ELECTRONIC BUSINESS AND PERFORMANCE OF SMES IN UGANDA: A CASE

STUDY OF SELECTED SMES IN KANSANGA, MAKINDYE DIVISION

BY

2019-08-

A RESEARCH PROPOSAL SUBMITTED TO THE COLLEGE OF ECONOMICS AND

MANAGEMENT IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR

THE AWARD OF BACHELORS DEGREE IN BUSINESS ADMINISTRATION

OF KAMPALA INTERNATIONAL UNIVERSITY

NOVEMBER 2022
 DECLARATION

This thesis report is my original work and has not been presented for a Degree or any other
academic award in any university or institution of learning.

…………………………… ……………………………

NAME NAME DATE:

 APPROVAL

I confirm that the work in this research proposal was done by the candidate under my
supervision.

…………………………… ……………………………

Supervisor’s name Date

 LIST OF ABBREVIATIONS AND ACRONYMS
AAI Alliance for Affordable Internet

GDP Gross Domestic Product

IT Information Technology

ICT Information and Communication Technology

ISPs Internet Service Providers

MTN Mobile Telecommunication Network

SMEs Small and Medium Enterprises

UIA Uganda Investment Authority

UN United Nations

UN DP United Nations Development Program

 CHAPTER ONE
INTRODUCTION

1.1 Background to the study

1.1.1 Historical perspective
According to Jiang et el. (2010) Electronic business System has grown tremendously around the
globe particularly in the developed nations bf the world. This growth however appears to be
relatively slower in the developing nations including African nations like Uganda. E-business
researchers reported tremendous growth in e-business system all over the globe due to the
enormous volume of goods and services traded between firms (Laudon and Traver 2001;
Garicano and Kaplan 2001). IDC reported that worldwide, more than 624 million Internet users
expected to make online purchases in 2009, totaling nearly $8 trillion (both business to business
and business to consumer). By 2015, worldwide ecommerce transactions will be worth more
than $16 trillion (IDC, 2010). Due to the global reach of e-commerce, Small and Medium-sized
Enterprises (SMEs) in the developed countries have started adopting c-commerce in their
businesses (Rao and Metts, 2003); but SMEs in Malaysian and many other developing countries
are still reluctant to use information technology or c-commerce in their day-to-day business
operation. According to Statistics of SMI (Small and Medium Scale Industries) Association of
Malaysia, only 30 per cent of the SMEs in Malaysia have a web presence and use IT on a daily
basis (Hussin and Noor, 2005). A recent statistics in Malaysia shows that the average growth rate
of internet penetration in the country between 2000 and 2009 was 356.8 percent per year
(Internetworldstats.com, 2010) and in 2009 total Internet users were 65.7 percent that contributed
to a total 16,902,600 Internet users. However, greater potential in business c-commerce have
encouraged companies to move from traditional method to the online business worldwide.
Thompson and Ranga Nathan (2004) argued that companies have much greater incentive to
adopt c-commerce than consumers because it offered many benefits to companies such as
massive cost saving in transaction costs, improved efficiency and strategic flexibility by
developing more dynamic and flexible relationships with key business partners.

In the past ten years, the economy of America continues to be good, so it offers stable
surroundings for the development of E-business. In the world, the economy of Asia has been
restored, thc competition mechanism of Europe has been resuscitated and more people have the
spirit of striving. All of these stimulate the development of E-business (Jiang et al., 2010). Now,
all of the countries in the world think highly of E-business and make it as impetus to the
development of economy. Even they think E-business has more importance than the Industrial
Revolutionary. It is getting more and more attention from entrepreneur and consumers, both
local and international. One of the main reasons is due to the highly successful operations of
some well-known names on the Internet, such as: eBay, Yahoo, Dell and Amazon websites. The
Sales revenue of these companies shown in their annual reports is without doubt, one of the
biggest factors why F-business is important in the commercial market nowadays (Vinsign, 2005).
Developing countries, especially in Africa as a continent and Uganda as a country in particular
are not an exception in this revolution. In South Africa there are still relatively few studies that
specifically offer useful insights on ICT and c-business system adoption and development of e-
business in the small and medium firm sector. Notably, some relevant studies involving the use
of ICT in SMEs to access business information services (Chiware and Dick, 2008); c-readiness
among SMEs (Mutula and Van Brakel, 2006) and internet adoption (Brown and Licker, 2003)
provided useful insights in this. In spite of this, they tend to lack the infrastructural, economic
and soci o-political framework for the development of E-business in comparison to developed
countries for which Ghana is not an exception Gibbs, Sequeira and White, 2007 confirm that the
process of developing an integrative theoretical framework incorporating ICT adoption attributes
in SMEs is still on-going.

The growth of Small to Medium Enterprises (SMEs) is a critical ingredient in the sustainable
development of developing economies. Furthermore, improvement in SME productivity and size
is also cited as a crucial phase in the successful implementation of export led growth (ELG)
strategy employed by East African countries which resulted in a remarkable increase in
economic growth in those countries (Singh, 2011).

Small and Medium Enterprises have taken a center stage in the social and economic development
of many nations (UNI) P, 2010). In Zimbabwe, SMEs in both formal and informal sectors have
long acted as engines of economic growth. According to Storey and Westhead (2010 SMEs are
regarded as the seed-bed foi’ the development of large companies and are the life blood of
commerce and industry at large. Many countries and indeed multilateral institutions have set up
agendas and strategies for the development &f these units. In Kenya, for instance, the Jua Kalis
have been supported by the Kenyan government (Alila and McCormick, 1994) as avenues of
industrializing and developing the country. The Ugandan industry is dominated by small and
medium sized enterprises (98% of the total firms in the industrial sector). Because of their lack
of bargaining power, scarce resources and low management skills, Uganda’s most enterprises
SMEs have been deeply affected by the increasing glohalisation of the world economy. In
Uganda especially in Kampala as a capital city, the role of this sector has been recognized and
various financing schemes have been established to assist the growth of these enterprises. Many
NGOs have been established to finance small enterprises as one of the problems that has been
identified that this sector has. Pride Africa, FINCA Uganda, Uganda Women Credit Finance
Institution, and many others are cases in point (Balunywa and Sejjaaka, 1997).

1.1.2 Theoretical Perspective

This study adopted Diffusion of Innovation (DOI) theory by Rogers (2003) which states the how,
why, and at what rate new ideas and technology spread through cultures, operating at the
individual and firm level. This theory is not a single theory but a Meta theory with several
perspectives that relate to the concept of diffusion. According to this theory, four factors
influence the adoption of innovation by members of an organization. Firstly, the innovation
itself, secondly, the communication channel used to spread information about the innovation,
thirdly, time and fourthly nature of the group to which it is introduced (Rodgers, 2005).

