MANAGING GLOBAL SYSTEMS - Furman University

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1/25/2014Chapter 15Managing Global SystemsVIDEO CASESVideo Case 1: Daum Runs Oracle Apps on LinuxVideo Case 2: Lean Manufacturing and Global ERP: Humanetics and Global ShopVideo Case 3: Monsanto Uses Cisco and Microsoft to Manage Globally6.1Copyright 2014 Pearson Education, Inc. publishing as Prentice HallManagement Information SystemsChapter 15: Managing Global SystemsLearning Objectives Describe the major factors driving the internationalization ofbusiness. Describe the alternative strategies for developing globalbusinesses. Explain how information systems support different globalbusiness strategies. Describe the challenges posed by global informationsystems and management solutions for these challenges. Describe the issues and technical alternatives to beconsidered when developing international informationsystems.15.2Copyright 2014 Pearson Education, Inc.1

1/25/2014Management Information SystemsChapter 15: Managing Global SystemsL’Oréal’s Global Makeover Problem: Large number of brands, products,locations; complex production process; multiplesystems Solution: SAP’s ERP system implemented globally,integrated with Apriso’s FlexNet for operationsmanagement Demonstrates: The need for global firms to haveglobal systems for monitoring production Illustrates: The use of enterprise software toenforce global quality and production standards15.3Copyright 2014 Pearson Education, Inc.Management Information SystemsChapter 15: Managing Global SystemsThe Growth of International Information Systems Global economic system and global world orderdriven by advanced networks and informationsystems Growth of international trade has radically altereddomestic economies around the globe For example, production of many high-endelectronic products parceled out to multiplecountries– For example: Apple iPhone’s global supply chain15.4Copyright 2014 Pearson Education, Inc.2

1/25/2014Management Information SystemsChapter 15: Managing Global SystemsAPPLE IPHONE’S GLOBAL SUPPLY CHAINFIGURE 15-1Apple designs the iPhone in the United States, and relies on suppliers in the United States, Germany,Italy, France, and South Korea for other parts. Final assembly occurs in China.Copyright 2014 Pearson Education, Inc.15.5Management Information SystemsChapter 15: Managing Global SystemsThe Growth of International Information Systems Strategy when building international systems– Understand global environment. Business drivers for global competition Inhibitors creating management challenges– Develop corporate strategy for global competition.– Develop organization structure and division of labor.– Consider management issues. Design of business procedures, reengineering,managing change– Consider technology platform.15.6Copyright 2014 Pearson Education, Inc.3

1/25/2014Management Information SystemsChapter 15: Managing Global SystemsINTERNATIONAL INFORMATION SYSTEMS ARCHITECTUREThe major dimensions fordeveloping an internationalinformation systemsarchitecture are the globalenvironment, the corporateglobal strategies, the structureof the organization, themanagement and businessprocesses, and the technologyplatform.FIGURE 15-2Copyright 2014 Pearson Education, Inc.15.7Management Information SystemsChapter 15: Managing Global SystemsThe Growth of International Information Systems Global business drivers:– General cultural factors lead toward internationalizationand result in specific business globalization factors15.8GENERAL CULTURAL FACTORSSPECIFIC BUSINESS FACTORSGlobal communication andtransportation technologiesDevelopment of global cultureEmergence of global social normsPolitical stabilityGlobal knowledge baseGlobal marketsGlobal production and operationsGlobal coordinationGlobal workforceGlobal economies of scaleCopyright 2014 Pearson Education, Inc.4

1/25/2014Management Information SystemsChapter 15: Managing Global SystemsThe Growth of International Information Systems Challenges and obstacles to global businesssystems– General cultural challenges Cultural particularism– Regionalism, nationalism, language differences Social expectations:– Brand-name expectations, work hours Political laws– Transborder data flow– Transborder data and privacy laws, commercialregulationsCopyright 2014 Pearson Education, Inc.15.9Management Information SystemsChapter 15: Managing Global SystemsThe Growth of International Information Systems Challenges to global business systems (cont.)– Specific challenges Standards– Different EDI, e-mail, telecommunication standards Reliability– Phone networks not uniformly reliable Speed– Different data transfer speeds, many slower than UnitedStates Personnel– Shortages of skilled consultants15.10Copyright 2014 Pearson Education, Inc.5

1/25/2014Management Information SystemsChapter 15: Managing Global SystemsThe Growth of International Information Systems State of the art– Most companies have inherited patchwork internationalsystems using 1960s-era batch-oriented reporting,manual entry of data from one legacy system to another,and little online control and communication– Significant difficulties in building appropriateinternational architectures Planning a system appropriate to firm’s global strategy Structuring organization of systems and business units Solving implementation issues Choosing right technical platformCopyright 2014 Pearson Education, Inc.15.11Management Information SystemsChapter 15: Managing Global SystemsOrganizing International Information Systems 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 15.12Domestic ight 2014 Pearson Education, Inc.6

1/25/2014Management Information SystemsChapter 15: Managing Global SystemsOrganizing International Information SystemsGLOBAL BUSINESS AND dCoordinated15.13Copyright 2014 Pearson Education, Inc.Management Information SystemsChapter 15: Managing Global SystemsOrganizing International Information Systems Global systems to fit the strategy– Configuration, management, and development ofsystems tend to follow global strategy chosen– Four main types of systems configuration1. Centralized: Systems development and operation occurtotally at domestic home base2. Duplicated: Development occurs at home base butoperations are handed over to autonomous units inforeign locations3. Decentralized: Each foreign unit designs own solutionsand systems4. Networked: Development and operations occur incoordinated fashion across all units15.14Copyright 2014 Pearson Education, Inc.7

