studying the feasibility implementing e-commerce in...

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International Research Journal of Management Sciences. Vol., 3 (6), 263-269, 2015

Available online at http://www.irjmsjournal.com

ISSN 2147-964x ©2015

Studying the Feasibility Implementing E-commerce in

Selected Commercial Institution

Foad Makvandi

1*, Mahjabin Akbarzadeh Zangeneh

2, Mohamad Amin Izadjoo

2

1Department of Management, Science and Research Branch, Islamic Azad University, Khouzestan, Iran

2Ms Students in EMBA, Science and Research Branch, Islamic Azad University, Khouzestan, Iran

*Corresponding Author: Foad Makvandi

ABSTRACT: Internet has provided a radical ambience for business so that internet purchase is increasingly growing.

The trend that one has verified in Electronic Commerce, assuming the internet as a privileged way for the

implementation of inter-organizational communication channels, and also the major development verified in the intra-

organizational technological infrastructures (intranets and extranets), have given else to complex commercial

partnerships. This complexity has had an enormous impact on what regards internal control systems and auditing

practices. An internal control system is composed by a set of control mechanisms thought of according to the risk

management connected to business’ processes. These mechanisms play an important role in assuring that electronic

commercial transactions are trustful and, so, enabling their increase. Khan and Mahapatra remarked that technology

plays a vital role in improving the quality of services provided by the business units. One of the technologies which

really brought information revolution in the society is Internet Technology and is rightly regarded as the third wave of

revolution after agricultural and industrial revolution. The cutting edge for business today is e-Commerce. The effects

of e-commerce are already appearing in all areas of business, from customer service to new product design. As a

descriptive survey – type, present study plans to conduct a feasibility study on establishing e-commerce in selected

commercial establishments, to measure its aspects, to determine the gap between status quo and desired status and to

provide improvement guidelines. To this end, a 22-item questionnaire in three aspects is devised and company’s experts

are asked in this regard.

Keywords: E-commerce, Internal control, Business processes, Electronic commercial transaction.

INTRODUCTION

One of the current applications in virtual space is e-commerce which has caused a remarkable transformation in

business and customer relations and has a major share in commercial interactions (Ching & Ellis, 2004). Establishing e-

government and e-commerce is derived from IT that has created a profound transformation in communications and

information transfer process (Mirabi & Saeedi, 2003). ITC which is also called information revolution has a huge share

in development or backwardness of organizations and countries and it now is covering all human social and individual

aspects (Jeon et al., 2006). E-commerce is a manifestation of ITC revolution in economy. It is rapidly growing due to its

huge benefits and interests (Turban, 2002). A well – admired definition on e-commerce is “to share business, to keep

business relations and to conduct business transactions by using telecommunication networks. Such conditions have

facilitated trades that have enhanced competition among organizations (Alzougool & Kurnia, 2010). Undoubtedly,

utilizing IT is a necessary link to improve commercial efficiency in economy of organizations. To facilitate trading, one

way is to use e-commerce and paperless techniques as one the most important features of e-commerce to facilitate

activities and to mitigate commercial costs. Businesses are increasingly using the Internet for commercial activities. The

ubiquitous nature of the Internet and its wide global access has made it an extremely effective mode of communication

between businesses and customers. Thompson introduced that the growth of Internet technology has enormous potential

Intl. Res. J. Manag. Sci. Vol., 3 (6), 263-269, 2015

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as it reduces the costs of product and service delivery and extends geographical boundaries in bringing buyers and

sellers together (Salehi, 2013).

Economic development and very rapid changes especially in technology field are seen as two main features of

current age that have challenged organizations and nations. Undoubtedly, ignoring such changes would lead into

backwardness of such organizations and nations (Jafarnejad & Sajadinia, 2009). Today, attendance in global markets by

efficient and successful methods which draw a picture for nations’ economic competency is a necessity to adapt with

existing international system due to economic and industrial accomplishments (Kashfibonab, 2010). The

competitiveness, dynamism and complexity of the new digital market have led organizations to guide their businesses

in a business guided process perspective. This trend has partially created new demands in the management of the

information systems control, which support the business processes (Barratt & Karsten, 2002).