1.1.3 Conceptual Perspective

E-business system is a generic term and encompasses the whole firm with the integration of all
electronic processes fi’orn suppliers to consumers (Papazoglou & Ribbers, 2006). In this study,
e-business system refered to the application of information and communication technologies
(ICT) in support of all the activities of business like use of internet, website, and database and
network server.

Machacha (2002) defines an SME as an enterprise that has less than 500 employees. For this
study the term growth of SME encompassed high turnover sales, financial resources, marketing
strategy, information access and Government support. This included even those enterprises run
by an individual.
1.1.4 Contextual Perspective
In Uganda SMEs are reported to contribute about 20% of Uganda and GDP (Tulip and
Bitekerezo, 1993). This figure may be much higher given that Uganda’s GDP is constituted by
mostly agricultural production. This is mainly by 3mall holders who may not even fit in the
definition of micro and small businesses. Besides, since a great component of GDP is non-
monetized and largely subsistence, it is possible that the contribution of both micro and small
units is much larger than 20%. It is also reported by the Ministry of Planning and Economic
Development (2009) that over 80% of Uganda’s manufacturing output is by small enterprises:
The sector also employs up to 2.6 million people in Uganda (Uganda Investment Authority,
2009).

Small and Medium-sized Enterprises (SMEs) have grown in importance in the Ugandan
economy during the last couple of decades. Both theoretical and practical economic business
development literature acknowledges the key contributions of SMEs to the development of
Uganda’s economy at the national level. This fact is not only measured by the number of SMEs
which represents nearly 90% of the total establishments across the world, but also their
significant role in creating employment opportunities (Uganda Investment Authority, 2009).

However, there is the challenge regarding whether there is enough information on the Web that
is relevant and valuable for the average SME in a developing country like Uganda that would
make investment in Internet access feasible. Underlying this is the fact that most SMEs in
Uganda cater for local markets and therefore rely heavily on local content and information. For
this reason, there is a need to substantially increase the amount and quality of local content on
the Internet to make it useful especially to low-income entrepreneurs. This study therefore sought
to establish the level of adoption of c-business among small enterprises in Kampala.

1.2 Problem Statement

SMEs in Uganda face limited growth in their business when it comes to Profit maximization,
expanding the market strategy and opportunities in the Global market space, accessing updated
business information regardless of their business location and getting innovation resources, the
growth of business in the SMEs sector is significantly very low as many enterprises in business
have their efforts on getting a customer next to the door and on the local areas trying to avoid
transport costs of advertising the products and services of the company ( Per article by: Uganda
Bureau of Statistics 2014). Most enterprises do not focus on improving on maximizing the
company profits and only using observation to get the business information of what people in
small area want little knowing what the customers in the Global market really are interested in
hence only getting few client on local level missing out the international customers.(Sultan et el
2010) Despite all the studies on the growth of SMEs in business sector, a little has proposed the
proper ways of dealing with the enterprise growth using the adoption of electronic business
systems services (Baron et el., 2009). Therefore, the researcher intends to investigate about the
role of electronic business on the performance of small and medium scale enterprises in Uganda.

1.3 Purpose of the Study

The purpose of this study was to establish the association between adoption of electronic
business system and growth of small and medium enterprises in selected companies in Kampala-
Uganda.

1.4 Research Objectives

i) To investigate the level of adoption of electronic business system in selected companies
in Kampala-Uganda.
ii) To determine the growth level of small and medium enterprises in selected companies in
Kampala-Uganda.
iii) To establish the significant relationship between adoption of electronic business system
and growth of small and medium enterprises in selected companies in Kampala-Uganda.

1.5 Research Questions

The study was guided by the following research questions:

i) What is the level of adoption of electronic business system in selected companies in

Kampala-Uganda?
ii) What is the growth level of small and medium enterprises in selected companies in
Kampala-Uganda?
iii) What is the significant relationship between the level of adoption of electronic
business system and the growth level of small and medium enterprises in selected
companies in Kampala-Uganda?
1.6 Hypotheses
There is no significant relationship between the level of adoption of electronic business system
and the growth level of small and medium enterprises in selected companies in Kampala
Uganda.

1.7 Scope
1.7.1 Geographical Scope
The study was carried out in Kampala specifically in Precise Diagnostic and Medical Supplies
located at Naguru, Ntinda-Nakawa Division and Bella Wine Ltd is located at Kiira town council.

1.7.2 Content scope

This study focused on electronic business system (independent) which was limited to online
marketing and advertising, electronic mailing system, database, internet, secure computer
networks and websites while growth of SMEs (dependent variable) was limited to financial
resources, marketing strategy, information access and profitability. The study also correlated
between the level of adoption of electronic business system and the growth level of SMEs.

1.7.2 Theoretical scope

This study was guided by Diffusion of Innovation theory of Rogers (2003). The theory states the
how, why, and at what rate new ideas and technology spread through cultures, operating at the
individual and firm level.

1.8 Significance of the Study

The findings of this study are expected to benefit government policy makers, ICT specialists,
business experts and SMEs in Uganda.

It is hoped that the policy makers need this information to facilitate the adoption and effective
usage of c-business systems in business as it can enable them to formulate policies that can
promote such.

It is also expected that the ICT specialists can be aware of the requirements and the factors that
can promote or inhibit the adoption and use of c-businesses systems by SMEs. This would enable
specialists to develop proper information systems which are expected to benefit SMEs in Uganda
immensely in conducting their businesses.
Equally important is that results from this research would generate new knowledge and also
motivate people to investigate any knowledge gap that still exist.

1.9 Operational definitions of Key Terms

For the purpose of this study, the following terms were defined as they are used:

Electronic business system: refers to the application of information and communication

technologies (ICT) in support of all the activities of business.

Electronic Business System Adoption: Refers to the organization acquiring new application of
information and communication technologies (ICT) in support of all the activities of work like
gaining access to internet followed by use of relatively simple application, such as electronic
mail, in order to dispense and gather information Small and Medium Enterprise: refer to an
enterprise that has less than five hundred employees.

SME: For this study the term SME will encompass all the enterprises with less than 250
employees.

This included even those enterprises run by an individual.

Performance of SMEs: shall refer to finance resources, marketing strategies, information access
and profitability of the organization or company.
 CHAPTER TWO
LITERATURE REVIEW
2.0 Introduction
This chapter dealt with the theoretical and conceptual frame works, and the review of related
literature. The literature review was presented in accordance with the study objectives.

