Teza de Licenta - Marina Bernaz

ACADEMIA DE STUDII ECONOMICE DIN MOLDOVA

FACULTATEA “ECONOMIE MONDIALĂ ŞI RELAŢII ECONOMICE

INTERNAŢIONALE”

CATEDRA “RELAŢII ECONOMICE INTERNAŢIONALE”

BERNAZ Marina

PERSPECTIVELE DEZVOLTĂRII AFACERILOR ELECTRONICE ÎN REPUBLICA

MOLDOVA.

TEZA DE LICENŢA

Specialitatea Relaţii Economice Internaţionale

Admis la susţinere Susţinută de:

Şef catedra: studenta gr. EMREI 287

conf. univ. Boris CHISTRUGA BERNAZ Marina

(semnatura) (semnatura)

Conducator stiintific:

dr.in. ec. Eduard

FRUMUSACHI

(semnatura)

Chişinau – 2012

PAGE \* MERGEFORMAT 77

ACADEMY OF ECONOMIC STUDIES OF MOLDOVA

FACULTY “WORLD ECONOMY AND INTERNATIONAL ECONOMIC

RELATIONS”

CHAIR OF “INTERNATIONAL ECONOMIC RELATIONS”

BERNAZ Marina

PROSPECTS FOR DEVELOPMENT OF ELECTRONIC BUSINESS IN REPUBLIC

OF MOLDOVA.

THESIS OF LICENCE

Specialty International Economic Relations

Admitted to support Elaborated by:

Chief of department: student gr. EMREI-287

conf. univ. Boris CHISTRUGA BERNAZ Marina

(signature) (signature)

Scientificant advisor:

Dr.inc.ec. Eduard

FRUMUSACHI

(signature)

Chisinau - 2012


CONTENTS

Introduction

Chapter I CONCEPTS AND FEATURES OF CONTEMPORARY ELECTRONIC

BUSINESS MANAGEMENT

1.1 Premises for e-business appearance, genesis of development

1.2 E-business - the concept, models, advantages and disadvantages

1.3 Specifics of managing e-business at the global market

1.4 Legal aspects of e-business

Chapter II E-BUSINESS MANAGEMENT AND INTERNATIONAL OVERVIEW ON

COMMERCIAL PROCESS

2.1 Analysis of the activity of the BC «Eurocredit Bank » in Moldova

2.2 Innovation Networks of the European Union and their influence on import/export of the

Republic of Moldova

2.3 Tools for e-business security in the Republic of Moldova.

Chapter III PROSPECTS FOR THE DEVELOPMENT OF ELECTRONIC BUSINESS

IN THE REPUBLIC OF MOLDOVA

3.1. Management on the basis of innovations

3.2 Problems of e-business and e-commerce on global and local markets

3.3 Solutions for the successful e-business management on global and local markets

Conclusion

Bibliography

Annexes


INTRODUCTION

Actuality of theme. Till recently, e-business had been narrowly viewed by most

organizations as establishing a website to offer more information about the company and its

products. The maximum efforts made by organizations were to develop the website into just

another marketing and sales channel. However, e-business has a much broader scope. It involves

digitization of an organization's internal business processes as well as its external interfaces with

customers, suppliers and partners. E-Business is about transforming an organization for the

information age where value is created by effectively managing intangible assets rather than just

physical assets. It offers significant potential to transform companies by creating new value

chains and business processes or redesigning existing ones.

The top management at most corporate is now recognizing that e-business is one of the

biggest transitions for businesses. They are worried that if they do not handle this transition in

the right manner, it could mean losing significant business in the short term or even going out of

business in the longer term. To manage this e-business transition successfully, requires

developing effective e-business strategies by the top management including the three 'Os' (CEOs,

CIOs and CFOs) of all organizations.

Innovations in information and communications technologies have created a digital

revolution that is changing the way the world works, learns, communicates and transacts

business. This revolution is helping to foster economic growth and social development across the

globe. Businesses are using the tools of electronic commerce to increase Internet productivity,

access global markets, reduce the time required to develop new products, and forge closer

relationships with their customers.

The Internet is a new and cost-effective way of diffusing product information, providing

information about new products, evaluating the competition, finding new distributors and

suppliers and reaching global customers. Electronic business, an Internet application, is a way of

conducting business. From nearly every perspective, observers see that e-commerce has the

capacity to radically alter some economic activities and the social environment surrounding

them.

The objectives of this research are as follows:

- To learn about e-business and how its business operation works.

- To analyze and increase the awareness regarding security involved in e-business.

- To analyze the understanding relating the trust involved in e-business.

- The increase the confidentiality of problems and solutions relating to e-business.


- To provide solutions in order to overcome e-business trust and security problems and also

its prospects.

My work is about problems and solutions of electronic business on national and

international market. Before I even begin looking through the aspects of economic trade, there’s

one important aspect of e-business that should not be overlooked.

So in my first chapter “Concepts and features of contemporary electronic business

management” I wrote about the e-business in general. The paragraphs that follow in this chapter

examine more closely some of the principles and policies that will best promote global electronic

business and allow us to reap the full social benefits of the Internet. Electronic business is a new

medium that is changing relationships in the business world, linking businesses and consumers,

and building new business communities by enabling trade to conduct more of their commerce

electronically.

In the second chapter “E-business management and international overview on

commercial process” I wrote about the Innovation Networks of the European Union and their

influence on import/export of the Republic of Moldova. The first section explores the activity of

EuroCredit Bank from Moldova. It is also important to note that this section makes no attempt to

cover exhaustively all aspects of government intervention and regulation that might impose on

electronic commerce. Also I mentioned about the security for e-business in Republic of

Moldova.

The last chapter “Prospects for the development of electronic business in the

Republic of Moldova” is about problems and solutions regarding e-business on local and

international market. This section develops and tests a model examining the relationship between

firm globalization, e-commerce adoption and firm performance. Globalization has differential

effects on B2B and B2C e-commerce, however, such that highly global firms are more likely to

do B2B but less likely to do B2C.

So I can say that in my study paper I tried to base on real facts and with new information

that are available to all us. My last opinion is that e-commerce and e-business continue to play a

key role as drivers of global economic growth and prosperity. E-commerce technology and

techniques are being used by industry and governments as a successful strategy to lower costs

while increasing their market reach by participating in sophisticated and international supply

chains, integrating and streamlining their business operations and providing better, faster and

cheaper customer response services. Rarely is E-commerce an end in itself. For most businesses

and governments, E-commerce is a tool used to modernize and enhance conventional business

approaches or a method to advance business goals. In other case, a sophisticated


telecommunications infrastructure and access to computing, telecom and software products and

services are fundamental rudiments for participating in E-commerce.

Recently, e-business has been associated with some fairly humiliating phrases..."dot

gone" and "dot bomb" being just two of them. At times, e-business has become almost worthy of

a snicker when the term comes up in conversation, and lately it's hard to open a newspaper

without reading about "pink slip parties," which former dot com employees attend to network,

write resumes (which they didn't need during the venture capital boom), learn that flip-flops and

cut-off jeans are not appropriate work attire in the real world and finally, come to accept that the

fairy-tale employment they have experienced in recent years has disappeared as spectacularly as

Cinderella's royal ball accessories at midnight.


Chapter I: CONCEPTS AND FEATURES OF CONTEMPORARY

ELECTRONIC BUSINESS MANAGEMENT

1.1 Premises for e-business appearance, genesis of development

Recent advances in three areas — computer technology, telecommunications technology,

and software and information technology — are changing lives in ways scarcely imagined less

than two decades ago. New means of exchanging information and transacting business are

transforming many aspects of social and economic organization. These modern technologies are

being combined, especially through the Internet, to link millions of people in every corner of the

world. Communications are increasingly unburdened from the constraints of geography and

time. Information spreads more widely and more rapidly than ever before. Deals are struck,

transactions completed, and decisions taken in a time-frame that would have seemed simply

inconceivable a few years ago.

Commercial firms to advertise and market both goods and services all over the world are

increasingly using electronic means aggressively. Virtually all products can be sold on the basis

of the information available on the Internet. Information on prices, quality, and delivery and

payment conditions enables manufacturing companies, retailers or consumers in far-off countries

to order their requirements from the most competitive suppliers. Physical goods are then

delivered by other means of transport.

It is becoming increasingly possible to deliver certain types of products electronically; in

fact any product that can be reduced to a digital format can be delivered in this way. The

potential product range is vast: financial and insurance services, audio-visual products, news and

information services, travel services, telecommunication services etc.

Electronic business is not a new phenomenon. For many years companies have

exchanged business data over a variety of communication networks. But there is now accelerated

expansion and radical changes, driven by the exponential growth of the Internet. Until recently

no more than a business-to-business activity on closed proprietary networks, electronic

commerce is now rapidly expanding into a complex web of commercial activities transacted on a

global scale between an ever increasing number of participants, corporate and individual, known

and unknown, on global open networks such as the Internet.

E-business (electronic business), derived from such terms as "e-mail" and "e-commerce,"

is the conduct of business on the Internet, not only buying and selling but also servicing

customers and collaborating with business partners.

One of the first to use the term was IBM, when, in October, 1997, it launched a thematic

campaign built around the term. Today, major corporations are rethinking their businesses in PAGE \* MERGEFORMAT 77

terms of the Internet and its new culture and capabilities. Companies are using the Web to buy

parts and supplies from other companies, to collaborate on sales promotions, and to do joint

research. Exploiting the convenience, availability, and world-wide reach of the Internet, many

companies, such as Amazon.com, the book sellers, has already discovered how to use the

Internet successfully.

Increasingly, much direct selling (or e-tailing) is taking place on the Internet of computer-

related equipment and software. One of the first to report sales in the millions of dollars directly

from the Web was Dell Computer. Travel bookings directly or indirectly as a result of Web

research are becoming significant. Custom-orderable golf clubs and similar specialties are

considered good prospects for the immediate future.

IBM considers the development of intranets and extranets to be part of e-business. E-

business can be said to include e-service, the provision of services and tasks over the Internet by

application service providers (ASP).

Evolution of e-business:

• Electronic data interchange (EDI) - electronically transfer routine documents (application

enlarged pool of participating companies to include manufacturers, retailers, services)

• 1970s: innovations like electronic funds transfer (EFT) - funds routed electronically from

one organization to another (limited to large corporations)

• 1990s: the Internet commercialized and users flocked to participate in the form of dot-

coms, or Internet start-ups

• 1997: Introduction of a brand new phrase – e-business

• 1999: The emphasis of e-business shifted from B2C to B2B

• 2001: The emphasis shifted from B2B to B2E, c-commerce, e-government, e-learning,

and m-commerce

• 2004: Total online shopping and transactions in the United States between $3 to $7

trillion

• E-business will undoubtedly continue to shift and change

The Future:

• Number of Internet users worldwide should reach 750 million

• 50 percent of Internet users will shop

• E-business growth will come more from: B2C, B2B, e-government, e-learning, B2E, e-

commerce


It is widely acknowledged today that new technologies, in particular access to the

Internet, tend to modify communication between the different players in the professional world,

notably:

relationships between the enterprise and its clients,

the internal functioning of the enterprise, including enterprise-employee

relationships,

the relationship of the enterprise with its different partners and suppliers.

The term "e-Business" therefore refers to the integration, within the company, of tools

based on information and communication technologies (generally referred to as business

software) to improve their functioning in order to create value for the enterprise, its clients, and

its partners.

E-Business no longer only applies to virtual companies (called click and mortar) all of

whose activities are based on the Net, but also to traditional companies (called brick and

mortar).

The term e-Commerce (also called Electronic commerce), which is frequently mixed up

with the term e-Business, as a matter of fact, only covers one aspect of e-Business, i.e. the use of

an electronic support for the commercial relationship between a company and individuals.

Is e-commerce the same as e-business? While some use e-commerce and e-business

interchangeably, they are distinct concepts. In e-commerce, information and communications

technology (ICT) is used in inter-business or inter-organizational transactions (transactions

between and among firms/organizations) and in business-to-consumer transactions (transactions

between firms/organizations and individuals).

In e-business, on the other hand, ICT is used to enhance one’s business. It includes any

process that a business organization (either a for-profit, governmental or non-profit entity)

conducts over a computer-mediated network. A more comprehensive definition of e-business is:

“The transformation of an organization’s processes to deliver additional customer value through

the application of technologies, philosophies and computing paradigm of the new economy.”

