Management Information Systems, Sixth EditionChapter 9: Challenges of Global Information SystemsManagement Information Systems, Sixth Edition2ObjectivesExplain why multinational corporations must use global information systemsProvide elementary advice for designing Web sites for an international audienceCite the cultural, legal, and other challenges to implementing international information systemsManagement Information Systems, Sixth Edition3Multinational OrganizationsAn increasing number of corporations are becoming multinationalGlobal information system: a system that serves organizations in multiple countriesUsed by multinational corporationsOverseas operations must abide by local laws, yet be sensitive to local cultures and standardsManagement Information Systems, Sixth Edition4The Web and International CommerceThe Web has become an important vehicle for B2B and B2C commerceThe ratio of non-English speakers to English speakers on the Web is growingInternet opens enormous global opportunitiesChinese market is expected to be the largest in the futureThe Web offers opportunities to increase revenue and to save on costsManagement Information Systems, Sixth Edition5Management Information Systems, Sixth Edition6The Web and International Commerce (continued)Online manuals with animation replace paper documentsWeb sites and documentation are presented in many languagesGlobal businesses must be sensitive to local audiencesGlobalization: designing global sites to cater to local needs and preferencesExample: McDonalds menu changes to appeal to local palatesManagement Information Systems, Sixth Edition7Management Information Systems, Sixth Edition8Management Information Systems, Sixth Edition9Think Globally, Act LocallyInternational companies must “think globally, act locally”Acting locally means being sensitive to regional customs and language nuancesControl must be decentralizedStrategic planning should be global, but can be followed with a local flavorManagement Information Systems, Sixth Edition10Think Globally, Act Locally (continued)Management Information Systems, Sixth Edition11Challenges of Global Information SystemsGlobal information systems face challenges such as:Technological barriersRegulations and tariffsElectronic payment mechanismsDifferent languages and culturesEconomic and political considerationsDifferent measurement and notation standardsLegal barriersDifferent time zonesManagement Information Systems, Sixth Edition12Technological ChallengesNot all countries have adequate information technology infrastructure to allow companies to build an international ISBroadband communication lines are needed to support todays graphics-rich Web pagesCompanies can offer two versions of their Web sites to compensate for slower bandwidthManagement Information Systems, Sixth Edition13Technological Challenges (continued)Language is another technological challengeEight-bit byte code is not sufficient for languages with large character setsUnicode allows for 65,536 charactersMust coordinate with databases and applicationsTelephone number and postal code formats are different in different countriesManagement Information Systems, Sixth Edition14Regulations and TariffsCountries have different import regulations and tariffsExecutives may be reluctant because of hassles of learning the laws, taxes, tariffs, and regulations of other countriesCompanies must comply with the laws of destination countriesNextLinx help importers and exporters for Web commerce by providing tariffs, customs delay information, license requirements, etc.Management Information Systems, Sixth Edition15Differences in Payment MechanismsE-commerce allows easy payment for online purchasesCredit cards are the preferred payment method in North AmericaNot all countries have adopted this preferenceHigh level of stolen credit cards in Eastern EuropeEuropeans prefer debit cardsMost Japanese reluctant to use credit cards Management Information Systems, Sixth Edition16Language DifferencesInternational parties must agree on a common language for communicationData might not be transmittable internationally in real time because it must first be translatedEnglish is considered the de facto international languageLarge companies translate their Web sites into local languagesManagement Information Systems, Sixth Edition17Cultural DifferencesPeople from different countries vary in their:TastesGesturesPreferred colorsTreatment of people of certain gender or ageAttitudes about workOpinions about ethical issuesManagement Information Systems, Sixth Edition18Cultural Differences (continued)Conservative groups in other countries may dislike the “Americanization” of their culturesWeb designers must be sensitive to cultural differencesManagement Information Systems, Sixth Edition19Management Information Systems, Sixth Edition20Conflicting Economic, Scientific, and Security InterestsGoal of corporate management is to seize a large market share and maximize organization profitsGoal of a national government is to protect its economic, scientific, and security interestsScientific information is an important national resource as well as a great source of income for foreign corporationsOccasionally interests conflictManagement Information Systems, Sixth Edition21Conflicting Economic, Scientific, and Security Interests (continued)Weapons manufacturers have technical drawings that are valuable to both the company and the security of countryGovernments may not allow the exchange of weapon designsPGP encryption application was opposed by the U.S. governmentThought to compromise national securityUsed by the 9/11 terrorists to encrypt their communicationManagement Information Systems, Sixth Edition22Conflicting Economic, Scientific, and Security Interests (continued)Countries treat trade secrets, patents, and copyrights differentlyMay hinder the transfer of documents to