Contents

ABSTRACT KEYWORDS 1. INTRODUCTION 1.2. Trading online 1.3. PURPOSE 1.4 CONTRIBUTIONS 2. RATIONAL AND SIGNIFICANCE 3. LITRATURE RIEVEW 3.1. The level of B-to-B e-commerce penetration: a process based approach 3.2. The transfer payment system using TPS (Transfer processing system) 3.3. Importance of SMEs 3.4. The integration between its business partners through EDI (electronic data interchange) 3.5. The business impacts of B-to-B e-commerce 3.6. Penetration of e-commerce 3.7. Understanding of e-commerce issues in SMEs 4. THEORETICAL FRAMEWORK 5. OBJECTIVE OF THE STUDY 5.1. The impact of e-commerce on business activity 6. HYPOTHESIS 7. METHODOLOGY 8. CONCLUSION 9. REFRENCES

Acknowledgement

This project is a great learning for us. Practice like this contributes very much in reducing distance between bookish and practical world. We have been able to accomplish our project successfully with the blessing of Almighty ALLAH who created this world for search of knowledge and bestowed us to complete this task. We invoke peace for Holy Prophet (P.B.U.H.) the most perfect and exalted among and never born on the surface of sky and earth. The greatest social reformer who is forever the torch of guidance and knowledge for humanity as a whole. We are thankful to our esteemed teacher HAFIZ MUSHTAQ AHMED Who guided us very well throughout the course of METHOD IN BUSINESS RESEARCH and really made this course fruitful for us.

Waseem iqbal MBA III (z) 01-220092-038 Research proposal Impact of electronic commerce on small and medium enterprises promotion
ABSTRACT This study depends on e-commerce by using an integrative and subsystem-based approach to assess the level of electronic commerce penetration in small and medium-sized enterprises. Results show that most SMEs are still at a very early stage of e-commerce adoption. As,firms in the top adopted quickly moving into e-collaboration activities with suppliers and customers. The results also reveal that e-commerce initiatives are strongly and significantly linked to positive business impacts and that once managers have experienced benefits from e-commerce initiatives, they continue to engage into additional e-commerce initiatives.

KEYWORDS Electronic commerce adoption, small and medium-sized enterprises, enterprise promotion.

1. INTRODUCTION

In the era of IT development from the last 10 to 15 years in Pakistan, the use of internet has become the backbone of business activities which transformed the traditional ways of transaction E-Commerce is like Any Other Business, developing a business over the Internet requires many of the same major activities as starting any other business. You should do some basic business planning. After all, you need a product. You may need funding to get your business going. You

need customers. You need to market products to your customers. You need strong customer service. You need to manage purchases by customers, finances, staff and other resources. Electronic commerce is said as E-Commerce as it is the platform for doing business over the communication channel i.e. selling and buying movable and unmovable assets through electronic media, Internet is playing a great role in assisting and easy transactions for the e commerce activities. The latest communication gadgets like the cell phone also allow the users to access internet and transact online in terms of buying, selling, paying utility bills etc. Latest market study shows that the use of E-Commerce services is growing day by day, since the internet users are increasing in huge numbers in the developing countries like India, China, Indonesia, Brazil etc. The main aim of these services is to have hassle free business transaction without the interaction of human and this is getting promotion by the animation and graphics. By using better graphics the seller can display the product so well that, it is very easy to select and place order for the potential buyers. The biggest advantage of the online business is that a buyer need not interact in person with the seller and vice versa. Thus saving the precious time and physical infrastructure cost of the stakeholders

1.2. Trading online Trading online enables businesses to reach much wider audiences while cutting the costs of traditional retailing methods. For example, an e-taller does not have to spend so much on an expensive High Street presence. Although the outlay on developing a good website is substantial the potential benefits can be enormous. One group of businesses that have been particularly successful as a result of the development of the web is specialist suppliers of items such as paintings, photographs, confectionery, and other items. An individual working from home can now advertise and sell their produce worldwide. Few subsystems mainly use in the category of e-commerce in Pakistan: TPS (transaction processing system). Mainly by bankers. CRM (customer relation management). Mainly by govt. SMS (supplier management system). Mainly by company suppliers. EDI (electronic data interchange). Mainly by web sites.

1.3. PURPOSE: SMEs access to finance Activities like operation; which includes online transactions, money transfer and receiving have been identified in many business surveys as the most important factor determining the survival and growth of SMEs in both developing and developed countries. Despite the importance of SMEs to the economies of both developing and developed countries, they have traditionally had problems in operations. Commercial banks and investors have been reluctant to service SMEs for a number of reasons, including the following: Information unevenness arising from SMEs lack of accounting records, inadequate financial statements or business plans makes it difficult for creditors and investors to assess the creditworthiness of potential SME proposals; High administrative/transaction costs of lending or investing small amounts do not make SME financing a profitable business; SMEs are regarded by creditors and investors as high-risk borrowers because of insufficient assets and low capitalization, weakness to market fluctuations and high mortality rates. Access to technology In a liberalized and open economy, SMEs increasingly depends on the ability to incorporate new technology and management practices.

