Research Review

Journal: The Information Technology and Management Infrastructure Strategy

Globalization and Information Management Strategies
By J Karimi and B.R. Konsynski

Book: Strategic Information Management: Challenges and Strategies in Managing

Information Systems
Edited by Robert D. Galliers and Dorothy E. Leidner

Mary Jane G. Maravilla

Master in Information Systems
Silliman University

The Research
This research review is based directly on the work of J. Karimi and B.R. Konsynski as
published in Strategic Information Management: Challenges and Strategies in Managing
Information Systems. In that paper, the authors presented the issues related to the radical
changes taking place in both the global business environment and the IT environment, and
effects of globalization on the organizational strategies. The authors gave the business
strategy/structure of global firms and its corresponding strategic management processes.
Moreover, the alignment of global and information management strategies were also exhibited.
The following is a description of the problem that this research review addresses as set forth
by Karimi et al.[1] Although many global firms have an explicit global business strategy, few
have a corresponding strategy for managing information technology internationally.
Changes in technologies and market structures have shifted competition from national to a
global scope. This has resulted in the need for new organizational strategies/structures.
Traditional organizational designs are not appropriate for the new strategies, because they
evolved in response to different competitive pressures. New organizational structures need to
achieve both flexibility and coordination among the firms diverse activities in the new
international markets.
To compete effectively, firms often must coordinate their activities on a worldwide basis.
Few global firms have a corresponding strategy for managing information technology
internationally. Therefore, a global information management strategy is needed as a result of (1)
industry globalization: the growing globalization trend in many industries and the associated
reliance on information technologies for coordination and operation, and (2) national competitive
posture: the aggregation of separate domestic strategies in individual countries that may contend
with coordination. Industries are associated with how the activities in the industry value chain
are performed by the firms worldwide systems. These systems involve information and
management process interchange across legal organization boundaries, as well as across national
boundaries.
It is also seen that coordination is a concern for a global firm. Coordination involves the
management of the exchange of information, goods, expertise, technology, and finances. Many
business functions play a role in such coordination logistics, order fulfilment, financial, etc.
Coordination involves sharing and use, by different facilities, of information about the activities
within the firms value chain. Organizations must begin to manage the evolution of a global IT
architecture that forms an infrastructure for the coordination needs of a global management team.
Issues related to the radical changes taking place in both the global business environment and
the IT environment such as changes taking place in the global business environment as a result of
globalization, the effects of globalization on the organizational strategies/structures and

coordination/control strategies, the information technology dimension and addresses the issue of
development of a global information systems management strategy, and other challenges to
senior managers that are emerging in the global business environment.
For the changes taking place in the global business environment as a result of globalization,
the following factors are considered catalyst for globalization: increased similarity in available
infrastructure, distribution channels, and marketing approaches among countries, as well as a
fluid global capital market that allows large flows of funds between countries. Additional causes
include falling political and tariff barriers, a growing number of regional economic pacts that
facilitate trade relations, and the increasing impact of the technological revolution in
restructuring and integrating industries. Scope of globalization is deemed to largely separate
domestic industries such as software, telecommunications, and services.
Significant changes have taken place in organizational strategies/structure during the 1980s
because of ever-increasing global competition and growth in the communications and
information-processing industry. Researchers in international business have pointed out that
the structure of a global firms value chain is the key to its strategy. Another study found that, in
successful global firms, organization structure and strategy are matched by selecting the most
efficient or lowest cost structure that satisfies the information-processing requirements inherent
in the strategy. That is, the firms strategy and its information-processing requirements must be
in alignment with the firms organizational structure and information-processing capabilities.
The evolution of the global forms strategy/structure is directly related to global strategy.
Global strategy is a strategy from which a firm seeks to gain competitive advantage from its
international presence through either a concentrated configuration of activities, or coordinating
among dispersed activities, or both. A global firm faces a number of options in both
configuration and coordination for each activity in the value chain. A global firm value-chain
activities are pulled together by two environmental forces: national differentiation and global
integration.
The following summarizes the evolution of the global firms strategy/structure and their
coordination/control strategies as a result of globalization of competition:
Table I. Global Business Environement-strategy/structure and coordination control

Business
Strategy/Structure
Multinational/
decentralized
federation

Global/centralized
federation

Strategic Management
Process
Informal
HQsubsidiary
relationships;
strategic decisions
are decentralized
Tight central
control of

