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Impact of Global Management Information Systems on Strategy - Essay Example

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This essay "Impact of Global Management Information Systems on Strategy" dwells on the information management systems of worldwide enterprises. It is stated that the primary focus of the current paper is the strategic perspective of such systems and their management. …
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Thank you A Delphi Study on the Impact of Global Management Information Systems on Strategy Introduction There has been substantial work over the past 10 years on information management systems of worldwide enterprises. The primary focus of the current paper is the strategic perspective of such systems and their management. Through a deduction on a wide array of literature on global business, strategic management, and organization design, the investigation projects about future trends in information system management. In doing so, it accords a blueprint for existing literature on management information systems. It focuses on the role of information technologies are a critical business driver for pushing global strategies of international firms. Simultaneously, it also projects information technology as a critical change driver in the internationalization process. With regards to international information strategy, the paper also presents the differences among business infostructure, IT infrastructure and the IS/IT suprastructure, presenting criteria initially presented by Peppard (1999). The important associations among the four dimensions of the conceptual framework are brought forth, and recommendations for future action are forwarded. Review of Related Literature As we go forth and leave the 20th century, numerous economists contend that we are about to play in an authentic ‘global economy’. Concurrently, some are posing queries on whether such a goal or vision may be attained, attributing these difficulties to factors such as regionalism, the hurdles of negotiations under the GATT treaty, and the pervasive rally for protectionism. Nonetheless, albeit these issues, the requisites for a global economy are presenting themselves conspicuously. There are three associated events that support such an assertion of our journey towards an authentic global economy. According to Negroponte (1995) and Tapscott (1996), one such event is the drastic broadening of the scope and scale of technology. This has allowed the most encompassing global markets to ‘shrink’ into relatively small, manageable economic families. Next, the burgeoning growth and development of global economic exchange as asserted by Lorange et al (1992). Lastly, the budding global village is made more integrative through information systems and technology, expediting the interaction among markets instead of continuing with conventional organization bureaucracies (Bradley, 1994). It is purported that value is brought forth more in networks (Coyne & Dye, 1998) as compared to these conventional bureaucratic entities. The outcome is an electronically network global economy, which allows national markets cease to exist as independent entities. Moreover, with it, geographical boundaries cease to exist as a basis for organizing economic exchange. A truly conspicuous evidence of such a development was the contemporary issue brought forth at the yearly conference of the wholesale and offshore trade organization of Germany. The president of the group asserted that German 'companies were losing lucrative niche markets because the Internet made it easier to compare prices and consequently was increasing competition' (Norman, 1996). In effect, internationalization and the international enterprise have grown into important research areas in the past 2 decades. The main issue of such literature has been the strategic perspective of the issue, delving specifically on issues about location (Meijboom & Vos, 1997), coordination (Meijboom & Vos, 1997) control (Eisen­hardt, 1985), governance (Lorange et at, 1992), product/market breadth and mar­keting (Bradley, 1991), supply chain (Christopher & Braithwaite, 1991), innovation (Nohria & Ghoshal, 1997), legislation and government policies (Doz, 1986), global partnerships and joint ventures (Nielsen, 1988) and peculiarities brought about by culture (Alder, 1986). It may be noteworthy to point out that except for some, management of information systems which is very critical to the growth and development of global enterprises is an area that has been derelict. Moreover, any mention of information management is implicitly regarded as a purely technical issue, and is considered as mainly being focused on communication network and infrastructures of technology. As an outcome, accountability is often delegated by senior management to technically equipped employees in the information technology (IT) firm. However, management has neglected the fact that information technology decisions are strongly business-oriented and business-driven decisions. Moreover, there seems to be a misnomer presented in the use of the terms ‘international /global technology management’ as it is, overall, considered as being focused on research and development (R & D), innovation and technology. The main goal of this paper is to contribute to the literature on information systems / information technology management in the international enterprise, and give recommendations on the directions that these areas are likely to take in the near future. By making deductions about the wide ranging literature in the global business and strategic management, I would like to share an analysis of information systems/ information technology management in the international enterprise. This represents an attempt to integrate a wide-ranging database of research on a variety of disciplines. It permits a basis for organizing current literature on this issue, and drafts guidelines for these fields. Moreover, it focuses on the role of information systems and information technology as complementary worldwide business strategies; simultaneously, it presents these are critical change drivers in the process of globalization. The important associations among these domains of the