E-Commerce: to enhance SMEs’ performance

E-commerce is a process of doing just about every aspect of business over the internet, which uses diverse technologies and embraces a wide range of financial forms such as electronic banking, electronic trading, electronic data interchange (EDI), electronic mail (E-mail) and all forms of messaging between Enterprises. E-commerce is a modern business methodology that addresses the needs of organisations, merchants, and consumers to cut costs while improving the quality of goods and services. This is also an unavoidable reality as the prime promoter of commerce and trade around the world.
E-commerce offers unprecedented opportunities to both consumer and supplier. From the supplier prospective Companies are not limited to physical locations or their own organizational boundaries for providing products and services. E-commerce allows trade to become simpler and more streamlined, thus increasing the value and speed of transactions. Any company can enter global markets where size and location have become rather irrelevant. From the consumer prospect the number one advantage of e-commerce is convenience of use. The user can browse online stores; compare prices and order products and services sitting at home on his/her PC. This provides considerable advantages over traditional commerce such as no dealing with traffic on the road or rude salesmen and access to a large market and wide range to explore before buying or selling without getting out of their comfortable chair. Apart from these obvious advantages, e-commerce also provides some other specific features, which gives it an edge over traditional commerce. One such feature is online customer service. According to Forrester Research, 37 percent of online consumers use customer service more from Web retailers than traditional retailers because of its potential for ease of use and quick response times.
Small and Medium Enterprises (SMEs) are important in a developing country like Nepal. It has a significant contribution to the nations’ Gross Domestic Product (GDP). According to the Federation of Nepal Cottage and Small Industries (FNCSI), the SMEs contribute 90 per cent to the industrial GDP of Nepal, and this sector engages 87 per cent of the labour force and employment. The Department of Cottage and Small Industries (DoCSI) statistics show that there are a total of around 170,000 cottage and small industries (CSIs) registered in the country, and they provide employment to about 1.6 million people. Small and Medium Enterprises (SMEs) have been playing a crucial role in the economic development of Nepal. They have been generating employment, leading to increased participation of indigenous people, use of local resources, generation of technological innovations and provision of skills and training at a low cost to the people. The major exportable items like woollen carpet, pashmina products and handicraft goods produced by SMEs have been major sources of earning foreign currency. SMEs are more suitable for Nepal because they generate employment since they use relatively less imported material and equipment while the large business sector is very dependent on such imports.
The growth, integration, convergence and sophistication of information and communications technologies (ICT) are changing society and economy. The basic structures and trend of marketing also have changed. One can see visible changes in international marketing strategies. Many companies have started to use the Internet to increase their marketing access and have improved their profitability by doing so. A profound change is likely to result, as consumers can now directly order manufacturers. It threatens to displace market intermediaries, such as insurance agents, travel agents, stockbrokers, bookstores, and consumer product retailers. These middlemen will be disintermediated and virtually replaced by infomediaries or modern internet technologies and also help consumers to become more empowered with product information. This process will make consumer more demanding, they know what is possible and unwilling to accept anything less than the best.
Although Small and Medium Enterprises (SMEs) play a crucial role in the country’s economy, and can play vital roles in creating dynamic and market-oriented economic growth, employment for the growing work force especially in the rural areas and for reducing poverty in Nepal. They could not face the challenges of changing European and American markets using information technology of the 21st century. In this context, electronic-commerce can be a good medium for today’s competition and modernisation, to recognise the modern multilateral trading system and to participate in the international trade. For LCD countries like Nepal technology plays important role to boost nation’s overall production capacity and efficiency. E-commerce accelerates the process of economic growth by speeding up the diffusion of new technologies. Potential benefits of e-commerce for Nepalese SMEs are immense. Any company can enter global markets where size and location have become rather irrelevant. Success in e-commerce will have an immediate impact not only on productivity and profits, but also generate new jobs employment and livelihood.
Since, developing a basic e-commerce site doesn’t require heavy investment, using an e-commerce site need not necessarily incurs additional expenses. Having an e-commerce site is possibly one of the best ways to make money from internet. It is just like to set up an additional virtual store in a minimal cost. This can be a second branch office for your business where customers from around the globe can explore products and services and place orders on their convenient time. As e-commerce isn’t dictated by any geographic barrier, SMEs, by using the online business model, can potentially market their products and services in a global market. A recent research shows that the number of online shoppers worldwide is increasing each day, and it’s obvious that online shopping will dominate the retail market in coming days. As we know that because of the internet technologies consumers are being more empowered with product information. This could be an opportunity for Nepalese business firm because Nepalese products will be less expensive than the western ones. But we must pay attention for the quality of the products. To trap this opportunity Nepalese Small and Medium Enterprises (SMEs) should take further steps towards international marketing and promotion of their products and services through e-commerce.
Apart from isolated effort undertaken by few business firms there is still lot to do in the field of e-commerce in Nepal. Some Nepalese business entrepreneurs use internet but they use it only for research and email purpose. There are very few business firms which are utilizing e-commerce as their marketing tools such as Muncha.com, which is a good example in this category. www.muncha.com is an online extension of Muncha House, one of the oldest departmental stores in Kathmandu. This is the pioneer internet venture to offer Daal, Chaamal on the internet. The handicraft Association of Nepal has started a vertical portal at www.nepalhandicraft.com.np which has links to its member home pages and other information to promote their interest internationally. www.b2b.com.np is the National Business to Business (B2B) e-Commerce Market Place as a single electronic gateway to promote the market linkages within the country and with the international markets. Some other business firms such as netfornepal.com, shopnbds.com, thamel.com, nepala.com and so on are also utilizing e-commerce as their marketing tools. Other business firms who have not yet actively participated in this race should learn from those who already have established their presence in the new economy to trap the opportunities provided by modern technologies
After accession of WTO, We have tremendous opportunities for exporting our products in the international market. But to substantially benefit from international trade, we must need to strengthen our capacity by increasing our competitiveness through enhancement of technological capability to increase efficiencies in the productions, distribution and sale of goods and services. There is an urgent need for Nepali entrepreneurs, involved with SMEs, to market their product to outer world; otherwise they will be left behind. There is lack of awareness among the Nepalese entrepreneur about the benefits of e-commerce and also majority of Nepalese businessmen those who are involved with SMEs don’t have the basic knowledge about how a basic e-commerce website works. They give least important to sales and promotion activities because they are regarded as a higher cost seeking component; it is just a perception, through the internet they can promote their products and services worldwide at nominal cost.
Nepal’s Government and other stake holders should create an image of e-commerce awareness and leadership and demonstrate to the business community the importance of e-commerce. Government should consider e-commerce issues at the highest level. Government should also identify e-commerce as a critical element of international competetitiveness. And also Nepalese entrepreneur should realize that there is urgent need for SMEs to follow e-commerce to cope with the fast changing global business environment.

