FREE online courses on Information Technology - Chapter 5 MANAGING INFORMATION TECHNOLOGY - Key Issues in an International Environment

 

Information Needs: An International corporation needs information to coordinate and control its diverse businesses. Reporting and early-warning systems are very important in this environment. Systems that summarize sales data and process accounting information are necessary, but they only reflect what has happened in the past. These systems represent traditional uses of IT for reporting and control.

 

Technology offers the international firm many more active tools to help manage the business. Coordination is a major problem for the global firm. IT provides a number of approaches to improving communications and coordination, for example, e-mail and fax. The emergence of groupware products is very important to international business. These systems let workers in different locations create a shared, electronic environment.

 

Implementing International IT: The ultimate objective for the global firm is to process data any place in the world without having to worry about the type of platform used for processing. What kinds of problems do you encounter trying to achieve this objective in an international environment.

The following section outlines some of the typical problems faced by manager of a global organization.

 

The first problem is managing local development when the foreign unit does not coordinate with headquarters. The foreign subsidiary may be duplicating development efforts under way in other parts of the world. It also may not have a talented staff, and may end up with poorly conceived and designed systems. The question of headquarters-subsidiary coordination and management is a central one in pursuing an international corporate strategy.

 

The counter argument from the local company is that it knows the needs in its location. A distant headquarters unit cannot set specifications for foreign countries. This contention leads to the second development issue. How does the firm develop a set of common systems shared across different countries to take advantage of economies of scale? Headquarters does not want each country to develop its own accounting and sales reporting system. Different countries have different laws and regulations, so it may be impossible to share programs among foreign locations without making special modifications for unique requirement in each country.

 

The third development problem is that when designing applications, there are real and perceived unique features in each country. Designers, especially those representing headquarters, must recognize what features are required for a system to work in a country and what features are there as an exercise in local independence. For example, Straub (1994) studied the use of e-mail and fax in Japan and the U.S. He found that cultural differences predisposed managers in each country to a choice of communications vehicles. Straub suggests that high uncertainty avoidance in Japan and structural features of the Japanese language explain why Japanese managers have a lower opinion of the social presence and information richness of e-mail and fax, though American and Japanese managers rated traditional communications media like the telephone and face-to-face communications about the same.

 

Managers must also be aware that more and more firms want to build a worldwide communications network to take advantage of communications and coordination tools to move data freely around the world. This effort can be a major challenge because of different technical standards and regulations. Certain countries regulate the kind of telecommunications equipment that can be used on their network. In a number of foreign countries PTT (Postal, telegraph, and telephone) monopolies regulate communications and may restrict the ability to transmit data. Some underdeveloped countries may not have adequate communications capabilities to support private networks. Countries also may prohibit importing certain kinds of computer equipment in order to protect domestic competitors. Different kinds of communications network and standards can greatly increase the difficulty and cost of building worldwide communications capabilities.

 

A number of government requirements may impede the development of global information systems:

 

1.      A requirement to purchase specific equipment in the foreign country that may not be compatible with the equipment other places the global firm operates.

2.      A requirement to do certain kinds of processing in the host country before data can be sent electronically to another country.

3.      Restrictions on the use of satellites and special requirements for building private networks.

4.      Limited access to flat-rate leased lines or a requirement that all transmission be made on variable cost lines.

 

A fifth major issue arising from international IS effort is transborder data flows. Moving data across a boundary may be curtailed by government regulation, ostensibly to protect its citizens and their privacy. Another impact of regulation is to reduce the economic power of foreign companies or limit the imposition of foreign culture on the host country. Many of the transborder regulations seem to be motivated by a desire to protect local industry. Countries may have a legitimate concern about the privacy rights of their citizens. This reason is probably cited most often for instituting data controls. To implement control, a country can establish regulations through its telecommunications ministry, levy tariffs, and/or require formal approval of plans to process data in the country.

 

Examples of barriers to data flows include:

 

¨       Restrictive regulations that require processing of data originating in a country in that country only, making it difficult to transmit and share data.

¨       Exorbitant pricing of communications services by government owned post, telephone and telegraph (PTT) ministries. However, a wave of “privatization” is sweeping countries and many PTTs are becoming private or quasi-private companies.

¨       Security. Attacks on computers by various hackers throughout the world have pointed out how difficult it is to secure networked computers.

 

As with any international venture, language and cultural differences can also present a challenge to developing IT on a global scale. Time differences can make communication difficult for different parts of the world, though fax and e-mail have eased this problem considerably. Some firms stress joint development teams will representatives from different countries to avoid problems stemming from developing a system in any one country or language. Foreign subsidiaries may be more willing to adopt an international system developed by a cross-cultural team.