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Branding Laws · Internet Marketing · eMarketing · Internet Advertising · Online Branding |
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Branding Laws · Internet Marketing · eMarketing · Internet Advertising · Online Branding |
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LEVERAGING E-BUSINESS TECHNOLOGIES FOR
INTERNATIONAL MARKET ACCESS: THE CASE OF
PISTACHIO INDUSTRY IN IRAN
Ali Asadi
MBA, Eric Sprott School of Business
Carleton University, Ottawa, Canada
Marketing Manager, Asadi Pistachio Production & Processing, Iran
(aasadi@connect.carleton.ca)
Shaobo Ji
Assistant Professor, Eric Sprott School of Business
Carleton University, Ottawa, Canada
(Shaobo_ji@carleton.ca)
Paper for 15th Annual IAMA Forum, Symposium and Case Conference
Focus Area: Contribution of Technology to Food Chain
June 25-28, 2005
Chicago, U.S.A
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ABSTRACT
Pistachio is one of the most important agricultural products in Iran. Persian
pistachio is well known and the product is exported globally. There are a large
number of producers in Iran. However, few of them export their products directly to
the importers of other countries. Most of them have to sell their products to a few
large exporters at a relatively low price. Due to increase in expenses, such as labor
wage, pistachio producers must find ways to gain new markets and increase their
profit margin, and one of the most important ways is to use the E-business
technologies to gain access to international market directly
The objective of this research project is to find effective ways of using EBusiness
technologies to help pistachio companies and the industry. The findings are
derived from surveying a number of pistachio producers and exporters and reviewing
literatures in E-Business, E-Agribusiness, and other related disciplines such as
international marketing, information technology management, and customer
relationship managemen1t. The result will be useful for Iranian pistachio producers to
explore international market using e-business technologies.
Keywords:
E-Business, International market, Pistachio, Iran
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1. INTRODUCTION
Pistachio is one of the most important agricultural products in Iran.
“According to the latest statistics released by the World Food and Agriculture
Organization (FAO) affiliated to the United Nations, Iran ranks first in the world in
terms of pistachio production and harvested area.” (Karimkoshteh, Varden, 2003)
There are a large number of producers in Iran. However, few of them export
their products directly to the importers of other countries. Most of them have to sell
their products to a few large exporters at a relatively low price. Due to increase in
expenses, such as labor wage and fumigation, pistachio producers must find ways to
gain new markets and increase their profit margin. And one of the most important
ways is to use the E-Business technologies to gain access to international market
directly. The objective of this research is to find effective ways of using E-Business
technologies to help the company and the industry. The findings are derived from
surveying a number of pistachio producers and exporters and reviewing literatures in
E-Business, E-Agribusiness, and other related disciplines such as international
marketing, information technology management, and customer relationship
management. The result will be useful for Iranian pistachio producers to explore
international market using E-Business technologies.
1.1Background
Similar to other businesses, market share, product price, and production cost are
important factors that determine the profit margin. The pistachio producers need to
focus on these factors in order to increase the profitability. For Iranian producers, they
are facing many challenges such as decrease in selling price and increase in cost of
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production due to competitions, rising labor cost, rising cost of production equipment,
and risk associated with export market as well as social and political situation.
As a result, there is an urgent need for the producers to find way to increase
selling price and reduce cost of production. One of the solutions to these problems is
technology, particularly E-business technologies. Today, new technologies have
provided many ways of doing businesses. They will help companies to reduce
production cost, cutting middle layers in marketplace, finding new markets, and
subsequently increasing profitability.
1.2 Purpose of Study
The purpose of this research is to find effective and practical ways to do EBusiness
for Iranian pistachio producers. The result will be helpful for all participants
in this business and especially helps pistachio producers to gain access to new
markets.
1.3 Methodology
This research examines the issue of applying E-business technologies in a specific
industry. The report is based on findings of related literatures in the following
subjects:
�� Pistachio, pistachio production, and export in Iran and in the world
�� E-Business and E-Agribusiness
�� International marketing and on-line international marketing
The necessary data have been collected based on surveys of many pistachio
producers, exporters and related companies and organizations in Iran and USA.
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1.4 Contribution
The research is unique in a sense that it’s perhaps one of the few studies ever
existed in applying E-Business technologies in pistachio industry in Iran.
After extensive search on the Internet, the author of this report could not find any
articles on pistachio and electronic businesses. E-mail was sent to California Pistachio
Commission (CPC), one of the most famous pistachio organizations in the world.
CPC responded and indicated that they have no information about pistachio and
electronic business. The author then went to Rafsanjan, a city in southeast of Iran,
where Rafsanjan Pistachio Company (RPC) is located. RPC is the biggest pistachio
company in Iran. It was found that RPC did not have information and articles about
pistachio and E-Business.
