Sample Essay With the popularity and rise in the various uses and access to the internet information and communications technology emerged to provide support to various organizational functions
CHAPTER` 1: INTRODUCTION
1.1 Development of E-Business
With the popularity and rise in the various uses and access to the Internet, information and communications technology (ICT) emerged to provide support to various organizational functions. Internet-based networks resulting to quick information updates has affected business operations of industries and commerce as well as consumer’s opinion of the real world and human lifestyle. Through the wide-ranging interconnectedness fostered by the Internet, systematic derivation, analysis, use and management of information and information technology developed as valuable tools for business firms seeking long-term viability and competitive advantage. Information and communications technology deserved recognition in causing important reductions in the costs of coordination and high efficiency gains in electronic markets. (Lee & Clark 1997)
All countries have engaged, albeit in varying degrees, in developing alternative systems to manual or paper-based systems of information storage and communication. In the last decades of the 20th century, Internet-based solutions have taken centre stage among business firms. The pervasiveness of the use of ICTs lies in the wide ranging application of the Internet in different business areas and fields, education and learning, and governance and regulation. Moreover, the Internet has been able to provide a real time channel for various applications that cuts across geographic distances and time zone differences. As such, the Internet and ICT has revolutionized needs and objectives, and the means of achieving needs and objectives, as well as created different needs and objectives. This changed market demand and the manner that suppliers organize their productions or service delivery systems to meet these emerging demands competitively.
Adoption of the Internet and ICT tools has a number of causes.(2002) investigated the extent of Internet diffusion among countries that are members of the Organization for Economic Cooperation and Development (OECD) showed that the causes of the spread of Internet utilities in these countries is GDP per capita that is able to support engagement in ICT tools by both the public and private sector. Moreover, access costs within the means of OECD countries also influenced the popularity of Internet and ICT tools in these countries. This implies that apart from automation functions, cost-efficiency also played an important role in causing the spread of Internet and ICT functions across the different sectors in these countries. A further implication is that access and utilization of Internet and ICT tools depended largely on the existence of economic infrastructures to support the change in governance and business systems. Without these infrastructures, diffusion of Internet use and access would be difficult to achieve. Internet and ICT use largely depend on a combination of resources and competencies to facilitate the effective use of these tools.
Baliamoune (2002) found that in the case of developing countries, it was national income and sound trade policies that constituted the primary determinants of the spread of the Internet and ICT tools in forty-seven developing countries. The study used as indicators, the number of internet users, internet service providers, personal computer owners and purchases, and mobile phone users and purchases. Higher national income translates into moderate to high income for at least majority of individuals and households, which further translates into the capacity to access Internet and ICT tools. Countries with a higher percentage of middle class usually hold the ability to support the diffusion of Internet and ICT tools.
Press et al. (2003) compared the rate of diffusion of Internet and ICT tools in the two Asian countries China and India. Growth of Internet and ICT use in these countries vary. Through six measures including connectivity infrastructure, geographical dispersion, organizational infrastructure, pervasiveness, sector-based absorption and sophistication of utilization, the study analyzed the growth of internet hosts and users and the variety in the use of the Internet and ICT tools in different areas such as education, government and health, development of local and international bandwidths, competitiveness in the telecommunication sector, inter-organizational coordination, and comparative advantages of the two countries. Analysis showed that India has acquired a comparative advantage in the utilization of Internet and ICT tools in governance, competitiveness of the telecommunication sector, and development of international bandwidths while China has gained a comparative advantage in the diffusion of Internet and ICT tool among its population. On one hand, India has to take advantage of the competitiveness of the telecommunications sector to achieve wide spread accessibility of Internet and ICT tools among the populace. On the other hand, China needs to focus on the development of public and private infrastructures to support not only the use of these tools in different areas as well as the establishment of international linkages.
Utilization of the Internet and ICT tools has various consequences. Waters (2000) explained that the diffusion of these tools in the domestic and international markets has caused many business firms to strive to implement effective e-business strategies. E-business strategy has become a popular issue in various industries and sectors to the extent that this has influenced the direction of business firms towards the use to these tools to enhance efficiency and gain competitive advantage. Internet and ICT tools have become essential in business operations so that individual business cannot expect to compete without adopting some form of e-business plan.
Evans (1999) provided examples of the way that business organisations commit to the actualization of potential gains through e-business. Cisco and IBM are firms that engaged, early on, in Internet and ICT tools as part of their strategy apart from the fact that these companies provide Internet and ICT related products and services. Due to their implementation of e-business strategies, these companies were able to decrease their operating expenses by redesigning business processes to accommodate Internet and ICT technologies. Other companies even in different industries and sectors joined the adoption of e-business strategies to achieve two gains, one is savings on operating cost and the other is the achievement of efficiency.
1.2 Conceptualization of E-Business
E-business involves the conduct of business using electronic tools and channels (Smith 2001). E-business emerged as a broad term encompassing the use of Internet availability, convenience, and widespread reach to improve existing business operations or create a virtual business (2002). This concept implies the wide scope of e-business since all electronic functions are covered. All business activities or transactions involving electronic tools or processes fall under e-business. In relation to the study, the use and application of e-business in garments companies are expected to be diverse and context-based as e-business strategies depends upon the specific needs and objectives of individual garments companies. Although the adoption of e-business may be diverse, garments companies are considered to have integrated e-business in their operations by using electronic functions in the production process through networked warehouse and production monitoring, website operations for individual and industrial consumers, and marketing through purchasing and payment options.
Although e-business and e-commerce have been used interchangeably, there is a slight distinction between these two concepts. E-business constitutes an encompassing term that covers not only e-commerce but also the linkages of business organisations with suppliers, business partners and employees while e-commerce focuses on customer dealings. Due to the greater scope of e-business, it has achieved widespread use compared to e-commerce. (Biggs 2000) E-business constitutes the driving force of the future technological revolution fuelled by Internet and ICT utilities.
The main purpose of this research is to help Chinese garment companies realize the importance of e-business in their firms as the initial step towards their actual engagement in e-business functions as a competitive strategy. Helping Chinese garments companies recognize the significant of e-business requires an inquiry into the various aspects of e-business in the Chinese context.
To accomplish the aims of the study, the investigation should cover a number of areas including:
- status of the introduction and development of e-business in China;
- e-business in the garments sector in China;
- importance and benefits of e-business in the garments sector in China;
- problems or issues faced by garments companies in adopting e-business; and
- strategies in effectively adopting e-business in the garments sector.
