e-commerce strategies_the relationship between e-commerce & competitiveness
DESCRIPTION
This research paper sets out to analyze the degree to which e-commerce can be embraced to achieve competitive advantages. It analyzes how e-commerce technologies have impacted on business performance in Zimbabwe. The research determines the relationship between e-commerce and business profitability.TRANSCRIPT
i
DEDICATION
To the Lord Jesus Christ who was with me through thick and thin and to my wife
Zoro whose unfailing love and support carried me throughout the research work.
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DECLARATION
I, Shepherd Magombedze, do hereby declare that this dissertation is the result of my
own investigation and research, except to the extent indicated in the
Acknowledgements, References and by comments included in the body of the
report, and that it has not been submitted in part or in full for any other degree to any
other university.
_________________ __/__/__ Student Signature Date
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ACKNOWLEDGEMENTS
Such an involving and daunting task as this work is only possible with the sacrifices
of others. The input and assistance of many enabled this work to be achievable.
However, it is not possible to individually thank all who went out of their way to assist
in this work. I would like to however extend my profound gratitude to all who made
this work a success.
I make special mention of my wife who went out of her way to see me through the
project and had to put up with late nights away from home. I also would like to thank
all my family members for their longsuffering and great understanding in the
moments I became scarce. Special mention goes to Mr Mutowo for his criticisms
and contributions which chiselled out chaff and left behind this work as it is today.
Mention will also be made of Percy and Laurence who helped with the revision of
this study. The constant company of fellow MBA students also provided a warm and
comfortable research environment. I will not leave out all the Victoria Foods
management and staff who went out of their way to assist me in this research.
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ABSTRACT
The use of electronic commerce (e-commerce) globally in businesses has
increasingly become a necessary component of business. Although e-commerce is
not a new concept in Zimbabwe, the milling industry has not fully implemented it. E-
commerce strategies that are fully integrated into the business’ strategy can be
utilised to build sustainable competitive advantage.
Through research surveys employing questionnaires and interviews, this research
study uses the case of Victoria Foods to analyse the degree to which the company
has embraced e-commerce and how this technology has impacted on business
performance. The main objectives of this research were to investigate e-commerce
awareness in the company, to investigate the company’s utilisation of e-commerce
technologies, to identify major challenges in implementing e-commerce, and to
determine if there is a relationship between e-commerce and profitability.
The research employed ideographic methods by using surveys and structured
interviews to source responses. Judgemental samples coupled with stratification
procedures were used to select sample data. A total of 50 questionnaires were
issued out to different levels of Victoria Foods’ computer system users. Descriptive
and inferential statistical techniques were used for data analysis.
Despite the company’s utilisation of different types of e-commerce, it has been
established that profitability was minimally achieved from these implementations.
The research found out that the above finding was as such due to lack of
commitment by the company’s management to e-commerce. Despite the above
finding, a strong relationship between the level of utilisation of e-commerce and
business profitability was established. Victoria Foods therefore needs to provide e-
commerce training to management and staff so as to be able to reap its benefits.
The organisation also needs to develop e-commerce strategies which will integrate
e-commerce with the business processes specifically the Value Chain process.
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TABLE OF CONTENTS
CHAPTER ONE ....................................................................................................................... 1
INTRODUCTION AND BACKGROUND ............................................................................. 1
1.0 INTRODUCTION AND BACKGROUND ....................................................................... 1
1.1 INTRODUCTION .............................................................................................................. 1
1.1.1 BACKGROUND ......................................................................................................... 2
1.1.2 VICTORIA FOODS .................................................................................................... 2
1.1.3. PRODUCT AND SERVICE MARKET..................................................................... 3
1.1.4 EXTERNAL ENVIRONMENT .................................................................................. 4
1.1.4.1 Political Factors .................................................................................................... 5
1.1.4.2 Economic Factors.................................................................................................. 5
1.1.4.3 Social Factors........................................................................................................ 6
1.1.4.4 Technological Factors........................................................................................... 6
1.1.4.5 Legal Factors......................................................................................................... 7
1.1.5 SWOT ANALYSIS OF THE COMPANY.................................................................. 7
1.1.5.1 Strengths and Weaknesses of the Company ......................................................... 8
1.1.5.2 Opportunities and Threats of the Company........................................................ 10
1.1.5.3 Summary of the SWOT Analysis ....................................................................... 12
1.2 STATEMENT OF THE PROBLEM................................................................................ 13
1.3 RESEARCH OBJECTIVES ............................................................................................. 13
1.4 RESEARCH QUESTIONS .............................................................................................. 13
1.5 RESEARCH HYPOTHESIS ............................................................................................ 14
1.6 RESEARCH JUSTIFICATION........................................................................................ 14
1.7 SCOPE OF RESEARCH.................................................................................................. 15
1.8 STRUCTURE OF THE DISSERTATION....................................................................... 15
1.9 CONCLUSION................................................................................................................. 16
CHAPTER TWO .................................................................................................................... 17
LITERATURE REVIEW ....................................................................................................... 17
2.0 LITERATURE REVIEW ................................................................................................. 17
2.1 INTRODUCTION ............................................................................................................ 17
2.2 THE E-COMMERCE CONCEPT.................................................................................... 17
2.2.1 THE DEFINITION OF E-COMMERCE .................................................................. 17
2.2.2 B2B AND B2C E-COMMERCE............................................................................... 18
2.2.3 THE BENEFITS OF E-COMMERCE ...................................................................... 19
2.2.4 MODELS OF E-COMMERCE ................................................................................. 20
2.2.4.1 Electronic Areas Model ...................................................................................... 21
2.2.4.2 The Hierarchical Framework of E-commerce .................................................... 22
2.2.4.3 The Electronic Commerce Value Grid ............................................................... 23
2.2.4.4 Discussion of the various e-commerce models................................................... 25
2.2.5 HOW THE INTERNET AFFECTS E-COMMERCE............................................... 26
2.2.5.1 Positive Effects to a Business ............................................................................. 26
2.2.5.2 Negative Effects to a Business............................................................................ 28
2.2.5.3 E-Commerce effects on Markets ........................................................................ 29
E-market Commodities ................................................................................................... 30
2.3.5.4 Five forces analysis of the Internet’s Impact on Business.................................. 30
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2.2.6 INHIBITORS OF E-COMMERCE........................................................................... 32
2.2.7 DRIVING FORCES OF E-COMMERCE................................................................. 33
2.3 THE CONCEPT OF SUSTAINABLE COMPETITIVE ADVANTAGE ....................... 34
2.3.1THE DEFINITION OF SUSTAINABLE COMPETITIVE ADVANTAGE............. 34
2.3.2 PORTER’S THREE GENERIC STRATEGIES ....................................................... 35
2.3.2.1 Overall Cost Leadership Strategy ....................................................................... 36
2.3.2.2 Differentiation Strategy ...................................................................................... 37
2.3.2.3 Focus Strategy..................................................................................................... 38
2.3.2.4 An Evaluation of Porter’s Generic Strategies..................................................... 39
2.3.3 THE RESOURCE BASED VIEW OF THE FIRM................................................... 40
2.3.4 E-COMMERCE AND COMPETITIVE ADVANTAGE ......................................... 42
2.3.4.1 Introduction......................................................................................................... 42
2.3.4.2 E-commerce’s influence on Operational Effectiveness ...................................... 43
2.3.4.3 E-commerce’s influence on Strategic Positioning.............................................. 44
2.3.4.4 Achieving competitive advantage through e-commerce strategies .................... 45
2.4 THE E-COMMERCE VALUE CHAIN FRAMEWORK................................................ 46
2.4.1 THE E-COMMERCE VALUE CHAIN.................................................................... 46
2.4.2 EXTERNAL, CUSTOMER-SUPPLIER LIFE CYCLE ........................................... 48
2.4.3 INTERGRATING INTERNAL AND EXTERNAL PERSPECTIVES.................... 49
2.4.4 APPLYING THE E-COMMERCE VALUE GRID.................................................. 50
2.5 CONCLUSION................................................................................................................. 50
CHAPTER 3 ........................................................................................................................... 52
RESEARCH METHODOLOGY............................................................................................ 52
3.0 RESEARCH METHODOLOGY...................................................................................... 52
3.1 INTRODUCTION ............................................................................................................ 52
3.2 RESEARCH DESIGN...................................................................................................... 52
3.2.1 RESEARCH PHILOSOPHY......................................................................................... 52
Deductive and Inductive Reasoning ................................................................................... 52
Realism vs. Nominalism ..................................................................................................... 54
Epistemology ...................................................................................................................... 54
Nomothetic vs. Ideographic Methodologies ....................................................................... 55
3.2.2 RESEARCH STRATEGY......................................................................................... 56
3.2.3 POPULATION AND SAMPLING TECHNIQUES ................................................. 57
Sampling Procedures ...................................................................................................... 57
3.2.4 DATA COLLECTION METHODS.......................................................................... 59
3.2.4.1 Observation ......................................................................................................... 59
3.2.4.2 Interview Methods .............................................................................................. 60
3.2.4.3 Survey ................................................................................................................. 61
3.2.4.4 Case Study .......................................................................................................... 63
3.2.4.5 Document Review............................................................................................... 65
3.2.4.5 Data Analysis ...................................................................................................... 65
3.3 RESEARCH PROCEDURE............................................................................................. 67
3.4 RESEARCH LIMITATIONS........................................................................................... 67
CHAPTER 4 ........................................................................................................................... 69
RESULTS AND DISCUSSION............................................................................................. 69
4.0 RESULTS AND DISCUSSION....................................................................................... 69
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4.1 INTRODUCTION ............................................................................................................ 69
4.2 RESPONSE RATE ........................................................................................................... 69
4.3 COMPOSITION OF E-COMMERCE USAGE ACROSS THE COMPANY................. 70
4.4 E-COMMERCE UTILISATION...................................................................................... 71
4.5 E-COMMERCE STRATEGY EXISTENCE AND LEVEL OF IMPLEMENTATION. 75
4.6 E-COMMERCE CONTRIBUTION TO BUSINESS PERFOMANCE........................... 76
4.6.1 Level of Integration.................................................................................................... 76
4.6.2 Contribution to Business Profitability ....................................................................... 77
4.7 BARRIERS THAT HAVE HINDERED THE EFFECTIVE IMPLEMENTATION OF E-
COMMERCE.......................................................................................................................... 78
4.8 THE RELATIONSHIP BETWEEN E-COMMERCE AND PROFITABILITY............. 80
4.9 CONCLUSION................................................................................................................. 82
CHAPTER 5 ........................................................................................................................... 83
CONCLUSIONS AND RECOMMENDATIONS ................................................................. 83
5.0 CONCLUSIONS AND RECOMMENDATIONS ........................................................... 83
5.1 INTRODUCTION ............................................................................................................ 83
5.2 CONCLUSIONS............................................................................................................... 83
5.3 RECOMMENDATIONS.................................................................................................. 85
5.4 RECOMMENDED FURTHER RESEARCH.................................................................. 86
REFERENCES ....................................................................................................................... 87
APPENDICES ........................................................................................................................ 93
APPENDIX A......................................................................................................................... 94
APPENDIX B ......................................................................................................................... 95
APPENDIX C ......................................................................................................................... 96
E-COMMERCE GENERAL QUESTIONNAIRE................................................................. 96
APPENDIX D......................................................................................................................... 97
APPENDIX E ......................................................................................................................... 98
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LIST OF TABLES
Table 3.1: A comparison of Nomothetic and Ideographic
Methodologies 55
Table 3.2: Judgemental Sampling Criteria 58
Table 3.3: Departmental Composition of Questionnaires 59
Table 3.4 Qualitative and Quantitative Data Analysis 66
Table 4.1: Questionnaire response rate 69
Table 4.1: The chi-squared test 81
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LIST OF FIGURES
Fig 2.1: Electronic Areas Model 21
Fig 2.2: The E-commerce Framework of Seven Levels 22
Fig 2.3: The Electronic Commerce Value Grid 23
Fig 2.4: Three Generic Strategies 35
Fig 2.5: Two types of fundamental resources underlying
Competitive advantage 40
Fig 2.6: Sustained Competitive Advantage Though the
RBV Model 41
Fig 2.7: The e-commerce value chain 47
Fig 4.1: Composition of users of e-commerce as a tool for
business 70
Fig 4.2: Different functions for which e-commerce is used 71
Fig 4.3: Types of e-commerce utilised 72
Fig 4.4: E-commerce Technologies being used. 73
Fig 4.5: E-commerce strategy Implementation 75
Fig 4.6: Level integration of e-commerce in different
components of the value chain 76
Fig 4.7: Contribution of e-commerce to business profitability 77
Fig 4.8: Barriers to E-commerce 78
Fig 4.9: Summary of Barriers to E-commerce 79
Fig 4.10: Comparison of Utilisation of e-commerce and the
contribution of e-commerce to business profitability 80
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LIST OF ABBREVIATIONS B2B - Business to Business e-commerce
B2C - Business to Customer e-commerce
B2S - Business to Supplier e-commerce
BOP - Balance of Payments
CFI - Consolidated Farming Investments
COS - Cost Of Sales
CRM - Customer Relationship Management
C-SLC - Customer/Supplier Cycle
DSL - Digital Subscriber Line
EC - Electronic Commerce
E-commerce - Electronic Commerce
EDI - Electronic Data Interchange
EFT - Electronic Fund Transfer
E-Fulfilment - Electronic Fulfilment
E-learning - Electronic Learning
E-Logistics - Electronic Logistics
E-Mail - Electronic Mail
E-Procurement - Electronic Procurement
E-Service - Electronic Service
GDP - Gross Domestic Product
GMB - Grain Marketing Board
GSM - Graduate School of Management
ICT - Information Communication Technology
IS - Information Systems
ISDN - Integrated Switching Digital Network
RBV - Resource Based View
RBZ - Reserve Bank of Zimbabwe
SADC - Southern Africa Development Committee
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1
CHAPTER ONE
INTRODUCTION AND BACKGROUND
1.0 INTRODUCTION AND BACKGROUND
1.1 INTRODUCTION
In the emerging global economy, electronic commerce (e-commerce) has
increasingly become a necessary component of business strategy and a strong
catalyst for economic development (Andam, 2003). The integration of information
and communication technology (ICT) in business has enhanced business-business
and business-customer relationships. Specifically, the use of ICT in business has
enhanced productivity, encouraged greater customer participation, and enabled
mass customization, besides reducing costs. These benefits from ICT are yet to be
realized from e-commerce hence the need to study and understand the concept of
e-commerce.
Projections of commerce via the internet are remarkable. According to Forrester
Research, online sales were expected to reach $300 billion in 2000 and $488 billion
4in 2002. Likewise, business-to-business commerce was projected to reach $327
billion by 2002 (Applegate, Lynda, McFarlan and James, 1996). E-commerce has
evolved from a high-tech marvel to a corporate initiative. According to Jack (1996) e-
commerce can no longer be ignored or thought of only as an ICT project. As such
King and Clift (2000) argue that the ‘‘e’’ – will soon be dropped and that e-business
will be business as it comes to be generally understood. Electronic commerce
projects must now be intertwined with the firm's strategic plans. The next section
reviews the background of Victoria foods and the Milling Food Industry in the light of
selected marketing and strategic management tools.
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1.1.1 BACKGROUND
Although e-commerce is not a new concept in Zimbabwe and the Hospitality sector
has implemented e-commerce portals, such progress has not been very evident in
the manufacturing sector. The food manufacturing sector in Zimbabwe has
embraced Electronic Data Interchange during business to business transactions,
however little has been implemented for business over the internet. Also the current
e-commerce implementations have not fully exploited all e-commerce tools or
integrated the technology to business processes.
It is also apparent that only a small proportion of the Zimbabwean population has
access to the internet, and a small fraction of those who use it, use it for e-
commerce. There is a big inertia to move towards the new technology and many
only use computers for e-mail, internet and typing. The general public views it as a
luxury to own a computer and even more to have personal internet access in homes.