The e-commerce has profoundly changed the market models, leading to the adoption of new rules and to the

change in trust from one that was based on people to one that is now based on technology. This change of pattern

requires some changes in the traditional control mechanisms (confidentiality, integrity and availability) to a public

network with the Internet characteristics.

E-COMMERCE

E-commerce is an aspect of e-business. In past decades, business and money exchange have highly advanced so

that high volumes of exchanges are no longer face-to-face and are conducted by other ways including telephone, post or

credit cards. There also other methods for payments such as e-checks and smart credit cards. They have not only led

into many transformations in purchase process, but also they have facilitated the entrance of companies into money

generation process which was traditionally controlled by governments (Maleki & Akbari, 2010). Today, e-commerce is

something beyond online buying and selling for many companies. E-commerce is changing the form of competition, the

velocity of activities, the flow of interactions, products and payments by customers to companies and by companies to

suppliers. In this paper we shall consider that e-commerce consists of the act of rendering effective a commercial

transaction, one that links two entities (customer and supplier), using the Internet as a technological platform to

establish the information and communication channel between those two entities. An electronic commercial transaction

has the same significance as the traditional commercial transaction, consisting of the satisfaction of a set of needs in

exchange of equal value (Elmazi et al, 2010), with the difference of using new communication and information

technologies to make itself effective.

Japanese Industry and Trade Ministry has provided its own definition: “e-commerce which was limited to a certain

number of companies in the past is not entering a new arena in which many consumers attend in the network.

Additionally, its content has gone beyond the scope of data exchanges on customization and general activities such as

advertising, negotiations, contracts and account settlements (Fathhian & Mahdavainoor, 2012). E-commerce involves

all process of development, marketing, sales, delivery, services and online payment for exchanged goods and services

in networked markets and global customers and enjoys global network backup of trading partners (Feather, 1996). It

involves many activities including online exchange of goods and services, immediate delivery of digital materials, sums

electronic transfer, shares electronic transfer, e-bills, commercial plans, joint designing and engineering, governmental

purchases, direct marketing and after – sales services.

In a scientific definition, e-commerce is goods, services and information sales, buying and exchange through

computerized networks including Internet or intranet. The main basis for such trading is to process and transfer online

data including texts, audios and videos. E-commerce involves different activities including immediate delivery of

digital materials, sums electronic transfer, shares electronic transfer, e-bills, commercial plans, joint designing and

engineering, direct marketing and after – sales services (Hanafizadeh & Rezaei, 2010). E-commerce means to conduct

online processes aimed at exchanging money, goods, service and information (Al-Hudhaif &.Alkubeyyer, 2011). The

main advantages of e-commerce include facilitating trading processes, eliminating unnecessary trading processes in

doing commercial affairs, mitigating the costs through improving coordination, mitigating administrative costs

especially the costs of correspondences, improving market accessibility, increasing diversity for customers and time –

saving due to high velocity of information exchanges (Torabi & Zamani, 2013).

E-commerce is now in the front – line of transformations which change commercial activities modus operandi and

is called as 21st century industrial revolution highly expanded by Internet emergence. In e-commerce, information and

services are traded or exchanged by computerized networks. Selling and buying can be in macro or minor levels,

physical or unphysical like books for software, providing buyers with different services such as medical or legal

consultancies, tenders, bids, information trading among offices, individuals or organizations (Samizadeh &

Chahrsooghi, 2008).

Types of e-commerce models

One of the aspects of such transformation is deep changes in economic relations among people, companies and

governments. Commercial exchanges among people with each other, companies with each other, people e with

companies and governments are rapidly leaving their traditional mood based on exchanging paper documents toward

exchanged by using electronic information systems (Khani, 2007).


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Waghmare has defined the following types of e-commerce:

a) B2B E-Commerce: Companies doing business with each other such as manufacturers selling to distributors

and wholesalers selling to retailers. Pricing is based on quantity of order and is often negotiable.

b) B2C E-Commerce: Businesses selling to the general public typically through cataloes utilizing shopping cart

software. By dollar volume, B2B takes the prize, however B2C is really what the average Joe has in mind

with regards to ecommerce as a whole. for example indiatimes.com.

c) C2C E-Commerce: There are many sites offering free classifieds, auctions, and forums where individuals can

buy and sell thanks to online payment systems like PayPal where people can send and receive money online

with ease. eBay's auction service is a great example of where customer-to customer transactions take place

every day.

d) Others: G2G (Government – to - Government), G2E (Government –to -Employee), G2B (Government -to-

Business), B2G (Business –to -Government).

