Chapter 2

REVIEW OF RELATED LITERATURE AND STUDIES

For further understanding of the study, the researchers made use of different reading materials
related to the online system. These materials such as books, magazines, newspapers, thesis and other
web articles are essential in broadening the knowledge of the researchers. These will also guide the
researchers to achieve their target objectives by getting ideas on other related studies and make
improvements as possible.
The information gathered by the researchers focuses on the development of e-commerce or
online marketing and its advantages to the economy, consumers and businesses. Security measurement
information in terms of payment and customers privacy to be considered in developing an online
system are also obtained.
The researchers also sum up the different techniques on how to gain web visitors and eventually
convince them to purchase the products based on some surveys gathered by the past studies. Some of
the programming background skills needed to create a website is also being discussed to further
understand why the researchers chose PHP5 as front end and MySQL as backend of the proposed
system.

27

Review of Related Literature
This review consists of books, articles, documents that focus on the same subject matter or other
concepts of the study.

Foreign
The web has become an opportunity for the marketers to add value to products and services.
The phenomenal growth and rising of the popularity of the internet and the World Wide Web have
become a key to attract more consumers and businesses to engage the benefits of Electronic Commerce
(E-commerce). This E-commerce is sited as any form of business transaction in which the parties interact
electronically rather than by physical exchanges or direct physical contact (Aldin, Brehmer & Johansson,
2004). This has transformed the traditional commerce and enhanced sales and exchanges of
merchandise and information. It is not just considered as single entity of technology but a combination
of technologies where applications, processes, business strategies are necessary to do business
electronically. The availability of goods and services with the click of a mouse is changing the global
setting.
Consideration of the websites design and operations are dependent upon the nature of business
activities and target consumers. According to Burleson (2005), a website must be simple and focused
site to succeed. One that is easy to build, maintenance-free, low cost, trustworthy, and a powerful
traffic-builder and customer-converter. Having the right tool and the right product alone doesnt ensure
the success of the website. To be effective, the Website must be designed with the target audience as
foremost consideration. Website designers must balance design considerations and capabilities with
client objectives and the consumers level of understanding in the modern technology (Geissler, 2001).
28

It is critical for companies to know how do they attract customers to their website, engage them
to turn into paying customers and also retain them in returning to your website. Online
communications techniques used to achieve goals of brand awareness, familiarity and favorability and
to influence purchase intent by encouraging users of digital media to visit a web site to engage with the
brand or product and ultimately to purchase online or offline through traditional media channels such as
by phone or in-store (Chaffey, 2009).

Local
In the Philippines, e-commerce is mostly being implemented by major retailers and multinational
corporations for bank-to-bank exchange. A number of Business-to-consumer transactions have emerged
through the years such as auctions, online shopping, and online banking (Lacson, Pasadilla, 2006). This
just shows that Filipino businesses welcome this new opportunity in selling goods since 16% of the
population is using Internet. This new marketing strategy will not only benefit those big companies but
also the small businesses who cannot afford to advertise their products. Just by creating a website in a
very affordable cost would make the business grow in terms of sales and enhance the company image as
well.
29

29

Philippine firms have yet to fully tap the potentials of e-commerce that will help them to compete
in domestic and global markets. In the process of preparing themselves to conduct e-commerce, these
firms will be changing the way they do business. These changes are expected to have an impact on the
welfare of Philippine workers. Most efforts to measure the economic effects of e-commerceincluding
those on workers welfarehave focused on the U.S. and Europe, who are considered to be the leaders
in e-commerce. (Roberto, 2002) In general, it discuss the changes in the nature of work from the front to
back office is likely within the sectors performing services Employment demand for these industry, they
may be focused away from agents and blue collared workers, toward higher management and executive
staff.
As Filipinos entered the 21st century, local e-commerce transaction reached Php 1 billiion. It
shows that theres at least one billion transaction sales growth annually. If this trend continues, figures
can reach up to Php 20 billion as more businesses conduct online transactions. If significant economic
growth takes place in the next 10 years, these estimates may even double or triple (Toral, 2004).
30

30

One indisputable benefit of e-commerce is its ability to reduce transaction costs. For consumers
or buyers, this is most likely to take the form of lower search costs and better information on products
and prices. There could be drastic savings in production and delivery costs of electronic or digital goods
as well. (Lee, 2006)
Information and Communication Technology (ICT) has become and will continue to be an integral
part of the day-to-day life of every Filipino across all levels of our society. The occurrence of
communication technology around the world necessitates that government get on a cohesive and
coordinated strategy on how to prepare its citizens to survive, live and thrive in a digital world.(The
Philippine Digital Strategy Transformation 2.0: Digital Empowered Nation 2011) The main objective of
the paper is to have a competitive society where everyone has a reliable, affordable and secure
information access in the Philippines.

