International business has been growing constantly lately and the number of enterprises that are classified in some sense as intenational is now very large. International managers must deal with the added risks of expropriation, discrimination, and foreign exchange rate fluctuations. Computer models have been developed to aid in exchange rate forecasting, but unfortunately none is a perfect forecaster. I think a good manager invests in IT to increase productivity. Besides reducing costs, computers can increase the quality of products and services provided to consumers. The company’s real challenge is to optimize its strategy. This paper presents several advantages and disadvantages of information systems used in international business management.Decision Support System (DSS), expert systems, genetic algorithms.

Cristina Pop

English

Research Papers in Economics

Management & Marketing (2009) Vol. 4, No. 4, pp. 27-34. 
 
 
INFORMATION SYSTEMS FOR INTERNATIONAL BUSINESS 
MANAGEMENT 
 
 Cristina Pop 
„Lucian Blaga” University, Sibiu 
 
 
Abstract:  International business has been growing constantly lately and the number of 
enterprises that are classified in some sense as intenational is now very large. International 
managers must deal with the added risks of expropriation, discrimination, and foreign 
exchange rate fluctuations. Computer models have been developed to aid in exchange rate 
forecasting, but unfortunately none is a perfect forecaster. I think a good manager invests in IT 
to increase productivity. Besides reducing costs, computers can increase the quality of 
products and services provided to consumers. The company’s real challenge is to optimize its 
strategy. This paper presents several advantages and disadvantages of information systems 
used in international business management. 
 
Keywords: Decision Support System (DSS), expert systems, genetic algorithms.  
 
 
1. Introduction 
 
The management process is often described as consisting of planning, 
organizing, directing and controlling. This management process takes place in both the 
international company and in the domestic one. There are some additional dimensions 
to consider in the international firm, such as human resources. Economic situations 
have become large-scale and complex, and the demand and the requirements of the 
market suffer many changes. Along with a change to diversify small-quantity 
production, there has been a change to diversify small-scale services. In case that the 
problems to be handled are very complicated or large-scale, we limit it an amount that 
we can process and focus our goals there. Information and data that are not very 
important are cut out. The general processing here depends upon human intellectual 
capacity and time. Using information systems we can increase the quality and the 
services provided to the consumer. 
 
2. Information system 
 
 A good information system provides information that is understandable and 
usable. While information systems are an important part of any company’s control 
system, they are critical for the international company. Because of the physical and 
cultural separation between units of the organization, clear information is vital to the 
maintenance of control throughout the organization. Of course, this separation also Management & Marketing 
 
28
makes the design of an effective system a major challenge. An international company 
system may have to be understandable to and usable by people who work in different 
countries, speak different languages, have different literacy levels, and view their 
information needs differently (Punnett & David Ricks, 1997). However, to design an 
effective system, an organization should consider the following: 
  The precise information needed at the various levels in the organization 
must be identified and systems put into place to accumulate the data 
required providing it. 
  Responsibility must be assigned for data collection and the needed 
authority delegated to an area or person to ensure that the data can be 
collected.  
  People need to receive only information that relates to the decisions that 
they have to make or to which they contribute. Only relevant information 
should be supplied to appropriate people. The determination of who are the 
appropriate people to receive specific information may vary from manager 
to manager, depending on the style of management and the location. 
  Raw data often must be transformed into more meaningful information. 
Responsibility and authority for this task need to be defined and allocated. 
Data must be converted to information that supports decision making. User 
input is particularly important in deciding on the format for presenting 
information so that it is in a form that the receiver can use and understand. 
  Information is useful only if it is available in a timely manner. Identifying 
and reducing the time lag between an event and the availability of 
information describing it therefore are very important. 
 
2.1. Information systems for organizational and managerial assistance 
 
The main factor of success management for the company lies in the 
implementation of an efficient information systems that optimize the information 
flow. The companies have to face the challenge of identification, assessment and 
control of the various types of risk. This issue is even 
more complicated for international companies, for which the risk management 
connected to investment projects in different countries include a range of new aspects. 
It requires to find the way to assist efficiently the decision-makers by implementing an 
information system for management who fits the business needs. Just like for every 
information system, following issues have to be defined and specified: the information 
requests, the information sources, the necessary processing steps to obtain the output 
from the input, including the methods (algorithms) of computing as well as the totality 
of equipments and resources involved which represents mainly the information system 
with its applications and modules. 
 
