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Electronic Commerce and Globalisation of Information Technology: A Case Study of Tourism in Ethiopia
by Berhanu Beyene and Kibruyisfa Achamyeleh
1997
Abstract
This paper provides a somewhat different lens to view the role of electronic commerce in globalisation of information and communication technology specifically the tourism industry in Ethiopia. Despite the low level of technology and poor performance of economic and social of the country, the prospects and possibilities of utilisation of the new information technology is quite viable. Information and communication technology is being rather no more luxury, but as vital as one of the production means; parallel to capital, labour, and land.
Electronic commerce has become a buzzword at the closing of the 20th century. The rapid growth in information and communication technology has opened up a new electronic infrastructure The electronic infrastructure supporting global electronic commerce is not only marching forward, but it also restructure the conventional market system, where a new form competition, possibly with free entry to the market for newly emerging firms, could be possible, due to mainly through reduction of transaction and sunk costs.
As the name connotes, touring and travelling is a global movement of information and material resources. Searching, negotiating, execution of contracts, settling payments using Internet has become quite vital in promoting global trade, specially in tourism. The Ethiopian Tourism Industry gets advantage of the electronic infrastructure to enter the world market.
1. Globalisation of Information and Communication Technology
The globalisation of information and communication technology, with its world-wide technological innovation in electronic infrastructure has led to a substantial cost reduction for the acquisition of information and access to global communications. Global markets offer boundless efficiency and choice for international community.
Indeed, the concept "globalisation" has raised many questions, and pro and contra views. The classical liberals and traditional protectionist view globalisation as an unrealistic and even that has adverse effects to the world economy, while the information technologist underlines globalisation as inevitable and favourable to global cost-effective communication, provision and utilisation of services. The speed of technological innovation leaves legislators and administrators for dead, and technology becomes a low unto itself [Ber97]. In other words globalisation is too often presented as a juggernaut which cannot be stopped, leaving the politician as bystanders.
Information, unlike most tangible goods can be processed by more than one person at the same time. Moreover, when information is communicated from one party to another, the transferor only loses possession to the receiver by operation of law. It is also clear the property concept of physical possession has little application to information. This lack of absolute possession underlines the essential characterstic that information is global. Communication technology and electronic networks enable instantaneous transfers of information across national borders. Therefore, the use, creation and processing of information can be accomplished in several countries simultaneously [Red88]
More and more companies regard the world as their marketplaces. Technological advances are rapidly blurring traditional industry boundaries and enabling global competition between firms that did not previously compete with one another [Gon96]
A globe which is shrinking beneath a network of satellite in geostationary orbit, interlinked economic empires seem to have seized control of the direction of change [Ber97]. Almost every concern about the globalisation has given more weight to transaction and organisational interconnection. The combined power of the market and information and communication technology manages to redefine boundaries. In a nutshell, growth in information and communication infrastructure have tantamount effects on globalisation.
2. World Commerce and The Information Technology
Due to a pervasive and steadily growing information and communication technology the world commerce is entering into a new phenomena: new form of competition supported by modern information and communication infrastructure. To sustain the competition firms need to adopt the new technology, i.e. the electronic infrastructure. Coupled with this, the globally distributed world markets ought to be open, so that communication and trading could be easily accessible. With the rapid growth of distributed information technology, development of mechanisms to interconnect the suppliers and the customers become mandatory. Hence, it is believed that networking of distributed computing systems not only reduce costs, but it also improve the efficiency of resource acquisitions [BeSt97].
Today, more and more aspects of the world market are directly or indirectly affected by the ever boosting information and communication technology. Participants of the world commerce (consumers and suppliers of goods and services) are the actors in the universe of the market system, who are users or potential users of electronic markets systems. Technological advances are rapidly blurring traditional industry boundaries and enabling global competition between firms that did not previously compete with one another [Ber96].
The 21st century world market would be a market system supported by electronic infrastructure. Since the information and communication technology knows no boundary, it might be also accessed, theoretically, by every ventures using Internet. The third world commercial firms would never remain eternally exceptional. As it has been the case in conventional world trade and other relationship, the modern information and communication infrastructure would abide anew the world trade relationship, nonetheless differently. This new technology has predominantly diverting the course of world commerce. On the other hand, commerce on Internet opens not only new forms of trade relationships among world trade participants, but it also restructures the whole market system, mainly as electronic market system, thereby such a system could certainly give opportunities for small firms specially those of third world countries to enter the market, which otherwise was hardly possible.