Three primary processes are enhanced in e-business:

1. Production processes, which include procurement, ordering and replenishment of stocks;

processing of payments; electronic links with suppliers; and production control processes, among

others;

2. Customer-focused processes, which include promotional and marketing efforts, selling over

the Internet, processing of customers’ purchase orders and payments, and customer support,

among others; and


3. Internal management processes, which include employee services, training, internal

information-sharing, video-conferencing, and recruiting. Electronic applications enhance

information flow between production and sales forces to improve sales force productivity.

Workgroup communications and electronic publishing of internal business information are

likewise made more efficient.

Business of all sizes in all sectors are using the Internet in many different ways - to work

with partners and suppliers, for procurement, for internal activities such as knowledge sharing

and new product development, and much more.

In practice, e-business is more than just e-commerce. While e-business refers to more

strategic focus with an emphasis on the functions that occurs using electronic capabilities, e-

commerce is a subset of an overall e-business strategy. E-commerce seeks to add revenue

streams using the World Wide Web or the Internet to build and enhance relationships with

clients and partners and to improve efficiency using the Empty Vessel strategy. Often, e-

commerce involves the application of knowledge management systems.

E-business involves business processes spanning the entire value chain: electronic

purchasing and supply chain management, processing orders electronically, handling customer

service, and cooperating with business partners. Special technical standards for e-business

facilitate the exchange of data between companies. E-business software solutions allow the

integration of intra and inter firm business processes.

E-business can be conducted using the Web, the Internet, intranets, extranets, or some

combination of these. Basically, electronic commerce (EC) is the process of buying, transferring,

or exchanging products, services, and/or information via computer networks, including the

internet. EC can also be benefited from many perspective including business process, service,

learning, collaborative, community. EC is often confused with e-business.

So, the Internet has been a door to myriad new business opportunities. Business owners

of e-businesses and their customers find advantages in Internet transactions as opposed to brick-

and-mortar operations.

1.2 E-business - the concept, models, advantages and disadvantages

The merge of the information technology and the web standards have formed the

electronic business "E-business". Succession in e-business will need organizations to revise their

strategies and goals to meet market rules of demand and supply. Conversion of ordinary business

into e-business has forced organizations to be redesigned and reshaped. E-business is a

combination of economic, technology and market forces that reinvented strategies of traditional


http://en.wikipedia.org/wiki/Extranet

http://en.wikipedia.org/wiki/Intranet

http://en.wikipedia.org/wiki/World_Wide_Web

http://en.wikipedia.org/wiki/Supply_chain_management

http://en.wikipedia.org/wiki/Value_chain

http://en.wikipedia.org/wiki/Knowledge_management

http://en.wikipedia.org/wiki/Empty_Vessel

http://en.wikipedia.org/wiki/Internet

http://en.wikipedia.org/wiki/World_Wide_Web

http://en.wikipedia.org/wiki/E-commerce



business. The business process is counted to use the power of computers and communication

networks which are known as Internet. This can allow organizations to stay competitive and

more efficient. Also, new business models have been introduced and implemented in a variety of

ways.

The e-business concept describes the rationale of the business, its goals and vision, and

products or offerings from which it will earn revenue. A successful concept is based on a market

analysis that identifies customers likely to purchase the product and how much they are willing

to pay for it.

The e-Business concept should be based, in part, on goals such as "become a major car

seller, bank, or other commercial enterprise", and "to become a competitor to some of the well-

known firms in each of these industries." Objectives are more specific and measurable, such as

"capture 10% of the market", or "have $100 million in revenues in five years." Whether these

goals and objectives are realistic or not, and whether the company is prepared to achieve these

goals is addressed in the business plan process for startup firms and in the implementation plan

for an existing firm that is considering a significant change. In looking at the business model it is

sufficient to know what the goals and objectives are, and whether they are being pursued.

Embedded in the e-Business concept are strategies that describe how the business concept

will be implemented. These are known as corporate strategies because they establish how the

business is intended to function. These strategies can be modified to improve the performance of

the business. Environmental strategies, discussed in a following section, describe how the

company will address external environmental factors, over which it has no control.

The selection and refinement of the business concept should be integrally tied into

knowledge of the market it serves. In performing market research care must be taken to

account for the global reach of the Internet for both customers and competitors. It is also

important to remember that markets shift, and can shift rapidly under certain conditions. But

most important is to truly understand what the market is, who comprises it, and what do they

want.


Figure 1.2.1: The e-Business Concept

Source: elaborated by James E. Burke, Ph.D.

Implementing an e-Business project necessarily involves the deployment of an enterprise

network through which enterprise-specific services are accessible in client-server mode,

generally via a web interface which can be queried by using a simple navigator.

Nonetheless, the implementation of computer tools is not sufficient. It is therefore

believed that an enterprise only actually implements an e-Business project as soon as it

implements a new organization based on new technologies.

The concept of e-Business is nonetheless very flexible and covers all possible uses of

information and communication technologies (ICT) for any and all of the following activities:

- Making the relationships between the enterprise and its clients and different partners

(suppliers, authorities, etc.) more efficient

- Developing new business opportunities

- Facilitating the internal flow of information

- Controlling the different processes of the enterprise (production, warehousing, purchasing,

and sales, human resources, etc.)

The goal is therefore to create privileged communication channels between the enterprise

and its environment and link them with its internal processes to better control internal and

external costs.


The goal of any e-Business project is to create value. Value can be created in different

manners:

As a result of an increase in margins, i.e. a reduction in production costs or an increase

in profits. E-Business makes it possible to achieve this in a number of different ways:

o Positioning on new markets

o Increasing the quality of products or services

o Prospecting new clients

o Increasing customer loyalty

o Increasing the efficiency of internal functioning

As a result of increased staff motivation. The transition from a traditional activity to an

e-Business activity ideally makes it possible to motivate associates to the extent that:

o The overall strategy is more visible for the employees and favors a common

culture

o The mode of functioning implies that the players assume responsibilities

o Teamwork favors improvement of competences

As a result of customer satisfaction. As a matter of fact, e-Business favors:

o a drop in prices in connection with an increase in productivity

o improved listening to clients

o products and services that are suitable for the clients' needs

o a mode of functioning that is transparent for the user

As a result of privileged relationships with the partners. The creation of

communication channels with the suppliers permits:

o Increased familiarity with each other

o Increased responsiveness

o Improved anticipation capacities

o Sharing of resources that is beneficial for both parties

An e-Business project can therefore only work as soon as it adds value to the company,

but also to its staff, its clients, and partners

A company can be viewed as an entity providing products or services to clients with the

support of products or services of partners in a constantly changing environment. The

functioning of an enterprise can be roughly modeled in accordance with a set of interacting

functions, which are commonly classified in three categories:


Performance functions, which represent the core of its activity (core business), i.e. the

production of goods or services. They pertain to activities of production, stock management,

and purchasing (purchasing function);

The management functions, which cover all strategic functions of management of the

company; they cover general management of the company, the human resources (HR)

management functions as well as the financial and accounting management functions;

The support functions, which support the performance functions to ensure proper

functioning of the enterprise. Support functions cover all activities related with sales (in certain

cases, they are part of the core business) as well as all activities that are transversal to the

organization, such as management of technological infrastructures (IT, Information Technology

function).

Figure 1.2.2: E-business circuit

Source: ITAA and Ernst & Young LLP

Enterprises are generally characterized by the type of commercial relationships they

maintain. Dedicated terms therefore exist to quality this type of relationship:


B To B (Business To Business, sometimes written B2B) means a commercial relationship

business to business based on the use of a numerical support for the exchange of

information.

B To C (Business To Consumer, sometimes written B2C) means a relationship between a

company and the public at large (individuals). This is called electronic commerce, whose

definition is not limited to sales, but rather covers all possible exchanges between a

company and its clients, from the request for an estimate to after-sales service;

B To A (Business To Administration, sometimes written B2A) means a relationship

between a company and the public sector (tax administration, etc.) based on numerical

exchange mechanisms (teleprocedures, electronic forms, etc.).

As an extension of these concepts, the term B To E (Business To Employees, sometimes

written B2E) has also emerged to refer to the relationship between a company and its employees,

in particular through the provision of forms directed at them for managing their career, vacation,

or their relationship with the company committee.

Whether on or off line, customers in today’s marketplace want quality products and

information in a quick and easy manner. I’ve typed it before and I’ll type it again, the internet’s

main benefit is that of speed and convenience. Therefore e-business, which uses the internet as

the core for business dealings, can help make a company more customer-friendly in addition to

many other things, such as creating a more efficient exchange of information and/or products and

services.

Here are some of the more important advantages of moving to e-business.

Removes Location and Availability Restrictions - users need not be in the same physical

location as an e-business and the exchange of information and transactions may take place at any

given time, twenty-four hours a day, seven days a week and from any location in the world with

Internet access. A physical location is restricted by size and limited to only those customers that

can get there, while an online store has a global marketplace with customers and information

seekers already waiting in line.

Reduces Time and Money Spent - in e-business, there is often a reduction in costs

required to complete traditional business procedures. Many of those same traditional business

approaches can be eliminated and replaced with electronic means, which are often easier to carry

out as well as easier on the pocketbook. For example, compare the cost of sending out 100 direct

mailings (paper, postage, staff and all), to sending out a bulk e-mail. Also think about the cost of

paying rent at a physical location opposed to the cost of maintaining an online site.


Heightens Customer Service - with e-business customers receive highly customizable

service, and communication is often more effective. There is far more flexibility, availability and

faster response times with online support. For example, think about the speed of e-mail inquiries

and live chat as opposed to getting on the phone, especially when that business is closed for the

day. There is also a faster delivery cycle with online sales, helping strengthen the

customer/business relationship. The internet is a powerful channel for reaching new markets and

communicating information to customers and partners. Having a better understanding of your

customers will help to improve customer satisfaction.

Gives a Competitive Advantage - the internet opens up a brand new marketplace to

businesses moving online. Competition via the internet is growing as the internet itself grows

and waiting too long to move online may cause you to lose your place in line entirely. Easy

access to real time information is a primary benefit of the internet, enabling a company to give

more efficient and valid information and helping to gain the competitive advantage over those

that are not online.

You can reach New Markets World Wide - The internet offers exciting ways of reaching

new markets that could only be dreamed of in the past. There are methods of promoting your

products online that allow you to precisely target the customers you are after whether they are in

your town or on the other side of the world.

You can reach Local Customers and Prospects more effectively - Until recently,

companies offering a product or service to local customers could not see the benefits of having

an online presence. But as more and more people become comfortable with using the internet

instead of traditional advertising sources like classified ads or yellow pages, having an

aggressive web presence makes better business sense even for local companies. This may also

offer a springboard to developing new markets further afield.

You can cut Advertising and Marketing Costs - Online advertising is not only more

efficient, but it is often less expensive than traditional advertising. After sales training expenses

can also be reduced by utilizing online seminars, training videos and tutorials.

Although there are risks associating with e-business, as with most business decisions,

there is also the risk associated with the inability to adapt to the changing times. Change is

inevitable in today’s marketplace and should be embraced with open arms and open sites!

The rapid growth of the internet commerce in recent years presents established small

businesses with a serious dilemma. On the one hand, they can stick with the business model that

has worked for them for the last number of years. On the other hand, they can make the shift to

serious e-business.


Choosing to stand pat is usually much easier in the short term. But in the longer term this

almost certainly means they will be left behind by technology, and lose many of their most

important clients to more aggressive competitors.

But shifting to e-business may involve committing substantial resources to developing a

new game plan. That usually means refining product lines to make them easier to sell online,

upgrading computer systems and websites, and training personnel at all levels to be more web

savvy. It also means developing or hiring staff to handle the administration of new marketing,

sales, and delivery systems, and working with outside consultants and service providers to

handle the technical aspects of the new program that cannot be handled by your own people.

However the benefits are achieved not by technology (which is an enabler) but by

addressing strategy, technology, organization, people and business processes as integrated whole

and making changes in all these dimensions. The Internet is just like other information

technologies - change management, good implementation practices and clear business objectives

are required in order to reap the full benefits.

Disadvantages of E-Business can be:

Sectoral Limitations: The main disadvantage of e-business is the lack of growth in some

sectors on account of product or sector limitations. The food sector has not benefited in terms of

growth of sales and consequent revenue generation because of a number of practical reasons like

food products being perishable items. Consumers do not look for food products on the Internet

since they prefer going to the supermarket to buy the necessary items as and when the need

arises.

Costly E-Business Solutions for Optimization: Substantial resources are required for

redefining product lines in order to sell online. Upgrading computer systems, training personnel,

and updating websites requires substantial resources. Moreover, Electronic Data Management

(EDM) and Enterprise Resource Planning (ERP) necessary for ensuring optimal internal business

processes may be looked upon, by some firms, as one of the disadvantages of e-business.

