Reorganizing the Business in Global Environment

How should a firm organize itself for doing business on an international scale? To develop a global company and information systems support structure, a firm needs to follow these principles:

  1. Organize value-adding activities along lines of comparative advantage. For instance, marketing/sales functions should be located where they can best be performed for least cost and maximum impact; likewise with production, finance, human resources, and information systems.
  2. Develop and operate systems units at each level of corporate activity-regional, national, and international. TP serve local needs, there should be host country systems units of some magnitude. Regional systems units should handle telecom­munications and systems development across national boundaries that take place within major geographic regions (European, Asian, American). Transna­tional systems units should be established to create the linkages across major regional areas and coordinate the development and operation of international telecommunications and systems development (Roche, 1992).
  3. Establish at world headquarters a single office responsible for development of international systems—a global chief information officer (CIO) position.

Many successful companies have devised organizational systems structures along these principles. The success of these companies relies not only on the proper organization of activities but also on a key ingredient—a management team that can understand the risks and benefits of international systems and that can devise strategies for overcoming the risks. We turn to these manage­ment topics next.

Source: Laudon Kenneth C., Laudon Jane Price (2020), Management Information Systems: Managing the Digital Firm, Pearson; 16th edition.

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