Management Information Systems Sixth Edition Chapter 9 Challenges

Management Information Systems, Sixth Edition Chapter 9: Challenges of Global Information Systems

Objectives • Explain why multinational corporations must use global information systems • Provide elementary advice for designing Web sites for an international audience • Cite the cultural, legal, and other challenges to implementing international information systems Management Information Systems, Sixth Edition 2

Multinational Organizations • An increasing number of corporations are becoming multinational • Global information system: a system that serves organizations in multiple countries – Used by multinational corporations • Overseas operations must abide by local laws, yet be sensitive to local cultures and standards Management Information Systems, Sixth Edition 3

The Web and International Commerce • The Web has become an important vehicle for B 2 B and B 2 C commerce • The ratio of non-English speakers to English speakers on the Web is growing • Internet opens enormous global opportunities • Chinese market is expected to be the largest in the future • The Web offers opportunities to increase revenue and to save on costs Management Information Systems, Sixth Edition 4

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The Web and International Commerce (continued) • Online manuals with animation replace paper documents • Web sites and documentation are presented in many languages • Global businesses must be sensitive to local audiences • Globalization: designing global sites to cater to local needs and preferences – Example: Mc. Donalds menu changes to appeal to local palates Management Information Systems, Sixth Edition 6

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Think Globally, Act Locally • International companies must “think globally, act locally” • Acting locally means being sensitive to regional customs and language nuances • Control must be decentralized • Strategic planning should be global, but can be followed with a local flavor Management Information Systems, Sixth Edition 9

Think Globally, Act Locally (continued) Management Information Systems, Sixth Edition 10

Challenges of Global Information Systems • Global information systems face challenges such as: – Technological barriers – Regulations and tariffs – Electronic payment mechanisms – Different languages and cultures – Economic and political considerations – Different measurement and notation standards – Legal barriers – Different time zones Management Information Systems, Sixth Edition 11

Technological Challenges • Not all countries have adequate information technology infrastructure to allow companies to build an international IS • Broadband communication lines are needed to support today’s graphics-rich Web pages • Companies can offer two versions of their Web sites to compensate for slower bandwidth Management Information Systems, Sixth Edition 12

Technological Challenges (continued) • Language is another technological challenge – Eight-bit byte code is not sufficient for languages with large character sets – Unicode allows for 65, 536 characters – Must coordinate with databases and applications • Telephone number and postal code formats are different in different countries Management Information Systems, Sixth Edition 13

Regulations and Tariffs • Countries have different import regulations and tariffs • Executives may be reluctant because of hassles of learning the laws, taxes, tariffs, and regulations of other countries • Companies must comply with the laws of destination countries • Next. Linx help importers and exporters for Web commerce by providing tariffs, customs delay information, license requirements, etc. Management Information Systems, Sixth Edition 14

Differences in Payment Mechanisms • E-commerce allows easy payment for online purchases • Credit cards are the preferred payment method in North America • Not all countries have adopted this preference – High level of stolen credit cards in Eastern Europe – Europeans prefer debit cards – Most Japanese reluctant to use credit cards Management Information Systems, Sixth Edition 15

Language Differences • International parties must agree on a common language for communication • Data might not be transmittable internationally in real time because it must first be translated • English is considered the de facto international language • Large companies translate their Web sites into local languages Management Information Systems, Sixth Edition 16

Cultural Differences • People from different countries vary in their: – Tastes – Gestures – Preferred colors – Treatment of people of certain gender or age – Attitudes about work – Opinions about ethical issues Management Information Systems, Sixth Edition 17

Cultural Differences (continued) • Conservative groups in other countries may dislike the “Americanization” of their cultures • Web designers must be sensitive to cultural differences Management Information Systems, Sixth Edition 18

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Conflicting Economic, Scientific, and Security Interests • Goal of corporate management is to seize a large market share and maximize organization profits • Goal of a national government is to protect its economic, scientific, and security interests • Scientific information is an important national resource as well as a great source of income foreign corporations – Occasionally interests conflict Management Information Systems, Sixth Edition 20

Conflicting Economic, Scientific, and Security Interests (continued) • Weapons manufacturers have technical drawings that are valuable to both the company and the security of country – Governments may not allow the exchange of weapon designs • PGP encryption application was opposed by the U. S. government – Thought to compromise national security – Used by the 9/11 terrorists to encrypt their communication Management Information Systems, Sixth Edition 21

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Conflicting Economic, Scientific, and Security Interests (continued) • Countries treat trade secrets, patents, and copyrights differently – May hinder the transfer of documents to certain divisions of a multinational corporation • Intellectual property is tightly protected in the U. S. and Western Europe, but less so in other countries Management Information Systems, Sixth Edition 23

