Magazine article European Business Forum

Integrating Electronic Commerce in SMEs: The Pace of Change Associated with the 'New Economy' Has Left Many Organisations Wondering How to Harness the Benefits of the Internet. A French Study of Small and Medium-Sized Enterprises Highlights the Key Points Firms Need to Consider If They Want to Successfully Combine E-Commerce and Their Traditional Business Practices

Magazine article European Business Forum

Integrating Electronic Commerce in SMEs: The Pace of Change Associated with the 'New Economy' Has Left Many Organisations Wondering How to Harness the Benefits of the Internet. A French Study of Small and Medium-Sized Enterprises Highlights the Key Points Firms Need to Consider If They Want to Successfully Combine E-Commerce and Their Traditional Business Practices

Article excerpt

New internet and web-based applications--and more generally information and communication technologies (ICTs)--have grown exponentially over the last five years. But the speed of change has often confused companies, provoking widespread questioning and reassessment of the way markets are likely to be organised and marketing strategy developed in the future.

In this article we will describe a range of commercial and marketing issues that we have identified as being critical for managers seeking to re-orientate themselves to the so-called 'New Economy'. Our findings are based on two years of field research with small and medium-sized enterprises (SMEs) and provide a conceptual and action-oriented framework for firms still seeking to integrate electronic commerce effectively into their existing activities (see Figure 1). The issues, which cover both the external environment and the internal context of the firm, are mostly relevant for those aiming to develop online business in parallel with their 'traditional' activities.

In our view, any company willing to integrate electronic commerce (EC) will have to go through the following process. Firstly, it needs to investigate the likely market transformation brought about by the introduction of the technology. For SMEs, technological changes are mostly initiated by partners, such as customers, suppliers and new or existing intermediaries--hence the focus on market re-configuration. Among important issues to be considered are possible changes in intermediation (will it lead to dis-intermediation and/or re-intermediation?), the threat posed by new entrants, shifts in negotiating power between the different players of the market, and possible opportunities to develop new forms of partnership for better exploiting value creation in the supply chain.

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Secondly, the enterprise will have to evaluate the impact of this market transformation on its own position, defining its strategic response and planning related changes in its organisation and competences. Here, electronic commerce should be seen as a means of achieving the desired position. Key steps will include consideration of the firm's geographical market coverage and ways in which the technology could be used to better manage customer relationships. EC's impact on marketing and sales (especially the complementary or replacement effect on existing distribution channels and communication media), and the implications for business processes and employee competencies.

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The remaining discussion is divided into three parts. In the first part we look at the scope of electronic commerce, the domains of its applications and its targets. In the second part we analyse the market reconfiguration issues and in the third part the different steps involved in transforming the enterprise.

The scope of electronic commerce

We view electronic commerce for the purposes of this article as "... any electronic exchange which contributes to the commercial and marketing activities of the firm and which facilitates relationships between customers, suppliers and/or any other partners." Too often EC is merely perceived as a narrow selling instrument deployed through a website--little more than a banner presenting the company and a catalogue of products from which customers can order directly online. The reality is that very few firms (particularly SMEs) have so far been able to sell to their end-customers through the web. By contrast, however, many have adopted Electronic Data Interchange (EDI) systems which hook together computers of commercial partners via telephone lines. Once established, this connection facilitates and accelerates communication within the supply chain for ordering between suppliers, distributors and customers, for disseminating information and thereby generating substantial cost savings.

Keeping in mind the broad definition of EC given above--"any electronic interchange participating in the firm's commercial and marketing activities"--EC is an opportunity for every firm in every industrial sector, albeit the extent and application of the opportunity will depend on the nature of the business and its products. …

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