Note: this article was published on http://literature.wnso.org/2005/E_commerce_Tika.htm

Globalisation ICT and Nepal

Globalisation is the most talked and debated issue in the contemporary world. It is a concept that escapes precise definition. In most cases, it is described rather than defined. However, it does not mean the same thing for all. For some, globalisation is a process of opening up economies so that trade between countries could take place freely. For them increasing globalisation has helped the expansion of opportunities for nations and benefited workers in rich and poor countries alike. Brings positive benefits for consumers, helping to increase choice, drive down prices, improve services and create new jobs and opportunities. Globalisation can therefore be seen as a positive force for change that has the potential to raise living standards and drive economies forward.
However, this is not readily acceptable for all. Many think globalisation as the concerted strategy of the industrial world, particularly of the Multinational Corporations, to safeguard their interest and spur a new form of colonisation. After opening of our market, our country will become a supermarket of foreign goods, which are cheaper, killing our local industries, increasing many more jobless. For them, globalisation means increasing poverty and deteriorating living standard of the workers, widening disparity between the rich and the poor within the country and also among the countries, and internationalisation of capital to the detriment of labour market. Even for the moderates, globalisation is a process of restructuring the world economy to find ways for business to maximise profits.
The IMF, the World Bank and the WTO and more generally, the high income countries are held responsible for influencing and largely determining the course of the globalisation process. They are also seen as the driving forces behind the policy reforms that the developing countries had to implement as part of their structural adjustment programs under the supervision of the IMF, the World Bank and the WTO. It is obvious that those countries and organisations will only foster their own interests. Globalization has become an unstoppable phenomenon affecting all aspects of our lives. Some Governments, political parties and trade unions often view this development as at best challenging and at worst sinister. Business and their representative organisations, on the other hand, promote the benefits of open trade across political boundaries and the integration of markets to create global opportunities.
Globalization is a process of increasing economic and non-economic linkages across the world. In the broadest sense Globalization implies integration of economies and societies across the globe. It is equated with the massive, irresistible cross-border flow and integration in the movement of goods, technology, labour and capital, resulting mainly from breakthroughs in transportation and communication. In a wider perspective, Globalisation, covers, various activities such as cultural globalisation, political globalisation, ecological globalisation, economic globalization and so on. But Here I am only discussing about economic globalisation. Economic globalisation implies increasing global inter-linkages of the markets in goods, services, capital and financing. Such a process has speeded up in the recent decade. The contributory factors for rapid economic globalisation are liberalisation, deregulation, privatisation, and declining costs of transport and communication.
The micro-electronics revolution has irrevocably changed the essence of human contact to earth. Distances are shrinking and information is spreading faster than ever before. The internet and World Wide Web have helped this process. Perhaps the most important catalyst for globalization is the spread of information and communications technology (ICT). Through the magic of ICT, it is now possible to instantly access useful information through the Internet and the latest computer technology.
While talking about globalisation, we must understand that our national economy has not even internally integrated. Market institutions and forces are yet to emerge in a competitive way. Nearly half of the population lives in absolute poverty and illiteracy. More than 80 per cent of the population earns livelihood from agriculture, which, however, constitutes only 40 per cent of the country's national income. Lack of proper planning process, commitment, accountability, and integrity of the government, and in lack of people's participation in development activities. The developing countries, particularly the least developed countries (LDCs) like Nepal, have not been able to substantially benefit from international trade due to both external as well as internal constraints. The developing countries have not been able to increase their share in international trade in spite of the preferential market access opportunities provided by the developed countries. It has been realised that market access for the developing countries is commercially meaningless if they cannot increase their competitiveness in the sectors in which they have preferential treatment. In the developing countries, lack of efficient production facilities, adequate infrastructure, weak management capacities, low level of technology and lack of technological capacity and inefficient transportation and communication, limits their potential to specialise in crucial productive sectors and to reap the benefit of preferential trading facilities.
