CHAPTER ONE

Introduction

The advent of Internet based e-commerce offers considerableopportunities for large and small firms across to expand theircustomer base enter new products and rationalize their businessesby competing in the global economies. SMEs have generally beenslow to adopt and evaluate e-commerce. The SMEs have failed toreach the levels of adoption required to realize the benefitsassociated with it during formative stages of the enterprises.Many SMEs are unaware of the potential of e-commerce to enhancetheir business operations which they consider not applicable tothe products and service.Small and Medium Enterprises (SMEs) have been defineddifferently, using different parameters in different countries.This study adopts the definition of SMEs as postulated by theSMEs Development Policy of Tanzania using the size criteriondepending only on employment. The policy classifies SMEs ascomprising of 5-49 employees and 50-99 employees ( MOIT, 2002).In LDCs, SMEs account for a significant share of production andemployment and are directly connected to poverty (one of thecharacteristics of LDCs) alleviation. They have become thevanguard of many countries’ private sector and contribute to thedevelopment of the local economies. However, for them to continuetheir efforts and remain competitive in this digital era, theyneed to acquire and utilize Internet-related technologies such asthose used for E-Commerce 1.1Background of the Study

E-commerce can be defined as any economic or business activitythat uses Information Communication Technology (ICT) basedapplications to enable the buying and selling of products andservices and to facilitate the transaction of business activitiesbetween and among businesses, individuals, governments or other

1

organizations (Fink & Disterer, 2006). This includes using ICTsto strengthen a company’s internal operations, such as logistics,procurement, human resource and contracts management, informationand data management, communication functions, and to facilitatethe flow of products between businesses and consumers, e.g.marketing, ordering, payment, delivery, and searching forsuppliers (McIvor & Humphreys, 2004).SMEs definition tends to vary across countries and in somecountries, the definition differs further between sectors. Numberof people employed and size of capital, sales, assets, etc. areused to classify enterprises into micro, small, and medium. TheTanzanian Ministry of Industry (MOI) classified SMEs based onlabor and investment costs criteria. Small and medium enterprisesare defined as those having 4-50 workers respectively. As to theceilings for investment costs, they are set at Tshs5 million andTshs10 million for small and medium enterprises respectively(Ministry of Industry and Trade, 2010)

Most of the international economies depend mainly on the role ofSMEs in supporting the national economy in different countries.SMEs contribute significantly to the economies of the countries,in case of Tanzania around 70% of all businesses are in SMEsector, and it is the main source of jobs and income forTanzanian people. This shows that SMEs account for a greaterproportion of economic activity (Economist Intelligence Unit,2009). In Tanzania, SMEs historically played a relativelysignificant role in the process of economic development.

The effective adoption of e-commerce offers a great opportunityto SMEs to gain greater global access while at the same timemanage to reduce transaction costs, provides substantialbenefits via improved efficiencies and raised revenues;facilitates access to potential customers and suppliers,productivity improvements, customization of products andservices and information exchange and management (UNCTAD, 2002).In Tanzania the usage of internet as the source of gettinginformation about firm’s goods and service has been progressslowly. In tourism sector things are different they are likely

2

to use internet more in their daily activities so as they canprovide information to their customers all over the world.According to WTO (2002) the Internet is revolutionizing thedistribution of tourism information and sales. An increasingproportion of Internet users are buying on–line and tourism willgain a larger and larger share of the online commerce market(Wang, & Cheung, 2004). However, the Small and Medium TouristEnterprises are facing some challenges in adoption of e-commerce. This study sought to explore the challenges faced bySMEs in the adoption of e-commerce in Tanzania, tours and travelagencies are a case study.

