Benefits of Internet Opportunities for SMEs in Mauritius
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SMEs are called upon to play a competitive role in the economy of Mauritius. Adoption of ICT by SMEs can a have positive impact on the national economy. The reasons are: (a) Internet based infrastructures are relatively cheap; (b) they provide an ever converging and rich environment for effective business networking; and (c) they provide SMEs access to a larger market.
This assignment examines the extent internet provides opportunities for business expansion of SMEs in Mauritius. It also identifies the enablers and barriers to the use of internet by SMEs.
A questionnaire was used to collect data among some SMEs. They were classified as follows: IT Novice, IT Savvy and e-Commerce Specialist.
The findings are reported, based on the analysis of the data collected.
Several key findings emerge from the research in this assignment:
- IT Savvy and e-Commerce Specialist use computers, they have internet connection that they exclusively use for email and they have a website too.
- The degree of diffusion of the internet is high among IT Savvy and e-Commerce Specialist.
For SMEs to take advantage of the opportunities provided by the internet for business expansion, they will have to acquire knowledge and skills in using the internet and be made aware of the facilities being offered by the NCB and the existing laws in the field of e-commerce.
They will also have to bank on the vulgarization of the use of internet amongst customers or at least, for the time being, design/customize products that could help target a certain market segment.
Internet has revolutionized and continues to deeply impact on the way one does business. It is now a major tool for conducting business. It allows buyers and sellers to meet online, communicate and exchange information on goods and services. Besides, it does away with the geographical boundaries, the time zones and, in some cases, the need for physical space to transact business. With its tremendous potential, it has become commonplace for businesses and consumers to transact business via the Internet through email or online purchasing. For the SMEs, it offers a vista of opportunities for business expansion.
However, many SMEs do not take advantage of the Internet thinking that their goods and services do not lend themselves to Internet transactions. Moreover, they do not possess the managerial knowledge and skills for e-business. Hiring an IT-expert or an e-business consultant to fill this gap requires relatively huge sum of money, which they cannot afford. Sometimes, the availability of broadband connections may affect the decisions of SMEs to adopt e-commerce.
Further, sound government policies should be in place to create the necessary environment and incentives to encourage SMEs to take advantage of the Internet to create business opportunities.
Many unscrupulous persons are interested in the huge potential of the Internet for their own selfish motives. In countries where there are no appropriate legal instruments, there may be a host of possible attacks that compromise the confidentiality, integrity and availability of information that they exchange through the Internet. Consequently, people may lose trust on the security of doing business in the Internet and thus forego it huge potential for business.
SMEs in MAURITIUS
According to the minister of Finance and Economic Development, Dr. R. K. Sithanen: "A key component in the government's agenda for economic development and democratization is the development of the small and medium enterprise sector into a competitive force" (April 2006).
Small and medium-sized enterprises (SMEs) are widely acknowledged as an important sector for national and international economic development. Growth oriented small business make a major contribution to economic development and employment generation within local communities and national economies. (Smallbone and Wyer, 2000) SMEs contribute substantially to national economies (Poon and Swatman, 1999) and are estimated to account for 80 per cent of global economic growth (Jutla et al, 2002).
It is no secret that globalization (r)evolution and communication technologies (ICT) are going to change the structure of the any economy. (Kaushalesh Lal and Aveeraj Sharma Peedoly, 2006). With the government of Mauritius promoting small and medium enterprises as a competitive sector of the economy, organizational and technological changes in these firms are expected to have significant impact on the national economy. Proponents of globalization argue that it will open a window of opportunities for SMEs while networking capabilities of ICTs suggest that SMEs can augment their competitiveness in global markets. In fact several studies (Lal, 2004 and Drew, 2003) found positive impact of the adoption of ICTs by SMEs.
Although there is very little data pertaining to the evolution of SMEs across time, the origins of SMEs in Mauritius can be traced back to the 1960s when Mauritius was witnessing the beginning of a timid industrialization process with an import-substitution strategy with the main objective of supplying the local market and giving certain autonomy to the country. The inward-looking industrial policy of the Government of the day was of encouraging the production of such commodities as the manufacturing of blades, electrical bulbs, batteries, soap, welding and steel work for construction, refining edible oils, plastic industry, food canning, industrial poultry breeding, yogurt manufacturing, biscuits, shoes, matches etc for the domestic market; this was also the prevailing orthodoxy of the time especially for African developing economies. Many critics (see e.g Maujean, 1996) argue that this programme was superficially planned with no support schemes nor incentives proposed to the enterprises. Although, the import substitution strategy was soon overshadowed by an export-oriented strategy with the setting up of Export-Processing Zones, many small-scale enterprises exploited the products mentioned above for the domestic market. In fact, most SMEs today cater for the local market in similar areas as mentioned above.
According to Maujean (1996) the early enterprises were attempts to reproduce locally models which existed abroad. In food processing, firms like Purlait Ltd, La Boulangerie Industrielle and Lyons Maid which pioneered private, small-scale enterprises in the country started off with enormous difficulties in spite of being relatively modern with an important capital investment and sophisticated distribution network. The concern with survival in a largely traditional and poorly developed society meant that the local market was not yet ready for such products. Nevertheless against this background a protectionist strategy which involved high tariff against competitive goods helped these industries to operate.
As Wignaraja and O'neil (1999) argue, for the size of the country and its stage of development, Mauritius has a particularly wide range of support services for the SME sector. Beyene (2002) makes a largely similar argument especially when looking at it by African standards. This wide array of support is provided mainly through Government and parastatal agencies or financial institutions. The Small Enterprises and handicraft Development Authority (SEHDA), Enterprise Mauritius (EM), the Development Bank of Mauritius Ltd (DBM), the Small & Medium Enterprises Partnership Fund (SMEPF), the National Computer Board (NCB) are generally regarded as the main institutions which provide support to SMEs by operating schemes to enhance the setting up or development of enterprises. They act mainly as facilitators, providing financial support, training and consultancy services, marketing and export assistance.
