Within the last decade the firms in North America have engaged in more business transactions on the Internet than ever before. A website based in North America can on average reach only 5% of the consumers globally. It will only reach 25% of the purchasing power on the globe (MacGregor and Kartiwi, 2010: 61). Unfortunately, only a handful of these consumer websites ever generate international revenue. Partly, such outcomes have been attributed to barriers affecting e-business. E-business is used to refer to the performance of business over the intranets, extranets, or Internet. It also refers to any information publishing in the manner described. The dominating barrier will depend on the region or area in question.
In order to conduct e-business successfully, entities must obtain a significant threshold of online users. This is a forerunner to a significant threshold of buyers and sellers. Although this threshold has been achieved in Scandinavian countries and North America, it is yet to be attained in the rest of the regions. In more ways than one, this threshold has a connection to Metcalfe’s Law. It states that a network’s value increases with the figure of participants squared (“E-business Partner”, 2000: 77). As it may be expected, more people going online translate to the increment of network values and increase in e-business opportunities. In order to understand the factors that may increase the online population globally, it is advisable to examine the clues in Europe and North America. Conducting e-business effectively needs a list of factors. However, not all of them exist in the majority of the markets. The major barriers identified include marketing issues, cultural issues, economic/political issues, inadequate infrastructure, and personal computer penetration.
Personal Computer Penetration
PC (personal computer) penetration is disputably the main indicator of e-commerce readiness. It is identified that a direct relationship exists between e-commerce and PC penetration. Additionally, the ownership of personal computers is related to income (Fillis, Johansson and Wagner, 2003: 337). This presents a fundamental consideration for the developing countries. In China, for example, a low-end personal computer can cost approximately $450. In the American standards, this is a bargain. However, it is worth two month wages for an average Chinese online. Personal computer penetration varies highly even in a given region. In Philippines and Thailand, for example, there are on average 20 personal computers for one thousand people as compared to 510 found in Singapore. Approximately twenty million people in China own personal computers with the overall population of 1.3 billion people in the country (Taylor and Murphy, 2004: 282). Personal computer and income relationship is made more complex by other numerous factors. Such factors include the incompetent and inadequate infrastructure that is needed to sustain Internet connections.
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An access to Internet continues to elude many people in the developing regions even with the declining costs of personal computers. Inadequate infrastructure plays the main role in the inhibition of global business. In the majority of developing countries, the issues related to Internet access as well as those related to software, hardware, and infrastructure in communication continue to pose serious hindrances to e-commerce. For example, in the larger part of Africa, infrastructure has been so poorly developed that it may take many years before a common person receives the benefits of e-business. Asia experiences such a difference in the infrastructure that the penetration rates of personal computers vary from twenty computers per one thousand in Thailand, forty three in Malaysia to five hundred in Singapore (MacGregor and Katiwi, 2010: 64).
Connection costs, especially through telephone lines, constitute another side of infrastructure challenges. Policies of the government can play an important role in hindering e-business. For example, in Thailand, all long-distance Internet connections and telephone lines have to pass through CAT (Communication Authority of Thailand) (MacGregor and Katiwi, 2010: 65). This monopoly gives rise to poor services, high fees, and limited choices. Additionally, the European industrial countries also undergo wide differential charges of connection. Internet charges are an average of $45 per month in France. In Germany, the charges are up to $68 per twenty hours (MacGregor and Katiwi, 2010: 65). These rates are partly influenced by price grouping and Internet monopolies. Additionally, for every unit used, the majority of systems in the telephone industry charge a toll. The combination of use and connection charges tends to hinder Internet usage in the majority of countries. Consequently, e-business activity is reduced.
The majority of subjects in the world of computers continue to pay using cash even today. The lack of interest or the inability to carry out transactions in credit continues to serve as a major hindrance in the world of e-business. Some innovative approaches have been exhausted in order to handle this challenge. However, unless new methods of payment emerge or credit cards become ever-present, transactions in e-business will continue to face inhibitions. The issues related to privacy protection and security continue to dominate the Internet arena. Industries have a duty to offer total security to their consumers. Additionally, with the application of suitable regulations, governments should also assure the security both to the consumers and the industries (Taylor and Murphy, 2004: 285). This challenge not only affects developing countries, it also affects all industries and consumers in the world of e-business.
In order to find out the perception of consumers in as far as ethical challenges associated with online retailing were concerned, some researchers surveyed three cities in Turkey. These were Mersin, Manisa, and Izmir. The researchers initiated 400 consumers who took part in online shopping. The researchers found out that ethical issues such as Internet non-deception, reliability, privacy, and security played a major role in the growth of both Internet shopping and shoppers (Nadal and Sahin, 2011: 190). The results showed that these four factors are strongly influential of the satisfaction of consumers. The stakeholders can implement digital signatures, amongst other authentication processes, in order to handle such challenges. Additionally, educating the consumers will play a major role in dealing with some average security issues such as fraud. Overall, the relevant institutions need to come up with more measures of ensuring people’s security, reliability, privacy, and non-deception.