Linkages Inter firm linkages can be a remarkable source of technology diffusion in SMEs through ecommerce. There are many types of linkages-backward, forward, R&D and overflow effects. The most profitable are the backward linkages between large and small enterprises. ICT and e-commerce Information and communication technologies (ICTs) have an impact not only on every single branch of industry but also on every service in an economy. ICTs have the potential to alter economic activity. They can be used to replace traditional means of communication.

1.4 CONTRIBUTIONS As in every field we targeted the group of peoples and area. In this study the main focused groups are Bankers Businesses related to transactions Customers using online purchasing These all contributed their existence and show very important part in this study.

2. RATIONAL AND SIGNIFICANCE:

E-commerce represents roughly 80% of total e-commerce and continues to grow

(The

Economist, 2004). Large manufacturers have been leading e-commerce initiatives in all industry sectors (US Department of Commerce, 2002), SMEs appear to lag behind their larger counterparts (Drew, 2003), leaving little choice to their smaller business partners to follow. In addition, considerable efforts have been made by the governmental agencies to accelerate ecommerce penetration among SMEs(OECD, 2002; Europe Action Plan, 2002) as these firms continue to play a major economic role in all industrialized countries (Stevenson and Lundstrm, 2001; The European Commission, 2003).Our collective understanding of e-commerce issues in SMEs remains slim (Kendall et al., 2001; Jeffcoate et al.,2002) and is even slimmer in the case of B-to-B e-commerce (Gebrauer and Shaw, 2002).According to Magill et al. (2001), ecommerce covers more than buying and selling and includes any activity for an organization to function effectively. In December 2005 the Central Board of Revenue, the tax authority, started allowing electronic filing of sales tax and federal excise returns by registered private and public companies. At that time, it said that it expected about 1,500 large taxpayers out of 22,000 to use the facility. Government efforts to promote the IT sector include the establishment of the (Information Technology and Telecommunications Division in July 2000), various incentives, and the commitment of resources for education and infrastructure building. The Ministry of Science and

Technology launched the National Information Technology Policy (in August 2000). It was developed by a team that included working groups on the following: human-resource development; IT in government and databases; IT market development and support; IT fiscal issues; telecoms, convergence and deregulation; cyber law, legislation and intellectual-property rights; IT research and development; Internet development; software export; e-commerce; and incentives for IT investment. Total spending (by the government and private sector) on information, communications and technology in Pakistan was US$10bn (during 2005/06). Various e-commerce projects and initiatives were underway in the public and private sectors in August 2006. The government said in May 2004 that it has planned new IT and e-commerce projects worth well over PRs4.5bn up to 2007, and by then it aims to produce 100,000 graduates a year in IT studies from the seven new IT universities it has already set up. Pakistan is part of the 15-member Asia Pacific Council for the Facilitation of Procedures and Practices for Administration, Commerce and Transport. The council aims to support the United Nations Centre for the Facilitation of Procedures and Practices for Administration, Commerce and Transport. Pakistan is a member of the Asia Pacific Council for Trade Facilitation and Electronic Business, a non-governmental organization that promotes trade facilitation, electronic business policies and activities in the AsiaPacific region.

3. LITRATURE RIEVEW

3.1. The level of B-to-B e-commerce penetration: a process based approach According to Magill et al. (2001), e-commerce covers more than buying and selling and includes any activity for an organization to function effectively. In a manufacturing context, any activity covers a wide range of activities from five generic functional areas: product development, engineering and design; procurement and purchasing; production and operations; sales, marketing and after-sales service; and distribution and logistics. To each of the five functional areas are associated specific business processes. We therefore propose to measure the level of e-