The Small Enterprises and Handicraft Development Authority (SEHDA)
The Small Enterprises & Handicraft Development Authority (SEHDA) was created following the merger of the Small & Medium industries Development Organisation (SMIDO) and the National Handicraft Promotion Agency (NHPA). The aim of the merger is to rationalize and optimize the use of resources dedicated to the small business sector in Mauritius. SEHDA, falling under the aegis of the Ministry of Industry, SMEs, Commerce & Co-operatives, provides support to potential and existing small entrepreneurs with a view to enable them to start new enterprises or to improve their existing businesses.
Enterprise Mauritius (EM)
Enterprise Mauritius operates under the aegis of the Ministry of Industry, SMEs, Commerce & Co-operatives and we have one primary objective, driving growth in exports both regionally and internationally through export sectors at 3 levels:
- Assisting in the development of Industry Sector strategies and Action plans
- The facilitation of Strategic Clusters to meet commonly shared group objectives
- And ultimately, working with individual businesses to help them develop an integrated market and capability development plan to provide access to resources that meet their specific requirements
Development Bank of Mauritius
An important part of the Bank's resources is geared towards the development, consolidation and modernization of the SME sector. A separate department at the DBM is in fact dedicated to promote entrepreneurship development. Loans are provided at competitive rates for start-ups, financing of production equipment, technology improvement and also for working capital with the maximum quantum allocated varying according to industrial sectors. With respect to exports, the DBM runs the Export Development Fund for participation in overseas trade fairs and market surveys and also provides loans for joint ventures with overseas partners. Together with the DBM, other commercial banks such as the Mauritius Post and Cooperative Bank (MPCB), the MCB and the STB offer credit facilities albeit at less competitive rates and relatively more important collaterals to small entrepreneurs. Recently most of the main banks in the country (MCCB, MCB, Barclays and the State Bank) have also announced preferential interest rates for SMEs.
Small and Medium Enterprises Partnership Fund (SMEPF)
A parastatal body set up to provide funding ranging from Rs. 300,000 to Rs. 3 million amounting up to 50% of the total capitalization of the business. The criterion used is the evaluation of the business plan of the proposed venture to assess its feasibility to allow the return of the allocated funds within a period of five years. SMEPF is gradually gaining more importance as a source of funding to SMEs.
National Computer Board (NCB)
The NCB was set up as the apex organisation to develop and promote ICT and ICT-related services in Mauritius. Its main contribution towards SME development has been in terms of its incubator centre mainly for ICT start-ups with the main objectives of promoting entrepreneurship in the ICT sector by providing the necessary infrastructure and logistics, the development of linkages with other institutions and marketing. Moreover it runs sensitization programmes regularly for SMEs in order to familiarize and influence them to the strategic and financial benefits of integrating ICTs in the running of their enterprises.
Information and Communication Technology Authority (ICTA)
The ICTA is a regulatory body set up in 2001 replacing the former Mauritius Telecommunications Authority. The main objectives of ICTA are listed below:
- To democratize access to information, taking into account quality, diversity and plurality
- To license and regulate the information and communication services
- To encourage optimum use of ICT in business, industry and government at large, the introduction of new technology and the investment in infrastructure and services
Other SME Supporting Institutions
Together with the above institutions there are others, which mainly private sector bodies such as the Mauritius Employers Federation (MEF), and Mauritius Chamber of Commerce and Industry (MCCI) do provide miscellaneous facilities for SMEs more specifically in terms of documentation, training, advice and consultancy.
Despite the variety of measures described above, it is acknowledged that the full potential of the SME sector has yet to be unleashed, the more so in the contemporary context of globalization which calls for greater competitiveness and efficiency in both local and overseas markets. A review of the existing literature on the difficulties faced by the SME sector pinpoints the shortcomings of the existing support system.
As Wignaraja and O'Neil (1999, p 64) argue:
"Undoubtedly the investment in SME support is not delivering the growth required or expected at the enterprise level and this must be improved. An overhaul of the entire support system is required to address the deficiencies (...) and to create a more cohesive integrated framework."
It has been noted that owing to the fact that SMEs are quite flexible, they sometimes lack the vision and discipline to maintain a coherent strategy to wards the market. IFC (2004) proposed that an aggressive push to be given to the sector of training and education.
One of the most important barriers to the adoption of e-business in Mauritius remains the lack of trust into the system. Indeed, (Kuwayama, 2001) found that companies believed that transactions on the internet were very unsafe. This situation seems to be recurrent in other developing countries as suggested by (Payne, 2002)
Aspects of Internet and Issues
The use of internet in business is one of the tools that e-commerce offers. We start therefore by overseeing some general facts about e-commerce as pertains to SMEs.
General e-commerce facts related to SMEs
The use of the Internet and communication technologies has been found to improve business competitiveness, with the Internet providing the opportunity for SMEs to compete on equal terms with larger organizations (Chapman et al., 2000). The development of e-commerce in the last ten years all over the world has involved a growing number of businesses. E-commerce has been used as an important lever to promote business growth (Bianchi and Bivona, 2002). It is important for a firm grow continuously if the firm wants to maintain competitive advantage. Thus firms should struggle for continuous growth keeping the aim of increasing or simply maintaining their sales and profits levels, to ensure their survival (Claver et al., 2006). Throughout management literature, many successful stories are spread and researchers are encouraging SMEs to start e-commerce ventures in order to increase their sales (Bianchi and Bivona, 2002). At the same time there is considerable effort expended, both in time and money, by governments to encourage small and medium sized enterprises to invest in the use of the Internet (Beckinsale and Levy, 2004).