As such, this culture has led to limited usage of e-commerce by wholesalers who are
the main customers of manufacturers. The result is lesser benefits of e-commerce to
manufacturers. This study uses the case of Victoria Foods to analyse the degree to
which the company has embraced e-commerce and how the technology has
impacted on business performance. In the following section, a background of
Victoria Foods is presented.
1.1.2 VICTORIA FOODS
Victoria Foods (Vic Foods) has come a long way from being a small milling company
to being the third largest milling company in Zimbabwe. Good management and
strategies have propelled the company forward to such heights (CFI Bulletin, 2004).
Changing times, growth and innovation has moved the company from paper based
information systems to computerized systems. These developments have then led to
the implementation of messaging systems and the internet in the organization.
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Victoria Foods, a wholly owned subsidiary of Consolidated Farming Investments
(CFI) is into the milling of maize and wheat and the packing and distribution of other
produce such as rice, salt, beans and manufacturing of snack foods. The company
was opened in 1929, in the Midlands (Gweru) under the name Midlands Milling
Company, and later changed its name to Victoria Foods Limited in 1997 due to
growth. The company has managed to increase its range of quality food products
over the years.
Given the above platform, Vic Foods has been able to do business electronically by
interacting with clients and other businesses using electronic means. This has
included clients ordering electronically via e-mail, electronic payments via banks and
electronic information provision to both suppliers and clients. To a great extent
current e-commerce implementations have provided strategic information to
management. However, the organization has not progressed much in terms of the
integration of e-commerce with business processes.
1.1.3. PRODUCT AND SERVICE MARKET
Victoria Foods (Pvt) Ltd has a wealth of experience in servicing both the domestic
and the industrial markets. It supplies bakeries, schools, wholesalers and retailers. It
also produces branded products for retailers and wholesalers such as food chain
group. It is evident that Victoria Foods’ variety of product lines has enabled it to cater
for a wide mass market (CFI, 2004), and pursue a mass marketing strategy. As
such, it produces a variety of high quality products which can be classified in four
groups:
1. Bakers products: Victoria Foods (Pvt.) Ltd supplies various industrial clients
mainly established bakeries and confectionaries with whole
wheat, baker, white, brown and cake flour.
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2. Maize products: Maize products are for Supermarkets and Retail stores. These
include roller meal and pearl white. Maize samps and mealie
rice are also produced as by products
3. Snacks: A variety of snacks are produced from maize. Snacks include
konkels, mhandire, crackerjax and the famous maputi which are
available in salted, cheese, tomato, mexicano and spicy
flavours.
4. Pre-packs: Victoria foods pre-packs salt, beans, popcorn, rice and flour in
bulk. Pre-packs are targeted at the domestic market. Flours
include plain, brown whole wheat, lightning and the popular self
raising flour.
Faced with economic challenges in the country, the food industry has also been
affected by the crises in agriculture which is straining the supply of food raw
materials such as wheat for flour and maize grain. Also the shortage of foreign
currency has adversely affected the procurement of supplementary wheat, salt and
some other raw materials required in production. Victoria Foods has thrived in the
face of such economic challenges to retain its key customers and has managed to
gain a remarkable market share.
1.1.4 EXTERNAL ENVIRONMENT
Mukarati (2005) argues that PESTL analysis is the best tool to explore the Political,
Economic, Social, Technological, Legal and Environmental dynamics affecting
businesses in a country. Mukarati (2005) however admits that this type of analysis is
limited in that it gives a snapshot of the concerned factors at a particular point in
time. As such this analysis needs to be carried out continuously as market dynamics
evolve.
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1.1.4.1 Political Factors
The Political situation has not been as stable as in the early 1990’s. The emergence
of new political parties has resulted in tension in the urban areas where food
industries are situated. This has negatively affected investors and partners who
wanted to partner with Victoria foods in the sourcing and supply of grain which has
been scarce. The government’s fast track land resettlement program has also
resulted in reduced grain output. This move by the government and other populist
laws that have affected the operations of business for example in late 2007 the
government froze all price increases and reverted prices to June 2007 prices
resulting in many businesses collapsing.
The government deregulated the economy from 1991 to 2003 and allowed a certain
degree of the operation of market forces (Mtetwa, 2006). However after much poor
economic performance the government reintroduced price controls which adversely
affected the food industry which produces commodity products.
The isolation of Zimbabwe from the international community including from the IMF
and World Bank had a serious impact on foreign currency supply in the country.
Foreign currency shortage has been increased also by speculative tendencies by
most businesses and individuals, especially in the financial sector. The implication
for all the above scenarios has been high risk for businesses and investment.
1.1.4.2 Economic Factors
Interest rates have been high and prohibitive for borrowing to finance business
operations. It has also meant difficulties in purchasing raw materials and machinery
for Victoria Foods. This has also been made more difficult by inflation which has
been rising at unprecedented rates resulting in the proliferation of the black market.
The Reserve Bank of Zimbabwe (RBZ) has tried to resolve the foreign currency
shortages by allocating foreign currency. This meant that only critical areas like fuel,
6
electricity, and food imports received attention. However the allocations have not
been enough and with industries sourcing fuel and raw materials elsewhere
production costs have gone high. Whilst production costs have increased,
consumers have suffered a depleted disposable income. Companies have become
less viable as unemployment levels have gone high. Accordingly volumes of goods
purchased have declined.
For a prolonged period Zimbabwe has experienced a negative balance of payments
(BOP) position with a shrinking Gross Domestic Product (GDP). Given all the above
factors, there seems to be no commitment from all stakeholders regarding economic
rejuvenation and the RBZ Governor’s efforts seem to fall short of remedying the
economy.
1.1.4.3 Social Factors
There has been a rapid decline in the social services such as health, education and
accommodation. July 2005’s “Operation Murambatsvina” left many people
homeless and drove rental prices up. There has also been a rising gap between the
have and have nots, which has also seen the disappearance of the middle class
consisting of professionals. The prevalence of HIV and AIDS has also affected the
industry due to loss of manpower. This loss of manpower has also been increased
by the emigration of skilled workers to neighbouring countries and abroad seeking
for greener pastures. Due to these problems, Victoria Foods has lost skilled workers
and also experienced high turnover.
1.1.4.4 Technological Factors
Mukarati (2005) affirms that in comparison with other countries in the SADC region
excluding South Africa, Zimbabwe is in a strong technological position. However,
due to the negative impact of political and economic environments on in-bound
investments and collaborative business initiatives, Zimbabwe has suffered
technologically. Zimbabwe’s extensive road and railway infrastructure linking major
7
cities and industries have deteriorated due to lack of adequate maintenance. Inputs
to food manufacturing depend on rail and roads. Due to foreign currency shortages
machinery conditions have deteriorated due to limited servicing and maintenance.
Telecommunication infrastructure is in place but has not been operating
competitively. Power cuts have become the order of the day as such resulting in loss
of time, more wastage and plant damage. This has increased costs highly and made
it more difficult to produce food products competently. For Victoria Foods this has
increased production costs as employees have to work overtime to meet production
schedules.
1.1.4.5 Legal Factors
Although there has been much noise about the rule of law, Zimbabwe has been
peaceful and more legally stable than some countries in the region. However, the
enforcing of price controls resulted in product scarcity. The setting up of the
Incomes, Price Monitoring and Stabilisation task force has ensured that products are
produced at low prices. However, this measure has failed to ensure availability of
products on shelves. The process failed to control the costs of raw materials some of
which are imported at high prices with foreign currency. The legal framework has
proven weak in dealing with cash hoarding and illegal foreign currency dealing.
1.1.5 SWOT ANALYSIS OF THE COMPANY
Thompson and Strickland (1990) contend that a SWOT analysis consists of sizing
up a firm’s internal strengths and weaknesses and its external opportunities and
threats. The argument is that the strategy must produce a strong fit between a
company’s internal capabilities and its external situation. On the other hand Grant
(1995) argues that the SWOT framework is handicapped by difficulties in
distinguishing strengths from weaknesses and opportunities from threats. As a result
we focus on the potential implications of factors in order to classify them as stengths
8
or weaknesses. Having analysed the PESTL we are in a position to carry out a
SWOT analysis of Victoria Foods.
1.1.5.1 Strengths and Weaknesses of the Company
Thompson and Strickland (1990) claim that a company’s strength is something that it
is good at doing or a characteristic that gives it an important capability. By the same
definition, a weakness is something a company lacks or does poorly (Thompson and
Strickland, 1990). It should be noted that strengths and weaknesses need to be
analysed in the light of how they matter in the competitive battle in which the
company is in.
Strengths
Competitive and Proven Management
Victoria Foods has a managerial excellence which has enabled it sail through stiff
competition from players like Grain Marketing Board (G.M.B) which has government
support, National Foods and Blue Ribbon Foods. Planning is very complicated in a
hyper – inflationary environment, but Victoria Foods management has competitively
tackled the situation by devising strategies that have raised the company into the top
three companies in the milling industry.
A wealth of committed customers
The company has established a name in the market for years. It has built an image
which makes some customers brand loyal, reluctant to shift to other brands.
Therefore brand loyalty built over the years helps the company survive in the
prevailing harsh economic and competitive environment.
Innovative Skills
Despite operating in a difficult economy, the company has hard working personnel.
Even though these harsh economic conditions are leading to reduced macinery due
to lack of foreign currency to replace machine parts, the company has managed to
9
innovate and produce the best with reduced machinery. Victoria Foods has qualified
personnel with each job having experienced personnel. The result is that the
company possesses a culture of innovation and creativity.
These innovation abilities have enabled the company to develop new unique
products which have strengthened the company’s market position. Such innovation
has maintained the company’s competence by consistently satisfying changing
consumers’ tastes and preferences. The company also has successfully provided a
variety of products in different sizes and flavours, enabling it to cater for distinct
tastes and preferences in the market.
Group Benefits
Vic Foods enjoys the benefits of being part of the CFI group which contains Farm
and City, Suncrest and Agrifoods. Being part of the CFI group enables Victoria
Foods (Vic Foods) to gain access to economies of scale since the group purchases
common goods in bulk. Vic Foods also produces in bulk and does toll production for
the group. Whilst leading to economies of scale, it also insulates Vic Foods from
competitive pressures and allows it to outperform competitors who are individuals.
Weaknesses
No communication of the strategy
Though it is clear that the company is pursuing a winning strategy, the weakness is
that this strategy is not well communicated to line managers and key implementers.
This has resulted in many conflicting goals and unnecessary politics. This has
affected the implementation of the strategy thereby affecting the profits of the
company.
High labour turnover
Though the company has many skilled and experienced workers, it has also been
affected by brain drain. Productivity and quality of output is severely impacted on by
the need to constantly replace skilled workers.
10
Unable to finance needed changes in strategy
Price controls and Price monitoring by the government have resulted in the company
operating on a stringent budget. These measures to remain profitable whilst inputs
are rising in prices have restricted the intended purchasing of new acquisitions to
implement the strategy. Lack of funds has also led to delays in the implementation in
Information Systems technology upgrades. As such one of the company’s
weaknesses is that of sticking to old versions of financial systems which are difficult
to maintain and operate, thereby impacting on the management information system.
1.1.5.2 Opportunities and Threats of the Company
Thompson and Strickland (1990) contend that a company’s opportunities are the
prevailing and emerging industry opportunities which are relevant to the company
and either can provide avenues for growth or lead to competitive advantage. On the
other hand, threats are factors in a company’s external environment that negatively
affect its well-being (Thompson and Strickland, 1990).
Opportunities
New markets
The company possesses the potential to venture into new foreign markets,
especially the regional markets since the SADC region has limited trade barriers.
The SADC region is in great need of grain products and since Zimbabwe used to be
the bread basket of the region, the opportunities are quite high. The company has
partnerships with some big companies in the region giving it a large potential supply
of grain inputs. On the contrary, major competitors have focused on the local market
and ignored external markets, giving the company an opportunity to gain these
foreign markets. Gaining foreign markets can help in providing the much needed
foreign currency.
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Distribution depots
The company has potential to enhance its distribution channels by establishing
depots in Mutare and Bulawayo. Such a move can enable market expansion in the
Eastern and Northern regions since orders in those regions will be provided for
timeously and cost effectively.
Vertical Integration
The company can also grow in size vertically by establishing its own bakeries. This
can enable it to generate more cash to support the production of snax and other
products. Furthermore, it can apply for its own farming plots to grow wheat, maize
and beans which it can use as raw materials in production of flour, snacks, maputi
and mealie-meal. These moves will allow for both backward and forward integration.
However, government regulations seem to bar vertical integration by the milling
industry although negotiations can be carried out with the government. This could be
a worthwhile venture since the benefits will be for all stakeholders.
Threats to the Company
Persistent Droughts and the shortage of raw materials
As a result of a contraction in the agricultural sector most of the raw material used in
production could not be availed. This has also been made worse by persistent
droughts. The above factors hinder the supply of inputs such as wheat for flour and
maize grains for maputi and kornsnax. Oils and flavours used in the production of
konkels, crackerjax and snacks are also affected by droughts.
Shortage of foreign currency and Inflation
The company imports oils, supplementary salt, wheat, rice, salt and gases which are
key inputs in the production of rice, snacks and other products. The foreign currency
required to acquire these inputs is in short supply which negatively impacts on the
company’s production. Inflation has tended to erode profits and disposable income.
12
Persistent power cuts
Production has been negatively affected as the industry is spending most of the time
without electricity. The night shifts are spending the nights sleeping in the factory as
power is cut as early as 2am. Load shedding is becoming intense which therefore
implies that production is restricted.
Price Controls and Government Policies
Government Policies such as “Operation Reduce Prices” are also negatively
impacting on operations as the businesses are forced to sell at low prices despite
exorbitant costs of inputs. The government also implements the Fiscal Policy which
sets very high corporate and income taxes. High corporate taxes erode the
company’s profits thereby leaving less capital for reinvesting, while high incomes
taxes erode workers’ disposable incomes and affect their morale at the workplace.
High Employee Turnover
High employee turnover means loss of skilled labour and therefore a strong threat to
the maintenance of good product standards. The requirement to continuously train
skilled workers proves costly and reduces productivity. There is also a threat to lose
workers to competitors.
1.1.5.3 Summary of the SWOT Analysis
SWOT analysis reveals that Victoria Foods is exposed to serious threats due to
shortages in inputs. The company has opportunities in foreign markets and could
expand into other provinces in the country or integrate vertically. The company could
harness its strong innovative skills and utilise the CFI group to finance the
implementation of new technologies for market expansion. A strong area to be
explored in technology development is how e-commerce can be best utilised to build
competencies. The next section lays out the problem statement of the research.
13
1.2 STATEMENT OF THE PROBLEM
Manufacturing sector companies have invested in e-commerce but have not been
able to achieve competitive advantage via its implementation. These current
investments in e-commerce have not been backed by properly crafted e-commerce
strategies and full utilisation of e-commerce technologies for value addition to
companies. The above mentioned facts may be the reasons why Zimbabwe’s milling
industry companies have failed to achieve competitive advantage through e-
commerce implementation. The study purposed to investigate the extent to which
Victoria Foods had utilised e-commerce technology, and how that utilisation helped it
become more profitable.
1.3 RESEARCH OBJECTIVES
The goal of this study was to analyse the extent to which e-commerce had been
utilised by Victoria Foods. As such the following were the objectives:
1. To investigate the degree of awareness in the Victoria Foods of the existence
of e-commerce.
2. To determine the degree to which Victoria Foods has utilised e-commerce
technologies.
3. To identify the major challenges in implementing e-commerce to ensure
competitive advantage.
4. To determine if there is a relationship between e-commerce and business
profitability at Victoria Foods.
1.4 RESEARCH QUESTIONS
The key question was: Has Victoria Foods fully embraced e-commerce technology?
In other words, to what extent has Victoria Foods embraced e-commerce
technology? As components of this question the following were the other questions
that came up:
14
1. What impact does e-commerce have in Zimbabwe’s food industry business
performance?
