Global Information System

1. Chapter 9: Global Information
Systems

2. Multinational Organizations and IS
• A multinational firm (MNF) is a firm that operates in many
countries. The firm may or may not have a headquarters in a
single country, but operates divisions and subsidiaries in
different countries to take advantage of local benefits (i.e.,
cheap labor)
• MNFs must use global information systems which are
systems that serve individuals and firm units in multiple
countries.
• Global information systems are different than other IS
because these systems must conform to laws, cultures, and
standards etc. in many countries

3. Global Product Development and Production
Figure 16-1

4. International Information Systems Architecture
Figure 16-2

5. Think Globally, Act Locally
• International companies “think globally, act locally”
– Be sensitive to regional customs
– Control must be decentralized
– Strategic planning should be global
– Can be followed with local flavor

6. Challenges of Global Information Systems
• Global information systems face challenges
– Technological barriers
– Regulations and tariffs
– Electronic payment mechanisms
– Different language and culture
– Economic and political considerations
– Different measurement standards
– Legal barriers
– Different time zones
• Challenges involve both the firm’s Web site and other
information systems

7. Technological Challenges
• Challenges
– Not all countries have adequate information technology
infrastructures
– Unable to build international IS
– Broadband communication lines needed
• Solutions
– Offer two versions of Websites to compensate for slower
bandwidth
– Use low earth orbit satellite systems to build network for
voice and data

8. Technological Challenges (continued)
• Challenges
– Language is technological challenge because eight-bit
bytes not sufficient for languages with large character
sets (e.g., Chinese
– Fields such as telephone numbers present problems for
databases in MNFs
• Solutions
– Use double-byte characters (e.g., unicode allows for
65,536 characters)
– Fields for telephone numbers must be variable length to
allow flexibility

9. Regulations and Tariffs
• Challenges
– Countries have different importing regulations
– Executives reluctant because of hassles
– Even with research there are fears that employees will
not know how to comply with laws of destination
countries
• Solutions
– There are programs such as NextLinx to help importers
and exporters for Web commerce
• NextLinx is integrated within the firm’s systems
• When an international order is placed the software
determines tariffs, cost of delivery, provides forms,
and logistics

10. Differences in Payment Mechanisms
• Challenges
– E-commerce allows easy payment for online purchases
– Credit cards preferred payment method in North America
– Not all countries adopt this preference
• Japanese avoid using credit cards
• Solutions
– Web sites for international firms must have multiple
payment mechanisms

11. Language Differences
• Challenges
– International parties must agree on common language
– Data not transmittable internationally because information must be
translated; computers still cannot accurately translate “on the fly”
– English considered de facto international language
– Many countries require accounting systems to be in the local
language
• Solutions
– Largest companies translate Web sites into local languages
– Web site design and translation should be done in overseas offices
although the server may be located in another country; lack of
uniformity in languages
– Multiple accounting systems in different languages

12. Cultural Differences
• Challenges
– Different countries vary
• Tastes
• Gestures
• Treatment of people
• Ethical issues
– Conservative groups against “Americanization”
• Solutions
– MNFs should employ local personnel to design their Web
sites or version of a Web site that will appeal to a
particular country

13. Conflicting Economic, Scientific, and Security
Interests
• Challenges
– Goal of corporate management
• Seize large market share and maximize organization profits
– Goal of governments is to protect economic, scientific, and security
interests of its people
– Occasionally interests conflict
• Drawings related to the design and manufacture of weapons
• Software packages
• Encryption software
– Differences in treatment of trade secrets, patents, and copyright law
• Solutions
– No easy ones
– Pressure from America for stronger copyright laws
– International trade groups

14. Political Challenges
• Challenge
– Information is power and some countries oppose policy of free
access to information and limit use of Internet
– Governments recognize that software is an economic resource and
require firms to purchase local software to build local industry;
problems for firms trying to standardize
• Solutions
– MNFs may have to cut some content from their sites to limit risks of
offending local government
– Limit use of employee blogs
– International human rights pressure may help in the long run
– Use open source software (e.g., Linux, MySQL) can help