Review of Related Studies
This section consists of information gathered from thesis and dissertations which are also
relevant to the research.

Foreign
E-commerce has become a standard method of providing distributed information to many
different platforms. It is being implemented by a growing number of companies to be more completive
in corporate world. All companies need to make a step forward towards a new technology. To be able
to compete with the global market, e-commerce was a good answer (Lanvin and Maggarqul, 2006).
31

The companys websites seem to have significant influence on sales and corporate image, and are
expected to contribute to overall customer satisfaction (Hossain, 2007). The easiest way to be reliable to
the customer is to maintain an easy and simple image in the companys website, which created positive
web experience to the customer. This can be done by having transparent interface, rich content, easily
accessible information and having a design that facilitates multiple audiences. This is simply emphasizing
the importance of knowing the target visitors as they have different tastes in terms of color and design
as a whole. Also, a good design is not enough to make your customers stay in the website; it must be
informative as well especially on the product details. As what Efendioglu and Igna stated that companies
may have great content, dynamic and attractive design on their website, but the customer may not be
aware of that website because of wrong or inadequate online marketing. (Retrieved on Aug. 14 2012
from https://pure.ltu.se/ws/files/33033408/LTU-EX-2011-32955905.pdf)
Website security also refers to the protection of confidential information of the consumers. This
is one way of gaining the customers trust because customers want to believe that the information they
provide will be protected and used only in appropriate ways (Mansoorian, 2006). Some of the important
details to be protected are Address and Contact Number which has to keep in private. Passwords must
also be encrypted to protect the consumers account from hackers.
32

Apart from the content of website and design of the pages, security must also take into
consideration most importantly on the payment transactions. Authentication and payment systems
must provide a high level of security due to the sensitive functions they perform. In order to achieve a
strong authentication method, it is necessary to identify and understand what needs to be protected,
possible attacks, how to protect vulnerable points and a ways to detect attacks. These methods can also
be made more resilient to attacks by incorporating multiple authentication factors and communication
channels. Most importantly, the limitations of the authentication method used must be clearly
understood. (Retrieved on Aug 14, 2012 from http://publications.lib.chalmers.se
/records/fulltext/146815.pdf). This why most E-commerce prefers payment gateways such as Paypal,
PayZa, Google Checkout etc. to ensure a fast and secure transaction between the client and the
company.
Several criteria must also be considered to create a successful e-commerce. Search Engine
Optimization (SEO) is a specialized research-driven process of analyzing and editing your web site in
order to increase the rankings of your site pages for specific search terms in search engines. By targeting
strategic key phrases that appeal to your target audiences, SEO allows you to be found by global or
regional markets of individuals who are seeking precisely whatever it is that you offer. Whether it is a
product, a service, a mission or a message that you want to promote, search engine optimization
provides benefits for just about any type of organization that wants to reach people. (Jaffray, 2004).

33


Local
Businesses who engaged into Electronic Commerce (e-Commerce) have been observed to gain a
competitive edge in the field of Marketing in terms of accessibility, convenience and availability. Since
the internet is accessible by people globally, the customers are no longer limited within the vicinity of
the store. Anyone can visit the store anywhere, anytime without hassle. Just by navigating the store, the
customer can choose the products and purchase it without going to the store directly .E-commerce
proves to enhance the way usual business transactions occur and helps lessen the time and effort
consumed by the company and customers as well (Deanna and Fritz,2006). With these, a good
relationship with their consumers will be established and their objective of increasing their sales will be
achieved (Kim and Katherine, 2004).
34

Through internet, E-commerce offers a simplified approach in business deals and gives a new
option for selling and buying the companys products and at the same time not only selling and buying
of products but also advertising the site. (Roso and Navarro 2006). Since the products are available in
the web, the more chances of gaining exposure to target customers and can eventually encourage them
to purchase an item. Its the most affordable way of advertising compared to some paid commercials
that even small businesses can easily implement.
Since most of the companies employ websites as one of their marketing strategies, competitors
are also spreading. The company must take into considerations the key factors in order to have a
successful online marketing system starting from the target audience, web design, interface, security in
terms of payment and customer information, content and even the smallest details of a website.