1.2 Statement of the study

This study aims to advance the understanding of e-commerceadoption from the inside of the organization, to unearth thesocial-technical issues that can explain the SME e-commerceadoption. In Tanzania context, the full potential of e-commerceadoption in the SMEs sector has not yet tapped due to theexistence of a number of constraints. This study aims to depictthe natural environment in which SMEs exist and how they solveissues regarding e-commerce and its development in the firm. Theemphasis is therefore to explore the internal and externalchallenges of SMEs on one hand and on the other, reflect on howthe phenomena of e-commerce has been understood and applied inbusiness context.

1.3 ObjectivesThe general objective of this study is to understand the challenges of SMEs in the adoption of e-commerce in Tanzania with the focus on the tour and travel agencies/companies

1.3.1 Specific objectives1. To determine internal/organization barriers in the adoption

of e-commerce2. To investigate external barriers in the adoption of e-

commerce3. To identify other challenges facing the industry

3

1.4 Research questionsQn 1: What is the nature and characteristics of e-commerce?There is a need to understand what e-commerce real is so as itcan be easily adopted into business, here the researcher need to know to what extent does the managers and other personnel understand e-commerce.Qn 2: What are the drawbacks in e-commerce adoption?There are a lot of factors which affect the adaptation of e-commerce in most SMEs in the LDCs, most research have been done in large organization and they have come up with various factors but here researcher will look on the small organizations and come up with their concrete point of viewQn 3: How can an organization determine the extent of e-commerce adoption?Here the researcher will look on other factors which interact in the adoption of e-commerce, the question tend to explore the knowledge of organization management in the external factors which can be among the reasons of their failure to adopt e-commerce effectivelyQn 4: What should be done to improve e-commerce adoption?This question tend to provide the way out to the SMEs by knowing that e-commerce is important into their business venture so to answer this question the organization can come with a clear way on how they can adopt e-commerce efficiently.

1.5 Significance of the studyThe study guides the adaptation of e-commerce in SMEs especially in the tourism industry in their daily operations with the intentof improving their business performance. SMEs may offer goods andservices of high quality, create new market and have competitive market in the current globalized market era. Therefore, findings in this study will contribute in provide new knowledge about SMEsand e-commerce in academic arena also provide the new way of doing business hence increase the performance and efficiency of SMEs.The result from this study will be beneficial to other coming researchers, policy makers, development agencies and entrepreneurs who will like to venture in the researched area

4

The study will be useful to those individuals who would like to adopt e-commerce into their business especially those whoare in SMEs sector as they will be aware of the challenges involved and to understand the possible approach to deal with those challenges hence adopt e-commerce efficiently.

1.6 Scope of the studyThis study will be conducted in Arusha.Arusha is among the countries large cities, it is located in the northern zone of Tanzania. Like any other cities, Arusha have people from all kinds of ethinic, religious and cultural backgrounds inhabit but since the present area of Arusha region used to be Maasai land, the Maasai are still the dominant community in the region.Their influence is reflected in the present names of towns, regional culture, cuisine, and geographical features. Arusha Region is a global tourist destination, home of Africa’s famous landscape and it is the main tourist hub in Tanzania hosting international diplomatic officers. It is the center of the northern Tanzania safari circuit with parks and natural attractions. Therefore with this business opportunities tour and travel agencies/companies enjoy the accessibility to a wide market and customer constration. In general terms, most of companies in tourism industry start business in or have a branch operating from Arusha. It is under this observation the researcher knows that the findings which will be obtained fropm tour and travel agencies/companies operating in Arusha will be the true representation of the industry in Tanzania.

