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CS 5038 ASSESMENT

INDIVIDUAL ARTICLE 1

TOPIC: IMAPCT OF INTERNET FRAUD IN E-COMMERCE ON DEVELOPINGCOUNTRIES

TO:

FRANK GUERIN

DEPARTMENT OF COMPUTING SCIENCE
UNIVERSITY OF ABERDEEN.

BY:

AUTHOR: AVINASH TATINENI

GROUP L

M.SC INFORMATION TECHNOLOGY

UNIVERSITY OF ABERDEEN

IMPACT OF SMALL AND MEDIUM ENTERPRISE IN

E-COMMERCEON DEVELOPING COUNTRIES

Definition:

When coming to the definition of the SME, we have to say there is no particular standard one, for this.

And all we know, SME stands for Small to Medium Enterprise.

The definition varies from country to country.And,according to the Canadian Industry sectors, they treat the term SME for the business which have less than 500 employees working in there enterprise and above 500 employees working in the enterprise is treated as large enterprise.

Where as, the European Union thought differently. They define it as, employeesless than 250 working in an enterprise is a medium enterprise and fewer than 50 is small enterprise.

Features of SME:

For everything there should be some unique features.Likewise, SME also have a feature to look.

In the initial stages of the SME business it should be handled very carefully. There should be perfect planning, regular monitoring and careful analyisation for which it should become very powerful and successful enterpriser.

Example: Now-a-days, India is giving very much helpful options for the establishment of SME.It giving some easy finance options, sufficient raw materials and easy connectivity for the SME’S.

Guidelines for Small and Medium Enterprise Development

There are some particular guidelines that have to be followed when any one has to start a SME.These guidelines are based on lot of things and given by ILO.

Some of the guidelines will include, various policies regarding working and for creating a regulatory or standard environment and some instructions for installing instruments for SME development.

And other guidelines are based on, potentially how much inputs and outputs it can give to the market, feasibility costs, and political, cultural and economic feasibilities and so on.

While preparing the guidelines for the polices of working and standard environment createment, it will keep some questions in the mind. Can this SME provide jobs at low capital?, Is it capable of working with large-scale enterprises and adjust to the fluctuations that will generally occurs at any time in the market?, They have enough capacity to develop or at leastadapt to the latest technology.

Similarly, it will keep all the factors while providing all the guidelines.

Does Developing Countries Need SME’s?

The answer is big YES. Because, the SME’s play a vital in the country’s economy development including the developed ones. They can’t be taken lightly because; the power of SME’s is already seen by the countries all over the world.

In the age of internet, even the farmers in India checking the prices of products online and now it’s the time to prepare the SME towards the e-commerce called e-readiness or e-commerce readiness.

But, it is not that much easy to prepare developing countries to use e-commerce useful and certainly it’s not impossible too.

Before we prepare for the e-commerce readiness, first SME’s have to know about it. Itincludes, How e-commerce helps in my SME business?, what parts of business have to be e-commerce and what parts not. What are the techniques I have to implement in the e-commerce and how to choose them? Can my plans take me to the success that I am thinking off?, How can I monitor my results? And how much it costs me.

What SME Has To Do In Developing Countries

Forget about the already developed places and countries.And, in the places like rural areas and the places where the most of the poor people live the SME has great role to play. Its role starts with the providing an opportunity for economic growth and employment.

When you see the SME in the context of the developing countries, generally the most of the SME’s are starting with the very less amount of money and facing severe hard conditions to overcome and high level of job insecurity due to the lack of social protection. And not only these, they face the fear of losses, lack of financial ability restricts them from upgrading their business to the next levels and end-up losing the market benefits.Besides,no stable faith on the intermediate buyers and high level of domestic competition making the things worst for them.

When these situations occur then, credit markets have their functions to do. They have to, motivate the SME’s how to create an standard sustainable environment that suits them , to help regarding how they can get their best from the intermediate suppliers by overcoming the supplying problems and finally how to link with the supply chains and financial intermediates with the large scale enterprisers.

If SME’s achieve all the constraints mentioned above, then only it will help for the growth of economy and employment for the nation.

Problems facing By the SME’s

It’s hard to believe that SME’s are facing with the ISO standards, but it is true in the reality.

In almost all developing countries ISO member bodies known the importance of standard development process for the ISO 14000 series and this was joined by the TC 207’s which was making some efforts for the standardization of SME’s.

Therefore, all the representatives of these groups supported ISO and its sub-members. There after, SME came to recognize that it’s very difficult to follow those standards because of the constraints they already have, even though the ISO tried its best to prepare in favor of SME’s.

After this, some of the voices in the SME have started to talk but, ISO is not in a situation to help because of lack of funds and even it is depended on the funds.Now, they are trying their best to make some changes to the present standards in the coming new standards.

Influence Of SME On Developing Countries

Finance and small and medium-sized enterprise in developing countries

Generally, SME’s are seen as the fast-track success achievers for the broader economic growth and also as a poverty reducer.