According to Levy and Powell (2002) most SMEs do not view the Internet as the key to their business strategy. Strategy is rarely raised as an enabler or as an inhibitor in the literature. The entrepreneur is critical in determining the Internet development. However, strategic commitment has been shown to be critical in SMEs. Research in several countries show that SMEs have been slower to adopt e-commerce than their larger counterparts, but the rate of the Internet usage in SMEs is growing quite rapidly. Internet has focused on large firms, new business models, the growth and development of dot-coms and the 'new economy.' SMEs in traditional industries have been slower to adopt e-commerce than their larger competitors and research into the use of the Internet by such firms is more recent. (Drew, 2003)
Furthermore, compared to the extensive literature on the importance and potential of the Internet as component of the business environment, research on organizational evolution and strategy for the Internet in businesses is limited and sketchy. The majority of publications, text books, press articles, and white papers on the Internet strategy deal with this issue on a somewhat tactical level: How to build up unique competitive position, attract customers, and increase sales. (Constantinides, 2004)
In many ways the field of entrepreneurship and small medium sized firm research seems no closer to understanding the dynamics of small business growth after decades of empirical studies (Lowe and Henson, 2004). Whilst the issue of growth in small firms is topical and well researched, the literature on growth processes and transitions in high-growth small firms is sparse and underrepresented in the entrepreneurship and small business journals. A recent content review of abstracts obtained via a database search identified only two percent addressing issues of high growth, growth processes and transitions as being key elements of the published papers. Saulnier and Rosson (2004) further mention that expressions made about the importance of e-business have not been fully matched by actions taken, particularly in the areas of staff training, technology infrastructure, and applications to deal with growth.
The use of ICT, technology upgrading, and continuous innovation are paramount to being competitive and run at optimum efficiency. However there is relatively little empirical data pertaining to SMEs in Mauritius and more particularly regarding the extent to which they have adopted ICTs in day to day running of their businesses.
A survey by Matadeen (2004) showed that most of the Mauritian companies were managed by the owners themselves irrespective of the fact that they may have management skills or not. With this in mind, the strategy to develop for SMEs and e-business must take into account the local culture and customs in Mauritius.
Possible Role of the Internet in Specific Growth Strategies Adopted by SMEs
The Internet is usually presented as an opportunity for smaller firms because it helps reduce transaction costs and level the playing field. Often cited benefits include expanding the scope of marketing, wider and richer communication, reaching new markets, reducing the cost of operations and partnering with suppliers and other collaborators. (Drew, 2003)
The Internet provides a unique opportunity to examine the evolution and growth of a business sector because it has taken place over a relatively short time period (Javalgi et al. 2004). The initial Internet environment might be described as a virgin environment, in which rapid growth could be expected. Among emerging technologies, the Internet is a new channel for commerce applicable in a wide variety of industries around the world. As a new strategic tool, it is transforming businesses and creating new opportunities as well as challenges for international marketers as many nations are fast connecting to the global marketplace.
Information technology is continuing to be an integral part of the business plan. Electronic commerce is affecting the way business are planning growth strategies and is the leading driver of corporate growth. The key is for IT to be seen as the new engine for growth, and not as a frustrating cost center. This result in a new way of thinking: The focus should be not on how much new technology should cost, but on how much revenue it will bring in. (Fruhling and Digman, 2000)
Many SMEs have made innovative uses of the Internet to invent new business models or to enhance existing practices (Drew, 2003). Firms with a history of innovation are embarking on a full- scale electronic commerce strategy. These firms are tying innovation with electronic commerce with the hopes to ensure company growth. Fruhling and Digman (2000) mention electronic commerce enables business to quickly and efficiently implement growth strategies. One of the main reasons this strategy is so attractive is the incredible growth rate of the Internet users.
Key Drivers for adoption of the Internet in SME Growth
Levy and Powell (2002) explored the adoption of the Internet among SMEs and formulated a model for the Internet adoption. This model identifies four roles for the Internet in SMEs brochure ware, support, opportunity, and network. These are driven by business growth planning and perceived the Internet value as shown in figure:
Levy and Powell (2002) advocate two key drivers in determining the use of internet by SMEs. The first driver is business growth. In some firms business growth is planned and investments are made ahead of need. In many other SMEs growth may occur but not as a result of planning. Attitude to business growth often determine whether SME owners consider resource investment in the business. IT investment is traditionally restricted in SMEs, with many investing at start-up, but no further investment is made until business outgrows existing system. It is reasonable that attitude to growth will impact SME's decision to invest in the Internet.
Business Value from Use of the Internet
The second driver is business value from use of the Internet. Business value of the Internet is identified through response to the firm's competitive positioning and their knowledge of respective industries. SMEs do consider the role of the Internet for their business generally with cautious approach. Most firms do not see the value of the Internet to their growth strategy. However, a number of visionary owners believe they can change their business through the use of the Internet. (Levy and Powell, 2002)
Brochureware are those firms that do not plan business growth and see the value of the Internet as low. Owners generally think about the Internet but cannot see its relevance to their business. One of the reasons is nature of industry in which SME operates. Hence, there is a role for the Internet for these firms but it is restricted to the presentation of on-line firm information or brochures and for e-mails. (Levy and Powell, 2002)
Business Opportunity is SMEs with recognition that the Internet has some value to them, in the future. However, it is limited to improving efficiency internally, customer communication, and research. The contrast between this category and Brochureware is that owners recognize the business value of the Internet and although not seeking growth, recognize that competitive pressure demand investment. These firms see a business opportunity from use of the Internet and related. (Levy and Powell, 2002)
Firms using the Internet for Business Support are planning growth, but currently see little future for their businesses from the Internet. Most of time these SMEs are innovative firms seeking growth. They have a number of innovative products that are sold to large firms, so personal contact is regarded by customers as important and there is little indication that the Internet is of value. These SMEs seek to grow but do not believe that industry demands investment in the Internet to support that growth. These firms see the worth of the Internet as a medium for business support. (Levy and Powell, 2002)
In Business Network opportunity from the Internet is seen as key to the development of SMEs. Firms see their future tied into using the Internet. Firms develop IT strategy alongside their business strategy most of the time. These are well positioned to take advantage of e-Business. These firms possesses effective internal network accessible by all employees as means to manage the business processes. (Levy and Powell, 2002)
Advantages of the Internet for SME Growth
According to Davis et al. (2000) a firm-specific advantage in penetrating international markets and facilitating organizational growth may stem from investments in technology or the use of specific technologies, such as the Internet. There is a long history of research linking technology and internationalization. Researchers advocate that to enter foreign markets, a firm must possess some clear advantage that will allow it to overcome native firms' more thorough understanding of the local market. Traditionally, multinational corporations use economies of scale and other advantages of large size.
