Role of E-business Adoption Models to SMEs - Essay Example

Critically Evaluate the Role of E-business Adoption Models to Assess Existing E-business Capabilities of SMEs and Make Recommendations for Future Strategy and Investment Business simply means the buying and selling of goods and services. And E-business, or E-Commerce is the buying and selling of goods and services through the internet. E-business provides information about the products to customers worldwide, and also a wide range of products with product description. This facilitates the customers to select their needed product within a small amount of time. Thus, it creates a close relationship between the customer and the producer of the product. Thus E-business reduces the cost of marketing, distribution and selling. In the olden stages of business, the manufacturer used traditional methods of marketing with advertising in the print and electronic media (Shima & Varfan 2008). And traditional methods uses different channels of distribution such as “wholesalers and retailers” (Bernard et al. 2010). Thus it involves a huge cost of distribution. The functioning of the business based on the “Internet and web based technology” is termed as E-business (Andam 2003, p. 5). As the technology advances day by day, it is better to adopt these changes to be successful in the business sector in terms of production and marketing. E-business helps in marketing through reducing the advertisement cost by reaching out to the people “globally” through the internet by search engines such as Yahoo, Google etc (Chapter 1: Introduction to E-business and e-Commerce n.d.). Small and medium sized enterprises (SMEs) have low man-power and low capital compared to large scale companies. Usually SMEs face difficulties at their initial stage of establishment. Since SMEs play a major role in the economic development of the country, a special “priority” has to be provided (The New SME Definition User Guide and Model Declaration 2005). Hence a study has to be made on the E-business model and the best among them can be adopted for the enhancement of SMEs. The cost of production and distribution is applicable to both large scale and small scale organizations. But the “SMEs” face more difficulties in raising funds as their amount of investment is very low (Promoting Entrepreneurship and Innovative SMEs in a Global Economy: Towards a More Responsible and Inclusive Globalisation 2004). At present the big and branded companies use “online marketing” as a selling method, which reduces their huge marketing cost (Eriksen & Hemmingsen n.d.). This technique can be also used by the SMEs. It involves the “electronic transactions” between a company and the third party (Myers, Fletcher & Gordon n.d.). It involves a financial aspect as the payment for the sale or services, and non-financial aspect of customer request and feed backs. There are two sides of E-business: namely, “Buy-Side” (Industry Snapshot: Investment Management n.d.) and Sell-Side. Buy-side involves acquiring redundant the raw materials for the production of goods and services. The procedures involved in selling the products to customers are the Sell-Side of E-business. Sell-side of E-business includes service oriented relationship-building website, which provides details in retaining the customers. Secondly, transactional E-business site - which facilitates purchasing products online. The third one, Portal or Media Site for providing news and information about variety of products. Portal simply means a gateway of information. Last but not the least is Brand Building site. That enables support to the brand of the product. The most important element in E-business comes under the “Supply Chain Management” (MEV425 Supply Chain Management n.d.). It involves the managing and controlling of all the organizational activities from supply to the delivery of the product to the customers. There can be a direct relation with the customer who is termed as B2C or the “Business to consumer method” (Kha 2000). Under this, the company directly deals with the customer. All the information regarding the products will be available to the customer through the internet and he makes the order online. The producer directly couriers the order to the consumer at his address provided. It can be seen in online shopping sites such as eBay. in, snapdeal.com, yebhi.com, flip kart, etc . Under B2B or the Business to Business model, the transaction takes place between two business organizations. It may be between the producer and the wholesaler or between wholesaler and retailer. It involves much time in transporting the goods from one place to another. And the customers have to wait for the arrival of the product at their locations. E-business Adoption Models: Nolan and Quiet Revolution Model “DTI Adoption Ladder” (Al-Qirim 2004). Scottish Enterprise Network Model CPIT Model Nolan and Quiet Revolution Model: Earlier, Nolan model was used as the source for consultancy studies but now it plays a major role in the “Zenith Cooperation Information system’s planning” (Krishna & Barman 2011, p. 1). This model handles the financial planning, ordering and on-line customer enquiries and mainly relies on the “computer and information technology budget” (2). According to Nolan, in an organization the growth model of the computer budget depends on the “penetration and usage model of IT” (2). The progress of an organization mainly depends on “different phases” such as Initiation phase, Contagion phase and integration phase (2). In initiation phase we have slow increase of the computer budget. Decreasing annual increase of the annual computer budget was done during the contagion phase and finally during the integration phase slow annual increase of the computer budget occurs. Nolan model is beneficial in Human Resource information system in Small and Medium Sized Enterprises (SMEs). A technique known as “Cumulative Weighted average (CWA)” on the basis of occupation category and Nolan model was adopted for the research study to find out the support level of Nolan model in Human Resource Information system (7). As a result, a confirmation was obtained that a small scale textile industry can be well-functioned with the help of Nolan model since they are capable of “accessing and managing” related information with the available technologies (7). Slowly introducing the technology into the industrial sector is done by the quiet revolution model. Quiet revolution model is successful up to a certain extent. DTI Adoption Ladder: Department of trade and industry (DTI) adoption ladder is an “e-adoption ladder” to represent the adoption of information and communication technology (ICT) by SMEs (Mendo & Fitzgerald 2005). It depicts the progression from basic access to more sophisticated use. The initial step of the DTI e-adoption ladder is the email for communication. Then it stepped into another stage known as creation of websites. Thence progressing into online buying and selling of goods (E-commerce) and then, integrated supply chains (E-business) and the final stage attained by the creation of transformed organizations. Scottish Enterprise Network Model: Under this head we discuss the approach taken by Scottish Enterprise to improve their business. Many Scottish Companies have faced bad “recession” (Kumar 2011) for many years. So they had decided to focus on improving the development of Scottish companies. The areas of concentration include government economic policies, energy sources, life science and technology. Also they concentrated on introducing new products and services. So, many companies faced difficulties in raising fund for their functioning. Scottish Enterprise planned to help them through direct funding products and with the support of Scottish Investment Bank. The Board of Scottish Enterprise had found out a “strategic plan” (Raisinghani, Meade & Schkade 2007) to respond and guide the economic opportunities the company faces. The elements had more impact on the Scotland’s economy; they are Growth companies, International trade and investment, Renewable energy, Low carbon and Innovation. The company adopts an integrated approach in stabilizing innovation, commercialization and knowledge transfer by way of getting new products and services to world market. Scottish Enterprise is planning to help companies to attain additional income from innovation during the coming years. They are implementing European Commission’s “Smart Specialization” which mainly concentrates on regional innovation and commercialization. These actions will improve the working and business of SMEs. The main goal is to help the SMEs to come out of the effect of Global financial crisis. Thus we can say that helping the SMEs financially is mainly done by the Scottish Enterprise through different strategies and banking assistance. CPIT Model: This can be said as “connect – publish- interact- transform’’ (Sharkasi & Wynn 2011). It is mainly concerned with interacting with the electronic business. This integration is carried out under CPIT model. The adoption of E-business by SMEs will definitely change its work culture. In order to bring the desired objectives through E-business the technologies applied must be integrated. We can ensure the integration by connecting the department of purchasing and marketing. This model states the importance of communication and information technology to improve the profitability, operational efficiency and enhancing of competitive efficiency. The application of technology, or the integration, will help in reducing the manpower requirement of the SMEs, which will reduce the unit cost of the products manufactured by the industry. Adoption of technology will improve the relation between the suppliers and the customers, which is more important for the growth of SMEs. CPIT model aims at improving marketing, distribution, promotion and customer retention, towards the reduction of operational cost. If the SMEs want to attain full benefits of E-business, it is important that the management to provide framework for adapting the “new technologies” (Ang & Husain 2012). More attention to be provided for the workers’ efficiency for learning new and advanced means of methods. It becomes crucial when the managers or the workforce refuses to adapt the technological change. The company has to take initiative to provide them with the information and training regarding the “E-business” (Brynjolfsson & Smith 2000) integrating methods, and make them to adapt the cultural change. It is necessary because E-business model allows SMEs to modify from customary models of business to most superior models that are helpful for the decision making and problem solving process. Nolan model faces certain limitations when the medium scale textile industries were considered. To attain maximum benefits the technology implemented have to be improved a lot as per the recommendation of researchers who studied about this model. The “weak areas” of the management information system must be improved. (Krishna & Barman 2011, p. 10). Nolan model is not preferable as the best one, since the technological support has to be improved to handle the investment and to enhance the performance. Since Quiet Revolution model is a time consuming one, it cannot be selected as the most suitable E-business model. DTI adaption ladder also have certain limitations. At each stage dynamic processes which affect the SMEs cannot be indicated. This is the major demerit of the DTI adaption ladder. Scottish Enterprise network requires financial assistance as well as bank transactions which take more time compared to other models. Conclusion: By this analysis we can identify that, in order to become successful in this modern and competitive business industry, new technologies and cost reduction plans must be adopted. E-business or Electronic Business is using technology in improving the business process. This involves the integration and management of different means of production, such as human resource, procuring of raw material from suppliers, sales and distribution of finished products. All these processes require a large amount of finance at all stages. SMEs are generally having limited amount of finance, hence they face difficulty in meeting the production and sales procedures. Thus it is recommendable that they should adopt new cost saving technologies. E-business or CPIT (connect-publish-interact-transform) model of E-business offers simple and easily adoptable method to SMEs. E-business is the adoption of technology such as web based methods for sales and marketing. CPIT model is stated to integrate the technologies to SMEs’ production and distribution process. This helps in making a connection with the suppliers and the customers, which will enable the growth of these industries. SMEs contribute a major share in the economic growth of the country. More attention has to be paid for helping them. CPIT model will help the SMEs in changing the traditional methods of production by the new and cost saving technologies. It can be successful with the coordination of both the management and the workers. 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