15. Different Standards
• Challenge
– No international accounting standards
– United States uses English system of weights and
measures; rest of world uses metric system
– Different standards for dates, temperatures, time,
telephone numbers, and addresses
– Different standards for product codes
• Solution
– Multiple accounting systems
– Multiple versions of data where user can request version
needed (i.e., software must be flexible and give users
choice)
– Promotion of universal product codes

16. Legal Barriers
• Challenges
– Countries have different laws that affect global business
in general and in particular areas such as
• Privacy with respect to data collection
• International transfer of data
• Free speech
• Location of legal proceedings
– Other differences in law
• Auctions
• Gambling
• Sale of liquor and prescription drugs

17. Legal Barriers: Privacy and Data Collection
• Privacy laws in general
– Respect for privacy in international business is unresolved
challenge
– Majority of democratic nations protect individual privacy
• How privacy laws differ with respect to data collection
– Does the law apply to data collected by a company or the
government?
– Does the law apply to manual data, digital data, or both?
– Does the law protect data concerning human beings or
does the law also protect legal entities such as
corporations?

18. Legal Barriers: US versus EU Approach to
Privacy with Respect to Data Collection
• US privacy laws
– Slanted toward the public sector (government)
– Over 50 % encompass manual and computerized systems
– Limited provisions for individuals versus legal entities (corporations)
• EU privacy laws
– Covers both public and private sector
– Stronger protection regarding computerized decision making
– Variance in EU with respect to coverage of entities; strong coverage with
respect to individuals

19. Legal Barriers: EU Practices with Respect to
Data Collected on Individuals
• European Union practices (Directive on Data Privacy) for
data collected by corporations on consumers follows the Fair
Information Practices mentioned in chapter 11
– Personal data collected only for specified purposes
– Personal data must be given consent to be processed
– Collecting organizations must identify themselves
– People have right to object to processing of personal data

20. Legal Barriers Between US and EU
• Challenge
– American companies collect data for marketing purposes
on all their customers, but differences between European
and American approaches prevent unrestricted flow of
information with respect to data collection on EU
customers
– For example, EU agents monitor US companies that
collect data on EU citizens
• Solution
– The EU has worked with the US Dept of Commerce to
enable US companies who comply with EU’s Directive on
Data Privacy to carry on trade without fear of violating
the directive (Safe Harbor arrangement)

21. Legal Barriers: Legal Proceedings
• Challenge
– Suppose you purchased an item from a site located in
another country, and the item has a defect or arrived
after the time promised. Because your request for
compensation or other remedies has not been answered,
you decide to sue. Where do you file the lawsuit?
• Solution
– Country- of-origin principle whereby all legal matters are
confined to the country where the site operates
– Country-of-destination principle whereby the laws of the
country to which the site caters apply regarding dealings
with the site, regardless of the site’s country (EU’s
approach)

22. Different Time Zones
• Challenge
– MNFs must craft policies that work for employees,
customers, and IS for all time zones
– Time stamping
• Solutions
– Teleconferencing systems can help; but huge time
differences require accommodations for employees in
other time zones
– Chat rooms and bulletin boards for asynchronous
communication
– Opportunity to work on projects 24 hours a day
– Enable customer support personnel to be available 24/7
without requiring night shift work
– Standard policy for time stamping documents

23. Summary
• Companies using Web for business must accommodate non-
English speaking audiences
• Companies must tailor to local preferences
• Must be aware of cultural differences and payment
preferences
• Tariff and legal issues
• Linguistic, cultural, economic, and political challenges must
be addressed

24. Summary (continued)
• Laws governing collection of data in United States and
European Union are different
• Incompatible data privacy laws
• Restricted flow of personal data between United States and
EU
• Safe Harbor arrangement enables EU to do business with US
• Old legal approach of territorial jurisdiction inadequate
• Free speech and consumer litigation of e-tailers brought
need for legal reform for cyberspace