CHAPTER TWO

LITERATURE REVIEW

2.1 Introduction5

The sluggish step of adopting e-commerce in SMEs sector has ledto a variety of studies. These studies have reported that SMEsare generally lagging behind to the adoption and usage ofecommerce. (Fillis et al. 2003] This studies has closely observethe adoption of e-commerce by SMEs and found that SMEs could gaincompetitive advantage through adopting e-commerce as it couldimprove their market performance by having better access to themarket. (Bolongkikit et al 2006). This have been found relevantin the tourism industry as they have been able to attract theircustomers all over the world by the click of the button. Apartfrom those advantages still the private sector who adopt e-commerce in most of the LCDs countries, have been facing withvarious problems such as lack of telecommunicationsinfrastructure, lack of qualified staff to develop and support e-commerce sites, lack of skills among consumers needed in order touse the Internet, lack of timely and reliable systems for thedelivery of physical goods, low bank account and credit cardpenetration, low income, and low computer and Internetpenetration (Kapurubandara M., 2009).The main purposes of this study are to investigate the challengesfaced by SMEs in the adoption of e-commerce in Tanzanian andto suggest some recommendations for applying e-commercesuccessfully. The work begins by examining the nature of SMEs ande-commerce followed by discussing the challenges to e-commerceadoption based on previous research.

2.1:2 Small and Medium Enterprises (SMEs)The SMEs nomenclature is used to mean small and mediumenterprises, this sector plays a major role in social economicdevelopment. SMEs mostly cover non-farm economic activitiesmainly manufacturing, mining, commerce and services. Small andMedium Enterprises (SMEs) have been defined differently, usingdifferent parameters in different countries. . A study done by USAID (1993) found over 50 definitions in 75different countries. However, the basis for categorization hasincluded: number of employees, capital investment, share capital,number of share holders, total assets turnover, market share,

6

geographical market coverage, organization complexity,composition of management and degree of formalization. This studyadopts the definition of SMEs as postulated by the SMEsDevelopment Policy of Tanzania (2002) using the size criteriondepending only on employment.

Table: Categories of SMEs in TanzaniaCategory Employees Capital Investment

in Machinery (Tshs.)Micro enterprise 1-4 Up to 5 mil.Small enterprise 5-49 Above 5 mil. to 200

mil.Medium enterprise 50-99 Above 200 mil. to

800mil.Large enterprise 100+ Above 800 mil.

Source: (URT, 2002) Small and medium Enterprises DevelopmentPolicy

The majority of SMEs falls under the informal sector, and theyare active both in rural and urban areas providing non-farmincome which increase income and create employment opportunities.According to the informal sector survey (1991) SMEs operating inthe informal sector alone consisted of more than 1.7 millionbusinesses engaging about 3 million persons that were about 20%of the Tanzania labour force. It is so hard to find crucial andreliable data rather than sketchy and unreliable but this showsthat SMEs sector plays a crucial role in the Tanzanian economy.In Tanzania tourism industry have contributed much in theeconomic growth through employment opportunities which areavailable together with raising foreign exchange capacity. Thisindustry has managed to formulate a number of private ownedbusiness which have been categorized as SMEs and here the studywill look on the tour and travel agencies/organization.

2.1:3 E-commerce

E-commerce simply means exchanging goods and services usingelectronic devices. It is possible for it to take place because

7

of computers and telecommunication technologies, ( Rwabutoga,2005). According to Laudon, & Laudon, (2003), categories of e-commerce as follows:

i) Business to Consumer (B2C): Electronic retailing ofproducts and services directly to individual consumers.

ii) Business to Business (B2B): Electronic sales of goods andservices among business

iii) Consumer to Consumer (C2C): Consumer selling goods andservices electronically to other consumer, Example e-bay

Although most commercial transaction still take place throughconventional channels but still there is rising number ofconsumers and business who use the internet for e-commerce. It isestimated that about 39% billion people use internet world widewhile only 16% are in Africa and in every 100 people in Tanzaniaonly 13.1 have the access in internet, (ITU, 2012). The internetis the market place where buyers and sellers interact; it may bedescribed as mail-order trading. Therefore, if internet is usedproperly it can help the growth of e-Commerce. In Tanzanianmarket e-commerce is not widely used but it is growing.

E-commerce has transformed some sectors of SMEs, most notably; thetourism and finance sectors are among the sectors which have been ableto develop successful stand-alone, online initiatives and integratede-commerce applications into traditional business processes.

