jobs
do too, some of them high level jobs that pay well
and require a college degree.
• Employment in information systems and the other
service occupations is expanding, and wages in the
tech sector are rising at 5 percent annually.
What does globalization have to do with
management information systems?
(the answer is : everything )
• The emergence of the Internet into a full-blown international
communications system has drastically reduced the costs of
operating and transacting on a global scale.
• Customers can now shop in a worldwide marketplace, obtaining
price and quality information reliably 24 hours a day.
• Communication between a factory floor and its far distribution
center is now instant and virtually free.
• Firms producing goods and services on a global scale achieve
extraordinary cost reductions by finding low-cost suppliers and
managing production facilities in other countries.
• Internet service firms, such as Google, Netflix, Alibaba, and
eBay, are able to replicate their business models and services in
multiple countries without having to redesign their expensive
fixed-cost information systems infrastructure
• Information systems enable globalization.
 The Emerging Digital Firm
• A digital firm is one in which nearly all of the organization’s significant
business relationships with customers, suppliers, and employees are
digitally enabled and mediated.
• Core business processes are accomplished through digital networks
spanning the entire organization or linking multiple organizations.
• Business processes refer to the set of related tasks and behaviors that
organizations develop over time to produce specific business results and
the unique manner in which these activities are organized and
coordinated.
• Examples of business processes: Developing a new product, generating
and fulfilling an order, creating a marketing plan, and hiring an employee
• The ways organizations accomplish their business processes can be a
source of competitive strength.
• Key corporate assets —intellectual property, core competencies, and
financial and human assets—are managed through digital means
 The Emerging Digital Firm (Cont’d)
• In a digital firm, any piece of information required to support key business
decisions is available at any time and anywhere in the firm.
• Digital firms sense and respond to their environments far more rapidly than
traditional firms, giving them more flexibility to survive in turbulent times.
• Digital firms offer extraordinary opportunities for more flexible global
organization and management.
• In digital firms, both time shifting and space shifting are the norm.
• Time shifting refers to business being conducted continuously, 24/7, rather
than in narrow “work day” time bands of 9 a.m. to 5 p.m.
• Space shifting means that work takes place in a global workshop as well as
within national boundaries.
• Work is accomplished physically wherever in the world it is best
accomplished.
• Many firms, such as Cisco Systems, 3M, and GE are close to becoming digital
firms, using the Internet to drive every aspect of their business.
• Most other companies are not fully digital, but they are moving toward close
digital integration with suppliers, customers, and employees.
 Strategic Business Objectives of
Information Systems

In contemporary systems, there is a growing interdependence between a firm’s information

systems and its business capabilities. Changes in strategy, rules, and business processes
increasingly require changes in hardware, software, databases, and telecommunications.
Often, what the organization would like to do depends on what its systems will permit it to do.
 Strategic Business Objectives of
Information Systems
• Business firms invest heavily in information systems
to achieve six strategic business objectives:
• operational excellence;
• new products, services, and business models;
• customer and supplier intimacy;
• improved decision making;
• competitive advantage;
• survival.
1- Operational Excellence
• Information systems and technologies are some of the most
important tools available to managers for achieving higher levels
of efficiency and productivity in business operations, especially
when coupled with changes in business practices and
management behavior. For example: Walmart, the largest
retailer on earth, because of its Retail Link system, which digitally
links its suppliers to every one of Walmart’s stores. As soon as a
customer purchases an item, the supplier monitoring the item
knows to ship a replacement to the shelf.
2- New Products, Services, and Business Models
• A business model describes how a company produces, delivers,
and sells a product or service to create wealth.
• For example, Apple Inc. transformed an old business model of
music distribution based on vinyl records, tapes, and CDs into an
online, legal distribution model based on its own iPod
technology platform. Apple has prospered from a continuing
stream of innovations, including the iTunes music service, the
iPad, and the iPhone.
3- Customer and Supplier Intimacy
• When a business really knows its customers and serves them well,
the customers generally respond by returning and purchasing more.
This raises revenues and profits.
• Likewise with suppliers, the more a business engages its suppliers,
the better the suppliers can provide vital inputs. This lowers costs.
How to really know your customers or suppliers is a central problem
for businesses with millions of offline and online customers.
• For example, the Mandarin Oriental hotel group, exemplifies the
use of information systems and technologies to achieve customer
intimacy. These hotels use computers to keep track of guests’
preferences. When a customer arrives at one of these hotels, the
system automatically changes the room conditions, such as
dimming the lights, setting the room temperature, or selecting
appropriate music, based on the customer’s digital profile. The
hotels also analyze their customer data to identify their best
customers and to develop individualized marketing campaigns
based on customers’ preferences.
 4- Improved Decision Making
• Many business managers operate in an information fog bank, never really having the right
information at the right time to make an informed decision. Instead, managers rely on
forecasts, best guesses, and luck.
• In the past decade, information systems and technologies have made it possible for
managers to use real-time data from the marketplace when making decisions.

