Structure and Factors Affecting Online Consulting Business - Essay Example

Entrepreneurship Report Institution Name Date Executive Summary This paper is about the impact of political, economic, social, technological and legal environment on online businesses in particular online consultancy in Saudi Arabia. The consulting business has evolved to offering services online to meet the needs with the advancement in technology. The political environment influences the online consultancy business through the policies that are set by the government. The government decision on these policies is influenced by the political pressure groups. The economic environment is made up of the economic policies and the economic conditions which include the state of economy of a country. The nature of a country’s economic system determines the economic strength of businesses in that country through the level of income of the people hence their purchasing power. The social factors that may have an impact on the establishment of the online consultancy business include the education level of the people and the nature of the population. For online consultancy to be successful, the clients must be people who have technological knowledge. The legal environment comprises of all the laws which protects the consumers, the business organization and the competitors. Every business must be aware and comply with these laws. Some of the legal obligations for an online consultancy business include laws on privacy, intellectual property and spam. Finally the online consultancy business has a bright future ahead considering the rate at which technology is advancing. Contents Page Number Introduction With the current advancement in technology, people are considering the option of doing businesses online. An online business is one where transactions are conducted through the electronic means. This has changed the traditional method of doing business where for one to get the goods or services, he or she has to come into contact with the seller. The buyers of goods and services are also considering online business because it is easier and saves time. It only requires one to have access to a computer and the internet connection. Consultancy is one of the fields where most people have really turned online. This type of business has been in existence for so many years and is continuously evolving. In the past, for one to see a consultant he or she had to visit the person’s premises or arrange for a meeting. However, with the advancement in technology, consulting can be done online without people having to meet. Some of the areas where consultancy services are being offered online include accounting, advertising, auditing, marketing and career counseling. There are however various factors that must be considered before starting an online consulting business and are also impacting the manner in which online businesses are being run. In this essay, am looking at the online consulting business and the political, economic, social, technological and legal environment affecting it both positively and negatively. Why the project focused on online business The project focused on an online business due to the changes that are taking place in the national business model in Saudi Arabia. Most companies are being privatized and others being corporatized (Mulkeen, 2010). This has therefore resulted in increased need for consultancy services with many of them seeking it from abroad. This shift has also increased profitability of businesses in Saudi Arabia and many are being set up. Increased business activities therefore require convenient consultancy servicers which can be easily accessed and gives immediate e feedback. This can therefore be achieved through online consultancy services which can also be sought as business operations continue. This is why my project focused on online consultancy services in Saudi Arabia. Structure of the online consulting business This is a form of business with a very simple structure because being online; it does not require a lot of administrative functions. Setting up an online consultancy business will require a group of experts in various business fields who will be offering the services to the clients. There will be one administrator who will be linking the clients to the experts depending on the needs of the clients. The business also requires a website which is easily accessible and with adequate information regarding the consultancy services. The environment of online business in Saudi Arabia The environment of online business in Saudi Arabia is characterized by many challenges which affect even the government itself. Some of the key challenges are the Information and Communication Technology (ICT) infrastructure and the security and privacy issues. The country lacks a reliable network and servers which can supply internet services to the citizens. It is only few areas where people have reliable internet connections. Most people have to rely on private internet connections which are expensive. Security and privacy of information is also a challenge to online business in Saudi Arabia. Most people fear de not engage in online business due to fear of their information being hacked. This is due to lack of clear privacy laws guiding online access of people’s information (Alshehri & Drew, 2010). However, as the government puts effort in establishing e-government services, it is believed that these issues will be dealt with and investors will be able to carry out online businesses easily. Factors affecting the online consultancy business As the consultancy business is continuously becoming online, there are some environmental factors that are having an impact on it. These factors include the political, economic, social, technological and legal environment. These factors have had an influence even in the past and are continuously impacting the online way of doing business both positively and negatively as discussed below. These are external factors which must however be considered before one starts operating an online consultancy business. Other internal factors include availability of the expertise, the nature of the target market and equipments for the business such as computers and internet facilities. The political environment is determined by the form of government and the political pressures that exist in it. According to Klapper, Lewin & Delgado (2009), good governance and political stability is a prerequisite for a favorable business environment. The government has policies and rules that control and monitor business activities in the state. The government decision on these policies is influenced by the political pressure groups. These groups also exert some control on business activities in a country. Therefore when formulating any business strategy, it is important to consider what is likely to be imposed according to the current state of government. Regarding the online business, the government sets policies concerning the privacy laws, regulation of software information, potential antitrust suite, computer piracy and fraud. Some of these policies may positively impact the online consultancy firms for example the computer piracy and fraud may protect those doing business online against the fraudsters. They may assist in ensuring security of online information especially for the consultants. On the other hand, privacy laws may require disclosure of information which may be used by competitors against the business. The privacy laws regulate the type of information that needs to be made public by those engaged in the online business. Once competitors access this information, they may use it for their own gains. The economic environment is made up of the economic policies and the economic conditions which include the state of economy of a country. The nature of a country’s economic system determines the economic strength of businesses in that country. This is due to factors such as purchasing power of individuals which is determined by their level of income, availability of credit services and the money in