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2. LITERATURE REVIEW
The following categories of literatures are reviewed:
�� E-Business Technologies
�� International Marketing
�� E-Business Technologies, International Marketing, and E-Agribusiness
2.1 E-Business Technologies
E-Business is one of the most important results of using information
technology in human life. Today we can see using information technology in every
aspect of life especially business. E-Business technologies generally refer to computer
based technologies that enable organizations to do business on the Internet. For
example, Amazon.com is one of the most famous companies, which uses e-business
to sell million items online.
2.1.1 Definitions
E-Business
There are many definitions for e-business. Generally, e-business refers to three key
concepts: 1) a way of doing business; 2) an electronic/computer based web tool; 3)
over the Internet. “Electronic business involves the total digitization of value chains
and business process; hold the promise of helping traditional organizations creates
new value.”(Barua, Konana, Whinston, and Yin, 2001). Another definition is:
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"E-business is the arena where the latest information technologies, business process
improvement and training converge with a genuine potential to create both iterative
and breakthrough results."(Beiman, 2002)
E-Commerce
"Buying and selling of products, services and information via computer networks
including Internet." (Turban, McLean, and Wetherbe 1999)
E-Marketing
“E-Marketing is marketing that utilizes the Internet as a communications and
distribution channel. This includes using email and the web.” (Sceat, 2004)
Lower cost and interaction between seller and buyer via the Internet are two main
differences between E-Marketing and marketing, but there are also a lot of similarities
between principles of marketing and E- Marketing for example the same careful
planning and considerations about the marketing mix that go into developing offline
marketing plans must also be applied to online marketing."(Sceat, 2004)
E-Agribusiness
"E-Business that has a focus on agricultural foods or services.”(Hooker, Heiling, and
Ernst, 2001)
Agribusiness consists of many activities such as production, sale, and distribution of
agricultural products. Agribusiness is one of the most important businesses in the
world and economy of many countries depends on it.
There are two main sections in E-Business:
�� Business-to Business (B2B)
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"The business to business group includes all applications intended to enable or
improve relationships within firms and between two or more companies."
(T.Kidd, 2004)
�� Business-to-consumer (B2C)
"The business to consumer group is a much newer area and largely equates to
electronic retailing over the Internet."
(T.Kidd, 2004)
2.1.2 Benefits of E-Business
Taking advantage of E-Business depends on how we use it.
Effective usage of E-Business will result in benefits for organizations and customers.
According to Turban et al. (1999), benefits to organizations and consumers can be
summarized as follow:
Benefits to Organizations
�� Reducing cost of all paper based information
�� Reducing inventory cost by using supply chain and just in time
systems
�� Reducing inventory turn over time
�� Decreasing communication costs
�� Enables small companies compete with large companies
�� Helps companies to find new consumers and being international
�� Helps companies to find new suppliers and services
�� Helps companies to get information about their competitors
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Benefits to Consumers
�� Provides power for customers to find better sellers
�� Helps customers to buy their needs from the entire world
�� Enables consumers to get customized products
�� Enables consumers to have communication with other consumers and
share information and experiences.
2.1.3 Limitations of E-Business
Despite the benefits, there are still risks and limitations associated with e-business.
For example, Turban et al. (1999) pointed out the following risks and limitations:
�� Security is one of the main problems that make E-Business unreliable.
�� Rapid changes in information technology
�� Cost of IT infrastructure is high
�� Many consumers do not have access to Internet
�� Most people do not want to transact on line
�� There are many barriers in international transaction such as different
local sales laws, tariffs and taxes.
�� Intellectual asset which has an important role in E-Business can be
evaluated precisely
�� Cost of applying new technology is high
Hence, it is very important for companies to have an effective strategy in using
E-Business.
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2.1.4 E-Business Strategy
Today companies, which use E-business, must have an effective strategy.
Before formulating strategy, managers must survey external and internal factors,
which affect company.
Vincent (2003) believes companies must understand following issues:
�� The decision making process in the company
�� The company objectives
�� Strength and weaknesses of company in using information technology
�� The industry which in company is
�� Cost of implementing IT
(Hooker et al, 2001) believe management must be flexible and ready to respond rapid
changes in technology and environment and it is obvious that they must know the
weaknesses and strengthens of their business and change the value chain system
according to their situation.
2.1.5 Relationship of Participants
Today Internet has provided the most cost effective way for communication
for all participants in business.