It is therefore, worthmentioning that one of the most profound consequences of the ongoing information revolution it its influence on how economic value is created and extracted. The new information technology redefines the relationship between buyer, seller and middleman, allowing new ways of accessing and tapping information, and price arrangements [BeSt97]
3. Electronic Commerce: A new phenomena and a new panacea
Electronic commerce has become a buzzword of the information society since half a decade. The concept electronic commerce denotes nothing more or less than supporting commerce with highly computerised dynamic and open information and communication technology. Electronic commerce can be defined as "doing business without paper"- that is ordering, tracking, paying and even delivering products (software for instance) electronically. In this case the electronic data interchange, the inter-process communication (computer application to computer application) of business information in a standardised electronic form, is the cornerstone of this system [ABC97].
The trading partners (sellers, buyers and brokers or mediators) might be globally distributed systems who meet on electronic market places - the Internet. The electronic marketplaces are the world wide distributed computer systems which are internetworked. All sorts of commercial activities, ranging from searching customers/suppliers, negotiation, contracting, and agreement, to settlement of payment (transfer of many to settle payments) ate done electronically, steadily and efficiently.
A myriad of world-wide distributed stand-alone computers, configured with heterogeneous system, and connected to communicate one another building „on ramps" so that each can plug into one vast system. Hence, in a dynamically changing unrestricted global open communication infrastructure, immense heterogeneous service offers and requests may typically arise at arbitrary points in time and space in a distributed network system [MML96]
The electronic market system offers valuable information and supports services beyond the conventional face-to-face market system. The innovation in the electronic market system revolts and drives not only conventional market, but also third world countries’ markets into a new era of competition. The interplay of factors of the market system is anew co-ordinating the global economic system, and is assumed to play an indispensable role in the allocation of resource and improvement of social welfare.
The electronic commerce paradigm is a major departure from conventional ones, in that the ability to quickly, inexpensively, and easily gather and disseminate information regarding products and services. Information gathering for the electronic commerce could be either by using a catalogue (for instance Trade Directories, Yellow Pages etc.) and/or brokerage (a trusted third party or a mediator) system to find and locate on-line agencies, commercial services, service providers, consumers, etc.
The other aspects of electronic commerce are the agreement, engagement and settlement of payments. The agreement involves the dynamic construction of descriptive profiles, leading to instatnatiated services descriptions and contract where the terms and conditions of engagement are agreed to buy the parties through negotiation and other mechanism (note, agreement in this context does not imply commitment). The Engagement aspect on the other hand involves the transfer from agreement to commitment, characterised in the real-world by the signing of a document by an authorised representative of a legal entity [BeSt97]. The electronic payment systems involve the transfer of money orders or cheques in almost similar way (conceptually) that the conventional market does since many years.
In general, today’s trade transaction is leaping towards and infrastructure supported by electronic services, ranging from searching a client to negotiation, form agreement to arrangement. A major impact of the electronic market system is that it does typically reduces the search costs buyers and sellers must pay to obtain appropriate information about the prices and product offerings available in the market. Economic theory suggests that the search cost reduction plays a major role in determining the implication of the systems for market efficiency and competitive behaviour [Bak91].
4. Information Technology, Internet and the Third World: With a Reference to Ethiopia
As it is indicated in the 1992 indicated of the United Nations’ report on Office of Technology Assessment, access to information and communication technologies is becoming increasingly critical for African community’s participation in economic and political life at national, international and global levels [ECA96]. The information and communication development in the developing countries has given many positive external effects to the third world countries. No doubt that the information technological revolution has reached African countries too, however it is coming slowly, ambiguously, and unevenly [Wil96].
4.1. Development of Information Technology in Africa
Today, several African countries have already made progress in their Internet links that have put them on the global connectivity roadmap [ECA96]. In some nations (e.g. Senegal and Mozambique), the government is allowing local entrepreneurs and non governmental organisations to "fast forward" into the information future; while in others (e.g., Congo and Cameroon), governments stand in the way of reform [Wil96].
