Marketing Management - Term Paper I

TERM PAPER 1

Select a particular marketing article from any credible journals, such as Journal of Marketing, Harvard Business Review, Journal of International Marketing and etc. Critically review the paper in terms of addressing i) the main issue discussed; ii) its explanation as a marketing body of knowledge; iii) its practicalities in the operation of domestic businesses (you may choose any type of business) and iv) its implication on the said enterprise.

JOURNAL
Success in Electronic Commerce Implementation: A Cross- Country Study of Small and Medium Sized Enterprises.

Author : Sandy Chong, Curtin University of Technology, Perth Australia
Source : http://www. emeraldinsight.com/1741-0398.htm

Success in Electronic Commerce Implementation: A Cross-Country Study of Small and Medium Sized Enterprises

Abstract
The journal aims to develop a model of electronic-commerce (EC) implementation success for small to medium-sized enterprises (SMEs). Australia and Singapore were selected for comparative study in order to explore differences in adoption strategies and variation of reasoning.

Main Issues Discussed

Due to the emergence of internet and World Wide Web (www), electronic commerce (EC) is identified as the most promising and opportunistic tool for businesses to reach out to customers, communicating with business partners and running of business operation. For firms, EC improves business processes and business communications which in turn benefited stakeholders such as consumer, suppliers, management teams and investors.

There are already shift in paradigm in using the internet as a tool for business. US expected increased of online sales from $172 billion in 2005 to $329 billion in 2010 (Forrester Research, 2005) while Asia Pacific Business-to-Business EC are expected to grow at a Compound Annual Growth Rate (CAGR) of 59 per cent (IDC, 2004).

SMEs are a vital sector in most countries economies with some reaching 90 per cent composition of the business sector. EC provides the SMEs opportunities in penetrate the global market which was previously the exclusive territory of multinational corporations. Successful implementation of EC will result in the SMEs increased sales; improved profitability; reduced inventories, procurement and distribution costs; services quality improvement as well as better competitive positions (Campbell, 1998; Dhokalia and Kshetri, 2004; Grandon and Pearson, 2003; Purao and Champbell, 1998; Smith, 1998; Stockdale and Standing, 2004; Whitely, 2000). On the other hand, failure of EC implementation will result in severe effect as SMEs have limited resources (Soh et al, 1997; Lee et al, 1999).

Despite obvious EC advantages, there are reluctance for majority of SMEs to implement EC due to technology costs, lack of managerial and technical skills as well as system integration and financial resources (Cragg and King, 1993; Iacovou et al. 1995; Stockdale and Standing, 2004).

The paper considered various factor in considering EC implementation including:
- Size of firms.
o Larger firms have higher perceived level of satisfaction of EC implementation due to better financial positioning enabling adoption of latest technology or latest innovation activities as well as ability to hire more skilled workforce which is necessary for implementation of new technology;
- Perceived readiness
o Most significant factor for the overall level of EC adoption satisfaction for Singapore’s SMEs. Firms with adequate resources contribute to EC effectiveness by their involvement during the requirement and design phases which encourage more realistic expectation from EC and comfortable implementation process and more satisfying experience of EC.
- Observability
o A significant factor for both Singapore and Australian firms. With the visibility of EC implementation results such as initiatives taken by other firms as well as positive exposure from media might influence SME to implement EC in their own organization.
- Variety of communication channel
o Australian was found to have positive relationship between overall satisfaction and variety of communication channel. Usages of more communication channel help encourage a firm’s trading partner to adopt EC as well which will improve business link. By increasing the awareness and knowledge of EC to their clients will improve their confidence resulting in higher level of use and satisfaction.
o The finding also suggested that the benefit of EC could be effectively communicated by promotional seminars, presentations and on site or demonstrations. Effective communications of EC benefits include on-the-job training for firm’s employees and usage of the EC for direct communication with their trading partners.
- Customer pressure
o Australian SMEs’ overall satisfaction was inversely related to customer pressure. Firms which adopt and use EC on their own initiative are less pressured by their customer and therefore have higher level of satisfaction.
- Supplier pressure
o There was directly positive relationship of supplier pressure to SMEs satisfaction level of adoption which is based on the fact that SMEs control the suppliers. Based on the research, supplier pressure should be considered as positive as implementation of EC would result in more supportive operational relation or environment which will result in more potential benefits such as ease and more efficient ordering system.
- Perceived level of governmental support
o The Australian SMEs overall satisfaction of EC implementation was positively affected by the perceived governmental support in the form of advisory support.