Widdows (2001) believes that there are following connections between participants
in E-Business (see Figure 1):
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Figure 1 Relationship of E-Business Participants (Adopted from http://wwwagecon.
ag.ohio-state.edu/programs/e-agbiz/pagepapersandpres/papers_presentations)
"The Internet environment as it concerns customer relations is represented in figure 1,
the continuum of communications comprises business to business (B2B), business to
consumer (B2C), customer to business (C2B, not identified separately from B2C in
ecommerce literature) and customer to customer (C2C)
communication."(Widdow2001)
Therefore in E-Business, communication environment has been changed from
one-way direction to bi-directional way.
In E-Business, most communications to consumers take place through websites
Consumers also search on business sites to get information about products and
interact with companies.
Communication can also take place between companies to sell their products
and services to each other or also exchange information. In addition, many
communications are taken place among consumers in chat rooms to share their
experiences about products and services.
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2.1.6 Consumer Relationship Management
Learning about consumers and consumer relationship management is one the
most important issues in E-Business. Changing the purchase system of customers
from traditional to online is not a simple task and it needs an effective customer
relationship management.
Widdows (2001) discussed two main scenarios in which consumers go to
company’s web site and to get information, or to buy goods and services from a
company: incidental contact and information seeker.
Incidental contact: This type of contact may happen when consumers visiting other
sites, surfing on the net, or using electronic mail.
A company via advertisement or link to other sites can start this contact. Incidental
business to consumer contact is one of the most effective ways in consumer
relationship management to attract consumers.
Information seekers: this type of contact occurs when consumers search for specific
product, brand, or company. It is called consumer to business contact. Therefore it is
very important for companies to know:
�� How can consumers access to company easily?
�� Is company’s web site attractive for consumers
�� Is it easy for consumers to gain access all useful information, they need?
However, there is also an important issue, which must be considered: Not all
information on the Internet is trustable and reliable. Many consumers do not want to
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use this information or use online purchasing system. Therefore many researchers
emphasize the role of “consumer educators” in “E-Consumerism”. It means “Actions
of consumers or their agents to protect and promote consumer interest and seek
empowerment in the context of the electronic market.” (Rha et al., 2001, p.3)
The specific goal of consumer education is to help consumers to get useful
information. Consumer education can take place in three levels:
�� Pre-purchase
�� Purchase
�� Post purchase
Pre purchase level: In this stage consumers search the web to find goods, services,
and information. Rha et al. (2001) suggest some activities, which help consumers in
this level:
�� Using search engines and other specific technologies to get necessary
information.
�� Using E-mail to get information from companies.
�� Using consumer networks to share information about products and services
and other consumers’ experiences.
In this situation consumer educators should know pre-purchase information on the
Internet and try to send correct information to consumers.
Purchase level: In this level effective communication tools enable consumers to be
organized and form a group. As a result, consumers gain more bargaining power. This
consumers’ power enables them to negotiate with sellers and get their favors. The role
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of consumer educators in this level is to inspire consumers to participate in on line net
works and buyer groups to increase their power.
Post purchase level: because of Internet, consumers have more power to express
their dissatisfaction about products and services of companies not only to them but
also to other consumers, government and third parties. Above activities will help
consumers to get trustworthy and reliable information and inspire them to go for
online purchasing system (Rha et al, 2001).
2.1.7 Applications of E-business
E-business has many applications. It can be divided in two main categories: business
to consumer applications (B2C) and business to business (B2B).
2.1.7.1 Business to Consumer Applications
The most common applications of business to consumer are (Turban et al, 1999):
�� Advertising
�� Electronic retailing
�� Electronic malls
�� Electronic publishing
�� News and communication groups
�� Recruiting agencies
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Advertising: Advertising and spreading information about products and services are
one of the most activities in E-Business.
Companies can do advertising in several ways, most of them are:
�� Company’s own website
�� Other companies and organizations’ websites
�� Search engines
Company’s own website: The first step in E-Business for each company is to have a
web site. A good website can provide information about company and its products
and services and also allow visitors to interact with company. So the design of a
website is very important to attract consumers’ attention.
An effective web page for a pistachio company should have following parts:
�� Type and sizes of available products
�� Prices of products
�� Pictures of products
�� Capable of on line transactions
�� Opportunity to refund
�� Information about regulations and legal condition of buying and selling
products
�� Information about delivery time
�� Types of payment
�� Safety of payment and information
�� Forum to interact with consumer and consumer with each other
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�� Information about relation between consumption of pistachio and health
�� Recipe can be made of pistachio
�� Links to other related organizations
Other Companies and Organizations’ Web Sites: Companies can pay other main
companies and organizations to advertise for them. In pistachio business, big food
companies and organizations are suitable places for advertising.
Advertising on Search Engines: Search engines such as Yahoo and Google are also
palaces, which companies can put their logo and banners on them for advertising.