commerce penetration at its locus of impact by assessing the use of electronic means to conduct business processes across the whole spectrum of business. This process oriented approach builds on previous work in research in IT penetration (Kauffman and Weill, 1989) 3.2. The transfer payment system using TPS (Transfer processing system) The transactions between the buyers and sellers mainly use the mode of TPS through which they transfer money more safely and fast. Mainly in Pakistan TPS mode is using for transfer of money and think as a safe mode of transfer payment. 3.3. Importance of SMEs According to Lall, divergence and marginalization are strong features in the industrial scene. But industrial development is not a zero-sum game: it is possible for all countries to gain from increased production and trade. Successful industrialization requires countries to link to the global economy and leverage the resources that it offers in order to improve endogenous capabilities and competitiveness. This linking needs strong initiatives, not just passive opening up, and it is essentially up to the countries to build the capabilities needed. Thus, policies and programmers to enhance competitiveness must centre on building productive capacities at the enterprise level within the country. 3.4. The integration between its business partners through EDI (electronic data interchange) The electronic integration between their business partners (suppliers, sub contractors, distributors, customers, etc.) can be traced back for a few decades with the use of EDI systems (Gebauer and Shaw, 2002). More recently, this electronic integration became stronger with Internet-based applications which offer similar benefits derived from EDI systems but without the substantial investments associated with these systems. Hybrid e-commerce solutions such as Internet-EDI (Chan and Swatman, 2004) are now common among different firms. B-to-B ecommerce relies not only on the Internet but also on private networks and also implies exchanging and sharing information within the firm itself or with external stakeholders (Daniel et al., 2002, p.254). Hence, we will retain here the broad and integrative definition of ecommerce to include all electronic means (Internet, intranet, extranet and private and public networks).

3.5. The business impacts of B-to-B e-commerce Potential benefits derived from e-commerce are well documented in the literature. They include reduction of transaction costs (Saloner and Spence, 2001) and gains in accuracy and speed (Verhoest, 1999; Lefebvre and Lefebvre, 2000). Internet-based systems are considered as an enabling technology (Porter, 2001) from which strategic benefits can be derived. For SMEs, the Internet represents a rather inexpensive way to reach new markets and new customers and provides global access and is said to level the playing field. However, the impacts of ecommerce may turn against some SMEs: by reducing barriers to entry, new foreign competitors may now be selected by large manufacturers or squeeze the margin of local SMEs (Drew, 2003). Further, large firms may exert more power over their smaller business partners when they operate on electronic market places. In other words, B-to-B e-commerce increases the pace of competition and the level of competitive rivalry and its impacts at the firm level remains elusive. This warrants further investigation. 3.6. Penetration of e-commerce The relationships between the level of e-commerce penetration and its business impacts are contingent upon several factors: firm size, level of internationalization and the relationships with business partners. Size, even among SMEs, matters. Larger SMEs overcome more easily technological and non-technological barriers to implement e-commerce as they have more access to capital knowledge and skills (Drew, 2003). SMEs involved in import and export activities are more exposed to the e-commerce initiatives from their foreign suppliers and customers and could more adequately harness the potential of these initiatives (Kraemer et al., 2002). The level of dependency of SMEs towards a few customers (Teo et al., 2003) may also accelerate the level of adoption of e-commerce initiatives at the detriment of the willingness of SMEs. The same may be true of the supplier side. 3.7. Understanding of e-commerce issues in SMEs This line of inquiry seems to be particularly relevant for several reasons. First, B-to-B ecommerce represents roughly 80% of total e-commerce and continues to grow (The Economist, 2004). Second, SMEs appear to lag behind their larger counterparts (Drew, 2003) and are pressured to fully grasp the potential of e-commerce. In fact, large manufacturers have been

leading e-commerce initiatives in all industry sectors (US Department of Commerce, 2002), leaving little choice to their smaller business partners to follow. In addition, considerable efforts have been made by the governmental agencies to accelerate e-commerce penetration among SMEs (OECD, 2002; eEurope Action Plan, 2002) as these firms continue to play a major economic role in all industrialized countries (Stevenson and Lundstrm, 2001; The European Commission, 2003). Third, our collective understanding of e-commerce issues in SMEs remains slim (Kendall et al., 2001; Jeffcoate et al., 2002) and is even slimmer in the case of B-to-B ecommerce (Gebrauer and Shaw, 2002).

4. THEORETICAL FRAMEWORK

According to my research the independent variable is the e-commerce, moderating variable is subsystems and different levels of e-commerce penetration usage in Pakistan and the dependent variable is the SMEs promotion. The main variable is SMEs and its promotion is either positive or negative due to the use of ecommerce, and the subsystems and level of e-commerce penetration have the contingent effect between SME promotion and e-commerce. As the usage of electronic commerce in global countries is too much and most of the businesses are connected through it, also that in Pakistan some e-commerce subsystems are use now in the big firms and the different levels like B2B, B2C etc, and the penetration of it towards the SMEs is required. For SMEs promotion we must have the proper authority whose duty is to check and balance on the e-commerce activities so that people tend to move towards this trend as it is cheaper and time effective.

Subsystems
(Moderating variable)

E-commerce
(Independent variable)

SMEs promotion
(Dependent variable)

Different levels of penetration

(Moderating variable)

Structural diagram of different variables.