conceptual framework are brought forth, and recommendations for future action are forwarded. The Global Setting There are two presumptions that have been made in the paper. The first and the more encompassing one is that management in the international setting is distinct from management within an exclusive, single organizational entity. Therefore, different sets of issues need to be responded to. The next assumption which is particular to the management of information is that the valued for monetary benefits and the advantages to be yielded in the management of information on a worldwide scale in contrast with a local country of one, exclusive site or setting. Empirical proof indicates that this is not so (Deans & Karwan, 1994; Earl & Feeny, 1996). To put the current investigation in context and to emphasize the level of complexity of international business, we might want to consider the following scenario (adapted from Dyment, 1987): “The global corporation, headquartered in Germany, mar­kets and sells a product that is designed in Milan, Italy, with components manufactured in Taiwan and Korea. It is assembled in Canada, Germany and Ireland and sold as a standard model in South America, and as a model with con­siderable options in the US, Europe and Australia. Transfer pricing of the components and assembled product is determ­ined with. an eye to minimize tax liability. The principal financing is provided from the Euro market based in Frankfurt. Add in the complexities of having transactions in dif­ferent currencies, with foreign exchange hedge contract gains and losses that sometimes offset trading losses or gains.” This comment embodies the complicated issues that are integrated with international operations at the business level; the conversion of business requirements into information and systems requisites grows into a herculean task. However, this is a reality that international organizations have to face on a regular basis. Management in the global business landscape poses several issues and difficulties that are not conventionally present when managing an exclusive, single local market entity. These encompass the following: Responding to various legislative requisites, taxation systems, accounting requisites, currency systems, and environmental benchmark standards, specifically beyond the walls of the European Union (EU). The EU aims to achieve the synergy of these facets, the fact is that many controversies still pervade among member nations. For instance, Virgin Express which is known to be a no-nonsense airline headquartered in Belgium, has no longer ranted about the nation’s tax and social security regime, and has announced that it would be building a novel base in Ireland (King, 1998). Next is addressing cultural peculiarities both within various operating units and national cultural distinctions. Even within Europe, there is a wealth of varying cultures and ethnicities. Culture exerts a significant impact in both business practices and customer inclinations or preferences. Language is yet another factor that embodies another challenge. Yet another factor that has to be considered is global economics and politics. One might want to assess the intervention of the French government when Hoover proclaimed that it intended to transfer manufacturing from France to Scotland. The constancy of political and economic systems differ across the word as does the degree of state involvement, specifically in luring offshore or foreign direct investment (i.e. PDI). Emphasizing the worldwide issue are observations associated to operating as a global entity. These include the following issues: It is frequently very challenging to make a distinction between what might be considered as ‘local’ vs. ‘global’ firms. Even the headquarters or home base may be deceiving. For instance, Honda produces more automobiles in the US than in Japan, engages more US workers than Japanese, yields greater revenue in the US than it does in Japan, and even imports US signature and manufactured cars to Japan. In several industries, global business can at certain times be depicted as a complicated weave of global links, frequently related with competitor organizations. For instance, while there is cutthroat competition among Nike, Adidas, and Reebok, they utilize exactly the same manufacturers in South East Asia. Moreover, the same trend is observed in the computer industry, with IBM, Digital, Hewlett Packard and Apple simultaneously engaged in collaboration and competing business partnerships and mergers. Internationalization has grown to be a strategy for firms of all sizes, as they attempt to broaden their engagement in foreign markets. The degree of internationalization differs from having a satellite sales office in a domestic market to the development of an advanced network of business operations completely ingrained and connected on a worldwide or global basis. In the globalization process, numerous organizations are frequently observed to emulate a developmental path from ‘international’ to ‘multinational’ to ‘global’ to transnational’ (Bartlett & Ghoshal, 1989). Concisely, the global stage is distinguished by a growing autonomy in its international division, apart from its local business. The multinational stage, on the other hand, is characterized by an enhanced rate of replication of the value chain process across countries and domestic autonomy. The global stage is depicted by an enhanced geographic synergy of initiatives and strategies. Finally, the transnational model is distinguished by " increasingly specialized units worldwide . . . linked to into an inte­grated network of operations that [enables] them to achi­eve their multi-dimensional strategic objectives of efficiency, responsiveness and innovation" (Bartlett & Ghoshal, 1989, p 89). For majority of global organizations, however, the transnational model is more a dream than a tangible reality (Turner & Henry, 1994). Even the smallest economic entity in terms of size, is not exempt from the impact of globalization as they gradually are confronted with competition from offshore firms, in terms of market share. With the dawn of the internet, each organization with an online presence can be considered as a key international or global player (Quelch & Klein, 