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Contents
ABSTRACT
KEYWORDS
1. INTRODUCTION
1.2. Trading online
1.3. PURPOSE
1.4 CONTRIBUTIONS2. RATIONAL AND SIGNIFICANCE3. LITRATURE RIEVEW
3.1. The level of B-to-B e-commerce penetration: a process based approach
3.2. The transfer payment system using TPS (Transfer processing system)
3.3. Importance of SMEs
3.4. The integration between its business partners through EDI (electronic data interchange)
3.5. The business impacts of B-to-B e-commerce
3.6. Penetration of e-commerce
3.7. Understanding of e-commerce issues in SMEs
4. THEORETICAL FRAMEWORK
5. OBJECTIVE OF THE STUDY
5.1. The impact of e-commerce on business activity6. HYPOTHESIS
7. METHODOLOGY
8. CONCLUSION
9. REFRENCES
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Acknowledgement
This project is a great learning for us. Practice like this contributes very much in reducingdistance between bookish and practical world.
We have been able to accomplish our project successfully with the blessing of Almighty ALLAH
who created this world for search of knowledge and bestowed us to complete this task. We
invoke peace for Holy Prophet (P.B.U.H.) the most perfect and exalted among and never born on
the surface of sky and earth. The greatest social reformer who is forever the torch of guidance
and knowledge for humanity as a whole.
We are thankful to our esteemed teacher HAFIZ MUSHTAQ AHMED Who guided us very
well throughout the course of METHOD IN BUSINESS RESEARCH and really made this
course fruitful for us.
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Waseem iqbal
MBA III (z)
01-220092-038
Research proposal
Impact of electronic commerce on small and medium enterprises
promotion
ABSTRACT
This study depends on e-commerce by using an integrative and subsystem-based approach to
assess the level of electronic commerce penetration in small and medium-sized enterprises.
Results show that most SMEs are still at a very early stage of e-commerce adoption. As,firms in
the top adopted quickly moving into e-collaboration activities with suppliers and customers. The
results also reveal that e-commerce initiatives are strongly and significantly linked to positive
business impacts and that once managers have experienced benefits from e-commerce initiatives,
they continue to engage into additional e-commerce initiatives.
KEYWORDS
Electronic commerce adoption, small and medium-sized enterprises, enterprise promotion.
1. INTRODUCTION
In the era of IT development from the last 10 to 15 years in Pakistan, the use of internet has
become the backbone of business activities which transformed the traditional ways of transaction
E-Commerce is like Any Other Business, developing a business over the Internet requires many
of the same major activities as starting any other business. You should do some basic business
planning. After all, you need a product. You may need funding to get your business going. You
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need customers. You need to market products to your customers. You need strong customer
service. You need to manage purchases by customers, finances, staff and other resources.
Electronic commerce is said as E-Commerce as it is the platform for doing business over the
communication channel i.e. selling and buying movable and unmovable assets through electronic
media, Internet is playing a great role in assisting and easy transactions for the e commerce
activities. The latest communication gadgets like the cell phone also allow the users to access
internet and transact online in terms of buying, selling, paying utility bills etc. Latest market
study shows that the use of E-Commerce services is growing day by day, since the internet users
are increasing in huge numbers in the developing countries like India, China, Indonesia, Brazil
etc.
The main aim of these services is to have hassle free business transaction without the interaction
of human and this is getting promotion by the animation and graphics. By using better graphicsthe seller can display the product so well that, it is very easy to select and place order for the
potential buyers. The biggest advantage of the online business is that a buyer need not interact in
person with the seller and vice versa. Thus saving the precious time and physical infrastructure
cost of the stakeholders
1.2. Trading online
Trading online enables businesses to reach much wider audiences while cutting the costs of
traditional retailing methods. For example, an e-taller does not have to spend so much on an
expensive High Street presence. Although the outlay on developing a good website is substantial
the potential benefits can be enormous. One group of businesses that have been particularly
successful as a result of the development of the web is specialist suppliers of items such as
paintings, photographs, confectionery, and other items. An individual working from home can
now advertise and sell their produce worldwide.
Few subsystems mainly use in the category of e-commerce in Pakistan:
TPS (transaction processing system). Mainly by bankers.
CRM (customer relation management). Mainly by govt.
SMS (supplier management system). Mainly by company suppliers.
EDI (electronic data interchange). Mainly by web sites.
