Chapter 9: Challenges of
Global Information Systems
Oz (5th edition)
Multinational Organizations and IS
A multinational firm (MNF) is a firm that operates in
many countries. The firm may or may not have a
headquarters in a single country, but operates
divisions and subsidiaries in different countries to
take advantage of local benefits (i.e., cheap labor)
MNFs must use global information systems which
are systems that serve individuals and firm units in
multiple countries.
Global information systems are different than other
IS because these systems must conform to laws,
cultures, and standards etc. in many countries
The Web and International Commerce
Web has become important vehicle for B2B and B2C
Ratio of non-English speakers to English speakers
Internet opens enormous global opportunities
Chinese market expected to be largest in future
Web offers opportunities to save on costs (see
subsequent slides)
The Web and International Commerce
Figure 9.1: Two-thirds of Internet users come from non-English-speaking countries
The Web and International Commerce
An example of cost savings: printing product and service
 Put on Web as opposed to shipping with product
 Downloaded at customer’s convenience
 Inclusion of animation, sound, hypertext, graphics, and
video clips
 Reduce customer service costs by 50 %
 Multiple language versions are easier on the Web
Global businesses must be sensitive to audiences
Glocalization: design global sites to cater to local needs
 McDonalds menu changes to appeal to local palates
The Web and International Commerce
Figure 9.2: Imperatives to heed when designing Web sites for an international audience
Think Globally, Act Locally
International companies “think globally, act
 Be sensitive to regional customs
 Control must be decentralized
 Strategic planning should be global
 Can be followed with local flavor
Challenges of Global Information
Global information systems face challenges
 Technological barriers
 Regulations and tariffs
 Electronic payment mechanisms
 Different language and culture
 Economic and political considerations
 Different measurement standards
 Legal barriers
 Different time zones
Challenges involve both the firm’s Web site and
other information systems
Technological Challenges
 Not all countries have adequate information
technology infrastructures
 Unable to build international IS
 Broadband communication lines needed
 Offer two versions of Websites to compensate
for slower bandwidth
 Use low earth orbit satellite systems to build
network for voice and data
Technological Challenges (continued)
 Language is technological challenge because
eight-bit bytes not sufficient for languages
with large character sets (e.g., Chinese
 Fields such as telephone numbers present
problems for databases in MNFs
 Use double-byte characters (e.g., unicode
allows for 65,536 characters)
 Fields for telephone numbers must be variable
length to allow flexibility
Regulations and Tariffs
 Countries have different importing regulations
 Executives reluctant because of hassles
 Even with research there are fears that
employees will not know how to comply with
laws of destination countries
 There are programs such as NextLinx to help
importers and exporters for Web commerce
►NextLinx is integrated within the firm’s
►When an international order is placed the
software determines tariffs, cost of delivery,
provides forms, and logistics
Differences in Payment Mechanisms
 E-commerce allows easy payment for online
 Credit cards preferred payment method in
North America
 Not all countries adopt this preference
►Japanese avoid using credit cards
 Web sites for international firms must have
multiple payment mechanisms
 Konbini example in Japan
Language Differences
 International parties must agree on common language
 Data not transmittable internationally because
information must be translated; computers still cannot
accurately translate “on the fly”
 English considered de facto international language
 Many countries require accounting systems to be in the
local language
 Largest companies translate Web sites into local
 Web site design and translation should be done in
overseas offices although the server may be located in
another country; lack of uniformity in languages
 Multiple accounting systems in different languages
Cultural Differences
 Different countries vary
►Treatment of people
►Ethical issues
 Conservative groups against “Americanization”
 MNFs should employ local personnel to design
their Web sites or version of a Web site that
will appeal to a particular country
Conflicting Economic, Scientific, and
Security Interests
 Goal of corporate management
► Seize large market share and maximize organization
 Goal of governments is to protect economic, scientific, and
security interests of its people
 Occasionally interests conflict
► Drawings related to the design and manufacture of
► Software packages
► Encryption software
 Differences in treatment of trade secrets, patents, and
copyright law
 No easy ones
