E-Commerce and Internet Marketing - Assignment Example

Abstract The international market is an immensely competitive market as it is perceived as being an open market. Thus, for surviving the stiff competition, it is imperative for the governments to support the companies through various favourable policies and procedures which help in encouraging trade and commerce with other companies, benefitting the businesses as well as the economy of the country. However, it is also to be understood that goods exported/imported should be protected from damages as well otherwise it would result in huge losses for the companies. There might be various reasons that may result in damaging the goods, which includes freight getting thrown, lifted or damaged while unloading during the customs inspections. Meanwhile, the exporters/importers may also benefit from the expansion of e-commerce and internet marketing, which offer various benefits for exporters to venture into expanding and operating into newer geographies without the requirements of having a physical presence in the new market. E-commerce helps in connecting exporters and importers world over in a virtual market place and supports in conducting business in a faster and efficient manner by reducing transaction costs. However, there are various challenges and limitations of using e-commerce as well. Some such challenges include poor infrastructure, lack of proper banking facilities, absence of substantial information on e-commerce and internet marketing, dearth of experts in the field and technical issues related to using e-commerce. Do governments play a positive role in influencing the ability of firms to compete internationally or are they a hindrance? International market is perceived as an open market, which promotes free trade and is immensely competitive. In order to survive such a competitive environment, it is important for the companies to be supported by the governments where they operate their business from. Thus, various governments all over the world have been implementing policies and procedures to encourage trade and commerce with other companies, benefitting the businesses as well as the economy of the country. Governments are responsible for helping in implementing international trade policies being chartered by organisations such as the United Nations and the World Trade Organization. The governments are mostly involved in the evolution of these trade policies and represent their country’s interest in the international forums. For instance, it is the responsibility of the government of a country to implement GATT or the General Agreement on Tariffs and Trade in their countries which helps in reducing import tariff rates (Bagwell 1999). Further, it is the job of the government of a country to create regional economic integration as well for the companies to expand and flourish in other geographies. Many countries have created their own blocs to promote free trade among the group of countries and benefit their companies. Some such blocs include the European Union and ASEAN promote free trade among the member countries. However, as the decision to join an economic bloc is the prerogative of the government of a country, it is totally dependent on the policies of the government of the country to join such blocs and create better economic opportunities for its exporters and importers (Bagwell 1999). The government of a country also signs several bilateral economic and political agreements with various other governments throughout the world to encourage trade and commerce between nations. Thus, governments help in building bilateral free trade by signing bilateral agreements, which further helps in creating open international market wherein the exporters and importers are able to conduct their businesses in an easier manner (Wibbels 2006). However, the international market also needs to be protected. Too much of free trade may harm the domestic industry, with cheaper goods imported from the international markets may flood the country and damage the domestic companies. Thus, in order to protect the interest of the domestic industry, many governments have initiated several policies and regulations, which include intensifying anti-dumping laws and restricting trade liberalization. In order to protect the domestic market, anti-dumping duties are being imposed so that cheaper goods or goods of inferior quality are not flooded in the market by importers. Many governments also imposed non-tariff barriers such as import license, import quotas, technical trade barriers, minimum prices and voluntary export quota. Some of the most important sectors that are still being protected by most governments all over the world are textile and agricultural products (Wibbels 2006). With the opening of the international market, many governments were also made to initiate open-door policy and put added stress on exports. Thus, various governments are also focusing on implementing policies to reduce import restrictions, decrease or abolish tariff and non-tariff barriers, create regional economic integration effectively and sign bilateral trade agreements (Deardorff 1997). Further, the government should also understand that exports should be recognised as an integral part of the national economy and provided with special status. With the growth in export, the country’s economy is also bound to progress. Thus, the government should look at promoting exports by promoting a conducive business environment, increasing labour productivity, stressing on domestic sectors, improving import capacity, expanding scale of production, gaining economies of scale etc. With the promotion of exports, the economy of the country would also progress, as it would help in receiving foreign capital, which in turn would promote domestic industry as well as help in assimilating various modern technologies from outside (Deardorff 1997). With increased competition in the market, even the domestic industry would be promoted to enhance its efficiency and quality, which reducing costs to improve its status in the international market. The governments are also required to create national export strategies which would help in providing open environment for the development of the international market. Such strategies are being made by the government as per the international