E-TRADE in
SMEs INCREASES INVESTMENT AND PRODUCTION
Assoc. Prof. Dr. Sefer
Gümüş
Deputy Dean of Faculty of Business
Administration,
Along with globalization, which
means new markets for large companies, competition chances of Small and Medium
Sized Enterprises (SME) are weakening day by day, because they lack resources
to do business (to open offices, to find distributers, to set up connections)
in foreign markets with traditional methods. As its known, the greatest
problem of the small sized enterprises has long been their lack of marketing
channels in order to reach the target mass and sell their products, and they
shall get into big trouble against globally producing and selling companies,
unless they can adapt themselves to the process of transition to e-trade.
E-trade brings SMEs very important
possibilities in reaching to new markets and competing with their opponents.
Virtual stores on the Internet make it possible for SMEs to target customers in
distant geographies by presenting them an effective and inexpensive marketing
channel. Thus SMEs get the opportunity
of entering many markets, and offering inexpensive and good quality products to
these markets at high speeds without having to make huge investments and high
expenses.
Some investigations carried out by
KPMG group on development of e-trade in SMEs in the EU have shown that e-trade
faces five basic barriers. In this investigation, which was started in 1997 and
repeated in 1998 and 1999, barriers of e-trade was defined to be related to
security, work power, technical infrastructure, lack of knowledge besides
application costs.
Small and
Medium Sized Enterprises (SMEs) and Electronic Trade Increase Exportation.
SMEs have an important place in Turkey
ECONOMICAL INDICATORS REGARDING
SMEs in VARIOUS COUNTRIES
|
|
|
Germ. |
|
JAP. |
|
|
Fran. |
Ital. |
Turk. |
|
Rate of Small Businesses to Total Number of Businesses |
97.2 |
99.8 |
98.6 |
99.4 |
96.0 |
97.8 |
99.9 |
97.0 |
98.8 |
|
Rate of Employment in Small Businesses (%) |
50.4 |
64.0 |
63.2 |
81.4 |
36.0 |
61.9 |
49.4 |
56.0 |
45.6 |
|
Investment Share of Small Businesses (%) |
38.0 |
44.0 |
27.8 |
40.0 |
29.5 |
35.7 |
45.0 |
36.9 |
6.5 |
|
Production Share of Small Businesses (%) |
36.2 |
49.0 |
50.0 |
52.0 |
25.1 |
34.5 |
54.0 |
53.0 |
37.7 |
|
Exportation Share of Small Businesses (%) |
32.0 |
31.1 |
40.0 |
38.0 |
22.2 |
20.2 |
23.0 |
- |
8 |
|
Loan Share of Small Businesses (%) |
42.7 |
35 |
15.3 |
50.0 |
27.2 |
46.8 |
48.0 |
- |
3-4 |
The fact that the share of
SMEs in exports is 8% in
The reasons why our SMEs are so weak in
competition power are:
They have difficulty in getting loans. Their share of
bank loans is around 4%.
They can hardly ever make use of subsidies.
They can not make enough use of other financial tools.
Their level of technology is generally low.
They can not follow local and foreign technical and
commercial developments.
They have a shortage of qualified employees.
They need their competition power to be improved in
terms of the customs union conditions.
One of the most important of these
problems is that SMEs have a low level of technology. Most of them dont have
PC and internet access yet. However the key of
being able to compete with global giants is electronic trade. This view
can be supported by stating the effects of electronic trade on SMEs.
A possibility for SMEs to compete with big firms under
equal conditions.
Lowering the costs of advertisement, delivery, product
design and production.
Improvement in marketing reports and strategic planning.
Effective marketing.
Accessing new markets under equal conditions.
Inclusion of customers in the process of product and
service design.
The
biggest advantage brought to SMEs by e-trade is elimination of time and
location problems and lowering costs. As a consequence, there will remain no
market that SMEs can not reach. Besides, every firm will compete in the same
arena because these market places are open to all firms. This will make it
possible for a little Turkish SME to
sell its products or service in the same store with a big American retailer who
is able to attract a great many customers through luxurious shop design.
Amazon.com who competed with Barnes&Noble, a rooted book seller and e-Toys
who competed with Toys R Us have made an unexpected success only by means of an
internet site.
Another advantage brought to
SMEs by e-trade is the lowering of production costs. It will be correct to
study in two dimensions how this advantage emerged. The first dimension is
that, e-trade changes the cost structure of the firms. Selling and delivery
costs decrease because staff, office and store costs come down at great rates.
The second dimension is the lowering of the costs spent during relations with
other businesses. A great decrease is seen in inventory costs due to quickened
orders.
The E-Trade Future of SMEs
A new economical order is seen to have
spread around the world due to the rapid improvements in communication
technologies and internet use. As a result of this; geographical boundaries
have lost their effects, markets where the seller and the buyer meet have
gained a new dimension, and sellers have moved their commercial activities to
web based systems, assuming the whole world their customer. This new trade form
of the globalizing world economy is called e-trade. There is a general view
that electronic trade increases productivity and decreases costs at great
rates.
New technologies, especially e-trade
is the last phase of change in our day. E-Trade has entered in an improvement
process towards the economical change of businesses, the structural change and
interaction of communities, and industrialization. Today, internet is an
obligation more than a need and e-trade has become an indispensable factor in many sectors. Each day without e-trade
means the lost potential customer. E-trade is becoming part of businesses
present job. For businesses, e-trade is not a risk but an investment. E-trade
contains a vision, which should be guided by professionals of the subject.
BIBLIOGRAPHY
YAZICI, Ayla.
E-Ticaretin Ekonomik Boyutu.
Meral SAYIN, Mustafa Akan FAZLIOĞLU, Avrupa Birliğinde Kobi
Destekleme Programları ve Diğer Teşvik Araçları, Kosgeb
Avrupa Bilgi Merkezi,
www.kosgeb.gov.tr