CHAPTER 2: LITERATURE REVIEW
Existing literature related to the study on the development of e-business in the garments factories in China cover the various areas including the perspectives of e-business, the functions of e-business, the advantages and disadvantages of e-business, the modes of implementing e-business, the challenges in adopting e-business strategies, the success factors in determining e-business, and the determinants of e-business. Literature provides a valuable theoretical background and measures in studying the development of e-business in the garments sector in China.
2.2 E-Business Perspectives
A number of perspectives on e-business have emerged. One perspective looks into the different factors largely associated to e-business while another perspective looks into the types of relationships emerging from e-business functions. These perspectives determine the decision of business organisations to engage in e-business as well as the extent that e-business is used to develop multiple relationships among stakeholders.
Damanpour (2001) describes four perspectives of e-business. First is the business or financial perspective, which considers e-business as operation of the business as an electronic firm instead of a physical entity. Due to the electronic transformation of the business firm, cost savings and efficiency are achieved. If a business organisation is being transformed instead of being introduced as an electronic firm, the business organisation need to undergo change in its image or branding, corporate culture, and accounting practices. Internet and ICT technology is utilized primarily as the enabler or of operational and market opportunities. Amazon.com constitutes an example of a business firm espousing this perspective since it constitutes an electronic entity operating through the virtual business environment. Second is the relational perspective, which considers e-business as forged by the development of new relationships and collaborative linkages to allow the firm to successfully enter new target markets or enhance existing relationships with business partners, suppliers, and customers. This perspective depends on the strength and effectiveness of technology infrastructure management, supply chain management, and customer relationship management applied by the firm. Applications of this perspective include the establishment of networked supply chain and business linkage processes and electronic marketplaces such as websites, catalogues and bidding systems. Third is the commerce perspective,which pertains to e-commerce systems that transforms buying and selling into electronic processes. Actualizing this perspective involved the establishment of systems, models, services and relationships in support of effective retailing and purchasing mechanisms. The focus of the perspective is emphasis on technology in meeting customer demands to achieve business success. Internet and ICT tools are optimized to achieve the widest possible customer reach at real time options. Fourth is the responsiveness perspective, which focuses on the timeliness of business processes and the efficiency of business transactions. Time considerations require firms to minimize the period between the orders of customers and fulfillment by the company using networked computing systems. Using Internet-linked computing systems allow business firms to meet contractual obligations to consumers without need for manual transmission and sharing of information.
Since these perspectives carry differentiated focus and requirements, the e-business perspective to be applied by the business firm should depend on the perspective that matches its needs and objectives. Firms concerned with cost savings and reduction may adhere to the business or financial perspective while firms particularly conscious of their goal of market expansion may benefit through the relationship or relationship, commerce or responsiveness perspectives. However, since these perspectives overlap and constitute reconcilable factors, combined perspectives could also benefit business firms according to the suitability to their specific business context.
Rao (2002) provides different perspectives of e-business based on the nature and extent of relationships built by the company. First perspective looks into business-to-business (B2B) relations involving the relationship of the business firm with its business partners such as the partnership of a manufacturing firm of the cooperation of another company for retailing, distribution or marketing. E-business covering this aspect involves the development of networks to ensure the development of partnerships. Second perspective considers business-to-consumer (B2C) encompassing the relationship of manufacturing or service firms with individual or industrial consumers so that this involves electronic marketing channels. Third is the recently emerged consumer-to-consumer (C2C) relationship, which still involves the role of e-business strategies in originating and sharing information or products from one consumer to another through file sharing and other interactive electronic channels.
These perspectives indicate that regardless of the perspective implemented by business firms, e-business works through the creation of multiple linkages so that e-business strategies should utilize the Internet and ICT tools to establish and maintain efficient business linkages that eventually result to efficiencies and cost savings for enhanced growth, expansion and competitiveness.
2.3 E-Business Functions
Rodgers, Yen and Chou (2002) explained that e-business creates firm links to consumers, business partners, suppliers and employees via Internet, intranet and extranet. Internet systems provide e-commerce services and process customer transactions. Intranet systems link employees by providing them with a means of accessing and sharing information. Intranets also apply in interactive, transactional and information-sharing processes based on the expectation that informed employees have enhanced output contributions. Extranet systems cater to the establishment of links and facilitate the flow of information exchanges with business partners. Extranets draw more business firms to engage in e-business because of the need to support linkages. As such, businesses experience improvements in logistics, streamlining of the manufacturing process, and automated ordering systems. In this sense, e-business then functions as a strategy in supply-chain management.
Rao (2002) provided that e-business functions by catalyzing change in two business drivers, communication translated into increased connectivity and interaction through increased speed. Increased connectivity expands the capability of individuals and companies to interact directly. Enhanced speed occurs by using higher bandwidth to facilitate the transfer of large loads of information at a faster speed than manual processes or lower bandwidths. Ryder (2001) added that connectivity and speed has three ripple effects. First effect is the development of enhanced intimacy of the firm with its business partners resulting to the need to develop new collaborative links and personalized customer support. With enhanced interconnectivity, present needs and objectives are met resulting to the development of new expectations, especially covering response times. The success of e-business is fostering intimate business relationships depends on the ability of the firm to respond, which is in turn determined by the availability and accuracy of data as well as the establishment of support processes. Second effect is the automation and exposition of international firm processes. This emerged because of the recognition that although speed plays an important role in meeting e-business objectives, speed cannot stand as the sole element. Relying on speed alone results to bottleneck problems and process inconsistencies. However, speed through automation also provides business firms with valuable information on their problem areas resulting to the implementation of the appropriate changes. Third effect is the targeting of new markets. Changes caused by the Internet have caused shifts in the competitive landscape on the areas of sales and marketing. In terms of sales, Internet exchange systems have allowed business firms to create links with more distributors and buyers through websites and other portal linkages. As such, many business firms have introduced electronic counterparts to provide venues for sales transactions as well as comparison websites that allow price comparison options to consumers. With regard to marketing, websites play the role of not only allowing business firms to reach out to a wide-range of market segments and international markets but also to have an even playing field in introducing the company or its products and brands to the international market and compete with large competitors.