However, many entrepreneurial firms can overcome the disadvantage of small size through their use of technology, such as the Internet, to reach consumers beyond their borders. Certain technologies can provide an advantage that widens market opportunities and serves as a platform for expansion. The Internet is widely considered to be one such technology rapid internationalization. (Davis et al. 2000)
Authors argue that internationalization and growth of firms are positively affected by increased use of the Internet and increased investments in information technology. In addition, more attention is to be paid to the application of the Internet as well as to the pattern of investments in information technology to explain international expansion and growth among entrepreneur- led businesses. The continued globalization of the world economy makes the realization of role of technology in expanding overseas and maintaining healthy growth.
Davis et al. (2000) mention that firms with more aggressive use of technology are likely to engage more in international activities. Their study of internationalization among new, high-tech firms reveals that firms with higher levels of technology usage incur costs associated with internationalizing to be significantly lower than firms with lower levels of technology usage. It appears that companies with a technological advantage have an incentive to expand overseas because they can use that advantage in overseas markets at little or no marginal cost over the cost of developing the advantage in the domestic market.
Role of the Internet in Product-Market Development Strategy
Online channels are used to sell into new markets, taking advantage of the low cost of advertising internationally without the necessity for a supporting sales infrastructure in the customers' regions (Chaffey et al. 2003). This is a relatively conservative use of the Internet, but is great opportunity for SMEs to increase exports at low cost. A less evident benefit of the Internet is that as well as selling into new geographic markets, products can also be sold to new market segments or different types of customers. This may happen simply as a byproduct of having a web site. The Internet may offer further opportunities for selling to market sub-segments that have not been previously targeted. For example, a product sold to large businesses may also appeal to small firms.
The Internet can be the basis for product development, information sharing, resource sharing, knowledge sharing and task assigning between different businesses. This can improve product quality and decrease development time and cost. (Yujun et al., 2006) Product development is innovative use of the Internet (Chaffey et al., 2003). Howe et al., (2000) report that the Internet provides global access to people, data, software, documents and multimedia have allowed organizations to shorten the development cycle of new products, to communicate with experts from around the world, to receive immediate customer feedback, and to access supercomputers for industrial research and development.
According to Howe et al., (2000) the Internet and its related applications can be effectively implemented at various stages of product development. For example, online forums, newsgroups, and Web sites provide an external source for product ideas. Market research can be performed on the Internet as numerous Web sites provide demographic information useful for estimating market size and potential. Surveys can be conducted on the Internet during the business case preparation to determine consumers' needs, wants and preferences. Web-based and intranet applications can play an important role in the development phase, particularly when projects involve numerous teams at various locations. Providing effective media for communicating and disseminating information, these technologies also facilitate concurrent engineering. The Internet can be used for beta testing of new products, allowing lead users and firms to collaboratively eliminate product defects prior to market introduction.
The Internet and its related technologies can add significant value to new-product development projects. The main value lies in the acceleration of profitable ideas through the new product development process. At the same time, risks associated with this `rush to market' are minimized as a formal system to weed out poor ideas quickly and to suggest modifications to product concepts. The use of the Internet and/or intranet at various stages not only minimizes time to launch but can also increase the integration of constituent viewpoints/recommendations, example consumers, engineers, marketing, etc., during development. This integration of the `voice of the customer' and other functional members of the firm are critical in successful new product introductions. Need for speed is becoming more salient in today's competitive arena. The firm that is first to launch a new product/technology, i.e. the pioneer, can accrue several pioneering advantages. These advantages include, but are not limited to: establishing product standards, building brand equity (combination of awareness, perceived quality, brand loyalty, etc.), securing distribution channels, and setting initial customer expectation for all other products. (Howe et al., 2000)
The Internet offers opportunities for firms in their new product development pursuits in terms of enhancing their abilities to collect, categorize and use information needed for product development; helping them understand their market better and thus target it more effectively; generating a wider range of new product ideas from a wider range of sources; making the concept screening process more comprehensive, flexible and objective; increasing the speed and the quality of business analyses; facilitating the collaboration of new product team members and enhancing operational performance; increasing the speed and the quality of testing and validation; improving the effectiveness and the efficiency of manufacturing development; enhancing the effectiveness and the efficiency of new product launch. (Howe et al., 2000)
Laws Covering Cross-Border Electronic Transactions between a Buyer and a Seller
Business to Business (B2B) transactions differs from Business to Consumer (B2C) transactions on the way an agreement is entered. In the case of a B2C transaction, the parties involved have to abide by the public policy laws of the consumer's country, which are meant to protect the consumer. On the other hand, parties have the freedom to choose which law will govern their contract. They have to state which law will govern their transaction(s). In case they have not specified, the jurisdiction responsible for the case will have to decide which law is applicable. In general, two solutions are most commonly applied:
- The applicable law will be the law of the country of the seller or
- The applicable law is that of the place of the signing of the contract.
Point of Sale for Which the Buyer and the Seller Become Legally Bound By a Contract
In countries with a common law system (e.g., the United Kingdom, Nigeria, India, New Zealand) when a seller offers products for sale, he is, as a rule, entitled to revoke his offer at any time before it is accepted by a buyer. This applies to online and offline offers for sale.
In countries with a civil law system (e.g., Germany, France, Brazil, Indonesia), when a seller offers products for sale, he is bound to maintain his offer open (i.e., he cannot revoke his offer, so long as he has sufficient stocks of his products to meet any orders). This principle applies to online as well as offline offers for sale.