Review of Related Readings
These are some articles from magazines, newspapers and journals related to the study.
Foreign
Internet users will be unlikely to use the Internet on a routine basis for commerce unless they
have confidence that their communications and data are safe from unauthorized access or modification.
Confidence in the system itself depends on the availability of effective means both for protecting
information systems attached to telecommunications networks and for authenticating and ensuring
confidentiality of electronic information to protect data from unauthorized use. It also requires well
educated users who understand how to protect their systems and their data. Unfortunately, as noted in
the US Framework document, there is no single "magic" technology or technique that can ensure either
security or reliability. Instead this requires the use of a range of technologies including encryption,
authentication, password controls and firewalls as well as a trustworthy key and security management
infrastructures. (Patterson, 2001).
35

The number of small- and medium-size retailers selling online has swelled in the last two years,
from 21 percent to 32 percent, according to a survey by IDC, a consulting firm. Aided by less expensive
and more sophisticated technology are competing with retailers as well as bigger sites like Amazon.
These businesses lack the huge marketing budgets of their bigger peers, of course, but they are
unearthing cheap advertising methods that, in some cases, help them compete with million-dollar
promotions. (Retrieved on August 18, 2012 from http:// www.nytimes.com/ 2007/12 /03/technology/
03ecom . html?ref= ecommerce). This just proves that even small businesses can compete with the
other companies through web just by providing an interface that promotes simplicity, security and
reliability.
38

36

Automated transaction means a transaction conducted or performed, in whole or in part, by electronic
means or electronic records, in which the acts or records of one or both parties are not reviewed by an
individual in the ordinary course in forming a contract, performing under an existing contract, or
fulfilling an obligation required by the transaction (Uniform Electronic Transactions Act, Section 2, 1999).
This Act informs the parties that they have both an obligation when it comes in transaction especially in
terms of electronic transaction.
A contract may be formed by the interaction of an electronic agent and an individual, acting on the
individual's own behalf or for another person, including by an interaction in which the individual
performs actions that the individual is free to refuse to perform and which the individual knows or has
reason to know will cause the electronic agent to complete the transaction or performance (Uniform
Electronic Transactions Act, Section 14, 1999). This article discuss about when getting into electronic
transaction, parties can both agree to the terms and condition to make the process of transaction much
reliable.

Local
Developing a technology for the companies/countries productivity should be the main concern of the
developer. As stated, the state shall give priority to research and development, invention, innovation,
and their utilization; and to science and technology education, training, and services. It shall support
indigenous, appropriate, and self-reliant scientific and technological capabilities, and their application to
the country's productive systems and national life. (Article XIV Section 10, Science and Technology
,1986)
37

Innovation of technologies to all potential sources must benefit not only the company but also the
country. According to Article XIV Section 12, Science and Technologys, (1986), The State shall regulate
the transfer and promote the adaptation of technology from all sources for the national benefit. It shall
encourage the widest participation of private groups, local governments, and community-based
organizations in the generation and utilization of skill and expertise.
Just like another law, Online Law should concerns on those businesses which are given to companies the
right to choose the type and level of security methods that suit their needs. To facilitate domestic and
international dealings, transactions, arrangements agreements, contracts and exchanges and storage of
information through the utilization of electronic, optical and similar medium, mode instrumentality and
technology to recognize the authenticity and reliability of electronic data messages or electronic
documents related to such activities and to promote the universal use of electronic transactions in the
government and by the general public (REPUBLIC ACT NO. 8792 June 14, Electronic Commerce Act,
2000)
38

Online Marketing helps company reach their target customer thru the use of Internet. Internet
marketing help the company to put up a better communication and improved relationships between
customers and the company. As stated on the Manila Bulletin (2011), The Internet provides endless
opportunities for your businesses to market your company and your product at the comfort of your
homes and offices. Internet marketing may be described and defined in many ways, depending on how
you make use of the Internet to help your business grow.
Online Marketing can generate much revenue not only in the Company but also the other country.
According to Emmie Manila Bulleting (2012), the company expects its overall business in the region to
grow 100 percent year-on-year and up to infinity in the Philippines, which at this point, has only 10
percent of its travel market online, as opposed to neighbors like Singapore, with 35 percent CEO Dan
Lynn Explained.