Infrastructure

Numerous studies have examined needed infrastructures for e-commerce that each one reveals one aspect of its

needed infrastructures. One can integrate them by a scrutinized and precise investigation and to draw a relatively

comprehensive model on e-commerce infrastructures.

Infrastructure of backup entities and the quality of their services are determining indicators in national economy

success. The existence of proper and efficient supportive entities of B2b and B2C is vital to establish and expand

commercial exchanges (O’Brien, 2008). As a result, proper and efficient structure of supportive entities is necessary.

The quality and easy access to supportive entities such as banking system, burse, sock exchange, customers, goods and

service providers, hardware/software manufacturers, website designers and other organs, networks and commercial

firms can be very important factors and infrastructures in e-commerce growth and development (Paryab, 2007). If it is

going to follow commerce electronically, all trading steps from marketing, advertising, ordering, L/C opening, sums

transfer, insurance and transportation to releasing the goods should be conducted by electronic facilities. Therefore,

establishing infrastructure of supportive entity is very important.

E-commerce growth and development in a country depends on technical readiness indicators. Needed technical,

telecommunication and communicational infrastructures to develop e-commerce include ITC networks, technology

penetration rate and technology accessibility costs especially the cost and quality of Internet access. To use data, audio,

video and other information, e-commerce needs hardware, software and communication networks with desired

performance and quality. To the same reason, such factors as developing information infrastructures such as phone lines

and data services, communicational infrastructures like home and commercial Internet networks as well as

computerized infrastructures, computer penetration ration and IT investment are too vital and are considered as pillars

of e-commerce process in our country (Al-Abdallah, 2013).

Cultural and social culture plays a vital role in establishing and growing e-commerce. Overall, social structure

highly impacts on business decisions such as business cost, selecting the suppliers and creating long term relations with

suppliers. Cultural elements like language, educational level, lifestyle and value systems impact on technological

innovations and entrepreneurship morale. The level of expertise in a country on technology achieves through such cases

as the familiarity of Internet users with technology, training and experience and is an important and influential factor on

e-commerce growth. For instance, a country may be high populated while low number of individuals has necessary

skills to use e-commerce in home or workplace. In progressed internal markets (technologically), companies have very

good opportunities to modify and change current products and services and to develop new ones. For instance, the

existence of very developed market of software in the United States highly helped companies in designing new software

products related to Internet commerce. The important point is that based on conducted studies, high percentage of

people prefer to navigate in websites with their native language rather than English. Therefore, language still exists as

social and cultural barrier in e-commerce growth (Moayed, 2010).

As we know, commercial laws are unique to where people live while by establishing e-commerce, geographical

borders are blurred and to execute and develop e-commerce, it needs legal frameworks and laws and as well as strong

rules to respond commercial problems by removing the borders (Sharma, 2002) since such issues as copyright,

intellectual property, protecting databases, patents and using trademarks need lawmaking and to determine the scope of

rights and assignments. Obviously, governmental laws and policies can be organized to expand and support industry,

technology and ITC services and to develop technical and economic environment. Regulation, policymaking, rules and

deregulation can transform financial, commercial and technological sections and expand e-commerce in national and

international exchange environments.

Literature review

There have been a number of studies concentrating on aspects of the technology adoption; however, there are few

studying the adoption and utilization of e- commerce in SMEs (MacGregor &Vrazalic, 2008). Reviewing the literature,

it can been seen that the researchers have general tendency to divide the factors that affect the adoption of e-commerce

by SMEs into three main groups: organizational factors, technological factors and external factors (Hafeez et al., 2010).


266

MacGregor and Vrazalic conducted study in Australia to identify the factors that affect the adoption of e-

commerce by using quantitative approach and dividing the target respondents to adopters and non-adopters. The

findings reveal that organizational factors are more important than technological factors. Organizational factors for this

study were: suitability of e-commerce, way of doing business, and e-commerce relative advantages. In perfect

agreement with the findings of MacGregeor and Vrazalic (Saeed Zahedi et al., 2013).