2. What challenges are there of implementing e-commerce to business
profitability?
3. To what extent has Victoria Foods implemented e-commerce technologies?
4. What relationship if any, exists between e-commerce utilisation and business
profitability?
1.5 RESEARCH HYPOTHESIS
The Hypothesis to be tested:
• Null Hypothesis (H0): The proportion of e-commerce technologies that have
been fully employed at Victoria Foods is greater than of those that have not.
• Alternative Hypothesis (H1): The proportion of e-commerce technologies that
have been fully employed at Victoria Foods is not greater than of those that
have not.
1.6 RESEARCH JUSTIFICATION
In Zimbabwe, not much value has been realized by firms implementing e-commerce.
However an understanding of the impact of fully embracing e-commerce on
business profitability will help companies to realize that it is costly not to utilise the
technology. This research intends to bring out the immediate benefits, in terms of
cost savings, efficiencies and enhanced profitability which are to be realized through
successful implementation of e-commerce technologies. According to Hobart (2001)
adopting e-commerce is no longer a competitive advantage, but a normal business
process, without which an enterprise is unlikely to survive competition.
Implementing an e-commerce strategy is neither straightforward nor cheap. For
example, it comprises a complete rethink of traditional modes of behaviour, the need
and importance to involve internal staff and external suppliers and customers right
15
from the conceptual stage, need to re-evaluate company’s core competencies, and
requires substantial investment in IT. As such, this study seeks to link e-commerce
concepts together with competitive advantage concepts analysing how these
concepts could be embraced to make the business more profitable.
Since Zimbabwe is in a challenging economic situation, companies which will
harness e-commerce for achieving competitive advantage will need to be strategic
thinkers focusing on customers, markets, and competitive positioning, as well as on
internal operations. The research seeks to help clarify e-commerce concepts. It also
seeks to aid strategic thinking by providing valuable information on how e-commerce
can be utilised strategically to create competitiveness. Such information brings new
depth to Zimbabwean e-commerce by providing guidelines as to how the potentials
and benefits of e-commerce can be fully harnessed by Zimbabwe’s milling industry.
The research set to provide academia with information on the applicability of e-
commerce in Zimbabwean food industries and provide a source of information for
further research.
1.7 SCOPE OF RESEARCH
This research focused on e-commerce in the milling food industry (In this case
limited to Victoria Foods). It was also restricted to the part played by e-commerce
technologies in Victoria Foods’ business processes. As such the study looked at the
operations of Victoria Foods in Zimbabwe for a five year period from 2003 to 2007
inclusive.
1.8 STRUCTURE OF THE DISSERTATION
The study is organized into five chapters. Chapter one has outlined the background
to e-commerce in Zimbabwe and introduced the dissertation. Chapter two lays the
theoretical background and therefore lays the foundation for a study on e-commerce
technologies, models together with competitive advantage concepts. Chapter three
16
explains the method that was used to analyse e-commerce utilisation and its
relationship to business performance. Chapter four presents the dissertation
findings. Chapter five concludes the research and provides recommendations for
Victoria Foods management to act upon.
1.9 CONCLUSION
In this chapter we have outlined the research’s intention to research on how Victoria
Foods has embraced e-commerce together with how e-commerce has impacted on
the company’s business performance. This chapter has given us the background to
Victoria Foods and its business environment. It has also stated the research problem
and justified why this research was carried out, thereby limiting its scope to Victoria
Foods. The following chapter will analyse different authorities on e-commerce and
different e-commerce models thereby preparing the reader for the rest of the
research document.
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CHAPTER TWO
LITERATURE REVIEW
2.0 LITERATURE REVIEW
2.1 INTRODUCTION
This chapter critically analyses the existing research on e-commerce. The write-up
will attempt to relate various models of e-commerce and competitive advantage
concepts. According to Shah and Dawson (2004) implementing e-commerce
technologies comprises a total rethink of traditional modes of behaviour, and the
involvement of all stakeholders right from the conceptual stage added to a re-
evaluation of the company’s core competencies. As such, executives of e-commerce
companies need to be strategic thinkers focusing on customers, markets and
competitive positioning. Practically, the chapter will analyse how e-commerce has
influenced business. It will explore how this new technology can be exploited to
achieve sustainable competitive advantage in conjunction with some traditional
strategy tools.
2.2 THE E-COMMERCE CONCEPT
2.2.1 THE DEFINITION OF E-COMMERCE
Many use the terms electronic commerce (e-commerce) and electronic business (e-
business) interchangeably. For the purpose of our study, we seek to differentiate the
two. Allen and Fjermestad (2000) suggest that e-business tends to be used as a
more general term to describe the use of the internet or any type of electronic
mechanism to conduct an organization’s business processes. This definition implies
that e-business is a term used to describe utilizing Internet technologies to improve
the productivity or profitability of a business. Andam (2003) describes e-commerce
as on-line trading. In other words, e-commerce consists of the buying and selling of
products or services over electronic systems such as the Internet and other
18
computer networks. Modern electronic commerce typically uses the Internet at least
at some point in the transaction's lifecycle, although it can encompass a wider range
of technologies such as e-mail as well. The wikipedia website considers e-
commerce to be the sales aspect of e-business (www.wikipedia.org).
Kalakota and Robinson (1999) argue that e-business is the function of deploying
technology to maximize customer value while e-commerce is the function of buying
and selling over digital media. Kenneth and Traver (2003) expand this definition
arguing that e-commerce encompasses digitally enabled commercial transactions
between and amongst organisations and individuals while e-business refers
primarily to the digital enablement of transactions and processes within a firm,
involving only the information systems under the control of the firm
In a summary e-business is a super-set of e-commerce. This implies that
incorporating e-commerce into a company's flow would transform the company into
an e-business. E-Business thereby can be broadly defined to encompass all internal
and external electronically based activities and processes. Bakos (1998)
summarises e-commerce as part of e-business which focuses on the electronic
commercial transactions between and amongst organisations and individuals. In this
research we are interested in business-to-business (B2B) and business-to-customer
(B2C) e-commerce.
2.2.2 B2B AND B2C E-COMMERCE
Fruhling and Digman (2000) argue that B2B e-commerce is a way for business to
create value by alignment with factors which include customers, suppliers, and
employees among other factors. Andam (2000) defines B2B e-commerce simply as
e-commerce between companies. He further argues that this type of e-commerce
deals with relationships between and among businesses.
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Types of business-to-business electronic commerce applications include: electronic
data interchange, electronic funds transfer, electronic forms, integrated messaging,
and shared databases. Business-to-business processes provide sharing of data and
increased information access through corporate extranets. B2C e-commerce
involves customers gathering information; purchasing physical goods or information
goods which are goods of electronic material or digitized content, such as software,
or e-books (Andam, 2000).
2.2.3 THE BENEFITS OF E-COMMERCE
E-commerce presents a number of opportunities for business organisations and
individuals alike. Metzger (2004) suggests that e-commerce companies have a
widened market base. The wide market base gives the companies an opportunity to
grow at very low costs. Hoffman et al (2004) contend that there are distribution,
marketing and operational benefits that can be realised from e-commerce. In other
words e-commerce can bring about a reduction in distribution costs through the
elimination of intermediaries. Since online transactions involve very little costs e-
commerce can also bring about a reduction in transaction costs (Kiggundu, 2002).
Internal and external processes can also be integrated to lower transaction costs. As
worldwide companies are adopting more collaborative relationships with key
suppliers in product development, key business processes now require cross-
functional information sharing on a wide range of issues (McIvor, Humpreys and
McAleer, 2000). This means that firms can utilise e-commerce to expand distribution
channels at lower costs. According to McIvor et al (2000), these low costs can be
achieved through the reduction of clerical procedures and paper handling. E-
commerce can also accelerate ordering, delivery and payment for goods and
services while reducing operating and inventory costs.
Schaeffer (2003) argues further that e-commerce dramatically reduces the time for
information search and transacting for buyers and sellers. The important point here
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is that e-commerce transcends geographic and time boundaries. Since time is
saved, this has cost saving implications. However geographic and legislative
constraints continue to present significant barriers to the distribution of goods and
services in practice. Even though such constraints exist, personalised product
offerings combined with free market access provide the customer with a wider
availability of hard-to-find products. Added to this wider selection of items, customers
can test products online before a decision is made to purchase (Karavdic, 2002).
Lumpkin, Drogee and Dess (2002) argue that even though the Internet makes
possible new opportunities for strategic success, ignoring business fundamentals
and basic financial requirements results in business losses. According to this line of
argument many e-commerce companies have been unsuccessful at making a profit
due to heavy spending on mass marketing, intensive price competition, lowered
customers' search and switching costs. De Figueiredo (2000) stresses this
argument, contending that increased customer power and lowered entry barriers due
to the Internet can heavily lower a company’s profitability.
Despite the above mentioned negatives of the internet, the author believes that the
main reason for failure on e-commerce is due to lack of clearly defined e-commerce
strategies targeted at building the business’ profitability. The reason for such a belief
is that whilst many companies have failed in e-commerce others have thrived under
the same conditions. The argument is that certain strategies which the successful
ones have perfected have made the successful companies more successful than the
failing companies. As such, the following section seeks to analyse different e-
commerce models in the light of their potential impact on e-commerce and
competitive forces.
2.2.4 MODELS OF E-COMMERCE
Different models can be used to analyse and build e-commerce model strategies for
business. No single model covers all the areas of interest and hence a selection of
21
models has to be used when planning. The section below outlines some of the most
prominent models and evaluates their strengths and weaknesses.
2.2.4.1 Electronic Areas Model
Fig 2.1. Electronic Areas Model (Choi et al., 1997:18).
The Electronic Areas model shown in Fig. 2.1 presents the difference between e-
commerce and traditional commerce. The representation portrays e-commerce as a
three dimensional space, with traditional commerce in the front bottom left area and
e-commerce in the back top right area. This model also identifies product, agent and
process as three key dimensions distinguishing e-commerce from traditional
commerce. The representation underlies the fact that e-commerce may be
implemented to compliment an existing venture, or may be used to establish a totally
new electronic venture (Haylock et al, 1999).
22
Kao and Decou (2005) argue that the electronic areas model can be useful in
determining the organisation’s focus in relationship to technology. However, even
though this model helps focus the relationship of an organization with e-commerce
applications, it does not assist in showing any clearly defined e-commerce strategies
to pursue.
2.2.4.2 The Hierarchical Framework of E-commerce
Meta-Level Level Function
Product and Structures
7 Electronic Marketplaces and Electronic Hierarchies
6 Product and Systems
Services 5 Enabling Services
4 Secure Messaging
Infrastructure 3 Hypermedia/ Multimedia Object Management
2 Public and Private Communication Utilities
1 Wide-Area Telecommunications Infrastructure
Fig 2.2. The E-commerce Framework of Seven Levels (Zwass, 1998)
The hierarchical model outlined in fig. 2.2 above defines three meta-levels of e-
commerce which are Product and Structures, Services and Infrastructure. Each
level sits on top of the one below it and benefits from the strengths of the lower level
(Zwass, 1998). Each level has sub levels which are shown as one to seven (fig. 2.2).
Feng Li (2006) contends that the strength of the Hierarchical model is that it shows
that in order to build a strong e-commerce strategy, a bottom up approach has to be
taken. In other words, there needs to be a strong Wide Area infrastructure and
strong ICT systems leading to the provision of excellent e-commerce products.
23
Riggins (1998) argues that one difficulty with the hierarchy is that the sequence of
layers may not be sufficiently flexible to accommodate the changing functions and
activities of e-commerce. However, Zwass (1998) further argues that the hierarchical
model focuses attention on important components to be considered within the e-
commerce strategic planning context.
2.2.4.3 The Electronic Commerce Value Grid
Riggins (1998) developed the Electronic Commerce Value (EC) Grid (fig. 2.3) to aid
managers in determining where Web-based electronic storefronts could improve
profitability.
Fig 2.3. The Electronic Commerce Value Grid (Riggins, 1998)
He argues that firms compete along five dimension of commerce. By using various
modes of interaction, firms compete over both time and distance to provide some
product or service to their customers through a chain of relationships (Riggins,
1998). He adds that since investments in information technology are typically
justified using three different criteria – generating efficiency, effectiveness, and/or
24
strategic benefits, the two perspectives mentioned above can be combined to create
the Electronic Commerce Value Grid (fig. 2.3) which identifies fifteen areas where
managers can use Web-based electronic storefronts to add value to their customers.
The strength of the model is that it provides a way for improving efficiency and
effectiveness for the decision makers by making the right information available on
demand (David et. al, 2000). These decision makers could be consumers
considering a purchasing decision or a manager seeking information to formulate a
marketing strategy. The model also offers strategic choices to the implementer and
allows firms to gain an advantage over competitors by developing new customer
loyalty. The result is temporal first mover competitive advantage. However, Riggins
(1998) argues that long term advantage can only be obtained by constantly updating
the content and functionality of the Web site and by redesigning business processes
to take advantage of the new technology.
While the E-commerce Value Grid is useful in identifying opportunities, it is specific
to Web-based sales applications and is difficult to use in other e-commerce strategic
developments (Elliot et al, 2000). It also does not consider financial and legal
business interests.
Applying the EC Value Grid
Riggins (1998: 12) suggests that to use the grid, managers should first determine
which of the five dimensions of commerce to target for impact using the online
storefront. He also poses the following questions:
Should the Web site be used to add value to the user by diminishing the time
it takes to deliver information, products, or services? Are there distance
barriers which need to be overcome in order to better serve customers? Is the
objective to alter the relationships in the industry, possibly by intermediation
or disintermediation? Can the organization improve the nature of the
interaction between industry parties? Or is the goal to use the technology to
25
institute entirely new products and services which were not feasible before
the introduction of the Web?
The above are some of the questions detailing the issues the EC Value Grid tries to
identify. Riggins (1998:34) further argues that managers must examine the type of
value to be generated for the user. He also stated that the following questions need
to be investigated (Riggins, 1998:34):
Is there a need to improve the efficiency of performing various tasks, improve
the user's effectiveness in delivering timely information to decision makers, or
use the technology to strengthen a long term relationship with the user?
Riggins (1998:35) contends that answering the above questions provides the EC
Value Grid with information to develop a Web-based application that will provide new
value for the user.
The extent to which the Web site incorporates several cells in the grid
becomes a measure of the strategic sophistication or EC coverage of the site.
The goal of the grid is to move from a simple online storefront, where the
impact is on time and distance generating efficiency and effectiveness
benefits, to vast electronic business sites which change the relationships in
the industry.
Riggins (1998:35) argues that the mode of interaction developed with customers and
trading partners utilising the EC Value Grid produces creative new products and
services to generate strategic value.
2.2.4.4 Discussion of the various e-commerce models
As already noted in sections 2.2.4.1 to 2.2.4.3 no one model covers all the required
areas. The electronic model can be used to focus on the relationship of a company
with e-commerce applications. The hierarchical model is then used to analyse the
infrastructure, services and product meta-levels of the company and aid in a bottom
up strategic e-commerce strategy. The electronic value grid will then be used to
26
factor in measures that will improve efficiency and effectiveness for customers. In
the application of these models it is also essential to consider financial and legal
concerns. These models have been designed to create competitive advantage,
however for its sustainability; they have got to be applied in support of the normal
strategic processes. Since they do not conflict, the above mentioned models can be
used concurrently to build competence. As such, we look at e-commerce in the light
of business strategy.
2.2.5 HOW THE INTERNET AFFECTS E-COMMERCE
Zwass (1998) argue that popularity of the Internet for e-commerce is
unquestionable. Schaeffer (1999) contends that this popularity emanated from the
fact that the internet offers a channel where buyers and sellers are able to complete
transactions cheaply, instantaneously and anonymously whilst overcoming
geographic and time barriers. He contends that it provides a channel to remove
multiple layers of middlemen by bringing companies and their customers and
suppliers together directly and cheaply (Shaeffer, 1999). As such, e-commerce is
thereby expected to widen markets and lower transaction costs.
