DEDICATION

To the Lord Jesus Christ who was with me through thick and thin and to my wife Zoro whose unfailing love and support carried me throughout the research work.

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DECLARATION
I, Shepherd Magombedze, do hereby declare that this dissertation is the result of my own investigation and research, except to the extent indicated in the Acknowledgements, References and by comments included in the body of the report, and that it has not been submitted in part or in full for any other degree to any other university.

_________________ Student Signature

__/__/__ Date

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ACKNOWLEDGEMENTS
Such an involving and daunting task as this work is only possible with the sacrifices of others. The input and assistance of many enabled this work to be achievable. However, it is not possible to individually thank all who went out of their way to assist in this work. I would like to however extend my profound gratitude to all who made this work a success. I make special mention of my wife who went out of her way to see me through the project and had to put up with late nights away from home. I also would like to thank all my family members for their longsuffering and great understanding in the moments I became scarce. Special mention goes to Mr Mutowo for his criticisms and contributions which chiselled out chaff and left behind this work as it is today. Mention will also be made of Percy and Laurence who helped with the revision of this study. The constant company of fellow MBA students also provided a warm and comfortable research environment. I will not leave out all the Victoria Foods management and staff who went out of their way to assist me in this research.

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ABSTRACT
The use of electronic commerce (e-commerce) globally in businesses has increasingly become a necessary component of business. Although e-commerce is not a new concept in Zimbabwe, the milling industry has not fully implemented it. Ecommerce strategies that are fully integrated into the business’ strategy can be utilised to build sustainable competitive advantage. Through research surveys employing questionnaires and interviews, this research study uses the case of Victoria Foods to analyse the degree to which the company has embraced e-commerce and how this technology has impacted on business performance. The main objectives of this research were to investigate e-commerce awareness in the company, to investigate the company’s utilisation of e-commerce technologies, to identify major challenges in implementing e-commerce, and to determine if there is a relationship between e-commerce and profitability. The research employed ideographic methods by using surveys and structured interviews to source responses. Judgemental samples coupled with stratification procedures were used to select sample data. A total of 50 questionnaires were issued out to different levels of Victoria Foods’ computer system users. Descriptive and inferential statistical techniques were used for data analysis. Despite the company’s utilisation of different types of e-commerce, it has been established that profitability was minimally achieved from these implementations. The research found out that the above finding was as such due to lack of commitment by the company’s management to e-commerce. Despite the above finding, a strong relationship between the level of utilisation of e-commerce and business profitability was established. Victoria Foods therefore needs to provide ecommerce training to management and staff so as to be able to reap its benefits. The organisation also needs to develop e-commerce strategies which will integrate e-commerce with the business processes specifically the Value Chain process.

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TABLE OF CONTENTS
CHAPTER ONE ....................................................................................................................... 1 INTRODUCTION AND BACKGROUND ............................................................................. 1 1.0 INTRODUCTION AND BACKGROUND ....................................................................... 1 1.1 INTRODUCTION .............................................................................................................. 1 1.1.1 BACKGROUND ......................................................................................................... 2 1.1.2 VICTORIA FOODS .................................................................................................... 2 1.1.3. PRODUCT AND SERVICE MARKET..................................................................... 3 1.1.4 EXTERNAL ENVIRONMENT .................................................................................. 4 1.1.4.1 Political Factors .................................................................................................... 5 1.1.4.2 Economic Factors.................................................................................................. 5 1.1.4.3 Social Factors........................................................................................................ 6 1.1.4.4 Technological Factors........................................................................................... 6 1.1.4.5 Legal Factors......................................................................................................... 7 1.1.5 SWOT ANALYSIS OF THE COMPANY.................................................................. 7 1.1.5.1 Strengths and Weaknesses of the Company ......................................................... 8 1.1.5.2 Opportunities and Threats of the Company ........................................................ 10 1.1.5.3 Summary of the SWOT Analysis ....................................................................... 12 1.2 STATEMENT OF THE PROBLEM ................................................................................ 13 1.3 RESEARCH OBJECTIVES ............................................................................................. 13 1.4 RESEARCH QUESTIONS .............................................................................................. 13 1.5 RESEARCH HYPOTHESIS ............................................................................................ 14 1.6 RESEARCH JUSTIFICATION........................................................................................ 14 1.7 SCOPE OF RESEARCH .................................................................................................. 15 1.8 STRUCTURE OF THE DISSERTATION....................................................................... 15 1.9 CONCLUSION................................................................................................................. 16 CHAPTER TWO .................................................................................................................... 17 LITERATURE REVIEW ....................................................................................................... 17 2.0 LITERATURE REVIEW ................................................................................................. 17 2.1 INTRODUCTION ............................................................................................................ 17 2.2 THE E-COMMERCE CONCEPT.................................................................................... 17 2.2.1 THE DEFINITION OF E-COMMERCE .................................................................. 17 2.2.2 B2B AND B2C E-COMMERCE............................................................................... 18 2.2.3 THE BENEFITS OF E-COMMERCE ...................................................................... 19 2.2.4 MODELS OF E-COMMERCE ................................................................................. 20 2.2.4.1 Electronic Areas Model ...................................................................................... 21 2.2.4.2 The Hierarchical Framework of E-commerce .................................................... 22 2.2.4.3 The Electronic Commerce Value Grid ............................................................... 23 2.2.4.4 Discussion of the various e-commerce models................................................... 25 2.2.5 HOW THE INTERNET AFFECTS E-COMMERCE............................................... 26 2.2.5.1 Positive Effects to a Business ............................................................................. 26 2.2.5.2 Negative Effects to a Business............................................................................ 28 2.2.5.3 E-Commerce effects on Markets ........................................................................ 29 E-market Commodities ................................................................................................... 30 2.3.5.4 Five forces analysis of the Internet’s Impact on Business.................................. 30

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2.2.6 INHIBITORS OF E-COMMERCE ........................................................................... 32 2.2.7 DRIVING FORCES OF E-COMMERCE................................................................. 33 2.3 THE CONCEPT OF SUSTAINABLE COMPETITIVE ADVANTAGE ....................... 34 2.3.1THE DEFINITION OF SUSTAINABLE COMPETITIVE ADVANTAGE............. 34 2.3.2 PORTER’S THREE GENERIC STRATEGIES ....................................................... 35 2.3.2.1 Overall Cost Leadership Strategy ....................................................................... 36 2.3.2.2 Differentiation Strategy ...................................................................................... 37 2.3.2.3 Focus Strategy..................................................................................................... 38 2.3.2.4 An Evaluation of Porter’s Generic Strategies..................................................... 39 2.3.3 THE RESOURCE BASED VIEW OF THE FIRM................................................... 40 2.3.4 E-COMMERCE AND COMPETITIVE ADVANTAGE ......................................... 42 2.3.4.1 Introduction......................................................................................................... 42 2.3.4.2 E-commerce’s influence on Operational Effectiveness ...................................... 43 2.3.4.3 E-commerce’s influence on Strategic Positioning.............................................. 44 2.3.4.4 Achieving competitive advantage through e-commerce strategies .................... 45 2.4 THE E-COMMERCE VALUE CHAIN FRAMEWORK................................................ 46 2.4.1 THE E-COMMERCE VALUE CHAIN.................................................................... 46 2.4.2 EXTERNAL, CUSTOMER-SUPPLIER LIFE CYCLE ........................................... 48 2.4.3 INTERGRATING INTERNAL AND EXTERNAL PERSPECTIVES.................... 49 2.4.4 APPLYING THE E-COMMERCE VALUE GRID .................................................. 50 2.5 CONCLUSION................................................................................................................. 50 CHAPTER 3 ........................................................................................................................... 52 RESEARCH METHODOLOGY............................................................................................ 52 3.0 RESEARCH METHODOLOGY...................................................................................... 52 3.1 INTRODUCTION ............................................................................................................ 52 3.2 RESEARCH DESIGN ...................................................................................................... 52 3.2.1 RESEARCH PHILOSOPHY......................................................................................... 52 Deductive and Inductive Reasoning ................................................................................... 52 Realism vs. Nominalism ..................................................................................................... 54 Epistemology ...................................................................................................................... 54 Nomothetic vs. Ideographic Methodologies ....................................................................... 55 3.2.2 RESEARCH STRATEGY......................................................................................... 56 3.2.3 POPULATION AND SAMPLING TECHNIQUES ................................................. 57 Sampling Procedures ...................................................................................................... 57 3.2.4 DATA COLLECTION METHODS .......................................................................... 59 3.2.4.1 Observation ......................................................................................................... 59 3.2.4.2 Interview Methods .............................................................................................. 60 3.2.4.3 Survey ................................................................................................................. 61 3.2.4.4 Case Study .......................................................................................................... 63 3.2.4.5 Document Review............................................................................................... 65 3.2.4.5 Data Analysis ...................................................................................................... 65 3.3 RESEARCH PROCEDURE............................................................................................. 67 3.4 RESEARCH LIMITATIONS........................................................................................... 67 CHAPTER 4 ........................................................................................................................... 69 RESULTS AND DISCUSSION ............................................................................................. 69 4.0 RESULTS AND DISCUSSION ....................................................................................... 69

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4.1 INTRODUCTION ............................................................................................................ 69 4.2 RESPONSE RATE ........................................................................................................... 69 4.3 COMPOSITION OF E-COMMERCE USAGE ACROSS THE COMPANY................. 70 4.4 E-COMMERCE UTILISATION...................................................................................... 71 4.5 E-COMMERCE STRATEGY EXISTENCE AND LEVEL OF IMPLEMENTATION . 75 4.6 E-COMMERCE CONTRIBUTION TO BUSINESS PERFOMANCE........................... 76 4.6.1 Level of Integration.................................................................................................... 76 4.6.2 Contribution to Business Profitability ....................................................................... 77 4.7 BARRIERS THAT HAVE HINDERED THE EFFECTIVE IMPLEMENTATION OF ECOMMERCE.......................................................................................................................... 78 4.8 THE RELATIONSHIP BETWEEN E-COMMERCE AND PROFITABILITY............. 80 4.9 CONCLUSION................................................................................................................. 82 CHAPTER 5 ........................................................................................................................... 83 CONCLUSIONS AND RECOMMENDATIONS ................................................................. 83 5.0 CONCLUSIONS AND RECOMMENDATIONS ........................................................... 83 5.1 INTRODUCTION ............................................................................................................ 83 5.2 CONCLUSIONS............................................................................................................... 83 5.3 RECOMMENDATIONS.................................................................................................. 85 5.4 RECOMMENDED FURTHER RESEARCH .................................................................. 86 REFERENCES ....................................................................................................................... 87 APPENDICES ........................................................................................................................ 93 APPENDIX A......................................................................................................................... 94 APPENDIX B ......................................................................................................................... 95 APPENDIX C ......................................................................................................................... 96 E-COMMERCE GENERAL QUESTIONNAIRE ................................................................. 96 APPENDIX D......................................................................................................................... 97 APPENDIX E ......................................................................................................................... 98

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LIST OF TABLES
Table 3.1: Table 3.2: Table 3.3: Table 3.4 Table 4.1: Table 4.1: A comparison of Nomothetic and Ideographic Methodologies Judgemental Sampling Criteria Departmental Composition of Questionnaires Qualitative and Quantitative Data Analysis Questionnaire response rate The chi-squared test 55 58 59 66 69 81

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LIST OF FIGURES
Fig 2.1: Fig 2.2: Fig 2.3: Fig 2.4: Fig 2.5: Fig 2.6: Fig 2.7: Fig 4.1: Fig 4.2: Fig 4.3: Fig 4.4: Fig 4.5: Fig 4.6: Fig 4.7: Fig 4.8: Fig 4.9: Fig 4.10: Electronic Areas Model The E-commerce Framework of Seven Levels The Electronic Commerce Value Grid Three Generic Strategies Two types of fundamental resources underlying Competitive advantage Sustained Competitive Advantage Though the RBV Model The e-commerce value chain Composition of users of e-commerce as a tool for business Different functions for which e-commerce is used Types of e-commerce utilised E-commerce Technologies being used. E-commerce strategy Implementation Level integration of e-commerce in different components of the value chain Contribution of e-commerce to business profitability Barriers to E-commerce Summary of Barriers to E-commerce Comparison of Utilisation of e-commerce and the contribution of e-commerce to business profitability 80 76 77 78 79 70 71 72 73 75 41 47 40 21 22 23 35

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LIST OF ABBREVIATIONS
B2B B2C B2S BOP CFI COS CRM C-SLC DSL EC E-commerce EDI EFT E-Fulfilment E-learning E-Logistics E-Mail E-Procurement E-Service GDP GMB GSM ICT IS ISDN RBV RBZ SADC Business to Business e-commerce Business to Customer e-commerce Business to Supplier e-commerce Balance of Payments Consolidated Farming Investments Cost Of Sales Customer Relationship Management Customer/Supplier Cycle Digital Subscriber Line Electronic Commerce Electronic Commerce Electronic Data Interchange Electronic Fund Transfer Electronic Fulfilment Electronic Learning Electronic Logistics Electronic Mail Electronic Procurement Electronic Service Gross Domestic Product Grain Marketing Board Graduate School of Management Information Communication Technology Information Systems Integrated Switching Digital Network Resource Based View Reserve Bank of Zimbabwe Southern Africa Development Committee

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CHAPTER ONE
INTRODUCTION AND BACKGROUND

1.0 INTRODUCTION AND BACKGROUND 1.1 INTRODUCTION
In the emerging global economy, electronic commerce (e-commerce) has increasingly become a necessary component of business strategy and a strong catalyst for economic development (Andam, 2003). The integration of information and communication technology (ICT) in business has enhanced business-business and business-customer relationships. Specifically, the use of ICT in business has enhanced productivity, encouraged greater customer participation, and enabled mass customization, besides reducing costs. These benefits from ICT are yet to be realized from e-commerce hence the need to study and understand the concept of e-commerce.

Projections of commerce via the internet are remarkable. According to Forrester Research, online sales were expected to reach $300 billion in 2000 and $488 billion 4in 2002. Likewise, business-to-business commerce was projected to reach $327 billion by 2002 (Applegate, Lynda, McFarlan and James, 1996). E-commerce has evolved from a high-tech marvel to a corporate initiative. According to Jack (1996) ecommerce can no longer be ignored or thought of only as an ICT project. As such King and Clift (2000) argue that the ‘‘e’’ – will soon be dropped and that e-business will be business as it comes to be generally understood. Electronic commerce projects must now be intertwined with the firm's strategic plans. The next section reviews the background of Victoria foods and the Milling Food Industry in the light of selected marketing and strategic management tools.

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1.1.1 BACKGROUND
Although e-commerce is not a new concept in Zimbabwe and the Hospitality sector has implemented e-commerce portals, such progress has not been very evident in the manufacturing sector. The food manufacturing sector in Zimbabwe has embraced Electronic Data Interchange during business to business transactions, however little has been implemented for business over the internet. Also the current e-commerce implementations have not fully exploited all e-commerce tools or integrated the technology to business processes.

It is also apparent that only a small proportion of the Zimbabwean population has access to the internet, and a small fraction of those who use it, use it for ecommerce. There is a big inertia to move towards the new technology and many only use computers for e-mail, internet and typing. The general public views it as a luxury to own a computer and even more to have personal internet access in homes. As such, this culture has led to limited usage of e-commerce by wholesalers who are the main customers of manufacturers. The result is lesser benefits of e-commerce to manufacturers. This study uses the case of Victoria Foods to analyse the degree to which the company has embraced e-commerce and how the technology has impacted on business performance. In the following section, a background of Victoria Foods is presented.