Sam and Hock-Eam find that external factors such as government support and expertise, organizational factors

like Chief Executive Officer (CEO) characteristic which were age, education, and frequent use of computer were

effective factors for e-commerce adoption. Elmazi, Vukaj, Gega, and Elmazi, find that the organizational factors such

as size, top management support for e- commerce, IT emphasis, existence of IT department were significantly effective

for SMEs adoption of e-commerce and the same results found for the technology factors (perceived benefits, perceived

compatibility) and the environmental factors (industry competitiveness). Differently, Hafeez, Keoy, Zairi, Hanneman

and Koh, found technological factors to be more effective rather than organizational factors (Azizi & Eshagh, 2012).

In Saudi Arabi a, Al -Hudhaif and Alkubeyyer found that the first step in adoption of e- commerce is heavily

dependent on external factors mainly factors related to market forces (customers and partners e-readiness), the

supporting industries e-readiness, and the effect of government e-readiness. The study reveals that for advance adoption

of e-commerce the main factors and determinants are internal factors such as technology resources related factors,

managerial factors, organizational factors. While the only external factors that still has a considerable influential power

in this level of adoption is the market forces’ e-readiness. Similar to this approach, Alzougool and Kurnia found that

organizational readiness (perception of technology, perceived organization resources, perceived governance ) industrial

readiness (perceived industry standards, perceived trading partners readiness, perceived level of trust among industry

players) national readiness (perceived government support, perceived supporting services) environmental pressure

(perceived internal pressure, perceived external pressure) affect the adoption of e-commerce by SMEs.

Saffu, Walker and Mazurek found perceived usefulness, ease of use, readiness and compatibility, and external

pressure respectively in order of importance were the factors that affect the adoption of e-commerce. The findings of

Irish study by Ramsey, Ibbotson, and Mccole, reveal that there are seven factors that can induce companies in Ireland to

adopt the e-commerce. These factors are: e- commerce capability, willingness to change/rate of response to new

technologies, technological opportunity recognition, customer orientation, sensitivity to competitive/customer

environment, perception of technology feasibility, and e-skills development mechanisms.

Similarly to shah Alam et al. found that relative advantages have the strongest impact on the adoption of SMEs in

Canada followed by competition’s pressure and management support respectively and differently from the finding of

Al-weshah and Al-Zubi found that business partner along with compatibility and complexity, government support,

were not significant for the adoption of SMEs. In contrast with Ifinedo found government support along with other

factors such as person al traits dimension, enterprise readiness, competency of staff and organization, technology,

business process, and market forces, are factors that can affect the smooth implementation of e-commerce (Teo et al.,

1998).

Interestingly, a study by Luqman using structural equation modeling approach reveals that compatibility is the

only construct that can affect the adoption of e-business and surprisingly, relative advantage along with trial ability

were found to have positive but not statistically significant relationship. Complexity and observability were found to

have negative and statistically insignificant relationship with the adoption of e-business. Cohen and Kallirroi found that

the success factors of E-commerce are proper selection of the planning and development team, e-commerce application

development by experienced personal, alignment with corporate strategy and top management support. O

Literature on web theory is scant because it is a relatively a new area and the technologists at the forefront of Web

design are typically not sufficiently academically inclined to formulate the relevant theories (Rowley, 2001). While

previous research has examined Internet usage (Martin et al., 2003), commercial websites, website design (Day, 1997),

website effectiveness from the consumers’ perspective (Bell & Tang, 1998), pricing paid placements on search engine

(Agrawal et al., 2012), and bidding (Fain & Pedersen, 2006).

This form of online advertising emerged (Gonzalez & Palacios, 2004) rapidly has become the central business

model of the major search engines (Chang & Wu, 2011), and is one of the most rapidly growing segments of the online

marketing area. Search engine has become a necessity for people to surf the web (Bell & Tang, 1998). It is a simple

user interface is designed. Any user simply fills in several fields and the system makes the decision about what to find,

where to search and how to look at. The threshold of search is lowered. SEM is an internet marketing model aiming at

promoting the ranking of websites in the search engine's search results page which can make a web site introduce into

more web users and website traffic (Kesharwani & Tiwari, 2011).