1996). Information Systems Management in the International Enterprise The global firm intends to manage the interrelationships among geographically separated multi-site operating entities. For instance among manufacturing entities, distribution centers, and sales satellites which are situated distinctly. Information is a means through which such synergy and collaboration is attained, and information technology is gradually being utilized for such geographic integration and management. Simultaneously, information technology is decreasing the expense on communication and transaction, and permits novel structures and processes that opens the door for more effective organizing alternatives (Boudreau et al, 1998; Jarillo, 1998). Novel value creation models are feasible with value creation transpiring in ‘networks’ in contrast with ‘chains’ (Coyne & Dye, 1998; Stabell & Fjeldstad, 1998). Despite this, information management which is truly critical to the functioning of global organizations has until of late, been lacking in research attention. Deans and Kane (1991) has purported that an encompassing review of the pertinent literature presents very scarce scholarly research in the area. In the same vein, global business research has been inclined not to pay adequate attention to the information systems functional area. In fact, Palvia (1998) asserts the accumulated research database to date as being purely descriptive and opportunistic. Similarly, the international business literature has tended to ignore the IS functional area. Palvia (1998) portrays the cumulative research base to date as being descriptive and opportunistic. That is, any mention of information management, is on the whole depicted as a purely technical issue and is considered as mainly focused on networks of communications and technological infrastructures. Certainly, these are critical facets; however, a more complete approach is necessary. A survey in 1991 has presented that more than 50% of the 100 major multinational organizations surveyed during the period rarely evaluated information systems or information technology as a critical component of strategy development (Amdahl, 1991). The study also purported that the ratio of firms that assess information systems and information technology as a part of their international strategy portfolio was as negligible as 14%. Majority of the literature on information systems and information technology is local or parochial in nature (Roche, 1996). For instance, they respond only to the issues related to information systems and information technology from an exclusive or single entity, site, or operating business unit within one nation. Limited research has determined the issues with information technology management in the worldwide arena (Roth et al, 1991), issues particular to chief information officers (CIO) of global firms (McFarlan, 1992), and there have also been contemporary studies on managing global information systems projects (Tractinsky & Jarvenpaa, 1995) and the impact of electronic communication on coordinating international organizations (Janssens & Brett, 1994). Moreover, there are a small number of case studies which are related to facets of international information systems and information technology management (Bechler & Marchand, 1994; Ives & Jarvenpaa, 1994; Ross, 1995). Considering the scarcity of literature, global information technology is fast becoming a subdiscipline with the information systems field. This is an acknowledgement of the criticality of information technology in globalization and in the management of international or global enterprises. In fact, there is a journal that is solely dedicated to the area; that is, the International Journal of Global Information Technology. Moreover, a working committee has been formed under the jurisdiction of the International Federation for Information Processing (IFIP) to advocate research and for the healthy exchange of best practices in the area. Summarizing, the current research literature purports that there is a little investigation dedicated to information systems and information management in the global enterprises. One investigation has noted the following: “the litera­ture remains fragmentary, offering only partial and potentially contradictory nor­mative implications for managers' (Ramarapu & Lado, 1995). Indeed, a more recent study concluded that ' ... the global information systems challenge appears to be more complex than commonly suggested ... there are no easy and straightforward prescriptions for practitioners involved with global information systems' (Earl & Feeny, 1996). Themes in Global Information Management While this is the need, one can glean two central themes from the literature which are presented from the scarce literature reviewed. The first indicates the importance of aligning the information systems and information technology strategies to international business strategy (Earl & Feeny, 1995). The second asserts the linkage of global organizational design strategies with techniques for according information technology support (Chismar, 1994). Various structures exert an influence on the way information flows within the firm (Neumann­Alkier, 1997), and information technology is expected to permit firms to undertake global business strategies which rely on complicated organizational and decision making processes (Chismar, 1994). The rationale lied is that in applying a global strategy, the whole firm drafts a specific business model which is supported and enabled by information technology. Along a similar vein, information technology also permits taking advantage of opportunities accorded in enabling global strategies and new infrastructures (Rayport & Sviokla, 1994, 1995; Evans & Wurster 1997). Information technology is also a driver of the globalization process through technologies such as the internet and the world wide web, permitting the smallest entity to take advantage of the opportunity to operate on an international scope or scale (Quelch & Klein, 1996). A Framework for the Relationship between Information Management and Global Enterprises Earl (1989), Pyburn (1983) and Ward and Griffiths (1996) in aligning IS/IT stra­tegies and business strategies. Henderson and Venkatraman (1993) and Broadbent