MIPP#8

MBA 5401, Management Information Systems 1

Course Learning Outcomes for Unit VIII Upon completion of this unit, students should be able to:

1. Analyze the use of information systems in business.

2. Examine emerging trends in information technology for organizations.

3. Explain how information technology systems influence organizational strategies.

4. Evaluate the prevailing ethical issues of information systems.

5. Critique core information systems applications from a business perspective.

6. Assess the procedures for securing information systems.

7. Discuss an information technology infrastructure.

Course/Unit Learning Outcomes

Learning Activity

1 Unit Lesson Chapter 15, pp. 564–587, 591–593 Unit VIII PowerPoint Presentation

2 Unit VIII PowerPoint Presentation

3 Unit VIII PowerPoint Presentation

4 Unit VIII PowerPoint Presentation

5 Unit Lesson Chapter 15, pp. 564–587, 591–593 Unit VIII PowerPoint Presentation

6 Unit VIII PowerPoint Presentation

7 Unit VIII PowerPoint Presentation

Required Unit Resources Chapter 15: Managing Global Systems, pp. 564–587, 591–593

Unit Lesson Information Technology (IT) Complexity of IT: Take a look at technology in its simplest form. Does it seem daunting or complex? For example, a simple website asks you to input information (e.g., your name, address, phone number). That information is stored in a record database somewhere. This seems simple, right? What if you consider the information stored by Amazon.com or some other major organization; what happens to your data is much more complex.

UNIT VIII STUDY GUIDE

Managing Global Systems

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A large retailer will store the input in multiple databases as operational information. That information is likely processed in different ways and turned into an output, and then the information is scrubbed. It may be stored in data warehouses for data mining purposes. Marketing decisions are made based on your sales information. Information systems provide the information that businesses need in order to be strategic in their practices. Managers need that information to be strategic with regard to decision-making. Information systems help operations to be more efficient, and they help all facets of business to be better, faster, and more effective. Years ago, computer systems were much more simplistic as well. Most organizations had large mainframe computers. Transactions were processed in batches at night. Today, there is a demand for instant, real-time information. In the past, systems did not talk to each other. You might have to go to three or four different systems to look up customer information. Today, there is a demand for integration across all systems. In the past, applications were platform specific (e.g., Unix, Windows). Now, there is a demand for applications that run on any platform. In the past, the best tool for making decisions might be an Excel spreadsheet. Now, there are expert systems that emulate the decision-making ability of humans. Globalization We are hearing this term more and more each day. Globalization can be described as the operation and production of goods and services on a global scale. Many companies will compete globally using global information systems (GIS). These systems allow organizations to compete in global markets. The opening case in Chapter 15 of the textbook, ”New Systems Help Eli Lilly Standardize as a Global Company,” illustrates how a global company can have the same information system requirements as a local or domestic company but on a larger and more complex scale. In this example, the company had dozens of subsidiaries, each with its own business processes and reports. Can you imagine the chaos and confusion at corporate headquarters as they try to make sense of all the data? Imagine all of the data redundancies and inefficiencies when the subsidiaries execute monthly financial data from all of the different systems and data standards. In short, the company needed to retire all legacy systems and use a common IT platform such as a single enterprise resource planning (ERP) system. In 2010, the company did just that—they started implementing a single global instance of Systems, Applications, and Products (SAP) to all of their subsidiaries. Today, the company runs on SAP ERP and at least a dozen other SAP software solutions, including systems for governance, risk management, and compliance (GRC). Of significance was the implementation of the SAP GRC process controls so that the company could better manage key compliance activities across all business processes, such as compliance with Sarbanes-Oxley (SOX), segregation of duties (SoD) and operational controls for managing the business. The SAP GRC process control serves as a central repository to store data from a global control matrix for Lilly’s entire enterprise and improves management of those controls with automated monitoring. Because Lilly standardized and streamlined the execution of its processes and business rules throughout the organization, Lilly has become even more efficient and effective as a global company. Organizational challenges of globalization: There are several factors to take into account when operating globally. Organizations must take into consideration a country’s culture, social expectations, and political laws. These factors often are not part of our domestic policies, but they will add layers to the organization’s processes, information system requirements, and management strategies.

Business person making global decision on business strategy (Stnazkul, n.d.)