Based on the regression result of overall satisfaction, the adoptions of EC in Australia are based on five factors: observablility, communication channel, customer pressure, supplier pressure and perceived governmental support. For Singapore, there are only three factors: firm size; perceived readiness and observability.

Marketing Body of Knowledge
E-Commerce means that the company or site offers to transact or facilitate the selling of products or services online. EC applies to both business-to-consumer (B2C) and business-to-business (B2B). B2C would include upstream activities of a business operation such as information on customer’s preference and queries, sales of products and services as well as customer satisfaction feedbacks. SMEs could also use EC as a tool of marketing to conduct research study on market segmentation and customer preference. B2B involved relationship between supplier-customer which in turn makes the market more efficient (Kotler et al, 2006). With EC, buyers have access to numerous information giving them advantages in term of product knowledge and also price transparency.

EC functions also include support services for trading encompassing “inter-organizational emails, directories, trading support systems for commodities, products, customized goods and services, management information, and statistical reporting systems” (Clarke, 2005).

Practicalities in the Operation of Domestic Business
Malaysia, as well as other countries in the world is facing globalization which is further facilitated by the existence of the internet. As more consumes are getting more internet savvy, SMEs should definitely implement EC to capture both the domestic and global market.

Based on Census on Establishment and Enterprise 2005, a total of 548,307 or 99.2 per cent of Malaysia’s total companies in operation amounting to 552,849 were Small and Medium Enterprises (SMEs). The service sector comprised of 474,706 (86.6 per cent) followed by the manufacturing sector of 39,376 (7.2 per cent) and the agricultural sector of 34,225 or 6.2 per cent (www.smidec.gov.my).

As of 15th October 2008, the Malaysia External Trade Development Corporation (MATRADE) registered 14,064 Malaysian exporters of which 11,876 or 84.4 per cent are SMEs. Of the total, 94.1 per cent (13,239) have emails but only 56.7 per cent (7,974) have websites. Only 56.5 per cent (7,751) is currently exporting (www.matrade.gov.my). Some of the website registered are through free listing online directory as opposed to full website with own domain name. The data indicated that most domestic SMEs do not have proper website to incorporate multi facet of e-commerce marketing strategies.

Based on similarity and near geographical location, Singaporean SMEs preference of EC implementation satisfaction of factors which are firm size; perceived readiness and observability might be also applicable to Malaysian SMEs (Chong, 2008).

Most of the Malaysian bigger SMEs have their own website such as Sepatu Timur Sdn. Bhd. A smaller number of smaller SMEs use the online directory such as Yellow Pages to register their contact details. In order to ensure competitiveness and fair leverage on international market share, Malaysian business entities should consider the implementation of EC as part of the marketing strategy.

The factors that further support the incorporation of EC include the increasingly efficient and cheaper internet infrastructure such as Broadband and Streamyx services. The cost of opening a website ranged from free via free web pages (www.blogger.com / www.fotopages.com), minimal fees (www.lelong.com for RM168.00 or www.ebay.com) to fully designed website fee from RM2,500.00 (www.netbuilder.com.my).

Implication of EC on Said Enterprises i.e. SMEs

Malaysia’s business-to-business (B2B) e-Commerce spending were expected to register a high growth of 77 per cent to RM 47.6 billion in 2006 with projected B2B spending projected to increase at CAR of 29 per cent (SMIDEC; IDC: Malaysia Internet & E-Commerce 2006 – 2019 Forecast: Tracking the Development).

Consumers are savvier in making their choices from the readily available information and e-commerce business in the internet. The existence of online bidding house such as eBay and Lelong.com gives consumer ample opportunity to get better bargain price. Discussion forums and chat rooms also give more detailed information of products to interested parties.

Sepatu Timur Sdn. Bhd. Is chosen as a representative for as a case study for SME entity embarking of e-Commerce usage (refer Appendix I). Via its website http://www.sepatutimur.com, the company boosts it global presence with related information posted for potential buyers such as Online Catalogue, Pricing and Shoe Sizes Variation Chart. Stakeholders’ needs are addressed by the existence of Company Profile section and Query/Feedback form are also included for feedback / comments / order purposes. Under the brand Minoli, it had exported Papua New Guinea, Fiji, Cambodia, France and Tahiti.