E-business works by allowing business firms and consumers to gain information, with business firms interested in gaining industry trends and market research and sending product, service and brand information while consumers are interested in gaining information on available products and services and sending their orders and payments in making actual purchases. In a way, e-business provides an alternative means of interaction between business firms and consumers that defy geographical distance and time zone differences. E-business constitutes a model that fits the operations of international businesses or business firms seeking market expansion. Transactions also occur online with business firms offering or advertising products online and consumers making purchases through website order, payment and tracking functions.
Apart from information management and business-to-consumer (B2C) linkage functions, e-business also offers various other benefits to different industries or sectors.
(2003) explain that ICT, which is a part of e-business, supports the implementation of strategic initiatives. Business firms gain the ability to derive industry and market information they need to develop, implement and adjust production and marketing strategies. Without accurate and up to date information, the ability of business firms to develop and apply business strategies is limited. Strategy development depends upon information on innovations and strategy implementation largely depends upon current internal and external information, which e-business functions provide.
Porter (2001) adds that e-business results to organizational transformation because electronic tools and processes require efficiency-driven change in the business values, operating systems and processes, and rules and regulations, marketing activities, and management functions of business firms. In applying e-business, firms need to change corporate culture to facilitate the acceptance and cooperation of the members of the organization.
Olson (2006) explains that e-business has also influenced the external business environment by developing a new business competency and changing consumer demands. Flexibility to e-business becomes a highly valued competence among businesses and engagement in e-business functions constitute added consumer demands. Phan (2003) further explains that e-business constitutes a means of developing competitive advantage. Porter (2001) describes competitive advantage as falling under two general forms, which are cost leadership and differentiation. Cost leadership pertains to the ability of companies to implement cost-saving production processes that concurrently allows the business firm to lower the price of its commodities relative to its competitors. Differentiation refers to the ability of business firms to create and offer unique value to consumers so that even if the price may be different or higher than that of competitors, customers hold the view that the value they expect to receive is equivalent or higher than the price that they have to pay for the commodity. E-business can facilitate cost leadership by allowing business firms to save on mistakes or delays by providing a means of integrating production and supply chain processes at real time to ensure convenience and efficiency. E-business can also support differentiation when business firms have adopted or developed e-business functions that allow them to provide added value to their consumers.
2.4 Advantages and Disadvantages of using E-Business
Engaging in e-business offers a number of advantages as well as disadvantages. This indicates that while e-business holds advantages for business firms in different sectors and industries, there are also possible disadvantages, which firms need to address in order to experience the optimization of potential benefits.
Rodgers, Yen and Chou (2002) explained that the most common advantages of e-business are cost savings and efficiency. Contrary to common conception, efficiency constitutes a preferred advantage more than cost savings since cost savings do not necessarily result to efficiency but efficiency inevitably leads to cost savings. Production and service companies alike engage in e-business to automate operations and service delivery processes to minimize lead times, mistakes and delays to allow the firm to meet customer expectations and achieve customer satisfaction. Efficiency constitutes a long-term advantage because this affects the sustainability of the company.
Rosa (2000) provided that firms engage in e-business to experience the advantage of improving their customer service to ensure the satisfaction of their customers and linkages to suppliers and business partners to ensure effective product and service provisioning. Through Internet and ICT tools, business firms create direct relationships with consumers resulting to the meeting of demands as well as addressing after sales issues in order to ensure a positive response from consumers and influence customer loyalty. Satisfied customers then constitute effective voluntary marketers for the company by sharing their positive product or service experiences and recommending the firm to their social networks. E-business tools also allow business firms to establish direct relationships with suppliers and business partners to experience enhanced services and satisfaction from the linkage. This results to better performance and productivity.
Yasin (2000) added reduction of inventory levels and storage costs as well as improved production or service delivery planning or scheduling as connected advantages of e-business. Through interactivity, e-business allows manufacturing companies to receive orders, as these are made and process, these immediately through a just-in-time (JIT) system of inventory achieve quicker services as well as reduce the cost of obsolete inventory. This carries an impact on the profitability of business firms. E-business also allows firms to track supply orders, which is necessary in organizing the planning as well as scheduling of production.
Rodgers, Yen and Chou (2002) and Hsieh, Lai and Shi (2006) reiterated that communications and interactivity constitute other advantages of e-business that results to decreased cost. Information sharing creates competitiveness among firm suppliers. Competition could result to the decrease in prices of raw materials and equipment for suppliers to gain the partnership of the business. As such, not only does the firm gain supplier options, it also gains cost reduction advantage by selecting the supplier that offers the values of quality and low cost.
Rodgers, Yen and Chou (2002) further explained that work efficiency constitutes another advantage of e-business, especially large business firms with different business units or extended organisations. Through e-business, capabilities of the business firm for internal communications develop. Enhanced intra-communications support information sharing as well as cooperation and collaboration. As such, this decreases the delays in production and overlapping of work that in turn leads to performance and productivity.
E-business has disadvantages. Vizard (2000) explained that one disadvantage of e-business is cost. Engagement in e-business constitutes an investment and like all investments, the venture involves expenditures. The cost of Internet and ICT tools depends upon the resources available to the company as well as the economic infrastructures emerging in the business environment. Business resources depend on available assets and other resources of the business firm. Small and medium business firms may finds difficulty in integrating e-business as their strategy when compared to large businesses usually with the capacity to engage in e-business. Moreover, the business environment determines the ease and cost of engaging in e-business. Less developed economies without sufficient infrastructures to support Internet diffusion and ICT utilisation makes it difficult for business firms, even with available resources, to engage in e-business.
Rodgers, Yen and Chou (2002) added that engaging in e-business also involves the risk of failure. E-business necessitates change in the corporate culture and policies of the firm to accommodate e-business as a new or alternative strategy. Change involves the enhancement of organisational infrastructures as well as drawing the acceptance and cooperation of employees. Involvement of all members of the organizational in implementing e-business has been recognised. However, this is not as easy as it sounds because of the possible apprehensions of employees about their job security with the introduction of automation, limited employee skills could also cause the non-acceptance of the e-business strategy, and different perspective and interest could delay the application of e-business strategies.
Nickles (2000) provided hacking and other security risks as a disadvantage of e-business. Electronic transmission of information could lead to leakage especially when the network system has no strong security support. Valuable information could go to people not intended to be recipients or tampered with resulting to an intervention in the information flow and accuracy of data sharing. On a serious scale, this could lead to inefficiencies and added costs that defeats the benefits offered by e-business.