2.1 Theoretical Review and Conceptual framework

2.1.1 Theoretical Review
This study adopted Diffusion of Innovation (DOI) theory by Rogers (2003) which states the how,
why, and at what rate new ideas and technology spread through cultures, operating at the
individual and firm level. DOI theory sees innovations as being communicated through certain
channels over time and within a particular social system. Individuals are seen as possessing
different degrees of willingness to adopt: innovations, and thus it is generally observed that the
portion of the population adopting an innovation is approximately normally distributed over
time.

Rogers (2003) explains that innovations typically diffuse via interpersonal communication
channels through a social system. This system can comprise individuals, informal groups and
organizations, which appear at different levels including national and community. Every social
system has its norms of expected behavior which influence diffusion. For instance, highly
innovative members are often seen as deviants by other system members who, by contrast, want
to follow the norms (or at least be seen to do so). Opinion leaders, rather than innovators, are
more likely to affect adoption or rejection by informally influencing others’ attitudes, because
they have earned respect based on competence, social accessibility and norm conformity. Rogers
argues that interpersonal communication about new innovations is more effective among
individuals who are similar to each other because of their similar perspectives, views and
experiences. Innovators, by contrast, are heterophilous because they are different to others in the
system.
Rogers’ DOI theory also includes individual or organizational innovation-decision processes.

E-Business adoption research suggests individual decision processes are more relevant to small
firms because owners are often the primary decision-makers (de Guinea et al., 2005; Premkumar,
2003). This process involves gaining knowledge of an innovation and basic information about it;
forming an (un)favorable attitude (perhaps influenced by opinion leaders); making a decision
about using it on a partial or trial basis; implementing the innovation fully; and then confirming
if the decision was appropriate.

2.1.2 Conceptual Frame work

INDEPENDENT VARIABLES DEPENDENT VARIABLES

ELECTRONIC BUSINESS FINANCIAL PERFORMANCE

Electronic-business system use Finance resource.

Online marketing and Marketing strategy.
advertising system Information access.
Electronic mailing system of Profitability
Electronic Business system
Database
Internet
Secure Computer
Networks
Websites

INTERVENING VARIABLES
Tax system
Government policy
Infrastructure
Political Instability

Source: (Nassazi, 2020) modified by researcher

The independent variable of this study is e-business system. For e-business system to be
successfully adopted by SMEs there must be some systems with secure computer network
access. Web-based Database, Website, and data warehouse. However for items in the
independent variable to be incorporated by SMEs, the SMEs must have lower transaction costs
and increase profits, expanded geographical coverage improvements to customer relationship
service capability to easily access information otherwise bad tax system, poor government
policy, bad infrastructure such as (road network, banking sector etc) and political instability
cannot give room for successful adoption of e-business system by SMEs.

2.2 Electronic Business Systems

F business, or c-business system, is the application of information and communication
technologies (ICT) in support of all the activities of business. Commerce constitutes the
exchange of products and services between businesses, groups and individuals and can be seen
as one of the essential activities of any business. Electronic commerce focuses on the use of ICT
to enable the external activities and relationships of the business with individuals, groups and
other businesses (Beynon-[)avies, 2010).

According to Amor (20 I 1), electronic business systems methods enable companies to link their
internal and external data processing systems ~more efficiently and flexibly, to work more
closely with suppliers and partners, and to better satisfy the needs and expectations of their
customers.

The internet is a public through way. Firms use more private and hence more secure networks for
more effective and efficient management of their internal functions. Paul (2000) explains that in
practice, c-business system is more than just c-commerce system. While c-business refers to
more strategic focus with an emphasis on the functions that occur using electronic capabilities,
Paul (2000) argues that c-commerce is a subset of an overall c-business strategy. Badger (201 3)
asserts that an e-business system involves business processes spanning the entire value chain:
electronic purchasing and supply chain management, processing orders electronically, handling
customer service, and cooperating with business partners. Special technical standards for c-
business systems facilitate the exchange of data between companies. E business system software
solutions allow the integration of intra and inter firm business processes. B-business systems can
be conducted using the Websites, the secure Internet, intranets. extrancts, or some combination
of these.

A “digital divide” now exists between technologically developed and developing countries, as
well as between populations within countries, and between genders and age groups worldwide
(Okpaku. 2001). The readiness of SMEs on the adoption of e-business systems will be effective
if the country’s infrastructure on ICT is adequate enough with good security policies and spans
through the length and breadth of the country. According to Okpaku (2001), the following are
the indicators as to whether they are e-ready for e-business systems adoption.

2.2.1 Online marketing system

Online/Electronic Marketing (B-Marketing) can be viewed as a new philosophy and a modern
business practice involved with the marketing of goods, services, information and ideas via the
Internet and other electronic means. By reviewing the relevant literature it is noticed that
definitions of electronic marketing (B-Marketing) vary according to each author’s point of view,
background and specialization. For that, while Smith and Chaffey defines it as: “Achieving
marketing objectives through applying digital technologies” (Smith and Chaffey, 2005: 11),
Strauss and Frost define it as: “The use of electronic data and applications for planning and
executing the conception, distribution and pricing of ideas, goods and services to create
exchanges that satisfy individual and organizational goals” (Strauss and Frost, 2001: 454). E-
Marketing has a broader scope than internet marketing since Internet Marketing (IM) refers only
to the Internet, World Wide Web, e-mails. While B Marketing includes all of that plus all other
E-Marketing tools like: intranets, Extranets and mobile phones.

EI Gohary et al (2010) says implementing Electronic marketing (E-Marketing) by small business

enterprise can change both the shape and nature of SBEs business all over the world. Because the
increase usage of the Internet and other electronic marketing tools (i.e.: Intranets, Extranets and
mobile phones) in electronic transactions might create not only a lot of opportunists for small
business enterprises but also can eliminate a lot of its threats.

2.2.2 Electronic Mailing System

Electronic-mailing system is a communication tool that allows information flow and sharing, in
large quantities and simultaneously to m~ Itiple recipients, regardless of where they are, almost
instantaneously at reduced costs. When e-mail is provided to employees by the organization, it is
assumed as a working tool and should be only used for the work related tasks and activities that
are set by those employees (Instituto de Tecnologias de InformaçAona Justiça [ITIJ], 2008).

Nowadays, it is common for people and organizations to work in different geographic locations,
communicating via electronic media for producing projects, generating innovation, tackling
complex organizational problems, proposing new organizational strategies, creating new
services, and even managing projects and organizations (Rego, 2007). This author argues that
electronic communication contributes to the increase of communications, as it allows sharing
great volumes of information with customers, suppliers and employees very quickly. Rego
(2007) also states that many of those communications would never exist if it were not for the
development of electronic media.