2.1:4 Tourism industryTourism is currently one of the fastest gowning industries acrossthe world. It is one among rare industry, which earns foreignexchange without exporting its national wealth. Tourism is themain stay of economics of many countries and it has emerged as asingle largest net earner of foreign exchange. Tourism is rankedas one of the world’s largest industry, with a global GDP of 11%and also the largest on-line industry (Roger, 2002). The businesses that emerge through tourism industry such as tourand travel agency have managed to provide employmentopportunities and contribute in GDP worldwide. According to WTTC,

8

(2012) travel and tourism has generated 98,031,500 jobs directlyin 2011 that is 3.3% of total employment and this was forecastedto grow by 2.3% in2012 to 100,292,000 that is 3.4 totalemployment, also the direct contribution of travel and tourism toGDP in 2011 was USD 1,972.bn that is 2.8% of total GDP and it wasforecasted to rise by 2.8% of USD 2,028.2bn in 2012. Tourism likeother economic activities flourishes best when it fits into thecontext of general economic policies and programmes which aredesigned to lead the optimum growth of the economy of a countryas a whole. (Gupta and Bansal 2001). In Tanzania tour companies and travel agencies have been able toobtain a significant amount of new business through the Internet,much of which is organized through electronic mail. Tourcompanies use their websites as their primary channel forobtaining new customers or booking return visit. The mostsuccessful websites have generic, easy to find names and haveregistered with search engines (WTO, 2001).Tourism sector surveyreport, 2010 has reported that international tourism hasincreased by 9.6% to782,699mil in 2010 this is due to theincrease of use of internet hence the information about tourismattraction in Tanzania is available in the world. The developmentof tourism in Tanzania has been a success story and the industryhas contributed to the growth of the country’s Gross DomesticProduct (GDP), raised the foreign exchange earning capacity, andhas created employment opportunities.The tourism industry has undergone rapid growth over the lastseveral decades. This has mainly been due to the cross borderadvertisements due to the increased information disseminationabout the majestic sceneries throughout the world, with the EastAfrican region being no exception. In Tanzania the tour andtravel agencies/companies are registered by Tourism confederationof Tanzania which has ten member associations.

E-commerce is turning out to be a positive tool for the tourismindustry in Tanzania. Tourism is one industry which has made useof the internet to the core. The online tourism industry hasenormous potential, with many opportunities for the existing

9

companies who have vested interests in the tourism industry, ornew companies with an entrepreneurial idea (Forrester Research,2001). People are already making bookings over the Internet,planning their holidays, reading magazines and newspapers,exchanging information and doing a thousand things they neverthought they would be doing electronically (Wang & Cheung, 2004).Emerging Information Technology-based tools require re-engineering of business processes as well as the development ofstrategic vision and commitment to enable tourism enterprises anddestinations to develop competitiveness (Robinsol & Clarke-Hill,2007).

2.1:5 SMEs adoption of e-commerce

Electronic commerce has transformed some sectors of SMEs, mostnotably; the travel and finance sectors which have relativelymanaged to develop successful stand-alone, online initiatives andintegrated e-commerce applications into traditional businessprocesses (Bernadas & Verville, 2005). Online travel and financeenterprises succeeded because they based their products oninformation and services that were quickly available 24 hours aday seven days a week, as opposed to selling and shippingtangible goods. Thus, these firms avoided the logisticalchallenges that affected other types of fledgling e-commercecompanies trying to market, sell and move tangible goods(Forrester, 2001). The tourism business have continue to grow dueto the increase of sales which have been made easy through onlinemarketing, most of the travel and tour bookings are made online.According to Laudon and Traver (2004) most companies in the hoteland travel industry consider electronic mail to be very importantin gaining international exposure and connecting with potentialcustomers. This is particularly true for companies that eitherhave a website or are listed on hotel/tourism trade sites(Briggs, 2001).

