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Benefits of E-commerce for Small Enterprises

Question:

Discuss about the Impact of E-Commerce On The Small Enterprises.

The technology of e-commerce helps in offering number of potential benefits for business of the organizations. The main aim of the paper is to elaborate the impact of e-commerce on the small enterprises of developing countries.  According to Choshin and Ghaffari (2017), small enterprises are considered as the fastest changing sector and it is posited that small enterprises can substantially achieve proper amount of benefit from e-commerce. It is found that the adoption of e-commerce is influenced by the governments of developing countries for achieving proper amount of success as well as for economic development of their country. In addition to this the advantages that are offered by the e-commerce in small enterprises is considered as one of the important factor for the growth of the developing countries.

The paper identifies how the small enterprises of developing countries are impacted by the adoption of e-commerce as compared to developed countries.

According to Ahmad et al. (2015), E-commerce is defined as one of the business or economic activity that helps in enabling selling as well as buying of products in order to provide the facility of business transaction. It is identified that e-commerce has a potential of adding higher value to the consumers as well as businesses in developing countries in comparison to developed countries Falk and Hagsten (2015, pp. 358).  However, with the rapid growth and develop of ecommerce, it is identified that  the rate adoption of e-commerce in developing countries by the small enterprises are slower as compared to the small enterprises of the developed countries.

It is stated by Hanna (2016) that the SMEs of developing countries are moving towards e-commerce in order to achieve success. The presence of e-commerce has expanded quite rapidly and this is due to the benefits as well as opportunities that the businesses are getting with the implementation of e-commerce. The concept of utilizing the e-commerce with the help of internet software as well as services helps in endeavor the linkage of internet use with the various types of opportunities that it generally offers to the firms Turban et al. (2017,pp.57). It further helps in recognizing that the strategic potential of internet use helps in controlling the bounds of relationships as well as interfaces that is mainly utilized between the business as well as customers that is mainly associated with the strategy of the firm.

Adoption of E-commerce in Small Enterprises of Developing and Developed Countries

It is opined by Abou-Shouket al. (2016) e-commerce helps in offering a number of potential benefits both to large business as well as to small enterprises. The studies help in elaborating the benefit as well as impact of e-commerce on the business of the organization. E-commerce helps in offering number of unmatched savings in terms of different types of transaction costs Savrul, Incekara and Sener (2014, pp. 37). In addition to this, it is identified that with the utilization of e-commerce the business can shorten their traditional supply chains for minimizing the transportation obstacles. Despite of the benefits that the small enterprises obtain due to the adoption of e-commerce into their business, it is identified that there are number of problems that are associated with the identification of appropriate application of e-commerce and its strategy due to lack of proper planning as well as knowledge in ICT White, Afolayan and Plant (2014, pp.34). Consequently, it is quite hard to witness that the SME’s owners as well as managers will finally develop the strategy of ICT through a trial and error procedure.

According to Awiagah, Kang and Lim (2016), e-commerce is considered as the most important instrument of the economy. The government of the developing countries is trying to enhance its usage so that the small enterprises of the developing countries can be aware about the   adoption of e-commerce in business. The governments of different developing countries are raising efficiency for accelerating the economic growth of their country. It is stated by Abdulhakeem, Edwards and McDonald (2017) that may developing countries are also planning serious bid for making the best utilization of e-commerce in order to boost the growth of the small enterprises.

 It is stated by Rahayu and Day (2017) that e-commerce is one of the medium of trade that mainly helps in creating a positive impact on the economy of the developing countries. It will be helpful in curtailing national debts as well as inflation debts of the developing countries in order to enhance the gross national product. Not only does e-commerce helps in creating a positive impact on the economy of the small enterprises but it also helps in curtailing the national debt of the developing countries for experiencing a more open economy as well as for enhancing competitive advantage Uwamariya, Cremer and Loebbecke (2015, pp.67). Such an opportunity by the e-commerce utilization in developing countries helps in holding lot of promise for developing the country economically by providing proper opportunities of penetrating both the national as well as the international market. The opportunities that are provided by e-commerce are for small enterprises of the developing countries that generally lacks resources. It is identified that the advent of e-commerce as well as internet are quite helpful in reducing the costs that are associated with the business.

Strategic Potential of Internet Use

It is identified that the changes that is sparked by the ecommerce helps in creating a important impact on the economy of the developing countries. The growth of e-commerce retail sales has reduced search cost of the consumers that generally helps in placing downward pressure on the prices of the consumer for minimizing the price dispersion for many consumer goods. This lead to substantial minimization in the number of companies that are operating in different industries that generally tend to be less involved with the e-commerce Rahayu (2015, pp.65).The rapid growth of e-ecommerce is helpful in providing major boost for different residential parcel delivery services.  E-commerce as well as globalization enhances the connectivity and the speed with which the sales transactions can be conducted.

It is identified that there is a tremendous enhance in online sales due to the utilization of e-commerce in small enterprises of the developing countries. It is identified that business revenue mainly incorporates an e-commerce platform for enhancing it up to 150%. This is generally attributed that most of the people generally prefers access as well as convenience of e-commerce platform. According to Panneerselvam (2016), economic condition is mainly recognized as one of the most important driver for adoption of e-commerce. Both the GDP as well as income per capita helps in indicating the economic condition of the developing countries. The e-commerce generally helps in depending on different technology infrastructures that are generally needed for connecting different regions as well as parties within the developing countries.

It is opined by Da Costa (2016) that e-commerce generally helps in carrying strong socioeconomic implications on the developing countries. The people of developing countries will be able to perform different types of transactions in the business for elevating their standards as well as quality of life. E-commerce utilization in small enterprises helps in creating high opportunity for the business of small enterprises with proper market access. Electronic commerce will be helpful in generating productive gains by minimizing the transaction cost of the business. It is analyzed that the consumers will also get the benefit through reduced search costs that generally helps increasing competition as well as reducing the prices.