  Information systems for international business management 
 
29
2.1.1. Expert Systems 
 
Expert systems are intelligent programs that use knowledge, facts and 
reasoning techniques to solve problems that require expert human knowledge. An 
expert system consists of the following basic modules:  
  A base of knowledge, 
  An engine that allows the system to simulate the process of solving the 
problem as a human expert,  
  An user interface,  
  And interface with expert human 
              Expert systems should allow the elimination of rules and adding new ones. 
To describe how expert systems work, it is necessary for human knowledge to be 
modeled and represented in a form that a computer can understand. Human knowledge 
model used by expert systems is called Knowledge Base (KB). KB contains a 
collection of relevant knowledge about a specific domain and is composed of rules and 
facts. Facts are used to represent the state of objects at a time and rules refer to 
operations that can perform on objects in the database. In the following figure are 
shown the components of an expert system: 
 
                                     Experts or specialists in the field of engineering knowledge 
 
 
     User                    
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
Figure 1. Architecture of an expert system 
 
Environment 
for 
Development 
Knowledge 
Engineer 
Experts 
User  
Interface 
Database 
Knowledge Base (KB) 
Knowledge Module 
The  engine for 
expert system 
Working memory  
 
Dynamic facts 
Selection of rules and 
facts 
Rules  Facts Management & Marketing 
 
30
Knowledge can be represented in structured programming using If-Then form. 
„If” represents the problem and „Then” is the answer (Ball & McCulloch, 1996). 
 
Example: 
 
IF INCOME > 200$                                                                         (condition) 
 
THEN PRINT NAME, PROFESSION AND AGE                              (action) 
 
The expert systems use a large number of rules (between 200 and 1000). 
These systems can be effective if used in areas of knowledge very restrictive, for 
example, to grant credit. 
 
2.1.2. Genetic Algorithms 
 
  Genetic algorithms are the most developed branch of evolutionary 
algorithms. They are used to solve complex problems of nonlinear optimization. The 
idea of such intelligent systems is the evolutionist theory principles. By combining 
genetic, each new population acquires the ancestors and is forced to evolve in a 
competitive environment. Genetic algorithms are related to a variety of techniques to 
solve problems, after the model of living organisms to adapt to the environment they 
live in. Application of genetic algorithms is done in several stages. At first, user 
generates randomly a population made up of rows of binary digits. Each row 
corresponds to a variable of the problem. The user applies a test to combine pairs of 
rows and to classify binary strings of digits according to the desired level of possible 
solution. Once the initial population is evaluated to form combinations that best suit, 
algorithm will produce the next generation of rows of digits. This generation consists 
of rows which have survived the previous test of compatibility, plus new rows of 
digits. The process continues until the best solution is found. 
In the following figure is presented the structure of a genetic algorithm. 
 
 
 
 
 
 
 
 
 
  Information systems for international business management 
 
31
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Figure 2. Structure of a genetic algorithm (Militaru, 2004) 
 
Genetic algorithm is a search mechanism based on population genetics and 
natural selection of individuals. These algorithms operate with a population of words 
that are encrypted using a finite alphabet. Genetic algorithms are used to provide 
solutions to certain classes of problems of optimization, product design and industrial 
monitoring systems. Many business problems require specific optimizations to 
minimize costs and maximize profits or to identify the best use of available resources. 
If these situations are very complex and dynamic, then to solve them can be used 
genetic algorithms. 
 
2.1.3. Decision Support System (DDS) 
 
A Decision Support System (DSS) is an anthropocentric, adaptive, and 
evolving information system meant to implement some of the functions of a possible 
"human support system". DSS integrate several general – purpose and specific IT 
tools. To better understand these systems is necessary to introduce a classification of 
types of decisions that appear frequently in business management. 
Classification is done by four criteria (a, b, c, d). According to the first 
clssification (a), decisions can be scheduled and unscheduled. Examples of scheduled 
decisions are: purchasing an item, the choice of routes and means of transportation for 
distribution, professional skills and knowledge necessary to get a well paid job. 
Unscheduled decisions are: merging with another company, organization restructu-
ring, closing a factory that is no longer profitable. 
 