In view of the above, a potential buyer may wish to provide evidence of her order. The best means for this to be done are:
- To electronically sign the order; or
- To print a copy of the acceptance of the offer; or
- Perhaps even to store the exchanges electronically (e.g., by saving them in a folder or database).
Procedures to Sign a Contract Electronically
Today, in practice, the digital signature (a process based on "public key cryptology") is the most frequently used technology for electronic signatures. This technology, as well as being the most widespread, is also the most secure. It allows signatories to be identified by recipients through the intervention of a trusted third party, known as the Certification Authority (C.A.). The technology involves the signatory generating a pair of asymmetrical digital keys: a "private" key which is kept secret between the signatory and the C.A., and a "public" key, which as the name indicates, allows a recipient to verify, through the C.A., that the signature has actually come from the person identified with the private key. The C.A. creates a digital identification certificate, which establishes a link between the person of the signatory and his pair of keys, so that the signatory cannot later disclaim the signature. This certificate is signed by the C.A..
The "signature" consists of an encrypted message of the kind normally used in "real" signatures, which is attached or logically joined to the main message. The intervention of a third party is indispensable in establishing confidence and security in electronic exchanges, since the contracting parties are never physically present to sign their contracts.
Protecting web site's domain name
Domain names are granted on a "first come first served" basis and conflicts often arise between existing brands or trade names and domain names.
The best protection is hence a simultaneous registration of your brand name (trademark or company name, see above) together with registration of your domain name of the type ending in .com, .fr, .mu, .net etc., with the national organization that manages patent and trademark rights.
It is possible to register a site's domain name as a trademark (if the brand name is already registered with the national Intellectual Property institute or with WIPO) by justifying the ownership of the trade mark. It is thus possible to obtain and register a domain name such as HILTON.tm.fr, for the holder of HILTON ™ or ®.
These precautions will ensure effective protection against a possible third party's fraudulent application to register a similar brand name, and later allotment of a domain name. For example, the holder of the mark HILTON.fr ™ or ® will be able to oppose the use by, or attribution to, others of HILTTON.fr as a brand or domain name. However, ownership of the HILTON mark alone may not be sufficient (except by invoking some clear offence of unfair competition, of parasitic dealing and of abuse of the right of reservation of the domain name just added) to ensure withdrawal of a domain name such as HILTTON.fr.
Legal framework in Mauritius for internet business
The Electronic Transactions Act 2000 enacted by the Parliament of Mauritius is to provide for an appropriate legal framework to facilitate electronic transactions and communications by regulating electronic records and electronic signatures and the security thereof. It also regulates the formation of contracts by electronic means and provides for electronic filling of documents in the public sector. Data protection and privacy, electronic consumer protection, and prevention of computer misuse and cyber crime have been considered in the new Cyber Crime Act of 2003.
The ETA 2000 act has paved the way for development of ecommerce in Mauritius by providing a legal framework for internet transaction.
The Mauritian public key infrastructure
The public key infrastructure is the most secure method for providing security and authenticity and integrity to electronic communications on the web. The legal requirements vary for each country. Therefore PKI is regulated as per the legal environment and other national needs of the country.
ICT in Mauritius
The government vision is to transform Mauritius into a Cyber Island and Develop ICT as a 5th pillar of the economy alongside sugar, Textile, tourism and financial service. This is supported by measures taken by the government through its commitments to the WTO General agreements on Trade in services.
Mauritius envisages becoming the 'dotcom hub' of the African region by following these strategies
- Exporting IT services by attracting Indian and other international firms to set up call-centres, back-office operations, and programming centres.
- Mauritius will build on its unique domestic strengths - French is spoken throughout the island - to create software packages for French-language markets in Africa, Europe and Canada.
- It hopes to become a regional centre for manufacture of computer hardware.
Mauritius can now have access to high speed communication. The implementation of SAT3/WASC/SAFE submarine fibre optic cable system has put Mauritius on the world digital Map and open the gateway for international communication. The SAFE (South Africa Far East) cable system is a technological and commercial breakthrough of unparalleled significance for Africa, offering a faster, more efficient trading channel between the continents and international markets
Following the launch of the SAFE project, ADSL was introduced in the country for faster access to the internet, permanent connection, simultaneous voice or fax calls and allow surfing on the web at a flat tariff.
The adoption of digitization has allowed Mauritius to introduce state of art technologies to facilitate universal access to telecommunication.
Knowledge & Expertise
ICT incubator centre
The government is laying much effort in the entrepreneurial development in the ICT sector. In this context the ICT incubator centre was set up by the National computer board in 2003 to provide logistic, infrastructural and business support to starts up in the ICT sector. Some of the facilities can be summarized as follows:
- Office space with table, chair, power socket, network points, air conditioning and lighting, Fax & photocopying facilities
- Internet Access & Emails (ADSL 512kbs connection)
- 24 hrs Security facilities
- Meeting room
- Business support- Training are provided for start up in collaboration with university of Mauritius
ICT incubator is geared toward promoting entrepreneurial culture in Mauritius and creating job in the ICT sector.
Government on Line centre
The government of line centre was launched on 17 May 2005 to bridge the gap between the government and people. Some of the services offered by the web portal are listed below:
- Get access to information in the public sector
- Allows for on line application for work permits, driving license and also advertise vacancies in the civil service
- Create a secure and trustworthy infrastructure and environment for conducting online transaction between the government and citizens, government and the business
Online database for ICT operators
The NCB recently launched the online database for ICT operators whose primary role is to promote the development of the ICT sector in Mauritius.
Some of the benefits of the on line database are as follows:
- Provide on line and updated information about ICT operators in Mauritius
- Market local ICT companies abroad
- Information about telecom operators
- Training institutions
- Support agencies
ICT awareness & training for SMEs
- The University of Technology Mauritius delivered a presentation on entrepreneurship development to more than 20 final year student.(16 march 2005)
- The NCB has started an ICT for SMEs program since 2004 comprising of a series of workshops. In 2005, a workshop on Internet technology and internet strategy was organized at labourdonnais Waterfront Hotel. More than 75 participants from SMEs attended the workshop.