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For example, a trading company sent out informational brochures to its global investors that included the state of the company; production statistics; and a strengths, weaknesses, opportunities, and threats (SWOT) analysis. In the SWOT analysis, the company used a red flag to indicate a problematic area. In the United States, a red flag symbolizes “danger” or a ”‘warning.” However, in other countries, the red flag symbolizes political socialism. You can imagine the trading company’s surprise when they were bombarded with e-mails asking why a socialist revolution (the red flag) was a threat to the company. Using the example above, we can see why there may be challenges conducting business with global companies because of language and cultural differences. Internationalization of business: Many companies do not construct all of their products in the United States. Apple’s iPhone is an excellent example of how the company relies on suppliers in other countries to manufacture parts for their phones. For example, some components are made in China, Malaysia, and Japan, and the assembly of the phones take place in Taiwan. This is only possible because of the advanced networks and information systems that Apple uses. A company’s headquarters is not always located in the United States either; they can be in other countries, such as Germany and Japan, and have local or regional operations in the United States. There are four types of business strategies and structures that global organizations can use. They are domestic exporter, multinational, franchiser, and transnational. Domestic exporter: This is a company that conducts most, if not all, corporate activities in the home country of origin. Caterpillar is an example of a domestic exporter of construction and mining equipment as well as heavy duty diesel and gas engines. Multinational: This type of organization centralizes its financial management and control from within a central location such as the corporate headquarters. Product marketing, production, and sales are decentralized to suit local market environments. Intel is an example of a multinational organization because it is headquartered in California but also operates out of other countries such as Israel and the Ukraine. Franchiser: This structure relies on local manufacturing and finance, but foreign resources are used to complete production and marketing. Examples of this structure are companies that manufacture perishable products. McDonald’s is an example of a franchiser because it operates restaurant franchises throughout the United States and around the world. Transnational: This type of organization is truly transnational because it does not have a centralized location but, instead, operates using regional headquarters or a global headquarters. Activities are managed from a global perspective and without the confines of national borders. An example of a transnational company is Sony (Japanese) because it produces its products in other countries to save on manufacturing costs. Difficulties of Internationalization: In “E-Commerce in China: Opportunities and Obstacles,” a case study from Chapter 15 of the textbook, a good example is provided regarding how China became one of the largest markets in e-commerce. E-commerce is strictly regulated in China by the Great Firewall of China. The Great Firewall of China is a set of rules, regulations, and technologies that regulate the Internet in China, according to Laudon and Laudon (2020). Chinese consumers have limited or no access to many foreign resources such as Google, Facebook, Snapchat, and some news sources (e.g., New York Times). By restricting access to foreign products, the Great Firewall of China forces the Chinese people to purchase products produced in China, reducing the demand for foreign products. As a result, China is home to several Internet giants such as Tencent, one of the world’s largest Internet and technology companies and the most valuable gaming and social media company, according to Laudon and Laudon (2020). From a cultural perspective, China is home to a large population of online shoppers who tend to be young, urban, and highly educated. This young generation of online shoppers are huge consumers of apparel, food and beverages, household goods, electronics, and healthcare products. There are a few select online social platforms that Chinese consumers can use to discover and evaluate products. But, because of the Great Firewall, only Chinese retailers are benefiting from engaging with consumers on these social platforms. This means it is extremely difficult for foreign companies to break through and reach the Chinese population with

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their products. To make matters even more difficult, in 2017, China passed a cybersecurity law, requiring foreign companies to undergo a security check and to store key data in China. Foreign companies that can conduct business with China must deal with the costs of doing business there. The main issue is the lack of high-quality logistic providers, resulting in the damage or loss of merchandise, slow or missing deliveries, and problems with other essential logistical services. These logistical issues can significantly increase e- commerce operating costs and consequently decrease profit margins.

Summary Operating a global company is very much like operating a domestic company; both have the same information system requirements but on a larger and more complex scale. The example of Eli Lilly illustrated how a company with several subsidiaries could overcome business process issues by implementing a single enterprise-wide ERP system. By using a single global instance of SAP at all of its locations, the company became more efficient and effective as a global company. Global corporations often face challenges and problems when designing, building, and managing their technology infrastructure. Operating globally means removing a hodgepodge of hardware and software and arriving at a solution that streamlines the company’s processes to make them more effective and proficient. There are other challenges to operating globally such as cultural and political differences between countries. For example, when a company develops a user interface for an application, which language should be used? Will some colors, graphics, or designs be construed as problematic or perceived differently from what was intended?

References Laudon, K. C., & Laudon, J. L. (2020). Management information systems: Managing the digital firm (16th ed.).

Pearson. Stnazkul. (n.d.). ID 46229114 [Graphic]. Dreamstime. https://www.dreamstime.com/stock-photo-

businessman-making-decision-business-strategy-globalization-concept-image46229114 Tanaonte. (n.d.). ID 115966076 [Graphic]. Dreamstime. https://www.dreamstime.com/padlock-china-flag-

smartphone-china-map-great-firewall-china-concept-padlock-china-flag-smartphone-china-map- image115966076

Suggested Unit Resources In order to access the following resources, click the links below. To reinforce the concepts from this unit, view the Chapter 15 Presentation (PDF for Chapter 15 Presentation). Your textbook has video cases that correlate with the information being presented in the assigned chapter readings. You are encouraged to review the video cases relating to Chapter 15 below.

Great Firewall of China Concept (Tanaonte, n.d.)

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Global Shop Solutions. (2012, February 7). Lean manufacturing & ERP Success Story: Humanetics and Global Shop Solutions [Video]. YouTube. https://www.youtube.com/watch?v=bOy1Q7s9lls&list=UUDhHbvXXqJLC2R- hcbfxurg&index=6&feature=plcp

Transcript Lean Manufacturing and Global ERP: Humanetics and Global Shop video Oracle Video. (2008, April 3). Daum runs Oracle Apps on Linux [Video]. YouTube.

https://www.youtube.com/watch?v=ayZ3OLmjAp0 Transcript Daum Runs Oracle Apps on Linux video