Main issue in online advertising: One the main issues in online advertising is the
measurement of its effectiveness. It is often difficulty to compare the cost and benefits
of advertising.
Turbans and McLean (2001) believe that the main reasons are:
�� It is difficult to relate hits to advertisement, because one person could have
visited a web sites one hundred times.
�� There is no guarantee that each visitor will be a buyer.
“Quality Signaling” and Ways to Implement It: Rha et al. (2001) and Hangtrevedt and
Hooker (2001) pointed out that one of the most important factors in online selling is
how to win consumers’ trust so that they will buy the products in the environment in
which uncertainty about the quality is high. So “quality signaling” has an effective
role in this situation.
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Regarding the characteristics of pistachio as an agricultural products and some
disease like Aflatoxin, which was discovered in Pistachio products before, it is vital
for pistachio producers to have a trust relationship with consumers and assure
consumers about the quality of their products.
The following ways are suggested to implement Quality signaling:
�� “ Branding and firm reputation”
�� “ Third party certification”
�� “Warranties and Guaranties”
�� “ Quality and quantity of information”
Rha et al. (2001)
Electronic retailing: Electronic retailing is selling products through web pages, and
each company can sell its products directly to consumers.
Electronic malls: In electronic malls many companies sell their products under only
one Internet address. In agricultural business there are many electronic malls, which
some of them are related to specific product and others are general for agricultural
products.
Electronic publishing: By using electronic publishing, which is sending and
receiving electronic magazines, books and so on, companies can get news and update
information about their related business. In pistachio business companies can get
information about production, selling, exporting and so on.
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News and communication groups: News and communication groups are also one of
the best ways to get new and update information about pistachio such as price, new
related products and environmental situation which will be very important and also
knowing preferences and suggestions of consumers in communication groups will
helps companies to improve their works.
Recruiting agencies: Recruiting agencies are also can work via Internet and help
pistachio employer and job seekers to find each other and will specialize works in this
type of business. (Turban et al, 1999)
2.1.7.2 Business to Business Applications
“Online Business to Business exchanges can be characterized as groupings of
using the Internet to communicate and coordinate production, processing, purchasing
and marketing activities. They may be horizontal across industries or vertical through
out a particular supply chain.” (Hooker, Rha, Ernst, and Widdow, 2001)
Most online transactions take place through on line business-to-business
exchanges." The value of business-to-business commerce in the US in 1998 was
estimated to be $43 B while business to consumer was estimated to be $ 8 B (The
Economist)"
Researchers forecasts that global B2B E-Commerce will reach $10 T in 2005.
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Business-to-Business exchanges can take place among several segments in pistachio
business, such as:
�� Pistachio producers
�� Pistachio exporters
�� Fertilizer producers
�� Chemical producers
�� Seed producer
�� Equipment producer
Thompson et al. (2001) believe that successful Business-to-Business models
should be combination of following activities:
�� Collect sellers to increase efficiency of sale
�� Collect buyers in the third parties
�� Gaining revenue via advising and educating consumers
�� Collect and filter information and sell useful data
�� Customize product
The most important Business-to-Business applications are:
�� Electronic data interchange (EDI)
�� Intranet
�� Extranet
Electronic data interchange (EDI): Electronic data interchange is an electronic tool
to facilitate sending and receiving business data and documents such as orders, bills
and so on between companies.
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There are many advantages of using electronic data interchanges for pistachio
companies such as:
�� Enables each company, which is related to pistachio industry to interact
with other companies to know about their products and services.
�� By using EDI, companies are able to gain access to a lot of information
and also send information quickly.
�� Because of using computer-to-computer transfer errors decrease.
�� Partner companies can access to each other data bases to save standard
transactions
�� Several partner companies can send and receive information consistently.
�� Using EDI reduces many costs, such as paper costs.
�� After receiving the data, companies can use it immediately.
�� By using EDI, companies are able to apply Just in Time system for
production, shipping, warehousing and…
Intranet: Intranet is an internal network of companies, which decreases cost of paper
works and connects internal parts of company via computers.
An effective Intranet of a pistachio producer company can increase the efficiency of
company by connecting sales, production and inventory parts together and helps
management make correct decisions.
Extranet: One of the most important objectives of Extranet is to connect companies’
Intranets to their suppliers, consumers and business partners.
One of the suitable examples of Extranet in E-Agribusiness is PowerAg.
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Power Ag is one of the most famous agricultural networks in the world, which
includes more than 200 companies. The objective of the extranet in Power Ag is
foundation the networks of producers, distributors, retailers. These participants use
EDI to accelerate their transaction process and work closely to each other to maintain
inventory level as an appropriate level.