and Weill (1993), on the other hand, has forwarded a framework for developing strategic alignment models. Earl (1996a) has expressed another for organizational fit framework (OFF), while Ives et al(1993) for global information management system strategy formulation. Peppard (1999) has combined all these models with global business, strategic management and organizational design literature in developing a more contemporary framework. In this, the two critical factors influencing global information strategy are taken as 1) the firm’s global business model and 2) its global business drivers. He further puts forth that an array of organizations traits impact on information systems organizational arrangements (Lee & Leifer, 1992; Earl et al, 1996). Moreover, it acknowledges the opportunities which information technology accords in providing strategic alternatives; simultaneously, facilitates novel options in terms of organization for strategy application. Information technology can exert an influence on the global business model in that it allows novel organizational structures and opens new configuration alternatives, specifically in association with assisting virtual structures. The globalization process drivers themselves are strongly influenced by developments in technology. For instance, information technology expedites mass customization (Boynton et al, 1993). Benefits of Global Information System and Technology Management Information and communications technologies are exerting a deep and meaningful effect on the strategic alternatives for the global organization, and allows for novel options and avenues (Sampler, 1998). For instance, the internet allows even the smallest firm to broaden their scale and scope of operations, making it possible for them to get in touch with new market sectors and new geographical borders (Quelch & Klein, 1996). Data has also become integrated in many conventional products and services. For instance, majority of international package delivery companies now allow customers to monitor their packages as they are transferred to their destination. Information technology also permits new product and service offerings to be made available. For example, numerous banks are now utilizing their automated teller machines (ATM) network to accord products and services which are not within the boundaries of conventional banking service options. In Spain, for example, ATMs can be utilized to buy theater and cinema tickets. In addition, information technology can be crucial in expediting alliances (Konsynski & McFarlan, 1990). It accords organizations empowerment to compete. Ironically, this is made possible by equipping them with novel means to collaborate. ‘Information partnerships’ are distinguished customer data sharing, and serves as a means of differentiation (Konsynski & McFar­lan, 1990). For instance, it can accord firms with the chance to engage in shared marketing programs, and leverage on novel distribution channels, and opportunities for cross-selling, or provide new incentives and services. Once there is a clear cut definition, a form’s global business strategy may give guidance and direction to the global business model. For example, on how its organizes for global operation. And yet in developing the global business model, one must also thoroughly evaluate global business drivers. Motives, Aims and Goals The main goals of the present paper are as follows: 1) To present a strategic perspective of global information systems and their relation to global strategy; 2) To review a broad range of literature on global business, strategic management, and organization design to make logical conclusions about the topic at hand; 3) To anticipate future trends about information systems management. In carrying these out, the paper provides a template for current literature on management information systems. It shall emphasize on the role of information technologies as a critical business driver for leveraging on global strategies for multinational firms. At the same time, , it also projects information technology as a critical change driver in the internationalization process. With regards to international information strategy, the paper also presents the differences among business infostructure, IT infrastructure and the IS/IT suprastructure, presenting criteria initially presented by Peppard (1999). Research Questions The following questions are addressed in the present study: 1) What is the role of global information systems in the achievement of global strategy? 2) How can international corporations use their management information systems to leverage on their objectives of business development? 3) What are the future trends within the realm of global information systems management? Research Strategies The current paper shall make use of secondary data sources, including books, online sources, journals, among others. I shall gather these secondary data to have comprehensive background on the topic at hand. Moreover, it shall also make use of the Delphi technique as a primary method of gathering data. Delphi is a technique used in researching the future and predicting. Delphi has been used in many areas, ranging from medical research to business issues and agricultural research (Linstone & Turoff, 1979; Lang, 1994). Linstone and Turoff (1979, p. 574) depicted Delphi as: ... a method of structuring a group communication process so that the process is effective in allowing a group of individuals, as a whole, to deal with a complex problem. Delphi is specifically useful for complicated issues, which necessitate more judgmental analysis (Kaynak et al., 1994, Mitchell and McGoldrick, 1994). Jillson (1979) also recommends Delphi for studies of industries that are undergoing rapid change. Data Sources The sources for secondary data include literature from books, online sources and journals. They will provide me with a comprehensive background on information systems management and associated future trends. Using these secondary data, I will be to carry out primary data gathering using the Delphi technique. Initially, I will use exploratory interview, followed by several rounds of the Delphi. Through these rounds, experts in the realm of information technology will be able to express their