HO et al (2011) explained about exploration of SEO technology applied in internet marketing, Kesharwani and

Tiwari (Khan & Mahapatra, 2009) studied the importance of website quality towards the success or failure of any e-

vendor.Khan and Mahapatra studied that the quality of internet banking (i-banking) services in India from customer’s

perspective.Malhotra and Singh carried out a research to find the i-banking adoption by the banks in India (Ho et al.,

2011). Thus, it is high time that India should act fast and decisively in order to use the growing electronic trade to our

advantage.


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METHODOLOGY

Since the findings of present research can be used in selected commercial establishments, it is an applied research

in terms of purpose and is a field study since the author is an employee in selected commercial establishments and has

gathered the information though elites by a questionnaire inside the organization. It is also a case study since it is

conducted in selected commercial establishments.

Table 1. Enhancement of researchers analysis is pro-vided.

Integration Separation

Brand

- Cross-Selling

- Brand recognition

- Web influenced consumer

commerce

- Can target different, "net-

friendly" products.

- Can target different

customer segments.

Management

- Alignment of strategic

objectives

- Sharing of information

- Organisational focus

- Flexibility (to innovate)

- Avoid cross-contamination

of business models.

Operations

- Purchasing leverage

- Exploits existing direct

marketing infrastructures

and distribution

efficiencies

Opportunity to build sepa-rate, state-

of-the-art custom-ised systems to

support the client experience.

Equity

- Parent captures entire

value

- Less fear of

"cannibalisation

Access to venture funding

Attract and retain talented

management

Research questions

Does selected commercial establishments enjoy proper potential capacities in terms of necessary infrastructures to

establish e-commerce?

Does selected commercial establishments financial system adapt to e-commerce standard?

Does selected commercial establishments enjoy proper situation in terms of hardware/software?

Can exchange cost decrease in selected commercial establishments by establishing e-commerce?

RESULTS

Does in selected commercial establishments enjoy proper situation in terms of hardware/software?

H0: hardware/software infrastructure average ≤ 3

H1: hardware/software infrastructure average ≥ 3

Concerning significance level and T-Value, the organization does not enjoy proper average in terms of

hardware/software infrastructure.

Table 2. Concerning significance level and T-Value in terms of hardware/software infrastructure.

One-Sample Test

Test Value = 3

t df Sig. (2-

tailed)

Mean

Difference

95% Confidence Interval of the

Difference

Lower Upper

Software -9.765 24 0.000 -0.50000 -0.6119 -0.3001

Can exchange cost decrease in selected commercial establishments by establishing e-commerce?

H0: exchange costs average ≤ 3

H1: exchange costs average ≥ 3


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Concerning significance level and T-Value, the organization does not enjoy proper average in terms of exchange costs.

Table 3. Concerning significance level and T-Value in terms of exchange costs.

One-Sample Test

Test Value = 3

t df Sig. (2-

tailed)

Mean

Difference


Difference

Lower Upper

Cost 0.367 24 0.784 0.02667 -0.1872 0.4532

Does in selected commercial establishments system adapt to e-commerce standard?

H0: financial system average ≤ 3

H1: financial system average ≥ 3

Concerning significance level and T-Value, the organization does not enjoy proper average in terms of financial system.

Table 4. Concerning significance level and T-Value in terms of financial system.

One-Sample Test

Test Value = 3

T df Sig. (2-

tailed)

Mean

Difference


Difference

Lower Upper

Financial

2.1 24 0.025 0.32000 0.0851 0.781

CONCLUSION

Apart from all advantages of e-commerce establishment, necessary grounds have not yet been built in some fields

like legal, cultural and social infrastructures. In present paper, we had the chance to address e-business concepts in

selected commercial establishments. E-business and e-commerce are the objective symbols of ITC revolution in

economy. Due to rapid expansion of e-business and e-commerce and inevitably in using them and the roles of modern

technologies in keeping, enforcing and developing firms’ competition status and savings from utilizing them, it is

necessary to use them.

Lack of trading culture expansion has made it necessary for personnel to get familiar with new technologies. To

execute e-commerce system and considering the lack of technology, using e-commerce service providers is the best

method. Studying security methods in e-commerce system, legal status of electronic signature, e-commerce laws and

regulation and its application in domestic industries can be issues for further studies in this field.

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