Rodgers, Yen and Chou (2002) further explained that the emergence of an uncommon framework for e-business could result to inefficiencies and limited connectivity. One common framework used by many business organisations is extensible markup language (XML), which constitutes a tool to tag data necessary in Internet and external exchanges. Although XML is common, there are also inherent problems. XML application has three layers, which are document, protocol and technology. Technology has achieved stability in providing a common platform for exchanges. However, document and protocol have not been stabilized to address incompatibilities. This means that even if businesses and consumers have the technology to support interactivity, connection may be difficult when the formats of documents or protocols are not compatible. Access and communication become difficult if not impossible that could be comparable to manual linkages or to unstable technology layer.
2.5 Implementing E-Business
Successfully implementing e-business requires the determination of the capabilities of firms in adopting electronic solutions. Biggs (2000) provided the consideration of business organisation in engaging in e-business. First is whether business transactions with partners currently sent or received electronically. Second is whether electronic data interchange and other networking systems are already in place. Third is whether networking standards have already been set in place. Fourth is whether the business firm is already using universal codes, coders and coding systems as product and process identifiers that are readable and transmissible to other network systems. Fifth is whether the firm have introduced barcodes, data capturing systems, data transmission systems. If majority of the answers provided to these questions are in the affirmative, this means that the business is already prepared for the adoption and utilization of e-business.
Follit (2000) suggested the consideration of context-based e-business strategies. This means that even if the generic strategies will be considered for guidance, the business firm should still implement its own processes to capture its needs and objectives. One important consideration in adopting e-business is the extent of centralization and control of the process. Since wide-ranging change is involved, control and supervision is necessary for direction. Another important concern in engaging in e-business is cautiousness that emerges from a goal-oriented or directed string of e-business actualization activities. Still another consideration is inter-business cooperation in establishing industry-wide e-business strategies. Ease in the implementation of e-business can be achieved through industry-wide involvement. This allows the establishment of infrastructures for the compatibility and standardization of e-business elements.
Rodgers, Yen and Chou (2002) suggested that business organisations should recognize challenges and opportunities experienced by the organisation. One thing that business firms should recognize is the difficulties and benefits promised by the dot-com tool, which has obtained acceptance and popular use by the customers and suppliers. Another thing for consideration is capturing the rules in the marketplace such as the Internet or ICT support for supply chain management. Still another thing that should be considered is dealing with customers first, so that e-business strategies should target e-integration, e-connectivity, knowledge management, and performance efficiency.
Hayes (2000) listed seven steps necessary in implementing e-business solutions. First step is to start high, which means that top executives need to accept and support the e-business initiative to give way to strategic implementation. The business firm perspective should be geared towards e-business as an organizational project instead of constituting only a mere technical task. Second step is to think fresh, which encourages business firms engaging in e-business to disregard its old ideas of business management and make way for the development of new paradigms in conducting business. Without innovation, e-business would not become successful. Third step is to learn about the market, since accurate market information becomes the bases of brand identity, competitive activities, and supply chain management. Fourth step is to set a vision for e-business consequences. Without a vision, the e-business initiative may not move towards the intended direction. Fifth step is to define the e-business strategy, which constitutes the means through which the business will actualize its vision. Without a strategy, implementation becomes problematic because there are no specific activities to ensure implementation. Sixth step is to create the e-business solutions such as create a website, install networking systems, and train employees to develop competencies. Seventh and final step to refresh the e-business solutions regularly to allow for adjustments as needed or updates since Internet and ICT tools rapidly change.
2.6 Challenges to E-Business
As mentioned earlier, e-business has advantages and disadvantages arising from the complexities that could occur in e-business adoption. These challenges also coincide with the disadvantages of e-business. However, the challenges encourage e-business adoption but provide the factors that need solution to ensure the success of the initiative. Vizard (2000) explained that the issue of cost constitutes a challenge because this may discourage business firms to engage in e-business even if this promises potential benefits to the business organisation. To address this challenge, leadership becomes necessary in achieving unanimous support for the e-business initiative. Apart from this, firm executives should also realize that although e-business involves cost, this is a necessary investment in enabling the company to achieve its needs and objectives. When all the firm’s closest competitors are getting ahead by engaging in e-business initiative, the business really has no other equivalent alternative but to engage in e-business solutions to keep up with the heightened competition. Moreover, leaders should understand that cost should be considered in relation to expected benefits. In doing so, the business firm would realize that although it incurs cost, future returns are greater.
(2000) mentioned that security problem constitutes another challenge to business firms because the inability to recognize and address security issues could lead to the failure of the e-business initiative. A number of steps can be taken by business firms to ensure control of security problems. First is keeping track of emerging security problems in the different stages of the implementation of e-business solutions. Second is optimizing available technology so that the business should take advantage of software and network tools to ensure secure ICT processes and protect the business and its consumers.
E-business streamlining (Rao 2002) or standardization (Lal 2005) could also pose a challenge to business firms. The success of e-business solutions partly depends upon a certain degree of standardization of IT languages and linkages to ensure inter-connectivity. Otherwise, e-business solutions would only apply within the organisation. Business firms should also consider the use of standardized business tools, especially those developed for the whole industries. By choosing appropriate business solutions, the business firm ensures that is able to connect online to consumers and business partners alike.
2.7 Success Factors of E-Business
Existing literature mentions a number of key success factors for business firms engaging in e-business. These success factors also constitute the measures of the e-business adoption of business firms.
Hayes (2000) mentioned vision as a key success factor in e-business adoption. This encompasses an organisation-wide guide so that this not only determines the results expected by the business firm but also determine the expected contributions of the members of the organisation. A vision means identifies the parties involved in the change, the contributions of the different parties, the changes and competencies required, and the results expected. A vision constitutes the underlying support for all e-business activities.
Patel and McCarthy (2000) explained that leadership also constitutes a success factor in e-business adoption. There should be an e-business champion within the organisation holding an esteemed position and able to influence the members of the organisation to accept and cooperate in the implementation of the e-business solutions. The e-business leader should hold a strong position in controlling the e-transformation of the organisation and expertise in e-transformation to guide the entire organisation in accomplishing its e-business objectives. The leader should hold the values of visual direction, energy drive, and passion regarding the e-business adoption.
