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Chapter 12

Chapter 12 Transnational IT Issues N GLOBAL STRATEGIES & BUSINESS ORGANIZATION DOMESTIC EXPORTER: Centralization in Home Country MULTINATIONAL: Central Home Base; Decentralized Production, Sales, Marketing in Other Countries

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Chapter 12

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  1. Chapter 12 Transnational IT Issues N

  2. GLOBAL STRATEGIES & BUSINESS ORGANIZATION • DOMESTIC EXPORTER:Centralization in Home Country • MULTINATIONAL:Central Home Base; Decentralized Production, Sales, Marketing in Other Countries • FRANCHISER:Product Created, Initially Produced in Home Country; Relies Heavily on Local Workers to Produce, Market in Other Countries * Dr. Chen,Transnational IT Issues and IT Buiness TM -2

  3. GLOBAL STRATEGIES & BUSINESS ORGANIZATION • TRANSNATIONAL:Truly Global Firm; No National Headquarters; Value-added Activities Managed From Global Perspective; Optimizes Supply & Demand, Taking Advantage of Local Competitive Strengths * Dr. Chen,Transnational IT Issues and IT Business TM -3

  4. GLOBAL (INTERNATIONAL, TRANSNATIONAL) INFORMATION SYSTEMS INFRASTRUCTURE BASIC INFORMATION SYSTEMS REQUIRED TO COORDINATE WORLDWIDE TRADE & OTHER ACTIVITIES Dr. Chen,Transnational IT Issues and IT Business TM -4

  5. GLOBAL INFORMATION SYSTEMS INFRASTRUCTURE GLOBAL ENVIRONMENT: BUSINESS DRIVERS & CHALLENGES CORPORATE GLOBAL STRATEGIES ORGANIZATIONAL STRUCTURE MANAGEMENT & BUSINESS PROCEDURES TECHNOLOGICAL PLATFORM GLOBAL INFORMATION SYSTEMS INFRASTRUCTURE Dr. Chen,Transnational IT Issues and IT Business TM -5

  6. The Impact of Information Technology on Transnational Firms • Geographic transfer of work • Global networking and expertise sharing • Global service levels • Time-based competition • Cost reduction Dr. Chen,Transnational IT Issues and IT Business TM -6 N

  7. Country Diversity • Sociopolitical • Language • Local constraints • Economics • Currency issues • Autonomy • National Infrastructure Dr. Chen,Transnational IT Issues and IT Business TM -7 N

  8. Issues in the National IT Environment • Availability of IT professional staff • Central telecommunications • National IT strategy • General level of IT sophistication • Size of local market • Data export control • Technological awareness • Border opportunities Dr. Chen,Transnational IT Issues and IT Business TM -8 N

  9. Corporate Factors • Nature of firm’s business • degree of integration and on-line update • Strategic impact of IT • Corporate organization • Company technical and control characteristics • level of functional control • technology base • corporate size Dr. Chen,Transnational IT Issues and IT Business TM -9 N

  10. Transnational IT Policy Issues • Guidance on architecture • a corporate international data dictionary • common communication technology • Central hardware/software concurrence or approval • Central approval of software standards and feasibility studies • Central software development Dr. Chen,Transnational IT Issues and IT Business TM -10 N

  11. Transnational IT Policy Issues (Cont.) • IT communications • regular interunit meetings • corporate–subsidiary exchange visits • newsletters • education • Staff rotation • Consulting services • Central IT processing support Dr. Chen,Transnational IT Issues and IT Business TM -11 N

  12. Drivers of Change Competitive Environment Business/IT Strategy Business Implementation Information Technology and Globalization Globalization Emerging Global Markets Internetworking The Global Enterprise Global Business Operations & Alliances Information Technology N Dr. Chen,Transnational IT Issues and IT Business TM -12