1.1.2 VICTORIA FOODS
Victoria Foods (Vic Foods) has come a long way from being a small milling company to being the third largest milling company in Zimbabwe. Good management and strategies have propelled the company forward to such heights (CFI Bulletin, 2004). Changing times, growth and innovation has moved the company from paper based information systems to computerized systems. These developments have then led to the implementation of messaging systems and the internet in the organization.

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Victoria Foods, a wholly owned subsidiary of Consolidated Farming Investments (CFI) is into the milling of maize and wheat and the packing and distribution of other produce such as rice, salt, beans and manufacturing of snack foods. The company was opened in 1929, in the Midlands (Gweru) under the name Midlands Milling Company, and later changed its name to Victoria Foods Limited in 1997 due to growth. The company has managed to increase its range of quality food products over the years.

Given the above platform, Vic Foods has been able to do business electronically by interacting with clients and other businesses using electronic means. This has included clients ordering electronically via e-mail, electronic payments via banks and electronic information provision to both suppliers and clients. To a great extent current e-commerce implementations have provided strategic information to management. However, the organization has not progressed much in terms of the integration of e-commerce with business processes.

1.1.3. PRODUCT AND SERVICE MARKET
Victoria Foods (Pvt) Ltd has a wealth of experience in servicing both the domestic and the industrial markets. It supplies bakeries, schools, wholesalers and retailers. It also produces branded products for retailers and wholesalers such as food chain group. It is evident that Victoria Foods’ variety of product lines has enabled it to cater for a wide mass market (CFI, 2004), and pursue a mass marketing strategy. As such, it produces a variety of high quality products which can be classified in four groups:

1. Bakers products: Victoria Foods (Pvt.) Ltd supplies various industrial clients mainly established bakeries and confectionaries with whole wheat, baker, white, brown and cake flour.

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2. Maize products: Maize products are for Supermarkets and Retail stores. These include roller meal and pearl white. Maize samps and mealie rice are also produced as by products A variety of snacks are produced from maize. Snacks include konkels, mhandire, crackerjax and the famous maputi which are available in salted, cheese, tomato, mexicano and spicy flavours. Victoria foods pre-packs salt, beans, popcorn, rice and flour in bulk. Pre-packs are targeted at the domestic market. Flours include plain, brown whole wheat, lightning and the popular self raising flour. Faced with economic challenges in the country, the food industry has also been affected by the crises in agriculture which is straining the supply of food raw materials such as wheat for flour and maize grain. Also the shortage of foreign currency has adversely affected the procurement of supplementary wheat, salt and some other raw materials required in production. Victoria Foods has thrived in the face of such economic challenges to retain its key customers and has managed to gain a remarkable market share.

3. Snacks:

4. Pre-packs:

1.1.4 EXTERNAL ENVIRONMENT
Mukarati (2005) argues that PESTL analysis is the best tool to explore the Political, Economic, Social, Technological, Legal and Environmental dynamics affecting businesses in a country. Mukarati (2005) however admits that this type of analysis is limited in that it gives a snapshot of the concerned factors at a particular point in time. As such this analysis needs to be carried out continuously as market dynamics evolve.

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1.1.4.1 Political Factors
The Political situation has not been as stable as in the early 1990’s. The emergence of new political parties has resulted in tension in the urban areas where food industries are situated. This has negatively affected investors and partners who wanted to partner with Victoria foods in the sourcing and supply of grain which has been scarce. The government’s fast track land resettlement program has also resulted in reduced grain output. This move by the government and other populist laws that have affected the operations of business for example in late 2007 the government froze all price increases and reverted prices to June 2007 prices resulting in many businesses collapsing.

The government deregulated the economy from 1991 to 2003 and allowed a certain degree of the operation of market forces (Mtetwa, 2006). However after much poor economic performance the government reintroduced price controls which adversely affected the food industry which produces commodity products.

The isolation of Zimbabwe from the international community including from the IMF and World Bank had a serious impact on foreign currency supply in the country. Foreign currency shortage has been increased also by speculative tendencies by most businesses and individuals, especially in the financial sector. The implication for all the above scenarios has been high risk for businesses and investment.

1.1.4.2 Economic Factors
Interest rates have been high and prohibitive for borrowing to finance business operations. It has also meant difficulties in purchasing raw materials and machinery for Victoria Foods. This has also been made more difficult by inflation which has been rising at unprecedented rates resulting in the proliferation of the black market.

The Reserve Bank of Zimbabwe (RBZ) has tried to resolve the foreign currency shortages by allocating foreign currency. This meant that only critical areas like fuel,

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electricity, and food imports received attention. However the allocations have not been enough and with industries sourcing fuel and raw materials elsewhere production costs have gone high. Whilst production costs have increased, consumers have suffered a depleted disposable income. Companies have become less viable as unemployment levels have gone high. Accordingly volumes of goods purchased have declined. For a prolonged period Zimbabwe has experienced a negative balance of payments (BOP) position with a shrinking Gross Domestic Product (GDP). Given all the above factors, there seems to be no commitment from all stakeholders regarding economic rejuvenation and the RBZ Governor’s efforts seem to fall short of remedying the economy.

1.1.4.3 Social Factors
There has been a rapid decline in the social services such as health, education and accommodation. July 2005’s “Operation Murambatsvina” left many people homeless and drove rental prices up. There has also been a rising gap between the have and have nots, which has also seen the disappearance of the middle class consisting of professionals. The prevalence of HIV and AIDS has also affected the industry due to loss of manpower. This loss of manpower has also been increased by the emigration of skilled workers to neighbouring countries and abroad seeking for greener pastures. Due to these problems, Victoria Foods has lost skilled workers and also experienced high turnover.

1.1.4.4 Technological Factors
Mukarati (2005) affirms that in comparison with other countries in the SADC region excluding South Africa, Zimbabwe is in a strong technological position. However, due to the negative impact of political and economic environments on in-bound investments and collaborative business initiatives, Zimbabwe has suffered technologically. Zimbabwe’s extensive road and railway infrastructure linking major

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cities and industries have deteriorated due to lack of adequate maintenance. Inputs to food manufacturing depend on rail and roads. Due to foreign currency shortages machinery conditions have deteriorated due to limited servicing and maintenance.

Telecommunication infrastructure is in place but has not been operating competitively. Power cuts have become the order of the day as such resulting in loss of time, more wastage and plant damage. This has increased costs highly and made it more difficult to produce food products competently. For Victoria Foods this has increased production costs as employees have to work overtime to meet production schedules.

1.1.4.5 Legal Factors
Although there has been much noise about the rule of law, Zimbabwe has been peaceful and more legally stable than some countries in the region. However, the enforcing of price controls resulted in product scarcity. The setting up of the Incomes, Price Monitoring and Stabilisation task force has ensured that products are produced at low prices. However, this measure has failed to ensure availability of products on shelves. The process failed to control the costs of raw materials some of which are imported at high prices with foreign currency. The legal framework has proven weak in dealing with cash hoarding and illegal foreign currency dealing.

1.1.5 SWOT ANALYSIS OF THE COMPANY
Thompson and Strickland (1990) contend that a SWOT analysis consists of sizing up a firm’s internal strengths and weaknesses and its external opportunities and threats. The argument is that the strategy must produce a strong fit between a company’s internal capabilities and its external situation. On the other hand Grant (1995) argues that the SWOT framework is handicapped by difficulties in distinguishing strengths from weaknesses and opportunities from threats. As a result we focus on the potential implications of factors in order to classify them as stengths

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or weaknesses. Having analysed the PESTL we are in a position to carry out a SWOT analysis of Victoria Foods.

1.1.5.1 Strengths and Weaknesses of the Company
Thompson and Strickland (1990) claim that a company’s strength is something that it is good at doing or a characteristic that gives it an important capability. By the same definition, a weakness is something a company lacks or does poorly (Thompson and Strickland, 1990). It should be noted that strengths and weaknesses need to be analysed in the light of how they matter in the competitive battle in which the company is in.

Strengths
Competitive and Proven Management Victoria Foods has a managerial excellence which has enabled it sail through stiff competition from players like Grain Marketing Board (G.M.B) which has government support, National Foods and Blue Ribbon Foods. Planning is very complicated in a hyper – inflationary environment, but Victoria Foods management has competitively tackled the situation by devising strategies that have raised the company into the top three companies in the milling industry.

A wealth of committed customers The company has established a name in the market for years. It has built an image which makes some customers brand loyal, reluctant to shift to other brands. Therefore brand loyalty built over the years helps the company survive in the prevailing harsh economic and competitive environment.

Innovative Skills Despite operating in a difficult economy, the company has hard working personnel. Even though these harsh economic conditions are leading to reduced macinery due to lack of foreign currency to replace machine parts, the company has managed to

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innovate and produce the best with reduced machinery. Victoria Foods has qualified personnel with each job having experienced personnel. The result is that the company possesses a culture of innovation and creativity. These innovation abilities have enabled the company to develop new unique products which have strengthened the company’s market position. Such innovation has maintained the company’s competence by consistently satisfying changing consumers’ tastes and preferences. The company also has successfully provided a variety of products in different sizes and flavours, enabling it to cater for distinct tastes and preferences in the market.

Group Benefits Vic Foods enjoys the benefits of being part of the CFI group which contains Farm and City, Suncrest and Agrifoods. Being part of the CFI group enables Victoria Foods (Vic Foods) to gain access to economies of scale since the group purchases common goods in bulk. Vic Foods also produces in bulk and does toll production for the group. Whilst leading to economies of scale, it also insulates Vic Foods from competitive pressures and allows it to outperform competitors who are individuals.

Weaknesses
No communication of the strategy Though it is clear that the company is pursuing a winning strategy, the weakness is that this strategy is not well communicated to line managers and key implementers. This has resulted in many conflicting goals and unnecessary politics. This has affected the implementation of the strategy thereby affecting the profits of the company.

High labour turnover Though the company has many skilled and experienced workers, it has also been affected by brain drain. Productivity and quality of output is severely impacted on by the need to constantly replace skilled workers.

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Unable to finance needed changes in strategy Price controls and Price monitoring by the government have resulted in the company operating on a stringent budget. These measures to remain profitable whilst inputs are rising in prices have restricted the intended purchasing of new acquisitions to implement the strategy. Lack of funds has also led to delays in the implementation in Information Systems technology upgrades. As such one of the company’s weaknesses is that of sticking to old versions of financial systems which are difficult to maintain and operate, thereby impacting on the management information system.

1.1.5.2 Opportunities and Threats of the Company
Thompson and Strickland (1990) contend that a company’s opportunities are the prevailing and emerging industry opportunities which are relevant to the company and either can provide avenues for growth or lead to competitive advantage. On the other hand, threats are factors in a company’s external environment that negatively affect its well-being (Thompson and Strickland, 1990).

Opportunities
New markets The company possesses the potential to venture into new foreign markets, especially the regional markets since the SADC region has limited trade barriers. The SADC region is in great need of grain products and since Zimbabwe used to be the bread basket of the region, the opportunities are quite high. The company has partnerships with some big companies in the region giving it a large potential supply of grain inputs. On the contrary, major competitors have focused on the local market and ignored external markets, giving the company an opportunity to gain these foreign markets. Gaining foreign markets can help in providing the much needed foreign currency.

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Distribution depots The company has potential to enhance its distribution channels by establishing depots in Mutare and Bulawayo. Such a move can enable market expansion in the Eastern and Northern regions since orders in those regions will be provided for timeously and cost effectively.

Vertical Integration The company can also grow in size vertically by establishing its own bakeries. This can enable it to generate more cash to support the production of snax and other products. Furthermore, it can apply for its own farming plots to grow wheat, maize and beans which it can use as raw materials in production of flour, snacks, maputi and mealie-meal. These moves will allow for both backward and forward integration. However, government regulations seem to bar vertical integration by the milling industry although negotiations can be carried out with the government. This could be a worthwhile venture since the benefits will be for all stakeholders.

Threats to the Company
Persistent Droughts and the shortage of raw materials As a result of a contraction in the agricultural sector most of the raw material used in production could not be availed. This has also been made worse by persistent droughts. The above factors hinder the supply of inputs such as wheat for flour and maize grains for maputi and kornsnax. Oils and flavours used in the production of konkels, crackerjax and snacks are also affected by droughts.

Shortage of foreign currency and Inflation The company imports oils, supplementary salt, wheat, rice, salt and gases which are key inputs in the production of rice, snacks and other products. The foreign currency required to acquire these inputs is in short supply which negatively impacts on the company’s production. Inflation has tended to erode profits and disposable income.

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Persistent power cuts Production has been negatively affected as the industry is spending most of the time without electricity. The night shifts are spending the nights sleeping in the factory as power is cut as early as 2am. Load shedding is becoming intense which therefore implies that production is restricted.

Price Controls and Government Policies Government Policies such as “Operation Reduce Prices” are also negatively impacting on operations as the businesses are forced to sell at low prices despite exorbitant costs of inputs. The government also implements the Fiscal Policy which sets very high corporate and income taxes. High corporate taxes erode the company’s profits thereby leaving less capital for reinvesting, while high incomes taxes erode workers’ disposable incomes and affect their morale at the workplace.

High Employee Turnover High employee turnover means loss of skilled labour and therefore a strong threat to the maintenance of good product standards. The requirement to continuously train skilled workers proves costly and reduces productivity. There is also a threat to lose workers to competitors.

1.1.5.3 Summary of the SWOT Analysis
SWOT analysis reveals that Victoria Foods is exposed to serious threats due to shortages in inputs. The company has opportunities in foreign markets and could expand into other provinces in the country or integrate vertically. The company could harness its strong innovative skills and utilise the CFI group to finance the implementation of new technologies for market expansion. A strong area to be explored in technology development is how e-commerce can be best utilised to build competencies. The next section lays out the problem statement of the research.

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1.2 STATEMENT OF THE PROBLEM
Manufacturing sector companies have invested in e-commerce but have not been able to achieve competitive advantage via its implementation. These current investments in e-commerce have not been backed by properly crafted e-commerce strategies and full utilisation of e-commerce technologies for value addition to companies. The above mentioned facts may be the reasons why Zimbabwe’s milling industry companies have failed to achieve competitive advantage through ecommerce implementation. The study purposed to investigate the extent to which Victoria Foods had utilised e-commerce technology, and how that utilisation helped it become more profitable.

1.3 RESEARCH OBJECTIVES
The goal of this study was to analyse the extent to which e-commerce had been utilised by Victoria Foods. As such the following were the objectives: 1. To investigate the degree of awareness in the Victoria Foods of the existence of e-commerce. 2. To determine the degree to which Victoria Foods has utilised e-commerce technologies. 3. To identify the major challenges in implementing e-commerce to ensure competitive advantage. 4. To determine if there is a relationship between e-commerce and business profitability at Victoria Foods.

1.4 RESEARCH QUESTIONS
The key question was: Has Victoria Foods fully embraced e-commerce technology? In other words, to what extent has Victoria Foods embraced e-commerce technology? As components of this question the following were the other questions that came up:

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1. What impact does e-commerce have in Zimbabwe’s food industry business performance? 2. What challenges are there of implementing e-commerce to business profitability? 3. To what extent has Victoria Foods implemented e-commerce technologies? 4. What relationship if any, exists between e-commerce utilisation and business profitability?

