Globalization and Business IT Exam - Assignment Example

?Question No. 2 The advent and implications of information technology has revolutionized the world in the most impressive manner. The world is now regarded as a global village where the economies of the world are interrelated and so are the various businesses. From a small cottage industry to a world renowned multinational, use of IT has greatly influenced the way operations are carried out in an organization which has resulted in greater efficiency and productivity. As per the e-commerce models such as Business to Business (B2B), Business to Consumer (B2C) Business to Employees (B2E) and Consumer to Consumer (C2C), the archaic methodology of conducting business has been redefined. The most striking advancement brought upon by the advancement in information technology is the drastic modification in the communication norms. Businesses are now able to communicate with its internal, external and connected stakeholders more conveniently, thus saving precious time and cost. Internet has played the most prominent part in abridging the distance. By using e-commerce, companies of all types are able to explore new business ventures in the form of new and similar market segments and lucrative business opportunities. Distance in no more a hurdle. Since the internet never sleeps, customers have the privilege of doing transactions 24-hours of the day, 365-days of the year. Bad weather or labor problems will not prevent the customers from visiting the store and placing their orders. From global perspective, the introduction of electronic data interchange (EDI) has standardized the language of business all across the globe. According the Advantages of EDI, using these industry standards, for transmitting data related to commercial transactions, the manufacturer and the supplier are easily and quickly able to complete a business transaction. In order to objectively evaluate the role of information technology for all businesses, its role can be divided into three major aspects which can prove to be vital for any business enterprise Support of its business processes and operations Support of decision making by its employees and managers Supports of its strategies for competitive advantage (O’Brien and Marakas 2008) An organization operating in global environment strives to implement the above mentioned traits in its corporate strategy and thus reaping maximum benefits. Multinational organization uses IT in order to integrate its various strategic business processes and operations such as keeping record of purchases and sales, automating the inventory record system or maintaining transaction history of the customers in order to forecast their demand in future. IT also provides the managers and those charged with governance several tools which assist them in making apt decisions. These decisions might include the addition or deletion of products from the current product line, what are the projects which are likely to yield positive cash flows in the future and identification of the lucrative investments. In today’s world, to obtain a clear strategic advantage over the competitors, a company needs to align its corporate strategy keeping in consideration the information technology requirements. The use of strategic information system has tremendously uplifted the quality of product and services offered by different companies and have immensely assisted in obtaining competitive advantage. A company can only survive if it develops strategies which are sufficient to counter the prevailing competitive threats in the market. Competitive forces can be analyzed through Porter’s five forces model which are illustrated in the figure below In today’s dynamic market, not only the companies are expending sufficient resources in countering the prevailing rivals in the market, but efforts have also been diverted towards establishing barriers which will stop the new entrants into the market. The internet has created several ways through which new entrants can enter into the market more easily and quickly and with considerably less cost. In order to counter this threat, companies, especially multinationals, are utilizing IT to develop alliances. IT has assisted these companies to create virtual organization of business partners. Through this strategy, the companies have developed online business relationship with its stakeholders such as customers, suppliers and subcontractors and others. By doing so, several companies have able to reduced inventory cost; boost its revenue, acquired market leadership and enhanced its market share. Introduction of a new substitute is another threat which a company faces while operating in the market. Since advancement in IT has made access to information cheaper, research and development expenditure (R&D) has been curtailed noticeably. The companies, in countering this threat, are indulging in developing new IT features to differentiate products and services. Examples are online discount stock trading, online package tracking and online full-service customer systems. Finally, in order to operate smoothly in the market, a business must safeguard itself from the risk of bargaining power of customers and suppliers. These two threats act as opposing forces in the market and can cause significant impact on the profitability of the company. In order to become indispensible for the suppliers and the customers both, the company needs to adopt tactics such as cost leadership and growth strategy. The company can establish intranet facility with its suppliers through which transaction can be carried out more efficiently and it would be cost effective for the supplier to transact with that particular company. In order to strengthen the relationship with the customers, the company can make valuable use of IT by adopting B2C model of business. Features such as offering online bidding and online shipment tracking facility is likely to