certain divisions of a multinational corporationIntellectual property is tightly protected in the U.S. and Western Europe, but less so in other countriesManagement Information Systems, Sixth Edition23Management Information Systems, Sixth Edition24Political ChallengesInformation is powerSome countries oppose the policy of free access to information as a threat to their sovereigntyThey believe it might give other nations an opportunity to control indigenous resourcesGovernments may require that only open source software is used in government operationsGlobal corporations must ensure compatibility with software adopted by local governmentsPolitical Challenges (continued)Some governments limit how the Internet is usedFree speech is not a universal principleWeb content restrictions are common in many countriesGlobal companies must obey local lawsMay require collaboration with the government, resulting in arrest and prosecution of local usersEthical dilemma: how to balance the business interest with moral principles, and not help dictatorships violate civil rightsManagement Information Systems, Sixth Edition25Management Information Systems, Sixth Edition26Different StandardsDifferences in standards must be considered when integrating ISs internationallyRecords may be incompatibleUnited States uses the English system of weights and measures; the rest of the world uses the metric systemNASA lost a $125 million Mars orbiter mission due to an error in a data transfer, caused by a mismatch between U.S. and metric measurementsManagement Information Systems, Sixth Edition27Different Standards (continued)Different standards also exist for:DatesTimesTemperaturesAddressesUnited States uses month/day/year format; the rest of the world uses day/month/yearManagement Information Systems, Sixth Edition28Management Information Systems, Sixth Edition29Different Standards (continued)Companies must adapt their ISs to changing formal or de facto standardsEuropean Article Number (EAN): bar code that includes an extra number to identify countryUniversal Product Code (UPC): American standard without the last extra numberAmerican Uniform Code Council (UCC): promoted the use of European standardU.S. companies had to adapt ISs to recognize, record, and process the new bar code standardManagement Information Systems, Sixth Edition30Different 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 valuesThe major push to use RFID tags in the U.S. could expand to the rest of the worldManagement Information Systems, Sixth Edition31Legal BarriersCountries have different laws that affect global business in general and e-commerce in particularDiffering laws pose challenges to:International transfer of dataFree speechLocation of legal proceedings when disputes ariseManagement Information Systems, Sixth Edition32Legal Barriers (continued)Privacy lawsRespect for privacy in international business is an unresolved challengeThe majority of democratic nations try to protect individual privacyLaws reflect a difference in approach to issue of privacyManagement Information Systems, Sixth Edition33Legal Barriers (continued)European Union practices may conflict with U.S. practicesPersonal data may be collected only for specified purposesPersonal data cannot be processed without the unambiguous consent of the subjectCollecting organizations must identify themselvesSubjects have the right to know to whom their data is disclosedSubjects have the right to object to processing of their personal dataManagement Information Systems, Sixth Edition34Legal Barriers (continued)American companies are busy collecting, buying, and selling data for marketing and decision makingThis discrepancy between the European and American approaches prevents unrestricted flow of informationEU directive is only a framework; EU countries may have more restrictive lawsSafe Harbor: arrangement for U.S. companies that have agreed to comply with the EU directiveManagement Information Systems, Sixth Edition35Legal Barriers (continued)Privacy laws regarding employees are also different in the U.S. and EUOther applicable laws affecting online business include those that address:Free speech What can or cannot be displayed onlineGamblingAuctioningSale of alcoholic beverages and drugsManagement Information Systems, Sixth Edition36Different Time ZonesDifferent global regions require policies for work and information systemsTeleconferencing systems must be available most of the day, sometimes 24 hours per dayAllows employees from different time zones to discuss problems that need immediate resolutionTeams in support centers may work shifts to accommodate clients worldwideManagement Information Systems, Sixth Edition37Management Information Systems, Sixth Edition38Different Time Zones (continued)Managers must be aware of incorrect time stamping in different localesSystems 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 Edition39SummaryCompanies using the Web for business must accommodate non-English speaking audiencesCompanies must tailor to local preferencesThey must be aware of cultural differences and payment preferencesThey must be aware of tariff and legal issuesLinguistic, cultural, economic, and political challenges must be addressedManagement Information Systems, Sixth Edition40Summary (continued)Laws governing the collection and manipulation of personal data in the U.S. and European Union are differentThe U.S. and EU have incompatible data privacy laws, which restrict the flow of personal data between the U.S. and EUSafe Harbor arrangement enables EU companies to do business with U.S. companiesManagement Information Systems, Sixth Edition41Summary (continued)The old legal approach of territorial jurisdiction is inadequate for business conducted on the WebFree speech and consumer litigation of e-tailers have brought to light the need for international legal reform for cyberspace