Chapter 15 Article Review: When You Shouldn't Go Global

The article written by Marcus Alexander examines the obstacles and pitfalls which companies may encounter when going global. In today's economy and with the changes in deregulation policies over the past 15 years, many companies have been enticed to expand their operations globally. While this aggressive strategy exposes companies to global economies of scale, many organizations have been unable to capitalize on a global strategy and have made ill-fated mistakes. He attributes the failures both to the firm's deeply misguided global strategies and the execution was more difficult than anticipated. The author suggests considering three important questions when contemplating going global:

1) Are there potential benefits for our company?

2) Do we have the necessary management skills?

3) Will the costs outweigh the benefits?

"Before launching a global move, senior managers need to conduct a simple but rigorous self assessment to gauge the likelihood of success," according to Alexander. Many companies, such as Royah Ahold, a large Dutch supermarket operator, were able to identify the potential benefits of globalizing but they did not put themselves in a position to realize those benefits.

Chapter 15 Case Study: Nestle Tries for an All for One Global Strategy

2) What type of global business and systems strategy did Nestle adopt? Was this strategy appropriate for Nestle’s business model?

Nestle has not necessarily believed in the concept of the global consumer. None of Nestle’s products is considered a truly global brand, with perhaps the exception of Nescafe, of which 100 million cups are served around the world each year. Nestle does target the world market but does so by creating brand strength locally by each diversified region. Nestle's global strategy fits the multinational startegy which is characterized by decentralization of production, sales and marketing operations to units in other countries. This strategy works well for Nestle since they are in the food market which needs to take into consideration, differing business cultures and local market preferences. Nestle remains the leading food and beverage company in the world so their strategy is effective, however, their decentralization of operations makes it extremely difficult to mainstream IT systems.

3)What management, organization, and technology challenges did Nestle have to deal with to standardize its business processes and systems?

As complex as the challenge seemed, Nestle embarked on a program to standardize and coordinate its information systems and business processes through a system called GLOBE. The company initially installedSAP’s R/3 enterprise resource planning software to integrate material, distribution, and accounting applications in the United States, Europe, and Canada. Instead of technology managers, Johnson tried to build his team from a diverse group of business managers who had experience in a variety of business sectors including manufacturing, finance, marketing, and human resources. It became apparent to Johnson that the greatest challenge of GLOBE might not be technical, but was personal and organizational perhaps. Managers resisted the idea of giving up control over their business processes to particpate in a centralized solution.

4)What strategies did Nestle management use to deal with these challenges? How successful were these strategies?

The implementation of the GLOBE system was paramount to Nestle's global market approach and it required large scale company buy-in. By the end of 2005, Nestle had converted 30 percent of its business to GLOBE, and had the capacity for one major rollout every month. The 80 percent number by the end of 2006 was still looming but the company had learned how to operate as a single unit on a global scale. Nestle is much closer to achieving its goal of standardizing all processes, data, and systems. Chris Johnson was able to develop projections for his team that were both measureable and attainable. Such a large scale important project deserves adequate manpower, budget and time to allow for the system to be properly implemented.

Article Review: Microsoft Unveils Project Management Effort for Partners

On June 3, 2009, Microsoft announced that all of its US partners who utilize Microsoft Office Project Server 2007, will have access to share templates, project methodologies and other project-management assets associated with Office Project Server 2007 via a Web portal. They named this program, "Project for Workgroups." Project for Workgroups provides solutions built by Microsoft's partners to create enterprise project management systems. The aim is to reduce deployment costs associated with project management implementations.

There are so many aspects of Project Management to keep track of that a Manager with multiple projects must invest a great deal of time simply to follow each individual project. Depending on the number of projects running simultaneously, this process may be exceedingly time consuming. Since finding problem areas before they become critical is essential to effective Project Management, any delay could be costly.

Project Management tools that provide a global overview of all the projects in a company’s portfolio, are a time-saving solution that can positively affect the outcome of a project. Having the necessary information at the right time can make the difference between project failure and success. The right tool can also help you to leverage your resources (people, money, schedules and capacity).

