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Chapter 9
Global Information Systems
Learning Objectives
• Discuss the reasons for globalization and for using global information systems, including
e-business and Internet growth.
• Describe global information systems and their requirements and components.
• Explain the types of organizational structures used with global information systems.
• Discuss obstacles to using global information systems.
Detailed Chapter Outline
I. Why Go Global?
The global economy is creating customers who demand integrated worldwide services, and the
expansion of global markets is a major factor in developing global information systems to handle
these integrated services. The growing trend toward global customers and products means
globalization has also become an important factor in purchasing and the supply chain.
Worldwide purchasing gives suppliers the incentive to consider foreign competition as well as
domestic competition. Furthermore, large global organizations can reduce costs in purchasing,
manufacturing, and distribution because they have access to cheaper labor and can sell products
and services locally as well as internationally.
A. E-Business: A Driving Force
E-business is a major factor in the widespread use of global information systems. E-business
includes transactions that support revenue generation as well as those that focus on buying
and selling goods and services. These revenue-generating transactions include generating
demand for goods and services, offering sales support and customer service, and facilitating
communication between business partners.
E-business builds on the advantages and structures of traditional business by adding the
flexibility that networks offer. By generating and delivering timely and relevant information
supported by networks, e-business creates new opportunities for conducting commercial
activities.
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As e-business matures and more companies conduct business online, consumers can engage in
comparison shopping more easily, for example. Small companies have discovered they can
not only conduct business online just as large companies do, but they can lower costs by using
the Internet to replace internal networks.
B. Growth of the Internet
Today, the Internet is a part of daily life in most parts of the world. According to the
Miniwatts Marketing Group, which tracked the worldwide growth of the Internet from 2001
to 2014, the highest growth has occurred in Africa, the lowest in North America.
With the explosive growth of the Internet and e-commerce, businesses that are active in the
global market should make their Web sites more appealing to global customers. Some
companies create separate Web sites for each country in which they do business. This is
called “localization of a Web site.”
II. Global Information Systems: An Overview
A global information system (GIS) is an information system that works across national borders,
facilitates communication between headquarters and subsidiaries in other countries, and
incorporates all the technologies and applications found in a typical information system to
gather, store, manipulate, and transmit data across cultural and geographic boundaries.
With a GIS in place, an international company can increase its control over its subsidiaries and
better coordinate their activities, thereby gaining access to new global markets. Strategic
planning is also a core function of a GIS. By being able to efficiently share information among
subsidiaries, international companies can track performance, production schedules, shipping
alternatives, and accounting items.
A GIS can be defined along two dimensions: control and coordination. Control consists of using
managerial power to ensure adherence to the organization’s goals. Coordination is the process of
managing the interaction among activities in different, specialized parts of an organization.
Control requires a centralized architecture for data, standardized definitions used across the
organization, standard formats for reports, defined behaviors for different processes (such as how
to respond when a customer has a complaint), and performance-tracking systems. Global
organizations may use a combination of high control and high coordination, high control and low
coordination, low control and high coordination, or low control and low coordination.
High coordination has the following advantages:
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• Flexibility in responding to competitors in different countries and markets.
• Ability to respond in one country to a change in another country
• Ability to maintain control of market needs around the world
• Ability to share and transfer knowledge between departments and international branches
• Increased efficiency and effectiveness in meeting customers’ needs
• Reduced operational costs
A. Components of a Global Information System
Although a GIS can vary quite a bit depending on a company’s size and business needs, most
GISs have two basic components:
• A global database
• Information-sharing technologies
Global Database
Designing and implementing a global database is a technical challenge, mainly because of
the different character sets required for the names of people and places and the different
formats required for phone numbers and postal codes.