Practical steps towards development and implementation of information and communication technology are [Kib97]:
- Through HealthNet, clinic patients in rural Kenya have better health care because they can consult by satellite with doctors in Nairobi and if necessary with specialists in Boston;
- As a consequence of media liberalisation rural audiences in Mali and Niger get more information and better entertainment, as dozens of private and community-owned radio stations are created that cater to consumer tastes and interests;
- African entrepreneurs, instead of waiting for government action, have created their own commercial Internet access businesses in Senegal and Ghana;
- Pinpointing the position of southern Africa trains via Transtel Satellite data and voice networks permits faster and cheaper deliveries of goods;
- A woman's craft Co-operative in Kenya learns through its use of Internet advertising that it can charge $15 for units it was intending to sell for $1; and,
- The south African information sector is exploding with everything from content wide Internet and cable services to self-supporting commercial "telephone shops" that give rural farmers access to cellular phones.
- Unless African countries become full actors in the global information revolution, the gap between the haves and havenots will widen, opening the possibility to increased marginalisation of the continent. The gap will increase the likelihood of cultural, religious and tribal ghettos leading to regional and international conflicts [Lis96]
4.2. Information Technology and Introducing Internet in Ethiopia
In Ethiopia too, since beginning 1997 the Internet service provided by the Ethiopian Telecommunication Authority, has opened opportunities to be interconnected to the pool of globally distributed networks, which is Internet.
It is also grossly understood that the Internet can provide a highly cost-effective means for a country's educational community to access global data of all kinds - in effect bringing them into the world community from what is in many cases a well-founded sense of isolation [Men95]. It is not mere educational services, the Internet provides almost all sorts of information in various forms, ranging from electronic library to electronic commerce, from audio-video, texts, pictures, to digital money, anywhere, to anybody without geographical limitation or racial discrimination.
Hence the Internet with its World Wide Web - powerful surfing tool appears to transform scientific communication, turning journals into electronic seminars, and weaving them into a single linked database. More and more, universities, research institutes, publishers, tourism & travel organisations and non profit and non governmental organisations proliferate on the World Wide Web, along with business, governments, and artists [Kibru97].
4.3. Technology: Factor to Facilitate Information Development
Ethiopia has introduced its first domestic connection to the Internet with a capacity of 5,000 clients. With the expansion of Internet facilities came the wide area hypermedia information retrieval system, the World Wide Web, which made it possible to access large universe of multimedia documents world wide [Kib97].
The utilisation of 21st century information and communication technology, the minimum requirement is unquestionably the telecommunication infrastructure, following by state policy, manpower, energy, and the market, mainly the price.
Besides Addis Ababa, there are over 22 towns that have automated telephone exchanges and another 13 towns with PABX-exchanges. Furthermore, the ETA planned to build 32 new digital telephone exchanges and 400 remote stations using radio or satellite links, increase line capacity from 169.700 to 335.000 and improve the number of telephones to 374.000 in 198993. Cellular telephony services are not offered yet, but in the long run the ETA might consider cellular telephony as a solution for the high urban demand [HuPh96]. Regarding the networking technology adopted, information is at its best scanty.
The skilled manpower for this technology is substantially produced by domestic institutions. With the countries economic policy of "Structural Adjustment Program" openness to external world has become out of question. Powerful personal computers, with appropriate software tools and systems, have become widely available at relatively cheap prices.
The demand for electronic mail and Internet service is feasibly growing. Private financial institutions like Banks and Insurance are stepping in installing even a LAN networking system. The tourism sector has long adopted electronic booking and reservation system.
5. Supporting the Ethiopian Tourism Industry with Electronic Commerce
Existing trading relationships and service provision within the tourism sector are undergoing rapid change with the development of new networks and services. Tourism has been among the pioneers to apply inter-organisational systems successfully on a large scale. The world-wide operating computer reservation systems are probably the best known and best described electronic markets. They have completely restructured the distribution channels and the way the whole industry compete. Indeed, it is not only the major airlines that have benefited but also the small enterprises: tour operators, travel agencies, local tourism organisations and others have been provided with an instrument that allows them to streamline their processes and offer their services to a world-wide audience of potential customers. The thriving touristic sites on the Web underline that there is no other medium today affording comparable efficiency and flexibility [ByEw96].