and domestic economic and political situation forecast for the future, the export target, the market distribution for exports, the important markets for expansion and the export structure. In the contemporary world, countries such as the US, UK, Japan and even groups such as European Union are developing export strategies to strengthen their exports in the international market (Wibbels 2006). Governments are also instrumental in creating the right business environment in the international market for the country, so that the domestic companies are able to export or import their products without any difficulties. Thus, the governments often have to engage in creating various business strategies combining economic, political, public relations and psychological variables to bring together various parties concerned in the deals and create a harmonious environment wherein business could be conducted effortlessly. Also, the government is required to identify and remove any trade barriers as well. For instance, trade unions, political parties, government departments, regional organisations, legislative bodies and even community organisations often create hindrances for the companies to grow in the international market. Thus, the government needs to identify these possible caveats and remove them at the onset itself so that the domestic companies could flourish in the international free market as well (Deardorff 1997). Identify the reasons why goods may be damaged or lost in an export/import transaction and discuss the options available to exporters and importers for minimising such losses. Shipping products and goods outside the country requires following different procedures and guidelines as compared to shipping products within the country. In the international market, the goods might have to go through various channels and required to be satisfied in every division to be allowed to move from one place to another. The goods sent should conform to the government regulations as well as pass the customs once the goods arrive in the country where it is exported to. The documents related to exports are also required to be in place (Wang 1997). However, the greatest fear in shipping goods is associated with damaging of the product during the export/import transaction, as this result in huge losses for the companies. In most of the cases, even if it is a small shipment when carried in 20-foot containers, the goods may get dismantled or spoiled. Although it may be carried as break-bulk cargo, the individual boxes and crates can slip. It can also have cargo stacked on them or around it. The freight once reaches the overseas destination; it may be lifted, thrown, lifted or damaged in the unloading in the customs inspections or when it’s being dropped at the final destination (O’Connel 2004). It can be also where, the cargo can be unloaded in rain and left in the airport's ramp or at the port, which is dependent on the country where it has to go, it may result in stealing as soon as it is unloaded. It has been said that packaging is supposed to be the first line of protecting against damage. Four reasons can be sighted for freight damages during export, i.e. theft, breakage, condensation or excess weight of the item. It is advisable that the freight forwarders’ guidance or recommendations on packaging and insurance is strictly followed (O’Connel 2004). Labeling: Labeling is also an important aspect so that it meets the instruction of the regulation and make it sure that that it adheres to the required level of handling. It can be labeled for avoiding advertising the contents when complying with the law, in such a case, the receiver are able to identify the contents. It could be labeled for complying with safety as well as environment regulations as per the destination country. One of the usual markings is according to the origin, number of packages, weight, precautions that needs to be observed as well as hazmat labels. This can be in all the language where the shipment is being originated and the destination country language. Incase other labeling may be required, the freight forwarder are in a position to advise you as well (Li and Cullinane 2003). Documentation: Documentation is an aspect that is very essential. In case of Air freight, waybills are non-negotiable, and straight bills are also important in case of seaborne freight. With this, shipper's order bill of the lading which is used during the ocean freight is also negotiable. Receiver usually has to keep an original bill for taking the possession of the goods, when it has cleared customs in destination country. Other documentation include invoice of the seller to the buyer. Along with this consular invoice with the information on shipper as well receiver with the value of the goods is also important. Along with this certificate of the origin that shows the goods has been produced with a NAFTA certificate of the originated place is required between the goods that is traded between United States, Mexico and , Canada (Russ 2004). In the U.S., it is mandatory by the Postal Service that shipper's export declaration while transporting goods which is worth more than $500. With the plethora of pitfalls that is related to documentation, taking the help of freight forwarder is advisable; although, assistance is always provided or available through Export Assistance Centers (www.doc.gov) and the Trade Information Center (800) USA-TRADE). Shipping, Insurance and Tariffs: A lot of shipments overseas are also made through intermodal contract that has straight bill of lading. In this case, contract is made with the transportation companies who are able to take charge of whole shipment process and also act as a freight forwarder. In this case, the companies are able to offer insurance for the air freight. For ocean freight, it is usually covered by marine cargo insurance that is available by the ocean freight forwarder. These tariffs are called cabotage laws or economic protection laws. This is paid by receiver when they claim the good from customs at destination (Shyu et al. 2000). Freight Forwarders: Professional assistance from the international freight forwarders is advisable. In the United States, these professionals have a license that is issued by International Air Transport Association. In case they handle air freight and