TABLE OF CONTENTS

INTRODUCTION........................................................................................................................................................2

SME IN MAURITIUS................................................................................................................................................3

Findings of a survey in relation to the use of internet of SMEs in Mauritius; (Peedoly and Lal, 2006)................................................................................................................................................................... 4

INSTITUTIONAL SUPPORT AND SMES IN MAURITIUS....................................................................6

National Computer Board...........................................................................................................................6

OPPORTUNITIES THAT THE INTERNET PROVIDES FOR SMEs TO FLOURISH...................7

Other useful opportunities that the Internet can provide to SME’s:.............................................8

The Internet as a marketing tool..........................................................................................................8

Improvement of the Value Chain and the Supply Chain Management..................................8

E Business................................................................................................................................................... 9

Access to a wider Market.......................................................................................................................9

Information-based products are at an advantage............................................................................9

Reasons for non adoption:........................................................................................................................10

Companies with physical products maybe at a disadvantage..................................................10

Small companies competing in standardized product areas face serious challenges......10

Cost implications....................................................................................................................................11

Culture attached to traditional method of retailing.....................................................................11

Some other more general reasons are:.................................................................................................11

In some companies, the returns of investments may be unclear and this may create little incentive for change in the operating method........................................................................................11

Hackers and insecure transactions, lack of trust prevents companies from relying on the internet................................................................................................................................................................. 11

Companies vying for the Internet to become a tool for business expansion will require the expertise....................................................................................................................................................... 11

SOME SPECIFIC STRATEGIES TO IMPROVE PERFORMANCE THROUGH INTERNET USE................................................................................................................................................................................. 12

Generation of capacities............................................................................................................................12

Mobilization of resources.........................................................................................................................12

Negotiated transitions................................................................................................................................12

CONCLUSION.......................................................................................................................................................... 13

REFERENCES...........................................................................................................................................................14

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INTRODUCTION

SMEs are defined as enterprises engaged in manufacturing and using production

equipment in their manufacturing process which includes transformation/conversion of

raw materials, repair, packing, assembly of semi-finished parts into finished goods. The

production equipment refers to equipment directly related to production (SMIDO Act

1993).

SMEs (Small and Medium-sized Enterprises) continue to be one of the major engines of

growth for most developing countries. They are vital for economic growth and

innovation, poverty reduction, local employment and development, and social cohesion.

The concept of using Internet for business operations by SMEs can be termed as

International Entrepreneurship. This means that people expand their horizons of doing

business and there is no longer the feeling that the road to entrepreneurship stops within

the borders of only of one’s own country. This allows for the possibility for global market

integration overall.

There is a dire need for modern and sophisticated SMEs which go beyond the traditional

and oversaturated markets in which many SMEs tend to linger and exploit areas which

have already been identified as having important potential – Footwear, Light engineering,

tourism, Agro-industry, ICT and services. Such SMEs would not be competing on the

basis of costs only and would require more emphasis on issues like quality, product

design, value-added, delivery, after-sales service and reliability.

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SME IN MAURITIUS

The vision of the Government of Mauritius is to make of the ICT sector the fifth pillar of

the economy and transform Mauritius into a regional ICT hub. Government wishes to

position Mauritius as a major destination in the region for investments in this sector. In

the critical sectors of economic importance and social relevance, ICTs are seen as a

catalyst to bring about better sector management and sector development, and to facilitate

collaborative interaction. Smart exploitation of ICTs together with organisational change

allows businesses to increase their productivity and improve their competitiveness.

Appanah (2003) argues if SMEs are defined as enterprises employing not more than 100

employees they would represent 80% of enterprises in Mauritius.

Therefore, there should be investments in developing the ICT sector to drive SMEs into

adopting or upgrading their information and communications technology. SMEs’

flexibility and adaptability are key determinants to take advantage of this technology.

More particularly, usage of ICT, technology upgrading, and continuous innovation are

paramount to being competitive and run at optimum efficiency.

Government should develop policy objectives to enable the innovative use of ICTs at the

level of SMEs in order to enable them to enter export markets and develop competence in

their respective areas. However, there is relatively little empirical data pertaining to

SMEs in Mauritius and more particularly regarding the extent to which they have adopted

ICTs in day to day running of their businesses.