Political Challenges • Information is power • Some countries oppose the policy of free access to information as a threat to their sovereignty – They believe it might give other nations an opportunity to control indigenous resources • Governments may require that only open source software is used in government operations • Global corporations must ensure compatibility with software adopted by local governments Management Information Systems, Sixth Edition 24

Political Challenges (continued) • Some governments limit how the Internet is used – Free speech is not a universal principle – Web content restrictions are common in many countries • Global companies must obey local laws – May require collaboration with the government, resulting in arrest and prosecution of local users – Ethical dilemma: how to balance the business interest with moral principles, and not help dictatorships violate civil rights Management Information Systems, Sixth Edition 25

Different Standards • Differences in standards must be considered when integrating ISs internationally • Records may be incompatible • United States uses the English system of weights and measures; the rest of the world uses the metric system • NASA lost a $125 million Mars orbiter mission due to an error in a data transfer, caused by a mismatch between U. S. and metric measurements Management Information Systems, Sixth Edition 26

Different Standards (continued) • Different standards also exist for: – Dates – Times – Temperatures – Addresses • United States uses month/day/year format; the rest of the world uses day/month/year Management Information Systems, Sixth Edition 27

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Different Standards (continued) • Companies must adapt their ISs to changing formal or de facto standards • European Article Number (EAN): bar code that includes an extra number to identify country • Universal Product Code (UPC): American standard without the last extra number • American Uniform Code Council (UCC): promoted the use of European standard – U. S. companies had to adapt ISs to recognize, record, and process the new bar code standard Management Information Systems, Sixth Edition 29

Different Standards (continued) • UCC is now trying to expand product codes to the 14 -digit Global Trade Item Numbers (GTINs) • GTINs support global supply chains by allowing many more product ID values • The major push to use RFID tags in the U. S. could expand to the rest of the world Management Information Systems, Sixth Edition 30

Legal Barriers • Countries have different laws that affect global business in general and e-commerce in particular • Differing laws pose challenges to: – International transfer of data – Free speech – Location of legal proceedings when disputes arise Management Information Systems, Sixth Edition 31

Legal Barriers (continued) • Privacy laws – Respect for privacy in international business is an unresolved challenge – The majority of democratic nations try to protect individual privacy – Laws reflect a difference in approach to issue of privacy Management Information Systems, Sixth Edition 32

Legal Barriers (continued) • European Union practices may conflict with U. S. practices – Personal data may be collected only for specified purposes – Personal data cannot be processed without the unambiguous consent of the subject – Collecting organizations must identify themselves – Subjects have the right to know to whom their data is disclosed – Subjects have the right to object to processing of their personal data Management Information Systems, Sixth Edition 33

Legal Barriers (continued) • American companies are busy collecting, buying, and selling data for marketing and decision making • This discrepancy between the European and American approaches prevents unrestricted flow of information • EU directive is only a framework; EU countries may have more restrictive laws • Safe Harbor: arrangement for U. S. companies that have agreed to comply with the EU directive Management Information Systems, Sixth Edition 34

Legal Barriers (continued) • Privacy laws regarding employees are also different in the U. S. and EU • Other applicable laws affecting online business include those that address: – Free speech – What can or cannot be displayed online – Gambling – Auctioning – Sale of alcoholic beverages and drugs Management Information Systems, Sixth Edition 35

Different Time Zones • Different global regions require policies for work and information systems • Teleconferencing systems must be available most of the day, sometimes 24 hours per day – Allows employees from different time zones to discuss problems that need immediate resolution • Teams in support centers may work shifts to accommodate clients worldwide Management Information Systems, Sixth Edition 36

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Different Time Zones (continued) • Managers must be aware of incorrect time stamping in different locales • Systems at both locations can be designed to record local times of both locations, or record a single time (that of the company headquarters) Management Information Systems, Sixth Edition 38

Summary • Companies using the Web for business must accommodate non-English speaking audiences • Companies must tailor to local preferences • They must be aware of cultural differences and payment preferences • They must be aware of tariff and legal issues • Linguistic, cultural, economic, and political challenges must be addressed Management Information Systems, Sixth Edition 39

Summary (continued) • Laws governing the collection and manipulation of personal data in the U. S. and European Union are different • The U. S. and EU have incompatible data privacy laws, which restrict the flow of personal data between the U. S. and EU • Safe Harbor arrangement enables EU companies to do business with U. S. companies Management Information Systems, Sixth Edition 40

Summary (continued) • The old legal approach of territorial jurisdiction is inadequate for business conducted on the Web • Free speech and consumer litigation of e-tailers have brought to light the need for international legal reform for cyberspace Management Information Systems, Sixth Edition 41