Sharlyn May Nas

MULTINATIONAL CORPORATION (MNC) A firm that operates across products, markets, nations, and cultures. It consists of the parent company and a group of subsidiaries. The subsidiaries are geographically dispersed, and each one may have its own unique goals, policies, and procedures. The Special Needs for Information Processing in an MNC The MNC is an open system but one that seeks to minimize the uncertainty that its environment imposes. Since uncertainty involves information, the MNC executives easily see that they can cope with environmental influences by making good use of information technology. Uncertainty- the difference between the amounts of information required to perform the task and the amount of information already possessed by the organization. Types of MNC Organizational Structure According to William Egelhoff of Fordham University, MNC’s can organize along the lines of worldwide functional divisions, international divisions, geographic regions, or worldwide product divisions. Worldwide Functional Divisions- subsidiaries are organized along functional lines—manufacturing, marketing, and finance. These funtional areas in the subsidiaries report directly to their functional counterparts in the parent company. All strategic planning are done in the top executive level in the parent company. International Divisions- all foreign subsidiaries report to an international division of the MNC that is separate from the domestic division. MNC is really to separate organizations—one that support domestic and one that support subsidiaries. Geographic Regions- MNC divides its operation into regions, and each reagion is responsible for the subsidiaries that are located within its border. Worldwide Product Divisions- the firm is organized along the lines of product divisions, and the division are each responsible or their own operations on a worldwide basis. Advantage: MNC easily recognizes different product needs of the subsidiaries and tailor the product accordingly. The Special Need for Coordination in an MNC Coordination has become a key to achieving competitive advantage in a global marketplace. Companies that are unable to gain strategic control of their knowledge operations and manage them in a globally coordinated manner will not succeed in the emerging international company. The Advantages of Coordination are: Flexibility in responding to competitiors in different countries and markets The ability to respond in one country—or in a region of a country—to a change in another The ability to keep abreast of market needs around the world The ability to transfer knowledge between units in different countries Reduced overall costs of operation Increased efficiency and effectiveness in meeting customer needs The ability to achieve and maintain diversity in the firm’s product and how they are produced and distributed GLOBAL BUSINESS STRATEGIES We already recognized thath MNCs can adopt different organizational structures. They also have a choice to the strategies they pursue. Four Business Strategies according to Christopher Barlett and Sumatra Ghoshal: Multinational Strategy It was a type of “hands off” strategy in which the parent allowed the subsidiaries to develop their own products and practices. In this setting the information systems facilitate decentralized decision making, and they consist of stand alone datbases and processes. Global Strategy Localizes control within the parent. The firm seeks to meet the needs of its worldwide customers with standardizes products. The products for all the world markets are manufactured centrally and shipped to the subsidiaries. International Strategy It is a blending of centralized control of the global strategy and the decentralized control of the multinational strategy. The international strategy calls for a management team at the parent location that is knowledgeable and skilled at penetrating global markets. This expertise is made available to the subsidiarries. The subsidiaries use this expertise to adapt the firm’s products, processes, and strategies to their own market. Firms that pusue this business strategy employ interorganizational systems that link databases and processes of the parent with those of the subsidiaries. Transnational Strategy The parent and all subsidiaries work together in formulating strategies and policies, as well as in coordinating the logistics of getting the products to the right markets. The firm seeks to achieve global integration ad efficiencies yet provide for flexibilty at the local level. When a firm pusues a transational strategy, it achieves integration in its information systems by means of standards that are applied on an international scale, as well as by adopting common architectures. Development teams include representatives of multiple subsidiaries to ensure that the system meet local needs. The teams often travel from site to site, implementing systems. The Transnational strategy places a big responsibility on the database administrator to ensure that database designs are common throughout the world. Global Information System– the information system used by the MNCs as they pusue these four business strategy. A GIS can be defined as a system that consists of networks that cross national boundaries. GLOBAL BUSINESS DRIVERS The driving force behind the first global information systems was the desire to achieve economies of scale. As firms began to apply their computers in a