Lecture 19: Globalisation

Why is globalisation significant?

What is driving businesses towards globalisation?

What is involved in a global IS strategy?

Why should it make any difference to IS strategy whether we're a global company?

Forces of globalisation

 Technology & Internet ( Satellite communications.)

 Economics Economies of scale

 Efficiencies

 Cost of high technology development.

 Markets Cross national alliances.

 For the large company International co-ordination

 Control and standardisation.

 For the small company International alliances

 Market access

Example:

A global corporation, head-quartered in Germany, markets and sells a product that is designed in Milan, Italy, with components manufactured in Taiwan and Korea.

It is assembled in Canada, Germany and Ireland and sold as a standard model in South America, and as a model with considerable options in the US, Europe and Australia.

Transfer pricing of the components and assembled product is determined with an eye to minimise tax liability. The principal financing is provided from the Euro market based in Frankfurt. Add in the complexities of having transactions in different currencies, with foreign exchange hedge contract gains and losses that sometimes offset trading losses and gains.

What are the IS strategy implications for such a company?

Progressive globalisation

A scale of maturity of globalisation:

International autonomous international division.

Multi-national duplication of value chain with some local autonomy.

Global geographic integration of activities and strategy.

Transnational specialised units linked to a network of operations.

Global integration is achieved through information.

Global Business Strategy

Products and Services

Markets

Core competencies

Partnerships e.g. local.

Global Business Drivers

1. Local Flexibility

Brands

Distribution

Marketing

Manufacturing

2. Global integration and efficiency

economies of scale

value chain integration.

3. Global Effectiveness

sourcing resources

alliances

global customers

4. Knowledge research and development

innovation.

Operationalisation of Global Strategy

1. Configuration

(where to place plant etc.)

regulatory requirements

finance / tax

customer preference

markets

government

2. Co-ordination

interdependency

distribution of services and products

value chain integration

3. Control

formal structures

information access

internal market structure

training

4. Culture

individual / collective

power distance

short term / long term orientation.

What are the IS strategy consequences of these?

Global Information Systems Strategy

Develop a global infrastructure which covers

Data

Transactions

Technical architecture

IT/IS services

Skills and competencies

Consider

Control (e.g. ‘centrally decentralised’)

Support of global business processes

Global knowledge management

Service Location

Global information flow

Balance:

Global economies of scale, standards, controls

e.g. telecommunications

Local Flexibility, responsiveness

e.g. local help desks

Consider: Outsourcing.

Alliances with global IT companies.

Mixed outsourcing

How can IS/IT support globalisation?

· IS/IT provides the means for centralising, linking regional units and controlling from the centre through IT infrastructure standardisation.

· IT applications may be used to provide a single point of contact for global customers.

· Mobile computing and EPOS can support data capture from local functions.

· Enterprise Resource Systems may be used to integrate financial data globally.

· Global Intranets.

· E-mail Communication.

References:

Earl, M.J. and Feeny,D.F. (1996) Information Systems in Global Business. In Information Management: The Organisational Dimension. Ed. Earl,M.J, Oxford, pp. 77-100.

Peppard, J. (1999) Information Management in the Global Enterprise: an Organising framework. European Journal of Information Systems 8, 77-94.

Chief Information Officer (CIO) Globalisation site.

Last Updated 5/12/00 By Neil McBride