Synthesis
Based on the information gathered by the researchers, company who engages into online Marketing are
more likely to be more competitive in the business field. The company will have a good image, thus
attracting more customers. According to the related literature and studies collected, e-commerce also
promotes convenience to both consumers and company. Yet, to have a successful online marketing,
there are several criteria to be considered first before developing website. These are the target visitors,
the web design, security, maintainability, reliability, handiness, quality and ease of use.
39

The researchers aim is not just build a website but a customer-converter online marketing by providing
adequate details of the products, user-friendly interface, secured payment transaction, search-engine
friendly and easy-to-maintain environment. The proposed system will not just build to advertise all over
the web but to provide good services to the target visitors. These considerations will help the company
in gaining a good image and eventually attracting more customers to buy their items.


CHAPTER 2
REVIEW OF RELATED LITERATURE AND STUDIES
This chapter presents the materials used such as books, magazines, journals,
internet and other thesis writing to support the relevance of the presented study.

I. Related Literature

Foreign Literature

The extension of technology that integrates the electronic media in the buying
and the selling process is known as the Ecommerce. Elton (2012) mentioned that the
ecommerce website has deflated the dissimilarity of the world.
Marketing is an important organizational function in today's age. It is the one
path that a firm follows to create and deliver value to its customer and itself. The
internet has created a vast array of opportunities to deliver this value.
According to Brigita Go (2012), running an online business is much better
than opening a store. Selling online is indeed one of the great ways to make profits
online. In fact, it is also a great way to widen your target market and grow your
business fast as well. Carolyn Anderson (2012) stated that "by putting your business
online, you are also widening your reach worldwide". It is important to check out
some online selling tips that may help make selling successful.
As more and more business take the ecommerce journey to charm customers,
it is enhancing more and more necessary to build effective ecommerce marketing
ideas. According to Sunny (2012) the primary reasons for marketing your ecommerce
business online is to remain fasten.
Ian Ross Hollander (2012) stated that there are three online marketing trends
every successful entrepreneur must adopt: communities are critical, dynamic browsing
environments and control what you create.
According to Harris (2012) the online medium offers a big platform to
promote your business as compared to other medium available. Your products and
services will reach to a large number of potential buyers only if you choose the right
marketing medium for your business.
Today online reservation system is even accessible to consumers through
Internet Gateways and it allows the users to book hotel rooms, rent cars as well as
book online airline tickets, which is definitely a more convenient way of making your
travel plans. Andrew mentioned that, online reservation systems are the future of the
self-catering holiday provider as more and more people request online or as a
minimum live availability.

II. Related Studies

Foreign Studies
According to Kartiwi (2006) the use of e-commerce in small medium-sized
enterprises (SMEs) has become an important topic in information systems research.
At present, there is a large number of well-documented benefits derived from e-
commerce for small-medium enterprises (SMEs) both in theoretical and practical
literature.
With the development of Internet, e-commerce becomes a common practice in
foreign trade and penetrates into every aspect of international trade. Xia (2006) stated
that e-commerce application in foreign trade enterprise are analyzed, the potential
application that e-commerce is superior to traditional trade is expounded, active
reactions are suggested be taken, the promotive function of e-commerce application
should be exerted by government, the enhancement of e-commerce competence, the
perfection of the service role as intermediary platform, the study of joint effort of all
parties for a promising e-commerce application environment.
According to Michael Braganza (2007), ecommerce is the latest mantra in
increasing you sales. This is because instead of selling your goods and services
through a local store, you can sell online and gain a greater customer base. Apart from
providing shipping services, you will need an online ecommerce merchant account to
accept credit card payments to make your venture a success.
A study from ARA Victoria (2007), there are many factors in professional
selling of products 'always give customers more than they expect', 'your success will
depend on how well you can meet the needs of your customer', 'the attitude you sent
out usually the attitude you get back' these are the main topics that they emphasize in
their study.
Idea from Nicole Mann Novick, most fashion- fanatics have no difficulty in
building clothes teeming with valuable parts. But several find it more of a trial to edit
down a collection, whether due to soppiness or an unwillingness to toss something of
worth into the giveaway basket. If you drop into the latter type, theres worthy news.
You can recoup, and possibly even return from, the cost of your outfits, providing you
know the tricks of the resale skill. From loving for your pieces to distribute them with
possible consumers, three of Los Angeles most respected specialists offer instructions
and guidance on how to sell youre 'mildly worn' fashionable flops.
Doris Raymond (2008), says, 'NOT EVER leave a piece on shipment deprived
of a previous understanding of what the trade value is and the terms'. Your receipt
with the supply is a deal, so take whatsoever is printed VERY extremely. We can be
accurately giving our pieces to that business naively.
Another idea form Amy Brantly (2012) is that pictures are worth a 1,000
words, so why not take excellent pictures to help sell your items? You need to find the
best lighting source possible, while natural light is wonderful, direct sunlight can
affect the color of the clothing in the image.
Based on the study of Sophie Walton (2012), online bargain hunting has
prepared my time much easier and less chaotic. She garage online for birthday
presents, textbooks, stuff, domiciliary supplies and occasionally even for foodstuffs.
However, spending for clothing online has one major problem - - females' sizes are
not standard. Clothing producers tell females they have standard sizes but females
know this is as false as one size fits all. She have really sobbed in a dressing area
since she had to buy a pair of pants two sizes larger because they were cut so small.
She does not let this halt me from ordering dress from online retailers because it saves
time and money by shopping online. Though, she has learned a few tricks for
shopping online for outfits that she want to share with us.
According to Paradise Style Group (2006), when we order clothing at the
internet, we can suppose some crinkling related with padding and delivery. Don't
associate the clothing that derives out of a package with the pictures on websites of a
skillfully steamed costume. To get the similar look for your clothing, we continuously
endorse having your clothing skillfully steamed or pushed after any changes are done,
and formerly your occasion.

