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.

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Factors affecting growth of E Business in India

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