receive Federal Maritime Commission if they work with ocean freight. They are able to act as an agent while sending material overseas. They have a good knowledge of import rules as well as regulations of the destination country as well as U.S. export rules. These freight forwarders are able to advise on the cost of packing, insurance and shipping. They are able to take care of documents and ensure that the goods are transported to the ship or even a plane. Freight forwarders can also be customs brokers who are able to arrange payment of fees as well as tariffs for ensuring proper release of material till it reaches the destination (Tsai 2000). What are the challenges, opportunities and limitations faced by exporters and importers due to the increasing use of e-commerce and internet marketing? Traditional markets are inflicted with various limitations, which can be taken care of through e-commerce and internet marketing, as they offer to provide benefits for exporters to venture into, expand and operate in newer markets without the pre-requisite of physical presence. E-commerce and online marketing helps to connect importers and exporters from all over the world with each other in a virtual market place to conduct businesses in a faster and efficient manner. With the use of e-commerce, the exporters and importers are able to reduce the transaction costs, which include costs of drafting, negotiating and safeguarding a deal between the companies trading with each other. Further, the development and operational costs connected with governance can also be reduced substantially through the use of e-commerce (Mitchell 2001). It can also be stated that e-commerce would help exporters to by-pass the trade-offs that have become a trademark of the traditional markets these days. Further, in the face of growing competition and uncertain market conditions, online marketing would be another area which would help exporters to reach to a wider audience and create a niche for the firm, without spending as much as the traditional marketing channels. Thus, e-commerce and internet marketing may provide the opportunities of easing engagements, providing cheaper and faster means of getting information, improving customer care facilities, generating quicker feedbacks, supporting interchange of online data with customers and suppliers and accessing a wide range of audience globally (Featherman et al. 2006). However, along with the opportunities provided by e-commerce and internet marketing, several limitations and challenges have also been faced by the exporters and importers. Some of these issues deal with poor infrastructure, lack of proper banking facilities, absence of substantial information on e-commerce and internet marketing, dearth of experts in the field and technical issues related to using e-commerce (Choi and Suh 2005). Infrastructure problems: Most countries still does not have fully developed internet connectivity and charge high cost for internet usage. Thus, companies often shy away from investing into e-commerce as it increases their overhead expenses. Further, many countries still do not have adequate infrastructure to find the right service provider who could offer a wide range of features and capacity that may help in hosting the website, maintaining it and conducting business over internet. Further, many also face the issue of insufficient bandwidth, inability to conduct transactions for foreign credit cards in bulk and costly bank charges (Choi and Suh 2005). Insufficient banking services: Exporters are often faced with various financial issues related to e-commerce as well, which includes inability to get credit card transactions processed electronically, due to lack of proper banking services in the country of operation or the country of business transaction. Further, often the bank charges associated with such transactions are also very expensive, which also increases the cost of transactions of the goods and services. Also, most countries do not have adequate laws and regulations related to stopping credit card fraud. This results in creating doubts in the minds of exporters and importers to conduct business over the internet (Goldsmith and McGregor 2000). Lack of information: Most companies are often clueless about e-commerce and internet marketing in general due to lack of sufficient information on the subject. Thus, most exporters and importers are confused about the guidelines on how to use internet for conducting business due to lack of guidance and information on the issue. Further, targeted information providing guidance to exports is also absent which causes greater hindrances. Companies are often not able to get targeted and reliable information regarding e-commerce. Also, there is a lack of subject-matter experts on e-commerce as well, who may guide the exporters on how to conduct business seamlessly over the internet (Mitchell 2001). Absence of technical know-how: Technical problems are also creating issues for the exporters to use e-commerce and internet marketing, as most exporters and importers are not aware of the technology required to operate or maintain such services. Often companies are not able to invest properly to create effective websites which could appeal the international audience (Featherman et al. 2006). Thus, e-commerce and internet marketing together with creating opportunities for the exporters and importers in the contemporary world are also creating various challenges and limitations for them to conduct business effectively over the internet. Reference: Bagwell, K. and Robert W. S. 1999, ‘An Economic Theory of GATT,’ American Economic Review Vol. 89, pp. 215-248. Choi, Y. U. and Suh, C. S. 2005, ‘The death of physical distance: An economic analysis of the emergence of electronic marketplaces’, pp.597-614. Deardorff, A. V. 1997, ‘International Conflict and Coordination in Environmental Policies,’ In Jagdeep S. Bhandari and Alan O. Sykes, eds., Economic Dimensions in International Law: Comparative and Empirical Perspectives, New York: Cambridge University Press, pp. 248-274. Featherman, M.S., Valacich, J. S. and Wells, D. 2006, ‘Is that authentic or artificial? Understanding consumer perceptions of risk in e-service encounters’, Information System Journal, Vol.16, pp. 107-134. 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