Therefore, for the promotion of this, one type of approach called ‘Developmental approach’ was identified by Staley and Morse in 1965.The main aim of this, is to increase the efficiency of the SME’s, that means to create the SME’s which depend upon on its own and not depending upon the any type of subsidy help, which ultimately leads to the better situations and standards of living. Thereafter, the small investors can improve themselves and can expand their business into medium scale and even large scale business also.

And obviously, it had some loopholes in the approach and then various other approaches came with modifying the loopholes in the previous approaches.

Success Story of SME inIndia

Here, we can see the success story of India in SME’s.That is, what are the factors that are reason for their success and how they implemented them.

In India, the strategy for the Industrialization was successful achieved by the government of India by giving high priority to a sector called “Village and Small Industries (VSI)” for its polices that are related to industries.

In India, the whole industries sectors are divided into three parts

  1. Large Scale Industries.
  2. Medium Scale Industries.
  3. Small scale Industries.

And, these are classified on the basis of their sizes.

While, coming to the export strategy in the country, they gave high importance to the export products of the small scale business enterprises.

They reduced the production cost and also increase the market value for the products of small scale sectors. Theyalso, had taken steps in carefully accessing the proper relations between the small, medium and large scale sectors. Mostimportantly, given special care to the marketing of rural market products.

They highly succeed in the aspect called Export Marketing.Here, they allowed the Small Scale Industries (SSI) products to exhibit in the international exhibitions without charging additional costs such as rent for the space provided for their stalls, shipmentcharges, insurance charges and all these charges are met by the governmnet.This step creates the high confidence in the hearts of small scale industries. Not only this, they also encouraged the rural sectors which provided high quality products by giving the national level prestigious awards.

For the small scale enterprises in the software side, they provided incentives for the software exports and also established a Software technology park in the capital city of India, (i.e.) in New Delhi. They also supported with the infrastructure that are needed for the small scale software sectors to update their technologies.

The Confederation Of Indian Industry(CII) arranged the meetings with their Indian companies who achieved outstanding success in SME’s and motivated them to know how important to have a long term strategy in order to face the problems like dumping.

With these several factors and implementation of these factors effectively makes India to have a success story in the SME’s.

SME Cluster and Network Development in Developing Countries

It tells about using the Networking as the strategy in the development of the SME’s in developing countries by using the United Nations Industrial Development Organization’s (UNIDO) approach.

The main aim of this networking approach is, to make communication between the SME’s easier such that they can contact with each other and discuss the problems they have and try to solve their problems with the help of other SME’s because, the SME’s knows the problems better than any one else.

And, the co-operation between them is typically divided into two. One is, horizontal co-operation and the other is Vertical co-operation.

In horizontal co-operation, all the SME’s are in the same value chain and they collectively achieve the bigger financial tasks for buying the advanced equipment for their use.Then, theyuse that machinery and try to produce the desired results of them in order to supply for the large scale sectors orders.

In vertical co-operation, all the SME’s along with the large scale enterprises with value chain has the chance to specialize on their own core businesses and also there is a chance of dividing the labor externally.

There is also a collective learning space for all of them, wherethey can exchange their ideas, share their knowledge regarding how to improve their product’s quality and how to make more profits by using the market segments more effectively and that learning space is termed as “InvisibleCollege”.

Business Development Services (BDS) and local policy makers get together in developing a shared local vision and to enhance the strategies among the enterprises through this networking approach.

Capacity building key to SME growth: China

In this world of SME’s,the Chinese raises an interesting point ,stating that the key factor for the development of SME’s will depends upon the how much effectively you build your capacity.

The talents and human power capacity is very much essential in present days for the development of SME’s than anytime in the past ,this is according to Jiang Qiangui,who is the head of delegation meeting of Asia-Pacific Economic Co-operation (APEC) forum that held at Acapulco in Mexico.

According to the deputy director of the Economic and Trade Committee of China's State Council, Mr Jiang, SME’s should be more reform structurally; they should use new technical innovations and new products in order to meet the new technological and economic revolutions that are in the world.

Medium and Small Businesses Exceeded 40 Million

No Wonder, why china is becoming one of the super powers in the world, that too very fastly, because the Chinese is showing high interest in encouraging the SME’s that’s why the country has 99.8% SME’s companies and leaving only 0.2% for the remaining companies and increases its economic growth with the help of over 40 million small scale business sectors in it.

Conclusion:

After studying the full above article, I came to the conclusion that, whether it is a developed nation or a developing nation, still SME’s plays a vital role in the development of economic growth of the nation in order to become the super power in the world.

The development of SME’s not only made the country as a super power but, also create an large number of jobs for the people in their country and through which there is a chance of reducing poverty and automatically improves the standards of living.

But, it’s not that much easier especially for the most of the countries in the developing countries, where there is lack of resources, technical solutions, protection from the society, high level job insecurity and high costs to implement the things.