circulation. This is however not a big challenge in Saudi Arabia since the oil industry is boosting the economic power of the people. The associated with online business include ability to purchase a computer and have access to internet connection which in most cases is not free. Once the business has been set up, people must have the purchasing power to access the services. A country like Saudi Arabia where investments are increasing and people’s income is high; consultancy business may really do well. This is because businesses will be experiencing a large number of customers and they may require advice on how to meet these customers’ demands. The economic environment that is required for an online consultancy business may negatively impact it in that the clients must be able to access the consultant via the online means. This means that they must have access to a computer and the internet. This limits the online business in that it is not for the ordinary people and businesses (OECD, 1999). Some of the social factors that may have an impact on the establishment of the online consultancy business include the education level of the people. Basically, this is a form of business that is entirely founded on technology. Therefore for it to be successful, the clients must be people who have technological knowledge. The nature of the population is also a social issue that must be considered when setting up an online business. A population that is made up of majority being old and uneducated people may not offer a good customer base for an online consultancy business. This type of a business must be set up in a population that understands its services and who can also be able to access them. Education level may not be a challenge in Saudi Arabia where the 85% of all alts were literate in 2007 (IHME), 2007). Technology is the key in the success of any online business. According to Hooff et al. (2005), the current business environment requires all firms to be able to cope with the changes that are taking place in technology. In the online consultancy services, both the service providers and the seekers must be up to date with technology. The main advantage of technological advancements in online consultancy business is that it enables the consultants to reach many people within a short duration. One is able to attend to multiple clients within the same time. The advancement is technology has also brought networks such as Skype where the consultant can be able to speak to the clients through the internet. Basically, technology has made consultancy services easy to offer. On the other hand, it has negatively impacted the online consultancy services in that it has enabled easy access to information. Businesses and individuals can access sources of information through the internet and this may render consultancy services unnecessary. Technology also keeps changing and even the online businesses must also keep changing with the technology. Basically it has caused a lot of competitiveness even in the online world and businesses have to keep up with it. For example the computers keep changing from desk tops, to lap tops and now people are using iPads and Smartphone. This poses a financial challenge to those businesses which are not well established. The legal environment comprises of all the laws which protects the consumers, the business organization and the competitors. Every business must be aware and comply with these laws. Intellectual property issues that are experiences in online consultancy firms include copyright and trademark infringements. In Saudi Arabia, trademarks are protected by the Trademarks Regulation, Royal Decree No. M/21 where after one registers the trademark, this law protects the owner from infringement. Copyright is guided by The Copyright Regulation Royal Decree No. M/41 which gives the owner of the work financial and moral rights to undertake any action on the work. Before an online business is started, the owner must be granted patents and protection for the intellectual property by the government agency which is charged with this role. In Saudi Arabia, Under Saudi Arabian law, patents are governed by the Royal Decree No. M/27 which protects industrial property under domestic law (Saudilegal, 2011). Other legal requirements for online consultancy business include licensing and Tax Identification Number. Every online business must also be licensed to operate and must have the Tax Identification Number which is used to identify the business for payment of tax (Frieden, 2009). In Saudi Arabia, every registered business must submit their financial statements and pay their business income tax before the 15th day of the third month of the year which according to Saudi Arabian fiscal year starts on 10th of Capricorn (Saudia Online, 2003). Benefits of online consultancy business Operating an online consultancy business has various benefits both to the owner and the clients. To the owner, it is easy to operate and does not require a lot of expenses such as transport costs and office space cost. To the clients, some of the benefits includes that one can access the services from anywhere in the world as long as there is a computer and internet connections. It also saves time and hustles of booking appointments and having to visit the consultant. Such a business will be highly beneficial in the Middle East where a lot of investments are taking place and investors may require easily accessible sources of information on business. The level of technology is also high Saudi Arabia and this offers a good chance for online consultancy. The future of online consultancy business The current trends indicate an exponentially growing use of internet and smart phones in Saudi Arabia. This means that online businesses are thriving well and are not close to ending. People will have to adapt to the online way of entrepreneurship. The growth of online business is however taking place at different paces across various countries. Howevre, eventually all the markets in the continent will reach the same level and the global market will minimize their geographical boundarirs to give rise to a favourable online business environment. This increasing trend in online businesses is creating more opportunities for consultants in various fields. Online consultancy business is one of businesses that has a bright future as the markets become global. The internet is bringing more buyers and sellers together and this widening of the markets is creating a need for consultancy services. Conclusion So many factors play a role in enterprenuership. This role is just taking a different direction especially with the emergent of online businesses. Just as it has been in the past for the consultancy business, the political, economic, social, technological and legal environment is still having an impact in the online consultancy business. Online consultants are also being influenced by the political environment and also have legal procedures to observe. Technology is summing it up with the much influence it having both positively and negatively. However, since online businesses are here to stay, people must get used to obtaining services online. The future of online consultancy seems bright and this requires all businesses to embrace the technology. References Frieden, J. (2009). E-Commerce Law. Retrieved on 11th October 2012 from http://ecommercelaw.typepad.com/ecommerce_law/2009/06/starting-an-online-business- licensing-requirements.html Hooff, B., Dijk, J., Bouwman, H., and Wijngaert, L. (2005). Information and Communication Technology in Organizations: Adoption, Implementation, Use and Effects. London: SAGE. Klapper, L., Lewin, A. and Delgado, J. (2009). The Impact of the Business Environment on the Business Creation Process. Geneva: The World Bank Development Research Group. OECD. (1999).The Economic and Social Impact of Electronic Commerce Preliminary Findings and Research Agenda: Preliminary Findings and Research Agenda. London: OECD Publishing. Queensland Government. (2012). 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