opinions on the topic and help finalize my framework for global information systems management. Conceptual Issues The framework on which all concepts are anchored is that of Peppard (1999). While there are other authors who have out forth related frameworks (see Earl, 1989; Pyburn, 1983; and Ward and Griffiths, 1996) in aligning IS/IT stra­tegies and business strategies, I think that Peppard’s (1999) framework is more contemporary and applicable. Henderson and Venkatraman (1993) and Broadbent and Weill (1993), on the other hand, has forwarded a framework for developing strategic alignment models. Earl (1996a) has expressed another for organizational fit framework (OFF), while Ives et al(1993) for global information management system strategy formulation. Peppard (1999) has synthesized all these frameworks with global business, strategic management and organizational design literature in putting forth a more modern and applicable framework. Methodology The research will empirically study the management of information management systems through semi-structured, convergent, in-depth interviews and successive stages of a Delphi study. At this phase of the investigation, the role of the interviews will be outlined and then the nature of Delphi studies will be discussed. Exploratory Interviews Exploratory interviews will be conducted in a converging capacity among executives and managers in the information and technology industry. The interviews’ purpose is to identify the key themes and issues relating to information management systems of global organizations. These themes informed the Delphi study, representing the next stage of the research. The interviews were conducted from _________and ________2006. Those interviewed will range from chief executive officers to senior vice-presidents to managers within the information and technology industry. Personal interviews will be utilized to afford greater exploration and time to probe and delve into the major emerging issues (Fowler, 1988; Easterby-­Smith et al., 1995; Saunders et al., 2000). The main disadvantage of this method is its time-consuming nature (Fowler, 1988; Hussey and Hussey, 1997). De Ruyter and Scholl (1998), have suggested that because of the wealth of data that may be yielded from interviews, it is adequate to hold only a small number. In this research, five interviews were undertaken. The researcher will take down notes in each, with the consent of the interviewees. The key issues will be determined through thematic content analysis. In combination with the literature reviewed, this will emphasize the critical areas for investigation within the Delphi study. The initial interviews garnered some interesting findings. Overall, the general theme or consensus emerged that the industry may be very different. Their key role in terms of this paper is to inform the Delphi questionnaire design. Their additional benefit is to underline the value of expert opinion in examining the complex issues of the significance and impact of information management in the globalization process of businesses in this century. Delphi in Theory and Practice This methodology entails yielding the opinions of experts over a series of rounds. The first round of a traditional Delphi study should discuss the general focus of the study. The second round gives feedback from the first round and asks for any revision of opinion in light of the findings and justification by those who provide deviating views (Delbecq et al., 1986). Feedback increases the level of information and furthers convergence (Rowe et al., 1991). The final round normally involves distribution of the justifications and the opportunity for panel members to agree or disagree with the justifications provided (Prendergast and Marr, 1994). The ultimate outcome is a forecast, policy or decision (Lang 1994). There are three quintessential aspects to a Delphi study, whereby all individual responses are represented in the final outcome (Rowe & Wright, 1999), namely: anonymity; controlled feedback; and statistical group response. A review of the literature on Delphi finds three problematic areas with regard to its use: the number of rounds required; the size of panel required; and the composition of the panel. Each of these issues is discussed below. Divergence of opinion exists with regard to the necessary number of rounds to execute an effective Delphi. While two rounds could be considered the minimum, others suggest that three to six is imperative to yield logical and valid findings (Tersine and Riggs, 1976; Linstone and Turoff, 1979; Custer et al., 1998). Others have indicated that as many as ten rounds may be necessary to achieve the research outcome (Brockhoff, 1979; Johnson and King, 1988; Lang, 1994). Eventually, a trade-off exists: as the number of iterations or rounds increases, the tendency for high error rates decreases, while attrition levels increase (Deitz, 1987; Mitchell, 1992). Numerous recommendations have emerged from the literature with regard to the desired size of the Delphi panel. Fowles (1978) illustrated that panel sizes should be no less than seven participants. Others suggest the panel should contain no less than ten panelists and no more than 40 (Day and Aaker, 1990; Mitchell and McGoldrick, 1994). With an increase in the panel number to between eight and 12, group error is reduced significantly, with further addition of members beyond this providing little if any reduction (Prendergast and Marr, 1994). However, Delbecq et al. (1986) state that there is no set number of panelists required providing there is a sufficient number to facilitate the pooling of judgments. The Delphi panel composition and selection is of the utmost importance to the successful execution of a Delphi study (Linstone and Turoff, 1979; Mitchell and McGoldrick, 1994). There is wide contention on the definition of an expert in an area of investigation (Fischer, 1978). Selection of panelists for a Delphi cannot be random, in that panelists need to be considered based on their knowledge and "informed opinion" (Deitz, 1987). However, Deitz (1987) indicated that the self-rating by respondents of their predictive ability facilitates a reduction in sampling/ respondent bias. 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