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1.3. PURPOSE:
SMEs access to finance
Activities like operation; which includes online transactions, money transfer and receiving have
been identified in many business surveys as the most important factor determining the survival
and growth of SMEs in both developing and developed countries. Despite the importance of
SMEs to the economies of both developing and developed countries, they have traditionally had
problems in operations. Commercial banks and investors have been reluctant to service SMEs for
a number of reasons, including the following:
Information unevenness arising from SMEs lack of accounting records, inadequate
financial statements or business plans makes it difficult for creditors and investors to
assess the creditworthiness of potential SME proposals;
High administrative/transaction costs of lending or investing small amounts do not make
SME financing a profitable business;
SMEs are regarded by creditors and investors as high-risk borrowers because of
insufficient assets and low capitalization, weakness to market fluctuations and high
mortality rates.
Access to technology
In a liberalized and open economy, SMEs increasingly depends on the ability to incorporate new
technology and management practices.
Linkages
Inter firm linkages can be a remarkable source of technology diffusion in SMEs through e-
commerce. There are many types of linkages-backward, forward, R&D and overflow effects.
The most profitable are the backward linkages between large and small enterprises.
ICT and e-commerce
Information and communication technologies (ICTs) have an impact not only on every single
branch of industry but also on every service in an economy. ICTs have the potential to alter
economic activity. They can be used to replace traditional means of communication.
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1.4 CONTRIBUTIONS
As in every field we targeted the group of peoples and area. In this study the main focused
groups are
Bankers
Businesses related to transactions
Customers using online purchasing
These all contributed their existence and show very important part in this study.
2. RATIONAL AND SIGNIFICANCE:
E-commerce represents roughly 80% of total e-commerce and continues to grow (The
Economist, 2004). Large manufacturers have been leading e-commerce initiatives in all industry
sectors (US Department of Commerce, 2002), SMEs appear to lag behind their larger
counterparts (Drew, 2003), leaving little choice to their smaller business partners to follow. In
addition, considerable efforts have been made by the governmental agencies to accelerate e-
commerce penetration among SMEs(OECD, 2002; Europe Action Plan, 2002) as these firms
continue to play a major economic role in all industrialized countries (Stevenson and Lundstrm,2001; The European Commission, 2003).Our collective understanding of e-commerce issues in
SMEs remains slim (Kendall et al., 2001; Jeffcoate et al.,2002) and is even slimmer in the case
of B-to-B e-commerce (Gebrauer and Shaw, 2002).According to Magill et al. (2001), e-
commerce covers more than buying and selling and includes any activity for an organization to
function effectively.
In December 2005 the Central Board of Revenue, the tax authority, started allowing electronic
filing of sales tax and federal excise returns by registered private and public companies. At that
time, it said that it expected about 1,500 large taxpayers out of 22,000 to use the facility.
Government efforts to promote the IT sector include the establishment of the (Information
Technology and Telecommunications Division in July 2000), various incentives, and the
commitment of resources for education and infrastructure building. The Ministry of Science and
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Technology launched the National Information Technology Policy (in August 2000). It was
developed by a team that included working groups on the following: human-resource
development; IT in government and databases; IT market development and support; IT fiscal
issues; telecoms, convergence and deregulation; cyber law, legislation and intellectual-property
rights; IT research and development; Internet development; software export; e-commerce; and
incentives for IT investment.
Total spending (by the government and private sector) on information, communications and
technology in Pakistan was US$10bn (during 2005/06). Various e-commerce projects and
initiatives were underway in the public and private sectors in August 2006. The government said
in May 2004 that it has planned new IT and e-commerce projects worth well over PRs4.5bn up
to 2007, and by then it aims to produce 100,000 graduates a year in IT studies from the seven
new IT universities it has already set up.
Pakistan is part of the 15-member Asia Pacific Council for the Facilitation of Procedures and
Practices for Administration, Commerce and Transport. The council aims to support the United
Nations Centre for the Facilitation of Procedures and Practices for Administration, Commerce
and Transport. Pakistan is a member of the Asia Pacific Council for Trade Facilitation and
Electronic Business, a non-governmental organization that promotes trade facilitation, electronic
business policies and activities in the AsiaPacific region.