It's evident that the advantages clearly outweigh the disadvantages of e-business. Every

business has to eventually change its modus operandi and adopt e-business practices in order to

ensure survival and success.

The potential obstacles identification in e-business implementation represents the support

for risk evaluation. The table 1.2.1 represents a synthesis of the investigations on e-business

obstacles made by Informational Technology of American Association (ITAA) in alliance with

Ernst & Young LLP, and participation of informational technologies responsible from 105

American enterprises.


Name

Impact (%)

Details and sharesHigh Medium Small

Credibility 44 42 13 - integrity and confidentially data (60%);

- authentication (56%);

- security data (56%).

Technology 39 50 12 - transaction protection and data (57%);

- the e-commerce integration with existent system (54%);

-communication technology (39%).

Labor force 26 52 - - availability of competent personnel (57%);

- personnel migration (54%);

- possibility of day trade (39%).

Policy in domain

42 38 - - sells tax on Internet (55%);

- authentication standards (51%);

- restrictions for vault use (45%).

Taxes 39 33 - - tax level of commercial operations on Internet (67%);

- confused legislation (45%).

Costs 48 36 - - adaptation on existent systems (56%);

- modification of business process (55%);

- the exchange of enterprise culture (42%).

Users reserves

42 38 - - delay of transfer of personnel data on Internet (66%);

- insecurity of banks’ transfer (40%);

- preference to trade direct on telephone or e-mail (40%).

Source: ITAA and Ernst & Young LLP

Table 1.2.1: Obstacles in e-business development

For companies, the e-Economy has brought new opportunities, both within the IT

industry and in other sectors; its impact varies substantially from sector to sector. E-economy

means that businesses can reach many more potential customers ('B2C'), work more effectively

with other businesses ('B2B') and with governments ('B2G'). And they can use the new

technology to change the way they work, modernizing their production processes and internal

organization, so that their operations can become more effective and efficient. Networked and

virtual organizations, private and public, allow small entities to work together in a flexible way.

For SMEs, the paradox is that "local" is becoming more not less important. Offering

opportunities to source a wide range of products from fragmented sources, e-Marketplaces act as


a potential catalyst for the internal market; they establish communities of buyers and sellers and

mechanisms that allow enterprises to participate cost effectively in global markets.

For consumers, the e-Economy brings many benefits. It means that products and services

are available to people even in remote areas. And it means that consumers can compare what is

offered by many different companies in many different places, to get the best deal.

For employees, the e-Economy brings the prospect of more fulfilling knowledge-based

jobs, and improvements in the way their working lives are organized – through different

opportunities offered by e-work.

1.3 Specifics of managing e-business at the global market

The pervasiveness of Internet technology, readily available solutions, and the repeatedly

demonstrated benefits of electronic technology have made e-business the obvious path. This

trend continues with new technologies, such as Internet-enabled cell phones and PDAs, and the

trend of e-business saturation will most likely continue for some time.

E-Business is the term used to describe the information systems and applications that

support and drive business processes, most often using web technologies.

E-Business allows companies to link their internal and external processes more efficiently

and effectively, and work more closely with suppliers and partners to better satisfy the needs and

expectations of their customers, leading to improvements in overall business performance

Pricing is an important part of the e-business concept and should be established on the

basis of market research. Price is often set with an eye on the competition and can have a direct

effect on market share. In traditional commerce in the U.S., the seller sets the price. Online

pricing, on the other hand, may include negotiation or auction pricing, where the interaction of

sellers and buyers can affect the price. Knowledge of competing prices is also readily available

online, and will keep downward pressure on prices.

When is it OK to increase prices? It depends on the business. If a company has high fixed

to variable costs, prices should be changed cautiously. If customers are "locked-in", and the

product or service is less sensitive to price, then prices may be changed, to a degree, with less

risk. But all changes should be checked beforehand with market research and financial analysis.

A potential problem for some products is that the market may change faster than the

seller can change the product or service. One way to survive in this environment is to sell at the

minimum price that allows a profit, avoid price changes and continuously upgrade the product.

This approach is often used in computer hardware and software sales. At the same time the seller


should invest in finding how to shorten the development cycle, and put in place a market

research program that will quickly identify trends and changes.

The steady development of a product has other advantages. It evens out the revenue

stream rather than having the "boom or bust" cycle of a single product. It also shows that the

company is steadily developing and upgrading products for the customers who should begin to

buy into the company's vision. And customers, analysts, and investors will develop confidence

that the company is going to be around for the long-term.

The price must also provide real value to the customer, which is the customer, must be

pleased with the purchase of the product or service. In addition to price, the buyer may also be

interested in how the product can be of assistance to his company. In this case, comparisons of

price and ROI may be used to show that the offering adds more value than a competitor's. The

price can also be a basis for building long-term customer relations, which can lead to multiple

sales. For example, as retail customers become more comfortable shopping on a site, it should be

easier to get them to migrate to higher margin products.

The value proposition describes the value that the company will provide to its customers

and, sometimes, to others as well. With a value proposition the company attempts to offer better

value than competitors so that the buyer will benefit most with this product.

A value proposition may include one or more of the following points:

Reduced price

Improved service or convenience such as the "1 click" checkout

Speed of delivery and assistance

Products that lead to increased efficiency and productivity

Access to a large and available inventory that presents options for the buyer

Providing value in an e-business uses the same approach as providing value in any

business, although it may require different capabilities. But common to both are the customers

who seek out value in a business transaction. The value proposition helps focus the business on

the well-being of the customer, where it remains in successful companies.

The integration of systems inside and outside the organization can provide value for both

customers and the organization. One of the requirements for e-business is to link front-end with

back-end systems in order automates the online operations of the organization.

Front-end activities deal directly with the customer while back-end systems include all of

the internal support activities that do not deal directly with the customer. Some enterprises have


different geographic locations for front-end and back-end office activities and rely on the

integration of the associated computer and network systems for successful corporate operations.

Figure 1.3.3: Front-End & Back-End Operations

Source: Elaborated by E.Burke, Ph.D.

E-business is a traditional business, migrated to the Internet. At the heart of business

management in the Internet based on the principles and rules applied in business management is

a global network. However, the business management of this kind has yet its own characteristics,

which cannot be ignored.

Management features of e-business based on the distinctive characteristics of the enterprise e-

business (online store) and traditional business. A small portion of these differences is presented

in table №1 Comparison of the processes of 2 types of businesses.

Parameter Traditional business E-businessMode intermittently No breaksSales Local Regional expansionType of communication with byer

Telephone, fax, e-mail. Telephone, fax, e-mail.

Byer’s support Verbally, fax, e-mail Special information pages, the creation of forums.

Range Established set (Local suppliers) Extended set (В2В)Promotion to the market Traditional advertising, ads. Traditional advertising, ads, search engines-

catalogs, mailing list, online advertising (including banner exchange)

Table 1.3.2: Comparison of working processes of 2 types of business.


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One of the first features of e-business is the principle of the Learning Organization.

Learning organization - is not a new model of construction and development company, but

rather a combination of advanced administrative tools, consolidation. This concept is based on

five "Learning Organization":

- Skill in improving the personality: the few companies encourage their employees to move

forward, the other as a result is unused, wasted resources is disappearing.

- Smart models: the model as stereotypes of different management situations as well rooted

in us, as well as purely domestic. That is why many good management ideas and are not

embodied in the life.

- A common vision: many managers do not attach importance to the fact that their personal

vision of the organization is not understood and reparability of all employees.

- Group training: however, in this case it is not just about training courses or seminars, but

also on the free exchange of ideas in groups - a dialogue.

- Systems thinking: Without this discipline all the other skills remain scattered receptions,

fashion innovation management science. In this case, it is vital that all the five "abilities" did not

develop individually and systemically;

Learning organization suggests that education - not just the accumulation of knowledge,

and meaningful development of skills to use them. There are many opinions about the properties,

which should have an organization to be considered a "learning".

Modern business environment is characterized by a transition from an industrial to an

information business. This means that the main value and competitive advantage of a modern

company is the knowledge accumulated and created in the organization. Knowledge can be

accumulated in an explicit form - instructions, patents, process descriptions, case studies, and

implicitly, which includes training for the staff, informal relationships and organizational

structure, people's perceptions about the existing order of things and ways of behavior.

In addition, as a rule, the knowledge gained in an implicit form, are no less important for

the existence and success of the organization than those with which it has explicitly. Thus, a

person recognized as the most valuable resource of the organization. This is due, including the

fact that the footage - the most adaptive type of resources. Due to this adaptability the

organization is able to change quickly in response to the unexpected demands of the

environment, maintain control in conditions of instability of the parameters, time constraints and

lack of other resources.

An essential feature inherent in the Internet, is the automatic operation of information

servers (sites). This fact creates the preconditions for the implementation of e-business around

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increased the number of potential customers - the consumers of goods and services a particular

company, as regards the global and the extraterritoriality of the Internet there will always be

clients for whom it is now the height of the working day.

Specific of the enterprises engaged in electronic commerce is a flat management

structure. Through this work the company becomes more flexible - quickly react to any changes

in the environment that gives a big advantage over competitors. However, this advantage does

not eliminate the time required for the reaction, n is reduced significantly.

Statistics existence and ratings companies involved e-business is provided by private

companies, which in essence is also engaged in e-business - the provision of services on the

Internet, in this case management services statistics. If desired, guide shop can make an order to

conduct this kind of statistics.

Besides the opportunity to see the daily statistics for your own e-business, management is

able to monitor the statistical data of competitors and partners, from which it can be concluded,

for example, whether to advertise on the site of one of the partners. National Bureau of Statistics

does not keep records of this kind. After processing the data provided by one of these agencies, I

have a schedule in Figure 1.3.4, which reflects the average monthly attendance of the largest

Internet - shops, which to some extent reflects the average number of customers per month.

Figure 1.3.4: Graph of average attendance of online shops

Source: ITA annual report 2008

As can be seen on the graph, the average monthly figure of 100 visitors were able to cross

only 9 major Internet - shops. A figure higher than the figure of 200 and even less - 6


companies. This suggests that 6 companies have earned not only the confidence of users, but

sympathy as well as design and service left a good impression.

Another specific of the management of e-business is a strategic and tactical planning.

In most cases, strategic and tactical plans are large companies. A mid-sized and small business

does not make them because they think that everything is obvious. However, the obvious part - is

just the tip of the iceberg of obstacles and difficulties that the head of the company has yet to

meet. A tactical and strategic planning will help management to identify target companies and

choose the tactics of doing business, in which the company will not just be successful, but it will

have a clear advantage and is able to skillfully will present to customers.

I analyzed six industries that have been changed most profoundly by e-businees, that

are computing and electronics, telecommunications, financial services, retailing, energy and

travel:

Computing and electronics. Together, Dell Computers, Cisco Systems and Intel sell more

than US$ 100 million a day over the Internet. For most makers of PCs, however, the Internet

continues to present a dilemma: whether to cede online sales to direct sellers like Dell and

Gateway, or risk alienating retailers by selling online and thus “cannibalizing” their own

distribution chains.

Telecommunications. Because of the burgeoning use of data transmission through e-mail,

servers and millions of websites, revenues from telecom services to businesses are expanding for

global leaders such as AT&T and MCI World Com, even as Internet-based firms such as Qwest

Communications International put pressure on rates.

Financial services. Financial services are easily digitized, deliverable online and

inexpensive. It costs banks in the United States only US$ 0.01 to process an Internet-based

consumer transaction, compared with US$ 1.07 for a branch and US$ 0.27 for an ATM

transaction. Although growth is fast, there have been concerns expressed that complex

regulations and security concerns are stifling competition and growth.

Retailing. Thousands of websites were created in the US in 1999 by traditional retailers.

Manufacturers of certain types of consumer goods, such as television sets and other electronic

products, are starting to sell direct to consumers.

Energy. Led by online sales of natural gas, trading in other energy such as electricity,

coal and fuel, is also taking place online because of the ability to respond immediately to rapidly

fluctuating demand. It is predicted that the most transactions will turn from existing brokers to

online exchanges, such as Altra Energy and HoustonStreet.com, breaking down traditional

geographic boundaries, spurring competition and lowering prices.


Travel. Consumers are bypassing travel agents to book tickets and other travel

arrangements online, significantly reducing their costs. For example, it costs US$ 1 to process an

e-ticket compared with US$ 8 for an agent-booked ticket. Jupiter Communications predicts that

by 2015, airlines will account for 62% of online bookings, compared with just 20% for travel

agents.