For an economy like ours to integrate into the world trading system on terms and conditions favourable to our development needs, we need to build our capacity to negotiate at the multilateral level. This will happen only if we are able to increase our ability to understand the multilateral trading regime espoused by the WTO and formulate our national policies to benefit from it.
We also need to strengthen our capacity to benefit from international trade by increasing our competitiveness through investment in infrastructure, development of human resources, strengthening of institutional capacity, enhancement of technological capability, and supporting local enterprises, including linkages between large and small enterprises. By joining the WTO, Nepal can now fully enjoy the rights that all members have under the WTO agreements, such as non-discrimination by other WTO members and the ability to use the WTO's dispute settlement procedure. This membership will provide tremendous international market opportunities to Nepal. However, taking advantage of the new opportunity will also be quite challenging. Nepal has few industries and hence very little to export. Garments and carpets account for most of the country's total exports. Despite being an agricultural economy, it does not have enough surplus produce. Threats to domestic industries from cheap imports also loom.
ICT allows trade to become simpler and more streamlined, thus increasing the value and speed of transactions. Companies are not limited to physical locations or their own organizational boundaries for providing products and services. Networked information systems are allowing companies to coordinate their geographically distributed capabilities and even coordinate with other organization as virtual corporation. One major advantage of promoting electronic commerce in Nepal is that it can provide relatively cheap access to global markets even for small and medium-sized enterprises in remote areas. Small and medium Enterprises (SMEs) have been playing a significant role in the economic development of Nepal. The major exportable items like woolen carpets, Pashmina products and handicraft goods produced by SMEs have been major sources of earning foreign currency. Potential benefits of e-commerce for the developing countries like Nepal are immense. Any company can enter global markets where size and location have become rather irrelevant. Success in e-commerce will have an immediate impact not only on productivity and profits, but also generate new jobs employment and livelihood.
After accession of WTO, We have tremendous opportunities for exporting our products in the international market. But to substantially benefit from international trade, we must need to strengthen our capacity by increasing our competitiveness through investment in infrastructure, development of human resources, strengthening of institutional capacity, enhancement of technological capability, and supporting local enterprises, including linkages between large and small enterprises. We have been experiencing the fact that the more technologically capable countries continue to dominate their less capable counterparts, effectively monopolizing opportunities for economic growth through their insurmountable advantage in ICT. Given these diverse possibilities occasioned by globalization, it is of extreme necessity for Nepal to re-examine the trends in ICT development worldwide and devise ways by which its advantages can be maximized. This includes the need to extend the breadth and reach of ICT to peoples and sectors that stand to benefit the most, while curtailing its illicit and destructive uses.

Note: this article was published at All Free Essays . com

Internet search engine marketing and its importance

As search engine marketing is an incredibly effective channel for connecting with potential customers and becoming the powerhouse of the online marketing landscape, dominated by Google. Furthermore, it has been widely recognized the importance of internet technology for the success of any organisation but I have not came a cross with any study focused on role of search engine marketing and its importance to small and medium enterprises (SMEs).

There are evidence exist that investment on online marketing is increasing as the internet users are increasing. Online marketing specially search engine marketing is evolving like anything, it wouldn't be too much to say that in coming years this segment will surpass the print media's share in advertising. accoriding to Chaffey(2005) more than 50% internet users use search engine to find thier search because they don't remember full URL of the site they want to visit, they search those site through search engine such as google, yahoo, MSN ect with the help of key words. So, it is increasingly becoming important for any organisation to survive in virtual world.