10

Tourism industry is currently growing with the improvement of ICThence provide the information to the global society. Although themain product in this industry is physical service, but it isdominated and achieved though information services. E-commerceoffers tourism businesses the potential to make information andbooking facilities available to large number of tourists atrelatively low costs. It also provides a tool for communicationbetween tourism suppliers, intermediaries, as well as end-consumers (Reynolds, 2006). The Organization for Economic Co-operation Development (OECD, 2000) revealed that the advent ofInternet-based electronic commerce offers considerableopportunities for firms to expand their customer base enter newproduct markets and rationalize their business. World TourismOrganization (WTO, 2001) also indicated that e-business offersSMEs the opportunity to undertake their business in new and morecost-effective ways. Since the Internet is revolutionizing thedistribution of tourism information and sales is increasing bylooking on the proportion of Internet users who are buying-on-line. Therefore, in that case tourism will continue to gain alarger share of the online commerce market. Obviously, theInternet is having a major impact as a source of information fortourism (Briggs, 2001).

2.1:6 Challenges of e-commerce adoption

The adaptation of e-commerce has not been easy for SMEs worldwidethis is because Information system have been changing rapidly andalso the variation needs of local and global business in general.The situation is worse in the Less developed countries were bythe adaptation of e-commerce in SMEs is not successfully. Theyhave failed to capitalize the growth of Internet of expand theirbusiness internationally. The failure to adopt e-commerce is SMEhave been literatures where they list out various reasons such ascost of acquiring and operating, ICT, lack of e-commerceknowledge, poor management, lack of Government policy and theirreadiness in e-commerce use, cultural issues, legal issues,

11

financial barriers, inadequate skills and infrastructure relatedproblems (Ndyali, 2013 and Kabanda, 2011).These studies also offer the practical solution for organizationsto meet these challenges but still SMEs in developing countriesreveal a delay and some have failed to adopt e-commerce. Thisstudy will try to determine the challenges in Tanzania contextand the findings will be derived from the organization context sothey will put out what they face in the process of adopt e-commerce

2.2 Theoretical Review

Adoption of electronic commerce offers a great opportunity to SMEs togain greater global access and reduced transaction costs, providessubstantial benefits via improved efficiencies and raised revenues;facilitates access to potential customers and suppliers, productivityimprovements, customization of products and services and informationexchange and management (UNCTAD, 2002). However, usage patterns amongSMEs in Tanzania show a slow progression from the use of the Internetfor communication (primarily electronic mail) to use of the Internetfor research and information search, to the development of websiteswith static information about a firms goods or services (Macharia,2009). The slow progression of internet use and adaptation of e-commerce in SMEs it is due to various factors, according to TanzaniaSMEs development policy, (2002) SMEs sector has not been able todevelop due to various constraint which include unfavorable legal andregulatory framework, underdeveloped infrastructure, poor businessdevelopment services, limited access to finance and lack ofinformation., therefore by adopting Internet technologies thesedisadvantages may be reduced to minimal

12

In order for SMEs to adopt e-commerce successfully steps should betaken and various literatures have been outlined to understand thisphenomenon. There are a number of theoretical Models that seek toexplain electronic commerce adoption by SMEs. The literature reviewedin this study include the Change Agency Theory (Grandon & Pearson,2004), Strategic information systems (SIS) theory ( Clarke, 1996),Internet Adoption Model (Mehrtens, Cragg and Mills (2001) andElectronic Commerce Business Model (Timmers, 1998). Based on thetheories, the study developed a conceptual framework with independentvariables being internal/organizational challenges and externalchallenges against the dependent variable of adoption of e-commerce bySMEs. The framework of e-commerce adaptation challenges has beenproposed with particular attention to organizations in developingcountries. The framework is adopted from Molla (2002) and Molla andLicker (2002) where the discussed about the framework two-dimensional concept representing internal/organizational andexternal constructs.

Internal/Organizational challenges are operationalised using fourvariables; Lack of qualified staff, Lack of management support andTechnological resources. External challenges are; evaluated asSocial & Cultural Challenge, Economic Challenge and PoliticalChallenge. Figure 1 captures a visual impression of the frameworkfollowed by summary of the research variables.

