The Internet: business growth environment (II)

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  • March 23, 2015
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The Internet: business growth environment (II)

… Online technological capabilities are considered as strategic advantages in order to successfully pursue international opportunities. These can help firms to discover and use international opportunities much better and faster than competitors. In detail, the important aspects of a firm’s online technological capabilities are: a) the extent to which web applications are integrated with back-end databases and systems; b) the firm’s ability to customize the online experience for particular markets; c) the firm’s technological opportunism (Reuber and Fischer, 2011, p. 661).

Evolution of the Internet technologies has led to the apparition of the online brand communities which if used properly, can help companies to discover, evaluate and exploit international opportunities because they can deliver information concerning buyers, support the buying process and build positive brand meanings (O’Reilly, 2007). Reuber and Fischer (2011) claim that potential foreign buyers can monitor the community to learn about the firm’s offerings from the customer point-of-view or ask questions about existing buyers. This is why the existence of engaged community members from diverse geographic regions can signal to potential international buyers that the firm can and does serve foreign clients effectively.

Internet access is open to companies of all sizes, offering benefits such as: the reduced importance of economies of scale, lower marketing communication costs, greater price standardization, reduced information float time, temporal a-synchronicity, increased contact between buyers and sellers and changes in intermediary relationships (Hamill and Gregory, 1997; Bell and Loane, 2010; Loane, 2006; Cuneo, 1995; Herbig and Hale, 1997; Coltman et al., 2001).

According to Loane’s (2006) research, the Internet and e-mail in particular is essential for business in the 21st century, as it provides the service platform, which helps them to penetrate new markets. Internet technologies reduce the investment and resources required in order to work internationally (Loane, 2006; Cuneo, 1995; Herbig and Hale, 1997; Coltman et al., 2001).

“…in concept the Internet has removed all the logistical problems for us. We have easy contact with the US sales people via e-mail and the video link.” CEO, Semi-conductor firm, Ireland (Loane, 2006, p. 268).

Loane (2006) argues in her research that the majorities of companies are using the Internet for their advantages in Marketing communication, Customer relationship management (CRM) and as Marketing Channel (diffuses the information and sales transaction). This majority agreed that the Internet offers a low cost effective solution to reach a large number of potential customers compared to traditional communication methods:

“We use it (the Internet) for all the marketing type things, advertising, promotion, contact, communications, demos of work, like a virtual catalogue. It’s our window on the world. You found us there! It powers the international element really-otherwise we would need offices in each country we work in, instead of just the US.” CEO, Media promotion firm, New Zealand (Loane, 2006, p. 269)

SMEs founder(s) leveraged the Internet usage and enablement to best “fit” with their internationalization strategies and objectives (Loane, 2006).

Table 1 shows from the point of view of the four leading authors, the main business benefits of the Internet one year before the Internet bubble.

Table 1: Advantages for using the Internet

Ellsworth & Ellsworth

(1996)

Sterne (1995) Quelch and Klein (1996) Cronin (1996)
Communications Improved corporate image More rapid SMEs internationalization Cost/efficiency savings
Corporate logistics Improved customer and investor relations Reduce importance of economies of scale Performance improvements
Globalization Increased visibility Reduce importance of global advertising cost as a barrier to entry Market penetration
Competitive advantages Cost reduction Adoption of global niche strategies Products transformation
Cost savings Finding new prospects (customers) Reduce importance of traditional international marketing intermediaries
Collaboration Market expansion Electronic support for inter-firm networks
Information search and retrieval Improved internal communication New worldwide marketing research medium
Marketing and sales

Source: Hamill and Gregory (1997, p. 12)

According to the interviews in Loane (2006, p. 273), the dominant disposition concerning the integration of the Internet and business processes “was not whether they should become Internet enabled, but rather how they could best” profit using Internet to enhance the international strategy and accomplish growth objectives.

Loane (2006) argues that the Internet provided tools for at least some firms to co-ordinate and support complicated value chain activities, as shown in Table 2.

Table 2: Business process supported by the Internet

Business process function Aspects used by case firms
Marketing and sales Transaction preparation (ordering, billing and payment, finance, delivery)
Transaction completion (ordering, billing and payment, finance, delivery)
Transaction support (information capture, information management, order tracking, market analysis, market development)
Link with MIS systems of channel partners
Point of contact
Manufacturing Process innovation (design integration, logistics, production, administration/production co-ordination, co-ordination of outsourcing)
Availability and accessibility of MIS over multiple sites/internal co-ordination
Joint project management with clients
Underpin collaboration capabilities
Human resources Recruitment advertising
Job applications submission
Administration Budgetary control
Accounting functions

Source: Loane (2006, p. 273)

As we can see in Table 2, for the majority of companies in Loane’s (2006) research, the Internet adoption was not an incremental process, but more of a disruptive one.


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