Sepatu Timur could further enhanced its EC usage by incorporating marketing related features such as online tracking of orders, just in time (JIT) ordering of material from suppliers when its raw material level dropped, continuous customer feedback system for further product development etc. It can also conduct surveys for market segment for its specialized products which includes Military Boots, leather footwear (Professionals) and Safety Shoes / Boots (Construction / Heavy Industry).

Further Research

The research may be further refined to ensure more countries to be included to prove generalization of EC adoption satisfaction level. Aspect of EC as a business strategy may be research such as a medium of more accurate market segmentation, feedback for research and development, medium of efficient marketing etc as the possibility of EC usage for SMEs is endless. Evidence of beneficial adoption of EC may be further research in term of increased sales, larger market segment targeting, and penetration into global market as well as higher projection of entity’s survival and success.

References

Champbell, A.J. (1998), “Embracing electronic data exchange now will keep your company in step with the competition’, Business America, Vol. 119 No. 6.
Clarke, R. (2005), “The past, present and future B2B e-commerce”, statement for panel session “Let’s go shopping”, Slattery’s Rewind Fast Forward Conference, Sydney, September available at: www.anu.edu.au/people/Roger.Clarke/EC/B2C-0509.html
Cragg, P. and King, M. (1993) “Small-firm computing: motivators and inhibitors”, MIS Quarterly, Vol. 17 No. 1, pp 47-60.
Dhokalia, R.R. and Kshetri, N. (2004). Factors impacting the adoption of the internet among SMEs”, Small Business Economics, Vol. 23 No. 4, pp. 311-22.
Forrestor Reaserach (2005), US eCommerce Forecast; Online Retail Sales To Reach $329 Billion By 2010, Forrestor Reaseach, 14 September, available at: www.forrestor.com/Research/Documenr/Excerpt/0,7211,37626,00.html (accessed September 2005)
Grandon, E. and Pearson, J.M. (2003), “Strategic value and adoption of electronic commerce; an empirical study of Chilean small and medium businesses”, Journal of Global Information Technology Management, Vol. 6. No. 3, pp. 22-43.
Iacavou, C., Benbasat, I. and Dexter, A (1995), “Electronic data interchange and small organizations; adoption and impact of technology”, MIS Quaterly, Vol. 19 No. 4, pp. 465 – 85.
IDC (2004), IDC Predicts Double Digit Growth of Asia / Pacific Internet Buyers from 2003 to 2008, IDC North Sydney, 6th August, available at www.idc.com.au/newsletters/idcpulse/detail.asp?intID=43 (accessed September 2005)
Lee, C., Seddon, P. and Corbitt, B. (1999), “Evaluating the business value of internet based business to business electronic commerce”, Proceedings of the 10th Australasian Conference on Information Systems. Wellington,New Zealand: Victoria University of Wellington, pp. 508-19)
Kotler P, Keller KL, Swee HA, Siew ML & Chin TT (2006) Marketing Management: An Asian Perspective, Pearson Prentice Hall, pp. 513-14
Purao, S. and Champbell, S. (1998) “Critical concerns for small business electronic commerce: some reflections based on interviews of small business owners”, Proceedings of the AIS Conference, Baltimore, MD
Smith, A. (1998), “New Frontiers”, Intelligence, June.
Soh, C., Mah, Q.Y., Gan, F.Y., Chew, D. and Reid, E. (1997), “The use of the internet for business; the experience of early adopters in Singapore”, Internet Research, Vol. 7 No. 3, pp. 217-28.
Stockdale, R. and Standing, C. (2004), “Benefits and barriers of electronic marketplace participation; an SME perspective”, Journal of Enterprise Information Management, Vol. 17 No.4, pp. 301-11.
Whiteley, D. (2004), E-Commerce – Strategy, Technologies and Applications, McGraw-Hill Publishing Company, Maidenhead.

Internet Journal Article:
Chong S (2008). Success in Electronic Commerce Implementation: A Cross-Country Study of Small and Medium-Sized Enterprise. Retrieved 15 October 2008 from http://www.emeraldinsight.com/1741-0398.htm

Organization / Government Agencies
Malaysia External Trade Development Corporation www.matrade.gov.my
Small and Medium Industry Development Corporation www.smidec.gov.my
E-Commerce Internet Website
Sepatu Timur Sdn. Bhd. www.sepatutimur.com
Netbuilder.com www.netbuilder.com.my
Lelong.com www.lelong.com.my
www.blogger.com
www.fotopages.com
www.inteshop.com
www.kedai2ekin.com