Figure 1: Conceptual Framework of Barriers of adopting e-commerce13

Internal/organizational challenges

Technology InfrastructureTo have success in e-commerce it depend on how well the infrastructuretechnology available. Firstly, telecommunication infrastructures are requiredto connect various regions and parties within a country and across countries(Molla 2005). The low cost for these infrastructure and its accessibility willresult to the increase usage of e-commerce hence facilitate its growth. Theoverall technology infrastructure development of a country relies heavily onthe economic and geographical conditions of the country. Geographicalcondition of a country has an impact to any technology infrastructure

14

INTERNAL/ORGANIZATION CHALLENGES

EXTERNAL CHALLENGES

SMEs ADOPTATION OF E-COMMERCE

IN

TANZANIA

Lack of qualified staff

Lack of management support

Technological infrastructure

l

Social & Cultural Challenge

Economic Challenge

Political Challenge

External influence

development, it is also significant for effective communication and it canbring together the widely spread parties.Lack of qualified staffThe knowledge of the use and potential benefits of ICT can also hinder thegrowth of e-commerce (Molla 2005). Most of staffs who work in the SMEs havelimited understanding of ICT, even in the case of e-commerce they are onlyaware of limited e-commerce applications such as chat, email and browsingwebsites, as a result, many organizations have not considered exploiting thepotential of e-commerce to improve their business operations.

Lack of management supportThe management of the SMEs have not been ready to take an extra mile to makesure that the e-commerce is adopted effectively in their daily activities, thyare not ready to make changes in their business setups so as they can be ableto accommodate e-commerce.

External challengesThese are those factors which are not in the organization butthey are likely to be a reason to why adoption of e-commerce isnot successfully in SMEs. These challenges are; social andcultural challenge, economic challenge and political challenge

Political challengesThe political situation of any country is a key factor for e-commerce growth.In a country with an unstable political condition, it is not possible for thegovernment to take enough measure in the policy development and not likely togive enough attention on e-commerce development Government initiatives are important in the adoption of e-commerce l (Molla2005). These initiatives can be in terms of promotion of e-commerce usage andthe redness to adopt in their daily activities, provision of education andthe establishment of policy that will guide e-commerce have sound legal issueand property protections which will insure security and privacy.

Economic challengesEconomic condition is also widely recognized as a major driver for e-commerceadoption. In order to, adopt e-commerce effectively there is a need of soundeconomic condition because e-commerce relies on some technologyinfrastructures which are relatively expensive for many developing countries.The countries with unfavorable economic condition are not likely to beinvolved in e-commerce effectively.

Socio-cultural ChallengeThe adoption of e-commerce also depends on the cultural and social

15

environment. The level of education, the availability of IT skills, the levelof penetration of personal computers and telephone within the society affectthe growth of e-commerce. In most of developing countries they don’t engage inbuying and selling through internet because they feel insecure.

External Influence   The growth of e-commerce in a country is also influenced by other countries.For example, the reputation of credit card frauds in some countries causedblockages of several IP addresses by a number of commercial sites fromdifferent countries. This situation can cause those countries to be expelledfrom global business transactions and hence, limit the usefulness of e-commerce (Hidayat 2004).

2.1: Research Gap

E-commerce adoption has the potential to improve efficiency andproductivity in various economic sectors; therefore, it has receivedsignificant attention in many countries. However, there has been somedoubt about the relevance of e-commerce for less developing countries.Currently, there are still a limited number of studies on e-commerceadoption by developing countries. To address the gap in theliterature, this study aims to assess the adoption of e-commerce inTanzania, as an example of a developing country, and its relevance byassessing the adoption level and challenges encountered due to e-commerce adoption. Most researchers have uses exploratory researchmethods such as survey that lack depth and theoreticalfoundation. However, most of the studies on e-commerce adoptionevaluation and benefits realization that have been done recently havebeen carried out in large organizations (Lin, 2005). According toMacharia (2009), there is limited systematic research into thechallenges enterprises face in adopting e-commerce in developingcountries

CHAPTER THREE RESEARCHMETHODOLOGY

Introduction16

This chapter present the methodology used for data collection. Itdescribes the research design, research approach, targetpopulation, the sampling frame, sample and sampling procedures,administration of research instrument, data collection methodsand data analysis techniques.