Herb Torrens, Microsoft Unveils Project Management Effort for Partners, 6/05/2009

http://rcpmag.com/articles/2009/06/05/microsoft-unveils-project-management-effort-for-partners.aspx

Chapter 14 Case Study: What Went Wrong with Maine's New Medicaid System?

1. How important are information systems for Maine’s Department of Health and Human Services? Analyze the impact of its faulty Medicaid claims processing system.

Information systems play an important role in data management and claims processing for Maine's Dept. of Health and Human Services. Having worked with Medicaid billing and information systems in California, through their intermediary Electronic Data Systems, I am familiar with the importance that information sent through the system plays in claims reimbursement, eligibility verification and treatment authorizations. Thes information systems are very sensitive to data that passes through them and claims get rejected for the slightest of errors. Much of these functions are done through computerized systems such as those utilized by the Medicaid program in Maine. Maine relies heavily on information systems to accurately process over 100,000 claims per day and manage the privacy and medical coverage for over 260,000 of its low-income residents.

The faulty Medicaid claims processing system implemented in Maine had a significant negative impact on healthcare providers and Medicaid recipients. More specifically, providers serving Medicaid patients were not getting paid for services rendered and many were eventually forced to deny medical services to Medicaid recipients. Many healthcare providers who relied on revenue from Medicaid patients, were being faced with streneous financial challenges. Furthermore, once claims began getting processed, the system was error prone, causing an estimated $9 million in provider overpayments rsulting from payments for entire procedures rather than just those covered by Medicaid.

2. Evaluate the risks of the Medicaid claims processing system project and key risk factors.

The Medicaid claims processing project carried many inherent risks and risk factors. The largest risk that this project carried was the mismanagement of processing the data. Many healthcare providers render services daily to Medicaid recipients in the state of Maine and rely on Medicaid payments to support their practices. A major delay in claim reimbursement to those providers creates a large risk for an undesired chain of events which ultimately results in the lack of medical care provided to Medicaid recipients. Another risk for this project was that the state of Maine acquired a company with limited expertise in these sorts of claims processing systems. Although CNSI may have been able to develop an extraordinary claim processing system, they lacked the track record and experience necessary for such a project. Facing time constraints set by HIPAA regulatory compliance and receiving a lower bid from CNSI, the DHS took a big risk and rushed in accepting the RFP from CNSI.

5. If you were in charge of managing this project, what else would you have done differently to increase chances for success?

Intially, I would have done a little more research on the successful model's that other states have implemented and are running smoothly. Many other states outsource their claims processing to specialists, such as Electronic Data Systems, to manage their claims, eligibility, enrollment and treatment authorizations. I would then compare the financial feasibility and comparison of outsourcing versus enlisting a private contractor working with the current IT staff. Assuming, it was in the best interest for the residents of Maine to reject the option to outsource, I would have invested the taxpayer's money into a private contractor with a proven track record and significant history in the field. Upon deciding which contractor to use, I would require a minimum of four proposals to be submitted prior to granting any contractor the project. Once a contractor is selected and the system has been developed and completed, there would have to be a trial period of about two months, prior to complete conversion from the old claims processing, where sample claims would be processed to assure accuracy of the system

Sources: Management Information Systems Managing the Digital Firm, tenth edition. pgs. 589-591. Laudon, Kenneth C.

Chapter 12 Case Study: Can Information Systems Make Your Doctor Better?

1) What problems are hospitals and physicians encountering in diagnosis diseases and prescribing medications? What management, organization, and technology factors are responsible for these problems?

Hospitals and physicians are encountering medication errors which have led to injuries and death. Mostly resulting in inappropriate prescriptions, dosages and patient-monitoring strategies, these errors can be very costly and damaging to a hospital and/or physician. Research has found that most of these errors have resulted from human factors such as poor handwriting, memory lapses, fatigue and distractions, compounded by the sheer complexity of available medications. In addition to medication errors, physicians have been challenged with properly diagnosing medical conditions after gathering and reviewing diagnostic tests. Consequently, computerized physician order entry and diagnostic decision support software is being developed to reduce the occurrences of medication and patient diagnosis errors.