1.5 RESEARCH HYPOTHESIS
The Hypothesis to be tested: • Null Hypothesis (H0): The proportion of e-commerce technologies that have been fully employed at Victoria Foods is greater than of those that have not. • Alternative Hypothesis (H1): The proportion of e-commerce technologies that have been fully employed at Victoria Foods is not greater than of those that have not.

1.6 RESEARCH JUSTIFICATION
In Zimbabwe, not much value has been realized by firms implementing e-commerce. However an understanding of the impact of fully embracing e-commerce on business profitability will help companies to realize that it is costly not to utilise the technology. This research intends to bring out the immediate benefits, in terms of cost savings, efficiencies and enhanced profitability which are to be realized through successful implementation of e-commerce technologies. According to Hobart (2001) adopting e-commerce is no longer a competitive advantage, but a normal business process, without which an enterprise is unlikely to survive competition.

Implementing an e-commerce strategy is neither straightforward nor cheap. For example, it comprises a complete rethink of traditional modes of behaviour, the need and importance to involve internal staff and external suppliers and customers right

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from the conceptual stage, need to re-evaluate company’s core competencies, and requires substantial investment in IT. As such, this study seeks to link e-commerce concepts together with competitive advantage concepts analysing how these concepts could be embraced to make the business more profitable.

Since Zimbabwe is in a challenging economic situation, companies which will harness e-commerce for achieving competitive advantage will need to be strategic thinkers focusing on customers, markets, and competitive positioning, as well as on internal operations. The research seeks to help clarify e-commerce concepts. It also seeks to aid strategic thinking by providing valuable information on how e-commerce can be utilised strategically to create competitiveness. Such information brings new depth to Zimbabwean e-commerce by providing guidelines as to how the potentials and benefits of e-commerce can be fully harnessed by Zimbabwe’s milling industry. The research set to provide academia with information on the applicability of ecommerce in Zimbabwean food industries and provide a source of information for further research.

1.7 SCOPE OF RESEARCH
This research focused on e-commerce in the milling food industry (In this case limited to Victoria Foods). It was also restricted to the part played by e-commerce technologies in Victoria Foods’ business processes. As such the study looked at the operations of Victoria Foods in Zimbabwe for a five year period from 2003 to 2007 inclusive.

1.8 STRUCTURE OF THE DISSERTATION
The study is organized into five chapters. Chapter one has outlined the background to e-commerce in Zimbabwe and introduced the dissertation. Chapter two lays the theoretical background and therefore lays the foundation for a study on e-commerce technologies, models together with competitive advantage concepts. Chapter three

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explains the method that was used to analyse e-commerce utilisation and its relationship to business performance. Chapter four presents the dissertation findings. Chapter five concludes the research and provides recommendations for Victoria Foods management to act upon.

1.9 CONCLUSION
In this chapter we have outlined the research’s intention to research on how Victoria Foods has embraced e-commerce together with how e-commerce has impacted on the company’s business performance. This chapter has given us the background to Victoria Foods and its business environment. It has also stated the research problem and justified why this research was carried out, thereby limiting its scope to Victoria Foods. The following chapter will analyse different authorities on e-commerce and different e-commerce models thereby preparing the reader for the rest of the research document.

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CHAPTER TWO
LITERATURE REVIEW
2.0 LITERATURE REVIEW 2.1 INTRODUCTION
This chapter critically analyses the existing research on e-commerce. The write-up will attempt to relate various models of e-commerce and competitive advantage concepts. According to Shah and Dawson (2004) implementing e-commerce technologies comprises a total rethink of traditional modes of behaviour, and the involvement of all stakeholders right from the conceptual stage added to a reevaluation of the company’s core competencies. As such, executives of e-commerce companies need to be strategic thinkers focusing on customers, markets and competitive positioning. Practically, the chapter will analyse how e-commerce has influenced business. It will explore how this new technology can be exploited to achieve sustainable competitive advantage in conjunction with some traditional strategy tools.

2.2 THE E-COMMERCE CONCEPT 2.2.1 THE DEFINITION OF E-COMMERCE
Many use the terms electronic commerce (e-commerce) and electronic business (ebusiness) interchangeably. For the purpose of our study, we seek to differentiate the two. Allen and Fjermestad (2000) suggest that e-business tends to be used as a more general term to describe the use of the internet or any type of electronic mechanism to conduct an organization’s business processes. This definition implies that e-business is a term used to describe utilizing Internet technologies to improve the productivity or profitability of a business. Andam (2003) describes e-commerce as on-line trading. In other words, e-commerce consists of the buying and selling of products or services over electronic systems such as the Internet and other

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computer networks. Modern electronic commerce typically uses the Internet at least at some point in the transaction's lifecycle, although it can encompass a wider range of technologies such as e-mail as well. The wikipedia website considers ecommerce to be the sales aspect of e-business (www.wikipedia.org).

Kalakota and Robinson (1999) argue that e-business is the function of deploying technology to maximize customer value while e-commerce is the function of buying and selling over digital media. Kenneth and Traver (2003) expand this definition arguing that e-commerce encompasses digitally enabled commercial transactions between and amongst organisations and individuals while e-business refers primarily to the digital enablement of transactions and processes within a firm, involving only the information systems under the control of the firm

In a summary e-business is a super-set of e-commerce. This implies that incorporating e-commerce into a company's flow would transform the company into an e-business. E-Business thereby can be broadly defined to encompass all internal and external electronically based activities and processes. Bakos (1998) summarises e-commerce as part of e-business which focuses on the electronic commercial transactions between and amongst organisations and individuals. In this research we are interested in business-to-business (B2B) and business-to-customer (B2C) e-commerce.

2.2.2 B2B AND B2C E-COMMERCE
Fruhling and Digman (2000) argue that B2B e-commerce is a way for business to create value by alignment with factors which include customers, suppliers, and employees among other factors. Andam (2000) defines B2B e-commerce simply as e-commerce between companies. He further argues that this type of e-commerce deals with relationships between and among businesses.

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Types of business-to-business electronic commerce applications include: electronic data interchange, electronic funds transfer, electronic forms, integrated messaging, and shared databases. Business-to-business processes provide sharing of data and increased information access through corporate extranets. B2C e-commerce involves customers gathering information; purchasing physical goods or information goods which are goods of electronic material or digitized content, such as software, or e-books (Andam, 2000).

2.2.3 THE BENEFITS OF E-COMMERCE
E-commerce presents a number of opportunities for business organisations and individuals alike. Metzger (2004) suggests that e-commerce companies have a widened market base. The wide market base gives the companies an opportunity to grow at very low costs. Hoffman et al (2004) contend that there are distribution, marketing and operational benefits that can be realised from e-commerce. In other words e-commerce can bring about a reduction in distribution costs through the elimination of intermediaries. Since online transactions involve very little costs ecommerce can also bring about a reduction in transaction costs (Kiggundu, 2002).

Internal and external processes can also be integrated to lower transaction costs. As worldwide companies are adopting more collaborative relationships with key suppliers in product development, key business processes now require crossfunctional information sharing on a wide range of issues (McIvor, Humpreys and McAleer, 2000). This means that firms can utilise e-commerce to expand distribution channels at lower costs. According to McIvor et al (2000), these low costs can be achieved through the reduction of clerical procedures and paper handling. Ecommerce can also accelerate ordering, delivery and payment for goods and services while reducing operating and inventory costs.

Schaeffer (2003) argues further that e-commerce dramatically reduces the time for information search and transacting for buyers and sellers. The important point here

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is that e-commerce transcends geographic and time boundaries. Since time is saved, this has cost saving implications. However geographic and legislative constraints continue to present significant barriers to the distribution of goods and services in practice. Even though such constraints exist, personalised product offerings combined with free market access provide the customer with a wider availability of hard-to-find products. Added to this wider selection of items, customers can test products online before a decision is made to purchase (Karavdic, 2002).

Lumpkin, Drogee and Dess (2002) argue that even though the Internet makes possible new opportunities for strategic success, ignoring business fundamentals and basic financial requirements results in business losses. According to this line of argument many e-commerce companies have been unsuccessful at making a profit due to heavy spending on mass marketing, intensive price competition, lowered customers' search and switching costs. De Figueiredo (2000) stresses this argument, contending that increased customer power and lowered entry barriers due to the Internet can heavily lower a company’s profitability.

Despite the above mentioned negatives of the internet, the author believes that the main reason for failure on e-commerce is due to lack of clearly defined e-commerce strategies targeted at building the business’ profitability. The reason for such a belief is that whilst many companies have failed in e-commerce others have thrived under the same conditions. The argument is that certain strategies which the successful ones have perfected have made the successful companies more successful than the failing companies. As such, the following section seeks to analyse different ecommerce models in the light of their potential impact on e-commerce and competitive forces.

2.2.4 MODELS OF E-COMMERCE
Different models can be used to analyse and build e-commerce model strategies for business. No single model covers all the areas of interest and hence a selection of

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models has to be used when planning. The section below outlines some of the most prominent models and evaluates their strengths and weaknesses.

2.2.4.1 Electronic Areas Model

Fig 2.1. Electronic Areas Model (Choi et al., 1997:18). The Electronic Areas model shown in Fig. 2.1 presents the difference between ecommerce and traditional commerce. The representation portrays e-commerce as a three dimensional space, with traditional commerce in the front bottom left area and e-commerce in the back top right area. This model also identifies product, agent and process as three key dimensions distinguishing e-commerce from traditional commerce. The representation underlies the fact that e-commerce may be implemented to compliment an existing venture, or may be used to establish a totally new electronic venture (Haylock et al, 1999).

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Kao and Decou (2005) argue that the electronic areas model can be useful in determining the organisation’s focus in relationship to technology. However, even though this model helps focus the relationship of an organization with e-commerce applications, it does not assist in showing any clearly defined e-commerce strategies to pursue.

2.2.4.2 The Hierarchical Framework of E-commerce
Meta-Level Product and Structures Level 7 6 Services 5 4 Infrastructure 3 2 1 Function Electronic Marketplaces and Electronic Hierarchies Product and Systems Enabling Services Secure Messaging Hypermedia/ Multimedia Object Management Public and Private Communication Utilities Wide-Area Telecommunications Infrastructure

Fig 2.2. The E-commerce Framework of Seven Levels (Zwass, 1998) The hierarchical model outlined in fig. 2.2 above defines three meta-levels of ecommerce which are Product and Structures, Services and Infrastructure. Each level sits on top of the one below it and benefits from the strengths of the lower level (Zwass, 1998). Each level has sub levels which are shown as one to seven (fig. 2.2). Feng Li (2006) contends that the strength of the Hierarchical model is that it shows that in order to build a strong e-commerce strategy, a bottom up approach has to be taken. In other words, there needs to be a strong Wide Area infrastructure and strong ICT systems leading to the provision of excellent e-commerce products.

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Riggins (1998) argues that one difficulty with the hierarchy is that the sequence of layers may not be sufficiently flexible to accommodate the changing functions and activities of e-commerce. However, Zwass (1998) further argues that the hierarchical model focuses attention on important components to be considered within the ecommerce strategic planning context.

2.2.4.3 The Electronic Commerce Value Grid
Riggins (1998) developed the Electronic Commerce Value (EC) Grid (fig. 2.3) to aid managers in determining where Web-based electronic storefronts could improve profitability.

Fig 2.3. The Electronic Commerce Value Grid (Riggins, 1998) He argues that firms compete along five dimension of commerce. By using various modes of interaction, firms compete over both time and distance to provide some product or service to their customers through a chain of relationships (Riggins, 1998). He adds that since investments in information technology are typically justified using three different criteria – generating efficiency, effectiveness, and/or

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strategic benefits, the two perspectives mentioned above can be combined to create the Electronic Commerce Value Grid (fig. 2.3) which identifies fifteen areas where managers can use Web-based electronic storefronts to add value to their customers.

The strength of the model is that it provides a way for improving efficiency and effectiveness for the decision makers by making the right information available on demand (David et. al, 2000). These decision makers could be consumers considering a purchasing decision or a manager seeking information to formulate a marketing strategy. The model also offers strategic choices to the implementer and allows firms to gain an advantage over competitors by developing new customer loyalty. The result is temporal first mover competitive advantage. However, Riggins (1998) argues that long term advantage can only be obtained by constantly updating the content and functionality of the Web site and by redesigning business processes to take advantage of the new technology.

While the E-commerce Value Grid is useful in identifying opportunities, it is specific to Web-based sales applications and is difficult to use in other e-commerce strategic developments (Elliot et al, 2000). It also does not consider financial and legal business interests.

Applying the EC Value Grid
Riggins (1998: 12) suggests that to use the grid, managers should first determine which of the five dimensions of commerce to target for impact using the online storefront. He also poses the following questions: Should the Web site be used to add value to the user by diminishing the time it takes to deliver information, products, or services? Are there distance barriers which need to be overcome in order to better serve customers? Is the objective to alter the relationships in the industry, possibly by intermediation or disintermediation? Can the organization improve the nature of the interaction between industry parties? Or is the goal to use the technology to

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institute entirely new products and services which were not feasible before the introduction of the Web?

The above are some of the questions detailing the issues the EC Value Grid tries to identify. Riggins (1998:34) further argues that managers must examine the type of value to be generated for the user. He also stated that the following questions need to be investigated (Riggins, 1998:34): Is there a need to improve the efficiency of performing various tasks, improve the user's effectiveness in delivering timely information to decision makers, or use the technology to strengthen a long term relationship with the user?

Riggins (1998:35) contends that answering the above questions provides the EC Value Grid with information to develop a Web-based application that will provide new value for the user. The extent to which the Web site incorporates several cells in the grid becomes a measure of the strategic sophistication or EC coverage of the site. The goal of the grid is to move from a simple online storefront, where the impact is on time and distance generating efficiency and effectiveness benefits, to vast electronic business sites which change the relationships in the industry. Riggins (1998:35) argues that the mode of interaction developed with customers and trading partners utilising the EC Value Grid produces creative new products and services to generate strategic value.

2.2.4.4 Discussion of the various e-commerce models
As already noted in sections 2.2.4.1 to 2.2.4.3 no one model covers all the required areas. The electronic model can be used to focus on the relationship of a company with e-commerce applications. The hierarchical model is then used to analyse the infrastructure, services and product meta-levels of the company and aid in a bottom up strategic e-commerce strategy. The electronic value grid will then be used to

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factor in measures that will improve efficiency and effectiveness for customers. In the application of these models it is also essential to consider financial and legal concerns. These models have been designed to create competitive advantage, however for its sustainability; they have got to be applied in support of the normal strategic processes. Since they do not conflict, the above mentioned models can be used concurrently to build competence. As such, we look at e-commerce in the light of business strategy.

2.2.5 HOW THE INTERNET AFFECTS E-COMMERCE
Zwass (1998) argue that popularity of the Internet for e-commerce is

unquestionable. Schaeffer (1999) contends that this popularity emanated from the fact that the internet offers a channel where buyers and sellers are able to complete transactions cheaply, instantaneously and anonymously whilst overcoming geographic and time barriers. He contends that it provides a channel to remove multiple layers of middlemen by bringing companies and their customers and suppliers together directly and cheaply (Shaeffer, 1999). As such, e-commerce is thereby expected to widen markets and lower transaction costs.