Corbett (2003) added that change in corporate culture constitutes another success factor in e-business adoption. In implementing e-business strategies, cultural change and change management are necessary in facilitating the change in values, beliefs and practices of the company in order to give way for the use of the Internet and ICT tools in substitution of manual systems. Cultural change involves shifts in the perception of managers and employees on e-business tools application while change management constitutes the policies and practices for implementation in ushering change. Without change, e-business tools will not be accepted or used efficiently by the organisation resulting to under-utilization of tools and the non-achievement of goals.
Marzulli (2000) mentioned planning, corporate communication and flexibility as the success factors in e-business adoption. Planning allows business firms to determine objectives as well as possible problems and implement alternative solutions. Corporate communication ensures that all members of the organisation are informed of the plans for change and strategies to draw their participation and cooperation. Flexibility allows business firms to make adjustments in case of contingencies or issues.
2.8 Determinants of E-Business Adoption
Lal (2004) used a number of factors as determinants of e-business adoption. The determinants constitute measures in determining the extent that business firms have adopted e-business strategies. First determinant is the attitude of the employees towards e-business tools. Perceptions, acceptance, cooperation, and actual use of Internet and ICT tools determine attitude. A positive attitude towards e-business tools eases the adoption of e-business. Second determinant is the bandwidth used by the company, with a higher bandwidth indicating the advancement in e-business implementation while a lower bandwidth signals the commencement of the adoption or low level of e-business adoption. Fourth determinant covers firm size and profit margins, since these impacts on the ability of business firms to support e-business tools. Fifth determinant encompasses efficiency in business transactions and competitiveness of the business firm since e-business adoption promises to enhance these factors.
E-business adoption constitutes a strategy requiring business firms engaging in e-business transformations to consider certain factors and go through the strategic processes. As a strategic process, e-business adoption starts with a vision and a strategic plan together with culture change and flexibility to ensure e-business adoption. E-business adoption constitutes a complex process with disadvantages and challenges. However, a consideration of the benefits and advantages makes e-business transformation a sound investment. In applying e-business strategies, best practices exist to guide business firms, according to their specific business contexts, such as Chinese garment companies, in achieving the goals of e-business adoption.
CHAPTER 3: BACKGROUND OF THE STUDY
The adoption of e-business models of individual business firms in the garments sector is important in experiencing the benefits of e-business strategies. In the garments sector, e-business supports production, marketing and management operations to ensure that the garments firms are able to determine market demands, translate these into production and service delivery outputs, and increase their levels of profitability and revenue generation. China has a thriving garments sector that caters not only to the domestic but also to the international market. As such, e-business offers to improve the operations of garments companies in China to support their business internationalization and viability objectives.
3.2 E-Business in China
E-business constitutes a promising strategy in the booming industries in China. The country has a population of 1.29 billion people together with a 9 percent growth rate. China constitutes third place in terms of geographic land mass and population. Majority of the population reside in rural areas while the remaining population are concentrated in the cities in Mainland China and the special administrative region of Hong Kong. With the opening of China’s economy to the international market, the country achieved an increasing growth rate due to the entry of foreign direct investment and technology sharing. China experienced a gross domestic product of 13.65 trillion 2004, which constitutes a higher growth rate by 9.5 percent when compared to the previous year. (2007) This means that in terms of number, China has great potential for the adoption of e-business tools in the business environment. Apart from number, China also carries the potential to support the growth of business through its competitive labour force as well as engagement in IT specialisations that supports the entry of further investments into various production and service sectors.
The development or enhancement of e-business in China has great potential. As of 2007, China has 172 million users of Internet with 4 million individuals engaging in Internet use every month. (Alexandri 2007) This indicates that the Chinese market alone is able to support e-business marketing functions such as website development and online shopping. Since local and international Chinese firms face competition from international counterparts that have already established online linkages, e-business would also allow Chinese business firms to acquire e-business function competencies necessary to compete locally and globally.
China has also established the basic infrastructures in the implementation of e-business strategies. The Chinese government introduced the first nationwide computing and networking system in China in 1994. The project emerged through private-public partnership that established ICT infrastructures. In 2006, the China International Electronic Commerce Center was established in 1996 to research and promote e-transformation among Chinese businesses. Then in 1997, Internet-based electronic commerce was introduced in China. In 2004, China has reached the ‘permeation’ phase with 94 million Internet users in the country. (2007) With the establishment of sufficient Internet and ICT infrastructures, business firms have the necessary infrastructures in adopting e-business.
(2007) added that government support for the e-business transformation of Chinese business sectors also makes it easier for Chinese business firms to adopt e-business strategies. To speed up the adoption of electronic systems, the central government focused on six areas including 1) the establishment of a legal environment conducive to e-business transformations, 2) industry support through ICT support policies, widening the reach of information on e-business factors, 3) development of technical support qualifications, 4) standards and competencies, 5) education policies geared towards ICT capabilities, and 6) fostering of international cooperation. This means that if the Chinese government succeeds in enhancing these areas, e-business adoption among business sectors becomes easier.
3.3 E-Business in the Garments Industry in China
Limited studies have been made on the e-business adoption in Chinese garments firms. However, existing literature indicated the status of garments companies in adopting e-business strategies and mentioned some areas that garments companies can focus on to ensure the success of their e-transformation projects.
Adoption of e-business in the garments sector in China is highly diverse, with some companies fully integrating e-business models into their operations while others remain manually operated. The difference is highly linked to the size or the business organization, scale of operation, and business values of the firms. Moreover, the development of e-business in China is beset with the complexities brought about by the clashes between traditional business values and practices and business innovations (People’s Daily 2000).
Martinsons (2000) explained that the garments sector in China applies ICT tools to enhanced internal control and coordination. This means that retailing and business networking applications through the Internet has not received the same rate of acceptance or application. As such, the electronic applications in the garments sector developed into cooperative networks encompassing complementary products and services with a small area focused on the development of linkages with electronic markets. These constitute the areas of e-business weakness of garment firms in China and the concurrent areas requiring improvements.
The study seeks to investigate the importance of e-business among garments companies in China by looking at the extent that individual firms belonging to the sector have adopted e-business. Concurrently, the study also covers the investigation of the perception of garments companies on the concept, functions, models, and importance of e-business. By deriving this information, the study should be able to determine the need to enhance the importance of e-business for garments companies in order to experience the various benefits that this business model offers and recommend ways for business firms to successful adopt e-business in their operations to support their long-term sustainability and profitability goals and other specific business objectives.