global way, they quickly became aware of the breadth of benefits that was possible. These benefits became known as global business driver (GBD) is an entity that benefits from global economies of scale and scope and thus contributes to the global business strategy. GBDs focus on such broad entities of the business suppliers, customers, and products and they spell out the information that is needed to support each one. Once established, GBDs serve as a basis for the firm’s strategic plan for information resources. Seven Drivers identified in a survey of 105 MNCs with headquarters in the United States: Joint Resources- several of an MNC’s subsidiaries share the same resources as a way to keep expenses down. Flexible Operations- production can be moved from one plant to another in response to changing conditions. Rationalized Operations- the components and subassemlies that go into MNCs finished products are produced around the world. The driver capitalizes on such local advantages as availability of raw materials, labor skills, and economic transportation. Risk Reduction- MNCs hedge against the risks inherent in operating in a single country by operating i n multiple countries. Global Products- the firm markets the same products around the world, or subsidiaries around the world assemble their own products from common subassemblies. Scarce Supplies- certain resources are so scarce or expensive that they cannot be provided at each location. Instead, they are stored centrally and made available when needed. Corporate Customers- the firm’s customers are located around the world. Typical firms with such needs are airlines, rental car companies, and hotels. Also included in this driver are other firms that operate globally. PROBLEMS IN IMPLEMENTING GLOBAL INFORMATION SYSTEMS Politically Imposed Constraints The national governments where the subsidiaries are located can impose a variety of restrictions to make it difficult for the parent to include the subsidiaries in the nerwork. Restrictions on Hardware Purchases and Imports- national governmetns seek to protect local manufacturers and stimulate foreign investment in local manufacturing by specifying that only equipment produced and assembled on that country is to be used. Restrictions on Data Processing- national policy mau dictate that data be processed within the country rather than transmitted out of the country and processed elsewhere. Restrictions on Data Communication- the most publicizes data communication restriction is that put on transborder data flows. Transborder data flows, or TBFs, are the movements of machine readable data across national boundaries. They have been classified into four parts: 1. Operational data 2. Personal data that identifies specific individuals 3. Electronic funds 4. Technical and Scientific data Technological Problems MNCs are often plagued with problems related to the level of technology that exist in subsidiary countries. Some of these problems are: 1. Reliable powersource are not availble 2. Telecommunication circuits often can only transmit data at low speed and tranmission quality may be poor. 3. Software Problems Lack of Support from Subsidiary Managers The managers of subsidiaries offices often are part of the problem. Some are convinced that they can run their subsidiaries without help, and they view headquarters-imposed regulations as unnecessary. Some subsidiary managers are paid based on profitabilty, and they will drag their feet when they think that corporate solutions will reduce their earnings. Middle-level managers may fear being bypassed by the new information links that funnel operational data to the parent. With all these potential problems, it is a minor miracle that MNCs ever attempt GISs. Although it is impossible to eliminate the problems completely, their effects can be minimized by following a well-thought-out strategy. GIS IMPLEMENTATION STRATEGIES When MNC follow a multinational strategy, several development teams are usually required, which work out the subsidiaries. When a global strategy is pursued, the GIS development team does most or all of its work at the parent location. When an international strategy is pusued, one or more development teams can travel from the parent to the subsidiaries. In the case of transnational strategy, the team includes representatives from both the parent and the subsidiaries. A transnational strategy for GIS Implementation Because the transnational strategy is the most complex of the four—it attempt to integrate the entire MNC into a smoothly working system. The strategy focuses on key issues that relate to the GIS/business strategy linkage, information resources, international data sharing, and the cultural environment. Link the GIS to Business Strategy- listed below are key issues that link GIS to business strategy. The development team should address these issues early in the project. The team should: 1. Work closely with the firm’s executives to gain an understanding of the potential impacts of the GIS on global business strategy. 2. Understand each business unit’s global business strategy. 3. Determine the global business strategy appropriate for each unit’s global business strategy. 4. Determine objectives for each GIS strategy. 