Globalization Concept - University of Manitoba

MIS 2000

Globalization and Information Systems Updated Nov. 2012

Outline • Globalization (concept, pros & cons)

• Trans-National Corporation (TNC) • Role of information systems and computer networks in TNC • Summary

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NOTE: This topic relates to previous topics, such as supply chain, e-commerce, and all IS types studied.

Dr. Bob Travica

Globalization and IS

Globalization Concept •

Globalization is the process of reducing economic and other boundaries between countries.*

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Examples of economic boundaries – closing of markets (consumer, supply) by legislation, high import taxes, or complicated import procedures. – making it impossible or hard for foreign enterprises to run production or sales operations in a given country – preventing entry to foreign labor.

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Globalization started with economic changes in China and political/economic changes in Europe, but attempts at global business go back in the far past.**

Dr. Bob Travica

Globalization and IS

Globalization Pros & Cons • Pros/Cons depend on the standpoint. • Economies in transition (China, India, East Europe) have experience growth (especially China) – more jobs, purchasing power increase, more tax money. But local business faces tough competition, and there is a sharper differentiation between haves and have-nots. • Parts of the world not included in globalization (Africa). • 50% of world lives on less than $2/day. • Developed economies: Corporations benefit from offshore operations. But labor faces a job loss and reduced wages (absolutely, or pressure to do more work for the same wage); the middle class shrinks. More…

Dr. Bob Travica

Globalization and IS

Globalization Pros & Cons – Digital Divide • Sources of informing and learning are globally accessible via Internet. But there is still a large gap between more and less developed countries in terms of the development level of information technologies and systems. This gap is called digital divide.

http://globaladvances.com/blog/wp-content/uploads/2009/02/africa2008top.jpg

Dr. Bob Travica

Globalization and IS

IS and Computer Networks in Globalization Production (China)

Production (US)

Suppliers (Ch, Can, Bra)*

Sales (Eur, Aus, NAm, LAm)

• All these operations belong to one firm. • IS and computer networks are necessary for doing business globally – the key enablers of global production, supply and sales processes.

• The key enabler of this highly dispersed organization is IS and computer networks (private, Internet). Dr. Bob Travica

Globalization and IS

Transnational Corporation (TNC) •

Definition: TNC is a company that performs the sourcing, production, and sales processes globally.

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The global capabilities of TNC rest on intensive use of advanced information systems and computer networks.*

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TNC is a key maker of globalization.

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TNC is the key player in global economy (presence, revenues, impact).

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TNC operates in various industries (manufacturing, finance, drugs, consulting, software, news media, manufacturing)*

More… Dr. Bob Travica

Globalization and IS

Special capabilities characterize TNC: • Global Efficiency: TNC treats world as a single market, works everywhere with the same efficiency. • Local Responsiveness: TNC is responsive to local markets needs, although its planning and production is at many locations. • Superior Knowledge: TNC combines centralized and decentralized development of knowledge, shares it across locations, and adapts it to local needs. Of raw materials, product parts, labour, capital To other firms

Global Sourcing

To consumers IS & Computer Networks

Dr. Bob Travica

Globalization and IS

Where row materials, labour is cheaper, taxes lower

Living in TNC-driven Economy • To survive and prosper in the global economy, a company needs to be able to do business or compete with TNC. This provides access to global markets. • To engage with a TNC, a firm must have a proper technological capability (various modern information systems and computer networking capability).

Dr. Bob Travica

Globalization and IS

Summary •

Globalization is the process of reducing economic and other barriers between nation-states.

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Globalization has been uneven, bringing differing benefits and costs to different players. Digital divide still is significant.

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TNC is a company that performs the sourcing, production, and sales processes globally. It depends crucially on advanced IS and computer nets.

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TNC is a key globalization maker and player with superior capabilities of global efficiency, local market responsiveness, and knowledge development and sharing.

Dr. Bob Travica

Globalization and IS