CHAPTER 4: RESEARCH METHODS
Investigating the development of e-business in Chinese garment companies involves two sides, business and consumer side. Businesses can provide information on their perceptions of e-business tools and the manner that these tools are used. Consumers provide valuable information on the extent that garment companies have implemented e-business strategies and their experience of these tools. To derive full data for the investigation, gathering data on the business and consumer perspective becomes imperative.
4.2 Prior Literature
Previous studies commonly used case study and survey methods to collect information on the utilization of e-business by various firms. Case studies functioned in studies, which focus on the e-business transformations of particular business firms or test the effectiveness of particular e-business tools. These studies were able to derive in-depth information on various areas of e-business tools and applications, which could be the basis of generalizations. Surveys applied in investigations that focused on the derivation of data from various sources such as business firms in one sector or industry or many consumers. Surveys were able to capture similarities and differences in their experiences and perceptions of e-business tools and systems. Case studies and surveys work in deriving various types of information and for different purposes.
Existing studies related to the research topic also used quantitative, qualitative or a combination of both data treatment types. Qualitative studies focused on the perceptions, acceptance and experiences of business firms and consumers of e-business tools and processes as a means of determining effectiveness, areas of weakness or issues, and the alternative ways of addressing these changes. Quantitative studies focused on measuring effectiveness or determining frequencies and deviations in the use of e-business tools. Integration of qualitative and quantitative studies seeks to obtain both measurable and immeasurable data on e-business tools and process applications as well as consumer experiences. Depending on the purpose of the study, these data treatment methods used singly or integrated could provide rich data.
4.3 Data Treatment
To derive rich data, the study used the triangulation of both quantitative and qualitative data treatment methods. Triangulation applies by merging the values derivable from the quantitative and qualitative data treatment methods to achieve confirmation of the validity of data derived and completeness of the information obtained from the respondents. In merging the to data treatment methods, triangulation retains the core values of the quantitative and qualitative approaches to ensure better results that could not have been obtained had the study utilized the quantitative and qualitative date treatment method singly. Confirmation ensued since quantitative data confirmed qualitative data and vice versa and completeness emerged with the consideration of various aspects of the study particularly qualitative and quantitative factors. In addition to the achievement of rich data, triangulation also allows the research to have a basis for conclusions and generalizations.
Triangulation involves the integration of the qualitative and quantitative research methods. Rubin and Rubin (2006) explained that the qualitative research method contributes to the study by enabling the derivation of detailed accounts or descriptive data from key respondents on the phenomenon subject of the study. By using the qualitative method together with the quantitative method, the research was able to obtain wide-ranging data. Blaxter, Hughes and Tight (1998) stated that the quantitative method contributes data collection through the derivation of measurable data subject to analysis. By using closed questions in the interview questionnaire, the research was able to achieve quantitative data. In analysis, both qualitative and quantitative data are considered together to support the provision of answers to the research questions and the derivation of conclusions and generalizations.
4.4 Data Collection Method
To obtain qualitative and quantitative data, personal observation and survey methods applied. Kent (1999) explains that personal observation, when compared to the other forms of observation utilized through mechanical tools, occurs by personally watching and taking note of the manner that consumers make purchases and the way that firms provide services. Factors for consideration in observing consumer purchases include the speed of the purchasing decision, factors considered in deciding, issues arising during the transactions and purchase, and quantity and price of purchase while observing product and service delivery involves the number of retail outlets, availability of orders, price, promotions, customer service, and other determinants of service quality and customer satisfaction. By conducting personal observation on service delivery and consumer purchases involving electronic transactions, answers were obtained.
Saunders, (2003) explained that the survey method works in studies that require the collection of descriptive data covering a particular situation or phenomenon. Survey method also works in determining the relationship of variables. Studying the development of e-business in the case of Chinese garment companies appropriately used the survey method because it sought to derive descriptive data on the development of e-business. Variables studied included the extent of engagement of consumers of e-business tools and the provision of business firms of e-business tools for consumers. A number of measures were used to measures these variables.
A number of interrelated advantages and disadvantages ensued by using the survey method. First advantage is the identification of the existence of a relationship between variables although this carries the disadvantage of not determining the direction of the relationship. The disadvantage found solution by taking confirmation from the observations or perceptions of customers. Second advantage is the derivation of wide-ranging data on the subject but this also involved the disadvantage of requiring tedious work. The study allocated enough time for the data collection to allow for the derivation of rich data through the aid of well-organized research methods.
4.5 Research Questions
To obtain the data required in meeting the research objectives, the study investigated answers to the following research questions:
- What is the extent that garments companies have established e-business tools for the delivery of products and service to consumers?
- What are the experiences of consumers over the existing e-business product and service delivery systems of garments companies?
- What problems or issues have been experienced by garments companies in utilizing e-business tools?
- What problems or issues have been raised by customers in engaging in the e-business tools established by garment companies?
- How can e-business tools improve product and service delivery for purposes of developing customer satisfaction and loyalty among garments companies in China?
4.6 Sample Selection
Target population for the study are Chinese residents over 16 years old high school and college or university students who have engaged e-business tools of garment companies regardless of the frequency. Random sampling applied in selecting the respondent consumers because the study sought to determine the experiences of general customers in using e-business tools in purchasing from garments companies in China. Respondents were selected by floating 250 questionnaires to randomly selected high school, college and university students with the questionnaires returned constituting the respondents of the study. This method was applied to obtain rich data from a wide-range of respondents cutting across age, gender and socio-economic differences.
4.7 Data Collection
The 250 questionnaires [See Appendix for the Questionnaire] were delivered personally to the randomly selected high school and college or university students selected. Their email addresses were also obtained and their permission taken for sending an electronic copy of the questionnaire that they can answers and send online for their convenience. Questionnaires were collected on the spot for respondents immediately agreeing to answer the questionnaire while the other answered questionnaires were obtained through email. The questionnaire obtained information on the demographic characteristics, the purchasing habits of consumers, and the experiences of the respondents in using e-business tools of garments companies in China in making purchases.