  13. Alignment of Global Vision with IT using Global Drivers N Dr. Chen,Transnational IT Issues and IT Business TM -13

  14. Global IT Management Cultural, Political, and Geoeconomic Challenges Business/IT Strategies Application Portfolios Technology Platforms Data Management Systems Development The Major Dimensions of Global IT Management N Dr. Chen,Transnational IT Issues and IT Business TM -14

  15. GLOBAL BUSINESS DRIVERSGeneral Cultural Factors: • GLOBAL COMMUNICATION & TRANSPORTATION TECHNOLOGIES • DEVELOPMENT OF GLOBAL CULTURE • EMERGENCE OF GLOBAL NORMS • POLITICAL STABILITY • GLOBAL KNOWLEDGE BASE Dr. Chen,Transnational IT Issues and IT Business TM -15

  16. GLOBAL BUSINESS DRIVERSSpecific Business Factors: • GLOBAL MARKETS • GLOBAL PRODUCTION & OPERATIONS • GLOBAL COORDINATION • GLOBAL WORK FORCE • GLOBAL ECONOMIES OF SCALE Dr. Chen,Transnational IT Issues and IT Business TM -16

  17. CHALLENGES & OBSTACLES TO GLOBAL BUSINESS SYSTEMS GENERAL: • CULTURAL PARTICULARISM • SOCIAL EXPECTATIONS • POLITICAL LAWS SPECIFIC: • TELECOMMUNICATION STANDARDS • NETWORK RELIABILITY • DATA TRANSFER SPEEDS • SHORTAGE OF CONSULTANTS * Dr. Chen,Transnational IT Issues and IT Business TM -17

  18. IT Characteristics of TransnationalCompanies • Logically Consolidated, Physically Distributed • Common Data • Integrated Systems • Specialized Workstation-Based Applications • Transnational IT Policies and Standards Dr. Chen,Transnational IT Issues and IT Business TM -18

  19. DOMESTIC EXPORTER GLOBAL BUSINESS STRATEGY & STRUCTURE STRATEGY MULTI- NATIONAL TRANS- NATIONAL FRANCHISER FUNCTION PRODUCTION CENTRALIZED DISPERSED COORDINATED COORDINATED FINANCE/ACCOUNTING CENTRALIZED CENTRALIZED CENTRALIZED COORDINATED SALES/MARKETING MIXED DISPERSED COORDINATED COORDINATED HUMAN RESOURCES CENTRALIZED CENTRALIZED COORDINATED COORDINATED STRATEGIC MANAGEMENT CENTRALIZED CENTRALIZED CENTRALIZED COORDINATED Dr. Chen,Transnational IT Issues and IT Business TM -19

  20. GLOBAL INFORMATION SYSTEMS • CENTRALIZED:Domestic Home Base • DUPLICATED:Copies of Home System Used in Foreign Locations • DECENTRALIZED:Each Unit has Unique System • NETWORKED:Integrated & Coordinated at all Locations Dr. Chen,Transnational IT Issues and IT Business TM -20

  21. Global Considerations for IT Import Restrictions Tariffs Global IT Issues Compatibility and Documentation Transborder Data Flows Government Approval Level of Local Service Dr. Chen,Transnational IT Issues and IT Business TM -21

  22. GLOBAL INFORMATION SYSTEMS CONFIGURATIONS STRATEGY SYSTEM DOMESTIC MULTI- TRANS- CONFIGURATION EXPORTER NATIONAL FRANCHISER NATIONAL CENTRALIZED X DUPLICATED X DECENTRALIZED x X x NETWORKED x X X : DOMINANT PATTERNx : EMERGING PATTERN Dr. Chen,Transnational IT Issues and IT Business TM -22

  23. REORGANIZE THE BUSINESS • ORGANIZE VALUE-ADDING ACTIVITIES FOR COMPARATIVE ADVANTAGE • DEVELOP & OPERATE SYSTEMS AT EACH LEVEL: National; Regional, International • ESTABLISH SINGLE WORLD HEADQUARTERS: Have Global Chief Information Officer Dr. Chen,Transnational IT Issues and IT Business TM -23