Because information is vital to improving business performance both cost saving and managers
entered the world of ‘the information revolution’ (Freeman & Louca, 1999). Among other
themes, they are interested in how employees contribute to organizational success through the
interpretation and use of information to improve skills and organizational performance, and how
information strengthens the connection between firm and employee performance (Landauer,
1995).

The need for efficient and low cost communication mechanisms, to share information and
knowledge (Figallo & Rhine, 2002; Weick, 1995), generates greater interaction through
electronic means (Gupta, Karimi, & Somers, 2000), which may improve management processes
by improving inter-departmental communication (Lucas, 1998; Olson & Lucas, 1982). Studies of
communication through e-mail has raised interest and questions about the adequacy and
effectiveness of electronic messages for information management; yet, little is known about the
effects of e-mail on work performance (Mano & Mesch, 2010).
 E-mail is an important form of communication when it comes to covering large geographical
areas with minimal growth in physical space, since it enables the virtual implementation of
certain operations: moreover, it enables greater electronic interaction among employees (Gupta
et al. 2000). For some (Romm & Pliskin, 1999), the properties associated with e-mail (low cost,
rapid communication and ease of use) and its “technological neutrality” minimizes potential
distortions of communication, related with differences in profession, gender or race of the agents
involved in that communication.

2.3 Levels of Electronic Business system

2.3.1 Database
According to Jefli~ey (1997), database refers to the data themselves and supporting data
structures. Databases are created to operate large quantities of information by inputting, storing,
retrieving and managing that information. Databases are set up so that one set of software
programs provides all users with access to all the data. According to Beynon-Davies (2004), a
“database management system” (DBMS) is a suite of computer software providing the interface
between users and a database or databases. Because they are so closely related, the term
“database” when used casually often refers to both a DBMS and the data it manipulates.

Jeffrey (1997) explains that outside the world of professional information technology, the term
database is sometimes used casually to refer to any collection of data (perhaps a spreadsheet,
maybe even a card index). This study is concerned only with databases where the size and usage
requirements necessitate use of a database management system.

Ling and Tamer (2009) argue that the interactions catered for by most existing DBMSs fall into
four main groups:

i) Data definition; Defining new data structures for a database, removing data structures from the
database, modifying the structure of existing data;
ii) Update; Inserting, modifying, and deleting data;
iii) Retrieval; Obtaining information either for end-user queries and reports or for processing by
applications and
iv) Administration; Registering and monitoring users, enforcing data security monitoring
performance, maintaining data integrity, dealing with concurrency control, and recovering
information if the system fails.

Linton (2014) explains that databases are integral to the success of an e-business. They enable
storing, analyzing and managing essential information about company products, sales and
customers so that the management can quickly and easily respond to changing market conditions.

Management can also share information in the database with suppliers and logistics partners to
improve the efficiency of its c-business operations.

Product Information

According to Linton (20 14), management can use c-business database to hold and update
information on their products, including detailed product descriptions and specifications, product
reference numbers, prices, promotional offers and availability. One can also include details of the
supplier for each product that is on stock. By updating the information in the database, rather
than changing and publishing individual website pages, management can save time and ensure
that the website always shows visitors the latest information.

Customer Information

Linton (2014) explains that the database should hold information on customers, including their
full names and contact details. For business customers, including the type and size of business
and their industry sector is a top notch adds Linton. For consumers, adding any personal
information that would be relevant to their buying potential, such as age range, income,
demographic details and interests could equip management with very good information about
their customers.

Transactions

The basic customer information is important for administration of e-business. By recording

information on customers’ product searches, information requests and purchases, management
can also build a detailed picture of individual customers’ product preferences, purchasing history
and future buying potential Linton (2014).

2.3.2 Internet
According to Miniwatts Marketing Group (2012), the Internet is a global system of
interconnected computer networks that use the standard Internet protocol suite (TCP/IP) to link
several billion devices worldwide. It is a network of networks that consists of millions of private,
public, academic, business, and government networks, of local to global scope, that are linked by
a broad array of electronic, wireless, and optical networking technologies. The Internet carries an
extensive range of information resources and services, such as the inter-linked hypertext
documents and applications of the World Wide Web (WWW), the infrastructure to support
email, and peer-to-peer networks for file sharing and telephony.

Comet’ (2006) explains that electronic business (E-business) involves business processes
spanning the entire value chain: electronic purchasing and supply chain management, processing
orders electronically, handling customer service, and cooperating with business partners. E-
commerce seeks to add revenue streams using the Internet to build and enhance relationships
with clients and partners.

According to research firm IDC, the size of total worldwide e-commerce, when global business-
to-business and -consumer transactions are added together, will equate to $16 trillion in 2013.

IDate, another research firm, estimates the global market for digital products and services at $4.4
trillion in 2013. A report by Oxford Economics adds those two together to estimate the total size
of the digital economy at $20.4 trillion, equivalent to roughly 13.8% of global sales (Oxford
Economics, 2011).

According to Mohamad (201 0), the Internet is the global networked environment which
supports systems such as email, World Wide Web ~(“the Web”), file transfer protocol (ftp), etc.
A counterpart network within organizations is called an Intranet. An extranet provides a secure
extension to an intranet so it can be accessed by business partners or other external players (e.g.
employees, consumers, etc). These linkages may be over private networks or the Internet, usually
requiring specific provisions for security to protect from unauthorized external access to
company networks and databases.
According to the white paper (2001), businesses can have two types of presence on the Internet,
a partial presence, and a complete presence. Most businesses have partial Internet presence that
is done by having a straightforward marketing site. The objective of the site is to supplement
traditional marketing activities, perhaps give additional information, and generally promote the
company. There is often a reluctance to give complete product details because the objective is to
induce visitors to call or write to the company for more information and thus establish contact.

Other businesses have a complete Internet presence, which is implemented by having a selling
site in addition to the marketing site. The objective is to close the sale electronically with
payment (and sometimes delivery) made over the Internet.

Ontario (2013) handbook explains that this type of site will be designed to include
comprehensive product information, as visitors will be expected to make a purchasing decision
based on the information presented. Such sites generally have three different sections. The first
section is for attracting customers and contains marketing and added value information. The
second section is for giving products detailed information including prices. The third section is
for on-line shopping cart and order processing. The true E-Business site will have all three
components in some degree.