3.1 RESEARCH DESIGN

Research deign is the plan that shows how you are going toapproach your study, it indicate the systematic arrangement andstrategies of investigation which will be used by the researcherin the process of data collection. Thus research design clearlystipulates methods used for data collection, the type of dataneeded and procedures for obtaining data including data analysis(Kothari 1992; Gall et, al; 1996)Gupta and colleagues, 2011; Kothari 2012) outline three majorresearch design. These designs are generally classified asexploratory research design, descriptive research design ordiagnostic research design and hypothesis-testing research designor experimental or casual research design. Gall and colleagues(1996) outline four major research designs. These designs aredescriptive, analytical, historical and experimental design Inorder to achieve the objectives of the study descriptive andanalytical research design will be adopted. Kothari (2004)defines descriptive research studies as studies concernithdescribing the characteristics of a particular individual or of agroup. The major purpose of descriptive research is descriptionof the state of affairs, as it exists at present. In analyticalresearch on the other hand the research has to use facts orinformation already available, and analyses these to makecritical evaluation of the material. In this study, bothdescriptive and analytical design will be used to describe aswell as to analyses the challenges faced by SMEs in the adoptionof e -commerce.Since the nature of the study need intensive description and in-depth contextual analysis of the similar situation inorganizations therefore case study will be used. Case study place

17

emphasis on a full contextual analysis of fewer events arconditions and interelations (Cooper and Schindler ,2003). It canuse matiple sources of data collection methods such as the use ofquestionaires, interviews, observationn and even documentaryreview. Case studies usually provide qualitative data rather thanquantitative data for analysis and interpritation (Sekaran, 2003)

3.2 Population Population is the totality of the objects under investigation.Dencombe (2007) defines a population frame as “an objective listof the population from which the researcher can make his or herselection.” A population frame must thus contain the recent listof all those who will be included in the target population.Target population is the study group selected to specificcharacteristics. This study targeted population includedprivate owned tourist and travel companies, since internet offerstourism business the potential opportunity to make informationand booking facilities available to large numbers of touristsworldwide at low cost and it also provides a tool for fastcommunication between tourism suppliers, intermediaries, as wellas end-consumers. The target populations was drawn from apopulation frame of Tour and Travel firms who are members ofTourism Confederation of Tanzania (TCT) that are in the categoryof SMEs.

3.3 Sampling frame

Sampling frame is a complete list of all objects/elements in thepopulation from which sample will be drawn(Adam J and Kamuzora2008). The advantage of drawing a sample from a population isthat is saves times and expenses of studying the entirepopulatioon (Pattorn ibid). Charles (1990) considers threefactors when selecting a sample size namely, availability of thepopulation, methods of sampling to be used and financingresources. Materns (1998) stress that another factor to beconsidered as equally important is time available for the

18

research. Taking into consideration of these factors and thenature of study 20 companies were selected. The sample wasobtained fom 10 members of Tourism Confederation of Tanzania(TCT) which is the umbrella organization representing the privatebusiness sector involved in travel and tourism industry inTanzania