2.2.5.1 Positive Effects to a Business
Shingh (2003) contends that the Internet enables a company to expand its market
reach. Jensen (1999) agrees and contends that a little company is able to utilize the
internet to reach markets far beyond its traditional vicinity while also gaining access
to markets beyond its current customer base. Given this advantage to small
companies, Jensen (1999) further argues that small companies can also have
greater visibility against large companies and hence a chance to level the playing
field to some extent.
Schaeffer (2003) adds to the debate that on the Internet each company is reduced to
the common size of the customer’s browser window. While creating the original web
27
presence may not be inexpensive, the cost of subsequent maintenance is minimal
(Shaeffer, 2003). Jensen (1999) argues that the Internet provides cost advantages
for businesses in being able to update information, post features, and simply
maintain a site that is perennially current at a minimal cost and time lag. These
features stated by Jensen (1999) combine to generate a greater presence within the
present target market while gaining a greater component of their mind share.
Shaeffer (2003) further argues that one of the greatest benefits of doing business
online rests in its ability to promote relationship building with customers and
partners. Straub (2001) contends that the Internet is unmatched in its ability to
increase responsiveness. Examples of this responsiveness are clearly visible in
companies such as Dell, UPS, and FedEx that now allow both partners and
consumers to check various facets of their transactions directly by logging onto their
Web sites (Straub, 2001). This interconnectedness comes at a lower cost and on
demand thus, providing a more efficient method to respond to customer
needs/wants.
Straub (2001) agrees with Schaeffer (2003) that the Internet provides the benefits of
shared information that can be enjoyed by organizations of all sizes big or small at a
fraction of the cost. Straub (2001) argues that access to real-time data enhances
efficiency, which improves productivity, and profitability. Schaeffer (2003) further
contends that the nature and content of information that can be shared has
broadened in scope. He states that the multi-media nature and real time capabilities
of the Internet are fostering an environment that is conducive for relationship
building.
The blossoming and adoption of the Internet has seen businesses realize enormous
cost savings by moving a myriad of services online. The range of business areas
positively impacted are vast, from customer service centres, online tracking of
packages, to online brokerages, the list is endless. Berryman, Harrington, Layton-
Rodin and Vincent Rerolle (1998) contend that the ability to digitize offerings and
28
provide products/services on demand has lead business to realize two allied goals of
enhanced service at a reduced cost of product, support, and service. The above
information strongly suggests that the Internet can also be used to gain competitive
advantage through linkages with suppliers which will cut costs.
2.2.5.2 Negative Effects to a Business
Given the above potentials of e-commerce, there are a number of challenges as e-
commerce takes root as a business tool. Schaeffer (2003) argues that e-commerce
is limited to the transmission of information that can be interpreted by two of the five
senses alone namely sight and sound. As such the internet is unable to
communicate taste, smell, and feel.
Wigand et al (2004) argue that there are possibilities of reduced profits as
competition intensifies. In agreement Straub (2001) states that e-commerce tends to
reduce entry barriers as there are very little and sometimes no setup costs required
to setup an internet based business. Straub (2001) further states that companies
involved in e-commerce lose their bargaining power end this tends to reduce the
companies’ ability to push their products thus driving down profits.
The UNCTAD Report (2002) states that one of the major challenges facing
companies doing business in an e-commerce environment is the issue of security.
The problem is generally about how to address the issue of security while preserving
the benefits and ease of use of the internet and its open nature. According to the
UNCTAD Report (2002) possibilities of fraud abound on the internet for both the
buyers and the sellers. Another challenge that may be faced by internet based
companies is the issue of costs especially in relation to network access. Network
access providers may monopolise access and charge premium charges for network
access (UNCTAD Report, 2002).
29
Gapu (2004) contends that a major challenge to e-commerce is customer loyalty:
one of the manifestations of using the technology of the internet has been the ease
with which consumers can navigate the internet in order to satisfy their needs and
wants. Besides, the internet reduces switching cost to the point where consumers do
not have an inherent investment in the current relationship. In instances where
businesses do not create a personal shopping experience, this problem is further
amplified.
2.2.5.3 E-Commerce effects on Markets
The Internet has seen the emergence of electronic markets. Whitey (2000) defines
an Electronic marketplace as an inter-organisational information system that
provides facilities for buyers and sellers to exchange information about price and
offerings. Berkowitz (2000) argues that this market space is information and
communication-based electronic exchange environment occupied by sophisticated
computer and telecommunication technologies and digitized offerings. The impact of
this digitization is evident in the following changes as stated by Berkowitz (2000:5):
• The content of transaction is different – information about a product often
replaces the product itself.
• The context of transaction is different – an electronic screen replaces the
face-to-face transaction
• The enabling infrastructure of transactions is different – computers and
communications infrastructure may replace typical physical resources
especially if the offering lends itself to a digitized format.
Shingh (2003) states that the Internet provides a platform for e-commerce by
providing a wide market place for business which covers the whole world. Goods
and services can be accessed from anywhere with virtually no costs. Accordingly
Schaeffer (2003) suggests that delivery of purchased items can be via postal
services or downloads if downloadable and payment can be done by credit cards or
mailing payments. As the internet provides for transactions with high speed
30
information flow there is much hope of lowered costs and an ever expanding
marketplace (Berkowitz, 2000).
E-market Commodities
According to Professors Rajiv Lal and Miklos Sarvay of Stanford University in
Schaeffer (2003) there are two types of goods that can be bought on the internet.
One type is goods that a person can buy without seeing. Experience goods are the
second type. One needs to see this type of goods before buying. Schaeffer (2003)
gives examples of the first type of goods as computers and compact discs and the
second type as goods like clothes and jewellery. Schaeffer (2003:15) states that:
Purchasers really like to touch and feel experience goods and will only buy
after some experience. Since brand identity and customer loyalty is important,
experience goods are not vulnerable to severe price competition. As such
physical stores can be used to build relationships with customers and then e-
commerce be used for creating repeat orders at low cost.
Therefore in this view e-commerce can be viewed as a complimentary channel to
integrate along existing distribution channels particularly for experience goods.
2.3.5.4 Five forces analysis of the Internet’s Impact on Business
Porter’s five forces model can be used to assess the impact of e-commerce on an
organization’s specific situation (Porter, 1985). In this section we use this model to
assess the impact of the Internet on business. Porter’s five forces model is a model
which assesses the impact of the following factors on an organisation’s environment:
• The threat of substitutes
• The bargaining power of suppliers
• Rivalry among existing competitors
• Bargaining power of buyers
• Barriers to entry
31
Threat of substitute products or services
According to Porter (2001), the Internet brings a positive change on the overall
industrial structure which becomes more efficient as the Internet expands the size of
the market. However the proliferation of Internet approaches creates new
substitution threats.
Bargaining power of suppliers
Porter (2001) argues that procurement using the Internet tends to raise bargaining
power over suppliers, though it can also give suppliers access to more customers.
On the other hand, the Internet provides a channel for suppliers to reach end users,
reducing the leverage of intervening companies. Since internet procurement and
digital markets tend to give all companies equal access to suppliers, differentiation is
reduced and there is a tendency to standardize products (Porter, 2001). Another
result of the internet is the shifting of power to suppliers due to the proliferation of
competitors.
Rivalry among existing competitors
Competition among competitors will increase due to reduced differences as offerings
are difficult to keep proprietary. Therefore competition will be more on the lines of
prices. As the geographic market widens, the number of competitors increase. There
comes increasing pressures for price discounting.
Buyers - bargaining power of customers
Customers now have low switching costs due to intense competition and therefore
have more bargaining power.
Barriers to entry
Anything that Internet technology eliminates or makes easier to do reduces barriers
to entry. Since Internet applications are difficult to keep proprietary from new
entrants and the internet has made many things easy the barriers of entry are
lowered. Since intermediaries are no longer needed and sales forces are no longer
mandatory, barriers of entry are reduced further (Porter, 2001).
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2.2.6 INHIBITORS OF E-COMMERCE
In developing countries like Zimbabwe, a major impediment to take-off of e-
commerce is inadequate ICT and Telecoms infrastructure as well as shortcomings in
physical infrastructure, logistics and trade facilitation (Gapu, 2004). Other limitations
include foreign currency controls, which limit the free exchange of value over the
internet. A research in Vermont, USA (Vermont Report, 1999) revealed that there
are three main areas of barriers to e-commerce:
� Ignorance – when people know little about the internet, they tend to hate the
technology and thus use of the facility will be limited. However, this is not the
situation in Zimbabwe because rapid changes in mobile technologies and the
quick buy in by people in Zimbabwe have proved that Zimbabweans are quick
to adapt to changes and embrace them.
� Cost – costs prevent most businesses from establishing e-commerce
services. Cost comes in the form of cost to buy hardware and software for
use in e-commerce. It also comes in the form of cost of building the system as
experts are expensive to pay. Significant costs also come from the cost of
leasing bandwidth from telecommunication service providers. In Zimbabwe,
cost is one big inhibitor to technological advancement.
� Time – companies find it difficult to invest in time to develop systems that can
be used on the internet.
Straub (2001) contend that other inhibitors of e-commerce come from fears about
perceived lack of online privacy, which arise from the internet’s ability to record
every aspect of the user’s behaviour. For example the Government recently
announced its intentions to monitor the Internet and intercept e-mails for
intelligence reasons. Every transaction on the internet involves some disclosure
of one’s personal information (Straub, 2001). This tends to scare away senior
managers away from conducting business on the internet.
Van Hooft and Stegwee (2001) contend that there is a general lack of secure
electronic payments system. They base their argument on the fact that current
33
generations of e-payment systems involve sending information over the internet.
This has the attendant risk that such information may be intercepted by the
wrong people and hence may be misused.
2.2.7 DRIVING FORCES OF E-COMMERCE
Improvements in technology continue to be a major driving force of e-commerce
(Vermont Research, 1999). There have been fast changes in technology and in turn
the associated costs of technology continue to fall. This in turn makes it very
possible for innovative new ways of doing business to emerge. Changes in
technology have also been making it possible for mobile technology to allow e-
commerce. An example is the emerging of WAP technology, which now makes it
possible to browse on the phone. As the technology improves, it will soon be
possible to have even larger bandwidth on mobile phones, which can make it even
easier to do commerce while on the move.
Changes in life styles of people have also contributed to growing use of e-
commerce. Falling prices of computers and associated hardware and software have
also facilitated more people to own computers. More people now own and use
computers for their day to day business making it easier for businesses to bring
shop fronts right in the homes of people. Gapu (2004) states that statistics show that
more and more people now own computers. For Zimbabwe the number of people
with computers rose from 33,000 in 1995 to 600,000 in 2000 (Gapu, 2004).
The technical capabilities of telecommunication networks have also been improving
thus making e-commerce more accessible. The bandwidth obtainable on existing
copper wire has been enhanced by such new technologies as DSL and ISDN. Since
these technologies work over existing infrastructure, it is easier to provide internet
access to more people with little investments in new infrastructure.
34
2.3 THE CONCEPT OF SUSTAINABLE COMPETITIVE ADVANTAGE
2.3.1THE DEFINITION OF SUSTAINABLE COMPETITIVE
ADVANTAGE
Grant (1995) argues that competitive advantage is the ability of a firm to outperform
rivals on the primary goal of profitability. Barney (1991:102) takes the definition
further suggesting that a firm is said to have sustainable competitive advantage
when it is implementing a value creating strategy not simultaneously being
implemented by any current or potential competitors and when these other firms are
unable to duplicate the benefits of this strategy.
Barney (1991) contends that resources that create this advantage have value,
rareness, inimitability and non substitutability. Mata et al (1995) agree with Barney
(1991) stating that for a resource to give sustainable competitive advantage, it must
be valuable, it must not be possessed by many competitors in the industry and it
must not be easily available for competitors to acquire. In addition Bharadwaj (1993:
84) in Maisiri (2006) also emphasizes that competitive advantage is only sustainable
if the advantage resists erosion by competitor behaviour.
Byrd and Turner (2001) in Basutu (2005) argue that IT is a highly transferable
resource, a necessary but not a sufficient condition for sustainable competitive
advantage. Powel and Dent (1997) differ and maintain the position that IT is not a
highly transferable resource, and therefore, it is both a necessary and sufficient
source of competitive advantage. Given Zimbabwe’s harsh economic environment
and the fact that e-commerce is a resource easy to imitate, we agree with Byrd and
Turner. In other words our position is that e-commerce competitive advantage are
quickly copied and firms have got to innovate quickly in order to keep on having
these advantages.
Mata et al (1995) reinforce our view stating that the use of proprietary technology as
a source of sustainable competitive advantage has proved to be difficult because IT
35
applications are difficult to patent. Workforce mobility has been found to reduce the
extent to which the proprietary technology is kept secret from competitors.
Competitors can easily get access to technical know how by hiring the workforce
involved in the development of the proprietary technology.
2.3.2 PORTER’S THREE GENERIC STRATEGIES
Porter’s Three Generic Strategies Model contends that a competitive strategy can
take a defensive or offensive action to create a defendable position in industry in
order to cope successfully with competition and generate superior profits (Porter,
1985). The basis for this above average performance within an industry is based on
a sustainable competitive advantage.
Fig 2.4. Three Generic Strategies (Porter,1995)
36
Fig 2.4 above summarises the three strategies that firms can use to create
competitive advantage: overall cost leadership, differentiation, and focus (Grant,
1995). Each strategy is uniquely implemented to overcome forces affecting
competitive strategy including threats from substitute products and new market
entrants, bargaining power of suppliers, buyers, and rivalry among existing
competitors.
2.3.2.1 Overall Cost Leadership Strategy
An overall cost leadership strategy attempts to offer lowest cost product or service to
customers relative to a firm’s rivals (Porter, 1985). To achieve this there should be
efficient management of the entire value chain. In other words, costs must be
rigorously controlled from raw material purchases to distribution channel delivery.
Lumpkin et al (2002) argue that cost leadership concentrates on a company’s value
chain resulting in low-cost products and services. Lumpkin implies that companies
using this strategy have to hammer down costs at each point in the value chain.
Brand is relatively unimportant, reputation for quality is marginal at best, but
customers can find low-cost products with minimal effort.
Internet technology offers new ways for overall cost leaders to minimize costs.
According to Lumpkin et al (2002) this is achieved through price decreases via
decreased transaction costs. Therefore in order to achieve cost leadership firms
need to re-examine transaction costs from procurement to distribution and after
service. This examination need to be critically done for every input in the e-
commerce value chain. Internet based procurement and disintermediation which is
the removal of intermediaries between supplier and the purchases, are good
examples of this cost control component of e-commerce.
E-commerce also offers cost leaders with abilities to reduce costs in the primary
activities of the value chain such as marketing in B2C e-commerce and supporting
activities such as purchasing e.g. on-line auction procurement (Perreault et al,
37
1999). According to Lumpkin et al (2002) e-commerce can reduce value chain costs
in a variety of ways which include:
• Web-based inventory control systems that reduce storage costs by providing
real-time ordering and scheduling to manage demand more efficiently
• Direct access to status reports and the ability of customers to check work-in-
progress to minimize rework.
• On-line bidding and order processing to eliminate the need for sales calls and
decrease sales force expenses.
• On-line purchase orders for paperless transactions to decrease costs of both
the supplier and purchaser.
• Collaborative design efforts to reduce the cost, and cycle time of new product
development. On-line testing and evaluation of job applicants by human
resources departments.
However the sustainability of competitive advantage maybe problematic since rivals
can easily mimic successful strategies by first movers.
2.3.2.2 Differentiation Strategy
Porter (1985) agrees with Grant (1995) that differentiation positions a company to
compete on the uniqueness and value of its products or services. Grant (1995)
further argues that a well known brand image, a strong reputation, and quality
products and services are the characteristics of a differentiation strategy. Gains in
image, reputation and quality come at a cost to consumers; they pay a premium
compared to overall cost leadership products and services (Grant, 1995).