2.3.3 Secure computer networks

According to Moharnad (2010), computer networks have their own security issues mainly due to
the fact that most networks are dependent on other private networks, owned and managed by
others, and on a public-shared infrastructure where you have much less control of, and
knowledge about, the implemented security measures. Mohamad explains that although
encryption aid to some extend in securing information moving across networks, it’s the network
operator’s job to ensure that the ii~formation is securely transported to its final destination.

According to Ladan (2011), the following are some of the well-known security issues related to
networks that affect e-bu sinesses:

Distributed Denial of Service (DDOS,)

One of the most troublesome security issues facing e-business is when hackers launch a denial of
service attack. This attack is characterized by an explicit attempt by attackers to prevent users
from using an e-business system. DDOS attacks are common in all kinds of networks where the
attacker does not require any physical infrastructure, all what he does is flood the main e-
business server with a large number of invalid requests slow it down or crash it and make it
inaccessible, high profile e-businesses like e-Bay, and Arnazon.com were subject to DDOS
attack and put out of service for some time in year 2008 (PC World, 2012). In addition to the
immediate loss of business activity, another more important loss as a result of such an attack is
the customer retention Factor which is so volatile in e-business field that may cause business
closure due to the fear and mistrust instilled in customers by such attacks.

Session Interception and Messages Modification

According to Lyman (2001), the attacker can intercept a session and alter the transmitted
messages of’ the session. Another possible scenario by an attacker is to intercept the session by
inserting a malicious host between the client host and the server-end host to form what is called
man-in-the-middle. In this case all communications and data transmissions will go via the
attacker’s host.

2.3.4 Firewall Loophole

A firewall is software or a hardware device that is used in e-business systems to separate the
back-end servers from the corporate networks and enables communication between the back-end
servers and a few servers within the corporate network Firewalls are mandatory for business
sites. I however, they are usually implemented at the network protocol layer and do not protect
the system from attacks aimed at higher protocols such as HTTP. For example, the Web servers
accept data packets through port 80, mea1it for HTTP requests. If a user accesses a component
through an I ITT P request that causes buffer overflow, the service can crash and provide the user
access to the system for further attacks. According to Spiegel (2000), hackers can gain access to
the intranet corporate back-end servers using some known unfixed firewall loopholes and try to
hack into price lists, catalogs and email lists and change or destroy the data, which can disrupt or
even disable business operations. This potential for having important data changed/hacked is a
serious threat to e-businesses.
2.3.5 Website
A website, also written as Web site, web site, or simply site, is a set of related web pages served
from a single web domain. A website is hosted on at least one web server, accessible via a
network such as the Internet or a private local area network through an Internet address known as
a Uniform resource locator. All publicly accessible websites collectively constitute the World
Wide Web Cailliau (2007).

Cailliau (2007) explains that whether one is planning to implement a new site or upgrading an
existing c-business site to meet growing needs, the following steps provide basic guidelines for
meeting the performance and availability demands of today’s online business environment:

i) Design an architecture that ensures availability. Build redundancy and scalability in your
design so the architecture will grow as your business grows, while being resilient to
failures;
ii) Choose highly available and manageable system platforms. Make sure that the
foundation for the various components is as robust as possible, while creating an
operating environment in which you can manage constantly growing storage and
accelerating usage;
iii) Choose solutions that optimize performance regardless of system load, as the site needs
to run at peak performance, all the time;
iv) Make sure that the data is protected from hardware component failures and operating
system or database corruption;
v) Data is only part of the overall availability question; the application must also be
protected, and provisions made for application-specific monitoring and application
failover; and
vi) Plan for change. Nothing is constant in the c-business environment, so choose solutions
that are flexible enough to work in dynamic and heterogeneous environments.

Mohamad (201 0) explains that business transactions in c-business can be classified according to
the organizations or individuals involved ~in these transactions. The main classifications include
business-to-business (B2B) transactions that involve two or more businesses, business-to
consumer (B2C) transactions between a business and individual consumers, and intra-business
transactions involving departments and/or individuals within an organization.
Business-to-Consumer (B2C): In B2C Web sites, Mohamad (2010) explains that the level of
activity can range from very inexpensive operations of a Web site with only company and
contact information, all the way to the investment of millions of dollars (as well as substantial
operating funds) in a site that can handle marketing and sales transactions, after-sales service,
and customer relationship management. ERusiness levels range from the least involvement to the
most advanced and most effective in terms of customer relationship management. In each case
the levels indicated below include any activities included in the levels above them in the list:

a) Presence only (company information);

b) Product and/or service information;
c) After-sales service support information: and
d) Direct sales of product (e.g. software) or information for digital products or information
and/or handling and tracking sales transactions for physical products over the Internet, e-
Handling the entire sales cycle over the Internet, including on-call human backup support
at any point in the cycle (e.g. via customer call centers).

Business-to-Business (B2B): according ~o the White paper (2001), B2B activities tend to be
different from B2C, since they involve higher volumes, contractual relationships, and the
establishment of permanent digital linkage between trading partners. Business-to-business e-
commerce has been used by a growing number of companies since the 1970s, when standards
were established for the exchange of business transaction documents (in North America, these
are industry-specific and are called Electronic Document Interchange, or EDT standards). Since
then, many large firms and their trading partners have been using this approach through private
networks, supported by intermediary firms called Value Added Networks. The advent of the
Internet greatly reduced the cost of exchanging this type of information, but it also allowed the
use of on-line supplier catalogues and one-to-one Internet linkages between supplier
organizations and procurement functions in buyer organizations.

2.4 Growth of Small and Medium Enterprises

For all businesses to be successful, it requires ever demanding efforts in all areas that affects the
business success. Increasing business competition, in particular against large and medium
competitors puts SME’s in a vulnerable position. As SMEs operates around the traditional lines,
and a lot of factors increase their influence and causing a huge effect on the success of SME’s no
matter what the location of SME’s and how strong is the market conditions are, influencing
factor is always there for the small businessmen to anticipate these factors while doing the
business. The literature is based on the success factors affecting the success of SMEs (Feeney,
and Riding. 2007).

The factors which we are concerned more in the literature are financial resources, marketing
strategy, technological resources, information access, and government support. Audretsch (2005)
showed the relationship between ownership, decision making and employee deployment and the
performances or the firm. Their finding showed that ownership profile is key factor in the
success of an SME. Business plan also holds its vital importance as better business planning
reduces the risks associated with any business activity. Insufficient awareness of the need for a
business plan was identified as one problem at the startup phase among SME’s (Chami, 2006).