2)Are CPOE and DDS systems appropriate solutions? Why or why not? What management, technology, and organization issues are involved in the use of these systems?

CPOE and DDS systems should be utilized by nurses and physicians as an extra diagnosis and medication resource to insure that they have not missed anything. With the myriad of over the counter and prescription medications out there and the vast amount of diseases, a structured, computerized system can serve as additional knowledge/resources for a physician.

Once the CPOE and DDS technology is finely tuned and the glitches have been worked out, it can serve as a tool to reduce liability associated with medical malpractice and can make healthcare delivery more efficient. Successful implementation of these systems has many advantages such as improved communication between nurses and doctors, saves time for doctors, clarity of medication orders resulting in an estimated 25% less occurrence of adverse drug reactions.





3) What obstacles prevent computer systems from improving the medical industry? How can these obstacles be removed?

A couple of obstacles prevent computer systems from improving the medical industry. First off, many physicians, proud as they are, may not be inclined to allow computer systems to make decisions for them. Their pride, egos and expertise may get in the way of the implementation of such systems, especially for older, less computer savvy doctors. Another obstacle that complicates the implementation of such a system is that it requires significant amounts of time to input all the medical data for a given hospital. This data entry aspect is also prone to human error and is very time consuming.


These obstacles can be overcome by implementing rigorous training programs to doctors, nurses, administrators and data entry personnel. A sustained training effort for appropriate staff prior to its implementation at a hospital may build confidence in their users and reduce the likelihood of errors. Furthermore, comprehensive training and educational programs for physicians should emphasize that the computer systems should act as a tool to compliment their art.

Sources: Management Information Systems Managing the Digital Firm, tenth edition. pgs. 505-507. Laudon, Kenneth C.

Article Review: Amazon vs. Sony: E-Book Reader Face-Off

With the advancement of e-commerce and technology as a whole, companies are introducing more innovative and sophisticated technological devices. An example of such a device is the e-book. An e-book, short for electronic book, is an e-text that forms the digital media equivalent of a conventional printed book, often protected with a digital rights management system. E-books are usually read on personal computers or smart phones, or on dedicated hardware devices known as e-book readers or e-book devices. Many mobile phones can also be used to read e-books. The article written by Melissa Perenson in the May 2009 edition of PCWorld, explores the second iteration of Amazon's e-book device, the Amazon Kindle 2 and Sony's Reader Digital Book PRS 700.

On February 9, 2009, Amazon announced the Kindle 2. It features a 6-inch display and became available for purchase on February 23, 2009 for the price of $359. The Kindle 2 features improved battery life, 20 percent faster page-refreshing, a text-to-speech option to read the text aloud, and overall thickness reduced from 0.8 to 0.36 inches (9.1 millimeters). The Kindle 2 has 2 GB of internal memory of which 1.4 GB is user-accessible. Amazon estimates that the Kindle 2 will hold about 1500 e-books. Unlike the original Kindle, Kindle 2 does not have a slot for SD memory cards. On March 3, 2009, Amazon.com launched an application entitled Kindle for iPhone in the App Store for iPhone and iPod Touch owners to read Kindle content. Through a technology termed "Whispersync," customers can keep their place across Kindle hardware devices and other mobile devices. Amazon typically sells downloadable e-books on its e-commerce site for $5-$10 per book.

A competitor of the Kindle 2 is the Sony Reader Digital Book PRS 700. Sony's latest release of its e-book reader costs $400 and differs dramatically from the Kindle 2. The most obvious differences are the absence of a keyboard, in return for a more compact shape. Additionally, like the iPhone and other next-gen touch-screen phones that have been appearing lately, the Reader incorporates some gesture-based commands. You can swipe your finger across the display to page forward or back (you can choose between a left or right swipe to advance pages in the settings menu). Swiping and holding your finger down at the end of the swipe allows you to advance or rewind through pages at a fast clip. With the included stylus or your finger you can highlight words and add annotations via a virtual keyboard. The Amazon Kindle offers this feature via a Blackberry-style keyboard. However, the Kindle doesn't have a touch screen.

