Ict, e-business and Small and Medium Enterprises

Box 3. A magnet manufacturer’s e-commerce success 

Ni-roku is a Japanese magnet manufacturer with 12 employees, which was established in 1940. 

In September 1997, an employee created the company’s Web site (www.26magnet.co.jp). By 2000, annual 

e-commerce sales of magnet products via the site had already reached more than USD 700 000, and the site 

has remained operational and generating revenue through 2004, although they still do not accept customers 

outside of Japan. 

In 1996 a company employee bought a personal computer at his own expense to use the Internet. 

He convinced the manager to launch the company’s Web site, although he was not confident that it would 

generate revenue that might counterbalance the decline in the company’s off-line sales. He consulted a 

small ICT service firm, which helped the company to create the Web page and took training to enable him 

to update it.  

To increase the number of visits to the site, the company used both an on-line campaign and 

off-line advertising. A free magnet offer campaign on the Web site combined with an on-line questionnaire 

to (potential) customers lured 1 000 visitors to the site during the peak early month. An advertisement in 

Nikkan Kogyo, an industry newspaper, also attracted the attention of many business readers. In response to 

requests from businesses as well as individual buyers, an on-line product catalogue was later added to the 

site. After the local newspaper covered the company’s e-commerce growth, other small firms in the region 

were encouraged to engage in Internet e-commerce. 

SMEs may also lack managerial understanding and skills for e-business. Successful integration of 

e-business requires many firms to restructure their business processes, to change organisational structures 

and to redefine their core competence and positions in the value chains. So, e-business tools cannot be 

successfully introduced and implemented without the visionary power and strategic decisions about how to 

apply ICT technologies for their business processes. However, SMEs lag behind larger firms in terms of 

internal managerial capabilities, usually having no CIO (Chief Information Officer) who can plan and 

implement e-business strategies for them. The professional advice of IT and e-business consultants can 

help them, but SMEs may not easily have access to them because of relatively high cost.