Business information of relevance for the perception of ability to success and thereby for
intention is relevant sources of inputs, markets and, technological solutions, and government
rules as well as regulators policies. The availability of the information is found to be dependent
on characteristics of the level of education, infrastructure qualities and media coverage and
telecommunication systems, and on social capital side as networks and never the least the
entrepreneurial ski I Is ([)eaki ii s, 2006).

2.4.1 Financial Resources

Financial resources are of vital importance for a business to run operations profitably. SMEs
which have comparatively limited resources often have greater difficulty in accessing funding
sources, are more dependent on a single product, have less adequate budget control system and
lack economies of scale (Thurik,2007). As in most developing countries, small and medium scale
enterprises form a significant part of the Ugandan economy. Nevertheless, they face a number of
problems, including access to finance from formal sources, which is often considered to be the
most important problem.

The obstacles to SME lending are universal. However, there is growing evidence that some
commercial banks in developed countries have found innovative ways around these obstacles
and are serving SMEs and making a profit. In a typical OECD country, SMEs contribute about
85 per cent of GDP, in developing countries about 50 per cent, and according to the French
Ministry of Foreign Affairs, about 58 per cent in Uganda (Abor and Quartey, 2010).

Ugandan SMEs have to grow and compete in the global economy, and the banks have probably
the most important role to play. Without finance, SMEs cannot acquire or absorb new
technologies, nor can they expand to serve global markets or even establish business linkages
with larger firms in the post-Doha period. Finance seems to be the obstacle and/or the key to
everything (United Nations, 2002),

Instead of relying on the bank, SMEs tend to rely on informal sources of funds such as family,
friends, credit cards, supplier credit and customer advances. This is because commercial banks
prefer selected customers such as Governments and large enterprises, thus crowding out SMEs.

 From commercial banks’ point of view, lending to SMEs involves high transaction costs
due to:
 Small amounts which require large amounts of time/effort; Cumbersome administrative
procedures;
 Lack of understanding of SME needs; Inability to assess creditworthiness;
 Poor financial information; Unreliable accounting; and Unrealistic business plans (United
Nations, 2002).

Lack of financial information increases the transaction costs of banks, or even worse makes it
impossible to evaluate the chances of their getting their money back. It is commonly stated by
bankers that most SMEs, even in the formal economy, do only tax accounting and usually under
declare sales/profits (United Nations, 200’!). So in the end, banks and venture capitalists do not
have reliable financial information which would indicate a track record. And even worse, SME
owners and managers do not have the information they need for management purposes. They
sometimes keep three sets of books: one for the taxman, one for themselves and one for their ex-
wives. At the end of the day they don’t know where their profit centers are.

2.4.2 Marketing strategy

Marketing strategy is defined as a process that can allow an organization to concentrate its
resources on the optimal opportunities with the goals of increasing sales and achieving a
sustainable competitive advantage (Baker, 2008). Marketing strategy includes all basic and long-
term activities in the field of marketing that deal with the analysis of the strategic initial situation
of a company and the formulation, evaluation and selection of market-oriented strategies and
therefore contribute to the goals of the company and its marketing objectives.

Marketing strategy of most SME’s operating around the globe tend to have less marketing and
technical resources, do less market research, possess fewer incentive and reward programs, lack
presence in large readily accessible markets and have less well-recognized brands (Hayami,
2009). Market development is, therefore, vital for preserving high growth in the small and
medium line businesses and their success.

2.4.3 Information access

SMEs need to have access to adequate information to enhance productivity and to facilitate
market access. The establishment of an active SMEs sector - and the effective utilization of
quality business information - has been identified as crucial in attaining long-term and
sustainable economic growth for developed and developing countries, alike (Corps, 2005).

However, in most developing countries, the SMEs sector suffers from inadequacies in the
provision of business information - which is only available from stand-alone institutions; is often
slow and cumbersome to access; is limited in scope; and is not provided in an integrated manner
(UNIDO, 2005). A study conducted in northern Uganda by Okello-Obura, et al (2008) shows
that the SMEs depend, mostly, on informal institutions as they lack an awareness of important
business information provision agencies or institutions. Access to information is insufficient.

This is inconsistent with the requirement for effective competition in global market. The SMEs
need tailor-made information solutions - i.e., business information services that assess, verify and
apply information to a specific business problem (Okello-Obura et tal 2008).

In order to respond to the specific needs of the SMEs, business information services should
create value by bringing together information from different sources - both local and
international. This enables the integration of the SMEs into national and global value chains
(UNIDO, 2005). Okello-Obura, et al; (2008) argues that there is a need for collaboration between
various industrial and trade organizations, professional bodies, private enterprises and
government departments to provide SMEs with a comprehensive range of business information,
advice and facilities. This implies that the issue of quality information becomes evident.
However, this is dogged by numerous challenges.

According to Strong, Lee and Wang (1997), poor information quality can create chaos. Unless its
root cause is diagnosed, efforts to address it can be worthless. According to Ladzani (2001), the
priority ranking of the SMEs needs, clearly puts information provision at the top of the list of
services to be provided, The SMEs development is hampered by an “information-poor”
environment. In most developing countries, market signals on business opportunities, customer
trends, methods of organization, etc., are not communicated, effectively, to the SMEs (Ladzani
2001; Okello-Obura, et al 2008). The SMEs perform better in information-rich environments
(Moyi 2000 and Ladzani 2001). To achieve quality within the information rich environment,
some notable challenges need to be handled head on. In looking at the challenges, we need to
consider them from the three core components i.e. information players, challenges faced and
strategies (interventions) so as to achieve quality information.

2.4.4 Profitability
According to Acemoglu (2002), profits are necessary for survival in the long run in a competitive
environment, but SME management may choose not to grow. Long-term profitability derives
from the relations between cost and revenue; it is a necessary but not sufficient condition for
growth. Revenues may be held up by entry barriers and costs pushed down by management
ingenuity. A low-profit firm will lack the finance for expansion, but a high-profit business may
conclude the risk and rewards of expansion are inadequate. In a ‘life style’ SME, an owner may
trade profitability today against profitability tomorrow. Dynamic pricing or sequential
investment projects may require initially lower profits in order to obtain higher future pay-offs
from greater market penetration. An SME manager’s time preference is likely to determine the
intertemporal profit trade-off. Profit performance must be standardized against the size of the
operation or the resources employed. Consequently, the ratio of profit to turnover is employed
here.
2.5 Related Studies
2.5.1 E-business adoption and Growth of SMEs
While many studies provide evidence of the positive effects of ICT adoption on firm
performance, others have shown no relation between computer use and firm performance. A
study of Canadian manufacturing establishments (plants) with ten or more employees (excluding
food processing establishments) drawn from Statistics Canada’s Business Register, shows that
those with high productivity growth are more likely to be using greater numbers of advanced
ICTs, meaning that there is a significant relationship between ICT adoption and business growth
(Baldwin, 2002). Between 1988 and 1997, advanced technology users grew more in terms of
both productivity and profitability than non-ICT users, especially when they used
communication technologies, including company-wide and/or inter-company computer
networks.