- NCB made a presentation at Swami Dayanand institute on Entrepreneurship development where more than 52 students attended.(20 Apr 2006)
- Workshop for the support of new and potential start up in the field of ICT at swami Vivekananda convention centre. 55 participants from various institution, ministries and companies participated in the workshop
- Presentation of the incubation centre in Municipalities Beau basin/Rose hill, Quatre-bornes, Vacoas/phoenix (9 March 2006)
- Half day program at Harel Mallac Institute to sensitise students on Entrepreneurship development. (14 Apr 2006)
- The ICT Business pre-incubator (IBP) is a joint initiative by University of Mauritius and NCB to promote the culture of entrepreneurship on the campus by providing students and faculty members with the necessary skills and knowledge for their launching of their own business in the ICT sector. It will also help in developing competencies through various training program and create future business leaders. (30 OCT 2006)
- SEHDA provide training in Technical skills to SMEs
A survey using questionnaire was carried out on entrepreneurs with the following background:
- IT Novice
- IT Savvy
- Ecommerce specialists
Besides The questionnaire was divided into the sub headings
- ICT Infrastructure Use
- Importance of e business
- Importance of website
- Barriers to internet
- Technological factors
- Managerial Factors
- Organisational factors
- Environmental factors
- Future policy
Taking the temperature of current Entrepreneurs
A questionnaire (Appendix 1) was distributed to 4 entrepreneurs who have been categorized as:
Entrepreneur 1 has a business consisting essentially of growing and selling flowers to florists. There are no computer-based business activities (notably stock management, order management, customer handling). There are only 2 employees as labourers. Customers come to fetch their flowers at the Garden. Only occasionally does the horticulturist need to deliver the flowers himself.
Entrepreneur 2 provides customized IT solutions (hardware, software and support) to its clients. It is a relatively new company, making use of computer-based applications from inception. Employees are already IT knowledgeable.
Entrepreneur 3 runs a beverage distribution company also making use of computer-based applications for business activities.
Entrepreneur 4 is an authority in the domain of eCommerce in Mauritius and runs a training institution providing various sorts of Training Programmes.
An analysis of the feedback is hereby done by the Questionnaire items:
- The first part is based upon ICT Infrastructure Use at the respective businesses of each of the entrepreneurs.
- The second part is based upon the perceived importance of various aspects of eCommerce to their respective businesses.
- The final part studies the perceived Barriers to the Use of Internet.
ICT Infrastructure Use
Tools used in business
Entrepreneur 1 makes use of only the mobile phone in the running of his business activities. No other ICT tools are used.
Entrepreneur 2 makes use of a host of ICT tools namely telephone, facsimile, mobile phone, PCs (also with LAN connectivity), Internet connection, Email, Web site and Intranet.
Entrepreneur 3 makes use of all the above tools and Electronic Data Interchange (EDI)
Entrepreneur 4 makes use of all, but PCs with LAN, Intranet, Extranet or EDI.
It is apparent that Entrepreneur 1's business does not necessarily need computer-based applications for business activities, hence there are no major ICT tools used, while the others' businesses are centered around the use of ICT tools, which they duly "indulge" in.
This shows a little the situation that is prevalent in Mauritius. One of the reasons ICT tools may not be in vogue in many SMEs is because of the absence of an obvious use for them. Also, many of those entrepreneurs may not be IT literate, which prevents them from initiating the implementation of computer-based applications to run their business. At the moment, without those, business runs well enough to warrant wholesale changes.
Young and IT literate entrepreneurs, as demonstrated by Entrepreneurs 2, 3 and 4, are making use of ICT tools, some intensively so. They implement their businesses around an IT framework (hardware, software and employees who IT literate) that allows them to easily make effective use of ICT tools.
Computer-Based Business Activities (CBA)
Entrepreneur 1 does not make use of any CBAs.
Entrepreneurs 2, 3 and 4 show a varied degree of use of CBA methods. Depending on the nature of business and day-to-day running, different tools are used. This is especially facilitated by having employees who are already IT literate. Most of these tools already are being used integrated either with each other or on the company web site.
Entrepreneur 1 does not make use of internet, while the others have been using the internet for more than 3 years (Entrepreneur 2 is making use of internet since the inception of the business less than a year ago). Almost all their employees, if not all, have access to the internet and the various internet tools are used in the running of the business.
Training for Internet Use
None of Entrepreneurs 2, 3 or 4 has recourse to external training services. Either training is not imparted, or there seems to be an informal/formal means of dispensing training between employees within the organization about aspects of CBAs and use of internet. This shows a tendency of entrepreneurs using ICT tools to recruit IT literate staff and who, as well, show a strong sense of sharing.
Importance of e-Business
Importance of Internet
Entrepreneur 1 expects that, even to his business, the use of internet and e-Commerce today is of extreme importance and he sees this importance ever increasing in the future.
The IT savvy Entrepreneurs 2 and 3 also perceive a similar kind of importance, although as concerns the importance of e-Commerce today, both agree that it is only important and has potential to grow for the future.
Entrepreneur 4, who we shall remind, is an authority in the domain of e-Commerce, interestingly appreciates that the use of e-Commerce today, at least as far as his business is concerned, is not important.
The responses to this question point out that there is an intuitive and probably a naïve, yet increasingly emerging perception by entrepreneurs of his background in CT terms that use of internet and e-Commerce today is already very important and is only going to grow with time. It might be interesting to study this perception in further detail amongst more entrepreneurs of this type to understand the actual reasons why this is so. However, it is interesting to note that the e-Commerce specialist does appreciate that today in Mauritius, e-Commerce is yet to really take off, whence its actual importance today is much less than that anticipated by the IT novices. This could mean that we might see a stronger momentum of investment towards the use of ICT tools in the near future, whereas, the likely profitability of such ventures would, as of today's value, not be as fruitful as could have been. This could be because of some of the barriers to the use of Internet and e-Commerce.