Local Studies

A study from W.Smith, (2008) social marketing is defined as 'a process for
influencing human behavior on a large scale, using marketing principles for the
purpose of societal benefit rather than commercial profit'.(p. 22, 23).
According to Pantiao, Hannahlyn B., (2009) because of their manual system
they have their services slow down. In their current system problems like missing
orders and loss of data possibly occur by the implementation of the online ordering
system anyone that have the authorization to access the information, they could used
them anywhere and anytime.(p. 1)
Words from Panlilio and Diana (2005) customers today are diverse as the
clothes themselves. There are some who stick to the trends, some who stick to classic
styles and some who would like to be set apart from the rest and hence come up with
styles of their own. Customers are seeking on ways in purchasing fashionable
products how and where. (p. 8)
According to George as Online Marketing, (2010) there are so many benefits
of online advertisement of a product. One is, you have wide coverage makes your
business to reach more audiences. Second is, it is more affordable in online
advertisement than other traditional advertising cost. Third is, easy to track and
measure conversation this makes online advertising more ahead than traditional
method of advertising. (p. 14)
A work from Salunson and Ramon, (2007) Electronic Commerce is consists
primarily of the distributing, buying, selling, marketing and servicing of products or
services over electronic system such as the internet, electronic devices and other
computer networks.(p. 17)
Based on the work of Ernie, Rachel L, (2005), entrepreneurship is encouraged
because it is one of the contributions towards developing an area and at the same time,
improving the lives of more Filipinos. The mentality of finishing a degree to work for
a company serves only the interest of rich employers. (p. 35)
A study from Katrina Tan, Business in Cyberspace, Entrepreneur Philippines
Magazine May 1, 2007, SYO Bnow, Inc., which stands for Start your Online Business
Now, is a company whose business is to help other people start their own businesses.
It recently launched the Philippines' first online marketplace for goods and services,
bringing together buyers and sellers through an online Web portal that serves as a
complete virtual office. (p. 45)
According to Philippines News Agency, NCC's e-Services Portal Launched,
April 26, (2008), Total Information Management Corp. (TIM), local IT, firm recently
spearheaded the official launch of the Computer Center's Philippine Government e-
Services Portal. (21-22)
Tagged as "eSerbisyo.gov.ph" or "eSerbisyo" in the international Internet
community, the e-Services Portal was built by TIM trough a Php 45-million contract
awarded by NCC last 2 years. This portal is designated to serve as a one-stop, all-in-
one Internet gateway for accessing comprehensive information and online frontline
services of multiple government agencies. "When we first embarked on this project,
we at TIM had the honor of being NCC's chosen solution." (21-22)


Local literature

LOCAL LITERATURE---- introduction---------

In the old days, business was done using papers and flat registers. The organization of these
registers was difficult and the storage of huge amounts of data was a real problem. Also, the process of
preparing a report takes a lot of time. But when computers were introduced into the business field,
everything had changed. Databases were used to store huge amounts of data and organize them.
Instead of spending many hours (or maybe days) preparing a report, a query consisting of a number of
statements can perform the job in some seconds.
Although databases were very useful, another problem has appeared. Companies and
corporations spread over wide distances. A single company can have branches in all the governorates of
a country and maybe with some branches outside that country. Data communicating and sharing was a
problem. This problem was solved using computer networks which are the best way for data
communicating. Nowadays, computer networks are essential for any business. Computer networks are
used for file transfer, voice and video conferencing. For this reason, we have chosen our final project to
discuss networks from different sides.[1]