2.2.5.1 Positive Effects to a Business
Shingh (2003) contends that the Internet enables a company to expand its market reach. Jensen (1999) agrees and contends that a little company is able to utilize the internet to reach markets far beyond its traditional vicinity while also gaining access to markets beyond its current customer base. Given this advantage to small companies, Jensen (1999) further argues that small companies can also have greater visibility against large companies and hence a chance to level the playing field to some extent.

Schaeffer (2003) adds to the debate that on the Internet each company is reduced to the common size of the customer’s browser window. While creating the original web

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presence may not be inexpensive, the cost of subsequent maintenance is minimal (Shaeffer, 2003). Jensen (1999) argues that the Internet provides cost advantages for businesses in being able to update information, post features, and simply maintain a site that is perennially current at a minimal cost and time lag. These features stated by Jensen (1999) combine to generate a greater presence within the present target market while gaining a greater component of their mind share.

Shaeffer (2003) further argues that one of the greatest benefits of doing business online rests in its ability to promote relationship building with customers and partners. Straub (2001) contends that the Internet is unmatched in its ability to increase responsiveness. Examples of this responsiveness are clearly visible in companies such as Dell, UPS, and FedEx that now allow both partners and consumers to check various facets of their transactions directly by logging onto their Web sites (Straub, 2001). This interconnectedness comes at a lower cost and on demand thus, providing a more efficient method to respond to customer needs/wants.

Straub (2001) agrees with Schaeffer (2003) that the Internet provides the benefits of shared information that can be enjoyed by organizations of all sizes big or small at a fraction of the cost. Straub (2001) argues that access to real-time data enhances efficiency, which improves productivity, and profitability. Schaeffer (2003) further contends that the nature and content of information that can be shared has broadened in scope. He states that the multi-media nature and real time capabilities of the Internet are fostering an environment that is conducive for relationship building.

The blossoming and adoption of the Internet has seen businesses realize enormous cost savings by moving a myriad of services online. The range of business areas positively impacted are vast, from customer service centres, online tracking of packages, to online brokerages, the list is endless. Berryman, Harrington, LaytonRodin and Vincent Rerolle (1998) contend that the ability to digitize offerings and

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provide products/services on demand has lead business to realize two allied goals of enhanced service at a reduced cost of product, support, and service. The above information strongly suggests that the Internet can also be used to gain competitive advantage through linkages with suppliers which will cut costs.

2.2.5.2 Negative Effects to a Business
Given the above potentials of e-commerce, there are a number of challenges as ecommerce takes root as a business tool. Schaeffer (2003) argues that e-commerce is limited to the transmission of information that can be interpreted by two of the five senses alone namely sight and sound. As such the internet is unable to communicate taste, smell, and feel.

Wigand et al (2004) argue that there are possibilities of reduced profits as competition intensifies. In agreement Straub (2001) states that e-commerce tends to reduce entry barriers as there are very little and sometimes no setup costs required to setup an internet based business. Straub (2001) further states that companies involved in e-commerce lose their bargaining power end this tends to reduce the companies’ ability to push their products thus driving down profits.

The UNCTAD Report (2002) states that one of the major challenges facing companies doing business in an e-commerce environment is the issue of security. The problem is generally about how to address the issue of security while preserving the benefits and ease of use of the internet and its open nature. According to the UNCTAD Report (2002) possibilities of fraud abound on the internet for both the buyers and the sellers. Another challenge that may be faced by internet based companies is the issue of costs especially in relation to network access. Network access providers may monopolise access and charge premium charges for network access (UNCTAD Report, 2002).

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Gapu (2004) contends that a major challenge to e-commerce is customer loyalty: one of the manifestations of using the technology of the internet has been the ease with which consumers can navigate the internet in order to satisfy their needs and wants. Besides, the internet reduces switching cost to the point where consumers do not have an inherent investment in the current relationship. In instances where businesses do not create a personal shopping experience, this problem is further amplified.

2.2.5.3 E-Commerce effects on Markets
The Internet has seen the emergence of electronic markets. Whitey (2000) defines an Electronic marketplace as an inter-organisational information system that provides facilities for buyers and sellers to exchange information about price and offerings. Berkowitz (2000) argues that this market space is information and communication-based electronic exchange environment occupied by sophisticated computer and telecommunication technologies and digitized offerings. The impact of this digitization is evident in the following changes as stated by Berkowitz (2000:5): • The content of transaction is different – information about a product often replaces the product itself. • The context of transaction is different – an electronic screen replaces the face-to-face transaction • The enabling infrastructure of transactions is different – computers and communications infrastructure may replace typical physical resources especially if the offering lends itself to a digitized format.

Shingh (2003) states that the Internet provides a platform for e-commerce by providing a wide market place for business which covers the whole world. Goods and services can be accessed from anywhere with virtually no costs. Accordingly Schaeffer (2003) suggests that delivery of purchased items can be via postal services or downloads if downloadable and payment can be done by credit cards or mailing payments. As the internet provides for transactions with high speed

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information flow there is much hope of lowered costs and an ever expanding marketplace (Berkowitz, 2000). E-market Commodities According to Professors Rajiv Lal and Miklos Sarvay of Stanford University in Schaeffer (2003) there are two types of goods that can be bought on the internet. One type is goods that a person can buy without seeing. Experience goods are the second type. One needs to see this type of goods before buying. Schaeffer (2003) gives examples of the first type of goods as computers and compact discs and the second type as goods like clothes and jewellery. Schaeffer (2003:15) states that: Purchasers really like to touch and feel experience goods and will only buy after some experience. Since brand identity and customer loyalty is important, experience goods are not vulnerable to severe price competition. As such physical stores can be used to build relationships with customers and then ecommerce be used for creating repeat orders at low cost. Therefore in this view e-commerce can be viewed as a complimentary channel to integrate along existing distribution channels particularly for experience goods.

2.3.5.4 Five forces analysis of the Internet’s Impact on Business
Porter’s five forces model can be used to assess the impact of e-commerce on an organization’s specific situation (Porter, 1985). In this section we use this model to assess the impact of the Internet on business. Porter’s five forces model is a model which assesses the impact of the following factors on an organisation’s environment: • • • • • The threat of substitutes The bargaining power of suppliers Rivalry among existing competitors Bargaining power of buyers Barriers to entry

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Threat of substitute products or services According to Porter (2001), the Internet brings a positive change on the overall industrial structure which becomes more efficient as the Internet expands the size of the market. However the proliferation of Internet approaches creates new substitution threats.

Bargaining power of suppliers Porter (2001) argues that procurement using the Internet tends to raise bargaining power over suppliers, though it can also give suppliers access to more customers. On the other hand, the Internet provides a channel for suppliers to reach end users, reducing the leverage of intervening companies. Since internet procurement and digital markets tend to give all companies equal access to suppliers, differentiation is reduced and there is a tendency to standardize products (Porter, 2001). Another result of the internet is the shifting of power to suppliers due to the proliferation of competitors.

Rivalry among existing competitors Competition among competitors will increase due to reduced differences as offerings are difficult to keep proprietary. Therefore competition will be more on the lines of prices. As the geographic market widens, the number of competitors increase. There comes increasing pressures for price discounting.

Buyers - bargaining power of customers Customers now have low switching costs due to intense competition and therefore have more bargaining power. Barriers to entry Anything that Internet technology eliminates or makes easier to do reduces barriers to entry. Since Internet applications are difficult to keep proprietary from new entrants and the internet has made many things easy the barriers of entry are lowered. Since intermediaries are no longer needed and sales forces are no longer mandatory, barriers of entry are reduced further (Porter, 2001).

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2.2.6 INHIBITORS OF E-COMMERCE
In developing countries like Zimbabwe, a major impediment to take-off of ecommerce is inadequate ICT and Telecoms infrastructure as well as shortcomings in physical infrastructure, logistics and trade facilitation (Gapu, 2004). Other limitations include foreign currency controls, which limit the free exchange of value over the internet. A research in Vermont, USA (Vermont Report, 1999) revealed that there are three main areas of barriers to e-commerce: Ignorance – when people know little about the internet, they tend to hate the technology and thus use of the facility will be limited. However, this is not the situation in Zimbabwe because rapid changes in mobile technologies and the quick buy in by people in Zimbabwe have proved that Zimbabweans are quick to adapt to changes and embrace them. Cost – costs prevent most businesses from establishing e-commerce services. Cost comes in the form of cost to buy hardware and software for use in e-commerce. It also comes in the form of cost of building the system as experts are expensive to pay. Significant costs also come from the cost of leasing bandwidth from telecommunication service providers. In Zimbabwe, cost is one big inhibitor to technological advancement. Time – companies find it difficult to invest in time to develop systems that can be used on the internet. Straub (2001) contend that other inhibitors of e-commerce come from fears about perceived lack of online privacy, which arise from the internet’s ability to record every aspect of the user’s behaviour. For example the Government recently announced its intentions to monitor the Internet and intercept e-mails for intelligence reasons. Every transaction on the internet involves some disclosure of one’s personal information (Straub, 2001). This tends to scare away senior managers away from conducting business on the internet. Van Hooft and Stegwee (2001) contend that there is a general lack of secure electronic payments system. They base their argument on the fact that current

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generations of e-payment systems involve sending information over the internet. This has the attendant risk that such information may be intercepted by the wrong people and hence may be misused.

2.2.7 DRIVING FORCES OF E-COMMERCE
Improvements in technology continue to be a major driving force of e-commerce (Vermont Research, 1999). There have been fast changes in technology and in turn the associated costs of technology continue to fall. This in turn makes it very possible for innovative new ways of doing business to emerge. Changes in technology have also been making it possible for mobile technology to allow ecommerce. An example is the emerging of WAP technology, which now makes it possible to browse on the phone. As the technology improves, it will soon be possible to have even larger bandwidth on mobile phones, which can make it even easier to do commerce while on the move.

Changes in life styles of people have also contributed to growing use of ecommerce. Falling prices of computers and associated hardware and software have also facilitated more people to own computers. More people now own and use computers for their day to day business making it easier for businesses to bring shop fronts right in the homes of people. Gapu (2004) states that statistics show that more and more people now own computers. For Zimbabwe the number of people with computers rose from 33,000 in 1995 to 600,000 in 2000 (Gapu, 2004).

The technical capabilities of telecommunication networks have also been improving thus making e-commerce more accessible. The bandwidth obtainable on existing copper wire has been enhanced by such new technologies as DSL and ISDN. Since these technologies work over existing infrastructure, it is easier to provide internet access to more people with little investments in new infrastructure.

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2.3 THE CONCEPT OF SUSTAINABLE COMPETITIVE ADVANTAGE 2.3.1THE DEFINITION OF SUSTAINABLE COMPETITIVE ADVANTAGE
Grant (1995) argues that competitive advantage is the ability of a firm to outperform rivals on the primary goal of profitability. Barney (1991:102) takes the definition further suggesting that a firm is said to have sustainable competitive advantage when it is implementing a value creating strategy not simultaneously being implemented by any current or potential competitors and when these other firms are unable to duplicate the benefits of this strategy. Barney (1991) contends that resources that create this advantage have value, rareness, inimitability and non substitutability. Mata et al (1995) agree with Barney (1991) stating that for a resource to give sustainable competitive advantage, it must be valuable, it must not be possessed by many competitors in the industry and it must not be easily available for competitors to acquire. In addition Bharadwaj (1993: 84) in Maisiri (2006) also emphasizes that competitive advantage is only sustainable if the advantage resists erosion by competitor behaviour. Byrd and Turner (2001) in Basutu (2005) argue that IT is a highly transferable resource, a necessary but not a sufficient condition for sustainable competitive advantage. Powel and Dent (1997) differ and maintain the position that IT is not a highly transferable resource, and therefore, it is both a necessary and sufficient source of competitive advantage. Given Zimbabwe’s harsh economic environment and the fact that e-commerce is a resource easy to imitate, we agree with Byrd and Turner. In other words our position is that e-commerce competitive advantage are quickly copied and firms have got to innovate quickly in order to keep on having these advantages. Mata et al (1995) reinforce our view stating that the use of proprietary technology as a source of sustainable competitive advantage has proved to be difficult because IT

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applications are difficult to patent. Workforce mobility has been found to reduce the extent to which the proprietary technology is kept secret from competitors. Competitors can easily get access to technical know how by hiring the workforce involved in the development of the proprietary technology.

2.3.2 PORTER’S THREE GENERIC STRATEGIES
Porter’s Three Generic Strategies Model contends that a competitive strategy can take a defensive or offensive action to create a defendable position in industry in order to cope successfully with competition and generate superior profits (Porter, 1985). The basis for this above average performance within an industry is based on a sustainable competitive advantage.

Fig 2.4. Three Generic Strategies (Porter,1995)

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Fig 2.4 above summarises the three strategies that firms can use to create competitive advantage: overall cost leadership, differentiation, and focus (Grant, 1995). Each strategy is uniquely implemented to overcome forces affecting competitive strategy including threats from substitute products and new market entrants, bargaining power of suppliers, buyers, and rivalry among existing competitors.

2.3.2.1 Overall Cost Leadership Strategy
An overall cost leadership strategy attempts to offer lowest cost product or service to customers relative to a firm’s rivals (Porter, 1985). To achieve this there should be efficient management of the entire value chain. In other words, costs must be rigorously controlled from raw material purchases to distribution channel delivery. Lumpkin et al (2002) argue that cost leadership concentrates on a company’s value chain resulting in low-cost products and services. Lumpkin implies that companies using this strategy have to hammer down costs at each point in the value chain. Brand is relatively unimportant, reputation for quality is marginal at best, but customers can find low-cost products with minimal effort.

Internet technology offers new ways for overall cost leaders to minimize costs. According to Lumpkin et al (2002) this is achieved through price decreases via decreased transaction costs. Therefore in order to achieve cost leadership firms need to re-examine transaction costs from procurement to distribution and after service. This examination need to be critically done for every input in the ecommerce value chain. Internet based procurement and disintermediation which is the removal of intermediaries between supplier and the purchases, are good examples of this cost control component of e-commerce.

E-commerce also offers cost leaders with abilities to reduce costs in the primary activities of the value chain such as marketing in B2C e-commerce and supporting activities such as purchasing e.g. on-line auction procurement (Perreault et al,

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1999). According to Lumpkin et al (2002) e-commerce can reduce value chain costs in a variety of ways which include: • Web-based inventory control systems that reduce storage costs by providing real-time ordering and scheduling to manage demand more efficiently • Direct access to status reports and the ability of customers to check work-inprogress to minimize rework. • On-line bidding and order processing to eliminate the need for sales calls and decrease sales force expenses. • On-line purchase orders for paperless transactions to decrease costs of both the supplier and purchaser. • Collaborative design efforts to reduce the cost, and cycle time of new product development. On-line testing and evaluation of job applicants by human resources departments. However the sustainability of competitive advantage maybe problematic since rivals can easily mimic successful strategies by first movers.

2.3.2.2 Differentiation Strategy
Porter (1985) agrees with Grant (1995) that differentiation positions a company to compete on the uniqueness and value of its products or services. Grant (1995) further argues that a well known brand image, a strong reputation, and quality products and services are the characteristics of a differentiation strategy. Gains in image, reputation and quality come at a cost to consumers; they pay a premium compared to overall cost leadership products and services (Grant, 1995).

