Information Technology On Global Management Commerce Essay

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Twenty-first century is the century of information technology (IT) and globalization. This paper discusses the impact of information technology on global management. information technology can help to redefine the vision of global corporations which is the primary component of global corporate strategy. IT can also help in managing the global talent in an environment of cultural diversity, and in managing global supply chain management. Previous literature is used to prove how IT can help in global management. One of the limitations of this paper is that it doesn't use primary data. Future study can use primary data to prove the impact of IT on global management.

1. Introduction

Advancements in information technology (IT) and the rapid globalization of businesses are both realities and opportunities of the twenty-first century (Roy & Sivakumar, 2007). The term information technology refers to techniques and facilities designed to enable the transfer, storing and processing of data (Pispa, 2003). This includes not only computers but also facilities for mailing services, telephone and fax networks, information centers, libraries. Internet is definitely one of its manifestations. Consumer markets are growing more global everyday (Cavusgil & Zhou, 1994). Brands like Coca-Cola, McDonald's, and Microsoft are popular not only in USA but also well known across the world. Manufacturing companies have got the opportunity of the globalization and today, much of the world's manufacturers and suppliers are located in the lower-cost countries (e.g. Nike in Thailand and Sony in China). Since 1995, the internet has further enabled coordination between overseas suppliers of services and goods and their buyers. Internet traffic is doubling every 100 days and e-business is in hyper growth. At the same time borders are becoming increasingly extraneous, while people and organizations are intermingling in very different ways (Manardo, 2000). This rapid growth in globalization has demanded for the need of integrated strategies in promoting organizational change technology innovation, and entrepreneurship (Davis et al, 1986; McLoughlin and Harris, 1998; James, 2002).

Globalization, at one end, is an opportunity, but at another end it also creates challenges for the multinational companies. Global corporations have two primary challenges; managing talent- because they need to share resources and knowledge across a number of business units and countries (Guthridge and Komm, 2008) and supply chain management (Motwani et al, 2000). Moreover, before going global it is very important to have global mindset or global vision (Manardo, 2000). This paper presents the impact of IT on global management. The areas covered in this paper are vision, corporate strategy, cultural diversity and global supply chain management. Construction of paper is as follows:

All areas are discussed one by one. Under each heading, first importance of that particular area is discussed with the references of previous literature and case studies. Then discusses how IT can play a role in supporting or redefining that particular area. Secondary data i.e. previous literature is used to support the arguments. After discussing each area, concluding remarks are given along with limitations and future directions.

2. IT and Vision

Global leadership development must be determined by an organization's global business strategy (Cohen, 2010). Only having "global" experiences at work is not enough for effective global leadership. Having a true global mindset enables leadership effectiveness in global environment. Increase in cultural and business complexity demands for a global mindset. To be a global organization, company's vision and values must show global consistency (Cohen, 2010). We refer here the case study of Deronde International by Nohria (2009) in which Yang Jianguo was appointed as the global head of product development. In fact, Jianguo was very committed and devoted person and had very successful career as a country manager, but he faced some problems when he came to France as a Global leader. He was focusing on local culture instead of global world. One can say that he was lacking global mindset. Therefore, his ideas were not appreciated by his colleagues even by his CEO. It is clear that the most important attribute required for effective global leadership is not a new set of skills or experience, but rather a new perspective called a global mindset (Cohen, 2010). A question confounding top management of the world's leading corporations is how to identify and develop global leadership competencies for the future direction of their businesses. A popularly held view is that successful global management will think strategically in a world wide context (May, 1997). Rapid change in the organization's environment resulting in uncertainty of goals in the issues together with continually increasing complexity of issues present considerable challenges on analytic and deductive modeling and knowledge acquisition approaches. The key function of a leader and managers in this situation is to form visions of the organization in the future (Pispa, 2003). Companies understand that going global can only be realized through a global vision and strategy (Manardo, 2000). But how? Four approaches are given by Cohen (2010) to develop global leadership.

i. Examination

ii. Education

iii. Experience

iv. Exposure

How can IT play its role to redefine vision or to develop global leadership? For this, it is critical for top management and IT to agree on where IT is to provide leadership and vision (see fig 1), and where IT is expected to partner and support (Motwani et al, 2000).

