BARRIERS TO INTERNET AND E-COMMERCE USE BY WOOD PRODUCTS EXPORT FIRMS IN GHANA (Case firms: Coppon Wood Processing Limited and Yenok Wood Products Limited)

BARRIERS TO INTERNET AND E-COMMERCE USE BY WOOD PRODUCTS EXPORT FIRMS IN GHANA (Case firms: Coppon Wood Processing Limited and Yenok Wood Products Limited)

Internet and e-commerce use for export marketing enables export firms to reach the mass and ensure profitability as it removes all geographical constraints, per-mits the instant establishment of virtual branches throughout the world, and al-lows direct and immediate foreign market entry to the smallest of businesses. To-day’s business life revolves around the internet and has made it compulsory for export firms to use and not an option to consider. However this is not the case of the wood export firms in Ghana.

The purpose of the thesis is to describe the Ghana wood industry, the internet, and e-commerce (with emphasis on business-to-business e-commerce), and explore the barriers the firms in this industry face in using e-commerce and discuss about the way forward for these firms. The theoretical part reviews the Ghana wood in-dustry, defines the internet and e-commerce, and provides guidelines and under-standing of internet marketing in electronic marketplaces.

The major barriers have been investigated in the empirical part by way of face-t-face interviews with the case firms and a meeting with an expert, all in Ghana. A quantitative study was made among thirty other firms in the industry to validate the findings from the interview with the case firms. The research showed that high cost of internet services was the major barrier as a result of the inadequate information and telecommunication infrastructure in the country. How B2B e-commerce can be developed for the wood industry and suggestions for further re-search are included.

ABSTRACT

LIST OF FIGURES AND TABLES

1.1 Background

1.2 Purpose of the thesis

1.3 Research questions

1.4 Limitation of the study

2.1 Ghana

2.2 The scope of the industry

2.3 Capacity

2.4 Markets

2.5 Forest Resources

2.6 Product groups

2.7 Timber trade procedures and guidelines

2.8 Registration

            2.8.1 Buyer’s registration process

            2.8.2   Exporter’s or retailer’s registration process

2.9 Timber export procedure

            2.9.1 Contract approval

2.10 Inspection and grading processes

2.11 Export permit process

3.1 Definition of terms

            3.1.1   E-commerce and E-business and the Internet

3.2 Benefits of the internet and e-commerce

3.3 Limitations of the internet and e-commerce

3.4 Types of e-commerce

3.5 B2B e-commerce

3.6 The framework of the internet

4.1 The e-marketplace

            4.1.1 Types of e-marketplaces

4.2 E-marketplace activities

4.3 E-marketplace versus traditional marketing methods

4.4 Business models in e-commerce

            4.4.1 Value stream

            4.4.2 Revenue stream

            4.4.3 Logistic stream

4.5 Barriers to using the internet and e-commerce

            4.5.1 Physical barriers

            4.5.2 Technical barriers

            4.5.3 Cost barrier

            4.5.4 Lack of training

            4.5.5 Trust barrier

5.1 Research strategy

5.2 Research design

            5.2.1 Theory

            5.2.2 Selection of case firms

            5.2.3 Data collection

5.3 Quality of the research design

6.1 The internet and e-commerce in the Ghana wood industry

6.2 Export statistics January to August, 2009

6.3 Case firms introduction

            6.3.1 Yenok Wood Products Limited

            6.3.2 Coppon Wood Processing Limited

6.4 Why these research questions

6.5 Answers to research questions

            6.5.1 Yenok Wood Products Limited

            6.5.2   Coppon Wood Processing Limited

            6.6 Meeting with an expert

            7.1 Summary of quantitative questionnaire

            7.2 The way forward

            7.3 Recommendation for case firms

            7.4 Suggestions for further research

1.1       Background

The internet has become an extremely important modern day technology for business. The way of doing business has changed in recent times because of the use and application of internet based technologies in business. The use of the internet for export marketing enables export firms to reach the mass and ensure profitability as it removes all geographical constraints, permits the instant establishment of virtual branches throughout the world, and allows direct and immediate foreign market entry to the smallest of business.

According to the World Trade Organization (WTO) Work Programme, e-commerce is understood to mean the production, distribution, marketing, sale and delivery of goods and services by electronic means. It can therefore be deduced that e-commerce encompasses all kinds of commercial transactions that are concluded over an electronic medium or network, especially, the internet, whether locally or internationally. Vladimir Zwass (1996), the editor-in-chief of the International Journal of Electronic Commerce, defines e-commerce as sharing business information, maintaining business relationships, and conducting business transactions by means of telecommunication networks. According to him, the World Wide Web’s Internet has become the prime driver of contemporary e-commerce. Although incorrectly often used interchangeably, the World Wide Web is the information and the Internet is a way of accessing that information (Tassabehji, 2003).

The internet is driving the new economy by creating unprecedented opportunities for countries, companies, and individuals around the world. In some countries and industries, using the internet and e-commerce is no longer an option to consider but a requirement for survival. The first country to introduce the internet in the entire West African region is Ghana. Network Computer Systems (NCS) Ltd., a company that is wholly owned by a Ghanaian, initiated the use of internet technology in Ghana in 1994. There are currently, three main Internet Service Providers (ISPSs) including NCS. The others are Africa Online Ltd and the Internet Ghana Ltd. NCS (Tetteh & Burn, 1999).

However, according to research conducted, companies and private sector in Africa have not been active initiators of e-commerce. For example, a survey in Ghana called “Ghana SCAN-ICT” revealed that about 65% of ICT companies do not have presence on the internet and 84% reported that they were not involved in e-commerce (Mensah, Bahta, & Mhlanga 2005). As the economy of Ghana is picking up, the timber industry, specifically companies that export wood products, are doing their best to extend their international reach to be able to attract new buyers worldwide since wood products exports contribute significantly to the economy of Ghana.

In order to reach as many potential customers as possible while reducing costs, these companies have to adopt the internet and e-commerce in their export marketing strategy. They will be able to reduce the number of middlemen involved in their supply chain and open doors to global markets. A directory I received from the Timber Industry Development Division (TIDD) of the Ghana Forestry Commission (GFC) via e-mail shows that out of the 230 wood products export companies in Ghana, only 2% of them have WebPages, 40% have e-mails, and only 2 of these companies have an own domain name business e-mail addresses.

In 2005, Ghana’s revenue was €170 million from the export of 455,000 cubic metres of wood products. However, this fell in 2006; wood products export in the first three quarters of 2006 was €125.82 million in value and 328,620 cubic metres in volume. These figures corresponded to 8.8% and 6.7% decline in value and volume, respectively, compared to 2005. Wood exports to the US and European markets were reported to have declined in volumes 23% and 32%, respectively (Domson 2008, 1).