Mr. Glincher
Hospitality Law
Dealing with the Impact of Online Reservation
Systems
By Andrew Glincher, Office Managing Partner, Nixon Peabody LLP
These services also pose serious challenges for hotels, threatening to commoditize hotel rooms, dilute
the value of brands, and place too much influence over pricing in the hands of third parties. Leaders of
the hotel industry are now beginning to understand those issues - both management and legal issues -
and develop tactics for dealing with them and harnessing the power of Internet marketing to their
advantage.
Online travel services today account for approximately five percent of all hotel bookings. Some experts
estimate that about 15% of all bookings will be made through these services by the year 2006. Clearly,
while it is not cutting into the majority of bookings, this phenomenon is touching a significant portion of the
market, as properties find themselves having to compete with themselves for bookings offered at their
own properties by third party reservation services at lower prices.
Unfortunately, the advent of online reservation services and their increased accessibility to a traveling
public with widespread access and greater comfort with Internet purchasing, has come at a time when the
hospitality industry has gone through a major slump. Initially, faced with steep declines, many properties
were happy to sell blocks of rooms at deep discounts to online resellers, who would then market and sell
them to the public. But as travel industry began to recover, and these third party services began
aggressively advertising and selling rooms at deeply discounted prices, the hotel industry quickly realized
that they were, in effect, competing against themselves.
How can properties adapt to this new reality? What issues should concern them and how should they
deal with them?
The first issue involves the relationship between the hotel and the reservation service. If a guest arrives
believing they have a reservation that was booked through an online service, and the hotel reservation
system has no record of it, who's responsible? Does the hotel have to honor it? Does the hotel have to
offer a refund if a room is not available?