Information Technology

Vision

(Global Mindset)

Corporate Strategy

Cultural Diversity

Global Supply Chain Management

Fig 1: Theoretical Framework

Top management should work with IT to translate the business vision to technical reality (Kalkan, V.D. 2008). Modern computers with their elevated calculating and graphical output capabilities offer the opportunity to form visions with due work processes in a virtual world of simulation models (Pispa, 2003). The leaders or managers can play with these visions and gain 'experience' of how the system solutions would function in certain important respects. The experience can concern both the outcomes of decisions under given constraints and the constraints themselves. Training plays very important role in redefining the vision of the managers. For instance, Jack Welch, the CEO of GE wanted to inculcate the antiunion sentiment in managers (Weissman, 2001). To make the mindset of the managers and leaders in this way, he introduced different courses for the managers and also held "Personnel Relations Leadership Seminar". One of the course learning objective is to develop UA (Union Avoidance) in the managers. Therefore, as for as training and education are concerned, there are number of IT based softwares which can be used by the companies for global leadership training. Computer based simulation models play very important role in redefining the vision of leaders or managers (Andersin and Sulonen, 1974). Table I gives the list of IT softwares which can be used by the companies.

Table I: Different types of IT softwares

Software

Description

Computer Assisted Instructions (CAI)

It is a system of individualized instruction that uses a program presented by a computer as a learning medium. Major types are: Drill and Practice, Tutorial, Dialog, Testing

Computer Managed Instructions (CMI)

In this, computer assigns a candidate to read certain book, listen certain tape, attend certain lecture and so on. On completing the assignment, the candidate returns to the computer for testing and further assignment

Computer Based Simulations

To simulate is to copy the behavior of one system with a different, dissimilar system. Thus a computer can be programmed to behave like some other system. Simulation is used when direct experimentation is impossible or undesirable or uneconomical or immoral or simply slow.

Computer Aided Problem Solving

It is used to explore and organize material from different sources by using computer as an aid to problem solving

Source: Adapted from a textbook of computer science by Professor Muhammad Tahir Hassan, National Book Foundation, Islamabad, Pakistan

Fig 1: Theoretical Framework 3. IT and Corporate Strategy

IT takes in business processes related to information technology or communication technology including decision making (Roy, 2003). For instance, IT adoption would include having an organizational intranet, having enterprise resource planning (ERP) systems installed (Rau and Harem, 2009), using e-mail for external communications, having an EDI, Video conferencing with suppliers, and so on (Wang, 2006; Roy, 2007). Formulating an effective business strategy for a firm is a complex task. Strategic and organizational requirements for person-system-organization fit are therefore becoming an important area of research for competitive advantage through deepening knowledge of technology, strong financial backing, learning new technological skills and information, building up the capabilities and competencies for organization design can distribute and serve a large customer base (Lei and Slocum, 2005).

The Internet is creating one global market place with specialized sub-markets that are organized without regard to geography (Manardo, 2000). E-business is just a mouse click away no matter where they are physically located, allowing buyers to comparison-shop globally. The IT has not changed the fundamentals of strategy - it is still about wining in both the competitive and capital markets. What the IT has changed, however, is the speed of strategy formation and evaluation. IT and Internet have also changed the formulation, execution, and evaluation of global strategy's key elements - vision and planning, measurement and the utilization of partnerships (Manardo, 2000). New technologies enable a real-time dynamic strategic process that breaks from traditional planning cycles. They facilitate greater input into strategy process by everyone in the organization, challenging established decision-making norms. As a result, planning in the internet age becomes dynamic, fuelled by the active involvement of the entire organization. Finally, strategic execution becomes critically dependent on the information flow enabled by the Internet, both within the company and throughout its network of suppliers. Globalization has increased the connectivity and collaboration which in turn has increased the magnitude and volatility of data available with and between organizations (Sikora and Langdon, 2006). Intelligent agents are now emerging as a way to deal with this astounding variety of data in diverse and assorted environments (March et at, 2000). Global information systems play a significant role for multinational companies in implementing strategies. These systems give competitive advantage to a business by enabling timely transfer of information irrespective of the different time zones and geographical constraints (Nickerson, 2001).