Lumpkin et al (2002) argue that a firm pursuing a differentiation strategy offers products or services that are viewed as unique and valued by customers. Such firms achieve differentiation advantages when price premiums exceed the extra costs incurred in being unique. Differentiators reduce costs in all areas that do not affect differentiation. For differentiators, mass customization enhances how companies respond to consumer demand (Lumpkin et al, 2002). E-commerce has enhanced the

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interaction between the manufacturer and the customer. Strategies such as on-line mass customization have enabled firms to decrease costs while enhancing product offerings, maintaining reputations for quality and preserving brand image. Forwardthinking organizations anticipate situations where they can capitalize on internet advantages through the value chain including (Grant, 1995:23): • Internet based knowledge management systems linking all parts of the organization to shorten customer response times. • Real-time access to manufacturing operations status such as scheduling and delivery information to empower sales forces and channel partners. • Personalized on-line access to provide customers with their own “site-within a site” to track orders and process new orders. • Rapid on-line response to service requests and fast feedback to customer surveys and product promotion to improve marketing efforts. • Access to real-time sales and service information to continually update research and development efforts. • Automated procurement and payment systems to provide suppliers and customers detailed status reports and purchasing histories.

The ability of e-commerce to enable mass customization has provided firms with tools that offer unique product offerings and exceptional service. As competing companies adopt applications of these technologies, internet based differentiation becomes more challenging.

2.3.2.3 Focus Strategy
Grant (1995) argues that a focus strategy is used by companies to position them in a market niche. Porter (1985) also contends that to focus pursue a focus strategy companies concentrate on a narrow market segment. Within their particular niche, they create competitive advantage over rivals through either cost leadership or differentiation tactics.

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The internet offers new avenues to compete by accessing markets less expensively (low cost) and providing specialized services and features (differentiation). This is especially important for small firms; and as such the internet has opened markets for small players that were previously inaccessible. Technology based efficiencies are available to firms using focus strategies. These efficiencies reduce the importance of scale advantages. According to Grant (1995:33) focusers use the internet to create: • Permission-marketing techniques that narrow sales efforts to specific customers who opt to receive advertising notices; • Chat rooms; discussion boards, and member functions for customers with common interests; • • Niche portals targeting specific groups with specialized interests; Streamlined browsing capabilities to focus customer search efforts within a specific domain; • Procurement efforts using techniques to match buyers with sellers.

Firms using focus strategies must effectively deploy resources in analyzing value chain activities to compete successfully. Both primary and supporting activities can be improved through single mindedness characteristic of firms using a focus strategy.

2.3.2.4 An Evaluation of Porter’s Generic Strategies
Porter’s generic strategies framework suggests that a company can maximize performance by striving to be the cost leader in an industry, by differentiating its products or services from those of other companies, and by focusing on a narrow target in the market (Grant, 1995). A company that attempts to combine cost leadership and differentiation strategies would invariably be stuck in the middle.

In practice, most successful companies make use of a combination of low cost and differentiation strategies. Thompson and Strickland (1990) argue that a weakness of Porter’s Generic Strategies is that it is difficult to distinguish between differentiation

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and cost strategies. It is very difficult for most companies to completely ignore cost, no matter how different their product offering is. Similarly, most companies will not admit that their product is essentially the same as that of others (Macmillan et al, 2000). As such, the generic strategies serve as a good starting point for exploring the concepts of cost leadership and differentiation not as an end in them.

2.3.3 THE RESOURCE BASED VIEW OF THE FIRM
Barney (1991) contends that firms obtain sustainable competitive advantage by implementing strategies that exploit their internal strengths, while neutralising external threats and avoiding internal weaknesses as detailed the resource-based view of strategy. The resource-based view (RBV) argues that firms possess resources, a subset of which enables them to achieve competitive advantage, and a subset of those that lead to superior long-term performance. Forsman (2000) argues along Barney (1991) that it is more relevant to consider a firm’s resources as a phenomenon having two sides. In line with this argument Forsman (2000) proposes that ‘à priori’ distinction should be made between strategic core resources and critical supporting resources as illustrated in fig. 2.5.

Figure 2.5. Two types of fundamental resources underlying competitive advantage (Forsman, 2000).

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Accordingly, the Strategic core resources available for a firm are those resources that are the primary source of the competitive advantage and represent the core idea around which the business is build. Forsman (2000) strongly contends that without these resources a real competitive advantage cannot be created.

Barney (1991) calls these strategic core resources: Resources that are valuable and rare. He agrees with Forsman (2000) that such resources can lead to the creation of competitive advantage. That advantage can be sustained over longer time periods to the extent that the firm is able to protect against resource imitation, transfer, or substitution.

Fig 2.6. Sustained Competitive Advantage Though the RBV Model (Barney, 1991) Barney (1991) in the RBV assumes that strategic resources are heterogeneous and immobile across firms, and that these resources are stable over time. Four empirical indicators of the potential of firm resources to generate sustained competitive advantage are proposed: value, rareness, imitability and substitutability (See fig. 2.6). Within this context, for a firm resource to have the potential of generating competitive advantage, it must be: • valuable, in the sense that it exploits opportunities and/or neutralises threats in a firm’s environment; • rare among a firm’s current and potential competition;

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imperfectly imitable (either through unique historical conditions, causal ambiguity, or social complexity); and

without strategically equivalent substitutes.

Jack (1996) argues that the RBV model’s strength is that it emphasizes the importance of a firm’s resource endowments in creating sustained competitive advantage. Barney (1991) agrees that the model rightly assumes that managers are limited in their ability to manipulate all the attributes and characteristics of the firm, which in turn makes them imperfectly imitable and hence the provision of sustained competitive advantage. Hence, Jack (1996) further contends that the weakness of the model is that when dealing with e-commerce competitive advantage can be easily imitated. He argues that the internet and e-commerce applications are resources which are not rare and can be easily imitated. It therefore becomes the challenge of the management as to how to make their strategy unique and inimitable.

2.3.4 E-COMMERCE AND COMPETITIVE ADVANTAGE
2.3.4.1 Introduction
Porter (1985) as evidenced from the previous sections argues that achieving a sustainable competitive advantage can be achieved by operating at a lower cost, by commanding a premium price, or by doing both. Accordingly, cost and price advantages can be achieved in two ways which are operational effectiveness and strategic positioning.

Operational effectiveness is doing the same things your competitors do but doing them better (Porter, 2001). Operational effectiveness advantages can take myriad forms, including better technologies, superior inputs, better-trained people, or a more effective management structure. Strategic positioning is doing things differently from competitors, in a way that delivers a unique type of value to customers (Porter,

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2001). This can mean offering a different set of features, a different array of services, or different logistical arrangements. E-commerce affects operational effectiveness and strategic positioning in very different ways. It makes it harder for companies to sustain operational advantages, but it opens up new opportunities for achieving or strengthening a distinctive strategic positioning.

2.3.4.2 E-commerce’s influence on Operational Effectiveness
Porter (2001) argues that Internet e-commerce is arguably the most powerful tool available today for enhancing operational effectiveness. Grant (1995) agrees that by easing and speeding the exchange of real-time information, it enables improvements throughout the entire value chain, across almost every company and industry. Porter (2001) further contends that because the internet is an open platform with common standards, companies can often tap into its benefits with much less investment than was required to capitalize on past generations of information technology. Hobart (2001) argues that companies only gain advantages if they are able to achieve and sustain higher levels of operational effectiveness than competitors. Hoffman (2000) disputes this argument stating that it is exceedingly difficult to sustain an advantage even in the best of circumstances. The point is that once a company establishes a new best practice, its rivals tend to copy it quickly. Horbart (2001) observes that the best practice competition eventually leads to competitive convergence, with many companies doing the same things in the same ways. Along the same line of reasoning, customers end up making decisions based on price, undermining industry profitability. Jack (1996) states that the nature of Internet e-commerce applications makes it more difficult to sustain operational advantages than ever. Jack (1996:45) further reasons as follows:

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In previous generations of information technology, application development was often complex, arduous, time consuming, and hugely expensive. These traits made it harder to gain an IT advantage, but they also made it difficult for competitors to imitate information systems. The openness of the Internet combined with the advances in software architecture, development tools, and modularity, makes it much easier for companies to design and implement applications. As the fixed costs of developing systems decline, the barriers to imitation fall as well.

Hoffman (2000) contends that today, nearly every company is developing similar types of e-commerce applications, often drawings on generic packages offered by third-party developers. The resulting improvements in operational effectiveness will be broadly shared, as companies converge on the same applications with the same benefits (Sinha, 2000). Very rarely will individual companies be able to gain durable advantages from the deployment of "best-of-breed" applications (Jack, 1996).

2.3.4.3 E-commerce’s influence on Strategic Positioning
Due to the advent of internet e-commerce, the above sections have shown that it has become harder to sustain operational advantages and strategic positioning becomes all the more important. Porter (1985) argues that if a company cannot be more operationally effective than its rivals, the only way to generate higher levels of economic value is to gain a cost advantage or price premium by competing in a distinctive way. Thompson and Strickland (1990) agree that without a distinctive strategic direction, speed and flexibility lead nowhere. Either no unique competitive advantage is created, or improvements are generic and cannot be sustained.

Having a successful e-commerce strategy now requires more discipline. Porter (2001) argues that e-commerce strategy requires a strong focus on profitability rather than just growth, an ability to define a unique value proposition, and a willingness to make tough trade-offs in choosing what not to do. A company must

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stay the course, even during times of upheaval, while constantly improving and extending its distinctive positioning (Porter and Millar, 1985). E-commerce strategy now goes far beyond the pursuit of best practices of strategizing. Shingh (2003) proposes that e-commerce strategies have to involve the configuration of a tailored value chain to be defensible. In other words, when a company's activities fit together as a self-reinforcing system, any competitor wishing to imitate a strategy must replicate the whole system rather than copy just one or two discrete product features or ways of performing particular activities.

2.3.4.4 Achieving competitive advantage through e-commerce strategies
How Overall Cost Leadership can be achieved by E-commerce Lumpkin et al (2002) contend that business fundamentals need to be adhered to for businesses to successfully implement e-commerce and achieve advantages. According to Lumpkin et al (2002:6): The service and capability offered by businesses have to be made uninimitable. For cost leadership advantages companies have to continue focusing on all cost centres, decrease expenses and maintain cost advantages as well as reduce inventories using e-commerce real-time communications to make production schedules and delivery systems more efficient.

How differentiation advantages can be achieved by E-commerce Firms can create capabilities so specialised for a given customer that the chance of customers turning to other solution providers is greatly lessened (Tapscott, 2000). There is still a great need to position products as unique and valuable to customers. Overpricing of products has to be avoided.

How Focus advantages can be achieved by E-commerce Porter (2001) agrees with Lumpkin et al (2002) that focusers can capitalise on ecommerce to capture specialised market niches. This can be done using

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technological capabilities to satisfy the needs of particular markets and reduce the threat of new entrants by firmly establishing itself as the customer’s most valued provider. Focusers need to read the scope and interests of their target markets (Lumpkin et al, 2002). As such uniqueness and focus on markets need to be maintained. A focus firm’s niche should be big enough to be profitable, but small enough to lessen the attractiveness to potential new entrants.

Summary According to Porter (2001), the creation of true economic value once is the final arbiter of business success. Economic value for a company is nothing more than the gap between price and cost, and it is reliably measured, only by sustained profitability (Porter, 2001). As such, sustainable competitive advantage creation involves making choices throughout the value chain that are interdependent (Porter, 2001). In other words, all company activities must be mutually reinforcing. This process actually makes a strategy harder to imitate since the whole system of competing is difficult to imitate.

2.4 THE E-COMMERCE VALUE CHAIN FRAMEWORK 2.4.1 THE E-COMMERCE VALUE CHAIN
Shingh (2003) argues that for electronic commerce, the value chain can be a convenient means of being able to organize the examination of the business processes within a business. Porter (2001) argues that the basic tool for understanding the influence of information technology on companies is the value chain. He defines the value chain as the set of activities through which a product or a service created and delivered to customers. Grant (1995) argues that when a company competes in any industry, it performs a number of discrete but interconnected value-creating activities, such as operating a sales force, fabricating a component, or delivering products, and these activities of suppliers, channels, and customers. Porter (2001) then in agreement states that the

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value chain is a framework for identifying all these activities and analyzing how they affect both a company's costs and the value delivered to buyers.

Firm Infrastructure E-learning Support Activities Human Resources Management Technology Development Procurement Customer Relations
E1 E2 E3 E4 E5

Collaborative Engineering Margin

Marketing and Sales

Inbound logistics

Outbound logistics

Operations

Primary Activities

Figure 2.7. The e-commerce value chain (Van Hooft and Stegwee, 2001) Key:
E1 – E-Procurement E2 – Fatory Floor Automation E3 – E-Fulfilment E4 - Web Site and Web Marketplace E5 – CRM and E-Service

Because every activity in the value chain involves the creation, processing, and communication of information, information technology has a pervasive influence on the value chain. The special advantage of Internet e-commerce is the ability to link one activity with others and make real-time data created in one activity widely

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Service

available, both within the company and with outside suppliers, channels, and customers. Taking the value chain (Porter and Millar, 2001) and placing e-commerce into the framework gives an insight into the reach of e-commerce into the value activities.

Figure 2.7 above shows how e-commerce reaches all activities of the organization. Linkages already exist between activities; some of these linkages have been integrated by using e-business technologies, ultimately providing a fully integrated ecommerce process. It is important to realise that these new applications have to be integrated with supporting and, if applicable, primary processes to prevent creating islands of automation.

The physical processes might have to be rearranged to better align the original value chain to the new e-commerce oriented value chain. Integration of the physical processes and e-business applications is essential to achieve maximum results. Analysing the e-commerce value chain can help in lowering the costs and increasing the value of activities.

Taking the Web marketplace as an example, one can see that, if a marketplace requires sound estimates for the delivery time of a product, e-fulfilment systems have to be in place and the factory floor automation has to be capable of providing this information. Supporting processes are not only the technical infrastructure, but also the databases holding all information and people capable of working with the systems.

2.4.2 EXTERNAL, CUSTOMER-SUPPLIER LIFE CYCLE
For the purpose of further analysing relationships between suppliers and customers, Kettinger and Hackbarth (1997) in Shingh (2003) introduced the Customer/Supplier Life Cycle (C-SLC) Theory. The purpose was to provide a way of isolating a company’s buying and selling activities to better understand the interrelationships

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between customers and suppliers’ business processes and their interactions in the company. The C-SLC framework is a particularly useful planning tool to help structure a review of existing business processes to determine the potential for turning these into e-processes (Kettinger and Hackbarth, 1997). Because every company is both a customer and supplier, the C-SLC can be used from both the supplier and customer perspectives:

From a supplier’s perspective, it is important to effectively target the market and advertise for customers, evaluate their product and service requirements and respond to their requests, deliver in a timely manner, and support customers after a sale. Concurrently, customers are searching for product and service information with the intent of more clearly specifying their own requirements, evaluating and selecting a supplier, and ultimately ordering and receiving a product or service (Kettinger and Hackbarth, 1997). Evaluating the current customer life cycle with selected customers might give new insights of where initiatives can best be made to increase the value offered to the customer.

