Barriers to global e-commerce adoption using the CAGE framework

Global E-Commerce

Strategy implementation issues

Strategy formulation and implementation are very difficult and lengthy parts of a management process. It should be known that both formulation and implementation are interdependent. In other words, the strategy making and the implantation of the strategy should be carried out in a proper way. There are many issues that arise in making strategy and implanting it.

Conflicts can arise during strategy formulation and one should know how to handle them. As mentioned earlier, strategy planning and execution are interdependent and a plan needs to be present before something can be executed. Another thing to note is that execution takes more time than coming up with the plan. This can detract the managers from attending to the strategic goals of the process. Furthermore, the process of executive should be adaptive and dynamic enough to any changes that may arise.

Another issue that comes up is that implementation and execution of a strategy involves many people and many managers across varying hierarchical levels. Communication down the entire plan pathway can be a problem and the entire organization should work to make sure that communication is maintained. The strategic objectives should be associated with the day-to-day objectives at varying locations and at different levels. It is also seen that some higher hierarchical managers believe that if something does go wrong, it is not their fault. A failure or fault in the entire strategy is everyone's responsibility.

Barriers to E-commerce and the Cage MODEL

The Cage model is present to show that there are still barriers present to conducting trade and commerce throughout the world. CAGE framework basically stands for cultural distance, administrative distance, geographic distance and economic distance. Cultural dimension basically means that a society is present due to the interactions among people. Increased cultural difference leads to decrease amount of trade in that region. For instance, different language and ethnicities can lead to a big communication barrier and thus inefficient transactions.

The Administrative dimension basically deals with the policies, laws, treaties and government run institutions of the country. Political hostility or colonial ties can hamper the transactions and thus make commerce between the two countries ineffective. If the government control over the institution is not strong, this can lead to corruption and loss for the firms doing international transactions.

It is quite obvious that as the distance increases, the probability of more economic profit decreases. It has harder to travel and maintain smooth economic relations. The transportation cost for the company would also increase and thus prove more burden than profit. Difference in time zones and climates can cause adaptability issues for the employees and thus lead to more and more conflict.

Lastly we look into the economic dimension. It is seen that increased high per capita income for the residents of the country can lead to increased labor costs for the firm. Also, the firm needs to be aware of the resources and lack of resources in the area can further aggravate the condition.

E commerce and old method

The old methods of funding required more effort and manual labor. The data and processes weren't all set and people had to work harder. Old methods of funding also put a standstill to the amount or sorts of products that were to be sold. A company has also to compete to sell the product. In other words, the number of customers is not that much. E-commerce and globalization together has led to more and more variety and more customers as well. In the old method of funding, the firms also had to analyze careful and make sure that they didn't make a mistake in any step. With e-commerce, firms have gotten more alert and are more organized about their strategies.

Espenlaub et. al (2003) also stated that new economy or e-commerce works better and increases the stock options for a firm. This method of funding therefore makes the entire organization more efficient and increases the productivity of the company. The firm can reach out to more customers and offer more products. There is more planning required and this leads to decreased chances of error. In this way, the firms can compete with websites and have complete access to the customer. Because the dealings are taking place online, the firms can be in contact with the customer and increase their advertising and dealings with the customer.

If seen at a macroeconomic level, then all the technological revolutions have peaked really high and then went down and collapsed. That is one possibility with e-commerce today. The CAGE dimensions discussed earlier are another reason why this new method could fail. Furthermore, over allocation of scarce resources is yet another reason why e-commerce could fail.