(Turban et al, 1999)
2.1.8 Electronic Payment
Goldfinger (2004) believes that there are two types of payments, which have
been used, in electronic commerce:
�� Value based payment: “there is actual transfer of value between the parties to
the transaction.”
�� Information based payment:” only data circulates on the Internet and actual
transactions take place offline.”(Goldfinger, 2004)
Limitations of information based system: There are many limitations in using
information-based system such as:
�� Verification process takes a lot of time
�� Increasing the risk of being stolen money
�� High processing cost specially for micro transactions
�� Buyer and seller must meet each other to pay cash or accept risk of losing
money by mail.
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�� There are many security risks through announcing credit numbers on the
Internet or phone.
�� Different types of payment cause some problems. For instance some buyers do
not use credit card and many sellers just accept credit cards.
Limitations of value based system: There are also some problems with value based
payment system:
�� Security is one of the most important problems in this issue and making a
secure payment is too expensive.
�� Using electronic payments for micro payment is costly.
�� Buyers and sellers must use the same method and standard of payment. For
instance if buyers use e-money, sellers must accept it.
2.1.9 E-Business Infrastructure
Radding (2000) define E-Business infrastructure as “all system components,
hard ware, soft ware, services that enable businesses to run their E-business
applications. In fact E-Business infrastructure includes every thing but the company’s
applications, content and data.” E-Business infrastructure is one of the main factors of
success and failure in E-Business companies.
There are many beliefs about a suitable E-Business infrastructure and most of
them have common points. Turban et al, (1999) believe an effective infrastructure for
E-Commerce should be:
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“First the infrastructure must be in place. Electronic commerce transaction
must be executable world wide with out any delays or mistakes. Some
transactions involve partners, requiring complex infrastructure. Second, the
electronic payment issues must be addressed with the exception of bartering
no, trade take place with out payment. Payments need to be secure,
convenient, fast and in expensive to process. Third, supports services for
specific activities must be in place and finally appropriate planning and
strategy that considers legal, technological and other requirements is
necessary.” (Turban et al, 1999)
Regarding above article which was related to E-Commerce, before going for EBusiness
infrastructure managers should answer some important questions such as:
�� Which type of E-Business do they use, business to business or business to
consumer or both of them?
�� How big their work is?
�� Is it their work informational or transactional?
Radding (2000) believes E-Business infrastructure must have four criteria:
�� “Scability: is the availability to handle more users doing more things.”
�� “Availability: is usually described in terms of the amount of down time a
company can tolerate.”
�� “Security: E-Business security today typically takes the form of secure
sockets layer encrypted transactions for commerce and pass word based
authentication and authorization. Looking a head, security will increasingly
entail digital certificates and incorporate public key infrastructure.”
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�� “Manageability: Manageability addresses system and network management
as well as application management and Web-site performance monitoring. A
host of tools are being introduced to address the various aspects of E-business
management and system-performance measurement. In addition, conventional
enterprise management solutions are being extended to include the Web and
E-Business.
In summary, an effective E-Business infrastructure should have these characteristics:
�� Match with whole strategy of company
�� Support all business processes of company
�� E-Business infrastructure should be Secure
�� E-Business infrastructure should be managed by expertise
�� Support data capacity of company
�� Capable to use new technologies, and functions
�� E-Business infrastructure should have standards such as networking standard,
web displaying standard and so on
Outsourcing of E-Business Infrastructure
Regarding the importance and complexity of E-Business infrastructure, some
companies use “E-Sourcing” which is “the delivery of standardized processes,
applications and infrastructure over a network as a service, with both business and IT
functionalities for companies to conduct E-Business.”(Ravendran, 2002)
There are many advantages of outsourcing E-Business infrastructure such as:
�� Reducing cost in comparison with having company’s own E-Business
infrastructure.
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�� Quick access to new capability
�� Progress in service
�� Reducing extra cost
�� Getting knowledge
�� Economies of scale
�� Making a suitable performance in facing uncertainty
�� Focusing on core competency of business
(Macsweeney, 2001)
But “E-Sourcing” is not the only solution and it depends on the company
itself, objectives, and long term plan. Regarding E-Agribusiness concepts and its
limitation, it is recommend for E-Agribusiness companies like pistachio companies
which want to do on line businesses, to out source their E-Business infrastructure and
use advantages of it.
2.2 International Marketing
The increasing usage of Internet has provided big opportunities for domestic
companies to be international, but going for international markets are not a simple
work and needs preparation for it.