3. LITRATURE RIEVEW
3.1. The level of B-to-B e-commerce penetration: a process based approach
According to Magill et al. (2001), e-commerce covers more than buying and selling and includes
any activity for an organization to function effectively. In a manufacturing context, any activity
covers a wide range of activities from five generic functional areas: product development,
engineering and design; procurement and purchasing; production and operations; sales,
marketing and after-sales service; and distribution and logistics. To each of the five functional
areas are associated specific business processes. We therefore propose to measure the level of e-
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commerce penetration at its locus of impact by assessing the use of electronic means to conduct
business processes across the whole spectrum of business. This process oriented approach builds
on previous work in research in IT penetration (Kauffman and Weill, 1989)
3.2. The transfer payment system using TPS (Transfer processing system)
The transactions between the buyers and sellers mainly use the mode of TPS through which they
transfer money more safely and fast. Mainly in Pakistan TPS mode is using for transfer of money
and think as a safe mode of transfer payment.
3.3. Importance of SMEs
According to Lall, divergence and marginalization are strong features in the industrial scene. But
industrial development is not a zero-sum game: it is possible for all countries to gain fromincreased production and trade. Successful industrialization requires countries to link to the
global economy and leverage the resources that it offers in order to improve endogenous
capabilities and competitiveness. This linking needs strong initiatives, not just passive opening
up, and it is essentially up to the countries to build the capabilities needed. Thus, policies and
programmers to enhance competitiveness must centre on building productive capacities at the
enterprise level within the country.
3.4. The integration between its business partners through EDI (electronic data
interchange)
The electronic integration between their business partners (suppliers, sub contractors,
distributors, customers, etc.) can be traced back for a few decades with the use of EDI systems
(Gebauer and Shaw, 2002). More recently, this electronic integration became stronger with
Internet-based applications which offer similar benefits derived from EDI systems but without
the substantial investments associated with these systems. Hybrid e-commerce solutions such as
Internet-EDI (Chan and Swatman, 2004) are now common among different firms. B-to-B e-
commerce relies not only on the Internet but also on private networks and also implies
exchanging and sharing information within the firm itself or with external stakeholders (Daniel
et al., 2002, p.254). Hence, we will retain here the broad and integrative definition of ecommerce
to include all electronic means (Internet, intranet, extranet and private and public networks).
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3.5. The business impacts of B-to-B e-commerce
Potential benefits derived from e-commerce are well documented in the literature. They include
reduction of transaction costs (Saloner and Spence, 2001) and gains in accuracy and speed
(Verhoest, 1999; Lefebvre and Lefebvre, 2000). Internet-based systems are considered as anenabling technology (Porter, 2001) from which strategic benefits can be derived. For SMEs, the
Internet represents a rather inexpensive way to reach new markets and new customers and
provides global access and is said to level the playing field. However, the impacts of e-
commerce may turn against some SMEs: by reducing barriers to entry, new foreign competitors
may now be selected by large manufacturers or squeeze the margin of local SMEs (Drew, 2003).
Further, large firms may exert more power over their smaller business partners when they
operate on electronic market places. In other words, B-to-B e-commerce increases the pace of
competition and the level of competitive rivalry and its impacts at the firm level remains elusive.
This warrants further investigation.
3.6. Penetration of e-commerce
The relationships between the level of e-commerce penetration and its business impacts are
contingent upon several factors: firm size, level of internationalization and the relationships with
business partners. Size, even among SMEs, matters. Larger SMEs overcome more easily
technological and non-technological barriers to implement e-commerce as they have more accessto capital knowledge and skills (Drew, 2003). SMEs involved in import and export activities are
more exposed to the e-commerce initiatives from their foreign suppliers and customers and could
more adequately harness the potential of these initiatives (Kraemer et al., 2002). The level of
dependency of SMEs towards a few customers (Teo et al., 2003) may also accelerate the level of
adoption of e-commerce initiatives at the detriment of the willingness of SMEs. The same may
be true of the supplier side.
3.7. Understanding of e-commerce issues in SMEs
This line of inquiry seems to be particularly relevant for several reasons. First, B-to-B e-
commerce represents roughly 80% of total e-commerce and continues to grow (The Economist,
2004). Second, SMEs appear to lag behind their larger counterparts (Drew, 2003) and are
pressured to fully grasp the potential of e-commerce. In fact, large manufacturers have been
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leading e-commerce initiatives in all industry sectors (US Department of Commerce, 2002),
leaving little choice to their smaller business partners to follow. In addition, considerable efforts
have been made by the governmental agencies to accelerate e-commerce penetration among
SMEs (OECD, 2002; eEurope Action Plan, 2002) as these firms continue to play a major
economic role in all industrialized countries (Stevenson and Lundstrm, 2001; The European
Commission, 2003). Third, our collective understanding of e-commerce issues in SMEs remains
slim (Kendall et al., 2001; Jeffcoate et al., 2002) and is even slimmer in the case of B-to-B e-
commerce (Gebrauer and Shaw, 2002).