2.4.3 INTERGRATING INTERNAL AND EXTERNAL PERSPECTIVES
Kettinger and Hackbarth (1997:67) outline that: It can occur that both internal and external processes become interconnected. For example, the automation of procurement (e-procurement) involves investigating the buying activities but also involves integration with internal processes and systems. So not only do the processes themselves but also the integration and automation through e-business become a topic of investigation. After the focus on parts of the C-SLC has been decided, the impact on current systems and processes has to be assessed.

The e-commerce value chain (introduced in Figure 2.7) can help in this assessment. Taking the example of e-procurement, it can be seen that this system affects both the supporting (procurement) and primary (inbound logistics) processes; for the

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example of the Web site, most linkages exist with the marketing and sales activity. In both cases it is important that the appropriate supporting processes are in place. Kettinger and Hackbarth (1997) argue that if an organisation’s processes consist of multiple value chains, the steps described above can be repeated for each chain.

2.4.4 APPLYING THE E-COMMERCE VALUE GRID
After having identified areas where e-commerce could be used to support the business strategy, specific e-business applications have to be specified. A framework to identify opportunities from Web-based electronic commerce (EC) applications has been developed by Riggins (1991) see section 2.3.5.3. Value is generated in three different ways, by using EC applications to generate efficiency, effectiveness and/or strategic benefits. It can be seen from the above mentioned section that the dimensions of commerce and the dimensions of value creation apply to all areas of the e-commerce value chain.

2.5 CONCLUSION
This chapter has shown that while it is easy to create competitive advantage utilizing e-commerce, it is a more daring task to build sustainable competitive advantage using the same technology. Although e-commerce is now a requirement for engaging in competitive business, it has been proven not to be enough in itself for sustainable competence. Chapter two has also shown that e-commerce implementations are easy to imitate and lower entry barriers as a result lowering a company’s profitability. It has been explained how no single strategy is enough to guarantee sustainable competitive advantage in e-commerce. What comes out is that it is essential to combine e-commerce strategies with traditional strategies so as to maintain competitive advantage. Given Zimbabwe’s economic environment of a Manufacturing Industry that has a limited infrastructure, the recommended approach is to utilize the Hierarchical Framework of e-commerce to develop an enabling

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infrastructure, maintain the services being provided by the company whilst developing electronic marketplaces. This approach will enable a company to target a global market whilst maintaining its current clientele. The Manufacturer can further employ the Electronic Value Grid to find means of better serving customers. The model will assist in developing improved efficiency and effectiveness of processes. The company needs to use the above mentioned tools together with other strategy planning tools. Porter’s five forces model and the three generic strategies can be used to understand competition better and employ the best chosen generic strategy to create competitive advantage. Finally, the RBV helps to analyse resources and protect against imitation, although this study has shown that this is a difficult task with e-commerce. As such, the modified Value Chain Model which is the EC- Value chain is used hand in hand with the C-SLC in applying e-commerce to the Value chain in the creation of value and a close alignment of the e-commerce strategy with the relationship between suppliers and customers. This analysis gives insight of where initiatives can be best made to increase value offered to customers. In conclusion, since competitors can imperfectly imitate the above mentioned value creation process, sustainable competitive advantage can be created.

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CHAPTER 3
RESEARCH METHODOLOGY
3.0 RESEARCH METHODOLOGY 3.1 INTRODUCTION
The previous chapter has discussed the literature on e-commerce and competitive advantage, including the conceptual framework on these concepts. This chapter analyses some of the theories surrounding the research methods and provides a design of how the research was carried out. This research was undertaken on Victoria foods only instead of the whole milling industry due to time constraints. The responses were tested and analysed with the aim of accepting or rejecting the hypothesis.

3.2 RESEARCH DESIGN
Marczyk, DeMatteo and Festinger (2005) argue that research design is used to structure the research to show how all the major parts of the research project will work together to address central questions. This current research pursued a nonexperimental, deductive approach in order to test theory based on observation. Specifically it employed surveys to arrive at conclusions in line with Robson (1997) who contends that surveys are appropriate for descriptive studies. He argues that descriptive studies portray an accurate profile of situations and can be qualitative or quantitative.

3.2.1 RESEARCH PHILOSOPHY Deductive and Inductive Reasoning
Marczyk et al. (2005) contend that to ground research a deductive reasoning or inductive reasoning approach can be used. Gill and Johnson (2003) further propose

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that a deductive research entails the development of a conceptual and theoretical structure prior to testing through empirical observation. Trochim (2002) then elaborates deductive reasoning stating that it follows a “top-down” approach in which theories of research are first stated. These are then narrowed down to a hypothesis, research questions and observations are then used to confirm the theories. However, Gill and Johnson (2003) argue that the problem associated with deductive reasoning is that cause-effect relationships are usually mistaken into thinking that the reverse relationships are also true. For example if all new farmers borrowed seed maize from Seedco last year and Murimi borrowed seed maize from Seedco, it does not follow that Murimi is a new farmer. Gill and Johnson (2003) argue that the logical ordering of induction is the reverse of deduction. They base their argument on the fact that induction involves the construction of explanations and theories about what has already been observed. Marczyk et al (2005) agree with Gill and Johnson (2003) stating that inductive reasoning starts with specific observations which are combined with other observations using generalizations and statistical inferences to arrive at conclusions. Gill and Johnson (2005) agree with Marczyk et al (2005) that generalisations in inductive reasoning can have problems when one hastily generalizes without sufficient information. Trochim (2002) also points out that another form of error associated with generalization is exclusion which occurs when important evidence is not used in the inductive reasoning process. According to Trochim (2002) during statistical inferences, problems can result if an unrepresentative sample is used to draw conclusions. This research followed the deductive approach by first theorising about e-commerce and its implementations. It analysed concepts of the value chain and competitive advantage and then surveys were taken to confirm the studied theories. It also incorporated inductive reasoning to eliminate the limitations of either process.

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Realism vs. Nominalism
Avison and Fitzgerald (1995) outline the importance of a philosophical approach in designing a research project. According to Burrell and Morgan (1979) in Gill and Johnson (2003), ontology refers to the worldview or reality which is divided between realism and nominalism. Realism assumes that the world is external to and existed before the researcher and hence can be observed using structured tools such as questionnaires. Nominalism argues that although the world exists, it does so only in the minds of the researcher and hence can not be observed but experienced through participation.

The researcher exploited both the realism and nominalism approaches. The researcher employed questionnaires and interviews to externalise himself from the participants. To eliminate bias, the researcher took the respondents’ views without trying to correct wrong perception or to incorporate his views. The researcher also allowed his experience as part of the Management and a member of the Information Systems (IS) department to accurately assess the e-commerce conditions and setup of the company.

Epistemology
Epistemology refers to an inquiry into the nature of knowledge and how one might begin to understand the world and communicate this as knowledge (www.library.uow.edu.au). According to Burrel and Morgan (1979) in Gill and Johnson (2003) the epistemological debate is hinged on two premises which are positivism and anti-positivism. Positivism asserts that knowledge is in a tangible form and can be observed. As such, true or false can be used as a basis for hypothesis testing. Anti-positivism calls for participatory observation as it asserts that knowledge is soft and can only be understood from the point of view of individuals directly involved in the activities.

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The researcher combined both the positivism and anti-positivism approaches in his research. The researcher took a participatory approach as part of Victoria Foods IS Management. He incorporated his experiences with e-commerce in the firm. The researcher also employed hypothesis testing to test the relationship between ecommerce utilisation and company profitability.

Nomothetic vs. Ideographic Methodologies
Methodology is a method of research as one investigates and obtains knowledge about the social world (www.library.uow.edu.au). The methodological research is split between nomothetic and ideographic principles (Burrel and Morgan, 1979). Gill and Johnson (2003) argues that any method adopted for research adopts a position on a continuum according to its relative emphasis upon the characteristics summarised in the Table Below:

Table 3.1: A comparison of Nomothetic and Ideographic Methodologies (Ghauri and Gronhaug, 2002) Nomothetic Methods emphasise
1 Deduction relationships covering-laws 3 Generation and use of quantitative vs. data 4 Use of various controls, physical or vs. statistical so as to allow for the testing of hypothesis 5 Highly structured research vs. methodology to ensure replicability of no.s 1,2,3 and 4 above Lab Experiments, Quasi-experiments Surveys, Action Research Commitment to research in everyday settings, to allow access to the subjects of research Minimum structure to ensure nos. 2,3 and 4 above (and as a result of no.1) and explanations by vs. 2 Explanation via analysis of causal vs.

Ideographic methods emphasise
Induction Explanation systems of and subjective meaning by explanation

understanding Generation and use of qualitative data

Methodology Continuum

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In a summary, Burrel and Morgan (1979) imply that according to nomothetic principles, the world can be delineated and observed and natural scientific methods can be used for hypothesis testing. Their ideographic principle assumes the position that an environment can not be observed, but experienced hence unstructured interviews and autobiographies are the best research methods. After considering Ghauri and Gronhaug (2002) and Burrel and Morgan (1979), the current research employed ideographic methods by using surveys and structured interviews. However, quantitative data and deductive reasoning were also utilised to eliminate the weaknesses of qualitative data.

3.2.2 RESEARCH STRATEGY
Ghauri and Gronhaug (2002) argue that were empirical evidence is obtainable and knowledge exists in tangible forms case studies can be used to support surveys. Marczyk et al (2005) further argue that where business phenomena can be delineated and independently observed questionnaire surveys can be employed. For the purpose of our research the company strategy documents and business memos were easily available to the researcher.

The researcher was also able to exploit his ICT experience and skills to delineate ecommerce variables in questionnaire parameters. As such, the research employed surveys in the form of structured questionnaires to collect quantitative information from Victoria Foods’ management and employees. This is in line with Robson (1997) who argues that surveys are well suited to descriptive studies where the interest is in proportions of attributes. According to him, surveys can be used to provide data for hypothesis testing. Interviews were then employed to source qualitative data. Case studies were carried out in the form of documental review of the company strategy documents and memos to verify Interview and survey findings.

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3.2.3 POPULATION AND SAMPLING TECHNIQUES
Gill and Johnson (2003) argue that all surveys are concerned with identifying the ‘research population’ which will provide all the information necessary for answering the original research question. Creswell (2002) then defines a population as a collection of random variables under study about which one is trying to draw conclusions in practice.

According to the above is definitions, the population should be specifically defined in the research to include only sampling units with characteristics relevant to the problem. In this research, the population was defined as all the business units of Victoria Foods. Individual business units constituted the population elements of which measurements were taken. Below we outline some of the sampling procedures that can be used for sampling.

Sampling Procedures
Sampling procedures can be divided into two broad categories: probability and nonprobability sampling. Ghauri and Gronhaug (2002) argue that inferences can be made from a known non-zero probability sample, while inferences within nonprobability samples are only valid within certain limits. Hence, non-probability samples include convenience, judgemental and quota samples. Churchill (1995) states that while in a convenience sample units that are convenient for some reason are selected, judgemental sampling uses judgement to get a sample that is representative of the population. Further, quota sampling makes sure that certain sub-groups of units are represented in samples in approximately the same proportion as they are represented in the same population.

In this research judgemental sampling was used to select a sample of 50 employees and managers from the company’s 500 employees. A sample of 50 was chosen since only 84 employees are computer users. This 60.2% of computer users were sampled judgementally for questionnaire surveys. The researcher chose

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respondents as shown in the table below to represent the population according to employee hierarchical level proportions. Ghauri and Gronhaug (2002) argue that while non-probability samples are easy to select, they have potential to bring out an unrepresentative of the population. An unrepresentative sample then leads in misleading results. In order to minimise these potential shortcomings of nonprobability samples, the researcher also employed stratified sampling as detailed below.

Table 3.2 Judgemental Sampling Criteria No. of Questionnaires Senior Total No. of Personnel Percentage of Personnel chosen (%) 60.0% 59.5% 61.3% 60.2%

Target Groups

Directors Management Line Managers Non Managers Total

&

6 25 19 50

10 42 31 84

Fowler (1988) argues that stratification is employed to cater for characteristics that may not be present in the same proportions in a population. A random sample was employed within each target group taking each group as a stratum. The rational was according to Creswell (2002) who states that well chosen strata provide the ability to generalize a population. Stratification was employed so as to equally cater for all levels of hierarchy within the organization. Gill and Johnson (2003) contend that prior knowledge of the make-up of the population from which a sample is to be drawn will assist in the stratification process.

For our population exposure to the variables under investigation differed in different employee levels. The target group population of computer users was used to stratify as shown of table 3.2 above. A total of 50 questionnaires were distributed according to table 3.2 as shown. The composition of samples per department was distributed

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as shown on table 3.3 to make sure that all departments were represented in the survey.

Table 3.3: Departmental Composition of Questionnaires Finance IS Marketing Production HR & Admin Technical Logistics Total 11 4 9 6 10 4 6 50

3.2.4 DATA COLLECTION METHODS
There are certain broad categories that encompass the common types of data collection techniques. The research question and the nature of the variables under investigation usually drive the choice of measurement strategy for data collection (Marczyk et al, 2005). Some of the common techniques are experimental research, observation, survey, case study, documentation review and focus groups. We will describe observation, document review, surveys and case studies since they are more relevant to our research.

3.2.4.1 Observation
The researcher carefully observes and records behaviour on subjects of interest. These observations are carried out in the subject’s natural setting. Observation methods can be divided into direct observation and abstraction. In direct observation, primary data can be collected by directly observing the respondent in question (Creswell, 2002). The difficult with this technique is that there is no opportunity for probing since it’s a passive form of data collection. This method of research was not used since the personnel under observation were affected by being observed and changed behaviours due to being observed.

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Cooper and Schindler (1998) in Sangula (2007) argue that abstraction involves consulting and extracting data from a variety of source documents. Its advantage is that data can be accessed from existent records at a very short space of time (Ghauri and Gronhaug, 2002). However, the observations are difficult to code and therefore subject to manipulation. Using this method the researcher obtained a first hand experience with participants and obtained information from strategy documents and memos. Creswell (2002) supports this method arguing that the method is very useful in exploring topics that maybe uncomfortable for participants to discuss. However, senior management perceived the researcher as being too intrusive when he sourced clarification of information detailed in the company documents. Assurance that research finding were to be used for research findings and a letter from the GSM, UZ assisted in getting maximum participation in this method of research.

3.2.4.2 Interview Methods
Interview methods extract data from direct questioning (Creswell, 2002). Robson (1997) contends that face-to-face interviews offer the possibility of modifying one’s line of enquiry following up interesting responses and investigating underlying motives in a way that postal and other self administered questionnaires cannot. Nonverbal cue may give messages which help in understanding the verbal response.

There are different types of interviews besides face-to-face interviews which include postal surveys, telephone interviews and questionnaires. Postal interviews are suitable in large populations and are cost effective. The researcher employed structured interviews to obtain detailed and specific information from senior management. A selective number of ten senior managers and three executives were interviewed from a set of questions (See Appendix B). The questions presented to these executives sought to determine the strategies that were being pursued by Victoria Foods. Certain questions set to determine the awareness of senior management to e-commerce. Some questions set to determine the level

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utilisation of e-commerce and establish whether it had helped the company become more profitable. The researcher also sought to discover hindrances to e-commerce by a set of questions.