4.8 Data Analysis
Personal observations on the e-business tools used by garments companies were transcribed and analyzed. Answers obtained through the survey questionnaire were organized into analytical clusters for purpose of analyses according to the research questions and objectives. Results of the analysis were presented through tables, graphs and figures as appropriate to ensure clarity and readability.
To begin with, although this research has been designed an idea methodology which includes store observation, questionnaire survey, and exploratory interviews so that good results can be got, there are only three months for the whole research and time is assumed to be a constraint element to finish those three methodologies which are supposed to conduct by only one person but not group. The research would start at the begging of June and finish by the end of August. Time is a very limited for this 15,000 words piece of research. Meanwhile, because of the limitation of time, one of the methodologies might be canceled so that the author could get enough time to analyse the data and construct a good piece of research.
Then, this research is written by a non-native speaker; language would be a struggling factor and it might happen sometimes that an appropriate word cannot be found.
Also, the sample would be chosen from some colleges or universities which the author has the access to do the survey. It means that most of the sample would be young adults who are age from 16 to 22, and most of them are from students group. It means that the perception of the non-students groups are not obtained and researched, and some valuable information from other age group such as from 12 to 15 or older age groups would be lost.
To undertake the methodologies and analyze the data of the research at the right time is the key to the success of a good research and therefore a timetable is needed before the research goes on.
Chapter 5: Results and Analysis
Presentation of the results and analysis commences with the demographic data on the respondents, followed by the data on the use of online purchasing of the respondents, then by the concerns and preferred features of online purchasing and website by the respondents, before engaging in the statistical tests to determine the link among variables measuring the online purchasing experience and the extent of online purchasing services offered by the companies.
5.2 Demographic Data
Total population of the study is 150 respondents, representing the number of questionnaires that were returned fully answered out of the 250 questionnaires distributed personally or through email. Answers of the respondents were considered in providing answers to the research questions and fulfilling the objectives of the study. This constitutes a high return rate for the questionnaires because 60 percent of the questionnaires were returned fully answered to contribute to the results.
Table 1 below shows the distribution of respondents according to age group. Respondents were closely distributed according to the different age groups but most of the respondents belonged to the 19-21 age group enrolled in college or university. This indicates an almost even representation of answers for the different age groups in terms of varying experiences with online purchasing by answering email offers, visiting company websites, or entering auction websites such as eBay and Taobao.
Table 1: Age Distribution of Respondents
Table 2 below shows the distribution of the respondents based on gender. Most of the respondents were females comprising 75.33 percent and the remaining 24.67 percent comprised of male respondents. This could indicates that females within the age group considered by the study, made up of high school, college and university students, engage in online purchases for garments more than the male population of this age group.
Table 2: Gender Distribution of Respondents
Table 3 below shows the distribution of the respondents according to the educational level. Twenty-five respondents of 16.67 percent are high school students. The remaining 125 respondents belong to the tertiary level of education out of which 36.66 percent are students at colleges in China and 46.67 percent are university students.
Table 3: Education Level Distribution of Respondents
Table 4 below indicates the distribution of the respondents according to family income. The respondents are widely distributed. However, it can be observed that majority of the respondents belonged to the median income indicating that most of the respondents belonged to the middle and upper class. Since majority of the respondents are college or university students, this indicates that the respondents belong to the middle to upper class with the income to support higher-level education. Income distribution of the respondents supports their engagement in online purchasing since this activity involves home computer and internet connection or access through net cafes and a credit account to support electronic purchases.
Table 4: Family Income Distribution of Respondents
|Family Income Level
Overall, the varying demographic characteristics of the respondents evidenced y the distribution of the respondents according to age, gender, educational level, and family income, provided the study with information from the different perspectives such as males and females, younger and older age groups, secondary and tertiary education, and low, middle or upper income class. By deriving information from various respondents with different socio-economic backgrounds, the study obtained rich data.
5.3 Personal Observation
Domestic and foreign firms make up one classification of garments companies in China. Comparison of these two groups in terms of the use of e-business tools such as online shopping websites for taking and fulfilling orders and the patronage of customers shows that most of the visited garments websites are those of exclusive foreign brands and international auction websites such as eBay for China. Foreign companies with long experience in online retailing have more edge, presence and reach over domestic companies, with only a limited number of companies that have established websites for retailing. Foreign websites with operations in China have gained more popularity among online purchasers because of their edge in developing their websites and distribution linkages for online purchasing. Apart from this, foreign garment companies also achieved brand recognition around the world and have the means to engage in wide-scale advertising to have the market learn about their products and channels of distribution. Only large and branded garment companies in China have invested in the development of online purchasing capabilities by learning from their foreign counterparts or their experiences in engaging in the international market.
Another classification of garments companies in China is according to the scale of operation as small, medium or large garment companies. Large companies whether domestic or foreign with the objective of expanding their markets usually engage in online retailing through their own websites if the company or its brands have already been established in the market or through online multi-brand retailers or auction websites. Smaller garment companies with limited market reach, without experience in e-business tools, or without the necessary means of supporting their online operations do not consider as priority the establishment of online purchasing systems to reach out to online consumers so that distribution or retailing remain through traditional channels.
5.4 Online Purchasing
The 150 respondents are those who have returned the questionnaires, answered these completely, and have engaged in online purchasing at least a single time. This means that all answers considered in the analysis came from the respondents with experience in online purchasing.
Figure 1 below describes the distribution of the respondents in terms of their first engagement in online purchasing. Although, the respondents were distributed across the different periods, many of the respondents have made their initial purchases in the previous years indicating a long-time engagement in online purchasing. Little difference exists among the respondents that made their initial online purchase in the past year, previous six months and the past month.
This implies two things. First is that online purchasing has picked-up in China even a few years back with the economic boost and enhanced trade that brought income to most of the households as well as the entry of products such as computers and the Internet. Use of electronic channels is more widespread in the rapidly developing urban areas but the rural areas are also starting to pick-up on the electronic trend with the entry of companies and products into inland China. Second is that the growth in Internet has peaked in the past year and even months as shown in the period of first engagement of respondents of online purchasing.
Figure 2 below shows the number of times that the respondents engage in online viewing to determine the extent that online purchasing is considered as an alternative to traditional shopping exercise. Again, the respondents were highly distributed among the different frequency periods. However, the most number of the respondents viewed garment websites once a week, followed by once a month and several times a month. A sizable number of respondents view garment retailing or auction websites several times a week. The smallest number of respondents comprises the respondents who view garments websites several times a year or only once every year.
