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SME e-readiness in Malaysia: Implications for Planning and Implementation - page 8 / 44

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LITERATURE REVIEW

Firms such as Cisco Systems, Dell Computer and General Electric report impressive payoffs

by making the Internet a key element in their strategies and business models, and by

transforming their “brick-and-mortar” operations into e-business organizations. Cisco

Systems and Dell Computer report in excess of 250% return on invested capital and over

USD 650,000 in revenue per employee from their e-business operations. They also have the

highest gross profit margin in their respective industries. From a survey finding of over 400

information technology managers worldwide, relative to larger firms, smaller businesses who

make effective use of Internet opportunities may also find that they are more innovative,

faster in responding to environmental demands, and better able to quickly change or adapt

business models to gain competitive advantage (Engler 1999). As a result, traditional firms,

especially small organizations, are under increasing pressure to follow suit, and to achieve the

often-cited benefits of e-business.

According to the Small and Medium Industry (SMI) Association of Malaysia, there are

around 100,000 SMEs in the country (manufacturing and service) that makes up some 91

percent of the country’s industrial establishments. For SMEs, which plays an important role

in Malaysia, to increase their competitive advantages against larger organizations, the

management in these firms is faced with the task of identifying opportunities, and assessing

their e-readiness and justifying Internet technology investments. “The longer Malaysia's

SMEs wait, the further they will be left behind as e-business and e-commerce begins a

transformation in the way business is conducted”, said SMI Association of Malaysia

president Looi Teong Chye.

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