Agreements to purchase bulk rooms at a discount must make it clear that the service is doing no more
than just that. It should be clear that the service is not an agent of the hotel and cannot hold itself out as
one. Whatever terms and conditions it attaches to the resale of rooms to travelers should be its own - in
no way binding on the hotel itself. The hotel's contract with the online service should make it clear that the
service is an independent entity, that is merely buying and reselling blocks of rooms, and that the
reservation service must place a disclaimer to that effect on its website.
Then, as hotel managers consider how best to help the clients who have been inconvenienced, their
decisions will need to be governed by customer relations considerations, and best business practices.
Hotels also need to get to the point where they are using these discount services only to sell excess
rooms. The average business traveler, booking rooms on a regular basis, should not be able to get a
deep discount anytime he or she travels, by simply logging onto a travel service website. If that happens,
the property is ceding control of its pricing to a third party.
On the other hand, if a convention property knows that a down period is anticipated, when a large number
of rooms will be vacant, it may make sense to offer them to online services at whatever discount is
required. Some revenue, after all, is better than none. But tight control over the number of rooms that are
offered is crucial, to protect both the business and the brand.
Great hotels have never thought of themselves as commodities. They have always differentiated
themselves on the basis of service, style, amenities and quality. The Internet should not change that.
Lower cost, two or three-star hotels may need to compete more than ever on the basis of location and
price - and therefore need to be even more cautious about discounts offered through online services - but
the best hotels should compete as they always have. They should position themselves as distinctive
properties that can command higher rates because of higher quality. As the economy heats up and
occupancy improves, these properties will find that they don't have to offer deep discounts - online or
otherwise - to attract clients.
Hotels can also compete by offering what these third-party services offer - ease of access through the
Internet - but doing it better and more effectively themselves. Large numbers of travelers are now booking
their rooms through hotel websites, many of which offer three-dimensional views of rooms, public areas,
spas and other amenities - giving clients the ability see what they are booking even more clearly than
they would by calling the hotel's reservation desk. Booking through the website then allows the hotel to
reduce its operating expenses without paying third party fees, or to raise its revenues by selling rooms
without a discount to third parties.
Many properties are offering their own Internet only specials, such as discounted rooms and various
types of packages. And increasingly, they are offering online rate guarantees - letting consumers know
that if they book directly through the hotel, and they see a lower rate advertised through another service,
they'll match it.
Setting up an online reservation system like this brings with it a whole set of unique legal and
management issues. For example, how do you manage security on the site? Who has access to
costumer credit card information? Do you have a privacy policy posted on your website? What
guarantees does it offer to concerned users? There is no legal requirement for what a privacy policy says,
but whatever it says, you have to live up to it. If you say that no information about customers is ever given
to third parties, you have to abide by that - without exception. If you say that you will do everything
possible to train employees and employ security measures to prevent hacking, you have to abide by that
as well.
A number of companies have faced legal sanctions recently because of a failure to live up to the
promises made in policies they post on their websites. Developing them carefully and reviewing them
frequently to ensure ongoing compliance is essential.
Internet based marketing and reservations pose a number of challenges and is certainly altering the
landscape for everyone in the business, from travel agents who are now positioning themselves for their
expertise in planning trips, to hotel owners, who must compete for clients with a plethora of new booking
services. But it also offers opportunities for those who understand the arena clearly and are able to shift
tactics to compete effectively.
Andrew Glincher specializes in the negotiation and resolution of business and real estate disputes. Mr.
Glincher has represented developers and owners of retail centers, hotels, movie theatres, office and
industrial buildings and parks, utilities, restaurants, subdivisions, apartment complexes, assisted living
housing complexes, long-term care facilities and condominium projects. Mr. Glincher is admitted to
practice in Massachusetts, the U.S. Court of Appeals, Third Circuit, the U.S. District Court, District of
Massachusetts and the U.S. Tax Court. Mr. Glincher can be contacted at 617-345-1222
or aglincher@nixonpeabody.comExtended Bio...
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THE IMPACT OF TECHNOLOGY ON SMALL
BUSINESS
By Karen Nerison, Marketing Director
Technology provides a wide range of tools entrepreneurs can use to guide their new companies through
the startup and growth stages. Advances in technology have revolutionized
accounting, marketing, and sales practices for small businesses. From laptop computers with Internet
capabilities to printers, online file storage, and web-based applications--technological advances impact
small businesses across various industries.
Technology has the potential to affect small business in several ways, depending on the goals a business
has in place, the products they chose to use, and how well entrepreneurs and their employees adapt to
new systems.
CREATI NG EFFI CI ENCI ES
Small businesses work closely with their clients to provide them products and services that add value to
their lifestyles. Going from an idea to a finished product or service requires small business owners and
their employees to collaborate with each other and external vendors. With the ability to instantly connect,
share information, and get feedback, e-mail and instant messenger are beneficial technological
advantages for small businesses.
Web-based project management programs offer an easy approach to keeping track of projects,
delegating tasks, updating team members and clients, tracking time, and sharing documents in real-time.
For small businesses, this means up-to-date information available in a central hub, regardless of a
person's location. Setting up and managing a new accounting system can be a challenging task.
Accounting software also assists managers by creating informative reports and financial statements to
increase decision-making effectiveness.
Time management is crucial for any small-business owner. Freeing up time from administrative tasks can
allow you to focus on more productive activities, such as drumming up new business and making vital
contacts with potential partners. Advances in computer and cell phone technology allow business owners
access to in-depth scheduling and customer relationship management software, enabling busy