It is stated by Mazzarol (2015) that the firms of developing countries generally utilizes internet in order to achieve different kinds of procurement as well as inventory savings. The potential for saving by the small enterprises can be mainly divided into minimized processing costs for procurement transactions, reduced price inputs that are mainly attributed for enhancing competition as well as for improving the inventory control. It is identified that utilization of electronic inventory as well as transferring information helps in enabling the producers to minimize the time components as well as various types of raw materials that are generally utilized in different stages of processing. It is identified that even small reduction in the holding of inventory can cause substantial rise in profit because of the average cost to retailers. It is opined by Edefiell and Riesbeck (2015) that procurement in small enterprise of the developing countries is quite slow as well as less intensive than in developed countries so the technical efficiency that is gained from transfer of procurement system is quite large. Additionally the savings in working capital from minimized holdings of inventories is found to be quite significant for developing countries when the cost of capital is quite high.

Problems Associated with Identification of Appropriate Application of E-commerce

According to Mazzarol (2015), productivity gains can be achieved by improving as well as eliminating the efficiency of intermediaries that are mainly associated with the marketing as well as distribution departments. It is identified that eliminating as well as transforming various types if intermediary functions generally helps in enabling the small enterprises of the developing countries to access both domestic as well as foreign markets at very much lower cost Rusko and Pekkala (2017, pp.176). The small enterprises of the developing countries mainly aim to help the domestic companies. Therefore, net externalities of work which is combined with lower marginal cost of adding new users means that the market of providing different types of intermediary services helps in offering considerable advantage to the company. In addition to this, developing countries also does not able to capture the cost savings from reduced intermediation.

 It is stated by Alrousan and Jones (2016) that the internet helps in offering the proper potential of saving the retail transactions as compared with traditional systems. It is suggested that greater the availability of information to consumers about the savings on the provided services then greater will be the productivity of the staffs of small enterprises of developing countries. Preliminary studies suggest that goods that are sold on the internet were priced higher than in stores Eid and El-Gohary (2013,pp.32).The lower cost of service transaction have very much little effect on the small enterprises of the developing countries than in developed countries because the lower wages that are paid in the developing countries means that the enterprise have very much little incentive for undertaking the fixed cost that is generally involved in setting up the electronic system.


It is opined by Laudon and Traver (2013) that the utilization of e-commerce in small organization assists in improving access as well as the ease of information that further helps in enhancing the productivity of the capital for raising its return in context to labor. It is identified that the utilization of e-commerce by small enterprises helps in increasing the demand for skilled labor. Electronic commerce helps in increasing regional equality. It is identified that some aspects of electronic commerce could be helpful in mitigating the impact of inequality in the developing countries Pantano (2014, pp.345). The minimized production costs enhance the demand of the workers despite the fall in the input of production.  It is identified that electronic commerce helps in enhancing market transparency by minimizing search costs as well as reliance on intermediaries. It is found that this effect of minimizing the process of different skill-incentive goods helps in increasing the income of work.

Impact of E-commerce on the Economy of Developing Countries

It is stated by Kurniaet al. (2015) that due to the use of electronic commerce, the sales as well as  marketing roles in small enterprises enhances in a global supply chain network. The steady growth of the small enterprises in the developing countries has been changed due to the use of e-commerce. The growth as well as utilization of e-commerce in small enterprises of the developing countries helps in substantially reducing the transaction costs as well as helps in improving the supply chain management by reducing the cost that is mainly associated with global sourcing Alrousan and Jones (2016, pp.270). Moreover, the growth of e-commerce helps in placing downward pressure on inflation and assists in enhancing productivity, competitiveness as well as profit margins.

The adoption of ecommerce by small enterprises in the developing countries assists in providing number of advantages. Several studies help in categorizing the benefit that the small enterprises of the developing countries gained due to the adoption of e-commerce. The benefits are generally divided into three important areas that include cost savings, time savings as well as quality improvements. Direct benefits are quite quantifiable while the indirect benefits are not properly quantifiable and are not oftenly predictable. It is identified that both direct as well as indirect benefit that is mainly categorized into long terms as well as short term benefits Da Costa (2016, pp.47) It is identified that the short term benefits are realized in couple of months whereas the short term benefit can be achieved for gained are quite unpredictable.

Additionally, it is analyzed that for all enterprises of developing countries, e-commerce helps in providing the benefit of reduced information that include search cost as well as different types of transaction costs. There are number of ways in which e-commerce helps in providing benefits. According to Mazzarol (2015), e-commerce helps in facilitating the development as well as promotion of business of the developing countries that further helps in achieving proper amount of financial benefit. Moreover, it assists in providing proper service to the enterprises of the developing countries by allowing them to operate properly as well as efficiently in provide proper benefit to the customers globally.

Conclusion

 It can be concluded from the entire assignment that e-commerce creates positive impact on the small enterprises of the developing countries. It is identified that e-commerce not only provides number of opportunities to the small enterprises but also helps in providing number of benefits. The use of ecommerce helps in reducing cost, increasing sales, minimizing productivity as well as helps in reducing time processing. Additionally, e-commerce adoption by small enterprises helps in raising the economy of the developing countries by achieving proper financial growth. The opportunities as well as benefits that are provided to the enterprises who adopt e-commerce assist in enhancing the popularity of the technology. In spite of the advantages, it is identified that it provides number of complexities to the organization that adopt them. It is quite important to resolve the issues so that the adoption of ecommerce by the small enterprises of the developing countries is helpful in providing proper benefits.

Potential of E-commerce in Curtailing National Debts

References

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