Conclusion: “Born global”, electronic commerce encompasses a wide spectrum of

activities, some well established, most of them very new.

Every business is unique, so every business will require a unique e-business solution.

Chances are most small businesses will not have the resources in-house to make the move. In

that case they should find an e-business solution provider that takes a comprehensive approach to

each situation. Rather than offering a pre-packaged program, they should be able to look

carefully at a business and make recommendations based on its specific needs. That includes the

ability to provide staff training and ongoing support long after the initial system is put in place.

Starting an e-commerce business is, for the most part, no different that starting any other

business. However, taxes and trademark matters can have different legal consequences.

Starting an e-business or an online business can be a very profitable venture for most. Not

only is an e-business easy to setup, but it is very easy to maintain. All you require is some

average computing skills and you can rake in millions of dollars a year in profits if you know

how to market yourself well. The internet is a fabulous marketing tool if used correctly and

having an e-business is the perfect way to make fantastic profits with little to no investment.

Currently having an e-business is one of the biggest small/home business trends in the world.

This is due to the fact that you can maintain your e-business within the confines of your home

with just a simple e-commerce website.

Owning an e-business is great, but it is also a tricky business to manage as you must

know the laws concerning not only how to set up an e-business but run it legitimately without

violating any laws. A good site to visit is the Small Business Development Center's National

Information Clearinghouse which has a number of links to important web laws for e-businesses.

It is important to know these laws as they will ultimately help you in the long run. A common

mistake that many e-businesses make is to ignore the legalities of e-commerce. This is not good

as you can be sued for not only privacy or security violations, but you can also have copyright

issues with your website.

E-business laws include; Trademark and patent laws; Consumer protection laws (if you

plan to sell online goods/services); Licensing laws and taxation laws. A good move if you want


to set up an e-business is to get in touch with an e-business lawyer and he/she will inform you

about the legal issues you can face. Starting any business should be carefully thought out, but

starting an e-business is particularly problematic because you not only have to deal with

local/national laws but you have to deal with international laws as well especially if you are

selling goods in other countries.

Some important e-business laws include:

- Ethical laws - These laws are with regards to ethical behavior of businesses online,

especially if your e-business is an online pharmacy or store.

- Privacy & security laws - Privacy and security laws are very important to know because

as an e-business you must at all times protect the privacy of your customers and keep their

information safe and secure particularly their personal information.

- Copyright laws - E-businesses need to be aware of copyright and plagiarism laws as

many copyright and plagiarism violations can be found all over the internet.

- Digital laws - Digital laws refer to laws regarding information technology,

software/hardware patents, etc. These laws are vital to an e-business.

- Taxation laws - Any e-business must be aware of the tax laws that apply to their

business and what state and local taxes they must pay.

E-business owners must also know and understand the Federal Communications

Commission rules, regulations and policies and make sure that they are fully complaint with

them.

Business Entity

The type of structure you choose for your business requires the same analysis you would

go through for any business. First, do some research into the various forms of legal and tax

business structures available. Your business can be a sole proprietorship, a partnership, a limited

liability partnership, an LLC, or an S or C corporation. Each has different legal and tax

consequences that you should be sure you understand. You can talk to an accountant and a

lawyer, or you can take the risks of doing the research and formation on your own and then fix

mistakes later when your business has enough revenues.

In most cases, you should pick a structure that gives your business a separate legal and

tax identity from yourself. This allows you to be sure that for tax and legal purposes, the money

and acts of your business are separate from your own. For example, if the users of your dating

service sue you because a fellow user posted libelous information and you lose, the company's

assets can be taken, but not your personal assets; the losses from the lawsuit would be deducted

on your company's tax statements, not your personal one. A sole proprietorship means that a


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person does business as himself--which means that legally and for tax purposes, you are one

entity. Many businesses start as sole proprietorships and then change their structure later.

If you plan to seek capital from outside parties, as many e-commerce businesses do, the

preferred entity of most investors and VCs is the C Corporation, which is the standard

corporation, formed. LLCs, Limited Partnerships and other entities are not favored due to the

variation in rules between states and because they lack the legal structure of shareholders, a

board of directors and officers, which are standard components of investment. If you have less

than 35 shareholders, you'll probably want to elect to be an S corporation for tax purposes. You

must file the election form 2553 within a short time after incorporating, so be sure to check with

the IRS regarding the filing and the deadlines. If you need to expand beyond 35 shareholders in

the future, you can change your tax status back to a C corporation to do so.

Sales Taxes

The revenue collection agencies in most states now have some kind of formal position on

e-commerce sales. Most treat the sales in the same way they treat mail-order sales; however, you

should contact your state tax agency and ask for help and information with regard to your

particular business to be sure.

Trademarks

Because your domain is such a big part of your e-commerce business, you'll want to be

sure to protect it. The best way to do that is through trademark law. A trademark is a word or

symbol used to identify the source of goods or services to consumers.

You may apply for registration of a trademark or service mark, word, phrase or image

after you use the mark to identify a product sold or service performed "in commerce," which

means that you've used it for advertising and/or sale to customers. Your online business name

can be a be a service (for trademark purposes) if it provides any kind of service to consumers:

information access, ticket booking, online dating and so on. If your site sells the goods you

manufacture, then your product names would be goods for trademark purposes. Trademark rights

arise upon use in commerce--with or without national registration--of the name of the good or

service. However, national registration expands and protects your trademark rights, giving your

company a presumption of first use of the mark in association with particular goods or services.

The trademark office will not register a domain name that does not also meet the

requirements of being a trademark; a domain name by itself is considered merely an address.

Having trademark rights allows you to protect your domain name against others who might

allege that it infringes on their trademark and try to have it legally taken from you, and also

allows you to enforce your trademark rights against others who use domain names similar to

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Trademarks are complex, so make sure you read more about them or consult an attorney

for your particular situation.

Other laws to be aware of when running an e-commerce business are Federal Trade

Commission regulations, which regulate mail order, Internet and auction activities, as well as

advertising, consumer data collection, sweepstakes, contests, promotions and more.

The realm of e-business is difficult to understand. While some may view its environment

as effortless, it can be complex and problematic for others. Seeing as most of our business today

is conducted over wires, computers, and the Internet, ethical, privacy, contract, buying and

purchasing issues in a traditional storefront business have been modified to support the privacy

and the exchange of consumer/business related information in e-commerce.

Unique to e-business, the privacy of individuals and businesses are enforced and

protected more considerably. There is more cost to maintain privacy with e-commerce security

measures than traditional storefront security. For example, since it is noticeably easier to store

masses of private information on a business computer vice a physical safe, we will expend and

invest more cost to protect this computerized information than the cost to protect information in

a safe.

Ethics cover a wide range of topics in e-business. With close ties to privacy, especially

for the consumer, e-business organizations have made it ethically clear to protect consumer

information and that information will be held in strict confidence. Unique to e-business,

consumer information is exchanged and protected electronically in secure websites and

databases. Additionally, it is our duty and theirs to be truthful with the information given and

provided.

Through the Internet a contract can be formed through a website or through email. Prior

to the establishment of a contract, fundamentals of a contract must be fulfilled. An Internet

contract must provide something that each party in the contract must benefit from. For example,

the most common purpose for a contract over the Internet is the trade of a product for payment

through offer and acceptance; whereas, one party will offer a product of information, service, or

a tangible item and the party accepting the offer will return a payment for the product.

Referencing these fundamentals, an example of an Internet contract through a website would be

the purchase of electronic software. The offer to purchase software is displayed. Upon

acceptance to purchase the software, the seller and purchaser is bound to the offer and their

acceptance, thus creating an Internet contract.

With respect to selling online in the US, Internet advertising is a crucial position and

must be in accordance with the Federal Trade Commission (FTC) Act. A seller must properly

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and marketing of an offer must also clearly provide a disclosure of payments and purchase

procedures. Aside from appropriate advertising, sellers must be competitively fair with the

pricing of an offer and abide by relevant intellectual property laws.

Conclusion: As to the division of responsibility between the private and public sector in

creating the appropriate environment for the new information media, many would argue that

governments have a key responsibility to support the spread of benefits from modern

communications technology as widely as possible within society, mainly through creating the

underlying conditions in which the technology will flourish. The appropriate division of

responsibility between government and the private sector in the regulatory field may differ in

regard to the formulation and implementation of policies. Second, an important challenge is to

define the appropriate scope of intervention in pursuit of legitimate public policy objectives, so

as to secure such objectives without compromising the promise of these modern technologies.

Third, the global reach of the Internet and similar technologies that might emerge in the future

implies a need for international responses to some of the policy challenges, and thus for active

cooperation among governments. Finally, special attention may be needed to ensure that

developing countries benefit from these new technologies.

The focus of this study is upon electronic business in particular, and not the broader

domain of modern information technology in all its guises and uses. Electronic business may be

simply defined as the production, advertising, sale and distribution of products via

telecommunication networks. Most of the discussion is limited to the Internet - the medium with

which electronic business is primarily associated. The study points out, however, that earlier

technological innovations such as the telephone and fax have been used in similar, albeit more

limited, ways to conduct business electronically, and future directions in which technology may

lead remain uncertain. The study distinguishes among three stages in electronic transactions - the

searching stage, the ordering and payment stage, and the delivery stage. These interactions may

be between interested parties on an arms-length basis, or may involve transactions within firms.

The searching stage is where suppliers and consumers interact in the first instance. This

stage may or may not lead to an actual transaction. The second stage entails ordering and

payment for the good or service, typically through the electronic transmittal of credit card or

bank account information. The third stage is delivery. Only those transactions that can be

concluded through electronic delivery of digitalized information may be carried through entirely

on the Internet. Electronic business via the Internet must end at the second stage for purchases

that cannot be delivered electronically, including physical goods like flowers or bicycles, and

services that can only be supplied if the supplier and consumer are in physical proximity, like


haircuts, tourism and construction. This study is a factual exploration of the benefits and

challenges associated with the development of electronic commerce and the Internet.


Chapter II: E-BUSINESS MANAGEMENT AND INTERNATIONAL

OVERVIEW ON COMMERCIAL PROCESS

2.1 Analysis of the activity of the BC «Eurocredit Bank » in Moldova

Today the banking sector of the Republic of Moldova experiences a new stage of its

development: outrunning the negative impact of the current financial and economic crisis,

improvement of the deposits insurance system, establishing of the credits history bureau,

extending commercial POS-terminals network with the view to creating conditions of a larger

use of banks cards, development of methods of the assets and liabilities management,

enhancement of the actual banking legal framework in order to bring it in accordance with the

international standards, implementation by banks of new effective risks management systems.

ВС "EuroCreditBank" SA (hereinafter referred to as "the Bank") was established in the

Republic of Moldova in September 1992 as a joint-stock Commercial Bank “Petrolbank”. In

September 1992, the Bank was reregistered as an open joint-stock company. During the General

Meeting of Shareholders held on March 7, 2002 Bank's new name became BC

“EuroCreditBank” SA.

The Bank was registered as a joint stock commercial bank on May 25, 2001 under state

identification number 1002600020056. The Bank’s registered address is 33, Ismail Street,

Chisinau, Republic of Moldova, MD-2001.

The BC “EuroCreditBank” S.A. is finance and credit institution with foreign and state

capital. The Bank operates as a commercial bank rendering a range of banking services

throughout 4 branches and 35 representative offices. As of December 31, 2010 the Bank's staff

reached 295 employees.

In April 2010 took place general meeting of shareholders BC "EuroCreditBank"S.A. Net

profit for 2009 year constituted 10.692 thousand lei. According to the decision of the general

meeting of shareholders 77,5% of the obtained profit will be directed to the reserve capital

creation and 22,5% on capitalization.

Total assets BC "EuroCreditBank" S.A. in 2009 year increased with 22,5%, constituting

280.192 thousand lei; generating profit assets - with 21,8%, constituting 158.151,2 thousand lei,

TNC - constituting 144.729 thousand lei. Total Bank income in current period constituted 55.175

thousand lei, increase with respect to the current period of the last year constituted - 2,4%,

expences constituted- 37.070,0 thousand lei. Return on assets (ROA) for the 2009 year

constituted 4,35%, return on equity (ROE) - 6,8%.

The Bank's major scope, since the very moment of its foundation was to provide highly

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Republic of Moldova. Thus the BC “EuroCreditBank” S.A. has become a universal financial

institution. Actually the Bank is a dynamic and professional participant of the financial market of

the Republic of Moldova. The Bank has become famous both in the country and abroad, this fact

being confirmed by foreign investments made to the Bank's capital.