Reference:

Perenson, Melissa (May 2009). Amazon vs. Sony: E-Book Reader Face-Off. PCWorld, 42-45

Chapter 10 Case Study: Can eBay Continue Growing?

1) eBay is a virtual marketplace for the sale of goods and services for and by individuals. eBay's business model and mission is to connect people — rather than selling products to them. They have created a person-to-person marketplace on the Internet, where sellers list items for sale and interested buyers bid on these items. Thier success relies mostly on revenue generated from fees and commissions related to its trading services. Their business model has been extremely successful and they were able to attract more than 200 million users by 2006 and were expected to surpass 2 billion items listed in 2006.

2) eBay faces several challenges which will test their ability to continue in their growth stage. On the international front, they face stiff competition from Yahoo!. Yahoo! is positioning themselves in the online auction site industry in the asian markets. Furthermore, another online giant, Google, dominates the online advertising industry and eBay is attempting to penetrate that market by offering its own online contextual ads and auction promotions on linked Web sites.

However, their greatest problem is their difficulty in providing their users with a secure and honest online trading environment. Their rapid growth and enormous amount of transactions that occur daily, has made it extremely difficult for eBay to monitor and control fraud, identity theft and unethical/dishonest transactions. Many users who have been victimized by these unethical practices, do not feel confident in the efforts that eBay has made to prevent dishonest transactions and thus, question eBays ability to ensure integrity in their auctions. This is a great obstacle for eBay to overcome. To battle this problem, eBay relies mostly on customer feedback through a rating sytem.

4) According to a Fortune article published on January 23, 2008, eBay has undergone a management change which will bring forth organizational and technological changes. More specifically, Meg Whitman has been replaced by John Donahoe as CEO of eBay. While Whitman was central to eBay's growth and success, she felt that the company needed fresh eyes and a new perspective to continue to drive its growth.

Donahoe promised big changes in his first several weeks to help revive eBay’s core business. He discussed his plan to offer fixed-priced goods and an improved customer rating and support system to lure buyers. In addition, he has promised to lower fees for sellers to list items hoping this attracts more sellers and thus more transactional sales revenue.

References:

http://techland.blogs.fortune.cnn.com/2008/01/23/new-ceo-uncertain-future-for-ebay/

Article Review: The Conficker Worm: A Potential Threat to PCs

While the frequency of computers getting infected from malware has decreased over the years, thanks to swift and organized responses from security response companies such as Symantec, VeriSign and Microsoft, some still pass through the cracks and pose huge threats to millions of computers worldwide. The latest of these malware comes in the form of an infectious worm which attacks a Windows Server Service flaw(MS08-067). This worm has been named the Conficker worm, aka Downadup, and has infected millions of computers worldwide, from French navy systems to British Hospitals, in the last year or so. The worm was intended to quietly make money by sending spam and stealing financial data or sensitive documents from infected computers. It was initially spread in its first stage where it enters the computer and targets the MS 08-067 flaw in the Windows Server Service, a flaw that attackers could target remotely, making it a large target for worms. Then updates to the worm would spread and take swipes at debilitating security programs such as Symantec or Microsoft Update. Then it would eventually gain access and steal passwords and data. However, its massive infection rate drew heavy attention from security response developers which may have halted the plans of the perpetrators of this Conficker worm. Currently, the worm is stuck in the second stage where it is not yet able to steal data and passwords and it is crucial for computers infected with this virus to download the appropriate anti-virus software.

To determine if your PC has been infected with the Conficker worm, you should try accessing anti-virus security websites, such as f-secure.com, kaspersky.com, symantec.com and others. If your computer is infected, you will not be able to gain access to these web sites. If this is the case, it is recommended that you download, from a separate computer, a Conficker removal tool and then run it on the infected computer to remove the worm, otherwise, should the authors of the Conficker worm proceed to find a payload for the worm, then it might steal personal data and you might get hit financially!

