How is e-Business helping SMEs to compete?
...t higher interest rates. Limited investment in IT when the implementation requires very high costs. No managerial economies in the human resource when no splitting and specialisation in management jobs such as no specialist in accountants, salesmen, etc. Poor marketing economies are made when lack of advertising on television, in national newspapers or other media. Lack of investment in training since it will incur extra costs. SME performs their operations on their own strength with fully utilised their proficiency and workforce within the small boundary. Smaller Production Capacity In SME, mass producing could not be reached due to small production capacity with inexpensive machinery intensively and small work forces, across a large level of output. Limited basic capacity limits opportunity for products expansion and development. The impact is good results in lower average cost could not be achieved. However, in certain cases it is an advantage to SME to compete, when some products cannot be mass produced e.g. contact lenses, products have only a limited demand, e.g. horse shows or products require little capital, e.g. window cleaning. Threats In contrary, threat is part of the analysis that always be seen as the most feared to the SME. The identified four treats that are basically common to SME are suppliers, competitors and massive competition particularly for the same products, internet and multimedia and environmental concern. Suppliers Selecting inappropriate suppliers will become threat to SME since suppliers are key elements in their success. Suppliers could create problems when they are not reliable, do not understand market demand, and do not deliver. It cause delay in production. Therefore products could not be delivered to customer. Eventually it could cause major failure to SME. Competitors and Massive Competition Particularly for the Same Products Threats to SME could also be derived from increasing new competitor in home market, competitors with new innovative product or service and competitors have superior access to channels of distribution. Massive competition for the similar product in specific, might wipe out any market position that SME have achieved. This might turn to a nightmare if their existing product becoming unfashionable or unpopular. It can be seen by end of season is approaching and sales demand is reducing. The problem is, it will be a waste of obsolete unsold products which turn to loss to them. The logistics issues will then follow when the cost of warehouse is increase of the over stock products. Internet and Multimedia The internet and multimedia innovation is a treat that will change the market beyond of SME ability to adapt. If their business process is not in align with this technology movement, they will loose their market demands, as market trends has changed. Environmental Concern Environmental concern plays important role in SME business. To certain extent, changes in the environment can be perceived as threats to the market position of the existing products. This may necessitate a change in product specifications or the development of new products in order for the SME to remain competitive. Those changes may relate to social changes, culture, market trend, economic environment, political and regulatory environment. Multicultural nature is often associated with poor communication, misunderstanding and conflict. This results in weak community cohesion and difficulty in decision making. The task of SME management becomes more demanding and requires great sensitivities. The world oil crisis gives direct impact when there is drastic increase in oil price. The transportation costs increases, leads to increases in operational costs. Uncertainty in currency fluctuation also reflects to increase cost in raw materials for imported products. The Government policies enforce SME to align their business operations that they have to adhere to. How SME Exploit the E-Business To Address Their Weaknesses And Treats. Blarney Stone Enterprises was established in 1987 by husband and wife Declan and Camilla Fearon. The company focuses on the design, manufacture, distribution and export of Irish-themed, collectable figurines such as dwelling creatures; teapot characters; and golfers collection. Their weaknesses are run on a small scale of economies with small capital invested, and minimum workforces of initial two employees. They faced marketing disadvantage of bad strategy with no advertisement, a serious branding and positioning problem with poor communication. Selecting appropriate suppliers has become a threat to their business. However these family businesses have successfully expanded their sales by exploiting the e-business. They embarked with developing a commercial website in 1996 which provides comprehensive product catalogues. Ever since, the volume of online purchases has grown steadily as these sites provide a means of ordering products online. In 2001 7,500 figurines were bought from the site (www.finnians.com). The other sites; www.telltaleteapots.com and www.fungolfers.com, have experienced similar interest. Despites, they also serve a growing community of collectors, who use the site’s message boards to buy and swap figurines. Blarney Stone had explored into diversification and sells other suppliers’ goods online through www.buyfromireland.com site. This promotes goods from over 100 different and diverse suppliers. The threats of external suppliers now turn to strengths. Experiencing this success, three lessons were developed that may be useful and applicable to other SME. First is to ensure the products promoted online are available; customers do not ...