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Chapter 1 Information Systems in Global Business Today 41

producers. But manufacturing is now a very small part of U.S. employment
(less than 12 percent and declining). In a normal year, about 300,000 service
jobs move offshore to lower wage countries. Many of the jobs are in less-skilled
information system occupations, but some are “tradable service” jobs in
architecture, financial services, customer call centers, consulting, engineering,
and even radiology.
On the plus side, the U.S. economy creates over 3.5 million new jobs in
a normal, non-recessionary year. However, only 1.1 million private sector
jobs were created due to slow recovery in 2011. Employment in information
systems and the other service occupations is expanding, and wages are stable.
Outsourcing has actually accelerated the development of new systems in the
United States and worldwide.
The challenge for you as a business student is to develop high-level skills
through education and on-the-job experience that cannot be outsourced. The
challenge for your business is to avoid markets for goods and services that can
be produced offshore much less expensively. The opportunities are equally
immense. Throughout this book, you will find examples of companies and
individuals who either failed or succeeded in using information systems to
adapt to this new global environment.
What does globalization have to do with management information systems?
That’s simple: everything. The emergence of the Internet into a full-blown
international communications system has drastically reduced the costs
of operating and transacting on a global scale. Communication between
a factory floor in Shanghai and a distribution center in Rapid Falls, South
Dakota, is now instant and virtually free. Customers can now shop in a world-
wide marketplace, obtaining price and quality information reliably 24 hours a
day. Firms producing goods and services on a global scale achieve extraordi-
nary cost reductions by finding low-cost suppliers and managing production
facilities in other countries. Internet service firms, such as Google and eBay,
are able to replicate their business models and services in multiple countries
without having to redesign their expensive fixed-cost information systems
infrastructure. Half of the revenue of eBay (as well as General Motors) in 2011
will originate outside the United States. Briefly, information systems enable
globalization.

THE EMERGING DIGITAL FIRM

All of the changes we have just described, coupled with equally significant
organizational redesign, have created the conditions for a fully digital firm. A
digital firm can be defined along several dimensions. A digital firm is one
in which nearly all of the organization’s significant business relationships with
customers, suppliers, and employees are digitally enabled and mediated. Core
business processes are accomplished through digital networks spanning the
entire organization or linking multiple organizations.
Business processes refer to the set of logically related tasks and behaviors
that organizations develop over time to produce specific business results and
the unique manner in which these activities are organized and coordinated.
Developing a new product, generating and fulfilling an order, creating a
marketing plan, and hiring an employee are examples of business processes,
and the ways organizations accomplish their business processes can be a source
of competitive strength. (A detailed discussion of business processes can be
found in Chapter 2.)

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