1/25/2014Management Information SystemsChapter 15: Managing Global SystemsGLOBAL STRATEGY AND SYSTEMS CONFIGURATIONSFIGURE 15-3The large Xs show the dominant patterns, and the small Xs show the emerging patterns. For instance, domesticexporters rely predominantly on centralized systems, but there is continual pressure and some development ofdecentralized systems in local marketing regions.Copyright 2014 Pearson Education, Inc.15.15Management Information SystemsChapter 15: Managing Global SystemsOrganizing International Information Systems To develop a global company andinformation systems support structure:1.Organize value-adding activities along lines of comparativeadvantage. For example: Locate functions where they can best be performed,for least cost and maximum impact.2.3.Develop and operate systems units at each level ofcorporate activity—regional, national, and international.Establish at world headquarters: Single office responsible for development of international systems Global CIO position15.16Copyright 2014 Pearson Education, Inc.8

1/25/2014Management Information SystemsChapter 15: Managing Global SystemsManaging Global Systems Principle management challenges indeveloping global systems– Agreeing on common user requirements– Introducing changes in business processes– Coordinating application development– Coordinating software releases– Encouraging local users to support globalsystemsCopyright 2014 Pearson Education, Inc.15.17Management Information SystemsChapter 15: Managing Global SystemsManaging Global Systems Typical scenario: Disorganization on a global scale– Traditional multinational consumer-goods company based inUnited States and operating in Europe would like to expandinto Asia– World headquarters and strategic management in UnitedStates Only centrally coordinated system is financial controls and reporting––––15.18Separate regional, national production and marketing centersForeign divisions have separate IT systemsE-mail systems are incompatibleEach production facility uses different ERP system, differenthardware and database platforms, and so onCopyright 2014 Pearson Education, Inc.9

1/25/2014Management Information SystemsChapter 15: Managing Global SystemsManaging Global Systems Global systems strategy– Share only core systems Core systems support functionality critical to firm– Partially coordinate systems that share some keyelements Do not have to be totally common across nationalboundaries Local variation desirable– Peripheral systems Need to suit local requirements onlyCopyright 2014 Pearson Education, Inc.15.19Management Information SystemsChapter 15: Managing Global SystemsLOCAL, REGIONAL, AND GLOBAL SYSTEMSAgency and other coordinationcosts increase as the firmmoves from local optionsystems toward regional andglobal systems. However,transaction costs ofparticipating in global marketsprobably decrease as firmsdevelop global systems. Asensible strategy is to reduceagency costs by developingonly a few core global systemsthat are vital for globaloperations, leaving othersystems in the hands ofregional and local units.FIGURE 15-415.20Copyright 2014 Pearson Education, Inc.10

1/25/2014Management Information SystemsChapter 15: Managing Global SystemsManaging Global Systems1. Define core business processes.2. Identify core systems to coordinate centrally.3. Choose an approach:– Piecemeal and grand design approaches tend to fail.– Evolve transnational applications incrementally from existingapplications.4. Make benefits clear:– Global flexibility– Gains in efficiency– Global markets and larger customer base unleash new economies ofscale at production facilities– Optimizing corporate funds over much larger capital base15.21Copyright 2014 Pearson Education, Inc.Management Information SystemsChapter 15: Managing Global SystemsManaging Global Systems The management solution: Implementation– Agreeing on common user requirements Short list of core business processes Develop common language, understanding of commonelements and unique local qualities– Introducing changes in business processes Success depends on legitimacy, authority, ability toinvolve users in change design process– Coordinating applications development Coordinate change through incremental steps Reduce set of transnational systems to bare minimum15.22Copyright 2014 Pearson Education, Inc.11

1/25/2014Management Information SystemsChapter 15: Managing Global SystemsManaging Global Systems The management solution (cont.)– Coordinating software releases Institute procedures to ensure all operating unitsupdate at same time– Encouraging local users to support global systems Cooptation: Bringing the opposition into design andimplementation process without giving up control overdirection and nature of the change– Permit each country unit to develop one transnationalapplication– Develop new transnational centers of excellence15.23Copyright 2014 Pearson Education, Inc.Management Information SystemsChapter 15: Managing Global SystemsInteractive Session: OrganizationsHasbro Develops a Global Systems StrategyRead the Interactive Session and discuss the following questions What problems was Hasbro having with its legacy SAP/R3enterprise resource planning (ERP) system installed in the1990s and how did it affect its operations and global strategy? What management, organization, and technology issues didHasbro address in order to implement a new global systemsstrategy? Describe Hasbro’s new global systems and the problems theysolved. How did they improve operations and managementdecision making?15.24Copyright 2014 Pearson Education, Inc.12

1/25/2014Management Information SystemsChapter 15: Managing Global SystemsTechnology Issues and Opportunities for Global Value Chains Technology challenges of global systems– Computing platforms and systems integration How new core systems will fit in with existing suite ofapplications developed around globe by different divisions Standardization: Data standards, interfaces, software, andso on– Connectivity Internet does not guarantee any level of service Many firms use private networks and VPNs Low penetration of PCs, outdated infrastructures indeveloping countriesCopyright 2014 Pearson Education, Inc.15.25Management Information SystemsChapter 15: Managing Global SystemsINTERNET POPULATION IN SELECTED COUNTRIESFIGURE 15-515.26The percentage of the total population using the Internet in developing countries is much smaller thanin the United States and Europe, but it is growing rapidly.Copyright 2014 Pearson Education, Inc.13

1/25/2014Management Information SystemsChapter 15: Managing Global SystemsTechnology Issues and Opportunities for Global Value Chains Technology challenges of global systems (cont.)– Software Integrating new systems with old Human interface design issues, languag

Management Information Systems Chapter 15: Managing Global Systems The management solution (cont.) –Coordinating software releases Institute procedures to ensure all operating units update at same time –Encouraging local users to support global systems Cooptation: Bringing the