The process proved time consuming and required persistence since the respondents were busy people and not easily accessible. The researcher also found this research tool difficult to employ since he was also part of management and the IS team. The actual interview sessions varied in length due to time limitations of different managers. The researcher had to standardise the interviews to 15 minutes so as to allocate the same time to all respondents. To avoid much inconveniences, the researcher made appointments via e-mail and telephone prior to interviewing visits. Goodman (2000) in Ghauri and Gronhaug (2002) states that certain biases exist due to the tendency by the interviewer to ask wrong questions and be supplied with answers he expects to get. The researcher sought to eliminate such errors by avoiding leading questions and taking a listener approach instead of providing suggestions. Probing was only applied as a means of seeking clarifications.

The researcher used postal interviews to source responses from two branch managers who were in Gweru and Bulawayo. Ghauri and Gronhaug (2002) contend that postal interviews eliminate interviewer bias and provide anonymity of respondents. However the branch managers were not anonymous, therefore removing the anonymity advantage. The researcher had to utilise the telephone for further probing the branch manager on their responses in order to overcome the challenge of distance.

3.2.4.3 Survey
Robson (1997) states that the survey method involves the collection of standardized information from a specific population. He further contends that survey methods are not limited to means of questionnaires or interviews. Ghauri and GronHaug (2002) state that in survey methods relatively small amounts of information are collected

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from many individuals. This is the opposite of a case study, where a great deal of information might be obtained from a ‘key informant’.

Marczyk et al (2005) further contend that survey studies ask large numbers of people questions about their behaviours, attitudes, and opinions. Other survey studies attempt to find relationships between the characteristics of the respondents and their reported behaviours and opinions. The survey study which the researcher chose sought to examine whether there was a relationship between the utilisation of e-commerce and the achievement of competencies. In order to arrive there it also sought to investigate the level of utilisation of e-commerce at Victoria Foods. Ghauri and GronHaug (2002) argue that when surveys are conducted to determine relationships as above, they are referred to as cor-relational studies.

Question Design and Formatting In surveys there is no attempt to manipulate variables (Robson, 1997). According to Robson (1997) surveys are often cross-sectional studies meaning that the focus is on the make-up of the sample and the state of affairs in the population at just one point in time. This type of method has to use a large sample and confidence depends on the quality of individual responses (Creswell, 2002). The researcher designed questionnaires to collect factual and attitudinal information. This was done in order to source information for evaluating the research questions.

The designed questions sought responses on the following variables:

a) E-commerce awareness and utilisation b) E-commerce strategy and implementation c) E-commerce contribution to business performance d) Barriers to E-commerce

Each variable had a set of questions sourcing responses which source to identify awareness of different variables and the level of responses and attitudes. Nominal

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scales of yes/no responses were used to find out awareness of different issues. Likert scales were used to rank attitudes and levels of responses to different variables. Rankings of 1 to 5 for strength of responses, 0 % to 100% in evaluation of usage and levels of utilisation, and Least to Most were used for different questions. To carter for ignorance of certain issues the “I don’t know” option was also used.

Administration of the Surveys Although a variety of methods for administering surveys are available, the most popular are face-to-face, telephone, and mail. In general, each of these methods has its own advantages and disadvantages. Ghauri and Gronhaug (2002) contend that the major consideration for the researcher in deciding on the form of survey administration is response rate versus cost. Ray & Ravizza (1988) in Mukarati (2005) suggest that if a high rate of return is the main goal of research, then face-toface or telephone surveys are the optimal choices, while mail surveys are the obvious choice when cost is an issue. The researcher utilised face-to-face surveys and e-mail surveys for administering questionnaires at the head office. Branch respondents were reached via mail delivery. Phone calls, e-mails and face-to-face visits were used to pursue responses.

3.2.4.4 Case Study
Marczyk et al (2005) argue that case studies involve an in-depth examination of a single person or a few people. They state that the goal of the case study is to provide an accurate and complete description of the case. Ghauri and Gronhaug (2002) agree that the principal benefit of case studies is that they can expand our knowledge about the variations in human behaviour. According to this view, the focus of the case-study approach is on individuality and describing the individual as comprehensively as possible. Marczyk et al (2005) further contend that the case study requires a considerable amount of information, and therefore conclusions are based on a much more detailed and comprehensive set of information than is typically collected by experimental and quasi-experimental studies. This research

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utilised Case studies an in-depth interview with the Managing Director, the Finance. These interviews sought to clarify research findings from questionnaires and interviews with other managers. A clarification of strategy documents and memo reviews were also sourced.

The information this case study provided was able to verify and rectify certain misconceptions by the researcher. Kazdin (2003) contends that the naturalistic and uncontrolled methods of case studies have set them aside as a unique and valuable source of information that complements and informs theory, research, and practice. According to Kazdin (2003c), case studies serve as a source of research ideas and hypotheses; they enable for the study extremely rare and low-base-rate phenomena, and they can describe and detail instances that contradict universally accepted beliefs and assumptions. The researcher employed the case study approach to query questionnaire and interview findings.

Case studies also have some substantial drawbacks. First, they merely describe what occurred, but they cannot tell us why it occurred. The researcher only used case studies as a verification tool since they involve a great deal of experimenter bias. Markczyk et al (2003) argue that case study is more at risk with respect to experimenter bias in that it involves considerably more interaction between the researcher and the participant than most other research methods. In addition, the data in a case study come from the researcher’s observations of the participant. Although this might also be supplemented by test scores and more objective measures, it is the researcher who brings all this together in the form of a descriptive case study of the individual in question.

Finally, the small number of individuals examined in these studies makes it unlikely that the findings will generalize to other people with similar issues or problems. A case study of a single person diagnosed with a certain disorder is unlikely to be representative of all individuals with that disorder. The overall contributions of the case studies cannot be ignored, since they provide substantially informed theory,

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research, and practice, serving to fulfil the first goal of science, which is to identify issues and causes that can then be experimentally assessed.

3.2.4.5 Document Review
This method makes use of public documents such as minutes of meetings and private documents such as journals, diaries and letters among other organizational documents. This method enables a researcher to obtain the language and words of participants (Creswell, 2002). The researcher employed document review since he could easily access documents at any time of convenient. The researcher collected the Company’s strategy document and selected minutes on e-commerce from the company library. Creswell (2002) contends that company documents provide an unobtrusive source of information. The strategy documents provided information that had been thoughtfully compiled since management took their time compiling and planning the future of the company. However, certain memos were protected making it difficult to verify e-commerce strategies that the company is pursuing.

3.2.4.5 Data Analysis
Ghauri and Gronhaug (2002) state that data analysis is the process of bringing order, structure and meaning to the mass of collected data. Howard and Sharp (1983) in Mukarati (2005) agree and further state that the role of data analysis is to supply evidence which justifies claims that the research makes. Saunders et al (2000) distinguish data analysis for qualitative and quantitative data by the use of the characterisation presented in table 3.4 below. The researcher used the two approaches documented by Saunders et al (2000) for quantitative and qualitative data respectively. In other words, the study used numerical scales to collect standardised data. Tables, histograms and pie charts were used to analyse the quantitative data collected thereby. The researcher also simplified and reduced qualitative data into proportions for analysis. The researcher also used standardised categorisations to capture qualitative data collected in

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interviews. Conceptualisation of the gathered qualitative data was performed in order to develop meaningful information.

Table 3.4. Qualitative and Quantitative Data Analysis (Saunders et al, 2000)

Quantitative Data
1 2

Qualitative data

Data analysis is based on meanings Based on meanings expressed derived Collection results in numerical and standardised data Collection results in non-standardised data requiring classification into categories Analysis through the use of conceptualisation

3

Analysis conducted through the used of diagrams and statistics

Qualitative data was used to complement quantitative data. Ghauri and Gronhaug (2002) state that the following types of validity are empasised:

Descriptive:

Refers to the degree to which the actual description holds true.

Interpretive:

Refers to how good the interpretation is.

Theoretical:

Refers to the adequacy of the suggested theory on explaining the study under research.

Generalisable:

The extent to which the findings from the study can be generalised to other settings.

The researcher checked the descriptive validity of qualitative data by cross checking interview, questionnaire findings with his IS knowledge of the company. Data that did not have all the 23 questions answered for the questionnaire was eliminated. This

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criterion was also applied in questions with sub questions, if more than one sub question was not answered. Quantitative data was coded and tested for associations and relationship using the chi-squared test at 95% significance level to investigate the relationship between e-commerce utilisation and the profitability of the company.

The researcher set to ensure interpretive validity by cross analysis of interview and survey data. Since Victoria Foods is middle sized company, the researcher assumed that findings of this research are generalisable to small and large companies given the fact that the structure and set up of milling companies is standard and identical throughout Zimbabwe. The next section summarises the procedure that was used in this research.

3.3 RESEARCH PROCEDURE
In a summary, the choice research methods were structured surveys, interviews and documental review. Our methods set to collect information from different employee levels at Victoria Foods. The structured interview was targeted at senior management who are the main implementers of strategies, while surveys were conducted on middle level and line managers. As such questionnaires were distributed at the Head Office and all Victoria Foods sites. The questionnaires were designed to obtain information to answer the questions which have been raised by the objectives of the study (See section 1.4).

3.4 RESEARCH LIMITATIONS
In carrying out this research, the following limitations were experienced:

a) The researcher did not have enough financial resources to travel to all Victoria Foods branches to ensure full branch participation. b) Directors and Senior Managers were always busy and could not afford the researcher all the time he requested for discussion.

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c) Certain information was deemed private and confidential and therefore could not be revealed to the researcher. d) The researcher had limited time to carry out the research since he is on full time employment. e) The researcher is also in the IS department and management and as such is also responsible for e-commerce. As part of the systems, the researcher had a potential to introduce bias into the research.

Despite all the above limitations, the researcher made every effort to objectively carry out the research. The researcher sourced evaluation from managers and independent parties to eliminate potential researcher bias. The researcher also made sure that enough responses from all branches and employees were gathered for an effective research. Also senior managers were pestered until reasonable outcomes were acquired. Having detailed the research methodology of this research, the next chapter looks at the research findings and discusses these to address the overall research objectives

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CHAPTER 4
RESULTS AND DISCUSSION

4.0 RESULTS AND DISCUSSION 4.1 INTRODUCTION
This chapter lays out research findings and discusses the results in the light of the literature theory presented in chapter two. Graphs, tables and charts are used to present these findings and answer questions raised in chapter one. The results will bring out the extent to which e-commerce technologies have been utilised by Victoria Foods. As such it will test the relationships between the degree of utilisation of e-commerce technologies by Victoria Foods and the creation of competitive advantage via the same tool.

4.2 RESPONSE RATE
A total of 50 questionnaires were distributed to Directors, Management, Supervisors and non management staff. The response rate is as depicted below:

Table 4.1. Questionnaire response rate Target Groups No. of Questionnaires Directors Management Line Managers Non Managers Total 25 19 50 21 17 42 88% 89.5% 84% & Senior 6 No. of Return Questionnaires 4 Response Rate (%) 83.3%

The response rate was an average of 42 out of 50, which is 84%. More details on the response rates can be analysed from table 4.1. The six senior managers were

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also interviewed and company strategy documents were also used to verify interview details.

4.3 COMPOSITION OF E-COMMERCE USAGE ACROSS THE COMPANY
Of the respondents who responded, 92% understand e-commerce and 87% acknowledge that in one way or the other, the company is utilising e-commerce (See Appendix C). Of all the respondents, 78.6% understand e-commerce with an understanding above average.

Key:
-E-commerce utilised by IS only -Everyone uses IS -Used by only a selected users -It is a key tool for management -Other Reasons

Fig 4.1 Composition of users of e-commerce as a tool for business

Fig 4.1 shows that e-commerce is used by selected users. The figure shows that 69% of questionnaire respondents responded that e-commerce tools are only used by a few selected users and 19% responded that it is a key tool for management. It is also evident from the interview findings that there is no convincing evidence that the management are utilising e-commerce as a tool. This also explains why the company is finding it difficult to develop its relationships with customers (Victoria

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Foods Strategy Document, 2007 – 2010). Victoria Foods’ strategy documents show that customer relationships are weak in support of Survey and Interview findings (see Appendix D)

Along these lines Gapu (2004) argues that relationships can be enhanced via ecommerce. Schaeffer (2003) also argues that e-commerce via the internet enables a company to expand its market reach. Expanding regionally is one of the key objectives in the next 10 years (Victoria Foods Strategy Document, 2007 – 2010). The findings show that in contrast to Gapu (2004) and Schaeffer (2004), Victoria Foods has failed to provide the infrastructure that would allow it to expand its market base through the internet and e-commerce.

4.4 E-COMMERCE UTILISATION

Fig 4.2 Different functions for which e-commerce is used

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The figure 4.2 above illustrates the degree to which different functions of ecommerce have been exploited at Victoria Foods. It shows that e-commerce is mainly used by the company for communication. However the interview has shown that this communication is not mainly business communication but communication with friends and relatives. According to the findings, 80% of communication is nonbusiness communication. Berkowitz (2000) argues that communication used for nonbusiness functions is not part of e-commerce. In other words, the company is lowly utilising e-commerce in all areas, otherwise its customer relationships should have improved.

Whitey (2000) agrees with Berkowitz (2000) that e-commerce can be used to define electronic market places thereby building a large marketplace for organisations. This is contrary to fig 4.2 which shows that the company has not been able to expand its market reach via e-commerce. The company has also not been able to reduce any cost of sales or improve transaction cost by e-commerce.

Fig 4.3 Types of e-commerce utilised

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However, fig 4.3 shows that the company has been able to utilise all types of ecommerce, Business to Business (B2B), Business to Supplier (B2S), Business to Customer (B2C) and internal e-commerce. B2C e-commerce has been shown to be the main type of e-commerce being utilised by Victoria Foods. This level of utilisation is followed by Business to Business e-commerce and all the other types which are at the same level of utilisation. The high level of B2C e-commerce shows the high degree of potential that Victoria Foods have to reach markets via e-commerce. Interview findings have shown that management believes the company can expand by utilising B2C e-commerce. The company strategy document shows the management’s intentions to enhance the ICT function in the company (Appendix D). However, no solid strategy and plan has been put in place to develop B2C ecommerce as an expansion move. Hoffman et al (2004) argues that B2C ecommerce can be used to build operational advantages in distribution marketing. In contrast, Victoria Foods the above findings show that Victoria Foods have not benefited from these potential advantages.

Fig 4.4 E-commerce Technologies being used.

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Fig 4.4 further shows that the company has used the different e-commerce technologies which include intranets, extranets, e-mail and electronic fund transfers in different levels. The prominence of e-mail usage is evident in fig 4.4 in agreement with the finding in fig 4.2 which shows that e-commerce has been mainly used as a communication tool. Interview findings also reinforce this finding showing that the company has got a robust intranet and efficient e-mail. However, interviews have shown that there is little integration between Victoria Foods and external companies i.e. the extranet is not established. Another interview finding is that Electronic Data Interchange (EDI) is only utilised together with electronic fund transfers (EFT) by the finance department’s finance director and manager.

However, contrary to the Questionnaire finding showed above (fig 4.4), interview findings show that there are only four computers installed with the internet in the company. The above 50% questionnaire response could be explained by the fact that all employees are allowed access to one of the internet PC computer which is a pool computer located in the board room.