entrepreneurs to hold "face to face" meetings online.
I NSTANT CONNECTI ON WI TH CUSTOMERS
Small business owners no longer have to mail surveys to customers and wait for weeks for replies, nor do
they have to call customers for feedback. Technology gives small businesses the ability to connect with
their customers via e-mail, through blogs, social networks, and forums. Small business owners can take
advantage of this instant connection by getting feedback from customers and applying it to their
businesses quickly.
I NTERNET
Technology allows businesses an option to set up online stores, rather than investing in costly storefronts.
With consumers migrating to the Internet to find everything from gifts to groceries, the popularity of online
shopping increases with the variety of products and services. Businesses with storefronts can create
online stores to expand their visibility and reach target markets beyond their neighborhoods and
surrounding communities.
The Internet has become a must have for small-business marketers competing against established
businesses. With advanced video and graphics editing software, small-business owners can create
professional marketing materials that reach thousands or millions of online viewers. Entrepreneurs can
take advantage of cost-efficient web marketing opportunities to spread targeted marketing messages to a
broad audience or a specific industry segment.
STARTUP COSTS
Despite the advantages gained by using technology, there are still challenges to the businesses reliance
on technology. One is the increase in startup expenses for new businesses. Almost every new business
requires computer workstations, multiple telephone lines, and network infrastructure before it can begin
operations. Bootstrap entrepreneurs can often get away with using their own PCs and cellphones during
the startup phase, but serious new ventures by experienced entrepreneurs usually involve large
infrastructure projects to accommodate rapid growth.
Technology offers many opportunities for a small business to market its products or services. Electronic
record keeping helps small businesses consolidate information systems by using databases that link
information in multiple ways. Electronic communication systems such as email, websites, blogs and
Twitter are invaluable marketing tools, enabling a small business to stay connected with customers and
suppliers. Small-business technology can be complex or simple, depending on the proprietor's comfort
level and the benefits that technology can offer to the particular business.
Online boom affects bricks and mortar businesses
These days you can get almost anything online, and local retailers know it. With the Australian e-
commerce market worth around $12.5 billion, excluding travel and groceries, there is much money to be
made selling your products on the web. As Dun & Bradstreet recently reported, this has paved the way
for a surge of group-buying websites such as Scoopon, Spreets, CatchOfTheDay, Cudo and LivingSocial.
Small to medium-sized businesses are feeling the pinch as more and more of their customers choose to
shop from the comfort of their own home, particularly when the internet has a wealth of cheaper options.
According to the latest Dun & Bradstreet Business Expectations Survey, 21 percent of the 1200
businesses surveyed reported lower profits and sales in the 2011 March quarter. Sales outlook for the
September quarter plunged to the lowest level in two years, pushed down by a variety of economic and
institutional factors.
"Retail has always formed a significant role in the economy but with consumers continuing to feel the
effects of last year's interest rate hike retailers are becoming more conservative with profit projections."
"In particular the continuously strong dollar is having a two pronged effect, encouraging some consumers
offshore while also making importing easier for a percentage of businesses," D&B chief executive
Christine Christian noted.
Small retailers are set to suffer from a lack of customers over the next few years, particularly if they do not
offer any services or specialised expertise such as repair or maintenance.
This is especially true for businesses who offer deals on group-buying websites. The Council of Small
Businesses of Australia (COSBOA) says that the group-buying model is "set up so that the small
business gets absolutely nothing except a big loss out of it."
Although these websites provide publicity and advertising for SMEs, the excessive discounting and over-
demand may cause cash flow problems.
Earlier in January, the National Retailers Association (NRA) lashed out at the online craze by joining Myer
and Harvey Norman in campaigning for the levying of Goods & Service Tax (GST) on all import sales.
Under current legislation, there is no GST or duties placed on imported products under $1000. The NRA,
which represents 3700 retail businesses (most of which are SMEs), claims that customers will be deterred
from shopping online if the ten percent GST is charged to all goods.
"There is no doubt that the exemption from GST and other import costs is being fully exploited by
overseas based retailers and is causing significant damage to local businesses," said NRA executive
director Gary Black in a media statement.
In response, the Productivity Commission released a review on the impact of globalisation on the retail
industry in March. The review concluded that it would be largely impractical and costly to levy the same
consumption tax on all imports, particularly postal items which are subject to international agreements. As
these items do not have barcodes or electronic documentation, the Commission stated it would be difficult
to assess and collect duties on them.
The review favoured the general consumer, stating that cost was not the only factor driving people to
shop online. "In some cases, consumers purchase items from offshore online providers because they
simply cannot purchase an equivalent product from a local supplier," the review reported.
So how can small retailers improve their situation? The chief executive of the Australian Retailers
Association, Russell Zimmerman, recommends downsizing their physical presence while building up their
web presence. Costs can be cut by investing less on fancy shop fronts and by leasing out part of their
space to other businesses.
Retailers should decide whether, "they're going to have their full range on display or only their latest
releases" to improve their profit margins.
Another solution is to diversify into other services that customers may find hard to find online. For
example, a retailer of cosmetics may find it viable to also offer manicures or beauty treatments.
SMEs may also want to boost marketing strategies by revamping their website, making it more accessible
for customers. Appalogue is an interactive application for the iPhone and iPad that provides just that- a
virtual catalogue that allows small and independent retailers to promote their business. This also offers
customers a clutter-free, environmentally-friendly option of searching for products suited to their need,
rather than receive promotional material they don't want.
Min-i-Mags is the Brisbane-based company behind this application. Co-founder Jillian Manly feels that e-
commerce provides a "brighter future for independent retailers as it allows them to compete by providing
greater convenience."
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