Lumpkin et al (2002) argue that a firm pursuing a differentiation strategy offers
products or services that are viewed as unique and valued by customers. Such firms
achieve differentiation advantages when price premiums exceed the extra costs
incurred in being unique. Differentiators reduce costs in all areas that do not affect
differentiation. For differentiators, mass customization enhances how companies
respond to consumer demand (Lumpkin et al, 2002). E-commerce has enhanced the
38
interaction between the manufacturer and the customer. Strategies such as on-line
mass customization have enabled firms to decrease costs while enhancing product
offerings, maintaining reputations for quality and preserving brand image. Forward-
thinking organizations anticipate situations where they can capitalize on internet
advantages through the value chain including (Grant, 1995:23):
• Internet based knowledge management systems linking all parts of the
organization to shorten customer response times.
• Real-time access to manufacturing operations status such as scheduling and
delivery information to empower sales forces and channel partners.
• Personalized on-line access to provide customers with their own “site-within a
site” to track orders and process new orders.
• Rapid on-line response to service requests and fast feedback to customer
surveys and product promotion to improve marketing efforts.
• Access to real-time sales and service information to continually update
research and development efforts.
• Automated procurement and payment systems to provide suppliers and
customers detailed status reports and purchasing histories.
The ability of e-commerce to enable mass customization has provided firms with
tools that offer unique product offerings and exceptional service. As competing
companies adopt applications of these technologies, internet based differentiation
becomes more challenging.
2.3.2.3 Focus Strategy
Grant (1995) argues that a focus strategy is used by companies to position them in a
market niche. Porter (1985) also contends that to focus pursue a focus strategy
companies concentrate on a narrow market segment. Within their particular niche,
they create competitive advantage over rivals through either cost leadership or
differentiation tactics.
39
The internet offers new avenues to compete by accessing markets less expensively
(low cost) and providing specialized services and features (differentiation). This is
especially important for small firms; and as such the internet has opened markets for
small players that were previously inaccessible. Technology based efficiencies are
available to firms using focus strategies. These efficiencies reduce the importance of
scale advantages. According to Grant (1995:33) focusers use the internet to create:
• Permission-marketing techniques that narrow sales efforts to specific
customers who opt to receive advertising notices;
• Chat rooms; discussion boards, and member functions for customers with
common interests;
• Niche portals targeting specific groups with specialized interests;
• Streamlined browsing capabilities to focus customer search efforts within a
specific domain;
• Procurement efforts using techniques to match buyers with sellers.
Firms using focus strategies must effectively deploy resources in analyzing value
chain activities to compete successfully. Both primary and supporting activities can
be improved through single mindedness characteristic of firms using a focus
strategy.
2.3.2.4 An Evaluation of Porter’s Generic Strategies
Porter’s generic strategies framework suggests that a company can maximize
performance by striving to be the cost leader in an industry, by differentiating its
products or services from those of other companies, and by focusing on a narrow
target in the market (Grant, 1995). A company that attempts to combine cost
leadership and differentiation strategies would invariably be stuck in the middle.
In practice, most successful companies make use of a combination of low cost and
differentiation strategies. Thompson and Strickland (1990) argue that a weakness of
Porter’s Generic Strategies is that it is difficult to distinguish between differentiation
40
and cost strategies. It is very difficult for most companies to completely ignore cost,
no matter how different their product offering is. Similarly, most companies will not
admit that their product is essentially the same as that of others (Macmillan et al,
2000). As such, the generic strategies serve as a good starting point for exploring
the concepts of cost leadership and differentiation not as an end in them.
2.3.3 THE RESOURCE BASED VIEW OF THE FIRM
Barney (1991) contends that firms obtain sustainable competitive advantage by
implementing strategies that exploit their internal strengths, while neutralising
external threats and avoiding internal weaknesses as detailed the resource-based
view of strategy. The resource-based view (RBV) argues that firms possess
resources, a subset of which enables them to achieve competitive advantage, and a
subset of those that lead to superior long-term performance. Forsman (2000) argues
along Barney (1991) that it is more relevant to consider a firm’s resources as a
phenomenon having two sides. In line with this argument Forsman (2000) proposes
that ‘à priori’ distinction should be made between strategic core resources and
critical supporting resources as illustrated in fig. 2.5.
Figure 2.5. Two types of fundamental resources underlying competitive advantage (Forsman, 2000).
41
Accordingly, the Strategic core resources available for a firm are those resources
that are the primary source of the competitive advantage and represent the core
idea around which the business is build. Forsman (2000) strongly contends that
without these resources a real competitive advantage cannot be created.
Barney (1991) calls these strategic core resources: Resources that are valuable and
rare. He agrees with Forsman (2000) that such resources can lead to the creation of
competitive advantage. That advantage can be sustained over longer time periods to
the extent that the firm is able to protect against resource imitation, transfer, or
substitution.
Fig 2.6. Sustained Competitive Advantage Though the RBV Model (Barney, 1991)
Barney (1991) in the RBV assumes that strategic resources are heterogeneous and
immobile across firms, and that these resources are stable over time. Four empirical
indicators of the potential of firm resources to generate sustained competitive
advantage are proposed: value, rareness, imitability and substitutability (See fig.
2.6). Within this context, for a firm resource to have the potential of generating
competitive advantage, it must be:
• valuable, in the sense that it exploits opportunities and/or neutralises threats
in a firm’s environment;
• rare among a firm’s current and potential competition;
42
• imperfectly imitable (either through unique historical conditions, causal
ambiguity, or social complexity); and
• without strategically equivalent substitutes.
Jack (1996) argues that the RBV model’s strength is that it emphasizes the
importance of a firm’s resource endowments in creating sustained competitive
advantage. Barney (1991) agrees that the model rightly assumes that managers are
limited in their ability to manipulate all the attributes and characteristics of the firm,
which in turn makes them imperfectly imitable and hence the provision of sustained
competitive advantage. Hence, Jack (1996) further contends that the weakness of
the model is that when dealing with e-commerce competitive advantage can be
easily imitated. He argues that the internet and e-commerce applications are
resources which are not rare and can be easily imitated. It therefore becomes the
challenge of the management as to how to make their strategy unique and
inimitable.
2.3.4 E-COMMERCE AND COMPETITIVE ADVANTAGE
2.3.4.1 Introduction
Porter (1985) as evidenced from the previous sections argues that achieving a
sustainable competitive advantage can be achieved by operating at a lower cost, by
commanding a premium price, or by doing both. Accordingly, cost and price
advantages can be achieved in two ways which are operational effectiveness and
strategic positioning.
Operational effectiveness is doing the same things your competitors do but doing
them better (Porter, 2001). Operational effectiveness advantages can take myriad
forms, including better technologies, superior inputs, better-trained people, or a more
effective management structure. Strategic positioning is doing things differently from
competitors, in a way that delivers a unique type of value to customers (Porter,
43
2001). This can mean offering a different set of features, a different array of
services, or different logistical arrangements.
E-commerce affects operational effectiveness and strategic positioning in very
different ways. It makes it harder for companies to sustain operational advantages,
but it opens up new opportunities for achieving or strengthening a distinctive
strategic positioning.
2.3.4.2 E-commerce’s influence on Operational Effectiveness
Porter (2001) argues that Internet e-commerce is arguably the most powerful tool
available today for enhancing operational effectiveness. Grant (1995) agrees that by
easing and speeding the exchange of real-time information, it enables improvements
throughout the entire value chain, across almost every company and industry. Porter
(2001) further contends that because the internet is an open platform with common
standards, companies can often tap into its benefits with much less investment than
was required to capitalize on past generations of information technology.
Hobart (2001) argues that companies only gain advantages if they are able to
achieve and sustain higher levels of operational effectiveness than competitors.
Hoffman (2000) disputes this argument stating that it is exceedingly difficult to
sustain an advantage even in the best of circumstances. The point is that once a
company establishes a new best practice, its rivals tend to copy it quickly. Horbart
(2001) observes that the best practice competition eventually leads to competitive
convergence, with many companies doing the same things in the same ways. Along
the same line of reasoning, customers end up making decisions based on price,
undermining industry profitability.
Jack (1996) states that the nature of Internet e-commerce applications makes it
more difficult to sustain operational advantages than ever. Jack (1996:45) further
reasons as follows:
44
In previous generations of information technology, application development
was often complex, arduous, time consuming, and hugely expensive. These
traits made it harder to gain an IT advantage, but they also made it difficult for
competitors to imitate information systems. The openness of the Internet
combined with the advances in software architecture, development tools, and
modularity, makes it much easier for companies to design and implement
applications. As the fixed costs of developing systems decline, the barriers to
imitation fall as well.
Hoffman (2000) contends that today, nearly every company is developing similar
types of e-commerce applications, often drawings on generic packages offered by
third-party developers. The resulting improvements in operational effectiveness will
be broadly shared, as companies converge on the same applications with the same
benefits (Sinha, 2000). Very rarely will individual companies be able to gain durable
advantages from the deployment of "best-of-breed" applications (Jack, 1996).
2.3.4.3 E-commerce’s influence on Strategic Positioning
Due to the advent of internet e-commerce, the above sections have shown that it
has become harder to sustain operational advantages and strategic positioning
becomes all the more important. Porter (1985) argues that if a company cannot be
more operationally effective than its rivals, the only way to generate higher levels of
economic value is to gain a cost advantage or price premium by competing in a
distinctive way. Thompson and Strickland (1990) agree that without a distinctive
strategic direction, speed and flexibility lead nowhere. Either no unique competitive
advantage is created, or improvements are generic and cannot be sustained.
Having a successful e-commerce strategy now requires more discipline. Porter
(2001) argues that e-commerce strategy requires a strong focus on profitability
rather than just growth, an ability to define a unique value proposition, and a
willingness to make tough trade-offs in choosing what not to do. A company must
45
stay the course, even during times of upheaval, while constantly improving and
extending its distinctive positioning (Porter and Millar, 1985). E-commerce strategy
now goes far beyond the pursuit of best practices of strategizing. Shingh (2003)
proposes that e-commerce strategies have to involve the configuration of a tailored
value chain to be defensible. In other words, when a company's activities fit together
as a self-reinforcing system, any competitor wishing to imitate a strategy must
replicate the whole system rather than copy just one or two discrete product features
or ways of performing particular activities.
2.3.4.4 Achieving competitive advantage through e-commerce strategies
How Overall Cost Leadership can be achieved by E-commerce
Lumpkin et al (2002) contend that business fundamentals need to be adhered to for
businesses to successfully implement e-commerce and achieve advantages.
According to Lumpkin et al (2002:6):
The service and capability offered by businesses have to be made
uninimitable. For cost leadership advantages companies have to continue
focusing on all cost centres, decrease expenses and maintain cost
advantages as well as reduce inventories using e-commerce real-time
communications to make production schedules and delivery systems more
efficient.
How differentiation advantages can be achieved by E-commerce
Firms can create capabilities so specialised for a given customer that the chance of
customers turning to other solution providers is greatly lessened (Tapscott, 2000).
There is still a great need to position products as unique and valuable to customers.
Overpricing of products has to be avoided.
How Focus advantages can be achieved by E-commerce
Porter (2001) agrees with Lumpkin et al (2002) that focusers can capitalise on e-
commerce to capture specialised market niches. This can be done using
46
technological capabilities to satisfy the needs of particular markets and reduce the
threat of new entrants by firmly establishing itself as the customer’s most valued
provider. Focusers need to read the scope and interests of their target markets
(Lumpkin et al, 2002). As such uniqueness and focus on markets need to be
maintained. A focus firm’s niche should be big enough to be profitable, but small
enough to lessen the attractiveness to potential new entrants.
Summary
According to Porter (2001), the creation of true economic value once is the final
arbiter of business success. Economic value for a company is nothing more than the
gap between price and cost, and it is reliably measured, only by sustained
profitability (Porter, 2001). As such, sustainable competitive advantage creation
involves making choices throughout the value chain that are interdependent (Porter,
2001). In other words, all company activities must be mutually reinforcing. This
process actually makes a strategy harder to imitate since the whole system of
competing is difficult to imitate.
2.4 THE E-COMMERCE VALUE CHAIN FRAMEWORK
2.4.1 THE E-COMMERCE VALUE CHAIN
Shingh (2003) argues that for electronic commerce, the value chain can be a
convenient means of being able to organize the examination of the business
processes within a business. Porter (2001) argues that the basic tool for
understanding the influence of information technology on companies is the value
chain. He defines the value chain as the set of activities through which a product or
a service created and delivered to customers.
Grant (1995) argues that when a company competes in any industry, it performs a
number of discrete but interconnected value-creating activities, such as operating a
sales force, fabricating a component, or delivering products, and these activities of
suppliers, channels, and customers. Porter (2001) then in agreement states that the
47
value chain is a framework for identifying all these activities and analyzing how they
affect both a company's costs and the value delivered to buyers.
Figure 2.7. The e-commerce value chain (Van Hooft and Stegwee, 2001)
Key:
E1 – E-Procurement
E2 – Fatory Floor Automation
E3 – E-Fulfilment
E4 - Web Site and Web Marketplace
E5 – CRM and E-Service
Because every activity in the value chain involves the creation, processing, and
communication of information, information technology has a pervasive influence on
the value chain. The special advantage of Internet e-commerce is the ability to link
one activity with others and make real-time data created in one activity widely
Primary Activities
Inbound logis
tics
Oper
atio
ns
Outb
ound logis
tics
Mar
ket
ing a
nd S
ales
Procurement
Technology Development
Human Resources Management
Firm Infrastructure
Ser
vic
e
Customer Relations
Margin
Support
Act
ivitie
s
E-learning
Collaborative Engineering
E 1 E 2 E 3 E 4 E 5
48
available, both within the company and with outside suppliers, channels, and
customers. Taking the value chain (Porter and Millar, 2001) and placing e-commerce
into the framework gives an insight into the reach of e-commerce into the value
activities.
Figure 2.7 above shows how e-commerce reaches all activities of the organization.
Linkages already exist between activities; some of these linkages have been
integrated by using e-business technologies, ultimately providing a fully integrated e-
commerce process. It is important to realise that these new applications have to be
integrated with supporting and, if applicable, primary processes to prevent creating
islands of automation.
The physical processes might have to be rearranged to better align the original value
chain to the new e-commerce oriented value chain. Integration of the physical
processes and e-business applications is essential to achieve maximum results.
Analysing the e-commerce value chain can help in lowering the costs and increasing
the value of activities.
Taking the Web marketplace as an example, one can see that, if a marketplace
requires sound estimates for the delivery time of a product, e-fulfilment systems
have to be in place and the factory floor automation has to be capable of providing
this information. Supporting processes are not only the technical infrastructure, but
also the databases holding all information and people capable of working with the
systems.
2.4.2 EXTERNAL, CUSTOMER-SUPPLIER LIFE CYCLE
For the purpose of further analysing relationships between suppliers and customers,
Kettinger and Hackbarth (1997) in Shingh (2003) introduced the Customer/Supplier
Life Cycle (C-SLC) Theory. The purpose was to provide a way of isolating a
company’s buying and selling activities to better understand the interrelationships
49
between customers and suppliers’ business processes and their interactions in the
company. The C-SLC framework is a particularly useful planning tool to help
structure a review of existing business processes to determine the potential for
turning these into e-processes (Kettinger and Hackbarth, 1997). Because every
company is both a customer and supplier, the C-SLC can be used from both the
supplier and customer perspectives:
From a supplier’s perspective, it is important to effectively target the market and
advertise for customers, evaluate their product and service requirements and
respond to their requests, deliver in a timely manner, and support customers after a
sale. Concurrently, customers are searching for product and service information with
the intent of more clearly specifying their own requirements, evaluating and selecting
a supplier, and ultimately ordering and receiving a product or service (Kettinger and
Hackbarth, 1997). Evaluating the current customer life cycle with selected customers
might give new insights of where initiatives can best be made to increase the value
offered to the customer.