The activity of BC ”EuroCreditBank” S.A. is subject to risks characteristic to all credit

organizations. This is why the analysis and management of risks is the most important problem

in the performance of any particular transaction. The Bank has conducted a significant work in

the field of management of risks, including the establishment of an effective internal control

system and the observation of norms imposed by the National Bank of Moldova.

The BC ”EuroCreditBank” S.A. is exceedingly careful in matters related to the risks of

banking activity. To provide for an efficient management of risks and to collect sufficient

information on the status and significance of risks, the BC ”EuroCreditBank” S.A. has

established a system of parameters used for the management of any particular risk. The use of

efficient risk management system is beneficial both for the Bank and its clientele.

The credit risk management system implemented in the BC ”EuroCreditBank” S.A.

provides for the evaluation and control of risks when the crediting operations are being

performed. The internal normative base setting out the conditions of issuing credits allows to

evaluate the financial status of potential clients and to determine the quality of credits in order to

establish the necessary reserves for the coverage of losses. The Bank performs regular qualitative

and quantitative analyses of credit portfolio with the scope of diversifying the credit risks and

maintaining them at an acceptable level.

The high service level may be assured only by the use of modern informational

technologies that determine the degree of data protection, the speed of transactions, the speed of

decision making and at last, the potential development.

EuroCreditBank opted for a differentiation strategy for its home banking service by

offering a superior web banking option with powerful and relevant functionalities wherein

customers can access/operate their banking accounts on the net with full confidence and ease.

In the year 2005, there were only four local banks offering simple home banking

solutions, EuroCreditBank wanted to be the first multinational bank to launch a multifunctional

home banking service and own the category before competition becomes fierce in the field.

EuroCreditBank’s mission was to be a leading e-Financial Services company by

becoming trusted, premier e-business enabler for its customers.

EuroCreditbank Online is considered as a standard Business to Consumer approach, the

e-business model EuroCreditbank is using can be classified as “Merchant”. See Table 2.1.3.


EuroCreditBank customer can access and operate all his relationships with bank at a click

of mouse in complete privacy. In doing so, bank is balancing between security and accessibility

of information leveraging on a robust e-banking service available within EuroCreditgroup.

Brokerage Market makers bringing together buyers and sellers and facilitating transactions.

Advertising A web-advertising model and extension of the traditional media broadcasting model where websites provide content and services and advertising messages.

Infomediary Collecting and disseminating informationMerchant Retailers selling goods directly to buyers (EuroCreditBank

Online)Manufacturer Manufacturers using the web to reach buyers directly,

eliminating wholesalers and retailers.Subscription Payment of fees to access information or services.Source: elaborated by author

Table 2.1.3: E-business models

The three elements of the business model; value stream, revenue stream and logistics

stream are complementing each other in this specific case. EuroCreditBank was certainly

focusing on adding value to its customers by offering unmatched level of service and security. Its

internal logistics were aligned towards a single objective; launching a powerful service to its

customers to complement its e-business strategy overall. Revenues after a period of time started

flowing too, making the investment worthwhile.

There are many ways of evaluating the success of the e-business model and e-business

strategies of EuroCreditBank, one of which is looking at the financials for the performance of the

service for the past four years.

EuroCreditbank Online is proving to be a successful acquisition and revenue-generating

channel, despite the fact that the management did not expect any revenues to be generated for the

first three years of the launch.

The Bank pays particular attention to the cautious management of risks associated to the

conducted activities. The risk management policy is a part of the bank’s development strategy. It

establishes programs and procedures designed to generate maximum possible profit and

reduction of losses or additional expenses incurred by the EuroCreditBank as a result of potential

risk exposure.

The policy determines the principles and stages of risk management, establishes the

competences and the responsibilities of bank’s managing board and of bank’s branches within

the process of risk management and internal control procedures.


The management of risks includes all policies, procedures, systems and actions which the

bank apply to ensure a reasonable management of all risks related to transactions concluded and

executed and to ensure that all transaction are concluded in accordance with the bank’s

preference and tolerance for risk.

The deployment of the program to EuroCreditbank, played a very important role in

gaining those revenues, as EuroCreditBank did not fund the development work, there were only

a couple of adjustments made to the service to suit the bank requirements.

According to them there are two dimensions of analyzing the e-business model:

a. The degree of innovation: EuroCreditbank is excelling in building and maintaining the

competitive advantage in the Internet era, all functionalities offered were well studied and

executed in a way where matching them is indeed a difficult task. Flexibility is built in the

system for further enhancements and additions.

b. The extent to which the new functions are integrated within the business model: the

functionalities added fit perfectly with the e-business strategy and business model opted. They

contribute directly towards meeting the objectives.

In this way Eurocredit Bank oferrs more electronic services.

Autopay is a new product for payment (without acceptance) of utilities - "TELEBANK-

AUTOPAY", designated to those who appreciate time at its real value and who do not want

monthly to spend time waiting to pay utilities at the pay-offices, to those who go for traveling or

for working abroad and who want - bank to pay utilities automatically. Moreover, there is the

possibility to pay the utilities for the family, parents, children relatives.

Telebank-Alerter

JSCB "EuroCreditBank" has implemented a new information service- ALERTER within

the remote payment system Telebank.md. ALERTER Service represents a system of automatic

notification of any changes of the condition of the bank account.

The following opportunities are, at the moment, available to physical persons:

Write-off of means from the card account (removal of means from the ATM, payments in

a trading network); information services on a plastic card (an extract, the rest of means on

a card);

notifications on operations with bank cards occurs both in a mode of real time, and in the

form of the final report for a day;

thus the client is also notified on unsuccessful attempts of carrying out of operations;

The immediate notification about exhibiting (reception of) new invoices for payments of

bills and other services from the enterprises, which render the services;


the notification about automatic payment of invoices for bills payments and other

services;

change of the status of documents transferred by the client by Telebank.md system,

during their execution in bank, including notifications about refusal the document,

indicating the reason.

For legal persons:

transfers on the account of payments(clearing);

the interbank payments which have come through system (as in a mode of real time, and

the final report for a day about all enlisted payments);

the control of operations through MasterCard Business cards, and also notifications on

cards;

receipt of NBM exchange rates (established by it next day);

setting of JSCB "EuroCreditBank" exchange rates(non-cash for legal entities, cash in

cash department of the Central office, Telebank)

ALERTER Service from JSCB "EuroCreditBank" Is the first and unique system in

Moldova of automated notification of clients.

Wap-Banking - now worldwide, round the clock, by means of a mobile phone our Bank

Clients can receive the information about statements on current, card, depositary and credit

accounts, to find out the accessible limits and to see the list of last operations made with bank

cards. The Client can receive current exchange rates of NBM, of EuroCreditBank and

teleBANK.MD system.

SMS-Banking - BC "EuroCreditBank" S.A. introduced for its customers a new service -

SMS-bankingfor additional control over the operations with the bank card.SMS-bankingservice

is an automatic system which sends notifications to the customers' mobile telephone on

transactions with bank cards.

Thus, SMS-banking was another service in addition to the system Telebank, which

allows customers to manage their money and completely control them, at the distance, without

visiting the bank.

ECB-OnLine - is a programmed complex designed to prepare and exchange electronic

documents between the Bank and Client.


ECB-Online system allows the EuroCreditBank's Client transmitting and receiving

financial information in electronic form, using computer in your office or home, printing paper

copies of the documents in conformity with the requirements regarding relevant documents of

the National Bank of Moldova, and also documents evidencing, and archiving.

ECB-Online system is equipped by multi-stage protection and information authentication

system designed on the basis of safety cryptographic algorithms and protocols which guarantees

confidentiality and safety of information exchange providing that the Client respects the rules of

ECB-Online system maintenance.

System of electronic exchange of financial information ECB-Online proposes to the

Client a possibility to form and transmit to the Bank via electronic communication channels

types of documents as follows:

• Payment orders regarding Client's resources transfer to other persons in Moldavian leis;

• Treasury payment orders;

• Documents of free layout

Payment order currency (with the confirmation on paper support)

Currency Buying/selling

ECB-email - EuroCreditBank represents new electronic service, a system of electronic

distribution of financial information through the channels of Internet protected electronic mail.

ECB-Informer is a new service of EuroCreditBank for site holders. If somebody wants

to have the freshest currency rates on your site or home page, you may use our service

completely free of charge.

During the past year, Moldovan banking sector learned a number of lessons. From the

economic and financial point of view 2012 is expected to be also difficult, and Moldovan banks

will certainly have to adapt to the new economic conditions and rules determined by the global

financial crisis. This adjustment depends on the adequate communication between politics,

business and the general public. But more than ever, it is important our banks to stick together.

As the result the real GDP decreased by almost 7% in 2009. From the beginning of 2010

the economy has been recovering, helped by increased financial stability and rebounding activity

in trading partners. Real GDP growth is expected at 2½ percent in 2010, with gradual

acceleration to 5 percent by 2012.


Conclusion. Banks today are aware of both the threat and the opportunity that the Web

represents. No traditional bank would dare face investment analysts without an Internet strategy.

But even a detailed and thoughtful approach to the Web does not guarantee business success.

The main purpose behind the launching of online banking services is to provide the customers

with an alternative, more responsive and with less expensive options. With options just a click

away, customers have more control than ever. They expect real-time answers and superior

usability. They also want personal attention and highly customized products and services. The

focus of e-business must always be on the customer. On the other hand, the technology and the

business structure follow on form of the value you intend to provide to the customer.

2.2 Innovation Networks of the European Union and their influence on

import/export of the Republic of Moldova

Economic of any country is the result of combined action of two categories of factors:

internal and external. The house, tied to efforts that make each nation to develop the economy,

have a role. The external circuit connected to the participation of countries in global economic

growth to directly influence through domestic factors multiplying them or decreasing their

power.

Among external factors, a particularly important and growing foreign trade has. The

influence of this factor on growth is exercised in many forms. First, ensuring the implementation

of foreign trade to achieve social product even in circumstances where demand structure differs

from the structure of supply.

While Moldova has drastically liberalized its trade regime in the decade since

independence, and now has a very liberal statutory trade policy regime, the way trade and other

policies are being implemented is creating substantial barriers to imports and exports. The

current tariff schedule has become more complex, increasing the administrative burden in

applying trade policy and collecting tariff revenue. A more uniform tariff structure with a small

number of tariff bands that is subject to less frequent changes will reduce uncertainty and allow

tariff revenues to be collected in a more efficient manner. A further reason for maintaining fairly

uniform tariffs is to avoid an escalating tariff structure.

Dynamics of technology transfer depend also on the strategy of a particular firm

innovator. Some firms prefer expansion by technology licensing others through foreign direct

investment as the most appropriate and safest solution for securing the technology and to prolong

the rent from the exclusivity of ownership.


According to product life cycle theory, production is being moved from the country

innovator to country imitator at the product’s maturity stage. In the first stage of product

development the production process is being conducted in the country of innovator (because of

specifics of supply of production factors and the character of local market demand). In the

second stage, together with diffusion of products, some export activities are established to

middle developed countries. In the third stage full technology diffusion takes place. Production

process simplifies when the innovator fails to resist its oligopolistic position.

This often leads to move production to foreign countries in order to find relative cheaper

production factors, to ensure better service of foreign markets and to internalize possessed

technology.

Figure 2.2.5: Intensity of technology flows in the product life cycle theory

Source: elaborated by author based on Vernon R “International Investment and International Trade in Product

Cycle” in Buckley P. ed., Internalization of the Firm, Academic Press, London 2008


Technology transfer intensity

Import Export

Highly developed countries (innovators; USA, Japan, Korea, EU countries)

Middle developed countries (early followers; Central and Eastern Europe countries)

Low developed countries (late followers; Middle East Countries)

Import

Import

Export

Export

Innovation Growth Standardization

Production

Consumption

Production volume

Technical progress is the key factor in economic development and decreasing the

technology gap between countries. The intensity of technology transfer depends mainly on

innovation potential of a receiving country. The more advanced it is the more complicated the

transfer will be.

The level of economic development is one of the main factors determining the intensity

of technology transfer.

Figure 2.2.6: Technology inflow specifics and country’s innovation capabilities

Source: elaborated by author based on The Interrelationship between Investment Flows and Technology Transfer,

UN, 2009. Pg 14

To ensure the effects of the technology transfer and its intensity a strengthening the

process by appropriate economic policy instruments. As we can see in Figure 2.2.6, there is a

high correlation between the intensity of technology transfer and a country’s innovation

capabilities.