Harindranath. Barnes and Dyerson (2005) conducted a study on factors affecting the adoption
and use of c-business in southeast England SMEs, the main result of this study indicated a
generally favorable attitude to c-business amongst the SMEs surveyed, it also suggests a failure
to recognize c-business’s strategic potential. A surprising result was the overwhelming ignorance
of regional, national and European Union wide policy initiatives to support SMEs. This strikes at
the very heart of regional, national and European policy that has identified SMEs as requiring
specific support mechanisms encouraged to adopt and use lCTs in carrying out their businesses.
The study clearly revealed that performance improvement, increased profitability and increased
market share were some of the factors fostering the adoption and use of lCTs by SMEs in the
road passenger transport sector in Lusaka. The study therefore, recommended that awareness be
increased on the importance of ICTs amongst SMEs. The acquisition of ICT equipment should
be enhanced through encouraging cooperation amongst SMEs. Furthermore, company owners
should be encouraged to train their employees in ICTs usage.

Recent OECD analysis shows the impacts of ICTs and e-business strategies on firm performance
are positive overall, but that ICTs are not a panacea in themselves. The OECD’s Electronic
Commerce Business Impacts Project (EBIP) studied a set of 220 early successful adopters of e-
business strategies in a range of established sectors in eleven different countries. This study
showed the positive impacts of c-commerce on their turnover and profitability and to a lesser
extent on employment, most notably when c-commerce is part of larger business strategies of
lirms (OECD. 2002). Further work by researchers in 13 OECD countries based on large scale
statistical surveys provides evidence that the use of ICT can contribute to improved firm
performance, in terms of increased market share, expanded product range, customized products
and better response to client demand. Moreover, it indicates that ICT may help reduce
inefficiency in the use of capital and labor, e.g. by reducing inventories, and that the more
customers or firms are connected to the network, the greater the benefits (spillover effects).

1-lowever, the analysis shows that complementary investments in skills, organizational change
and innovation are key to making ICT work, and that the use of ICT affects firm performance
primarily when accompanied by other changes and investments and that without these, the
economic impact of ICT may be limited.

2.6 Summary of gaps identified

From the literature review, the following gaps were identified and therefore this study sought to
add to frontiers of knowledge by bridging the gaps.

 Theoretically, many studies about reactance theory have mostly been used in information
technology in education sectors and information communication systems in
telecommunication sector but it has not been used in electronic business systems and
growth of small and medium enterprises.
 Conceptually, it is evident that a number of studies about growth of enterprises have been
carried out in manufacturing companies. However, literature about electronic business
systems in other different business sectors including non-government, government,
production, and retailer also is needed.
 Contextually, while some studies on IT and electronic business systems adoption have
been carried out in the enterprise in developed areas especially in the cities, none has
addressed the enterprises per each division in the city of Kampala Uganda. Still to note,
electronic business system adoption and growth of small and medium enterprises has not
yet been investigated in the local context.
 CHAPTER THREE
METHODOLOGY
3.0 Introduction
This chapter describes the methodology that was used in addressing the set objectives. The
chapter is organized under the following subsections: research design, research population, and
sample size, sampling procedure, research instruments, validity and reliability of research
instruments, data gathering procedures, data analysis, ethical considerations and limitations of
the study.

3.1 Research Design

This study employed descriptive correlation design. This research as a descriptive study was a
non-experimental investigation that described the characteristics of a particular individual or of a
group (Gall et al., 1996). This study design was used because it is the most commonly used
research method in social research. Amin (2005) asserts that results from such a survey method
are easily extrapolated to the entire population.
3.2 Research Population
The target population of this study included a total of 277 respondents from two enterprises
namely: Precise Diagnostic & Medical Supply Ltd and Bella Wine Production Company. These
two companies were purposively chosen since the information that the research wanted part of it
was confidential and could only be disclosed to someone whom they really knew could keep the
financial statement they had to show and also getting into the company database that holds the
customers confidential details and as well as employes. The researcher grouped the respondents
of these companies into three categories; the CEOs, Managers and support staff. CEOs and
managers were purposively chosen from each enterprise while support staffs were randomly

3.3 Sample Size

Slovene’s formula was used to compute the sample size. Slovene’s formula states that, for any
given population (N), the sample size (n) is given by;

N
n= 2
1+ N e

Where;

n=the required sample size;

N = the known population size=277; and e = the level of significance which was fixed to be 0.05
in social science research when the population size is known.

N
n=
1+ N e 2

277
n=
1+277 × 0.052

n=164

The population and sample distributions of this study are shown in table.

Table 3:1 Population and Sample size of the respondents

Category of Staff population(N) Sample Size(n)

 Respondents Precise Diagnostic Bella Wine Precise Diagnostic Bella Wine
and Medical Supply Production and Medical Production
Ltd Company Supply Ltd Company
CEO 1 1 1 1
Manager 1 4 1 2
Support staff 30 240 17 142
Total 32 245 19 145
Grand total 277 164

The researcher anticipated the return of 164 distributed questionnaires but 159 questionnaires
were successfully retrieved, giving a retrieval rate of 97%.

3.4 Sampling Procedure

The support staffs were selected using simple random sampling. The names of the support staff
were obtained from human resource and the researcher randomly selected respondents by
arranging their names in alphabetical order.

Purposive sampling was used to select the CEOs and Managers from the two enterprises in order
to collect focused, typical and useful information to avoid time and money wasting. According to

Amin (2005), purposive sampling is preferred in selecting people holding positions that allow
them to be more knowledgeable with issues in their areas.

3.5 Research Instrument

The following tools were utilized in this study: face sheet to gather data on the respondents’
demographic characteristics (gender, age, educational level, and working experience); and
researcher devised Interviews and questionnaires were used to establish the level of adoption of
electronic business system and the growth level of small and medium enterprises.