2.4.3 INTERGRATING INTERNAL AND EXTERNAL PERSPECTIVES
Kettinger and Hackbarth (1997:67) outline that:
It can occur that both internal and external processes become interconnected.
For example, the automation of procurement (e-procurement) involves
investigating the buying activities but also involves integration with internal
processes and systems. So not only do the processes themselves but also
the integration and automation through e-business become a topic of
investigation. After the focus on parts of the C-SLC has been decided, the
impact on current systems and processes has to be assessed.
The e-commerce value chain (introduced in Figure 2.7) can help in this assessment.
Taking the example of e-procurement, it can be seen that this system affects both
the supporting (procurement) and primary (inbound logistics) processes; for the
50
example of the Web site, most linkages exist with the marketing and sales activity. In
both cases it is important that the appropriate supporting processes are in place.
Kettinger and Hackbarth (1997) argue that if an organisation’s processes consist of
multiple value chains, the steps described above can be repeated for each chain.
2.4.4 APPLYING THE E-COMMERCE VALUE GRID
After having identified areas where e-commerce could be used to support the
business strategy, specific e-business applications have to be specified. A
framework to identify opportunities from Web-based electronic commerce (EC)
applications has been developed by Riggins (1991) see section 2.3.5.3. Value is
generated in three different ways, by using EC applications to generate efficiency,
effectiveness and/or strategic benefits. It can be seen from the above mentioned
section that the dimensions of commerce and the dimensions of value creation apply
to all areas of the e-commerce value chain.
2.5 CONCLUSION
This chapter has shown that while it is easy to create competitive advantage utilizing
e-commerce, it is a more daring task to build sustainable competitive advantage
using the same technology. Although e-commerce is now a requirement for
engaging in competitive business, it has been proven not to be enough in itself for
sustainable competence. Chapter two has also shown that e-commerce
implementations are easy to imitate and lower entry barriers as a result lowering a
company’s profitability.
It has been explained how no single strategy is enough to guarantee sustainable
competitive advantage in e-commerce. What comes out is that it is essential to
combine e-commerce strategies with traditional strategies so as to maintain
competitive advantage. Given Zimbabwe’s economic environment of a
Manufacturing Industry that has a limited infrastructure, the recommended approach
is to utilize the Hierarchical Framework of e-commerce to develop an enabling
51
infrastructure, maintain the services being provided by the company whilst
developing electronic marketplaces. This approach will enable a company to target a
global market whilst maintaining its current clientele.
The Manufacturer can further employ the Electronic Value Grid to find means of
better serving customers. The model will assist in developing improved efficiency
and effectiveness of processes. The company needs to use the above mentioned
tools together with other strategy planning tools. Porter’s five forces model and the
three generic strategies can be used to understand competition better and employ
the best chosen generic strategy to create competitive advantage.
Finally, the RBV helps to analyse resources and protect against imitation, although
this study has shown that this is a difficult task with e-commerce. As such, the
modified Value Chain Model which is the EC- Value chain is used hand in hand with
the C-SLC in applying e-commerce to the Value chain in the creation of value and a
close alignment of the e-commerce strategy with the relationship between suppliers
and customers. This analysis gives insight of where initiatives can be best made to
increase value offered to customers. In conclusion, since competitors can
imperfectly imitate the above mentioned value creation process, sustainable
competitive advantage can be created.
52
CHAPTER 3
RESEARCH METHODOLOGY
3.0 RESEARCH METHODOLOGY
3.1 INTRODUCTION
The previous chapter has discussed the literature on e-commerce and competitive
advantage, including the conceptual framework on these concepts. This chapter
analyses some of the theories surrounding the research methods and provides a
design of how the research was carried out. This research was undertaken on
Victoria foods only instead of the whole milling industry due to time constraints. The
responses were tested and analysed with the aim of accepting or rejecting the
hypothesis.
3.2 RESEARCH DESIGN
Marczyk, DeMatteo and Festinger (2005) argue that research design is used to
structure the research to show how all the major parts of the research project will
work together to address central questions. This current research pursued a non-
experimental, deductive approach in order to test theory based on observation.
Specifically it employed surveys to arrive at conclusions in line with Robson (1997)
who contends that surveys are appropriate for descriptive studies. He argues that
descriptive studies portray an accurate profile of situations and can be qualitative or
quantitative.
3.2.1 RESEARCH PHILOSOPHY
Deductive and Inductive Reasoning
Marczyk et al. (2005) contend that to ground research a deductive reasoning or
inductive reasoning approach can be used. Gill and Johnson (2003) further propose
53
that a deductive research entails the development of a conceptual and theoretical
structure prior to testing through empirical observation. Trochim (2002) then
elaborates deductive reasoning stating that it follows a “top-down” approach in which
theories of research are first stated. These are then narrowed down to a hypothesis,
research questions and observations are then used to confirm the theories.
However, Gill and Johnson (2003) argue that the problem associated with deductive
reasoning is that cause-effect relationships are usually mistaken into thinking that
the reverse relationships are also true. For example if all new farmers borrowed
seed maize from Seedco last year and Murimi borrowed seed maize from Seedco, it
does not follow that Murimi is a new farmer.
Gill and Johnson (2003) argue that the logical ordering of induction is the reverse of
deduction. They base their argument on the fact that induction involves the
construction of explanations and theories about what has already been observed.
Marczyk et al (2005) agree with Gill and Johnson (2003) stating that inductive
reasoning starts with specific observations which are combined with other
observations using generalizations and statistical inferences to arrive at conclusions.
Gill and Johnson (2005) agree with Marczyk et al (2005) that generalisations in
inductive reasoning can have problems when one hastily generalizes without
sufficient information. Trochim (2002) also points out that another form of error
associated with generalization is exclusion which occurs when important evidence is
not used in the inductive reasoning process. According to Trochim (2002) during
statistical inferences, problems can result if an unrepresentative sample is used to
draw conclusions.
This research followed the deductive approach by first theorising about e-commerce
and its implementations. It analysed concepts of the value chain and competitive
advantage and then surveys were taken to confirm the studied theories. It also
incorporated inductive reasoning to eliminate the limitations of either process.
54
Realism vs. Nominalism
Avison and Fitzgerald (1995) outline the importance of a philosophical approach in
designing a research project. According to Burrell and Morgan (1979) in Gill and
Johnson (2003), ontology refers to the worldview or reality which is divided between
realism and nominalism. Realism assumes that the world is external to and existed
before the researcher and hence can be observed using structured tools such as
questionnaires. Nominalism argues that although the world exists, it does so only in
the minds of the researcher and hence can not be observed but experienced
through participation.
The researcher exploited both the realism and nominalism approaches. The
researcher employed questionnaires and interviews to externalise himself from the
participants. To eliminate bias, the researcher took the respondents’ views without
trying to correct wrong perception or to incorporate his views. The researcher also
allowed his experience as part of the Management and a member of the Information
Systems (IS) department to accurately assess the e-commerce conditions and setup
of the company.
Epistemology
Epistemology refers to an inquiry into the nature of knowledge and how one might
begin to understand the world and communicate this as knowledge
(www.library.uow.edu.au). According to Burrel and Morgan (1979) in Gill and
Johnson (2003) the epistemological debate is hinged on two premises which are
positivism and anti-positivism. Positivism asserts that knowledge is in a tangible form
and can be observed. As such, true or false can be used as a basis for hypothesis
testing. Anti-positivism calls for participatory observation as it asserts that knowledge
is soft and can only be understood from the point of view of individuals directly
involved in the activities.
55
The researcher combined both the positivism and anti-positivism approaches in his
research. The researcher took a participatory approach as part of Victoria Foods IS
Management. He incorporated his experiences with e-commerce in the firm. The
researcher also employed hypothesis testing to test the relationship between e-
commerce utilisation and company profitability.
Nomothetic vs. Ideographic Methodologies
Methodology is a method of research as one investigates and obtains knowledge
about the social world (www.library.uow.edu.au). The methodological research is
split between nomothetic and ideographic principles (Burrel and Morgan, 1979). Gill
and Johnson (2003) argues that any method adopted for research adopts a position
on a continuum according to its relative emphasis upon the characteristics
summarised in the Table Below:
Table 3.1: A comparison of Nomothetic and Ideographic Methodologies
(Ghauri and Gronhaug, 2002)
Nomothetic Methods emphasise Ideographic methods emphasise
1 Deduction vs. Induction
2 Explanation via analysis of causal
relationships and explanations by
covering-laws
vs. Explanation of subjective meaning
systems and explanation by
understanding
3 Generation and use of quantitative
data
vs. Generation and use of qualitative data
4 Use of various controls, physical or
statistical so as to allow for the testing
of hypothesis
vs. Commitment to research in everyday
settings, to allow access to the subjects
of research
5 Highly structured research
methodology to ensure replicability of
no.s 1,2,3 and 4 above
vs. Minimum structure to ensure nos. 2,3
and 4 above (and as a result of no.1)
Lab Experiments, Quasi-experiments Surveys, Action Research
Methodology Continuum
56
In a summary, Burrel and Morgan (1979) imply that according to nomothetic
principles, the world can be delineated and observed and natural scientific methods
can be used for hypothesis testing. Their ideographic principle assumes the position
that an environment can not be observed, but experienced hence unstructured
interviews and autobiographies are the best research methods. After considering
Ghauri and Gronhaug (2002) and Burrel and Morgan (1979), the current research
employed ideographic methods by using surveys and structured interviews.
However, quantitative data and deductive reasoning were also utilised to eliminate
the weaknesses of qualitative data.
3.2.2 RESEARCH STRATEGY
Ghauri and Gronhaug (2002) argue that were empirical evidence is obtainable and
knowledge exists in tangible forms case studies can be used to support surveys.
Marczyk et al (2005) further argue that where business phenomena can be
delineated and independently observed questionnaire surveys can be employed. For
the purpose of our research the company strategy documents and business memos
were easily available to the researcher.
The researcher was also able to exploit his ICT experience and skills to delineate e-
commerce variables in questionnaire parameters. As such, the research employed
surveys in the form of structured questionnaires to collect quantitative information
from Victoria Foods’ management and employees. This is in line with Robson (1997)
who argues that surveys are well suited to descriptive studies where the interest is in
proportions of attributes. According to him, surveys can be used to provide data for
hypothesis testing. Interviews were then employed to source qualitative data. Case
studies were carried out in the form of documental review of the company strategy
documents and memos to verify Interview and survey findings.
57
3.2.3 POPULATION AND SAMPLING TECHNIQUES
Gill and Johnson (2003) argue that all surveys are concerned with identifying the
‘research population’ which will provide all the information necessary for answering
the original research question. Creswell (2002) then defines a population as a
collection of random variables under study about which one is trying to draw
conclusions in practice.
According to the above is definitions, the population should be specifically defined in
the research to include only sampling units with characteristics relevant to the
problem. In this research, the population was defined as all the business units of
Victoria Foods. Individual business units constituted the population elements of
which measurements were taken. Below we outline some of the sampling
procedures that can be used for sampling.
Sampling Procedures
Sampling procedures can be divided into two broad categories: probability and non-
probability sampling. Ghauri and Gronhaug (2002) argue that inferences can be
made from a known non-zero probability sample, while inferences within non-
probability samples are only valid within certain limits. Hence, non-probability
samples include convenience, judgemental and quota samples. Churchill (1995)
states that while in a convenience sample units that are convenient for some reason
are selected, judgemental sampling uses judgement to get a sample that is
representative of the population. Further, quota sampling makes sure that certain
sub-groups of units are represented in samples in approximately the same
proportion as they are represented in the same population.
In this research judgemental sampling was used to select a sample of 50 employees
and managers from the company’s 500 employees. A sample of 50 was chosen
since only 84 employees are computer users. This 60.2% of computer users were
sampled judgementally for questionnaire surveys. The researcher chose
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respondents as shown in the table below to represent the population according to
employee hierarchical level proportions. Ghauri and Gronhaug (2002) argue that
while non-probability samples are easy to select, they have potential to bring out an
unrepresentative of the population. An unrepresentative sample then leads in
misleading results. In order to minimise these potential shortcomings of non-
probability samples, the researcher also employed stratified sampling as detailed
below.
Table 3.2 Judgemental Sampling Criteria
Target Groups No. of
Questionnaires
Total No. of
Personnel
Percentage
of Personnel
chosen (%)
Directors & Senior
Management 6 10 60.0%
Line Managers 25 42 59.5%
Non Managers 19 31 61.3%
Total 50 84 60.2%
Fowler (1988) argues that stratification is employed to cater for characteristics that
may not be present in the same proportions in a population. A random sample was
employed within each target group taking each group as a stratum. The rational was
according to Creswell (2002) who states that well chosen strata provide the ability to
generalize a population. Stratification was employed so as to equally cater for all
levels of hierarchy within the organization. Gill and Johnson (2003) contend that
prior knowledge of the make-up of the population from which a sample is to be
drawn will assist in the stratification process.
For our population exposure to the variables under investigation differed in different
employee levels. The target group population of computer users was used to stratify
as shown of table 3.2 above. A total of 50 questionnaires were distributed according
to table 3.2 as shown. The composition of samples per department was distributed
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as shown on table 3.3 to make sure that all departments were represented in the
survey.
Table 3.3: Departmental Composition of Questionnaires
Finance 11
IS 4
Marketing 9
Production 6
HR & Admin 10
Technical 4
Logistics 6
Total 50
3.2.4 DATA COLLECTION METHODS
There are certain broad categories that encompass the common types of data
collection techniques. The research question and the nature of the variables under
investigation usually drive the choice of measurement strategy for data collection
(Marczyk et al, 2005). Some of the common techniques are experimental research,
observation, survey, case study, documentation review and focus groups. We will
describe observation, document review, surveys and case studies since they are
more relevant to our research.
3.2.4.1 Observation
The researcher carefully observes and records behaviour on subjects of interest.
These observations are carried out in the subject’s natural setting. Observation
methods can be divided into direct observation and abstraction. In direct
observation, primary data can be collected by directly observing the respondent in
question (Creswell, 2002). The difficult with this technique is that there is no
opportunity for probing since it’s a passive form of data collection. This method of
research was not used since the personnel under observation were affected by
being observed and changed behaviours due to being observed.
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Cooper and Schindler (1998) in Sangula (2007) argue that abstraction involves
consulting and extracting data from a variety of source documents. Its advantage is
that data can be accessed from existent records at a very short space of time
(Ghauri and Gronhaug, 2002). However, the observations are difficult to code and
therefore subject to manipulation. Using this method the researcher obtained a first
hand experience with participants and obtained information from strategy documents
and memos. Creswell (2002) supports this method arguing that the method is very
useful in exploring topics that maybe uncomfortable for participants to discuss.
However, senior management perceived the researcher as being too intrusive when
he sourced clarification of information detailed in the company documents.
Assurance that research finding were to be used for research findings and a letter
from the GSM, UZ assisted in getting maximum participation in this method of
research.
3.2.4.2 Interview Methods
Interview methods extract data from direct questioning (Creswell, 2002). Robson
(1997) contends that face-to-face interviews offer the possibility of modifying one’s
line of enquiry following up interesting responses and investigating underlying
motives in a way that postal and other self administered questionnaires cannot. Non-
verbal cue may give messages which help in understanding the verbal response.
There are different types of interviews besides face-to-face interviews which include
postal surveys, telephone interviews and questionnaires. Postal interviews are
suitable in large populations and are cost effective. The researcher employed
structured interviews to obtain detailed and specific information from senior
management. A selective number of ten senior managers and three executives
were interviewed from a set of questions (See Appendix B). The questions
presented to these executives sought to determine the strategies that were being
pursued by Victoria Foods. Certain questions set to determine the awareness of
senior management to e-commerce. Some questions set to determine the level
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utilisation of e-commerce and establish whether it had helped the company become
more profitable. The researcher also sought to discover hindrances to e-commerce
by a set of questions.