Kotler, Armstrong, and Connigham (2002) have discussed some required steps:
�� Surveying international marketing environment
�� Choosing target markets
�� Choosing the way to enter the market
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“In online international marketing, you will conduct a situation analysis to
identify the current environment of each of your markets and your company’s ability
to enter each one. For example, do the people speak English? What form of online
advertising do they prefer? What is the Internet penetration of the region? Who is
buying online? Other areas you may research include competition, demand for your
product or service, product positioning and pricing, and foreign payment options. The
analysis will give you a clear picture of your current situation, and enable you to plan
and prepare for entry into the new market.”(Marketing find, 2002, p.4)
Surveying international marketing environment is the first step in going for in
global markets. The international markets are very complex, so companies must
consider many important issues such as:
�� International transaction system
�� Economic situation
�� Cultural environment
�� Political environment
2.2.1 International Transaction System
Each company wants to go abroad must know conditions of international
trades. There are many problems, which will be faced when companies want to sell to
other countries such as:
Tariff: a tax which governments place on importer products to support their
domestic producers.
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Quota: a limitation which governments place to accept foreign exported products to
their countries.
Embargo: a ban on the import of specific products. For example in September 1997
some European countries placed a ban on Iranian pistachio importers because they
believed to find Aflatoxin (a kind of poison) in Iranian pistachio. This ban reduced a
lot of Iranian pistachio export and made a lot of loss for Iranian. Today fortunately
this problem has been solved.
World Trade Organization: world trade organization is an international organization,
which control and pass rules and laws of transactions between countries. One of the
most important goals of WTO is to reduce tariffs and other international barriers and
countries like Iran, which is waiting to join this organization, will face many
opportunities and threat to transact with other countries before and after joining to
WTO.
2.2.2 Economic Situation
The other factor, which must be considered, is the economic situation of other
countries.
Kotler et al, (2002) believe, there are two main economic factors:
�� “ The country’s industrial structure”
�� “ Income distribution”
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“The country’s industrial structure”: form employment level, income level and
type of products and services, which people need. So above researchers talked about
four types of industrial structure.
“Subsistence Economies”: most people in these countries have low incomes and
need simple goods and services.
“Raw material Exporting Economies”: countries like the Saudi Arabia which most
income of them came from exporting raw materials like oil, some of theses countries
like Arab countries in the south of Persian Gulf are so rich and big markets for Iranian
agricultural products especially pistachio
“Industrializing Economics”: countries like Egypt and Philippines in which
manufacturing increase and use raw materials of the other countries.
“Industrial Economies”: which are the main importers in the world, most food and
cosmetics companies which use pistachio in their products are located in these
countries. Countries like Canada, USA, and Germany that have industrial economies
and have high distribution income are big markets for Iranian Pistachio.
Kotler et al, (2002)
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2.2.3 Political Environment
Political environments are one of the main issues in today international
business. Political relationship between Iran and countries like USA has had many
sanctions for Iranian and American traders.
2.2.4 Cultural Environment
One of the most important issues in on line marketing is to know the language,
which is used by people in target markets. So the company’s web site should be based
on most common language in the world. The other important factor is type of
payment, which is used by people in other countries. “For example, Germany, France
and the UK have varying payment method preferences. According to Forrester, the
French prefer checks, while UK consumers prefer credit cards.
Global research states that while credit cards are rare in Germany; many new
bank customers are given a debit card, which can be used to buy online. Generally,
however, Germans tend to want the option to pay by invoice.”(Marketing find, 2002,
p.7)
Therefore cultural environment is very important for international companies.
2.2.5 Market Research
Regarding economical, political and cultural environments and other
challenges which international companies face, it is vital for a company planning to
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go abroad to conduct market research. Internet is an effective tool for market research
to know consumers’ interests, language, entry into a specific country, cultural
differences and so on.
2.2.6 Set Specific Goals
After doing market research companies must set specific and measurable
objective such as sales volume and number of countries, which they want to penetrate.
Setting objectives will help companies to choose specific strategy to gain them.
2.3 E-Business Technologies, E-Agribusiness and International
Marketing
E-agribusiness as was mentioned earlier is an Electronic business, which
focuses on Agribusiness.
Kimle (2000) believes that E-agribusiness can make value added for agricultural
companies in two ways:
�� Cost reduction such as decreasing order, inventory, sale, marketing
and administrative cost.
�� Increasing revenue by making new markets for their products and
increasing their sales and market share.
These can also make benefits for consumers and the result will have an
effective impact on all growers, sellers, and suppliers in agricultural business.
31
“Electronic commerce affords buyers the opportunity to pay for products based on
their specific value to them and it allows sellers to be paid upon the inherent value of
product to their customers” (Kimle, 2000, p.2)
E-Business can also change the type of integration in agricultural business.