5. OBJECTIVE OF THE STUDY

All too frequently, technology promises more substantial benefits than it can deliver and information technologies are no exception (Coates, 1992). Can benefits at the business level be derived from e-commerce? This paper seeks to find answers to these questions but different from other studies as following objectives:

I. To measure the level of e-commerce usage by examining which business processes are performed in an electronically mediated environment; II. To analyze the future behavior of the firms with respect to e-commerce is conditioned by their actual experience; III. To assess the strength of the relationships between the level of B-to-B e-commerce penetration and its impacts and benefits at the firm level; IV. To determine relationships between e-commerce penetration and its impacts upon internal and external factors such as firm size, degree of internationalization and the relationships with business partners;

Main problems faced in Pakistan due to which this research is conducted, as e-commerce in SMEs in Pakistan is not successful as in other countries due to many problems if these problems are solved then e-commerce will boost in Pakistan also, these problems are as follows; Credit card faults. Mistrust of items delivery or the delivery of original quality. Major Price differences. Trend of bargaining no fix prices. Education problems. Frauds and scams. As Pakistan is one of the developing countries. Due to many reasons it can take better steps for going forward in electronic purchasing and selling if these problems are over come.

5.1. The impact of e-commerce on business activity. (The times 100) Selling through websites is the fastest growing method of trading worldwide. There are two main forms of e-commerce: Business to business (B2B) trading where companies trade and exchange information using the World Wide Web. Business to consumer (B2C) trading where companies deal directly with customers through web pages, and orderings carried out online. There are many different types of products and services that are traded on line including books, CDs, cars, holidays, and insurance. In response to e-tailing and e-trading, most businesses have now set up their own websites.

6. HYPOTHESIS The main questions being hypothesis in this study are as follows: H1: How we can use the e-commerce activities for the betterment of SMEs.

H2: To solve the problems of e-commerce and motivate the Pakistani culture towards the use of e-commerce activities. H3: In order to have the stability towards the use of internet and to encourage the small enterprises towards e-commerce.

7. METHODOLOGY

I. Sample A survey based primary data and also secondary data is to be used to examine the relationship among independent, moderating and dependent variables. The survey is done from the different peoples having their own small industries, friends working there, colleagues and software engineers. These all guide me to understand the causes and the impact of e-commerce on different enterprises. II. Instrument Mainly internet and bookish knowledge and friends views and comments are added in the preparation of this paper. Owners/Executives and accountant of different firms like Karachi tea situated in Nankari Bazar in Rawalpindi. Soft ware engineers done his education from abroad. And from internet, different surveys conducted in Pakistan. III. Procedure After data collection, the appropriate data analytic techniques including persons correlation and multivariate analysis is carried out keeping in view the objective of this study.

8. Conclusion:
This study suggests strongly that e-commerce penetration among manufacturing SMEs is an evaluative, dynamic ad rather coherent process. Past behavior reinforces future behavior and organizational learning appears to be the essential ingredient to benefit from the impacts of ecommerce. After detailed analyzing and studying of the effects and benefits of incorporating an e-commerce solution to an existing business, it is clear that an e-commerce solution will benefit the business in every aspect.

REFERENCES Sir Mushtaq Ahmed Downloaded from The Times 100 Edition - http://www.thetimes100.co.uk Jeffcoate, J., Chappell, C. and Feindt, S., 2002. Best Practice in SME Adoption of Ecommerce. Benchmarking, Vol. 9, No. 2, pp. 122-132. International Journal of Electronic Commerce, Vol. 6, No. 4, pp. 7-17. http://www.europa.eu.int/informationsociety/eeurope/actionplan. Chan, C. and Swatman P.M.C., 2004. B2B E-Commerce Stages of Growth: The Strategic Imperatives. Proceedings of the37th Hawaii International Conference on Systems Sciences. Hawaii: IEEE. Coates, V.T. The future of Information Technology 1992. The Annals of the American Academy, Vol. 522, pp. 45-56 Couper, M.P., 2000. Usability Evaluation of Computer-Assisted Survey Instruments. Social Science Computer Review, Vol. 18, No. 4, pp. 384-396. Daniel, E., Wilson, H. and Myers, A., 2002. Adoption of E-Commerce by SMEs in the UK, Towards a Stage Model. International Small Business Journal, Vol. 20, No. 3, pp. 253-270. Dillman, D.A., 2000. Mail and Internet Surveys: The Tailored Design. New York: John Wiley. Drew, S., 2003. Strategic Uses of E-commerce by SMEs in the East of England. European Management Journal, Vol.21, No. 1, pp. 79. Elia, E., Lefebvre, L.A. and Lefebvre, . 2004. Typology of B-to-B E-Commerce Initiatives and Related Benefits in Manufacturing SMEs. Proceedings of the 37th Hawaii International Conference on Systems Sciences. Hawaii: IEEE. eEurope Action Plan, 2002. An Information Society for All, Action Plan 2002 and 2005. Gebauer, J. and Shaw M.J., 2002. Introduction to the Special Section: Business-toBusiness Electronic Commerce.