Factors affecting growth of E Business in India

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"Factors affecting growth of E Business in India and Importance of SMEs" is paper presented in International conference at SZABIST, Dubai, 2011.

"Factors affecting growth of E Business in India and Importance of SMEs" is paper presented in International conference at SZABIST, Dubai, 2011.

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  • 1. Factors Affecting the Growth of E -Business in India & its Impact on SMEs Presented by , Ayaz Ahmed Shariff K Asst. Professor, Dept. Of CSE Birla Institute of Technology International Centre Ras Al Khaimah @ INTERNATIONAL CONFERENCE OF TECHONOLOGY & BUSINESS MANAGEMENT 2011 Venue: SZABIST, ACADEMIC CITY, DUBAI
  • 2. Objectives of the presentation
    • Overview of terms E Business & E Commerce.
    • Difference between E business & E commerce
    • Factors affecting the growth of E Business in developing countries like India.
    • Impact of E Business on SMEs in India
    • Proposed Model for E Business in rural agricultural markets for farmers, traders
  • 3. Introduction to E Business
    • Both e-business and e-commerce rely on the Internet to accomplish their goals
    • “ E Business includes buying and selling of products and services, servicing customers, collaborating with business partners, and conducting other intra-business tasks”
    • Successful E Business depends on a critical threshold of online users, the precursor to a critical threshold of sellers & buyers
  • 4. E Business & E Commerce
    • E Business
    • E business is a broader aspect with e commerce, Internet marketing, e procurement etc.
    • E-business applications strive to give a good idea of their company, promoting the values they use to market their business
    • Transactions involving money are "e Commerce" activities including the interactions with business partners, customers, vendors
    • E Commerce
    • E commerce refers to online transactions - buying and selling of goods and services over the Internet involving transaction of monetary nature
    • E commerce is a subset of E Business.
    • E-commerce focuses on appearance much more than e-business.
  • 5. E Business in India
    • E Business has tasted much success in India in recent past and has provided Indian business a new heights, global reach, competitive advantage, acquiring new customers (global & local), foreign product knowledge etc
    • E Business has become integral part of everyday life from online banking to brokerage transactions, e contracts to global marketing
    • E Business has seen significance impact on airline sector, banking sector, educational, matrimonial services, placement sites and many B2B transactions
  • 6. Growing sectors of E Business in India
    • Automobiles: Buying and selling of new & used four wheelers and two-wheelers, its marketing, etc.
    • Real estate and e-commerce: They provide information on new properties as well as properties for resale.
    • Travel & tourism: Online reservations, tour packages, hotel bookings
    • Stocks & shares: Online trading, Online banking
    • Gifts through E commerce: Chocolates, Luxury items, flowers
    • Matrimonial Services, Employment sites
    • Indian railway (IRTC)
  • 7. Need of study
    • The tremendous rise of growth in E business has also increased the growth of risks, security threats, hackers, fear among internet shoppers.
    • Apart from ebay.com have had on Indian users, there are few traditional sectors which has touched the expectations of ecommerce. There is much scope open left for e business in global marketing, online shopping, delivery of products, advertising.
    • Currently, there are less than 1,000 merchants in the country who are doing business online. Large chunk of these merchants are SMEs
    • Successful E Businesses based on viable E Business models and sound business principles will grow, change and mature; on other hand, E Business models based on flawed E Business models find it difficult (Albert Napier )
  • 8. Barriers affecting the growth of E Business
    • The factors affecting the growth of E Business as follows:
      • IT and Security factors
      • Customer perception & Attitudes
      • Technological factors
      • General factors
      • Internet factors
      • Infrastructural & Internal resisting factors
      • Regulatory & Political factors
      • User interface factors
  • 9. Information Technology & Security factors
    • Major hurdle for growth of e business all over world is the security of online data
    • Ensuring security of payments and privacy of online transactions is key to widespread acceptance of e commerce
    • Virus, spyware, worms, Phishing increases fear
    • Denial of Service attacks & spoofing
    • Lack of transparency in electronic transactions
    • Internet provides greater access to data not only to legitimate users, but also hackers, disgruntled employees, corporate spies.
  • 10. Customer perception and attitude
    • Lack of trust among customers for online business
    • Not sure of product quality