Larkin, Erik (May 2009). The Conficker Worm: A Potential Threat to PCs. PCWorld, 37-38

Chapter 8: A stolen laptop at the VA: The worst data theft ever?

1) List and describe the security weaknesses at the Department of Veteran Affairs.

-lack of appropriate data security policies in place/disregard for privacy rights of veterans:
When policies are developed with proper foresight and safety considerations, they are typically the most important step to preventing undesirable occurrences from happening. In the case of the stolen laptop from a Veteran Affairs (VA)data analyst's home, there were very loose security policies which allowed for this security breach to occur. More specifically, the data analyst was allowed to take a laptop home containing data from millions of veterans for approximately three years. Furthermore, he was allowed to use at-home software to access and manipulate millions of veterans' social security numbers, addresses, phone numbers, etc. For lack of a better word, this ignorant decision demonstrates the VA's lack of foresight and demonstrates a disregard for the privacy of veteran's rights. There are many obvious risks with removing sensitive data from a secure location and taking it to someones home, such as an unauthorized person tampering and/or stealing data, deletion of data, acquiring a virus, etc. I am sure that none of those VA staff or management would want their personal data being taken home regularly and without proper security features to a stranger's home. It doesn't take a genius to realize that there is a risk posed by allowing laptops with personal data to be removed from the building and taken to employee's homes. This was a case of failed leadership to protect data and policies should have been in place disallowing this type of activity.
-delayed reaction to theft of sensitive identity data:
The VA Inspector General was not informed of the incident promptly after its occurrence and he found out about seven days after the fact, through"office gossip," that the burglary took place. Furthermore, the Secretary of Veteran Affairs, Jim Nicholson, did not find out about the burglary until 13 days after it occurred. This type of delay can inhibit the FBI and Justice Department's investigative process and prevent them from solving the case. Luckily, the thieves were not extremely computer savvy and did not access the data. Also, they were eventually caught but had it been a computer savvy hacker, all that personal data may have been stolen and used within a matter of days and could have created huge financial losses.
-decentralization of IT security systems:
Apparently, an audit conducted in 2004 of the VA's IT system revealed that a centralized management system should be implemented to improve information security at the VA. The current decentralized system in place at the VA made it difficult to implement necessary changes/updates to their systems and made them more susceptible to delays and performance failures. The VA's chief information security officer lacked direct authority to enforce security policies and mandates.
-weak information security program:
Sensitive data held in the laptop that was stolen, did not have adequate access control features. Data on the computer was not encrypted and there were no biometric authentication programs linked to their large database of confidential data. Theft, in general, whether at home or at the workplace is often difficult to prevent, but with stringent security features in place protecting the personal data, it would limit any unauthorized exposure and limit damages.


2)What management, organization, and technology factors contributed to these weaknesses?

It is clear that the stolen data was a result of failure on many levels. From a management perspective, the VA failed to implement adequate security policies to protect the privacy rights of the veterans. An important role of a manager is to be able to recognize risks to an organization and its stakeholders. In addition, managers should demonstrate solid judgement and foresight when making decisions. The decision to allow unprotected, confidential data to leave the VA premises on a laptop and into an employee's home for three years demonstrated poor judgement from management. With regards to organizational factors that led to the VA's weakness, I would claim that their decentralized management structure made it difficult as an organization to swiftly recognize potential threats and implement change. In this type of organizational structure, information systems security has to clear many levels and reach multiple approvals prior to its implementation. A more direct, centralized organizational structure may have allowed for a more secure IT environment. Finally, in terms of technological factors which led to the VA's weaknesses, they lacked up-to-date access controls which protected the data from unauthorized access. Whether the data was stolen from home or the workplace, there should be both biometric authentication controls and encryption controls protecting the data.