Sensitivity to cultural dissimilarities plays a significant role in the success of international commerce. This issue applies to international e-commerce. It is fundamental that parties understand how the web aligns with the culture/cultures in a country relevant for successful international business. Sites that target international consumers should do more than array their products in English, which many businesses assume to be an international language. Translating these sites into the local language is one great way of absorbing the culture to the target country and making the consumers feel “at home” while engaging with the site (Taylor and Murphy, 2004: 286). According to statistics, the English-published webs constitute eighty percent of the websites population. Translating such sites into other languages will encourage more of the non-English consumers to engage in online business. A site that is well translated to another local language or languages has the capacity of paying for its costs a number of times more than its competitors in terms of the increased revenues.
Diverse cultural platforms and languages compound the density of engaging with business internationally. However, the bigger challenge may be the culture and the attitude of government entities and business. These entities must push consumers to comprehend their expectations of e-commerce. Many CEOs in Europe, for example, comprehend the Internet power and influence. Unfortunately, they are short of the power to fully exploit the power of the Internet. Instead of viewing the Internet as a revolutionary tool that requires a completely different mindset, they see it a device for developing the businesses in existence (Taylor and Murphy, 2004: 288). Although in the long-run they will be approved of as doing the right thing, this attitude will partly play a role in the unequal use and acceptance of the Internet, including the industrial Europe. Apart from the issues of language, other behaviors pertaining to culture such as lifestyle differences and risk aversion may have an effect on the web success. For example, cultures that are low on individualism and risk-averse have a higher likelihood of being hostile to introductions of e-commerce to consumers.
There is a wide array of marketing issues that have an effect on global e-commerce. Some of them include ethical issues, fulfillment issues, business forms (business-to-consumer/business-to-business), and market content. If it is taken that the language in the marketplace is consistent with the locally spoken language, it is relevant to make sure that the content available is relevant and appropriate to the market. This is more complex than simply translating English to a local language. In fact, the need to be relevant is so significant that a professional consultant from the target country may be required to ensure the relevance and culture consistency (“E-business partners”, 2000: 78). The e-business form is critical to the business success. For example, most emerging markets prefer business-to-business forms of e-business. This is opposite to the market in the United States, where business-to-consumer form is preferable.
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For the businesses interested in B2B, a partnership with local companies is most advised as such partnerships assist in the expansion of the business. Partnerships come with a number of benefits. First, the business will be able to understand the culture in question. Secondly, the business will increase its speed in carrying out a number of activities, thus save on time, costs and other resources. However, partnerships can come with their drawbacks. These align with issues such as disagreements. It is therefore advisable that businesses assess and evaluate their potential partners before making actual partnerships (“E-business partners”, 2000: 78).
Fulfillment and logistic factors are some of the main challenges that make domestic e-business retail hard to take it overseas. Some of the factors impeding a firm’s capacity to engage in overseas shipping include international shipments’ rates, language, customs regulations, different currencies and tariffs. The shipment rates can vary from thirty to fifty percent, depending on the region and the products in question. In transactions that do not use credit cards, fraud is increased as address verification becomes a challenge. Another challenge includes determining the inventory amount in the distribution channels and estimating changes in customers’ demands (“E-business partners”, 2000: 78).
In the emerging environment of e-commerce, the managerial unit should competently adapt to a more corporate competition and collaborative model. This should bring new challenges to traditional ethics in business. In the earlier (older) models of business ethics, companies were seen as isolated. They were seen as competitors in a business environment that was quite harsh. Such perceptions provided justifications for the numerous predatory activities and they encouraged firms to take full advantage of the advantaged short-term loopholes. In these business days, firms interested in business-to-business form of conducting e-business at an international level usually partner with other firms globally (E-business”, 2000: 77). This action means that such firms are open to sharing sensitive information with other firms. They are also open to scrutiny. Today firms highly value network relationships and as far as business ethics is concerned. Additionally, trust is a fundamental value for such relationships. When firms lack these attributes, they can face exclusion from the opportunities provided by e-business. Apart from screening partners carefully, astute businesses dealing with e-commerce should put in place a firewall around their intellectual property and critical information (E-business partners”, 2000: 79). Being strategic is identifying the information to remain private and the one to be shared.
Technology is evolving at a fast rate. Consequently, businesses, especially those in the developed countries, are taking maximum advantage of such technology. Although the Internet has taken businesses globally to another level, they might not realize its full potential if the prevailing challenges are not dealt with comprehensively. The developing countries are also a part of the global market, and so initiating the necessary arrangement for their incorporation of e-business will be an advantage to the general global market. It is high time for people in managerial positions to change their attitude to Internet. They should view it as more than a device to improve businesses. Marketing issues, cultural issues, economic/political issues, inadequate infrastructure, and PC penetration may be challenges, but they can also be opportunities if more effort to overcome these challenges is applied.