retain the current customers and cultivate future customer relationship. A further analysis of the impact that IT has brought upon the operations of the multinationals can be analyzed through the value chain analysis. The value chain comprises of primary activities and secondary activities. The primary activities are provided in order to create value among the customers and consist of activities such as inbound logistics, operations, outbound logistics, marketing and sales and services. Support activities such as firm infrastructure, human resource management and technology development assist these primary activities. In the past few decades, the multinationals have recognized the advantages of linking the value chain of the company with that of the other organizations. According to the article The value chain, the expansion of the value chain is done through establishing an Interorganizational Information System (ISS). ISS, which was previously confined to the boundaries of an organization, has now been extended across the value chain of supplier’s, channel and buyer.(Schultheis 1999).Considering the linkage of value chain with the supplier, such automated inventory ordering systems can be implemented which can automatically generate purchase order when the inventory level falls below a predefined limit. IT also assists the managers in establishing Decision Support Systems (DSS) which has been actively utilized in Customer relationship management (CRM).Information technology basically enhances the value of any company through implementing differentiation strategy. Through the implementation of IT, the company can raise the switching cost of the customers, thus retaining the market share and profitability. Advent and implementation of IT in the business operations has drastically changed the face of the business and competition. Operational efficiency in business is increasing day by day with the use of state of the art Enterprise Resource Planning (ERP), Decision Support System (DSS), Data base management system (DBMS) Communication techniques, internet and intranet etc. Consumers and providers are now closely linked via IT, and boundaries no longer remain a hurdle. References [1] 2005, e-commerce models, viewed June 15th 2011, [2] 2011. Electronic Data Interchange (EDI) - Advantages Of Edi, How Edi Works, Security Issues, the Future of Edi. Viewed 15th June 2011. . [3] O’Brien and Marakas, 2008, Management information system, 8th edition. Kansas [4] 2009. The value chain viewed Web.16th June 2011. < www.netmba.com> [5] Schultheis, 1999 Management Information Systems: The Manager’s View, 4th edition. p-311 Question 10. Enterprise Resource Planning (ERP), according to the article What is ERP, is a software product which is actively utilized by the companies in carrying out its day to day operations and decision making. In this era of automation through computerization, the use of ERP is not limited to any specific industry. According to SAP ERP functions and features, the primary purpose of implementing the ERP systems is to integrate several operations of a company such as sales and procurement, financial, human capital management, operations, corporate services. As per the introduction to ERP, some of the most renowned ERP software available in the market are SAP, Oracle applications, PeopleSoft, JD Edwards and Baan. With the increasing inclination of market towards implementing ERP, the revenue of the ERP market has reached an astounding $38 billion and future growth is envisaged. [Paul D Hemerman 2008] In order to analyze the utility of ERP from the perspective of multinationals, the benefits can be divided into tangibles and intangibles. The tangibles benefits of ERP are measured in monetary terms and are primarily related to the core operating activities of the company. The principal concern for the multinational in this era is to reduce the cost of production and services. Considering the tangible benefits, the use of ERP increases the productivity of the day to day operations and personnel. The implementation of ERP also considerably decreases the cost of production. For example, the ERP significantly reduces the holding cost of the inventory by analyzing the minimum inventory requirement i.e. the buffer stock level, and making sure that inventory is not over bought. The use of ERP has proven to be useful for reduction in the stock obsolescence, which can cause a highly adverse effect on the profitability of the company. The implementation of ERP also assists significantly in the reduction of the lead time. Lead time, from the manufacturing concern perspective, can be defined as the delay between the initiation and execution of an order.(investopedia) In addition to the above mentioned, the inventory also reduces the paper and postage cost. Most of the ERP’s include modules for electronic communication, inter and intra company. These correspondences primarily include procurement order, electronic invoicing, payments and receipt. Considering the intangible benefits that implementation of ERP can accrue to the organization, it improves the organizational transparency and responsibility. Those charged with the governance of organization are now inclined towards utilizing ERP in the strategic planning. Resources of the company are adequately managed by the ERP in the most apt fashion, thus the misutilization of the resources is reduced to the minimum. With the implementation of ERP, multinational are able to transfer their data faster to their global subsidiaries. Faster transfer of data helps the mangers in quick decision making, thus lucrative ventures are not lost due to delay in taking decisions. Since major operations are automated, there is a lot of time saving when it comes to date entry. Another tangible benefit which the organization avails due to the use of ERP is the development of Customer relationship management (CRM). Through CRM, multinationals are able to