3)What solutions would you suggest to prevent these security problems?
I would propose the following three suggestions to prevent the VA's security problems:
1)The VA must update their corporate security policies and specify on each position's job descriptions, proper guidelines regarding what data they can access, to complete work on intrusion detection systems and immediately prohibit the removal of confidential data, whether by laptop or flash drive, etc., from the main server computers.
2) Implement access controls which encrypt data and install biometric authentication devices on computers which would need access to confidential data. This would protect data from unauthorized exposure in the event of a theft and would make it nearly impossible for unauthorized access to be gained into personal records.
3) Development of a centralized management structure with less levels of bureaucracy in the VA's IT department. As the two former CIO's, McFarland and Gauss, suggested, it would be beneficial for the VA to appoint a chief information security officer with direct authority to monitor IT security and enforce security policies and mandates swiftly.

Article Review

Article Review coming soon...

Chapter 3 Case Study: Blockbuster vs. Netflix

Question #1:
What is Blockbuster's business model? Blockbuster is one of the largest, well known, movie retail chains in the world. Their business model is one composed of heavy marketing and advertising to the public along with strategically placed retail stores to cater to customers seeking video rentals and/or purchases. They have been around since 1985 and were able to thrive throughout the years by offering their customers a recognizable brand to rent and buy movies from.

How successful has it been? Based on their market share in the rental video industry of 40%, it is safe to conclude that their business model has led them to success. By 2004, Blockbuster generated yearly revenues of $7-9 billion from video rental business and $16 billion from video sales.

Question #4:
How successful is Netflix and its business model? Netflix developed a unique business model in 1998 which allowed customers to rent movies through an online store without the risk of late fees. This provides the customer with unparalleled convenience which other video rental stores were not providing at the time.
Netflix is enjoying success from its online video rental business and has seen steady growth in their yearly revenues. In 1998, Netflix generated $522 million ; in 2005 they generated $1 billion and they are projected to generate $3 billion in sales in 2009. Apparently, their entry into the video rental industry has been well-received.

Question #5:
Do you think that Blockbuster or Netflix will succeed in the future? Explain your answer.
Given today's shaky economic landscape and the emergence of convenience through technology, it is difficult to predict the success of any company, but I strongly believe that Netflix holds a better chance of succeeding than does Blockbuster. Although, Blockbuster has the added advantage of having retail stores placed in numerous locations, they carry a large burden of maintaining a large workforce and mounting capital long/term liabilities such as rent, mortgages, etc. Nevertheless, I doubt that either company is going to go bankrupt anytime soon and that they will remain as competetive forces in the movie rental industry. I see both companies adapting to, if not setting, future trends in the industry.

ABOUT ME

My name is Igor Molchanov and this is a little blog about my history and background. I was born in Odessa, Ukraine and moved with my family to Los Angeles in 1979 where I was raised.

I attended UCLA and obtained my B.S. degree in Physiological Science in 2000 and went on to work in the field of geriatric services/health care. Currently, I am pursuing an MBA degree from California State University, Channel Islands. Since 1999, I have been fortunate enough to be a part of a team that provides adult day health care services to seniors. Serving as administrator of the facility, I have been able serve and offer an assortment of therapeutic activities and treatments to many seniors who suffer from various illnesses and those who need assistance with acitivities of daily living. Unfortunately, our ADHC has recently undergone an ownership change and the new owners are bringing in their own management team, so I was forced to look for a new job and was successful in landing one with a great company: Sunrise Senior Living. I will serve as their Alzheimer's Care Director for their Santa Monica facility. I am very excited to be making this career transition.

My greatest blessings in life, undoubtedly have been my wonderful wife, Violet, and my son Nicholas. They are my motivation and the main reason why I am pursuing my MBA degree at CSUCI.

In 5 years from now, I hope to climb the management ranks at Sunrise Senior Living and become an Executive Director in about a year or so. As boring and mundane as it might sound, I strongly believe that my career calling in life is healthcare and given the demographic projections of the aging population in the next 20-30 years, I am confident that the geritric services industry will continue to grow. On the family front, I hope I am lucky enough to have another child in the next couple of years...