Generating 
initial  
population 
Reached the 
optimization? 
Evaluation 
function 
Best 
individuals 
Selection 
Recombination 
Genetic 
combination 
 Yes 
No 
Start  Results Management & Marketing 
 
32
Table 1  
Classification of the decisions types 
Function Types  of  decisions 
Planning  What are the objectives of the organization? What strategies address these 
objectives? How difficult must be individual tasks? 
Organization  How contingent should report directly to a leader? How should tasks be 
designed? When you need to change the organization?  
Leading  How to work with people less motivated? Which style is most effective in a 
certain situation? 
Control  What activities should be controlled? How the control is done? What type of 
information system should choose the manager? 
 
There are a few advantages and some disadvantages of group decisions. Some 
advantages are: discussion stimulates creativity, allow assessment of a larger number 
of facts and issues are analyzed from different points of view. Disadvantages of 
groupthink: take a long time, nobody is responsible and may create conflicts. 
 
 
 
 
 
 
 
 
 
 
 
 
Figure 3. Types of decisions (Rob and Coronel, 2007) 
 
According to the classification of step (c) decisions fall in deterministic 
decisions, probabilistic decisions and uncertain decisions. 
                                
                                   (a)                           (b)                               (c)                                   (d) 
Types of 
decisions 
Scheduled 
decisions 
Unscheduled 
decisions 
Individual 
decisions 
Group 
decisions 
Probabilistic 
decisions 
Uncertain 
decisions 
Non conflicting 
decisions 
Conflicting 
decisions 
Deterministic 
decisions  Information systems for international business management 
 
33
If   Sj (j€[1,n]) are the solutions of the problem, then pj  is the probability for Sj 
to happen: 
  Deterministic decisions, pj=1; 
  Probabilistic decisions, 0≤pj≤100; 
  Uncetain decisions, value of pj is unknown. 
So a DSS, is an interactive computerized system that gathers and presents data 
from a wide range of sources, typically for business purposes. DSS applications are 
systems and subsystems that help people make decisions based on data that is culled 
from a wide range of sources. For example: a national on-line book seller wants to 
begin selling its products internationally but first needs to determine if that will be a 
wise business decision. The vendor can use a DSS to gather information from its own 
resources to determine if the company has the ability or potential ability to expand its 
business and also from external resources, such as industry data, to determine if there 
is indeed a demand to meet. The DSS will collect and analyze the data and then 
present it in a way that can be interpreted by humans. Some decision support systems 
come very close to acting as artificial intelligence agents. DSS applications are not 
single information resources, such as a database or a program that graphically 
represents sales figures, but the combination of integrated resources working together.  
 
  3. Conclusions 
 
International business takes place in a dynamic environment, because the 
word is ever changing. Managers of international companies often face different 
challenge when making operational decisions. In my opinion information systems play 
an essential role in creating competitive companies, for managing international 
business.  These systems have been developed with the emergence of Internet and 
other communications networks. They provide the necessary IT infrastructure for new 
business models. International companies combine the unified and fragmented 
approaches in a variety of ways. Effective international managers want to be 
constantly aware of the changes occurring around the world in order to understand and 
assess their potential of business. 
 
 
 
 
 
 
 
 
 Management & Marketing 
 
34
 
References 
 
Punnett, B.J., Ricks, D.A. (1997), International Business, Blackwell Business, University of 
Windsor, pp. 234-298 
Ball, D.A., McCulloch, W.H., Jr. (1996), International Business-The Challenge of Global 
Competition, Irwin McGraw-Hill, pp. 452-470 
Katz, R.N., Oblinger, D.G. (2000), E-commerce, E-business, and E-learning in the future of 
higher education, Vol. 1, pp. 163-174 
Militaru, G. (2004), Sisteme informatice pentru management, Editura ALL,  Bucureşti, pp. 
159-170 
www.webopedia.com/TERM/D/decision_support_system.html 
 
 
 
 
 

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