However, Riggins (1998) contends that the internet should provide the interaction dimension of the electronic commerce value grid to for efficient customer feedback and online interaction with the customer community. This is not so from the findings, since there is limited internet within the company. Since not all technologies are fully in use, the above findings contradict Riggins (1998) who argues that firms should compete along five dimensions of e-commerce which are time, distance, relationships, interaction and product (see section 2.2.4.3). In Victoria Foods’ case, the relationship and interaction dimensions are severely compromised due to limited access to the internet by employees. The limited extranet network also lowers communication and linkage with business partners.

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4.5 E-COMMERCE STRATEGY EXISTENCE AND LEVEL OF IMPLEMENTATION
The research study findings presented on Appendix E show that 73.8% of the respondents view E-commerce strategies as none existent or were implemented to a small extent.

Fig 4.5 E-commerce strategy Implementation Fig 4.5 shown above agrees with Appendix E. Its findings shows that respondents had a bias towards the “I don’t know, No and to a small extent” options of ecommerce strategy implementation. In a summary the questionnaire finding indicates that e-commerce strategies have been implemented to a limited extent. Interviews with Senior Management show that no e-commerce strategies have been developed or are in place. Shingh (2003) agrees with Porter (2001) that an ecommerce strategy is needed to establish a competitive edge (see section 2.4). As evident in the above findings, Victoria Foods has not established any competitive edge through the implementation of e-commerce strategies.

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4.6 E-COMMERCE CONTRIBUTION TO BUSINESS PERFOMANCE 4.6.1 Level of Integration
The electronic value chain framework developed by Van Hooft and Stegwee (2001) shows how e-commerce strategies can integrate e-commerce to reach all organisational activities (see section 2.4.1).

Fig 4.6 Level intergration of e-commerce in different componets of the value chain

Research study findings illustrated by fig. 4.6 show that in all the value chain processes the majority of the respondents responded that e-commerce has been utilised minimally in all the value chain processes with the majority of respondents saying e-commerce has been utilised between 0-20 %. Interviews further elaborated the fact that different processes and departments in the value chain are not integrated. As a result, the interviews further show that departments are disjointed

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and individualistic. This is contrary to Kettinger and Hackbarth (1997) who introduced the C-SLC (See section 2.4.2). They argue that by analysing relationships between suppliers and customers businesses can be structured to increase value offered to the customer by integrating all processes internally and with the external. As such the company is product oriented instead of being market driven, to quote one of the senior managers.

4.6.2 Contribution to Business Profitability

Fig 4.7 Contribution of e-commerce to business profitability

A detailed analysis of fig 4.7 using a scale of 0–100% contribution to business performance shows that 60 percent of the respondents responded that e-commerce contributed 60% towards business profitability, whilst 71.4% responded that ecommerce contributed about 60 – 80% profitability as a combined range. Further, research study interview findings show that all management representatives

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interviewed responded that e-commerce has contributed to the profitability of the company. Survey Findings in Appendix F show that e-commerce is not fully integrated to the value chain. Although interview findings are in agreement with the survey findings, they show that e-commerce has a great potential for yielding business profitability if integrated with the value chain. Riggins (1991) supports these findings in his arguments that e-commerce can be used to generate efficiency, effectiveness and strategic benefit (see section 2.2.4).

4.7 BARRIERS THAT HAVE HINDERED THE EFFECTIVE IMPLEMENTATION OF E-COMMERCE
Difficulty of implementation 9% Lack of Management Commitment 14%

Resistance to change 9% No Understanding to ecommerce Benefits 14%

No customer connectivity 10%

Lack of Financial Resources 10%

High cost of Ecommerce Implementation 12%

Security Issues 11%

Lack of Confidence in E-commerce 11%

Fig 4.8 Barriers to E-commerce The ration of 60.3%:39.7% can be approximated to a ration of 60:40. In this case management ignorance and attitude contributing to more that 60% of the barriers to

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e-commerce progress. This ration can be interpreted to mean that human factors which constitute about 40% of the factors considered are responsible for 60% of the barriers to e-commerce. This analysis closely follows the Pareto 80:20 rule, which states that 80 percent of the results are due to 20% of the factors.

Fig 4.9 Summary of Barriers to E-commerce

Fig 4.9 above summarises Research interview findings with middle and low level management. These findings attribute most barriers as due to lack of senior management commitment and lack of understanding to benefits of e-commerce. The Vermont Report (1999) also echoes these findings, stating that e-commerce is inhibited by fears of online privacy by management.

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4.8 THE RELATIONSHIP BETWEEN E-COMMERCE AND PROFITABILITY

Fig 4.10: Comparison of Utilisation of e-commerce and the contribution of ecommerce to business profitability

Survey results in Table F2. Appendix F show that the majority of responses were on the middle response. On a scale of 100%, 21 out of 35 respondents responded that the percentage of contribution of e-commerce to business profitability was 60%. 29 out of 42 responded that the percentage utilisation of e-commerce at Victoria Foods was 60%. These findings are summarised by fig 4.10 above.

Fig 4.10 shows a comparison between research study responses on the contribution of e-commerce to business to business profitability and the utilisation of ecommerce. The findings show similar trends for different response options. As such, the researcher investigated the relationship between the two variables. Ghauri and

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Gronhaug (2002) argue that the chi-squared test can be used to test the relationship between two variables.

Hypothesis Test for the Relationship between e-commerce utilisations and its contribution to profitability The researcher assumed that the null hypothesis was that the proportions of the research responses on the contribution of e-commerce to business profitability were the same as that of the utilisation of e-commerce. The researcher tested the relationship on a 95% significance level. The critical value was 0.05. Ho: 80% respectively. H1: The ratio of responses for 20%, 40%, 60% and 80% levels are not 5.7%:22.9%:60%:11.4% The degree of freedom (d.f.) = 3. For 3 d.f. and p = 0.05, the critical chi-square value is 7.815. 5.7%:22.9%:60%:11.4% for the responses of 20%, 40%, 60% and

Table 4.1: The chi-squared test
Actual utilisation responses 2 3 29 8 42 Expected Proportion out of 100 5.7 22.9 60.0 11.4 100.0 Expected responses 2.4 9.6 25.2 4.8 42 Actual – Expected (A-E) -0.4 -6.6 3.8 3.2 Sqr (A-E) 0.16 43.56 14.44 10.24 sqr(A-E)/ E 0.1 4.5 0.6 2.1 7.3

Chi-squared value =

From table 4.1, Chi-squared = 7.3, which is less than the critical value of 7.815. The null hypothesis was therefore accepted, and the conclusion was that at 95% level of significance, e-commerce utilisation is related to its contribution to profitability.

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4.9 CONCLUSION
The findings have shown that 60.9% of the respondents responded that e-commerce is only used by selected users. In all the business processes, research findings show that e-commerce has been utilised below 40%. However, e-commerce has been equally used for B2B, B2C and Internal e-commerce. E-commerce has not been able to utilise extranets or the internet since these infrastructures have been implemented minimally. The research findings have also revealed that e-commerce has not been utilised to interlink and integrate business processes in the value chain. The main barrier to e-commerce has been shown to be human factors which included lack of management commitment to the implementation of e-commerce. The following chapter presents the research conclusions and recommendations to management.

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CHAPTER 5
CONCLUSIONS AND RECOMMENDATIONS

5.0 CONCLUSIONS AND RECOMMENDATIONS 5.1 INTRODUCTION
This research set out to investigate the degree to which Victoria Foods has embraced e-commerce. In identifying this utilisation of e-commerce, the research was carried out through interviews and questionnaire surveys to find out the following:

1. The degree of awareness at Victoria Foods of the existence of e-commerce. 2. The degree to which Victoria Foods has utilised e-commerce technologies. 3. The major challenges in implementing e-commerce to ensure competitive advantage. 4. The different e-commerce strategies that can be implemented by Victoria Foods for competitive advantage.

From the research findings and their analysis, conclusions can be made as to the level of implementation of e-commerce by Victoria Foods. This chapter purposes to carry out that particular function and present recommendations for possible action by Victoria Foods Management.

5.2 CONCLUSIONS
1. Even though all managers and most employees understand e-commerce with an understanding above average, the research has established that ecommerce tools are only being utilised by a few selected users. The research

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also established that e-commerce is not considered as a key business tool by management. 2. Internet which is supposed to be a key tool to enhance e-marketing has been shown to be minimally utilised. As a result Victoria Foods has not been able to establish e-marketplaces. In return, no sales have been improved via ecommerce implementations.

3.

Despite the fact that the company has been able to utilise Business to Business, Business to Customer and Business to Supplier e-commerce, it has failed to be more profitable from utilising e-commerce. This could be explained by the fact that Victoria Foods has no e-commerce strategy in existence to effectively drive the e-commerce thrust.

4.

The research has established that e-mail is the main e-commerce technology under use. However it has also been established that the company has not been able to harness the potential of e-mail to enhance business communications and develop customer relationships. This is the case, since the company has not been able to utilise other e-commerce tools which should contribute hand in hand with e-mail to quicken and make business processes more efficient.

5.

The research has also established a strong relationship between the level of utilisation of e-commerce at Victoria Foods and its contribution to business profitability. Although it has been established that e-commerce has contributed to the profitability of the company, it can be concluded that the absence of an e-commerce strategy has strongly contributed to the failure by the company to establish competitive advantage via e-commerce.

6.

The research has established that e-commerce has been mainly hindered by the lack of commitment to e-commerce and low appreciation of the benefits of e-commerce by management. Other big hindering factors have been shown

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to be high costs of implementing e-commerce and security fears by management.

In considering all the above conclusions it can be concluded that the e-commerce technologies among e-mail, the internet, extranets, intranets, EDI and EFT that have been fully utilised by Victoria foods in business processes are less than those that have not. In other words, Victoria Foods has not fully embraced e-commerce.

5.3 RECOMMENDATIONS
The following recommendations are documented for Victoria Foods management in the light of the findings and conclusions of the research study:

5.3.1 The training of management on e-commerce The Information Systems (IS) department in conjunction with the HR department should develop a training program to educate senior management about ecommerce and its benefits. This training should cover how e-commerce strategies are developed and how they can be integrated to all business processes and the value chain. By offering this training, the lack of understanding and low appreciation will be minimised and the knowledge will be used to effectively implement ecommerce.

5.3.2 The development of an e-commerce strategy Management with the aid of the IS department should develop an e-commerce strategy. This strategy should build on Victoria Foods general and IS strategies. It should direct how the company intends to build competitive advantage through the implementation of e-commerce strategies. The buy in of CFI (the holding company) should be sourced in order to make sure that the implementation of the e-commerce strategy will not be hindered due to lack of funding. Developing a robust ecommerce strategy will set Victoria Foods ahead of the competition. Since

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competitors are still reluctant to utilise this technology fully, Victoria Foods can reap from first mover advantages.

5.3.3 Development of the different types of e-commerce Victoria Foods should fully develop Business to business and Business to customer e-commerce by the implementation of internet for linking with key suppliers and customers. To develop business to customer e-commerce, the marketing department will need to be fully computerised from the ordering process to customer servicing. The setting up of a fully functional website can also enhance customer services. The business will need to analyse supplier-customer processes so as to enhance customer services. Victoria Foods will need to develop external links with key suppliers so as to enhance and secure the procurement process.

5.3.5 Integration of e-commerce with the Value Chain Victoria Foods will need to fully computerise and expand access to computers by every key information requiring and processing department. The Value Chain needs to be fully integrated by the full implementation of e-commerce to every process in the value chain. This will enable the company to become market driven as the production department will be able to produce as per orders from marketing. All departments will be able to make informed decisions based on current up to date information due to online systems.

5.4 RECOMMENDED FURTHER RESEARCH
This research could also be further carried out on the whole food milling industry to establish the potential benefits of e-commerce in the industry. In that research an investigation of how e-commerce strategies can be used to establish competitive advantage can be carried out. The research could also set to find out how ecommerce can actually be utilised by the Foods Industry in Zimbabwe to expand globally and through the SADC region.

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APPENDICES

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APPENDIX A

GRADUATE SCHOOL OF MANAGEMENT

UNIVERSITY OF ZIMBABWE Research Title:
E-Commerce strategies for achieving sustainable competitive advantage in Zimbabwe’s manufacturing sector Dear Sir / Madam I am a final year student in the Masters in Business Administration program with the Graduate School of Management. As part of the requirements to fulfil my studies I am required to submit a dissertation project. My research is on the above stated research title. Attached is a questionnaire that will go a long way in assisting me to meet the requirements of the research topic and therefore I kindly request you to complete the questionnaire to the best of your knowledge. All responses given on these questions will be held strictly private and confidential and used for academic purposes only. Please will you respond by 18 January 2008.

Faithfully,

Shepherd Magombedze

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APPENDIX B
E-COMMERCE QUESTIONS FOR INTERVIEWS WITH SENIOR MANAGEMENT

1. What are the current short term and long term strategies being pursued at your company? 2. What are the company’s objectives? 3. Are you aware of e-commerce? Can you define the term ecommerce? 4. Is the company utilizing e-commerce? 5. To what extent has the company implemented any e-commerce technologies? 6. How has e-commerce contributed to your company’s performance? 7. How has e-commerce technologies contributed in creating competitive advantage in your company? 8. What e-commerce strategies can be implemented by Zimbabwe’s food industry to achieve competitive advantage? 9. What challenges are you facing in the implementation of ecommerce? 10. Kindly outline the steps, which Zimbabwe’s food industry should take for implementations of e-commerce to be fully productive and effective. 11. Kindly indicate how your company can be motivated to introduce ecommerce into its strategic management practices. 12. Please recommend any measures you think should be taken in order to make sure that e-commerce technologies are fully utilized resulting in the creation of competitive advantage.

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APPENDIX C E-COMMERCE GENERAL QUESTIONNAIRE

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APPENDIX D
Extracted from the “STRATEGIC REVIEW AND PLAN CFI AFRICA 2012” document 2007 Strategic Objectives Review

Strategic Objectives

Remarks

4.1

Baseline Protection Integration with raw material sources as security

Toll manufacturing of packaging, synergies with Biscuit & Mufushwa suppliers and wheat and other commodities contract farming.

4.2

Information and communications technology

ICT in place but not fully beneficiary to business

4.3

Strengthening marketing function Human Resources Management

Not yet strengthened for regional thrust

4.4

No progress made

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APPENDIX E
THE EXISTENCE OF E-COMMERCE STRATEGIES AT VICTORIA FOODS

Fig E1. Respondence on the existence and non-existence of e-commerce strategies

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APPENDIX F UTILISATION OF E-COMMERCE AND PROTABILITY Table F1: Table showing the level of utilisation of e-commerce in the Value Chain Levels of E-commerce utilisation
0 – 20% E-learning Eprocureme nt Collaborati ve Engineering Factory Automation E-Fulfilment Web marketing CRM and Eservice 26 21 – 40% 0 41 – 60% 4 61 – 80% 2 81 – 100% 0

21

9

0

2

0

26

0

6

1

0

15 26 20 21

6 2 4 1

9 0 4 10

2 4 4 2

0 0 0 0

Table F2: Table illustrating the relationship between utilisation of e-commerce and contribution of business profitability
Percentage of Contribution or Utilisation 20% Contribution to business profitability Utilisation of E-commerce 2 2 40% 8 3 60% 21 29 80% 4 8 100% 0 0 Total 35 42

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