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Findings of a survey in relation to the use of internet of SMEs in Mauritius; (Peedoly and Lal, 2006)

According to Peedoly and Lal (2006), from a survey of 60 SMEs conducted in November

2004 till January 2006 on the degree of ICT adoption, it was found that Fifty-five percent

of sample firms reported that they were using ICTs while remaining firms were not using

them at all.

“The general picture of Mauritian SMEs that emerges from the findings is that the

overwhelming majority are ill-equipped both literally and figuratively to cope with the

challenges of globalization. The gradual demise of some of the economic pillars of the

country in recent years triggered by contemporaneous ideological, economic and political

realities of globalization and their accompanying effects on the unemployment rates are

presenting at the one same time both a challenge and an opportunity for the SME sector.”

(Peedoly and Lal, 2006)

“Focusing on the implementation of ICTs by local SMEs, it is clear from the findings of

the study and also from available literature and interviews with Government officials who

are responsible for providing support to SMEs, that Mauritius conforms to the norm of

developing countries in the ‘digital divide’. Whilst the sectors chosen should in principle

reflect those sectors where SMEs would be more likely to have adopted ICTs, the

outcome of the survey show that the ICTs used are severely limited” (Peedoly and Lal,

2006)

“Usage of more recent ICT tools such as Management Information Systems, CAD/CAM,

and flexible manufacturing systems were hardly known, let alone used by the firms

surveyed. Only about a third of the sample makes regular use of the more common tools

such as email and internet. Reasons for not using ICTs are predominantly the costs

involved (not only in the purchase, installation and maintenance but also the

communication costs and internet subscription fees), the lack of infrastructure for their

use as well as their perceived little importance for the respondents trade. There is also

evidence that a significant proportion of SMEs, as high as 33% are not aware of

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appropriate ICTs to be used and are unsure about the benefits of ICTs” ((Peedoly and Lal,

2006)

Therefore, we can say that the Internet currently constitutes the technological basis for

the information society and for network organizations. Internet use as a strategic business

tool puts the information revolution within reach of SMEs and gives these kinds of

enterprises more opportunities to compete in today's fast-changing markets.

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INSTITUTIONAL SUPPORT AND SMES IN MAURITIUS

As Wignaraja and O’neil (1999) argue, for the size of the country and its stage of

development, Mauritius has a particularly wide range of support services for the SME

sector. This wide array of support is provided mainly through Government and parastatal

agencies or financial institutions. The SMEDA, Export Processing Zone Development

Authority (EPZDA), the Development Bank of Mauritius Ltd (DBM), National Computer

Board (NCB) are generally regarded as the main institutions which provide support to

SMEs by operating schemes to enhance the setting up or development of enterprises.

They act mainly as facilitators, providing financial support, training and consultancy

services, marketing and export assistance.

National Computer Board

The NCB was set up as the apex organisation to develop and promote ICT and ICT-

related services in Mauritius. Its main contribution towards SME development has been

in terms of its incubator centre mainly for ICT start-ups with the main objectives of

promoting entrepreneurship in the ICT sector by providing the necessary infrastructure

and logistics, the development of linkages with other institutions and marketing.

Moreover it runs sensitization programmes regularly for SMEs in order to familiarize and

influence them to the strategic and financial benefits of integrating ICTs in the running of

their enterprises.

It still needs to be seen to what extent the imminent policy initiatives through the setting

up of firms like of ‘Enterprise Mauritius’ will go beyond the institutional support which

is presently available and address those important challenges which may prove vital for

the well-being of the local economy.

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OPPORTUNITIES THAT THE INTERNET PROVIDES FOR SMEs TO FLOURISH

The Internet can be a critical factor in enhancing a firm’s market reach and operational

efficiency (Porter, 2001). There is some evidence to suggest that the Internet has

increased international opportunities for SMEs (Hamill and Gregory, 1997; Lituchy and

Rail, 2000).

According to Williams (1999, p. 20), Internet technologies:

1. Increase ability of small firms to compete with other companies both locally and

nationally (promotional tool)

2. Create the possibility and opportunity for more diverse people to start a business

3. Offer convenient and easy way of doing business transactions (not restricted to certain

hours of operation, virtually open 24 hours a day, seven days a week)

4. Offer an inexpensive way (compared to postage, fax, telephone and travel prior to

Internet) for small business to compete with larger companies and for companies to sell

in distant markets.

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Other useful opportunities that the Internet can provide to SME’s:

The Internet as a marketing tool

The Internet can be used to create a web site of the Company. The number of people

using the internet for information search is increasing day by day. A web site where all

the products and other practical info are accessible to the customer gives the SME’s an

advertisement which may not have been possible otherwise. The only requirement is a

well designed web site and an email address.

By collecting vital information on the net about customer’s needs and preferences, and

also by analysing customer feedbacks, the company may develop new products and

improve the service it provides. The Company web provides a 24 hour access to

customers of different time zones and hence it can access and provide better service to

customers in any geographic location. Facilities can also be provided for assisting

potential customers with their purchasing decision - for example by guiding them through

product choices in an smart way

Ongoing Customer Support – The Company may provide extensive after-sales support to

customers by online methods; thus increasing satisfaction, creating customer loyalty and

stimulating further purchases.

Improvement of the Value Chain and the Supply Chain Management

Use of the internet (and e-mails) drastically improves communication. Use of e-mail

makes communication faster. This allows for cost savings in terms of delivery, stock of

products or raw materials for all stakeholders. SME’s may optimize the use of logistics

by well timed communication. All the stakeholders in the supply chain, such as suppliers

and distributors, are supported through online interaction

A company can use the Internet to create business partnership by the simple use of an e

mail. Internet use can reduce transaction costs and increase the speed and reliability of

the transactions. In fact the company increases the profit margin in the value chain by

providing a faster service at reduced costs. By creating an ongoing interaction with its

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customers through the use of e mails, the Company may develop loyalty among

customers and creat and other firms with which it is dealing

E Business

Many Companies have started using the Internet for the benefits mentioned before. Use

of online payment, online purchase or even online delivery in certain cases may provide a

very competitive aspect for SME’s vis a vis larger enterprises. It is seen that many

companies who have started e commerce in the developed countries have further

expanded the experience by getting in the next stage, E Business. The Companies

become more involved in more sophisticated use of ICT and the Internet. B2C (Business

to Customer) and B2B (Business to Business) e commerce form part of an overall e

business strategy. All processes, internal involving all departments and external with

customers, suppliers and even competitors, are linked.

Access to a wider Market

Most businesses are now starting to trade via the Internet. Prospective customers are also

surfing the Web to get info about or even buying products via the internet. Hence SME’s

making use of the internet will access the global market through the Internet. The

company may also identify new target markets through exposure to a global environment

Information-based products are at an advantage

Companies with information based products have a real advantage in the networked

world. Not only can websites display product information and take orders, but they can

deliver the end product immediately and at a low cost. These benefits obviously accrue to

music, video and software companies but also to lawyers, accountants, stockbrokers and

consultants among others.

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Reasons for non adoption:

It is commonly recognized that there are major problems and barriers facing SMEs

desiring to adopt and use Internet technologies especially in developing countries.

Moving into e-commerce requires the adoption of specific communication and

information technologies. Not surprisingly, many small businesses are waiting to see if

these new innovative ways are viable and whether the return on the investment will

exceed the costs of adopting the new technologies.

Financial &Business Benefits

Companies with physical products maybe at a disadvantage. They must deal with the

complexities and expenses of international order fulfillment. The issues of distribution,

warehousing, timely delivery, order tracking, and return of unsatisfactory goods are such

as to make most small companies pause before they go into business on a global scale.

Products such as CDs or DVDs, which are identical and for which only service and price

can differentiate sellers, face enormous competition and frequently do not last long.

Customers of online stores can be notorious and disloyal. One example of poor service

can be enough to send an online shopper to a rival store.

It is apparent that successful online purveyors of CDs, Books and DVDs are

comparatively large companies which can absorb freight costs and can offer speedy and

efficient return service for imperfect products.

Cost implications and Technology Constraints

The cost of ICT equipment and the implications for keeping a web site up to date can be

prohibitive .and yet this is an absolute essential in a field where customers expect to see

changes every time they log into the site. In Mauritius, compared to many other countries,

the cost of access to Internet and the associated equipment is still expensive. In many

Countries telecommunications infrastructures are poor and this may deter SME’s to use the

Internet as acompetitive advantage. The cost implications attached to the integration of ICT

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in the Business Process is also complex. This requires certain skills and know how which

many people do not want to take the risk to get into.

Resistance to Change

The culture that is attached to traditional methods of retailing may hinder the adoption of

internet in the running of business. There may be resistance to change as it is quite

difficult for individuals to change cultural habits which have prevailed for so long. There

need to be a mindset change in order to adopt e-commerce and this is not prevailing

among entrepreneurs in the country. It is also to be noted that the Government’s

involvement in the process is minimal. The drive and initiatives are limited to a few

awards and insufficient funding through National bodies dealing with SME’s. As stated

before, one major driver in the adoption of ICT and the Internet would have been the

decrease in access costs to the Internet.

Keeping up with the Technology

Once a company is involved in e commerce, there is no turning back . The company will

need to be involved in updating its technology to keep up with the competition and with

its customer’s requirements. This will involve regular upgrading of equipment, training

for staff, and it may even involve changes in the HR structure of the company.

Some other more general reasons are:

In many cases there is a lack of applicability of the Internet. The SME’s are more

focused towards a specific part of the market whereby use of Internet would not create

added value.

In some companies, the returns of investments may be unclear and this may create little incentive for change in the operating method.

Hackers and insecure transactions, lack of trust prevents companies from relying on the internet

Companies vying for the Internet to become a tool for business expansion will require the expertise

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SOME SPECIFIC STRATEGIES TO IMPROVE PERFORMANCE THROUGH INTERNET USE

Generation of capacities

SMEs should recognize and develop competitive advantages, helping themselves with

the potential of the Internet to be different from other companies, for example, through e-

commerce;

Mobilization of resources

SMEs should assure as far as possible financial and human and technological resources

that aim towards growth of the company. The Internet and related technologies are now

relatively accessible tools to SMEs in many developing countries (low investment);

Negotiated transitions

SMEs should make the necessary adjustments to the company and its members to adapt

themselves to the dynamics of the organization, products, services and markets, where

the Internet plays an important role as a support for business processes. The motivation

and the impulse provided by managers are essential to accomplish these continuous

improvements.

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CONCLUSION

Finally, the mere use of the Internet does not constitute a structural solution for many of

the problems that SMEs could face, especially in emerging and developing countries.

Nevertheless, the potential of this technology will clearly bring quantifiable benefits and

continuous improvement of processes and operations for those SMEs that know how to

make the most of all the advantages the Internet has to offer.

The widespread acknowledgement of the importance of the concept of ‘innovation’ for

the competitiveness of SMEs is in fact intricately connected with ICTs. Modernizing the

SME sector goes far beyond providing financial facilities to acquire or reduce costs

associated with usage of ICTs. It requires perhaps a complete overhaul of the average

entrepreneur’s mindset and more investments in capacity building.

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REFERENCES

Ali Acılar & Çağlar Karamaşa, October 2010, Bilecik University, the Department of Business Administration, 11000, Bilecik, Turkey, Factors Affecting the Adoption of E-Commerce by Small Businesses: A Case Study1

Appanah, V., 2003. “Linkages between clustering, entrepreneurship and incubators in SADC countries” Paper presented at the Workshop on Technology-based Incubators in SADC countries Grand-Bay Mauritius, pp. 1, Organised by WAITRO (World Association of Industrial and Technological Organisation and hosted by SMIDO.

Kaushalesh Lal and Aveeraj Sharma Peedoly, January 2006, “Small Islands, New Technologies and Globalization: A Case of ICT adoption by SMEs in Mauritius”.

Khong Sin Tan, Faculty of Business and Law, Multimedia University, Ayer Keroh, MalaysiaSiong Choy Chong, Putra International College, Ayer Keroh, MalaysiaBinshan Lin, College of Business Administration, Louisiana State University in Shreveport,USA, and Uchenna Cyril Eze Faculty of Business and Law, Multimedia University, Ayer Keroh, Malaysia, May 2009, “Internet-based ICT adoption among SMEs Demographic versus benefits, barriers,and adoption intention”

Wignaraja, G and O’Neil S (1999) “SME Exports and Public Policies in Mauritius”

Commonwealth Trade and Enterprise Paper No 1 London: Commonwealth Secretariat,

London

Vadim Kotelnikov, 2007, Asia-Pacific Development Information Programme (APDIP) “Small and Medium Enterprises and ICT”

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Williams, V., 1999, “Small Businesses Venture into Ecommerce”, Office of Advocacy, U.S. Small Business Administration.

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