Importance of Web Site
Entrepreneur 1 finds the use of a web site important or extremely important in most relevant questions asked. However, in so far as increasing customer satisfaction is concerned, he believes that the use of a web site for making business does not necessarily provide the right contact.
Entrepreneurs 2, 3 and 4 show varying degrees of approval (ranging from neutrality to extreme approval) for the use of web sites for running a business. Some of the reasons for the neutrality would pertain to the line of business: effecting procurement via a web site for a training institute might not necessarily be too easy as is the case for Entrepreneur 4; this would also be the case for Entrepreneur 3, who acquires beverages of renowned brands, which might make the use of a web site for procurement less important; also, the line of business of Entrepreneur 3 might not make it too fruitful for the web site to act as a medium to gather and share business intelligence.
In general, therefore, the perception of expert and novices, would be that web sites are mostly positive towards the running of a business.
Barriers to Use of Internet
Initial investment for implementing IBAs
Entrepreneur 4 is the only one to appreciate the high initial investment required to implement Internet-Based Applications (IBAs), which would be going along with literature seen earlier. The response of Entrepreneur 1 is interesting in that it reveals a general layman notion of the ubiquity and ease of use of internet applications. The evaluation of Entrepreneurs 2 and 3 that implementation of IBAs is not expensive would suggest either that they are not investing in a way to make full use of these tools or perhaps would suggest the use of pirated software as opposed to licensed ones, as might be the method most sought out by entrepreneurs willing to implement IBAs.
Return on investment on IBA uncertain
The whole spectrum of responses is covered by this issue. The response of Entrepreneur 1, in this regard, would suggest that while the importance of the use of internet is the accepted way to go, there is a distinct lack of knowledge amongst IT novices about the kind possibilities the use of internet could bring. The response of Entrepreneur 4, on the other hand, would suggest that there is an appreciation of the difficulty for making customers effectively use IBAs. Culture factors might be the types that come to play here. Entrepreneur 2 seems already to be benefiting from the investments made in the use of IBAs, whence the favourable response.
IBAs are technologically too sophisticated
Entrepreneur 1's response is directly attributable to the IT literacy state. Entrepreneurs 2 and 3 would seemingly profile young and upcoming IT literate entrepreneurs who very easily embrace the use of IBAs. However, it is very interesting to note the word of Entrepreneur 4, as an e-Commerce specialist, who, even though being an authority in the domain, seems to be of the opinion that the complexity of IBAs is dependent on specific cases.
Security concerns are serious
Here, there seems to be a general knowledge about the perceived security issues associated with the use of the internet throughout the spectrum of entrepreneurs.
Lack of assistance and information from technology providers
The response Entrepreneur 2 would suggest that there is probably not as much need for assistance in his case as would be the case with either of Entrepreneur 1 or 4. It might be expected that the response of Entrepreneur 4 might be an educated one in that the said entrepreneur might be aware of the kind of support and assistance is provided in general, while that of Entrepreneur 1 would suggest that there is an expectancy from the entrepreneur for more information to be made available readily.
Product not suitable for online purchase
Entrepreneur 1 seems to not know how flowers could be sold to customers via IBAs. Entrepreneur 2 sells customized IT solutions that cannot be easily sold via a web site, but, for the time being, by direct interaction with the customer. There are at least two of the respondents who evaluate that there is a potential to be unleashed about selling their products online, if customers could respond favourably.
Products from suppliers are not suitable for online purchase
The response of Entrepreneur 1 suggests that he might not have tried acquiring his required materials online. Otherwise, the other responses would suggest that the procurement of material(s) from suppliers is dependent on the nature of the material(s). Increasingly, though, procurement of materials can be effectively done via the internet, allowing a wider choice of quality at a more competitive pricing.
Cost to access web site too high
The response of Entrepreneur 1 would suggest that he is not too versed in the means of internet connectivity that could be used to access web sites and their respective costs. This might be symptomatic of what a lot of similar entrepreneurs would be aware of.
Otherwise there is a general notion that accessing web sites is a relatively cheap affair.
Network infrastructure and access to same is poor
There is a singular consensus throughout the survey panel over the possibility that infrastructure available should have been of a better standard and more vulgarized.
Strong support for IBA from management
There is a general tendency for all entrepreneurships to support the use of IBAs.
Management is of possible benefits from IBAs
The support of the use of IBAs is seemingly generally because of well-known potential benefits. However, Entrepreneur 1 does not seem to know concretely what benefits could be derived, although an intuitive sense of importance is given to their use.
Management knows what types of IBAs to be used
The responses here follow the logical conclusion that could have been anticipated. Only Entrepreneur 1, by virtue of the lack of knowledge in the domain, seems to go against the trend of the more knowledgeable counterparts who seem to be aware of the type of IBAs that they could use.
Management Attitudes and Organizational inflexibility
Entrepreneur 1 seems to find it difficult to, by himself, implement IBAs by virtue of the way the business is currently run. Similarly for Entrepreneur 3, who is quite successful at the current level of performance to which it would not be easy to bring significant improvement. The response of Entrepreneur 2 would seemingly go along the lines of malleable attitudes to making business that could be characteristic of young upcoming entrepreneurs, while that of Entrepreneur 4 would suggest that neither extreme should be envisaged and a case-to-case consideration should be given to issues of attitudes vis-à-vis IBAs.
Management willing to Develop an e-Business strategy
The lack of expertise of Entrepreneur 1 seems to be the single factor de-motivating him from developing an e-Business strategy. Otherwise, all other entrepreneurs seem to adopt a positive attitude to the adoption of an e-Business strategy.
Employees more comfortable with conventional way of conducting business
Only Entrepreneur 1 shows that his current employees would not readily embrace anything but the conventional way of doing business without IBAs. Entrepreneur 3 has a wide ranging number of employee types who might or might not embrace IBAs easily, while the other two respondents agree to IBAs being the way their employees prefer to work.