4. THEORETICAL FRAMEWORK
According to my research the independent variableis the e-commerce,moderating variable is
subsystems and different levels of e-commerce penetration usage in Pakistan and the
dependent variable is the SMEs promotion.
The main variable is SMEs and its promotion is either positive or negative due to the use of e-
commerce, and the subsystems and level of e-commerce penetration have the contingent effect
between SME promotion and e-commerce.
As the usage of electronic commerce in global countries is too much and most of the businesses
are connected through it, also that in Pakistan some e-commerce subsystems are use now in the
big firms and the different levels like B2B, B2C etc, and the penetration of it towards the SMEs
is required.
For SMEs promotion we must have the proper authority whose duty is to check and balance on
the e-commerce activities so that people tend to move towards this trend as it is cheaper and time
effective.
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Structural diagram of different variables.
5. OBJECTIVE OF THE STUDY
All too frequently, technology promises more substantial benefits than it can deliver and
information technologies are no exception (Coates, 1992). Can benefits at the business level be
derived from e-commerce? This paper seeks to find answers to these questions but different from
other studies as following objectives:
I. To measure the level of e-commerce usage by examining which business processes are
performed in an electronically mediated environment;
II. To analyze the future behavior of the firms with respect to e-commerce is conditioned by
their actual experience;
III.To assess the strength of the relationships between the level of B-to-B e-commerce
penetration and its impacts and benefits at the firm level;
IV.To determine relationships between e-commerce penetration and its impacts upon
internal and external factors such as firm size, degree of internationalization and the
relationships with business partners;
Subsystems
(Moderating variable)
E-commerce
(Independent variable)Different levels of penetration
(Moderating variable)
SMEs promotion
(Dependent variable)
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Main problems faced in Pakistan due to which this research is conducted, as e-commerce in
SMEs in Pakistan is not successful as in other countries due to many problems if these problems
are solved then e-commerce will boost in Pakistan also, these problems are as follows;
Credit card faults. Mistrust of items delivery or the delivery of original quality.
Major Price differences.
Trend of bargaining no fix prices.
Education problems.
Frauds and scams.
As Pakistan is one of the developing countries. Due to many reasons it can take better steps for
going forward in electronic purchasing and selling if these problems are over come.
5.1. The impact of e-commerce on business activity. (The times 100)
Selling through websites is the fastest growing method of trading worldwide. There are two main
forms of e-commerce:
Business to business (B2B) trading where companies trade and exchange information
using the World Wide Web.
Business to consumer (B2C) trading where companies deal directly with customers
through web pages, and orderings carried out online.
There are many different types of products and services that are traded on line including books,
CDs, cars, holidays, and insurance.
In response to e-tailing and e-trading, most businesses have now set up their own websites.
6. HYPOTHESIS
The main questions being hypothesis in this study are as follows:
H1: How we can use the e-commerce activities for the betterment of SMEs.
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H2: To solve the problems of e-commerce and motivate the Pakistani culture towards
the use of e-commerce activities.
H3: In order to have the stability towards the use of internet and to encourage the small
enterprises towards e-commerce.
7. METHODOLOGY
I. Sample
A survey based primary data and also secondary data is to be used to examine the relationship
among independent, moderating and dependent variables. The survey is done from the different
peoples having their own small industries, friends working there, colleagues and software
engineers. These all guide me to understand the causes and the impact of e-commerce on
different enterprises.
II. Instrument
Mainly internet and bookish knowledge and friends views and comments are added in the
preparation of this paper.
Owners/Executives and accountant of different firms like Karachi tea situated in
Nankari Bazar in Rawalpindi.
Soft ware engineers done his education from abroad.
And from internet, different surveys conducted in Pakistan.
III. Procedure
After data collection, the appropriate data analytic techniques including persons correlation and
multivariate analysis is carried out keeping in view the objective of this study.
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8. Conclusion:
This study suggests strongly that e-commerce penetration among manufacturing SMEs is an
evaluative, dynamic ad rather coherent process. Past behavior reinforces future behavior and
organizational learning appears to be the essential ingredient to benefit from the impacts of e-commerce.
After detailed analyzing and studying of the effects and benefits of incorporating an e-commerce
solution to an existing business, it is clear that an e-commerce solution will benefit the business
in every aspect.
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