The researcher used a 5 Likert scale grading where 1 means strongly disagree, 2 disagree, 3
neither, 4 agree and 5 strongly agree. This likert scale was adopted for this study due to its
suitability in measuring perceptions, attitudes, values and behaviors that related to adoption of
electronic business system and the growth level of SMEs. The response modes, scoring and
interpretation of’ scores were as indicated in Table 3.2 below.
Table 3.2: Interpretation of the Mean Values

Scale Mean range Response mode Interpretation

5 4.01-4.75 Strongly Agree Very satisfactory
4 3.26-4.00 Agree Satisfactory
3 2.51-3.25 Moderate Fair
2 1.76-2.50 Disagree Poor
1 1.00-1.75 Strongly Disagree Very poor

3.6 Validity and Reliability of the Instrument

Validity: Validity o1~ instruments were tested using Content Validity Index (CVI). The
researcher established the validity of the instruments by using expert judgment method as
suggested by Amin (2005). This involved judges scoring the relevance of the questions in the
instruments in relation to the study variables and a consensus judgment given on each variable.

It is given by;

number of itemsdeclared valid by experts

CVI=
total number of items

28
CVI=
34

VI =0.82

3.7 Data Gathering procedure

After the approval of the proposal, the researcher got a transmittal letter of introduction from the
College of Economics and Management of Kampala International University to enable her to
proceed to the field. After ascertaining the reliability of the instruments, the researcher proceeded
to administer the area of study.

3.8 Data Analysis

Information obtained from questionnaires were coded and updated on a coding framework.
Qualitative data were descriptively analyzed while quantitative data were analyzed using a
statistical package for social sciences (SPSS). The following descriptive and inferential statistical
approaches were applied:

i. Objective 1: to investigate the adoption level of e-business system, means and standard
deviation were calculated.

ii. Objective 2; to determine the growth level of small and medium enterprises, means and
standard deviation were calculated.

iii. Objective 3; to establish the relationship between adoption of e-business system and growth
level, Pearson’s correlation coefficients and regression analysis were calculated.

3.9 Ethical Considerations

The following strategies were adapted to ensure the moral justification of the investigation.

Authorization: This involved getting clearance from the ethical body and consent of the
respondents.

Anonymity and confidentiality: The names or identifications of the respondents were

anonymous and information collected from them was treated with utmost confidentiality.

Integrity: The researcher acted honestly, fairly and respectfully to all other stakeholders that
were involved in this study.

Ascriptions of authorships: The researcher accurately attributed to the sources of information

in an effort to celebrate the works of past scholars or researchers. This ensured that no plagiarism
occurred.

Scientific adjudication: The researcher worked according to generally acceptable norms.

3.10 Limitations of the Study

Apart from extraneous variables such as honesty of the respondents where some of them might
not say the truth, the researcher used transmittal letter to convince them that the study is strictly
for academic purpose. All other threats to validity of the findings such as testing the instruments
were solved during data collection.
Attrition/ Mortality: Not all questionnaires were returned completely answered. Out of the 164
questionnaires distributed, the researcher managed to retrieve 159 making a retrieval rate of
97%. This was because some staff members did not turn up on the day the study was carried out
in their departments while other staff members were attending board meeting so they could not
participate. The researcher also encountered the challenge where some potential respondents
withdrew since they would not be given money for their contribution.

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APPENDICES

APPENDIX I: RESEARCH INSTRUMENT

SECTION A
Profile Characteristics of the Respondents
Please tick the appropriate option
1. Respondents’ Gender
i) Male ii) Female
2. Respondents’ Age bracket
i) (20-25) ii) (26-30) iii) Above (30 years)
3. Level of education?
i) Above Masters ii) Masters level iii) Bachelors level
iv) Diploma and Below
4. Duration you have worked in this company?
i) Two years ii) Three years iii) Four years
iv) Five and above years
SECTION B
Determining the level of e-business adoption among selected companies in Kampala

Score Response Description

5 Strongly agree
4 Agree
3 Neither
2 Disagree
1 Strongly disagree
You agree with no doubt at all
You agree with no doubt
You doubt
You disagree with no doubt
You disagree with no doubt at all

Rankings
Statement 1 2 3 4 5
a Online marketing system
1 e-market our goods and services via the internet
2
e-prices of our goods and services are often displayed
online
3
4 We have electronic marketing tools.
5 E-products are mostly ordered online.
b Electronic Mailing System
1 I have an email account
2 most of our customers and suppliers have email accounts
3 The mostly communicate to customers and suppliers using
emails
4 A vast volume of communications and information sharing
within and outside the organization is through email.
c Level of electronic business system
Database
1 My organization has a database system in place.
2 The database system is capable of holding information on
customers, suppliers, and products.
3 The database system is user friendly and fast.
d Internet
 1 The Company’s internet connection is fast and stable for c-
business
2 The internet is cost friendly for e-business
3 The Company uses both intranet and extranet network
system.
4 The Company’s business has a complete presence over the
internet.
e Secure computer network
1 The Company’s network is secure.
2
The Company operates on a private network.

3 Customers’ and other vital information are often encrypted.

4 The Company has a firewall to protect its network.

f
Website

1 The company has a functional website.

2 The website presents only company information.

3 The website is used for transacting company products.

4 The website has a unique domain name.

SECTION C
Determine the growth level of small and medium enterprises among selected companies in
Kampala
Instruction:
Using the scale provided in Section B above, please indicate in the boxes the rating that best
describes the growth level of SMEs and your company in particular.

Rankings
Statement 1 2 3 4 5
A Financial Resources
1 The Company has limited financial resources
2 The Company has easy access to funding sources
3 The Company has adequate budget control system
4 The Company depends on a single product for its source of
finance
B Marketing strategy
1 The Company researches on its competitors and the general
state of the market
2 The Company operates under set objectives within a given
period of time
3 The Company maintains a good relationship with its local
suppliers
4 The Company uses social networking outlets such as
facebook, twitter, blogs etc. for marketing its products
C Information access
1 The Company has trained information professionals
2 The Company has appropriate technology to access
electronic information
3 The Company has the necessary skills and expertise in
information seeking and acquisition
D Internet
1 The Company’s internet connection is fast and stable for e-
business
2 The internet is cost friendly for e-business
3 The Company uses both intranet and extranet network
system.
4 The Company has an organized information/records
management system.

5 The Company receives information that has local content to

address business needs of the
community
4 The Company’s business has a complete presence over the
internet.
E Profitability
1 The business is experiencing higher pay-offs from deeper
market penetration.
2 The size of the resources we employ is smaller compared to
the profits we reap.

3 Net profit margin, return on assets and return on equity have

 been adopted as appropriate to determine profitability in my
company.

4 Comparisons are made of the current profits with the profits

made in the previous years to assess profitability trends.

5 The management establishes the minimum return required

to meet the company’s ROA and ROI objectives to help
determine current pricing strategies for different products.

Thank you!
END