Aggressive technology acquisition and its efficient use in production processes played

key role in the economic development with a long-term goal to increase international

competitiveness position.

Development of innovation potential followed the main policy of economic development,

which could be broadly characterized as moving from import substitution to export promotion.

Protection of local imports and strict import policies enabled to acquire basic technologies

mainly through import (some were acquired by licensing and foreign direct investments

conducted mainly through joint ventures, which were used as a vehicle to assimilate the

technology). Once acquired technologies were further developed using local R&D capabilities,

based on broad linkages between state and private research institutes.


Innovation capabilities

Base technology

Imitating technology

Adaptive technology

Innovation technology

Technology transfer intensity

Analyzed the information below we can very quickly determinate three key components

for the development of an efficient platform of Innovation and Technology Transfer for Republic

of Moldova:

1. Measuring the Innovation Potential off the Moldovan economy and current level off

economic development and technological intensity off its economy;

2. Existing institutional and organizational structure off the national innovation system

and the market environment off technology transfer in which it functions

3. Opportunities for the development off the national innovation system and technology

transfer platform.

A very important step in development of technology transfer is the creation of Agency for

Innovation and Technology Transfer.

The Agency for Innovation and Technology Transfer of the Republic of Moldova (AITT

RM) was created on 29th of October 2004 for coordination, stimulation and implementation of

the mechanisms of innovation activity and technological transfer.

The main task of Agency of Innovation and Technology Transfer is to support operators

of the process of technology transfer:

a) inventor - in assessing the commercial potential of his invention and to assign the

"look good" so that together they can interest the investor and entrepreneur;

b) investor - in selecting technology for more efficient investment of its cash resources

resulting from its mentality and request;

c)entrepreneur - in selecting new technologies to improve quality and reduce cost price of

products and assimilation of advanced types of products.

The AITT RM collaborates closely with economic operators of the Republic of Moldova

dealing with implementation of innovations and technology transfer in the following directions

of its activity:

a) Development of scientific-technologic parks and innovation incubators. The first

Scientific-technologic Park "Academica" and the innovation incubator "Incubatorul" were

created on December 5th 2007. The AITT RM has organized the activity of selecting the

residents of the scientific-technological park and innovation incubator, as well as different

projects in the field of innovations and transfer of technologies.

b) Implementation of technology transfer projects The Agency supports the

implementation of technology transfer projects by using the co-financing scheme: a minimum of

50% of the necessary amount is paid by the innovation enterprise itself and a maximum of 50%

by the state.


Simply put, technology transfer is the process by which a technology, expertise,

knowhow or facilities developed by one individual, enterprise or organization is transferred to

another individual, enterprise or organization. Effective technology transfer results in

commercialization of a new product or service or in the improvement of an existing product or

process.

Another important step for our country is Know-how Exchange Programme. The Know-

how Exchange Programme (KEP) is a grant facility created in 2004 to support transfer of best

practice and transformation experience from CEI EU to non-EU Member States (financed

exclusively from the Italy-sponsored CEI Trust Fund at the EBRD). The Programme originates

from the conviction that economic development in non-EU MS can be strengthened by

transferring sound approaches (good practice) already in place in more advanced CEI countries.

In the CEI region, there are currently 9 EU and 9 non-EU members. Even though the non

EU Member States have undergone a significant reform process, in many areas they still lag

behind the countries who are now part of the European Union. On the other hand, the EU

countries – especially those which joined the EU zone in 2004 and 2007 – possess valuable

transition experience that could be used by those economies undergoing a similar harmonisation

process leading to EU membership.

By financing capacity building and technical assistance projects in the non-EU countries

carried out by experts from the CEI EU zone, the objectives of the KEP are to:

Strengthen economic and social advancement of the CEI non-EU Member States;

Help the recent EU members in their transformation from recipients to donors (emerging

donors) of development assistance;

Promote principles of foreign development aid and support international collaboration

among institutions in CEI member countries.

The CEI Know-how Exchange Programme is funded also financed by the Austrian

Government (Austrian Development Agency). The Government of Austria has recently renewed

its support for the next three-year period 2011-2013

Within the KEP proposals 2011 the projects benefitting the following CEI-non EU

member states are eligible: Albania, Bosnia-Herzegovina, Macedonia, Moldova, Montenegro

and Serbia

The CEI finances up to 50% of the total project cost and not more than €40.000 per

project. Sufficient co-financing must be ensured by the applicant from his own or external

sources.

The future economic development of Moldova is an important issue because of the

continued eastward expansion of the European Union. Moldova, like other countries of the PAGE \* MERGEFORMAT 77

former Soviet bloc, is eventually likely to want to join the EU and it is now facing the choice of

economic model that would allow it to limit the pain of the transition to a market economy.

The EU, in its turn, would like to secure stability and economic growth on its eastern

borders. Economic growth would, amongst other benefits, reduce the gap in living standards of

the countries across the EU border and as a result at the very least limit illegal immigration and

trafficking through its borders.

Economically, doing business in Moldova can be very profitable for western companies.

The major reasons behind this are a good investment climate and the availability of cheap and

well-educated labor. There is also some scientific and manufacturing expertise remaining from

the former Soviet defense industries. This can be converted into the base for development of

high-tech industries such as electronics and telecommunications.

At the moment, foreign companies in Moldova invest primarily in utilities (gas and water

supply absorb 53% of all foreign investments, followed by food, transport and only then

telecommunications). EU companies account for 40% of these investments, while only 26% of

foreign trade is with EU.

Several factors affect future economic development priorities for Moldova:

- The goal of EU membership is very likely to become a priority for Moldova in the not

so distant future. However, currently Moldova is the poorest European state. GDP per capita at

purchasing power parity is about 9.5% of the average level for the EU. Thus, this goal currently

looks unrealistic and far distant.

- On the other hand, the countries to the East, i.e. Ukraine and Russia, are the former

Soviet Union partners with whom Moldova has historically been closely connected. The current

situation is that these countries account for 52- 57% of the volume of foreign trade and supply

80% of Moldova’s energy resources. The immediate economic well-being of Moldova is very

dependent on its relationship with CIS.

- Thus, Moldova, like some other former Soviet-bloc countries that are now potential EU

entrants, may end up being torn between its close ties with former Soviet allies and increasingly

important future partners in the EU. It should work on integrating itself into the European

economy while maintaining its current good relationship with its CIS partners.

To satisfy EU entry requirements in the long-term it should sustain real growth of GDP

between 6 and 10% p.a. To achieve this high level of GDP growth, Moldova can attempt to

implement a growth-oriented economic development modelThe EU can help by limiting its

protectionism to assist this process.


Software development has the biggest exporting potential in the ICT sector. About 70%

of total production of software companies is exported. Countries collaborating with Moldovan

software developers include the USA, Russia, the UK, Germany, Romania, and Ukraine.

The main competencies in software development in Moldova include content

management applications, billing and accounting applications, banking systems, encryption

utilities, e-commerce applications and electronic post programs. Most of the software products

used by Moldovan companies are in English.

ICT-related services such as training, consulting, systems integration, support services

and information services are probably the most underdeveloped cluster as there are only a few

training, consulting and information companies and these have limited capacity and skills. As

Moldova’s business environment matures, B2B services are expected to experience more

demand, especially in ICT consulting and outsourcing.

System integration and support is better developed as it is based not only on distribution

of hardware but also on hardware post-sale services and support. Both local and international

companies offer system integration services of a high quality.

The outsourced call centre is a business model that has recently appeared in Moldova,

which is highly favorable for such activity because of the high overall level of education and

language skills in the country.

New research has revealed a critical gap between the quality and quantity of information

technology (IT) graduates in Moldova and the demands of private enterprises.

Nearly 65% of IT managers identified networking as a crucial skill in their company and

almost 50% are not satisfied with the local training available. In addition, more than 60% of IT

managers agree that the demand for professional skills in IT security, architecture development,

and quality assurance will grow in the next few years.

The research was jointly commissioned by the Competitiveness Enhancement and

Enterprise Development (CEED) Project, financed by the United States Agency for International

Development (USAID), and the E-Government Project of the United Nations Development

Programme (UNDP).

Scientific cooperation between the European Union and Republic of Moldova, between

2005 - 2008, was stipulated in the EU/Moldova Action Plan. The immediate result of EU-RM

collaborative relations is expressed in the participation of Moldovan scientific community in the

Framework Programmes in the area of research. For example, from 65 project proposals

submitted to the FP6, 17 were accepted, while in FP7 in the first call of proposals out of 63

submitted with Moldovan participation more than 10 were main listed. In comparison with

neighboring Ukraine and Russia, PAGE \* MERGEFORMAT 77

Moldova has no Agreement on S&T cooperation with EU. In March 2008 was signed a

Memorandum of Intentions on scientific and technological cooperation with the German

Federal Ministry of Education and Research, on basis of which was announced an Open Call

for collaborative research project proposals for a duration of 12 months, with a budget of up to €

35,000 each, shared between Germany (approximately € 25,000) and Moldova (approximately €

10,000), which will be implemented in 2009. 25 applications where received, out of which 10

were selected for financing.

I suggest that European economic integration gives Moldova an opportunity to develop a

knowledge-based economy and a comparative advantage in low-cost high-skilled manufacturing

for high-tech industries.

The future economic development of Moldova is an important issue because of the

continued eastward expansion of the European Union. Moldova, like other countries of the

former Soviet block, is eventually likely to want to join the EU and it is now facing the choice of

economic model that would allow it to limit the pain of the transition to a market economy.

The EU, in its turn, would like to secure stability and economic growth on its eastern

borders. Economic growth would, amongst other benefits, reduce the gap in living standards of

the countries across the EU border and as a result at the very least limit illegal immigration and

trafficking through its borders.

Economically, doing business in Moldova can be very profitable for western companies.

The major reasons behind this are a good investment climate and the availability of cheap and

well-educated labor. There is also some scientific and manufacturing expertise remaining from

the former Soviet defense industries. This can be converted into the base for development of

high-tech industries such as electronics and telecommunications.

At the moment, foreign companies in Moldova invest primarily in utilities (gas and water

supply absorb 53% of all foreign investments, followed by food, transport and only then

telecommunications). EU companies account for 40% of these investments, while only 26% of

foreign trade is with EU.

The goal of EU membership is very likely to become a priority for Moldova in the not so

distant future. However, currently Moldova is the poorest European state. GDP per capita at

purchasing power parity is about 9.5% of the average level for the EU. Thus, this goal currently

looks unrealistic and far distant.

On the other hand, the countries to the East, i.e. Ukraine and Russia, are the former

Soviet Union partners with whom Moldova has historically been closely connected. The current

situation is that these countries account for 52- 57% of the volume of foreign trade and supply


80% of Moldova’s energy resources. The immediate economic well-being of Moldova is very

dependent on its relationship with CIS.

Following a 30% decline in 2009 as a result of the financial and economic crisis, bilateral

trade between the EU and Moldova has shown an increasing trend in the last two years, reaching

a total turnover of €2.7 billion in 2011.

The EU is Moldova's most important trading partner with a 50% share of its external

trade. Moldova's exports to the EU remain rather limited and non-diversified. It is expected that

the autonomous trade preferences that the EU has extended to Moldova at the beginning of 2008

(and has increased as from 1 July 2011) will lead to a further diversification of exports and as a

result stimulate economic growth in Moldova.

National Bureau of Statistics informs, that exports of goods in February 2012 registered a

value of 158,0 mio. US dollars, which is with 7,1% more than in the previous month and with

1,9% less compared to February 2011.

In January-February 2012 exports summed up 305,5 mio. USD, more than in the

corresponding period of 2011 with 3,4%.

Imports of goods in February 2012 registered a value of 389,0 mio. US dollars, which is

with 14,8% more than in the previous month and with 9,3% - compared to February 2011.

In January-February 2012 imports summed up 727,9 mio. USD, more than in the

corresponding period of 2011 with 13,6%.

EU bilateral trade with Moldova represents only 0.1% of the total trade, but it is growing

and the EU is encouraging closer economic ties.

The 2010 recovery is driven mostly by the investments into fixed capital and exports of

goods and services, which increased by 12.8% and 7.9% correspondingly in January-September

2010 in comparison to the same period of 2009; private consumption also increased by a rate of

5%; finally, government consumption is almost stagnant with a growth of 1.3%. The growth of

private consumption and investments are accompanied by a rapid (12.2%) recovery of imports.

Apparently, the pre-crisis model of growth has been fully re-established; no structural change

seems to happen in the economy due to the crisis (see figure 2.2.7).