The process proved time consuming and required persistence since the respondents
were busy people and not easily accessible. The researcher also found this research
tool difficult to employ since he was also part of management and the IS team. The
actual interview sessions varied in length due to time limitations of different
managers. The researcher had to standardise the interviews to 15 minutes so as to
allocate the same time to all respondents. To avoid much inconveniences, the
researcher made appointments via e-mail and telephone prior to interviewing visits.
Goodman (2000) in Ghauri and Gronhaug (2002) states that certain biases exist due
to the tendency by the interviewer to ask wrong questions and be supplied with
answers he expects to get. The researcher sought to eliminate such errors by
avoiding leading questions and taking a listener approach instead of providing
suggestions. Probing was only applied as a means of seeking clarifications.
The researcher used postal interviews to source responses from two branch
managers who were in Gweru and Bulawayo. Ghauri and Gronhaug (2002) contend
that postal interviews eliminate interviewer bias and provide anonymity of
respondents. However the branch managers were not anonymous, therefore
removing the anonymity advantage. The researcher had to utilise the telephone for
further probing the branch manager on their responses in order to overcome the
challenge of distance.
3.2.4.3 Survey
Robson (1997) states that the survey method involves the collection of standardized
information from a specific population. He further contends that survey methods are
not limited to means of questionnaires or interviews. Ghauri and GronHaug (2002)
state that in survey methods relatively small amounts of information are collected
62
from many individuals. This is the opposite of a case study, where a great deal of
information might be obtained from a ‘key informant’.
Marczyk et al (2005) further contend that survey studies ask large numbers of
people questions about their behaviours, attitudes, and opinions. Other survey
studies attempt to find relationships between the characteristics of the respondents
and their reported behaviours and opinions. The survey study which the researcher
chose sought to examine whether there was a relationship between the utilisation of
e-commerce and the achievement of competencies. In order to arrive there it also
sought to investigate the level of utilisation of e-commerce at Victoria Foods. Ghauri
and GronHaug (2002) argue that when surveys are conducted to determine
relationships as above, they are referred to as cor-relational studies.
Question Design and Formatting
In surveys there is no attempt to manipulate variables (Robson, 1997). According to
Robson (1997) surveys are often cross-sectional studies meaning that the focus is
on the make-up of the sample and the state of affairs in the population at just one
point in time. This type of method has to use a large sample and confidence
depends on the quality of individual responses (Creswell, 2002). The researcher
designed questionnaires to collect factual and attitudinal information. This was done
in order to source information for evaluating the research questions.
The designed questions sought responses on the following variables:
a) E-commerce awareness and utilisation
b) E-commerce strategy and implementation
c) E-commerce contribution to business performance
d) Barriers to E-commerce
Each variable had a set of questions sourcing responses which source to identify
awareness of different variables and the level of responses and attitudes. Nominal
63
scales of yes/no responses were used to find out awareness of different issues.
Likert scales were used to rank attitudes and levels of responses to different
variables. Rankings of 1 to 5 for strength of responses, 0 % to 100% in evaluation of
usage and levels of utilisation, and Least to Most were used for different questions.
To carter for ignorance of certain issues the “I don’t know” option was also used.
Administration of the Surveys
Although a variety of methods for administering surveys are available, the most
popular are face-to-face, telephone, and mail. In general, each of these methods has
its own advantages and disadvantages. Ghauri and Gronhaug (2002) contend that
the major consideration for the researcher in deciding on the form of survey
administration is response rate versus cost. Ray & Ravizza (1988) in Mukarati
(2005) suggest that if a high rate of return is the main goal of research, then face-to-
face or telephone surveys are the optimal choices, while mail surveys are the
obvious choice when cost is an issue. The researcher utilised face-to-face surveys
and e-mail surveys for administering questionnaires at the head office. Branch
respondents were reached via mail delivery. Phone calls, e-mails and face-to-face
visits were used to pursue responses.
3.2.4.4 Case Study
Marczyk et al (2005) argue that case studies involve an in-depth examination of a
single person or a few people. They state that the goal of the case study is to
provide an accurate and complete description of the case. Ghauri and Gronhaug
(2002) agree that the principal benefit of case studies is that they can expand our
knowledge about the variations in human behaviour. According to this view, the
focus of the case-study approach is on individuality and describing the individual as
comprehensively as possible. Marczyk et al (2005) further contend that the case
study requires a considerable amount of information, and therefore conclusions are
based on a much more detailed and comprehensive set of information than is
typically collected by experimental and quasi-experimental studies. This research
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utilised Case studies an in-depth interview with the Managing Director, the Finance.
These interviews sought to clarify research findings from questionnaires and
interviews with other managers. A clarification of strategy documents and memo
reviews were also sourced.
The information this case study provided was able to verify and rectify certain
misconceptions by the researcher. Kazdin (2003) contends that the naturalistic and
uncontrolled methods of case studies have set them aside as a unique and valuable
source of information that complements and informs theory, research, and practice.
According to Kazdin (2003c), case studies serve as a source of research ideas and
hypotheses; they enable for the study extremely rare and low-base-rate phenomena,
and they can describe and detail instances that contradict universally accepted
beliefs and assumptions. The researcher employed the case study approach to
query questionnaire and interview findings.
Case studies also have some substantial drawbacks. First, they merely describe
what occurred, but they cannot tell us why it occurred. The researcher only used
case studies as a verification tool since they involve a great deal of experimenter
bias. Markczyk et al (2003) argue that case study is more at risk with respect to
experimenter bias in that it involves considerably more interaction between the
researcher and the participant than most other research methods. In addition, the
data in a case study come from the researcher’s observations of the participant.
Although this might also be supplemented by test scores and more objective
measures, it is the researcher who brings all this together in the form of a descriptive
case study of the individual in question.
Finally, the small number of individuals examined in these studies makes it unlikely
that the findings will generalize to other people with similar issues or problems. A
case study of a single person diagnosed with a certain disorder is unlikely to be
representative of all individuals with that disorder. The overall contributions of the
case studies cannot be ignored, since they provide substantially informed theory,
65
research, and practice, serving to fulfil the first goal of science, which is to identify
issues and causes that can then be experimentally assessed.
3.2.4.5 Document Review
This method makes use of public documents such as minutes of meetings and
private documents such as journals, diaries and letters among other organizational
documents. This method enables a researcher to obtain the language and words of
participants (Creswell, 2002). The researcher employed document review since he
could easily access documents at any time of convenient. The researcher collected
the Company’s strategy document and selected minutes on e-commerce from the
company library. Creswell (2002) contends that company documents provide an
unobtrusive source of information. The strategy documents provided information that
had been thoughtfully compiled since management took their time compiling and
planning the future of the company. However, certain memos were protected making
it difficult to verify e-commerce strategies that the company is pursuing.
3.2.4.5 Data Analysis
Ghauri and Gronhaug (2002) state that data analysis is the process of bringing
order, structure and meaning to the mass of collected data. Howard and Sharp
(1983) in Mukarati (2005) agree and further state that the role of data analysis is to
supply evidence which justifies claims that the research makes. Saunders et al
(2000) distinguish data analysis for qualitative and quantitative data by the use of the
characterisation presented in table 3.4 below.
The researcher used the two approaches documented by Saunders et al (2000) for
quantitative and qualitative data respectively. In other words, the study used
numerical scales to collect standardised data. Tables, histograms and pie charts
were used to analyse the quantitative data collected thereby. The researcher also
simplified and reduced qualitative data into proportions for analysis. The researcher
also used standardised categorisations to capture qualitative data collected in
66
interviews. Conceptualisation of the gathered qualitative data was performed in
order to develop meaningful information.
Table 3.4. Qualitative and Quantitative Data Analysis (Saunders et al, 2000)
Quantitative Data Qualitative data
1 Data analysis is based on meanings
derived
Based on meanings expressed
2 Collection results in numerical and
standardised data
Collection results in non-standardised
data requiring classification into
categories
3 Analysis conducted through the
used of diagrams and statistics
Analysis through the use of
conceptualisation
Qualitative data was used to complement quantitative data. Ghauri and Gronhaug
(2002) state that the following types of validity are empasised:
• Descriptive: Refers to the degree to which the actual description holds
true.
• Interpretive: Refers to how good the interpretation is.
• Theoretical: Refers to the adequacy of the suggested theory on
explaining the study under research.
• Generalisable: The extent to which the findings from the study can be
generalised to other settings.
The researcher checked the descriptive validity of qualitative data by cross checking
interview, questionnaire findings with his IS knowledge of the company. Data that did
not have all the 23 questions answered for the questionnaire was eliminated. This
67
criterion was also applied in questions with sub questions, if more than one sub
question was not answered. Quantitative data was coded and tested for associations
and relationship using the chi-squared test at 95% significance level to investigate
the relationship between e-commerce utilisation and the profitability of the company.
The researcher set to ensure interpretive validity by cross analysis of interview and
survey data. Since Victoria Foods is middle sized company, the researcher assumed
that findings of this research are generalisable to small and large companies given
the fact that the structure and set up of milling companies is standard and identical
throughout Zimbabwe. The next section summarises the procedure that was used in
this research.
3.3 RESEARCH PROCEDURE
In a summary, the choice research methods were structured surveys, interviews and
documental review. Our methods set to collect information from different employee
levels at Victoria Foods. The structured interview was targeted at senior
management who are the main implementers of strategies, while surveys were
conducted on middle level and line managers. As such questionnaires were
distributed at the Head Office and all Victoria Foods sites. The questionnaires were
designed to obtain information to answer the questions which have been raised by
the objectives of the study (See section 1.4).
3.4 RESEARCH LIMITATIONS
In carrying out this research, the following limitations were experienced:
a) The researcher did not have enough financial resources to travel to all
Victoria Foods branches to ensure full branch participation.
b) Directors and Senior Managers were always busy and could not afford the
researcher all the time he requested for discussion.
68
c) Certain information was deemed private and confidential and therefore could
not be revealed to the researcher.
d) The researcher had limited time to carry out the research since he is on full
time employment.
e) The researcher is also in the IS department and management and as such is
also responsible for e-commerce. As part of the systems, the researcher had
a potential to introduce bias into the research.
Despite all the above limitations, the researcher made every effort to objectively
carry out the research. The researcher sourced evaluation from managers and
independent parties to eliminate potential researcher bias. The researcher also
made sure that enough responses from all branches and employees were gathered
for an effective research. Also senior managers were pestered until reasonable
outcomes were acquired. Having detailed the research methodology of this
research, the next chapter looks at the research findings and discusses these to
address the overall research objectives
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CHAPTER 4
RESULTS AND DISCUSSION
4.0 RESULTS AND DISCUSSION
4.1 INTRODUCTION
This chapter lays out research findings and discusses the results in the light of the
literature theory presented in chapter two. Graphs, tables and charts are used to
present these findings and answer questions raised in chapter one. The results will
bring out the extent to which e-commerce technologies have been utilised by
Victoria Foods. As such it will test the relationships between the degree of utilisation
of e-commerce technologies by Victoria Foods and the creation of competitive
advantage via the same tool.
4.2 RESPONSE RATE
A total of 50 questionnaires were distributed to Directors, Management, Supervisors
and non management staff. The response rate is as depicted below:
Table 4.1. Questionnaire response rate
Target Groups No. of
Questionnaires
No. of Return
Questionnaires
Response
Rate (%)
Directors & Senior
Management
6 4 83.3%
Line Managers 25 21 88%
Non Managers 19 17 89.5%
Total 50 42 84%
The response rate was an average of 42 out of 50, which is 84%. More details on
the response rates can be analysed from table 4.1. The six senior managers were
70
also interviewed and company strategy documents were also used to verify interview
details.
4.3 COMPOSITION OF E-COMMERCE USAGE ACROSS THE
COMPANY
Of the respondents who responded, 92% understand e-commerce and 87%
acknowledge that in one way or the other, the company is utilising e-commerce (See
Appendix C). Of all the respondents, 78.6% understand e-commerce with an
understanding above average.
Fig 4.1 Composition of users of e-commerce as a tool for business
Fig 4.1 shows that e-commerce is used by selected users. The figure shows that
69% of questionnaire respondents responded that e-commerce tools are only used
by a few selected users and 19% responded that it is a key tool for management. It
is also evident from the interview findings that there is no convincing evidence that
the management are utilising e-commerce as a tool. This also explains why the
company is finding it difficult to develop its relationships with customers (Victoria
Key: -E-commerce utilised by IS only
-Everyone uses IS
-Used by only a selected users
-It is a key tool for management
-Other Reasons
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Foods Strategy Document, 2007 – 2010). Victoria Foods’ strategy documents show
that customer relationships are weak in support of Survey and Interview findings
(see Appendix D)
Along these lines Gapu (2004) argues that relationships can be enhanced via e-
commerce. Schaeffer (2003) also argues that e-commerce via the internet enables a
company to expand its market reach. Expanding regionally is one of the key
objectives in the next 10 years (Victoria Foods Strategy Document, 2007 – 2010).
The findings show that in contrast to Gapu (2004) and Schaeffer (2004), Victoria
Foods has failed to provide the infrastructure that would allow it to expand its market
base through the internet and e-commerce.
4.4 E-COMMERCE UTILISATION
Fig 4.2 Different functions for which e-commerce is used
72
The figure 4.2 above illustrates the degree to which different functions of e-
commerce have been exploited at Victoria Foods. It shows that e-commerce is
mainly used by the company for communication. However the interview has shown
that this communication is not mainly business communication but communication
with friends and relatives. According to the findings, 80% of communication is non-
business communication. Berkowitz (2000) argues that communication used for non-
business functions is not part of e-commerce. In other words, the company is lowly
utilising e-commerce in all areas, otherwise its customer relationships should have
improved.
Whitey (2000) agrees with Berkowitz (2000) that e-commerce can be used to define
electronic market places thereby building a large marketplace for organisations. This
is contrary to fig 4.2 which shows that the company has not been able to expand its
market reach via e-commerce. The company has also not been able to reduce any
cost of sales or improve transaction cost by e-commerce.
Fig 4.3 Types of e-commerce utilised
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However, fig 4.3 shows that the company has been able to utilise all types of e-
commerce, Business to Business (B2B), Business to Supplier (B2S), Business to
Customer (B2C) and internal e-commerce. B2C e-commerce has been shown to be
the main type of e-commerce being utilised by Victoria Foods. This level of utilisation
is followed by Business to Business e-commerce and all the other types which are at
the same level of utilisation. The high level of B2C e-commerce shows the high
degree of potential that Victoria Foods have to reach markets via e-commerce.
Interview findings have shown that management believes the company can expand
by utilising B2C e-commerce. The company strategy document shows the
management’s intentions to enhance the ICT function in the company (Appendix D).
However, no solid strategy and plan has been put in place to develop B2C e-
commerce as an expansion move. Hoffman et al (2004) argues that B2C e-
commerce can be used to build operational advantages in distribution marketing. In
contrast, Victoria Foods the above findings show that Victoria Foods have not
benefited from these potential advantages.
Fig 4.4 E-commerce Technologies being used.
74
Fig 4.4 further shows that the company has used the different e-commerce
technologies which include intranets, extranets, e-mail and electronic fund transfers
in different levels. The prominence of e-mail usage is evident in fig 4.4 in agreement
with the finding in fig 4.2 which shows that e-commerce has been mainly used as a
communication tool. Interview findings also reinforce this finding showing that the
company has got a robust intranet and efficient e-mail. However, interviews have
shown that there is little integration between Victoria Foods and external companies
i.e. the extranet is not established. Another interview finding is that Electronic Data
Interchange (EDI) is only utilised together with electronic fund transfers (EFT) by the
finance department’s finance director and manager.
However, contrary to the Questionnaire finding showed above (fig 4.4), interview
findings show that there are only four computers installed with the internet in the
company. The above 50% questionnaire response could be explained by the fact
that all employees are allowed access to one of the internet PC computer which is a
pool computer located in the board room.