Tactical
Business
Processes
Mainly financial
flows; capital out
and dividends back

One-way flows of
goods, resources

Coordination
and
control processes
Socialization;
careful recruitment,
development, and
acculturation of key
decision makers
Centralization;
substantive

International/
coordinated
federation

Transnational/
integrated
network

Interorganizational/
coordinated
federation of
business groups

decisions, resources
and information
Formal
management
planning and
control systems
allow tighter HQ
subsidiary linkages
Complex process of
coordination and
cooperation in an
environment of
shared decision
making
Share activities and
gain competitive
advantage by
lowering costs and
raising
differentiation

and information
Assets, resources,
responsibilities
decentralized but
controlled from HQ

Large flows of
technology,
finances, people,
and information
among
interdependent
units
Vertical
disaggregation of
functions

decision making by
senior management
Formalization;
formal systems,
policies and
standards to guide
choice
Co-opting; the
entire portfolio of
coordinating and
control mechanisms

Formalization;
multiple and
flexible
coordination and
control functions

Source: Strategic Information Management: Challenges and Strategies in Managing Information Systems,
page 93.

As seen, research on international business suggests that globalization has caused a change in
the coordination/control needs of global firms. Research further suggests that different
organizational strategies/structures are necessary across products or businesses with diverse
(global) environment demands. In response, there have been two relatively new trends in
organizational strategies: (1) a shift from a multinational strategy with decentralized
organizational structures to a transnational strategy and globally integrated networks of
operations, and (2) a rapid proliferation of interorganizational designs and structurally
independent organizational units and business groups.
Therefore, the success in global competition depends largely on (1) a proper fit between an
organizations business strategy and its structure, (2) an organizations ability to adapt its
structure in order to balance the environmental forces of national differentiation and global
integration for its value-chain activities, and (3) the manner of coordination/control of the
organizations value-chain activities. the globalization of competition and the evolving business
environment suggest that the success of todays global firms business and its
coordination/control strategies may be linked to a global information management strategy.
There are an increasing number of applications of IT by global firms in both service and
manufacturing industries due to the dramatic changes in IT, and the increased skills in

organizations to deploy and exploit those advances. Patterns in the economies of IT development
are changing. The existence or near completion of public national data networks and of public or
quasi-public regional and international networks in virtually all developed (and a few
developing) countries has resulted in rapid growth in data-service industries, e.g. data processing,
software, information storage and retrieval, and telecommunications services.
Today global firms not only rely on data-service industries and IT to speed up message
transmission but also to improve the management of corporate systems by: (1) improving
corporate functions such as financial control, strategic planning, and inventory control, and (2)
changing the manner in which global firms actually engage in production.
Therefore, more and more of global firms mechanisms for planning, control and
coordination, and reporting depend on information technology.
A global information system (GIS) is a distributed data-processing system that crosses
national boundaries. Because GISs cross national boundaries, unlike domestic distributed
systems, they are exposed to wide variations in business environments, availability of resources,
and technological and regulatory environments.
The following table shows the alternative information systems management strategy/
structure as a result of the evolution in global business environment and technology.
Table 2: Alignment of global and information management strategies
Business
strategy/ Coordination control Coordination control IS strategy structre
structure
strategy
mechanism
Multinational
Socialization
Hierarchies;
Decentralization/
decentralized

managerial decisions standalone

federation
determine the flow databases and
of
materials
and processes
services
Global/centralized
Centralization
Centralization/
federation
centralized
databases and
processes
International
and Formalization
Markets;
market IOS/linked
interorganizational/
forces determine the databases and
coordinated
flow of materials processes
federation
and services
Transnational
Co-opting
Integrated
integrated network
architecture/shared
databases and
processes
Source: Strategic Information Management: Challenges and Strategies in Managing Information Systems,
page 103.

New information technologies are allowing closer integration of adjacent steps on the valueadded chain through the development of electronic markets and electronic hierarchies.33 As that
study reports, the overall effect of technology is the change of coordination mechanisms. This ill
result in an increase in the proportion of economic activities coordinated by markets rather than
by hierarchies. This also supports and explains change in global firms strategies from
multinational, global strategies to international (interorganizational), transnational strategies.
Because of the widespread distribution of organizational units and the relative infrequency of
direct contacts among those in disparate units in a transnational firm, top management has a
better opportunity to shape relationships among managers simply by being able to influence the
nature and frequency of contacts by using a proper information system management strategy.
The key components of a GIS management strategy are (1) a centralized and/or coordinated
business/technology strategy on establishing data communications architecture and standards, (2)
centralized and/or coordinated data management strategy for creation of corporate databases, and
(3) alignment of global business and GIS management strategy.