Touring and travelling is a global movement, where global information, global communication and more or less, standardised services and products are required. Tourists and Travellers and predominantly consumers of information services. Thus, the information shall be easily, cost-effectively accessibly, and more importantly available on online, which is user-centred interactive. This could assist to timely transfer information across Internet, which would be a key to promote and realise electronic commerce in the tourism sector.
5.1. Assessment to the Possibility of Application of Internet to the Ethiopian Tourism Industry
The Ethiopian tourism industry could be a favourable play ground for the application Internet and electronic commerce. With regard to the prospects of the application of Internet to the Ethiopian tourism industry Kibru has undertaken a research by distributing a questionnaire for 110 population size, where only 80 respondents (72.2%.) filled and returned the questionnaire. The profile of respondents is as follows according to the strata mentioned in the data collection method.
Sample Strata |
Number of respondents |
Percentage of respondents |
| Business Organisation | 8 |
10% |
| Educational Institutions | 7 |
9% |
| Travel & Tourism organisation | 6 |
8% |
| UN organisations & NGO's | 9 |
11% |
| Individuals | 50 |
62% |
| Total | 80 |
100% |
Table 5.1: Percentage of respondents
As the result of the questionnaire shows, 42% of the respondents meant tourism sector could be given the first priority to the implementation of Internet. At the same time the respondent (50) affirmed that business should be give 2nd priority, following by education (3rd ) and museum and art (4th).
| Sector | Rank |
|||
| 1st | 2nd | 3rd | 4th | |
| Tourism | 42% | 24% | 21% | 10% |
| Education | 29% | 4% | 53% | 8% |
| Business | 22% | 50% | 13% | 10% |
| Museum & Art | 5% | 12% | 12% | 66% |
Table 5.2: Rank of the possible areas that could be published on the Web
Although the representation from the tourism sector was merely 8%, the result highlights that touring and travelling need electronic information infrastructure, not only to advertising purpose, but also for booking and reservation. Coupled with this tourism industry could be partly affected by the international information system and needs to remain competent. It is conceivable that the business sector should benefit from the new information and communication technology. This may be best exemplified by the possibilities of sharing technological innovation of western world, and entering the world market.
5.2. The Web Page: The Information Infrastructure to the Ethiopian Tourism Industry
It then evident that the tourism sector ought to be supported by electronic market system. Thus the application of Internet is quite necessary. The following model Web page could help the Ethiopian tourism industry to internetwork to the rest of the world.
Figure: The "Travel & Tourism" page
This page, which divides the Travel & tourism link into six sections: East, South, South west, North, North west Ethiopia, and Historic route, provides touristic information for the tourists and potential travellers. Besides, there are valuable information regarding, general information about rules & regulations of the country, what tourists and travellers should know before coming to Ethiopia, and detail information about Hotels, travel & tour agents, transport, etc.
Moreover this prototype Web page links to different page on the World Wide Web about Ethiopian culture, history and country studies at different sites world wide. A similar Web pages are being developed by some interesting groups. For instance Hilton Ethiopia in Addis Ababa provides price, online and toll-free, reservation service
What is next feasible is digital or electronic money transfer or payment on Internet. This could be possible through experienced electronic commercial service providers.
6. Conclusion
The rapidly growing information and communication technology is knocking the front-door of every country in the world, where Ethiopia would never be exceptional. Globalisation of Information technology has made the world smaller and opaque through digital and virtual reality of cyberspace. It is this technology that is revolting the verge of this millennium. Entrepreneurs can break encrustation in the economy through innovation from information and communication technology and through new form of competition.
Electronic commerce has become a business strategy. Those who have the power to control information technology are those who are winning the race. The paperless trade has become inevitable. Electronic commerce has empowered, specially tourism and travel, by virtue of providing information on a finger tip and settling payments the same way.
With all inhibiting factors, Ethiopian tourism industry finds its way out to enter the world market solely with the application of Internet. As a matter of fact, current experience shows green light to more investment on Information. Electronic commerce, if we like it or not, would be the rule of the 21st century commerce.
References