Time for implementation of IBAs is long
The nature of business and the level of IT literacy seem to be guiding the responses to this question. Entrepreneur 1, would by virtue of his lack of IT expertise, believe that implementation of a suitable IBA might be time consuming. Entrepreneur 2 finds it depending on a case to case basis, while Entrepreneur 4 has already had experience in the implementation of suitable IBAs that make him believe that implementation time is not unduly long. Entrepreneur 3, on the other hand, would be guided by the nature of the way business is already running to judge, thereby, that implementing IBAs would probably imply wholesale changes and hence a long implementation time.
IBAs do not increase employee productivity
The nature of the business of Entrepreneur 1 leads him to believe that his employees (labourers) would not be more productive with the use of IBAs. Along the same lines, the other entrepreneurs expect their employees to be more effective with IBAs.
Employees have relevant skills and knowledge to migrate to IBAs
The response here goes along the same lines as the previous one.
Employees will readily embrace training programmes in IBAs
Entrepreneurs 2 and 4 indicate that their employees would readily embrace IBA training programmes and this is in large part down to the nature of the business. Again, down to the same reason, Entrepreneur 3 does not expect all his employees to readily embrace training programmes - some of them not being IT "freaks".
Entrepreneur 1 seems to be guided by the notion of the ubiquity of internet and IBA use and thereby evaluates the costs associated with their use to be relatively low. Otherwise, the other responses go along the expected lines as per literature that IBAs are relatively not that cheap to use.
SMEs Lack ICT and Managerial knowledge
Entrepreneurs 1, 3 and 4 seem to agree about their being a general lack of ICT and Managerial knowledge being made use of in SMEs. This is an especially poignant response by Entrepreneur 4, who is much versed in the current situation concerning this issue in Mauritius. Entrepreneur 2 seems to be guided by a notion that young and upcoming entrepreneurs, in general, equip themselves well and believe in themselves before starting their ventures.
Long-term relations with client important
A self explanatory as strong a consensus about this issue as could be.
Critical to share useful information with suppliers
Entrepreneur 1 is averse to sharing information with his suppliers for fear of seeing them taking ideas to implement their own similar business. Entrepreneurs 2, 3 and 4 otherwise, seem to believe strongly on mutually-beneficial supplier relationships to be built.
Trust builds through direct contact
A strong indication that belief is still there that direct contact with suppliers and with customers is necessary to help build the trust aspect in the relationships.
Face to face interaction required
The responses to this question go along the same lines as the previous three.
Government is encouraging to go online
Only Entrepreneur 4 seems to be aware of Government providing the necessary encouragement for SMEs to go online. This would probably mean that there is not a strong enough vulgarization of the Government policy in this regard vis-à-vis entrepreneurs and SMEs.
Training offered by Government organizations relevant to implementation of IBAs
Being a retired Government officer and having had basic training courses himself, Entrepreneur 1 seems to believe that there are relevant courses by Government in what concerns ICT. The distinction has probably not been made about IBAs specifically in the response, though. Otherwise, the response of Entrepreneur 4 is a telling one, where it is clearly an educated indication of the serious lack of Government-backed training programmes being made available.
IBAs not relevant
A general consensus seems to exist on this issue that IBAs are the way forward. Only Entrepreneur 1 is a little undecided on the issue since he is not much aware of which IBA could be relevant in what manner.
Partnering with 3rd party e-market place offers opportunity for growth
Entrepreneur 1 is unaware of this kind 3rd party e-market place, whence the response. Otherwise, there is a strong consensus about such market places providing good opportunities for growth.
Fear of stronger competition on the internet
While there is a notion that competition on the internet is likely to be hard, responses would indicate that any gains in market share done by the use of internet to conduct business sales would only help in making the company progress.
Goods and services cannot be sold over the internet
Neutral responses are down to one of these reasons: product needing customization dependent on interaction with client (Entrepreneur 2); a well defined and successful business framework (Entrepreneur 3); and in the case of Entrepreneur 1, an absence of the vision of how the business could be conducted online.
Transactions via the internet are not trustworthy
There is a distinct belief that reliance on security methods on the internet is far from being a formality and remains one of the major issues to be addressed when implementing IBAs.
Based on the above feedback, we can synthesize our analysis of the present situation about what the use of the internet can provide as a list of opportunities and barriers, which we discuss hereafter.
Opportunities provided by the internet to SMEs in Mauritius
Acquiring new market share
The major problem for small family business units has been shopping around for new customers. Today they just require a smart website supplying relevant information which they can advertise to targeted prospective customers who are on the lookout for such enterprises. Thus through the web, the small enterprises can have international exposure and international clientele. The website can also be advertised to the web directory listed below:
- Yellow pages www.dialmauritius.com,
- The business portal of mauritius www.biz-mu.com
- E-Mauritius.biz (www.e-mauritius.biz)
Act as a medium to gather and share business intelligence
SMEs can learn and share business practices and acquire knowledge in new area related to the business by connecting with others SMEs around the world. This can lead to increase productivity and reduction in wastage. Moreover, by acquiring new skills they can undertake new strategies in product and service development.
SMEs can also attract investors and even large corporation by exposing their technologies and know how, product, services and financial positioning.
They can also develop global partnership which can stimulate business expansion both locally and globally.
Improve business transaction and reduce costs
The adoption of internet is an obvious strategy that would lead to a reduction in transaction costs and allow compete on price. However the cost equation includes not just costs to the buyer, but also costs to the SMEs. Taking orders online, for example, will reduce the unit cost fraction for order taking can make substantial saving. The SMEs can reduce costs of setting up an Internet trading operation if they can design their own websites, thus reducing startup costs. However, this can only be contemplated by traders with the necessary skills.
Increase customer satisfaction
SMEs can improve customer satisfaction and loyalty by providing customized product and services via the
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