5. Identify operations necessary to ahieve each GIS strategy and prioritize them. 6. Assign responsibilities for implementing the application. Define the Information Resources—the GIS will employ all types of information resources—hardware, software, personnel data and information, and facilities. Listed below are key tasks of the development team in the area of resources. The team should: 1. Determine the number and location of regional data centers. 2. Identify vendors who can provide products and services for each subsidiary site. 3. Specify standard hardware and software that can be used at all sites. 4. Make plans for one or more help desks to assist subsidiaries on a 24/7 basis. 5. Be prepared for implementation delays that are not expirienced in the parent company. Provide Data for Sharing- the key to achieving standardization in operations lies within the data rather than the processes. Planning for the GIS should be focused on the entire firm with the end product being an enterprise data model. In the case of a GIS, the enterprise is an MNC, and the model encompasses both the parent and the subsidiaries. The broad scope of the enterprise makes data modelling for MNCs more difficult for firms with only domestic operations. Several tasks are involved in setting up a system for data sharing. The development team should: 1. Develop a global data model that supports the global business objectives. 2. Form a group consisting of representative from both the parent and the subsidiaries for the purpose of establishing data standards to be applied throughout the MNC. 3. Study legislation in the various countries of operation to define limitations on processing and telecommunication. 4. Based on the study, determine wether to tranmit to transmit data across country borders or process it in the subsidiaries countries. 5. Implement the database. Consider the Cultural Environment- throughout the development process, the MNC executives and multinational development team should pay attention to cultural issues. In particular, the development team should: 1. Be alert to cultural differences that exist among subsidiary countries and formulate systems conditions that are mutually acceptible to all concerned. 2. Conduct a skills survey of information specialists within the subsidiaries for the purpose of making maximum use of those skills during implementation. 3. Provide educational and training opportunities to the subsidiaries so that their personnel can acquire skills in areas where they are defficient and sharpen skill in areas where they have strength. 4. Establish formal programs for preparing managers at the parent location to work with managers in the subsidiaries, and vice versa. Such programs should address the cultural differences that can be expected and how to respond to them. COMPUTING AROUND THE WORLD In this section we recognize the impact that varying cultural environments can have on computer efforts around the world. Group Support Systems in Africa Originally aomed at supporting individual problem solvers, the concept has been expanded to include systems that support group of problem solvers. The term group decision support system (GDSS) or GSS has been used for these systems that typically support problem solvers meeting in group settings. In 1999, a series of GSS sessions were conducted in three Southeast African Countries—Malawi, Zimbabwe, and Tanzania. The objective of the study was to shed light on the influence of culture on the use and acceptance of GSS. The research built on the idea of a Technology Acceptance Model (TAM), developed by Davis, Bagozzi, and Warshaw. The underlying idea of TAM is that use of technology is influenced by a person’s perceived ease of use and potential usefulness. The study in the three countries concluded that five factors influence acceptance of GSS on those cultural settings. These are: Top Management- long been recognized as a fundamental influence on computer use in the United States. Computer Literacy- in countries such as the ones in Africa, where computing is just gaining a foothold, the range of literacy is much broader than the range found in countries where computing has become commonplace. As the GSS sessions progressed, the less computer-literate attendees seemed to grow more enthusiastic. Lack of keyboarding and mouse skills did not seem to hinder participation. Refferent Power- recognizes that a person’s influence in getting things done in an organization is based more on personal contacts than expertise. Such as an influence is a reality that has long been recognized by developers of computer-based systems in the more developed countries. Oral Communication Refference- a key to the success of a GSS is the participation of the attendees. Such participation is encouraged by keeping ech person’s suggestions and comments anonymous. Those persons who favored written communication formed positive attitude toward the GSS, whereas those who like to communicate orally had difficulty in adapting to the computer-based environment. Satisfaction with use- a risk that information specialist take when using a technology such as GSS is that if the expirience proves to be a negative one for the paticipants, it can have a damaging influence on the future use of technology. A Strategic Support System in Switzerland The strategic decision support system developed by the Banknotes and Securities Division of Orell Fussli, a Swiss printing company provided an example of the level of sophistication that can be achieved in countries in a rich computer history. The system of Orell Fussli is menu-driven and consists of three major sections: