Four Effects of Information Technology on E-Commerce

Information technology is vital for a modern firm’s optimal performance today, as it increases the firm’s capability to coordinate business transactions within the firm, but also among firms such as between buyers and suppliers. There are four effects of information technology that reduced transaction and coordination costs (WIGAND 1997):
(i) the communication effect, the advances in information technology allow more information to be communicated in the same unit of time, thus reduce transaction costs,
(ii) the electronic integration effect, which has a close relationship with electronic linkage between buyer and seller,
(iii) the electronic brokerage effect, an electronic marketplace where buyers and sellers come together to compare offerings, and
(iv) the electronic strategic networking effect, the information technology enables the design and deliberate strategic deployment of linkages and networks among cooperating firms intended to achieve joint, strategic goals to gain competitive advantage.

Agri-food Industries - The Reasons of Using Internet

As a consequence of research carried out by the Turkish agri-food SMEs directorate (KOBI), it was found that only 5% of agri-food SMEs in Turkey was using the Internet for their business (CETIN et al. 2004). The challenges of the business environment for SMEs to contact with global markets are;
-lack of connectivity of these small firms with local and global markets,
the need for more effective marketing availability of their products by Internet and web sites,
-providing authentic and organic food products to Turkish communities in other countries and to people with affinity to Turkey,
-enabling marketing facilities for people visiting Turkey in order to increase consecutive purchases (CETIN and OZSAYIN 2005).
The main objective of internet is to provide and sustain competitive advantage. In addition to the challenges mentioned, there are many reasons of using Internet for the management of supply chain. These are;
-to reach any information in a quick way,
-to provide less transaction period and better customer service,
-to meet effectively the demand and the needs of customers,
-to increase the facilities of transport, and
-to reduce the cost of transport.

agri-food industry - the rapid growth in computer networks and online services

In the mid to late 1980s, the rapid growth in computer networks and online services directed companies including agri-food industry to use information and communication technologies (ICT). As a result of this progress, in order to remain competitive in the rapidly changing business environment of the twenty-first century small and medium sized enterprises (SMEs) need to change through the use of Internet and Websites (CETIN et al. 2004)

Nowadays, ICT become the most important sector in the world. Technological changes, non-separated part of daily life as for significant effects of ICT in economic and social life, contribute particularly to the development degree, competing power, capacity and income level of the countries. ICT has evidently an impact on both global and local markets.

Electronic commerce, commonly known as e-commerce, is described as the use of online facilities for doing business. Online facilities include the Internet, intranets, extranets, private networks, and any other facility that enables buyers to communicate with suppliers. (SANG-BAE 2001) E-commerce is changing the way organizations perform their tasks, interact with their customers and do business, and is not only concerned with the buying and selling of products and providing services via electronic means, but it also involves all the other activities that support the business process (LU et al. 2001).

The evolutionary development and industry’s increasing interest in and recognition of importance of technology is increasing and this increase is exhibited by the use of Internet (WIGAND 1997, THOMAS and SPARKES 2000). The Internet is the new method of transportation; it supports the electronic delivery of information, software, and entertainment (WATSON and ZINKHAN. 1997). The emergence of e-commerce also significantly lowered barriers to entry in the selling of many types of goods; accordingly many SMEs are able to use the Internet to sell goods. SMEs’ existence and importance is gradually increasing and their contribution on economy, employment, and development can not be denied.

Companies should change their management practices when taking e-commerce into account, combining the real world with the virtual world so as to guarantee their competitive position in the market (LIMA et al. 1999).

Within Turkish economic system, e-commerce must be seen in the context of markets, the places of exchange. A market is where supply and demand meets, and conceived to consist of all firms, government agencies, and individuals purchasing the commodity. When the market is competitive, it is characterized by many buyers and sellers, homogeneous products, easy entrance to and departure from the market, low costs for consumers who wish to choose among suitable goods from competing firms, and the availability of perfect information (WIGAND 1997).

Because of the adoption of new information technology, transaction based commercial activities such as information gathering, shopping, trading, brokering, banking, accounting, auditing, auctioning, financing, negotiating, collaborating, marketing, supplying, partnering, training, meeting, scheduling, manufacturing, distributing, servicing, and retailing are experiencing rapid change (SHAW 2000)

All companies, either large or small, will face inevitable challenges brought about by the technologically enabled developments, which creates both risks and opportunities.                          E-commerce is in many ways an uncharted new frontier. Carefully thought-out business execution, strategy development, and research become important to understand all the rules and to identify rising opportunities to develop new competitive advantages. The information revolution is drastically reshaping global society and pushing the world toward an information-based economy. By effective usage of the Internet, these firms can be more innovative, have a faster response to environmental demands, and be able to adopt or change to attain a competitive advantage (KLEINDL 2000).

E-COMMERCE AS AN INFORMATION TECHNIQUE IN AGRI-FOOD INDUSTRY

The term of globalization that is popular nowadays appears thanks to the development of Internet. Internet technologies enables the flow of digital information across the world so that it has changed the ways in which people learn, work, communicate, consume and transact business. Also by means of Internet, it can remove the borders between countries in marketing their products. The idea of using data technologies in trading activities develops it rapidly. Becoming widespread of Internet increased the sharing of knowledge; therefore, e- commerce is gradually progressing all around the world. Customers are intended to reach information quickly and the firms are aimed at meeting the demands of the customers by e-commerce. The opportunities of electronic commerce in Turkish agri-food industries such as more transparent markets with easier access to information about possible transaction partners and their products provide interesting support options for establishing business relationships with other countries. The Internet’s global connectivity and easy communication can improve business relations and also provide commerce in the global market. The Internet allows businesses to reduce their cost and with more people that use it will result in more money circulation.