However, Riggins (1998) contends that the internet should provide the interaction
dimension of the electronic commerce value grid to for efficient customer feedback
and online interaction with the customer community. This is not so from the findings,
since there is limited internet within the company. Since not all technologies are fully
in use, the above findings contradict Riggins (1998) who argues that firms should
compete along five dimensions of e-commerce which are time, distance,
relationships, interaction and product (see section 2.2.4.3). In Victoria Foods’ case,
the relationship and interaction dimensions are severely compromised due to limited
access to the internet by employees. The limited extranet network also lowers
communication and linkage with business partners.
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4.5 E-COMMERCE STRATEGY EXISTENCE AND LEVEL OF
IMPLEMENTATION
The research study findings presented on Appendix E show that 73.8% of the
respondents view E-commerce strategies as none existent or were implemented to a
small extent.
Fig 4.5 E-commerce strategy Implementation Fig 4.5 shown above agrees with Appendix E. Its findings shows that respondents
had a bias towards the “I don’t know, No and to a small extent” options of e-
commerce strategy implementation. In a summary the questionnaire finding
indicates that e-commerce strategies have been implemented to a limited extent.
Interviews with Senior Management show that no e-commerce strategies have been
developed or are in place. Shingh (2003) agrees with Porter (2001) that an e-
commerce strategy is needed to establish a competitive edge (see section 2.4). As
evident in the above findings, Victoria Foods has not established any competitive
edge through the implementation of e-commerce strategies.
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4.6 E-COMMERCE CONTRIBUTION TO BUSINESS PERFOMANCE
4.6.1 Level of Integration
The electronic value chain framework developed by Van Hooft and Stegwee (2001)
shows how e-commerce strategies can integrate e-commerce to reach all
organisational activities (see section 2.4.1).
Fig 4.6 Level intergration of e-commerce in different componets of the value
chain
Research study findings illustrated by fig. 4.6 show that in all the value chain
processes the majority of the respondents responded that e-commerce has been
utilised minimally in all the value chain processes with the majority of respondents
saying e-commerce has been utilised between 0-20 %. Interviews further elaborated
the fact that different processes and departments in the value chain are not
integrated. As a result, the interviews further show that departments are disjointed
77
and individualistic. This is contrary to Kettinger and Hackbarth (1997) who
introduced the C-SLC (See section 2.4.2). They argue that by analysing
relationships between suppliers and customers businesses can be structured to
increase value offered to the customer by integrating all processes internally and
with the external. As such the company is product oriented instead of being market
driven, to quote one of the senior managers.
4.6.2 Contribution to Business Profitability
Fig 4.7 Contribution of e-commerce to business profitability
A detailed analysis of fig 4.7 using a scale of 0–100% contribution to business
performance shows that 60 percent of the respondents responded that e-commerce
contributed 60% towards business profitability, whilst 71.4% responded that e-
commerce contributed about 60 – 80% profitability as a combined range. Further,
research study interview findings show that all management representatives
78
interviewed responded that e-commerce has contributed to the profitability of the
company.
Survey Findings in Appendix F show that e-commerce is not fully integrated to the
value chain. Although interview findings are in agreement with the survey findings,
they show that e-commerce has a great potential for yielding business profitability if
integrated with the value chain. Riggins (1991) supports these findings in his
arguments that e-commerce can be used to generate efficiency, effectiveness and
strategic benefit (see section 2.2.4).
4.7 BARRIERS THAT HAVE HINDERED THE EFFECTIVE IMPLEMENTATION OF E-COMMERCE
Lack of Confidence in
E-commerce
11%
No customer
connectivity
10%
Difficulty of
implementation
9%
Resistance to change
9%
Lack of Management
Commitment
14%
High cost of E-
commerce
Implementation
12%
No Understanding to e-
commerce Benefits
14%
Security Issues
11%
Lack of Financial
Resources
10%
Fig 4.8 Barriers to E-commerce
The ration of 60.3%:39.7% can be approximated to a ration of 60:40. In this case
management ignorance and attitude contributing to more that 60% of the barriers to
79
e-commerce progress. This ration can be interpreted to mean that human factors
which constitute about 40% of the factors considered are responsible for 60% of the
barriers to e-commerce. This analysis closely follows the Pareto 80:20 rule, which
states that 80 percent of the results are due to 20% of the factors.
Fig 4.9 Summary of Barriers to E-commerce
Fig 4.9 above summarises Research interview findings with middle and low level
management. These findings attribute most barriers as due to lack of senior
management commitment and lack of understanding to benefits of e-commerce. The
Vermont Report (1999) also echoes these findings, stating that e-commerce is
inhibited by fears of online privacy by management.
80
4.8 THE RELATIONSHIP BETWEEN E-COMMERCE AND PROFITABILITY
Fig 4.10: Comparison of Utilisation of e-commerce and the contribution of e-
commerce to business profitability
Survey results in Table F2. Appendix F show that the majority of responses were on
the middle response. On a scale of 100%, 21 out of 35 respondents responded that
the percentage of contribution of e-commerce to business profitability was 60%. 29
out of 42 responded that the percentage utilisation of e-commerce at Victoria Foods
was 60%. These findings are summarised by fig 4.10 above.
Fig 4.10 shows a comparison between research study responses on the contribution
of e-commerce to business to business profitability and the utilisation of e-
commerce. The findings show similar trends for different response options. As such,
the researcher investigated the relationship between the two variables. Ghauri and
81
Gronhaug (2002) argue that the chi-squared test can be used to test the relationship
between two variables.
Hypothesis Test for the Relationship between e-commerce utilisations and its
contribution to profitability
The researcher assumed that the null hypothesis was that the proportions of the
research responses on the contribution of e-commerce to business profitability were
the same as that of the utilisation of e-commerce. The researcher tested the
relationship on a 95% significance level. The critical value was 0.05.
Ho: 5.7%:22.9%:60%:11.4% for the responses of 20%, 40%, 60% and
80%
respectively.
H1: The ratio of responses for 20%, 40%, 60% and 80% levels are not
5.7%:22.9%:60%:11.4%
The degree of freedom (d.f.) = 3.
For 3 d.f. and p = 0.05, the critical chi-square value is 7.815.
Table 4.1: The chi-squared test
Actual utilisation responses
Expected Proportion out of 100
Expected responses
Actual – Expected (A-E)
Sqr (A-E) sqr(A-E)/
E
2 5.7 2.4 -0.4 0.16 0.1
3 22.9 9.6 -6.6 43.56 4.5
29 60.0 25.2 3.8 14.44 0.6
8 11.4 4.8 3.2 10.24 2.1
42 100.0 42 Chi-squared value = 7.3
From table 4.1, Chi-squared = 7.3, which is less than the critical value of 7.815. The
null hypothesis was therefore accepted, and the conclusion was that at 95% level of
significance, e-commerce utilisation is related to its contribution to profitability.
82
4.9 CONCLUSION
The findings have shown that 60.9% of the respondents responded that e-commerce
is only used by selected users. In all the business processes, research findings
show that e-commerce has been utilised below 40%. However, e-commerce has
been equally used for B2B, B2C and Internal e-commerce. E-commerce has not
been able to utilise extranets or the internet since these infrastructures have been
implemented minimally. The research findings have also revealed that e-commerce
has not been utilised to interlink and integrate business processes in the value
chain. The main barrier to e-commerce has been shown to be human factors which
included lack of management commitment to the implementation of e-commerce.
The following chapter presents the research conclusions and recommendations to
management.
83
CHAPTER 5
CONCLUSIONS AND RECOMMENDATIONS
5.0 CONCLUSIONS AND RECOMMENDATIONS
5.1 INTRODUCTION
This research set out to investigate the degree to which Victoria Foods has
embraced e-commerce. In identifying this utilisation of e-commerce, the research
was carried out through interviews and questionnaire surveys to find out the
following:
1. The degree of awareness at Victoria Foods of the existence of e-commerce.
2. The degree to which Victoria Foods has utilised e-commerce technologies.
3. The major challenges in implementing e-commerce to ensure competitive
advantage.
4. The different e-commerce strategies that can be implemented by Victoria
Foods for competitive advantage.
From the research findings and their analysis, conclusions can be made as to the
level of implementation of e-commerce by Victoria Foods. This chapter purposes to
carry out that particular function and present recommendations for possible action by
Victoria Foods Management.
5.2 CONCLUSIONS
1. Even though all managers and most employees understand e-commerce with
an understanding above average, the research has established that e-
commerce tools are only being utilised by a few selected users. The research
84
also established that e-commerce is not considered as a key business tool by
management.
2. Internet which is supposed to be a key tool to enhance e-marketing has been
shown to be minimally utilised. As a result Victoria Foods has not been able
to establish e-marketplaces. In return, no sales have been improved via e-
commerce implementations.
3. Despite the fact that the company has been able to utilise Business to
Business, Business to Customer and Business to Supplier e-commerce, it
has failed to be more profitable from utilising e-commerce. This could be
explained by the fact that Victoria Foods has no e-commerce strategy in
existence to effectively drive the e-commerce thrust.
4. The research has established that e-mail is the main e-commerce technology
under use. However it has also been established that the company has not
been able to harness the potential of e-mail to enhance business
communications and develop customer relationships. This is the case, since
the company has not been able to utilise other e-commerce tools which
should contribute hand in hand with e-mail to quicken and make business
processes more efficient.
5. The research has also established a strong relationship between the level of
utilisation of e-commerce at Victoria Foods and its contribution to business
profitability. Although it has been established that e-commerce has
contributed to the profitability of the company, it can be concluded that the
absence of an e-commerce strategy has strongly contributed to the failure by
the company to establish competitive advantage via e-commerce.
6. The research has established that e-commerce has been mainly hindered by
the lack of commitment to e-commerce and low appreciation of the benefits of
e-commerce by management. Other big hindering factors have been shown
85
to be high costs of implementing e-commerce and security fears by
management.
In considering all the above conclusions it can be concluded that the e-commerce
technologies among e-mail, the internet, extranets, intranets, EDI and EFT that have
been fully utilised by Victoria foods in business processes are less than those that
have not. In other words, Victoria Foods has not fully embraced e-commerce.
5.3 RECOMMENDATIONS
The following recommendations are documented for Victoria Foods management in
the light of the findings and conclusions of the research study:
5.3.1 The training of management on e-commerce
The Information Systems (IS) department in conjunction with the HR department
should develop a training program to educate senior management about e-
commerce and its benefits. This training should cover how e-commerce strategies
are developed and how they can be integrated to all business processes and the
value chain. By offering this training, the lack of understanding and low appreciation
will be minimised and the knowledge will be used to effectively implement e-
commerce.
5.3.2 The development of an e-commerce strategy
Management with the aid of the IS department should develop an e-commerce
strategy. This strategy should build on Victoria Foods general and IS strategies. It
should direct how the company intends to build competitive advantage through the
implementation of e-commerce strategies. The buy in of CFI (the holding company)
should be sourced in order to make sure that the implementation of the e-commerce
strategy will not be hindered due to lack of funding. Developing a robust e-
commerce strategy will set Victoria Foods ahead of the competition. Since
86
competitors are still reluctant to utilise this technology fully, Victoria Foods can reap
from first mover advantages.
5.3.3 Development of the different types of e-commerce
Victoria Foods should fully develop Business to business and Business to customer
e-commerce by the implementation of internet for linking with key suppliers and
customers. To develop business to customer e-commerce, the marketing
department will need to be fully computerised from the ordering process to customer
servicing. The setting up of a fully functional website can also enhance customer
services. The business will need to analyse supplier-customer processes so as to
enhance customer services. Victoria Foods will need to develop external links with
key suppliers so as to enhance and secure the procurement process.
5.3.5 Integration of e-commerce with the Value Chain
Victoria Foods will need to fully computerise and expand access to computers by
every key information requiring and processing department. The Value Chain needs
to be fully integrated by the full implementation of e-commerce to every process in
the value chain. This will enable the company to become market driven as the
production department will be able to produce as per orders from marketing. All
departments will be able to make informed decisions based on current up to date
information due to online systems.
5.4 RECOMMENDED FURTHER RESEARCH
This research could also be further carried out on the whole food milling industry to
establish the potential benefits of e-commerce in the industry. In that research an
investigation of how e-commerce strategies can be used to establish competitive
advantage can be carried out. The research could also set to find out how e-
commerce can actually be utilised by the Foods Industry in Zimbabwe to expand
globally and through the SADC region.
87
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APPENDICES
94
APPENDIX A
GRADUATE SCHOOL OF MANAGEMENT
UNIVERSITY OF ZIMBABWE
Research Title: E-Commerce strategies for achieving sustainable competitive
advantage in Zimbabwe’s manufacturing sector
Dear Sir / Madam
I am a final year student in the Masters in Business Administration program with the Graduate School of Management. As part of the requirements to fulfil my studies I am required to submit a dissertation project. My research is on the above stated research title. Attached is a questionnaire that will go a long way in assisting me to meet the requirements of the research topic and therefore I kindly request you to complete the questionnaire to the best of your knowledge. All responses given on these questions will be held strictly private and confidential and used for academic purposes only. Please will you respond by 18 January 2008. Faithfully, Shepherd Magombedze
95
APPENDIX B
E-COMMERCE QUESTIONS FOR INTERVIEWS WITH SENIOR MANAGEMENT
1. What are the current short term and long term strategies being
pursued at your company?
2. What are the company’s objectives?
3. Are you aware of e-commerce? Can you define the term e-
commerce?
4. Is the company utilizing e-commerce?
5. To what extent has the company implemented any e-commerce
technologies?
6. How has e-commerce contributed to your company’s performance?
7. How has e-commerce technologies contributed in creating
competitive advantage in your company?
8. What e-commerce strategies can be implemented by Zimbabwe’s
food industry to achieve competitive advantage?
9. What challenges are you facing in the implementation of e-
commerce?
10. Kindly outline the steps, which Zimbabwe’s food industry should take
for implementations of e-commerce to be fully productive and
effective.
11. Kindly indicate how your company can be motivated to introduce e-
commerce into its strategic management practices.
12. Please recommend any measures you think should be taken in order to
make sure that e-commerce technologies are fully utilized resulting in
the creation of competitive advantage.
96
APPENDIX C
E-COMMERCE GENERAL QUESTIONNAIRE
97
APPENDIX D
Extracted from the “STRATEGIC REVIEW AND PLAN CFI AFRICA 2012” document 2007 Strategic Objectives Review
Strategic Objectives Remarks
4.1 Baseline Protection Integration with raw
material sources as security
Toll manufacturing of packaging, synergies with Biscuit & Mufushwa suppliers and wheat and
other commodities contract farming.
4.2 Information and
communications technology ICT in place but not fully beneficiary to business
4.3 Strengthening marketing
function Not yet strengthened for regional thrust
4.4 Human Resources Management
No progress made
98
APPENDIX E
THE EXISTENCE OF E-COMMERCE STRATEGIES AT VICTORIA FOODS
Fig E1. Respondence on the existence and non-existence of e-commerce strategies
99
APPENDIX F
UTILISATION OF E-COMMERCE AND PROTABILITY
Table F1: Table showing the level of utilisation of e-commerce in the Value Chain
Levels of E-commerce utilisation
0 – 20% 21 – 40% 41 – 60% 61 – 80%
81 – 100%
E-learning 26 0 4 2 0
E-
procureme
nt 21 9 0 2 0
Collaborati
ve
Engineering 26 0 6 1 0
Factory
Automation 15 6 9 2 0
E-Fulfilment 26 2 0 4 0
Web
marketing 20 4 4 4 0
CRM and E-
service 21 1 10 2 0
Table F2: Table illustrating the relationship between utilisation of e-commerce and contribution of business profitability
Percentage of Contribution or Utilisation
20% 40% 60% 80% 100% Total
Contribution to business
profitability 2 8 21 4 0 35
Utilisation of E-commerce 2 3 29 8 0 42