3.4 Sample and sampling procedures

A sample is a small group of respondent drawn from a populationabout which the researcher is interested in getting informationand drowning conclusions. (Patton 1990). The advantage of drawinga sample from a population is that it saves time and expenses ofstudying the entire population (Patton ibid). Charles (1990)consider three factors when selecting a sample size such asavailability of the population, methods of sampling to be usedand financing resources. Martens (1998) stress that anotherfactor to be considered when sample is selected which is equallyimportant is time available for the study in hand. Thereforetaking into consideration all the factors and looking on thenature of study 20 companies will be selected. The sample wasobtained using the simple random sampling, stratified samplingand purposive sampling procedure. According to Mugenda and Mugenda (2003), simple random samplingis a probabilistic sampling technique which ensures each subject,object or respondents to have an equal chance of representation.A simple random sample is used when a population is heterogeneousmaking it the most appropriate sample to come up with the targetsample. Stratified random sampling is a sampling technique whereby thetotal population is divided into different groups or layersbefore selection of the representatives Adam and Kamuzora ,(2008).This ensure all members of the population are ensured tohave a chance of representation hence there is no possibility ofhaving one-sided sample as it can be in simple random sampling.Purposive sampling which is also known as judgmental sampling, inthis sampling procedure the researcher choose only those elements

19

which believes to deliver the required data. This method is lessexpensive and quick for selecting a sample but it has the majorweakness that is biasness.

3.5 Instruments

Instrument is the generic term that researchers use for ameasurement device (survey, test, questionnaire, etc.).Instruments fall into two broad categories, researcher-completedand subject-completed, distinguished by those instruments thatresearchers administer versus those that are completed byparticipants. Researchers chose which type of instrument, orinstruments, to use based on the research question. Examples arelisted below:

Researcher-completed Instruments Subject-completed InstrumentsRating scales QuestionnairesInterview schedules/guides Self-checklistsTally sheets Attitude scalesFlowcharts Personality inventoriesPerformance checklists Achievement/aptitude testsTime-and-motion logs Projective devicesObservation forms Sociometric devices

The instrument incorporated in this study is Likert scales whichmeasure the perception, attitude, values and behavior of thegroup.

3.6 Data collection Procedure

The study employed several data collection methods. Interviews,questionnaires and documentary review were used. Gall andcolleagues (1996) emphasize on the fact that using a combinationof data collection methods should be in a way that no singlemethod is necessarily superior to the other.

20

3.6:1 InterviewsAccording to Borg (1987), an interview enables the researcher toask follow up question and thus, obtain more information withgreater clarity and even supplementary information. The choice ofinterviews as a method of data collection it is based on itsstrength. Interview always produce more satisfactory results thanquestionnaires, they provide the room for clarification if aninterviewee does not understand the question. This makes aninterviewee to respond correctly instead of giving false answer.Interview can be divided into three categories namely,structured, semi-structured and unstructured (Gall, et.a;2003).This study will employ semi-structured type of interview.Semi-structured interviews are guided conversation where broadquestions are asked, which do not constrain the conversation, andnew questions are allowed to arise as a result of the discussion.Interview will be used to find information from the companypersonnel regarding their knowledge, challenges and generalinformation about the adaptation of e-commerce into their line ofwork.

3.6:2 QuestionnairesA questionnaire is a form containing a set of questions,especially addressed to a statistically significant number ofsubjects as a way of gathering information for a survey.Questionnaires, incorporating both open-ended and closed-endedquestions items were used to gather the study’s data. Kothari(2004) asserts that use of questionnaires is cost effective andefficient. It covers a large number of participants who arewidely spread geographically, and it is also free from theinterviewer’s bias. Participants has enough time to give wellthought responses and for those who are not easily approachedthey could fill them during free times or when workloads aremanageable, therefore this method can be conveniently.The questionnaires will be self-administered to cover 20 tour andtravel companies since all the above establishment make the useof e-commerce in their daily operations.

21

3.7 Data AnalysisThe use of statistical data presentation such as charts, graphsand tables will be used. This will help a researcher to analysesdata and interpret the numerical information so as to reach thedesired conclusion. Both qualitative and quantitative techniquesof data analysis will be used so as to help a researcher reachinto generalization regarding the nature, occurrence and meaningof the study.

22

23

24