keep track of the customer buying behavior and it has also revolutionized the process of transactions. As per challenges in managing multinational firms, managing a multinational business comes with a wide spectrum of challenges such as barriers to entry into foreign market, foreign government regulations and law, product standardization, human resources and product adaption. ERP assists the multinationals in market research. It can aid the organization in identifying the similar market segments and assist in identifying the demand pattern analysis. Human resource is another crucial area where multinational face a great deal of problem. The administration of benefits and salaries often proves to be a primary concern for the multinationals. Where the companies are focusing on reducing costs and acquire the position of cost leader, they also want to offer their human resource with the best remuneration packages so that the skilled human capital can be retained. ERP manages this dilemma by striking the right balance between reducing its administrative cost and analyzing the optimum mix of the labor. ERP software is also equipped with the payroll modules which make it quite efficient for the multinationals to manage the payroll across various countries. ERP also assists the multinationals in managing the taxation structure applicable in various countries of the world. References [1] 2006. What is ERP – The ERP definition. viewed June 15th 2011. [2] 2010. SAP ERP Features and Functions. viewed June 15th 2011. < www.sap.com> [3] 2010.An introduction to ERP .viewed June 16th 2011. [4] Paul D Hemerman. 2008. ERP application 2008: The battle goes vertical,. Viewed June 16th 2011. [5] 2009. Lead time definition. Viewed June 16th 2011. [6] 2011. What are the challenges in managing multinational firms? viewed June 16th 2011 \ Implementation of Information Technology in the business process model Introduction IT has played a very important role in reshaping the today’s business. The company’s are inclined towards automating their operations in order to obtain competitive advantage and increase their profitability. In today’s era, IT plays a very prominent role in the formulation of the IT strategic plan. An overall business or corporate strategy feeds down, through divisional or business unit strategies, into a number of functional strategies. One of these strategies is the Information system strategy which is further divided into a number of other strategies such as IT strategy and communication strategy. It has been observed that in this era, the success of the organization depends on its ability to gather, produce, maintain and disseminate information knowledge. (Hui-Liang Tsai) Advantages Implementation of IT is useful in the effective management of expensive and critical assets of the organization. For any organization, the critical assets comprises of information, hardware, software and people. IT manages all these important resources in the utmost efficient fashion. The company needs to invest more in the development of the information system so that the company’s other investments are under proper scrutiny. Another advantage of utilizing IT in the business strategy is to improve the communication between the business management and information system. Business management will obtain an excellent understanding of their current systems; as well identify any risk and opportunities. This linkage is likely to create a drastic change in the environment and will assist in achieving the company objective. The IT planning model also links the information system direction to the business direction which is immensely helpful in setting a proactive approach. Since information is considered to be the most valuable resource of the company and IT assists in planning and managing the flow of information throughout the organization. Strategic Planning Components While including IT in the strategic planning process, the company must evaluate the following Where the system is currently Where the system has to be in the future Identification of gaps (Schilder 1997) Issues requiring consideration Identification of key business area is important when considering the implementation of IT in the business model of the company. Key business area might include Finance, procurement, order recording, customer management etc. Where IT increasing the efficiency of the system to greater extent, its immediate implantation cost is quite high and requires substantial investment. After the implementation of the system, it requires continuous maintenance which can cause a downward force on the profitability of the company. Considering the global information integration, the application software is changing at rapid pace in various countries of the world. In addition to that rapid access is required between the subsidiaries and the multinationals. The company must also ensure that the quality and consistency of the database is practices all across the countries in which its subsidiaries operate. Human capital is the primary concern when implementing the IT in the business model. The company must ensure that the workforce is acquainted with the implementation of the new IT infrastructure. Jobs created by information technology are likely to require various portfolios of skills. Since the operations become automated, and there is less need of man labor, labor lay off will take place which will result in the redundancy cost. In order to avoid such situation and retain the individuals, training session must be organized so equip them with the relevant IT skills. (O’Brien and Marakas 2008) References [1] Hui-Liang Tsai. 2003. Information technology and business process reengineering. 1st edition. USA [2] Diane Schilder. 1997. Strategic Planning Process: Steps in developing strategic plans. Harvard Family research project [3] O’Brien and Marakas, 2008, Management information system, 8th edition. p 510. Kansas. Read More