 Pressure from America for stronger copyright laws
 International trade groups
Political Challenges
 Information is power and some countries oppose policy
of free access to information and limit use of Internet
 Governments recognize that software is an economic
resource and require firms to purchase local software to
build local industry; problems for firms trying to
 MNFs may have to cut some content from their sites to
limit risks of offending local government
 Limit use of employee blogs
 International human rights pressure may help in the
long run
 Use open source software (e.g., Linux, MySQL) can help
Different Standards
 No international accounting standards
 United States uses English system of weights
and measures; rest of world uses metric
 Different standards for dates, temperatures,
time, telephone numbers, and addresses
 Different standards for product codes
 Multiple accounting systems
 Multiple versions of data where user can
request version needed (i.e., software must be
flexible and give users choice)
 Promotion of universal product codes
Legal Barriers
 Countries have different laws that affect global
business in general and in particular areas such
►Privacy with respect to data collection
►International transfer of data
►Free speech
►Location of legal proceedings
 Other differences in law
►Sale of liquor and prescription drugs
Legal Barriers: Privacy and Data
Privacy laws in general
 Respect for privacy in international business is
unresolved challenge
 Majority of democratic nations protect
individual privacy
► How privacy laws differ with respect to data
 Does the law apply to data collected by a
company or the government?
 Does the law apply to manual data, digital data,
or both?
 Does the law protect data concerning human
beings or does the law also protect legal entities
such as corporations?
Legal Barriers: US versus EU Approach
to Privacy with Respect to Data
US privacy laws
 Slanted toward the public sector (government)
 Over 50 % encompass manual and computerized systems
 Limited provisions for individuals versus legal entities
EU privacy laws
 Covers both public and private sector
 Stronger protection regarding computerized decision
 Variance in EU with respect to coverage of entities; strong
coverage with respect to individuals
Legal Barriers: EU Practices with
Respect to Data Collected on Individuals
European Union practices (Directive on Data
Privacy) for data collected by corporations on
consumers follows the Fair Information Practices
mentioned in chapter 11
 Personal data collected only for specified
 Personal data must be given consent to be
 Collecting organizations must identify
 People have right to object to processing of
personal data
Legal Barriers Between US and EU
 American companies collect data for marketing
purposes on all their customers, but
differences between European and American
approaches prevent unrestricted flow of
information with respect to data collection on
EU customers
 For example, EU agents monitor US companies
that collect data on EU citizens
 The EU has worked with the US Dept of
Commerce to enable US companies who
comply with EU’s Directive on Data Privacy to
carry on trade without fear of violating the
directive (Safe Harbor arrangement)
Legal Barriers: Legal Proceedings
 Suppose you purchased an item from a site
located in another country, and the item has a
defect or arrived after the time promised.
Because your request for compensation or
other remedies has not been answered, you
decide to sue. Where do you file the lawsuit?
► Solution
 Country- of-origin principle whereby all legal
matters are confined to the country where the
site operates
 Country-of-destination principle whereby the
laws of the country to which the site caters
apply regarding dealings with the site,
regardless of the site’s country (EU’s approach)
Different Time Zones
 MNFs must craft policies that work for
employees, customers, and IS for all time
 Time stamping
 Teleconferencing systems can help; but huge
time differences require accommodations for
employees in other time zones
 Chat rooms and bulletin boards for
asynchronous communication
 Opportunity to work on projects 24 hours a day
 Enable customer support personnel to be
available 24/7 without requiring night shift
 Standard policy for time stamping documents
Companies using Web for business must
accommodate non-English speaking audiences
Companies must tailor to local preferences
Must be aware of cultural differences and payment
Tariff and legal issues
Linguistic, cultural, economic, and political
challenges must be addressed
Summary (continued)
Laws governing collection of data in United States
and European Union are different
Incompatible data privacy laws
Restricted flow of personal data between United
States and EU
Safe Harbor arrangement enables EU to do business
with US
Old legal approach of territorial jurisdiction
Free speech and consumer litigation of e-tailers
brought need for legal reform for cyberspace

Chapter 9: Challenges of Global Information Systems