For Example: Privi Organics Ltd., a leading Indian company that manufactures, supplies, and
exports aroma chemical products worldwide, uses the Oracle Human Capital Management
system for real-time insight into individual employee information—including performance
rating and compensation history. The system helps managers make faster human resource
decisions, such as promotions or transfers, by integrating all employee records across the
organization. Managers are able to quickly review employee performance ratings for the
previous three years and drill down into more details.
 5- Competitive Advantage
• When firms achieve one or more of these business
objectives—operational excellence; new products, services,
and business models; customer/supplier intimacy; and
improved decision making—chances are they have already
achieved a competitive advantage.
• Doing things better than your competitors, charging less for
superior products, and responding to customers and
suppliers in real time all add up to higher sales and higher
profits that your competitors cannot match.
• Examples: Apple Inc., Walmart, and the Mandarin Group
are industry leaders because they know how to use
information systems for this purpose.
 6- Survival
• national and regional legislation in health
care, financial services, education, and privacy
protection impose significant information
retention and reporting requirements on
global businesses.
• Firms turn to information systems and
technologies to provide the capability to
respond to these record management
requirements
 1- 2 What is an information
system? How does it work? What
are its management, organization,
and technology components?
Why are complementary assets
essential for ensuring that
information systems provide
genuine value for organizations?
 What is information system?
• Information technology (IT) consists of all the
hardware and software that a firm needs to use in
order to achieve its business objectives.
• This includes not only computer machines, storage
devices, and handheld mobile devices but also
software, such as the Windows or Linux operating
systems, the Microsoft Office desktop productivity
suite, and the many thousands of computer
programs that can be found in a typical large firm
 What is information system? (Cont’d)
• An information system can be defined technically as a set of interrelated
components that collect (or retrieve), process, store, and distribute information
to support decision making and control in an organization.
• It helps managers and workers analyze problems, visualize complex subjects,
and create new products.
• It contains information about significant people, places, and things within the
organization or in the environment surrounding it.
• Three activities in an information system produce the information that
organizations need to make decisions, control operations, analyze problems,
and create new products or services.
• These activities are input, processing, and output.
• Input captures or collects raw data from within the organization or from its
external environment. Processing converts this raw input into a meaningful
form. Output transfers the processed information to the people who will use it
or to the activities for which it will be used.
• Information systems also require feedback , which is output that is returned to
appropriate members of the organization to help them evaluate or correct the
input stage.
Dimensions of Information Systems
Dimensions of Information Systems
• MIS deals with behavioral issues as well as
technical issues surrounding the development,
use, and impact of information systems used
by managers and employees in the firm.
 The organization
• no business without an information system.
• The key elements of an organization are its people, structure,
business processes, politics, and culture.
• Organizations have a structure that is composed of different levels
and specialties. Their structures reveal a clear-cut division of labor.
• Authority and responsibility in a business firm are organized as a
hierarchy, or a pyramid structure.
• The upper levels of the hierarchy consist of managerial, professional,
and technical employees, whereas the lower levels consist of
operational personnel.
• An organization coordinates work through its hierarchy and through
its business processes. Most organizations’ business processes
include formal rules that have been developed over a long time for
accomplishing tasks.
The organization
• Senior management makes long-range strategic decisions about products
and services as well as ensures financial performance of the firm.
• Middle management carries out the programs and plans of senior
management.
• operational management is responsible for monitoring the daily activities
of the business.
• Knowledge workers , such as engineers, scientists, or architects, design
products or services and create new knowledge for the firm.
• data workers , such as secretaries or clerks, assist with scheduling and
communicationsat all levels of the firm.
• Production or service workers actually produce the product and deliver
the service.
• Experts are employed and trained for different business functions.
• The major business functions , or specialized tasks performed by business
organizations, consist of sales and marketing, manufacturing and
production, finance and accounting, and human resources