In the past agriculture companies made vertical integration which means integration
of suppliers, growers and sellers to gain more efficiency, but by using information
technology and effective systems like supply chain management companies can
change the type of integration from vertical which is costly to virtual integration.
Therefore E-agribusiness can create value in many ways but it depends on the
effective implementation of it.
There are many similarities between E-business and E-Agribusiness but
because of the nature of agricultural business there are some extra issues that must be
considered. Ernst and Hooker (2002) suggest that E-Agribusiness has following
attractions:
�� Increasing revenue for growers
�� Increasing number of choices for consumers
�� Increasing potential markets especially international markets
�� Increasing consumer relationships
But there are also some limitations, which are:
�� Many consumers want to see, smell, handle and taste food products before
buying.
�� Distribution cost is high
�� Internet connection is an important problem in rural area and small cities
where agricultural businesses are
32
�� Farmers are slow adapter of information technology because of some
reasons:
o Farmers’ age
o Farmers’ place
o Farmers’ knowledge about new types of technology
33
3. E-Business Technologies and International Marketing:
the Case of Iranian Pistachio Industry
Regarding the importance of pistachio industry in Iran, it is obvious before going for
E-Business in this industry we must know its situation completely.
3.1 Export
Pistachio is one of the major exporting products of Iran, and this about more
than 60% of exporting of pistachio in the world. Major importing countries are: the
UAE, Germany, Hong Kong, India, Italy, and Taiwan.
The following figure shows Iran exports of pistachio from 1993 to 2003:
0
20
40
60
80
100
120
140
160
180
200
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Year
Iran Exports of Pistachio
Thousand Tons
Figure 2 Iran Exports of Pistachio (Adopted from
http://www.faostat.fao.org)
In traditional way most growers have to sell their products with a low price directly
to huge exporter companies because:
34
�� There is no connection for them in importer countries.
�� Competition with huge exporter companies is very difficult
There are also many problems for exporter companies such as:
�� Selling, administrative and marketing costs are too high
�� Going for International markets is risky
�� It is difficult to find new markets
So finding a better way to export pistachio products will be so helpful for all both
producers and exporters.
3.2 Iranian Pistachio Producers
3.2.1 Description
There are a large number of producers in Iran. However, few of them export
their products directly to the importers of other countries. Most of them have to sell
their products to a few large exporters at a relatively low price. “Kerman province is
the main center of pistachio production in Iran and its share is 83% and 80% in total
output and total harvested area respectively.” (Karimkoshteh, Varden 2003)
.
35
3.2.2 Main Challenge
Because of increasing cost of production and decreasing selling price in Iran,
pistachio producers have to find better markets for their products. Therefore the main
question is “How can pistachio companies use E-Business technologies to gain access
to international markets?”
3.2.3 Solution
One of the most effective ways to find new markets and access to importers
directly is Electronic Business. By leveraging E-Business not only pistachio
producers will have no need to sell product with a low price to huge exporters, but
also they will be able to reduce marketing and other administrative costs for exporting
products.
36
3.3 International markets and E-Business in Pistachio Industry
3.3.1Global Situation
United Nation’s Food and Agriculture Organization (FAO) announced the
main pistachio producers in the world in 2004 as Iran (305000 metric tons), USA
(90000 tons), Turkey (85000 tons), Syria (50000 tons) and China (28000 tons).
The following figure shows pistachio production in the world from 1994 to 2004.
0
100
200
300
400
500
600
700
800
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Year
Global Pistachio Production
Thousand Tons
Figure 3World Pistachio Production, Adopted from
(http://www.faostat.fao.org)
Because of using new methods for cultivating and controlling diseases, the
pistachio production has increased in the main producers in the world and it is
anticipated to increase in the following years.
The following figure shows pistachio production in main pistachio producer
countries:
37
0
50
100
150
200
250
300
350
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Islamic Rep of
Iran
United States
of America
Turkey
china
Syrian Arab
Republic
Year
Pistachio Production in Main Pistachio Producers
Thousand T ons
Figure 4 Pistachio Production in Main Pistachio Producer Countries
(Adopted from http://www.faostat.fao.org)
38
0
50
100
150
200
250
300
350
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Year
The World Imports of Pistachio
Thousand Tons
Figure5 World Imports of Pistachio (Adopted from
http://www.faostat.fao.org)
Figure 6 Leading Importers of Pistachio (Adopted from
http://www.fas.usda.gov)
39
3.3.2 Political Environment and Effects on Pistachio Industry
“The pistachio case touches more than one nerve in the economic and political
spheres, especially when the explosive relationship between the US and Iran is taken
into consideration.