4. IT and Cultural Diversity/Organizational Culture

Cultural distance moderates the role of IT adoption on globalization (Roy & Sivakumar, 2007). Ye (2002) studied the collaborative information infrastructure in a distributed virtual enterprise and presented a theoretical approach to engineering collaboration in the process of designing production systems. Cultural distance; which refers to differences between country cultures, has become a construct of enduing interest in global business (Shenkar, 2001). Organizational culture and team development become more and crucial with the development of globalization and virtual organizations (Wang, 2006). In the recent years, teams and interpersonal relationship are becoming more and more important HR factors for organizational effectiveness of technological innovations (Wang and Mobley, 1999). For advanced global companies, employee development is a pillar of the enterprise-value framework, equal in importance to shareholder support or customer loyalty. Retaining talent is identified as a key business priority for all the companies surveyed by World Economic Forum (Manardo, 2000; Guthridge and Komm, 2008). The digital economy is changing the relationship between global companies and the workforce. The globally connected business environments employees have more options than ever before, members of a "free-agent" workforce can expect and demand more from the employer in exchange for their loyalty. New Internet-related technologies facilitate the recruitment of quality employees from around the world and enable increasingly creative work arrangements that balance work demands and family responsibilities. Research (Manardo, 2000) shows that global firms are increasingly using Internet - IT related technologies to enable and necessitate the use of virtual teams around the world to solve complex global problems and foster both knowledge integration and continuous learning, which aid in the motivation and retention of a company's best people. The rapid change in organizational structure and globally distributed engineering demand for integrated strategies and new ways of HRM in promoting organizational culture, and entrepreneurship (Davis et al, 1986; Mcloughlim and Harris, 1998, James, 2002). Besides this, there is a problem of balancing the culture of openness and knowledge-sharing with the need to appropriate knowledge as intellectual property. IT can play very important role in knowledge sharing specifically in an environment of cultural diversity. I refer here an example of IBM's ThinkPlace program, "catalyst" where employees post ideas on an intranet site and invite comment or support from other people (Ende and Kijkuit, 2009). This approach should be adopted to nurture the ideas within the organization. Knowledge management is itself a global challenge in such kind of cultural diversity. In fact, knowledge management is essentially a deeply social process which must take into account the human and social factors primarily (Mason & Pauleen 2003). There are two main approaches to knowledge management. One focuses on the deployment and use of appropriate technology to utilize knowledge while the other focuses on the capture and transformation of knowledge into a corporate asset (Mason and Pauleen, 200; Guah & Currie, 2004). The first approach emphasizes information technolog (IT) and focuses on it as the mechanism for managing knowledge (Alavi and Leindner, 2001; Hansen et al, 1999). The second emphasizes people and processes. It attaches greater importance to human relations and the elicitation of tacit knowledge (Aller, 1999; Holsapple and Joshi, 2000; Gold et all, 2001).

5. IT and Global Supply Chain Management

In today's highly competitive and global environment, companies need to improve effectiveness and efficiency. GSCM, as a major part of business operations, plays an important role for organizations to achieve competitive advantage (Motwani et al, 2000). A well managed supply chain can help a company to meet market demand. An improved supply chain should be able to "move product to market faster and cut the cost of moving goods from the original source to the customer" (Andel, 1997). The wide applications of IT makes it possible for the organizations to improve the over all business operations. Supply chain managers increasingly want to automate all of the supply chain, from forecasting to distribution, and to every element of the chain (Macleod, 1994). Today, companies want an integrated solution to enable them to see the entire supply chain at once. For instance, they want to know that if they drill down to forecast, they can see the demand history, which is a combination of data which comes from sales order processing, inventory management and the warehousing system. The ability to reduce human intervention yet oversee minutely the flow of parts and products along the entire length of the supply chain can help dramatically in cutting logistics costs and boosting customer satisfaction (Van, 1994).