Figure 2.2.7: Moldova trade with the world


Source: IMF (DoTS)

Representing only 0.1% of total European foreign trade, the trade relations with Moldova

were not of much interest for EU in the past decade. However, as trade is growing, EU devotes

more attention to the issue and encourages closer economic and trade links with Moldova. Due

to limited impact that a more liberalized trade with Moldova can exert on European markets, this

fact is an important argument that Moldova can leverage in its trade negotiations with EU.

Obviously, for Moldova the issue of trade with EU is vitally important. It has to be

mentioned that not only trade in goods is important for Moldova, but also trade in services.

Figure 2.2.8: EU trade with Moldova

Source: IMF (DoTS)

Under the Autonomous Trade Preferences (ATP) scheme, the EU lifts trade tariffs for all

Moldovan products except those clearly specified in the ATP regulation, for which only a quota

is tariff-free. In the same time, Moldova has been removed from the list of GSP beneficiary

countries. The ATP scheme will expire in 2012. In the GSP+, the range of duty-free goods was

wide, but some strategic agricultural export products of Moldova like wines and fresh fruit and

vegetables, were not included. The ATP scheme solved this problem and facilitated export of

these products to the EU market. However, not all the restrictions have been removed; for

instance, in 2008, the quota for duty-free wine delivery from Moldova makes up 60 thousand

hectoliters or about 10 million bottles. Moldovan wine exporters have used most of this duty-free

quota in a eight months. Similarly, the EU has set duty-free quotas for Moldovan sugar exports

to the EU. For 2008 the quota level was 15,000 tonnes, with most of the product going to

Romanian market.


Figure 2.2.9: EU imports from Moldova

Source: IMF

There is a significant difference in products exported to EU and products exported to CIS

countries. While EU countries import most of the articles of apparel and clothing accessories,

footwear, manufactured goods from iron and steel, travel goods, handbags and similar

containers; CIS countries are the main importers of manufactures of metal, textile yarn, fabrics,

made-up articles, paper, paperboard and articles of paper pulp, of paper or of paperboard, general

industrial machinery and equipment, road vehicles, medicinal and pharmaceutical products.

Therefore the EU imports from Moldova are mainly concentrated in the manufactured goods and

manufactured miscellaneous articles, where also the most important foreign investments are

done by EU countries.

The share of EU 10 in the exports of Moldova was low in the first decade of transition

and it increased only with their accession to the EU in 2004 (Table 2.2.4). Today, Poland has

become the most important importer from EU 10 countries, accounting for 63% of exports. It is

interesting that the share of exports to the Baltic States has decreased in spite of stronger trade

relation before the collapse of the Soviet Union.

1995 2000 2005 2010

EU27 (mil USD) 55.73 91.53 257.01 447.11

EU 15 (share in EU 27) 41.18% 76.32% 58.14% 52.52%

EU 10 (share in EU 27) 5.98% 6.45% 15.48% 11.81%

EU 2 (share in EU 27) 52.85% 17.23% 26.38% 35.67%

Source: Comtrade Database and author calculation

Table 2.2.4: Structure of exports to EU 27

As regards, Romania and Bulgaria, the immediate neighborhood and historical relations

with Romania made it one of the most important trade partners in the beginning of transition.

This development was also facilitated by the Free Trade Agreement between Romania and the


Republic of Moldova since the beginning of transition and a preferential trade agreement

between Bulgaria and Moldova. As these two countries joined the EU and the free trade

agreements were abolished it was expected that the exports from Moldova to the two countries

would decrease.

Surprisingly, they have further increased and also their share in total EU exports has

increased to 35% in 2010. This is very important in the context of the negotiation of the free

trade agreement with EU, as we can see that not the free trade agreement is the most important

step toward the of exports to EU, but rather other factors as competitiveness of products on the

domestic market of the countries.

However, behind-the-border technical barriers affect Moldovan exports as well.

Important constraints for Moldovan exporters include access to knowledge, shortage of skilled

labor, inadequate infrastructure and logistics services. Access to knowledge regarding

technology and potential foreign clients is a commonly cited constraint by the exporters,

especially in higher value-added markets. Particularly in the textile and footwear sectors, firms

experience shortages in semi-skilled labor due to the ‘grey’ economy and migration. Finally,

trading across borders in Moldova is considered much harder than in neighbouring countries and

its trading partners due to weak transport infrastructure (particularly railways), inadequate

logistics services, excessive customs procedures and inconsistent and frequent changes of trade

regulations.

Besides, there are a number of institutional constraints limiting the growth potential of

Moldovan exports. Many cumbersome regulatory procedures affect the international trade both

directly and indirectly. From this perspective Moldova fares poorly in comparison with the

European and transition countries. In the context of a potential Deep and Comprehensive FTA

with EU, it is highly necessary for Moldova to improve the trade institutional environment in

order to make full use of the trade preferences and for the Moldovan companies to withstand

competition with European companies.

2.3 Tools for e-business security in the Republic of Moldova

The digital sea is a sea of networks. It flows in all directions. Networks are the defining structure

of the 21st century - all kinds of networks - social, political, economic, and particularly

information and knowledge networks.

Today we are to ascertain the Internet and e-commerce infrastructure in one of the

landlocked countries in Eastern Europe, Moldova, is located between Romania to the west and

Ukraine to the north, east and south. The country declared itself an independent state with the

same boundaries as the preceding Moldovan SSR in 1991, as part of the devolution of the Soviet


Union. Moldova is a current member state of the United Nations, Council of Europe, WTO,

OSCE, GUAM, CIS, BSEC and other international organizations. At present, the country strives

to join the European Union, and has implemented the first three-year Action Plan within the

framework of the European Neighbourhood Policy (ENP). Notably, 25% population of Moldova,

that represents the poorest country in Europe, lives off of less than $2 a day. However the

country has enjoyed consistent economic growth since 2000 until it was hurt by the recent global

economic collapse.

Rapid deployment of Internet and related services conditioned Internet usage growth.

That can be reflected by some statistics data offered by internetworldstats.com. Thereby, if in

2000 Internet penetration in Moldova was even less than 1%, by 2006 it exceeded 10%.

Currently the volume of subscribers has surged to almost 20% with 850,000 users. As Internet

became more accessible to larger groups of population, Internet user’s penetration in Moldova is

increasing.

The Internet industry in Moldova has been deploying rapidly. There are about 38 ISPs

currently operated in the country but most of them are regional only, with few offering their

services throughout the country.

The leaders of the national Internet market, Moldtelecom (or MTC) and StarNet, are

sharing around 64% of the market. The remaining 36% is shared by other ISPs, like Telemedia

Group, SunCommunications, Arax Communications, OK and others. Almost all large ISPs have

their headquarters located in the capital, Chişinău, the exception is OK, whose headquarters are

located in Tiraspol.

Computer crimes are the serious threat to humanity, the degree of threat which is not yet

fully understood and studied. The introduction of modern information technology has led to new

types of crime, illegal interference in the work electronically - computers, systems and computer

networks, theft, misappropriation, extortion of computer information, a dangerous social

phenomenon, which is called "computer crime".

E-business is unthinkable without the use of electronic - digital signature; in introducing

a variety of issues arise:

• Organizational - technical, due to incomplete legal framework for information -

communication technologies;

• legal relating to the need to use foreign crypto signature at the international electronic

exchange. In the Republic of Moldova adopted the Law "On electronic document and digital

signature" № 264 of 15.07.2004;

• technical, as there is the possibility of incompatibility of software products from

different manufacturers. PAGE \* MERGEFORMAT 77

The need for rapid development of legislation in the field of information technology has

been the changing nature of social relations in economy, administration and banking sector due

to the introduction of information technologies in the sphere of communications.

The law "On electronic commerce" № 284, adopted in the Republic of Moldova on

07/22/2004, determines the use of electronic information in the relations arising between the

parties to electronic commerce. E-mail to the validity equal to the information provided in

written form, and has the same probative force.

The legal framework, which opened the possibility for wider use of the Digital Signature

of the Republic of Moldova, is a record since the signing of the 2004 Parliament of the Law "On

electronic document and digital signature." This Law regulates relations arising in the

development and use of electronic records and digital signatures. The law establishes the rights

and obligations of owners of digital signature, user public key certificates, as well as principles

of state regulation in the use of digital signatures.

The legislative framework that governs the use of ICT in the Republic of Moldova,

supplemented with the following regulations:

The law "On electronic commerce" № 284 of 22.07.2004 defines the use of electronic

information in the relations arising between the parties to electronic commerce. E-mail to the

validity equal to the information provided in written form, and has the same probative force.

The adoption of such laws as the Law "On Electronic Commerce" and the Law "On

electronic document and digital signature" is a significant step in the legislative definition of

strategic components of information security issues in Moldova.

The Ministry of Economy and Trade (MET) has started preparation of a new normative

act on electronic commerce. MET specialists affirmed that future normative act will exempt

companies from requirements to submit a large number of documents to fiscal bodies and will

considerably simplify a range of other bureaucratic procedures.

As e-commerce is still in the early phases of development in Moldova, there is very little

data available as yet with regards its growth. There are no statistics regarding the approximate

turnover of e-commerce divided between B2B and B2C. However, as an indication of growth,

the Ournet portal, which is very popular and indexes almost all Moldovan websites, currently

lists over 3,370 websites and has registered approximately 20 percent growth per year over the

past five years. 52 percent of sites are available only in Romanian and 21 percent offer some or

all of their information in Romanian, Russian and English.

A key enabler of e-commerce is the availability of electronic payment mechanisms. The

number of payments made with bankcards in 2009 constituted 3 percent of all retail sales and


paid services in Moldova. As of 1 July 2009, the total number of cards in use was 493,487 of

which 13,362 (2.7 percent) were local cards.

FinComBank launched an online municipal services payment system on 15th June 2005

for users of MasterCard and Visa credit cards.

Moldcell also recently launched a WAP banking service for clients of Telebank.

Ecentru-com S.A. is developing Internet retail outlets in partnership with Ritlabs and

S&T Mold companies. One of the main information partners of Ecentru-com is Zingan.com with

its portal www.allmoldova.com. In partnership, they have created a range of Internet shop

windows such us Bosch (housekeeping equipment), RevelСomputers (computers), Sanin

(polymer tape), Uniflux-line (data transport technology), AccentTehno (computers,

housekeeping equipment), AGEPI (industrial rights protection), FedEx (express mail services),

and Infotag (news agency).

The majority of websites in Moldova present information in the official state language,

Romanian. The Government institutions’ sites also make 70 percent of information available in

Russian and 30 percent in English. As a rule, the written mass media, radio and TV companies

present information on their websites in the language in which they broadcast (or write in the

case of newspapers). More than half (55 percent) of the news agencies publish information on

their pages in 3 languages: Romanian, Russian and English. 90 percent of the information by the

news agencies Reporter.md, Basa Press and Infotag is translated into Russian and English. The

agency Noutati Moldova presents information in Romanian and in Russian.

Moldova has comprehensive legislation in the electronic communications sector,

overseen by the National Regulatory Authority (ANRTI).

Interconnection regulation is considered complete and in line with European legislation.

The Interconnection Regulation also forms a basis for requiring LLU, although implementation

has proven problematic.

Legislation is in place on data protection, although there is no oversight body (although a

body with some data protection powers is planned) and limited rules on the international transfer

of personal data.

The general framework for online payments appears to be in place in Moldova, although

low Internet penetration and purchasing power mean that online service provision has not yet

reached its full potential.

E-government services are at an early stage of development. Government websites have a

low level of interactivity. For example, tax forms may be downloaded from the Internet but

cannot be submitted electronically for official purposes.


In October 2006, the Ministry of Economy and Trade initiated the development of a new

normative act on electronic commerce to improve the legislative framework in the sector.

In order to help support the sector, software producers will be exempted from the

payment of VAT for a period of five years through a simplified exemption procedure. The new

measures will also reduce the bureaucracy surrounding the procedure for allocation of work

permits for invited foreign software specialists as well as the procedure of recognition of foreign

diplomas in Moldova.

In most countries, criminal responsibility for crimes committed in the area of information

and communication technologies. Criminal Codec Republic of Moldova considers such crimes in

the area of information and communication technologies such as:

• Unauthorized access to computer information;

• The introduction or spread of malicious computer programs;

• A security breach of information systems.

Those crimes are punishable by fines, imprisonment, and unpaid work in the public

interest, deprivation of the right to occupy certain positions or engage in certain activities.