  24. STRATEGY: DIVIDE, CONQUER, APPEASE • DEFINE CORE BUSINESS PROCESSES • IDENTIFY CORE SYSTEMS TO COORDINATE CENTRALLY • CHOOSE AN APPROACH: Incremental, Grand Design, Evolutionary • MAKE BENEFITS CLEAR Dr. Chen,Transnational IT Issues and IT Business TM -24

  25. MAIN TECHNICAL ISSUES • HARDWARE & SOFTWARE INTEGRATION • CONNECTIVITY • SOFTWARE: Languagescan be a Barrier Dr. Chen,Transnational IT Issues and IT Business TM -25

  26. Technology Appraisal Program • Technology appraisal program: as an audit function • first visit: appraise existing services and raise general concerns that local management could effectively pursue • second visit: assess problems of: 1. Government restrictions 2. Quality and quantity of available human skills 3. Present and planned communication services • at least three alternatives should be prepared • Expansion of present system • Transfer of all or portion of IT work to a neighboring country • Transfer of all or portion of IT work to a regional headquarters. Dr. Chen,Transnational IT Issues and IT Business TM -26

  27. Summary • Coordinating international IT is extraordinary complex. Corporate IT management may have maximum responsibility for, but only limited authority over, distant staff and technologies. • Demand leadership on: • persuasion and cajoling • being will informed on new technologies • the corporate culture, and • the wide diversity of cultures existing in the world Dr. Chen,Transnational IT Issues and IT Business TM -27 N

  28. Chapter 13 The IT Business Is IT business in the electronic-based computer, telecommunications, and desk support business?

  29. Manageable Trends(Six Major Themes) • Strategic Impact of IT • Integrating Changing Technology Platforms • Assimilating Emerging Technologies • Sourcing Policies for the IT Value Chain • Applications Development Process • Partnership of Three Constituencies TM -29 TM -29 Dr. Chen, The Trends of the Information Systems Technology N

  30. The IT Business Analogy “Information Technology ... is in the business of bringing a sustained stream of innovation in information technology to companies’ operations and, in many cases, products.” • IT strategy formulation = Marketing mix • IT steering committee = Board of directors • IT director = Chief executive officer TM -30 Dr. Chen,Transnational IT Issues and IT Business N

  31. Changes in IT Product Line Dr. Chen,Transnational IT Issues and IT Business TM -31 N

  32. Changes in IT Consumer Profile Dr. Chen,Transnational IT Issues and IT Business TM -32 N

  33. Changes in Consumer Costs Dr. Chen,Transnational IT Issues and IT Business TM -33 N

  34. Changes in the IT Channels of Distribution Dr. Chen,Transnational IT Issues and IT Business TM -34 N

  35. Competitive Challenges 1. Consumers ignoring IT’s manufacturing and distributing capacity 2. Consumers failing to recognize that they have problems or opportunities that can be addressed by IT To deal with 1., be prepared to limit manufacturing role and place resources with the consumer To deal with 2., educate consumers as to benefits/costs of IT solutions, especially new technologies N Dr. Chen,Transnational IT Issues and IT Business TM -35

  36. Promotion • “Phase-2 learning by consumers is at the core of a successful IT business.” • Key promotional activities: • price discounts — introductory offers • branch offices — decentralized analysts • central IT sales force and coordination • Be prepared to deal with direct marketing to consumers • Consider change to market structure from product structure N Dr. Chen,Transnational IT Issues and IT Business TM -36

  37. Price I • Market inefficiencies affect evaluation of external vendor’s prices • difficulty of assessing quality of product • differences in vendor’s strategic position • by-product vs. main product pricing • excess capacity and loss-leader pricing • Introductory offers N Dr. Chen,Transnational IT Issues and IT Buiness TM -37

