Introducing Internet technology to any business allows it to take advantage of the many benefits it offers. The trend of e-business practices can be seen not only in large firms. If more businesses continue to adopt the Internet it may be imperative that SMEs begin plan Internet strategies. Hamish McRae, Associate Editor of the Independent Newspaper predicts ‘There will be no such thing as e-business because all business will be e-business. There is no opt-out: to be a success in any part of the commercial world in the future you have to be successful in the electronic aspects of your business as well as the physical ones’ (KPMG, 2000). However, Jeffcoate (2000) claims that ‘Many small businesses do not formally define, or understand their competitive strategy, a factor that serves to weaken their position in their chosen market…..unlike much larger companies, SMEs taking up E-commerce have very little choice of strategy.’ This essay will analyse the existing obstacles in implementing e-business models for SMEs.

Firstly, there is lack of Knowledge about e-business among SMEs’ managers. Research conducted by Hamill and Gregory (1997) discovered that 70% of the SME’s in their survey who were at that time ‘expressing an interest in using the Internet’, stated that limited knowledge and experience were the most important inhibiting factors. ‘Lack of awareness and understanding of the opportunities presented by the Internet’ are also identified by Timmers (1999:8) as one of the reasons businesses are hesitating to engage in e-commerce. Similarly research by Oftel (2000) showed that out of nine reasons for not connecting to the Internet, three were regarding information and knowledge. The reasons were ‘I would need more information on how the Internet could benefit my business before I became connected’, ‘We can’t spare the time to learn how to use the Internet’ and ‘Lack of knowledge about the equipment needed and how to use it’ (Oftel, 2000). Evidently, lack of knowledge and information is a significant constraint for small businesses connecting to the Internet.

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Secondly, the level of skills for using new technology is relatively low in SMEs. Small businesses that are already operating in the e-commerce market will be concerned with new technologies that can help them to improve the ones they have already adopted, or can be introduced to a certain area of their business. However, for small businesses that have only just decided to invest in e-business it can be more complicated. ‘If you do not embrace technology in during the next 12 months your business will start to fall behind the majority’. Webb (2001) Although this emphasises the importance ...

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