"To survive, let alone win, a company must be part of one

or more supply chains producing world class performance." Towill (1997)

Hence companies need to work together and optimize the complete pipeline by establishing a seamless supply chain ("think and act on") to maximize their market share. The global industry of today demands logistics managements to plan and execute customer-led, profit-driven tactics, where an array of alternative production and procurement methods is deployed simultaneously (Motwani et al, 2000). GSCM is the philosophy that underpins the logistics business in the Royal Air Force (Martin, 1996). A new IT system, LITS (Logistics Information Technology Strategy) is being developed to support GSCM at RAF. Table II provides examples of corporations that provide IT tools/services and corporations that have successfully implemented IT related software packages in GSCM. The strategy in GSCM is to optimize product and information flow from the purchase of raw material to the delivery of finished product, with the aim of achieving ever higher levels of productivity, quality, innovation and alliance between the company and its vendors and customers (Muller, 199).

Table II corporations that provide IT tools and corporations that use IT tools

Corporations that provide IT tools

Name

Description/application of IT tools provided

Allied-Corp.

Global company integrating SCM services to industrial clients worldwide

CAPS logistics Inc.

Specializing in decision optimization software for supply-chain modeling

Chesapeake Decision Sciences, Inc.

Provides software and services for developing supply-chain and scheduling solutions

CyberSystem Technologies, Inc.

Offers fully-automated, supply-chain management systems, called intraMalls

Global Information Solutions

Provides logistics/supply-chain software products and custom programs

i2 Technologies

Provides clients/server based eBPO software products for SCM and related business

InterTrans Logistics Solutions

Provides enterprise-wide, integrated client/server SCM software applications

LogicTools, Inc.

Develops SCM tools for intelligent strategic, operational, and tactical decision

Lyte Group, Inc.

Offers integrated SCM and planning software solutions

Supply Chain@ Solutions

Developer of application software to manage the supply-chain environments of manufacturers, wholesalers, etc.

Corporations that have successfully implemented IT related software packages in GSCM

Name

Direct benefits from IT implementation in GSCM

Cardinal Logistics, Inc.

Increased customer service; reduced customers' inventory levels; reduced customers' transportation costs

Compaq

Increased on-time delivery to 95 percent; decreased inventory; decreased order-to-receipt cycle time to five days

Cumberland Packaging

Decreased inventory by 10 to 15 percent, or approximately by $2 million; reduced production costs substantially

Data Card

Reduced engineering change process time from two weeds to two hours

Kobe Copper Products

Increased the information sharing across the company dramatically. Approximate saving of $270,000 per year on account of this information sharing

Pair Gain

Saved millions of dollars by strengthening corporation among employees and outside business partners; cut change cycle time by nine weeks

Philips Semiconductors

Increased forecasting accuracy; decreased inventory levels; integrated logistics and marketing functions

Thompson Consumer Electronics

Reduced planning cycle time from four to five weeks to one week; reduced raw materials, work-in-process, and finished goods inventory substantially

Xircom

Increased the speed of engineering change order cycle by five times; permitted instant broadcast of product data worldwide

Note: Adapted from http://emeraldinsight.com/10.1108/09576050010378540

Companies exploiting IT and related technologies are successfully implementing this strategy. For example, Bennetton, of Italy, is often cited as one of Europe's success stories (Motwani et al, 2000). It is an international organization; but they do not have their own manufacturing facilities nor retailing outlets. They are, in fact, a merchandiser and distributor, who contract manufacturing and sell through franchised outlets. Using their excellent IT system they respond to the pull of the marketplace to schedule manufacturing and direct to correct products to their customers (Parker, 1994).

6. Concluding Remarks

The world has now become a global village. Borders and barriers are going to be vanished. In order to operate effectively in an environment of borderless markets, global multinational corporations have to manage their corporate philosophy in order to sustain in this environment of globalization and information technology (Kustin, 1993). Information technology is a great truth of this century it has a great impact on globalization. This paper discusses the role of information technology on global management. Multinational companies which are implementing IT and related technologies are enjoying competitive advantage over the companies which don't do the same. In this paper, several areas of global management are taken and discusses how IT has already help or can help in these particular areas. Previous literature has been taken. One of the limitations of this study is that it is based on secondary data. Time constraint is also a limitation of this paper. In future, primary data could be used to support the argument that IT has a direct relationship with global management.

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