  38. Price II • Monopoly position of the central IT unit • most evident in confidential data management, centralized databases • Unbundling • separate pricing for development, maintenance, operations, and special turnaround • state prices in consumer units • Profit N Dr. Chen,Transnational IT Issues and IT Business TM -38

  39. Board of Directors A Business Products/Services Customers Suppliers Competitors CAIT: Figure 9-6 Dr. Chen,Transnational IT Issues and IT Business TM -39

  40. Board of Directors Information Systems Organization Customers Suppliers Competitors CAIT: Figure 9-7 Dr. Chen,Transnational IT Issues and IT Business TM -40

  41. Needs and Priorities Steering Committee Opportunities Direction Wants & Needs Justification Real Dollars? IT Needs, Real Dollars Information Systems Organization Users Suppliers Products, People Products & Services Constraints Costs Pressures on IT Products and/ Services Real Dollars Competitors CAIT: Figure 9-8 Dr. Chen,Transnational IT Issues and IT Business TM -41

  42. Role of the Board of Directors(The IT Steering Committee) • Appoint and assess the performance of IT CEO • Assure that appropriate standards are in place and being adhered to • Ensure that (IT) board is structured appropriately • level of members appropriate to strategic importance of IT • representative of diverse user needs • appropriate technical persons • Provide broad guidance for IT to ensure it supports corporate strategy • presentations by IT about its markets, products, and plans • summary documentation of overall IT direction • briefings by (non-IT) board members on IT support • internal and external review of IT Dr. Chen,Transnational IT Issues and IT Business TM -42 N

  43. Role of the IT Chief Executive Officer • Maintain personal relationships with board members and customers • Ensure that new technologies are evaluated early • Pay close attention to human resource management issues for IT staff • High priority to manufacturing security • Balance among marketing, manufacturing, and control • Develop IT esprit de corps Dr. Chen,Transnational IT Issues and IT Business TM -43 N

  44. Making It Happen! Business Leadership Technology Leadership Competitive Vision Tactics Strategy Crisis Management Process Improvement Action Initiators Executive Power CAIT: Figure 9-5 Dr. Chen,Transnational IT Issues and IT Business TM -44

  45. IT Change Change Change Issues between IT Organization and its Customers IT Organization Customers IT is not in the electronic-based computer, telecommunications, and desk support business. Rather, it is in the business of bringing a sustained relevant stream of innovation in IT to companies’ operations and, in many cases, products and services. Dr. Chen,Transnational IT Issues and IT Business TM -45 N

  46. Ten Commandments for Digital Products Companies • 1. Create early visibility and market presence • 2. Invest in building trust • 3. Don’t make it difficult for buyers to assess you and your products • 4. Provide signals about product quality • 5. Make it easy for buyers to express their needs. Dr. Chen,Transnational IT Issues and IT Business TM -46 N

  47. Ten Commandments for Digital Products Companies • 6. Don’t forget product quality • 7. Customize content and presentation • 8. Be nimble, be quick with customer care • 9. Don’t treat customers with a one-size-fits-all strategy • 10. Offer bundled products in a world of synergy - TEXAS, The Business School Magazine, Spring 1999 (pp. 10) Dr. Chen,Transnational IT Issues and IT Business TM -47 N

  48. How To Be Successful? • “… Other entrepreneurs have told us that LUCK, LUCK, LUCK, and HARD (SMART) work are the four things it takes to be successful.” • You definitely need a lot of luck, but you also need to be smart enough to take advantage of the apparently lucky situations that arise.” • TEXAS, The Business School Magazine, Spring 1999 (pp.18) Dr. Chen,Transnational IT Issues and IT Business TM -48

  49. Figure 03.08 Dr. Chen,Transnational IT Issues and IT Business TM -49

  50. Alignment of Global Vision with IT using Global Drivers N Dr. Chen,Transnational IT Issues and IT Business TM -50

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