    • No touch & feel of product
    • Many Indians prefer to physically go out for shopping
    • Indian customers has attitude to bargain products
    • Impatience to wait for receiving the purchased product
    • “ it’s one thing to submit a credit card number to buy a product. It’s quite another thing to put your entire personnel dossier online and hope that no one intercepts it , Allan & William [5]”
  • 11. Technological factors
    • E business partners find it hard to invest & update with new technologies
    • Bandwidth: Transmission capacity of a communication channel is a major barrier for products that require more graphical & video data.
    • Rapidly changing technologies & emerging of new technologies
    • Financial costs: Storing information, data mining, processing orders has impact
    • High costs of developing, purchasing new software, licensing of software, Integration into existing systems, costly e business solutions for optimization
  • 12. General factors
    • Lack of awareness & understanding the value of e business & security involved in it
    • Lack of understanding on how E business operation works
    • Lack of trust: Safety, security, delivery
    • Need for insurance of high cost products
    • Shipping & courier costs
    • Lack of IT knowledge to purchase online
    • Different local languages & cultural factors
    • Leaders of many SMEs have less literacy in computers & IT area
  • 13. Internet factors
    • According to internetworldstats.com, India with a population of over 1.1 billion has estimated 6.9% (81 million) Internet users by 2008 [5]
    • E business depends on speed, bandwidth of communication.
    • Internet connections yet to reach many rural areas.
    • Broadband connections are limited to urban & sub-urban areas.
    • Low internet penetration as well as low credit card population.
  • 14. Infrastructural & Internal resisting Factors
    • Logistics: Deliver the product, safe and secure, in the hands of the right guy in right time frame
    • Need to share your revenue here (~4% or more) even when you get paid by net banking
    • Underdeveloped transportation infrastructure resulting in slow and uncertain delivery of goods and services
    • Bureaucratic wrangles: Fear among elderly staff is significant barrier to e-transformation of organization
    • Survey by the GIIC found out that only 20% of organization covered under CIO segment are trying to use E Business to an extent.
  • 15. Political & Legal factors
    • Taxations: Octroi, entry tax, VAT and lots of state specific forms which accompany are confusing at times
    • Lack of regional legal framework, and legal framework on e-signatures
    • Need of harmonized taxation laws
    • Misuse of E commerce (child pornography, cyber squatting)
    • Rights to e-consumers still a major issue
    • Domain name registration policy, domain name disputes, privacy & data protection issues
  • 16. User Interface factors
    • Some products require more graphics than textual data
    • Some website’s GUI confusing at times
    • Limited menus, poorly designed navigations, difficulty in comparing multiple products on same screen
    • Lack of online support with product selection
    • Room for improvements in sound and picture quality
    • Virtual immaturity: This area in which much progress has not taken place
    • Web page design can change customer preferences
  • 17. E Business Impact on SMEs
    • E Business has much impact on SMEs with reduced information costs & transaction costs
    • E Business facilitates SMEs to world markets
    • Indian SMEs in the service sector have expanded their market with overseas customers
    • Investment pressures & marketing pressures to attract customers
    • Difficulty integrating the existing systems with E Business transactions
    • However, there is still a doubt for SMEs whether there is enough information on the Web that is relevant and valuable for them to try, that would make investment in internet access feasible.
  • 18. Proposed E Business model for agricultural trading
  • 19. References
    • 1. Laudon &Traver, text book on E-Commerce (2002)
    • 2. P T jospeh, text book on E Commerce Indian Persepctive, PHI
    • 3. Zorayada Ruth Andam (2003) “E commerce & E business”in e-ASEAN task force
    • 4. Lord, P., Mary, A. And Kristy, B., 2002, Managing e-business security & challenges, an Oracle white paper, USA.
    • 5. Allan D. S.and William 2002, “E-lending: Foundations of financial and consumer marketing in an Information intensive society” – Journal of e-business and IT vol. 3 No. 1
  • 20. References
    • 6. www.internetworldstats.com
    • 7. "Creating a Winning E-Business"By H. Albert Napier
    • 8. Jing Ni Xinli Zhai Lijun Zhu “A semantic web service oriented model for E-Commerce”Servics systems & management, 2007, International conference, IEEE
    • 9. Kaparubandara, M. Aruntileka, S. Gnige “Application of E Business strategies for SMEs in developing countries”2004 International conference on e-commerce and e-service, IEEE
  • 21.
    • Thank You All 