The frequency of online viewing indicates the extent that consumers have accepted the electronic channels as a means of shopping for garments. In the traditional mode of purchasing, the frequency of viewing depends upon the turnover rate of stocks and the display of new products. This means that seasonal shops usually have high customer visits at the beginning and end of the season when new items are displayed and stocks are placed on sale. However, in the online mode of purchasing, offering and sales of new products can happen within a matter of minutes, especially in auction or multi-brand retailing websites. This means that shoppers seeking to learn about new items need to check out the websites frequently to learn about new items of promos. Checking websites once a week or once a month constitutes a lesser frequency compared to the daily visits in other markets. However, the fact that many respondents visit garment websites once a week indicates that Chinese consumers have considered online channels as alternative modes of shopping for garments.
Figure 3 below shows how many times the respondents make online purchases to indicate the extent of engagement of customers of the e-business tools placed by garment companies to support online customers purchases. The highest number of respondents makes actual purchases once a month followed by those that purchase garments once a week. Lesser number of respondents makes purchases several times a week or several times a month. Least number of respondents makes actual purchases once or several times a year.
This implies a number of things. First, in relation to the frequency of website views, there is a link between the frequency of viewing and the frequency of purchase since the highest number of respondents answered that they view websites once a week or once a month that corresponds to the highest frequencies of actual purchases once a week or once a month. Since viewing has strong links to actual purchases, garments companies engaged in online retailing in China should encourage more frequent viewing by providing customers with incentives to engage their websites such as regular new products, promotional offers, price cuts, and a well-designed and engaging website. Second, the frequency of actual purchases indicates the significant regularity in the online activities of the respondents, which means that online purchasing has become accepted as an alternative mode of shopping. Electronic customers are constantly growing so that it is up to the garment companies to develop their e-business strategies to accommodate the growing demand.
Figure 4 below shows the degree of acceptance of the respondents of online purchasing. Majority of the respondents or 66 percent showed acceptance of online purchasing as an alternative to traditional shopping. However, the remaining 34 percent do not discount online purchasing only that they prefer to engage in the traditional purchasing or garments.
This indicates the extent that the Chinese market has become rife for online retail. The high acceptance and preference for online purchasing is caused and reflects Internet use as part of popular culture among the young people China who have found a number of uses for this virtual channel including shopping for garments. As such, the potential of tapping into the growing virtual market should be a priority for Chinese garment companies, especially the firms seeking to achieve competitive advantage.
Figure 5 below reflects the preferences of the respondents in continuing to make online purchases. Almost all of the respondents answered that they would continue viewing garment retail websites and make actual purchases. This implies the sustainability of the market of e-commerce through the continued engagement of customers of garment websites. As such, garment companies seeking growth and expansion should consider engaging in e-business tools to provide alternative purchasing options for their consumers.
Table 5 summarises the online purchasing activities of the respondents to show the trend of growth in online customers. For garment companies that have already established e-business tools and e-commerce, the trend indicates the potential for expanding their market and enhancing online services. On the part of garment companies that have not invested in e-business tools and e-commerce to support online customer purchases, the trend indicates that they are already missing a promising opportunity.
Table 5: Summary of Online Purchasing of Respondents
|Use of Online Purchasing|
|First Use of Online Purchasing|
|Within the Month||32||21.33|
|Within the Past Six Months||35||23.33|
|Within the Past Year||31||20.67|
|Within the Past Years||52||34.67|
|Frequency of Online Viewing|
|Once a Week||40||26.67|
|Several Times a Week||30||20.00|
|Once a Month||34||22.67|
|Several Times a Month||32||21.33|
|Once a Year||8||5.33|
|Several Times a year||6||4.00|
|Frequency of Online Purchasing|
|Once a Week||46||30.67|
|Several Times a Week||20||13.33|
|Once a Month||50||33.33|
|Several Times a Month||14||9.33|
|Once a Year||9||6.00|
|Several Times a Year||11||7.33|
|Online Purchasing Preference|
|Continuity of Online Purchasing|
5.5 Concerns in Online Purchasing
5.6 Preferred Features of Online Purchasing
5.7 Degree of Satisfaction of Online Purchasing
5.8. Statistical Results
Chapter 6: Conclusion and Recommendation (5 pages)
6.2 review of objective
Instructions: Please place an answer on the line or place a check on the line provided following your selected answer.
- Demographic Data
Name (optional): _________________________________________________________
16-18_____ 19-21_____ 22-24_____
High School_____ College_____ University_____
Family Income Level:
Below 10,000_____ 10,001-20,000_____ 21,001-30,000_____ 30,001-40,000_____
40,001-50,000_____ Above 50,000_____
Instructions: Please place a check on the line provided following your selected answer.
- Online Purchasing
- Have you made purchases online?
- Since when have you made online services?
Within the Month_____ Within the Past Six Months_____ Within the Past Year_____
- How often do you make online purchases?
Once a Week_____ Several Times a Week_____ Once a Month_____
Several Times a Month_____ Once a Year_____
- With what garment company/s do you usually make online purchases?
- Do you prefer online purchasing to traditional purchasing?
- Would you continue using online purchasing in the future?
Instructions: Please check as many concerns that you consider in selecting an online purchasing service.
- Preferred Purchasing Websites or Company/Brands
- Concerns in Making Online Purchasing
Recommendations by Family and Friends_____
Popularity of Online Purchasing_____
Wide Selection of Online Products and Services_____
Cost of Online Purchasing_____
Speed of Transactions and Delivery_____
Please add your other concerns that are not included in the list above.
Instructions: Please rate the items listed below according to your preferred online banking features in terms of online banking service and online banking system.
- Preferred Features of Online Purchasing
Online Purchasing Process
Ease of Use_____
Pleas add features you prefer but are not included in the lists above.
Instructions: Please provide answers to the questions below.
- Degree of Customer Satisfaction
- Are you satisfied with your experience of online purchasing services?
Yes _____ No_____
- Are you satisfied with the online purchasing experience of your favorite garment companies?
- Are you satisfied with your online purchasing website experience?
- Will you switch to other garment companies in the future? Please explain.
- Can you recommend changes or improvement to online purchasing services? Please explain.
- Can you recommend change or improvement to online purchasing websites? Please explain.