Since the late 70's, the US and Iran have not been on friendly terms. During
the Carter Administration, the US broke diplomatic ties with Iran entirely. Carter later
instituted an economic boycott on all products from Iran. The tense history continues
as in 1984 Iran was added to a list of states that were involved in terrorism around the
world. This prohibited the sale of weapons or financial loans to Iran from the US and
other international organizations, basically ending all assistance to the nation (Office
of Press Secretary, 1996). The US was not finished with Iran; in 1987, the
government extended sanctions against Iran that continued to prohibit the importation
of goods and services from Iran. President Clinton, in 1996, continued the tradition by
prohibiting all financial and commercial transactions with Iran (OPS,
1996). “(Styczynski, 1999, p.3)
So, before going for international market, Iranian companies must consider
political situation such as
�� Relationship of target markets with Iran
�� Political and economic sanctions against Iran
These surveys will be so helpful to choose target market and decreasing the risk of
failing in the international business.
40
3.3.3 PEB
PEB, which stands for pistachio E-Business is part of rapidly growing
domestic and international B2B and B2C network with a dynamic database. This
project is the result of many researches in E-Business, international marketing and
pistachio industry done by Ali Asadi and technical help of Vahid Alinaghizadeh. In
this database all participants in pistachio business can insert their data and can
communicate with the others and also customers can access to useful data and can
choose the specific seller to buy from.
This database consists of following parts:
�� Pistachio: all general information about pistachio
�� Nutrition products: the list of food products in which pistachio is the main
material
�� Related products: other pistachio products such as cosmetic and health
goods.
�� Producers: includes name of producers and useful information about their
companies and products.
�� Exporters: includes name of exporter companies and useful information
about them.
�� News: pistachio news and other related events.
In this online system, SQL server database has been used to save structure and other
related information of webpages and information can be entered to database through
special software. Finally according to users' requests the webpages will be made by
ASP (active server pages).
41
Figure 7 PEB Main Menu Webpage
Technical information of this system:
�� Database: SQL server
�� Technology which is used to make pages: ASP
�� Programming language to load software: Delphi
�� Technology to load software and interface for entering information:
client/server
�� Web server: (Internet information service) IIS 5
The goal of PEB is providing a common forum for all participants in pistachio
business in order to further the advancement of this industry.
42
3.4 Recommendations
These are many recommendations for using the E-Business technology to help
Iranian companies to export pistachios. Regarding the text following steps
recommended:
�� Understanding all aspects of E-Business
�� Understanding company and its objective such as needs, opportunities,
strength and weaknesses to do E-Business
�� Provide resources to do E-Business
�� Understanding international market of pistachio including political, economic
and marketing process analysis.
�� Formulating an effective E-Business strategy to gain access to international
markets
�� Implementing and control
43
4. CONCLUSION
For being successful in complex environment, one must use new and effective
tools to gain competitive advantages. One of the most important tools for international
market access is E-Business technology. Implementing E-Business is not simple and
it requires companies to consider understand its all aspects.
There are many factors that show how successful a company is, such as:
increasing market power, increasing revenue, increasing level of interaction with
customers and decreasing cost. Applying E-Business is one the ways that companies
choose to be a successful company. Today many pistachio producers and exporters
and organizations started to go for E-Business, but evolution of electronic pistachio
business depends on several factors:
�� Adoption rate of Internet by participants in pistachio business
�� Advantages of E-Business
�� Increasing knowledge about E-Business
But the question is: Is it just enough to adopt E-Business?
It is obvious that adopting E-Business is not enough and companies must
implement it effectively.
“Gaining competitive advantage requires building on the proven principles of the
effective strategy.”(D.Phan, 2002, p.583)
D.Phan (2002) indicates that companies must have an effective supply chain
relationship with all participants in their business such as suppliers, distributors and
customers and this relationship must be trustable.
44
In summary, following factors are the main successful factors in pistachio E-Business:
�� Information technology must accompany, company’s strategy
�� E-business must get top managements’ support in the company
�� Company must consider all situations and conditions to enter to market
�� Information technology infrastructure must support E-Business effectively
�� All costs must be controlled
�� Customer relationship management is so important
�� High quality products and services should be offered to customers.
�� Company must track competitors
�� Learning E-Business by managers, employees and all participants in this part
is vital
�� Providing a high quality website to attract and keep customers
�� Providing an effective interaction with all participants in business
So information technology must help traditional ways of competing not
eliminate them and companies will be successful in E-Business, which understand the
concept of E-business now how to implement it. By better understanding of pistachio
business, international marketing and all elements and applications of E-Business,
companies can gain advantages of leveraging E-Business, according to their
objectives, environmental situation, budget and other capabilities.
45
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