Evaluation and Discussion

The paper clearly focused on how globalization trends have resulted in a variety of
organizational designs that have created both business and information management challenges.
This challenges affects the organizational strategy/structure as well the coordination of the
business with its internal and external environment.
Indeed, globalization is an opportunity but at the same time it also creates challenges for the
multinational and international companies. Whilst IT takes in business processes related to
information technology or communication technology including decision making, globalization
also cause the change in strategy formation and evaluation of a global firm, in a continuos
manner, so as to keep up with the business profit of being in a global market and in global
strategic point of view.
Globalization, as being embraced by most businesses recently, has numerous evidence of
effect in the aspect of increase in knowledge, increased competition, yet on the drawback it
somehow destruct the local industry. Hence multinational companies, as defined by Karimi and
Konsysnski is a global perspective firm but the focus of the product or services are for the local
basis of consideration for innovation.As stated on their paper The Age of Globalization,
Benjamin Lawlor[3], debated on the globalizations effects on business environment as There is
no specific event or timeline that marks when modern globalization began, because it was a
gradual progression, but what needs to be remembered is that globalization means worldwide
integration not just of social systems, but of political, cultural and business systems as well. It is
possible to dissect each of these systems and examine the affects of globalization on them, for

the sake of this paper I will only focus on its affect on the worldwide business environment. Over
the past few decades there has been a sudden increase in international integration of goods,
services, capital and economic activity, it is this worldwide integration that has lead us to come
up with the term, globalization. Even, though this integration of worldwide markets and
economies is relatively new, the evolution of globalization has had a profound affect on the
global business environment. To keep this paper as up to date as possible I will only go over
the effects of globalization at its current state of total worldwide integration when discussing the
business environment.
One of the most beneficial aspects of globalization for businesses is that companies can now
take skills and knowledge from across the globe and widen their horizon which leads to
increased collaboration and breakthrough innovations. The ability to communicate and transfer
information all around the globe lets companies focus on their main core competencies which in
turn leads to better collaboration and innovation. Thomas Friedman argues, with the growing
pressure of commoditization, collaboration and innovation are invaluable qualities that your
company must possess. Being able to draw from experience, knowledge, skills from firms and
individuals increases your chances of creating the next breakthrough product.2 With
globalization, this type of worldwide collaboration is possible, companies are now able to
outsource and offshore sectors of their corporation or merge with companies from different
corners of the world and are now able to communicate and transfer knowledge with almost no
effort and at super-sonic speeds. There is a limitless talent pool that is out there waiting to be
utilized and with globalization corporations now have the ability to use this talent.
A particular aspect of the business affected by information technology is the global supply
chain management. In todays highly competitive and global environment, companies need to
improve effectiveness and efficiency. As global supply chain management is a major part of
business operations helping to meet the market demand, the wide applications of IT make it
possible for organization to improve the overall business operations. That is, supply chain
managers increasingly want to automate all of the supply chain, from forecasting to distribution
and to every element of the chain.[2] Hence, companies need to work together and optimize the
complete pipeline by establishing a seamless supply chain.
In his paper, The Age of Globalization: Impact of Information Technology on Global
Business Strategies, Richard Vernon[4] , it is perceived that the concept of globalisation and its
various multidimensional persepectives can no longer be ignored from a strategic management
perspective. The ambiguity and lack of understanding that exists as to the concepts impact on
modern day business institutions should be analyzed from a viewpoint of ecological, political,
economic, and technological perspective. That is, within emerging economies uncertainty
emanating from a lack of information therefore needs to be factored into contemporary strategic
management theory, yet within the literature the accent is on managing within the global
information age.

References
[1] Karimi J., Konsynski B.R., 2003 The Information Technology and Management
Infrastructure Strategy, Globalization and Information Management Strategies (2003) 89-109.
[2] Ahmed, .I, Qadri A., Shahzad R., and Khilj B., 2011 World Applied Sciences Journal 12
(2011): 1100-1106
[3] Lawlor, B., 2007 The Age of Globalization: Impact of Information Technology on Global
Business Strategies(April 2007) 7-20
[4] Vernon, R., 2002 Globalisation and Its impact on Contemporary Strategic and Business
Management Practice(2002) 79-91