In Moldova, as well as in other countries, the criminalization of the spread of malicious

programs, that can be attributed and spyware. However, given a sufficiently low probability of

bringing to justice all the distributors of such programs, should join forces to combat computer

crime. The rights and freedoms of subjects in the course of their relationship should be protected

equally effectively regardless of their use of technology.

Information security of telecommunication systems involved in the Republic of Moldova

State Enterprise Center of Special Telecommunications. Provide reliable protection of

telecommunication system is a complicated task that includes a number of organizational and

technical measures to implement are the Center of Special Telecommunications.


Chapter III: PROSPECTS FOR THE DEVELOPMENT OF ELECTRONIC

BUSINESS IN THE REPUBLIC OF MOLDOVA

3.1. Management on the basis of innovations

Every e-business concept based on a technology break-through runs the risk of being

replaced by a company with a newer technology. Therefore, a strategy to maintain technological

leadership, or to have access to the leading applicable technologies, is essential for the long-term

survival of a technology-based e-business.

A technical innovation strategy can be as simple as outsourcing the technical side of an e-

business rather than trying to maintain the competency in-house. If it is large enough, a firm can

develop new technologies. But for most firms, an R&D program is too expensive. One option is

to partner with an organization known for developing new technologies, so that they become

available as they are developed. Co-developing and licensing technologies are also options. The

use of a strategic alliance can serve as a technology strategy, as well as a competitive strategy.

To avoid falling victim to a new technology, a firm must try to keep abreast of

technological developments that may affect its industry. Any company that is technology-

dependent must have someone in-house who is knowledgeable about the latest technical

developments. But more importantly, the company must be willing to take action when it

appears that a major advance in technology poses a threat.

Nowadays is practically impossible not to deal with technology and innovation. Despite

the vast amount of technology tools at our disposal, every day one sees the emergence of

innovations turning obsoletes the tools we have been used to.

In this way, the management of innovation (1) is becoming a business imperative. This

condition was the main reason for the development of a research that could analyze an

innovation management tool which could be simultaneously simple, fast e effective. Hence,

some available tools have been assessed in order to benchmark one tool which could generate

simplicity, speed and effectiveness, and more than that, it could fit to the current technology and

innovation new environments.

Amongst the analyzed innovation management tools one aspect called the attention:

despite the current importance of the information and communications technologies, none of

those tools pays the due attention to the role of these technologies to innovation. Therefore, it

seemed reasonable the development of a new innovation management tool with a competitive

differential in its emphasis on the information technology- IT management. In other words, a

tool which paid attention to the impact of: the information content management, the information

systems management, and the information and communications technology management, on the PAGE \* MERGEFORMAT 77

technological and organizational internal choices of the innovative firm, organization or

institution.

In our increasingly competitive environment most firms have, besides profit, revenue

generation, quality, on-time delivery and reliability as target of innovativeness. But to be

successful in this dimension the organization needs to be aligned accordingly. We define six

dimensions to characterize an innovative organization:

a) Openness

b) Level of organization

c) Information management

d) Awareness of conflicts

e) Recruiting requirements

f) Competences and responsibilities.

Only firms with these six characteristics are able to optimize their innovation process

leading to innovation success. They have the appropriate organizational structure to ensure a

fully integrated innovation process.

Figure 3.1.10: Innovation evaluation process

Source: http://www.ickn.org/html/innovation.htm

Therefore the authors stress the necessity of the above mentioned six characteristics for

an innovation affined firm. The openness emphasizes the ability of information absorption and

transfer. Innovative companies focus on relationships with opinion leaders. They are open to any

kind of discussion. Employees tend to be intellectually curious, willing and free to explore

knowledge creation and use.

A minimum level of organization is typical for innovative organizations. People have to

have the freedom to manage their roles and responsibilities. Only a limited number of rules

define the joint working process. This openness is also reflected in the information management.


Only little communication is organized by rules. People are not inhibited in sharing knowledge,

they are not alienated or resentful of the company and do not fear that sharing knowledge will

cost them their jobs. Conflicts are the seeds for innovation. Innovative companies support

cultures, where conflicts arise and are discussed. With conflicts the employees are trained how to

handle new situations. Innovative companies have accordingly adapted recruiting requirements.

These firms attract and hire people who reinforce the positive orientation towards

creativity and innovation. People need to have the ability to create conflicts and find ways how

to solve them. Competence and responsibility for innovation is shared within the entire

workforce. Everybody within the organization is responsible to develop and push innovation. All

employees have the one joint overall target to support the development of innovation. A culture

with a positive orientation to innovation is one that highly values learning on and off the job and

one in which experience, expertise and rapid innovation supersede hierarchy.

It is made clear that innovation management corresponding to its type of industry, type of

innovation, and its organizational structure, has to employ different mechanisms and structures

to be able to utilize the existing tacit knowledge assets for each company’s innovation success.

Problems which occur within the scope of the innovation process are often too complex to be

solved only on an analytical basis. Making decisions within an innovation process rely heavily

on tacit knowledge ‘know-how’. Consequently tacit knowledge plays an important role in all

stages of the innovation process. It is obvious that in the early phases of the innovation process,

(idea discovery and generation), the degree of intangibility is high, so the assumption is close

that the significance of tacit knowledge in the early phases of the innovation process plays a

more important role. However, has disclosed in his case studies that also in later phases of the

innovation process tacit knowledge tremendously contributes to speeding-up of the innovation

process and thus results in innovation success [1.34. pg 49].

As regards to innovation success is defined innovation success by two components:

product innovation success and process innovation success. These two dimensions reflect the

market recognition compared to the competitive environment. Successful innovations lead to

increased revenues and profits.

The innovation indicators are assigned to five dimensions and grouped in two main

themes: inputs and outputs. Innovation inputs include three dimensions:

• Innovation drivers (5 indicators), which measure the structural conditions required for

innovation potential;

• Knowledge creation (4 indicators), which measure the investments in R&D activities,

considered as key elements for a successful knowledge-based economy;


• Innovation & entrepreneurship (6 indicators), which measure the efforts towards innovation at

firm level.

Innovation outputs include two dimensions:

• Applications (5 indicators), which measure the performance, expressed in terms of labor and

business activities, and their value added in innovative sectors;

• Intellectual property (5 indicators), which measure the achieved results in terms of successful

know-how.

The 25 EIS innovation indicators have been classified into five dimensions to better

capture the various aspects of the innovation process. Innovation drivers measure the structural

conditions required for innovation potential, Knowledge creation measures the investments in

R&D activities, Innovation & entrepreneurship measures the efforts towards innovation at the

firm level, Applications measures the performance expressed in terms of labor and business

activities and their value added in innovative sectors, and Intellectual property measures the

achieved results in terms of successful know-how.

Figure 3.1.11: Innovation performance per country group and innovation dimension

Source: created by author based on European Innovation Scoreboard

In terms of this year’s composite indicator scores, the innovation leaders perform best on

all innovation dimensions (see Figure 3.1.11). The innovation followers score second on every

innovation dimension. Of the countries showing a below EU25 innovation performance, the

trailing countries perform better than the catching-up countries on Knowledge creation,


Applications and Intellectual property but worse on Innovation drivers and Innovation &

entrepreneurship.

If innovation was a purely random phenomenon, then no nation should remain amongst

the world’s technological leaders for very long, and newly innovative nations should regularly

rise up. However, the first thing is that we do not see randomness in national innovation rates.

Instead, we see some enduring regularities, with the United States, Japan, Switzerland, and

Sweden consistently placing amongst the world’s leading innovators, while Spain, New Zealand,

Norway, and Italy are repeatedly the least innovative of the industrialized world.

This is especially puzzling when we consider that almost every industrialized nation

expends a considerable share of its resources on the pursuit of technological progress. Yet,

despite the seemingly clear policy and fiscal requirements for promoting innovative behavior,

some countries are consistently more successful than others at technological innovation, even

amongst the industrialized democracies. Note also that amid the regular patterns, there is some

occasional but significant jockeying for relative position. These regularities need explaining, as

do the countries which violate them.

3.2 Problems of e-business and e-commerce on global and local markets

Electronic Business which is commonly referred to as e-business, which is the utilization

of information and communication technology (ICT) in conduct business on the internet, not

only buying and selling but also servicing customers and collaborating with business partner.

Electronic business methods enable companies to link their internal and external data

processing systems more efficiently and flexibly, to work more closely with suppliers and

partners, and to better satisfy the needs and expectations of their customers. Trust is the key to

the success of e-business and lack of trust is the significant problem on the way to e-business

success. During every business transaction, the parties involved should feel trust with the people

and the companies. It must be established and managed continuously in business transaction

activities.

Security services offering protection from security threats are: identification,

authentication, confidentiality, integrity, access control, and non-reputation. Today, e-business

applications are doing more than ever to increase efficiency and improve relationships with

partners and customers.

In relation to trust and internet technologies, consumers are concerns about two main

things which are privacy and security. This study is focusing on the issues relating to e-business,


such as its importance, issues and the solutions in order to overcome related to the security and

trust in e-business.

E-business is very widely implemented by many companies in order to simplify

purchasing processes by customers. There is almost an uncountable number of ways that an e-

business setup could be attacked by hackers, crackers and disgruntled insiders. Common threats

include hacking, cracking, masquerading, eavesdropping, spoofing, sniffing, Trojan horses,

viruses, bombs, wiretaps, etc.

With the rapid advances in communication technology over the past 30 years, the

corporate world has been revolutionized by the ability to conduct electronic business ("e-

business") through the Internet. Many of the changes that have occurred are positive. For

example, digital technology allows the instantaneous storage and sharing of contracts,

transaction information, and market research and so on. Transactions may also be conducted

online, allowing for commercial activity across thousands of miles. However, there are also

several problems that come with e-business, including ethical issues.

Security

Security is a major ethical issue in e-business.

One of the foremost ethical concerns about conducting e-business is security. Although

many companies are now aware of problems caused by hackers, maintaining online security

continues to be an issue. Going along with technology breaches is the issue of fraud. According

to a 2009 Forrester Research Survey, businesses lost 0.6 percent of their sales to fraudulent

transactions online. In response, these companies plan to spend an average of $23 million in

combating and detecting fraud in online sites.

Privacy

Anyone using the Internet runs potential privacy risks, and businesses are no exception.

Companies are relying more and more on digital storage capacity, including online databases, to

collect, organize and store data about contracts, transactions and customers and clients.

Intellectual Property

Many companies that conduct business online or using digital technology deal with

intellectual property issues, including electronic copyright infringements. Well-known examples

include music and film piracy. According to a 2007 report by the Institute for Policy Innovation

(IPI), small businesses and other music industry workers lose billions of dollars a year from

illegal downloads. Pirated software is also a concern for companies, especially in foreign

countries where enforcement of copyright laws may be less strict.

Employee Training

Employee training in ethics is often outpaced by the speed of technological advancement. PAGE \* MERGEFORMAT 77

One difficulty faced by companies involved in e-business has to do with employee

training. In many cases, the speed of advances in technology outpaces a company's ability to

teach its employees how to deal with the ethical issues involved. InformationWeek.com reports

that only 54 percent of IT and business professionals surveyed had a personal code for evaluating

the ethics of business decisions. Many make these decisions based on company policy, making it

even more important for a business to develop clear guidelines regarding ethical issues in e-

business.

E-commerce sites offer huge potential for online sales, but you can't just throw up a

website and expect customers to flock to your product. Too many e-merchants fail to recognize

the importance of providing the best e-commerce site possible. With some simple (and some not-

so-simple) adjustments, an e-commerce site can improve its profitability significantly.

Here are the top 5 problems with e-commerce websites that can make a huge difference:

Wasting the customer's time - Time is the most important commodity in online

shopping. You want your customers to be able to find what they want and buy it as quickly as

possible. Dynamic pages with changing content may look interesting, but they also make pages

take longer to load. When customers have to wait for pages to load, they often give up and go to

a faster-moving site. Additionally, some e-commerce sites make the mistake of wasting a

customer's time during the checkout process by requiring registration or asking for unnecessary

info. Once a customer decides to buy from your site you should make the checkout processes as

fast as possible with as few clicks as possible. Otherwise, the customer may fail to complete the

sale out of frustration.

Lack of compatibility with more than one browser - While 80% of the market

uses Microsoft Internet Explorer, failing to design your e-commerce site to work with other

browsers is passing up a huge opportunity. You immediately knock out at least 20% of your

potential customer pool, maybe more. Making your website work with a variety of browsers

usually only requires a few minor tweaks, but it can make a big difference in the amount of

traffic you receive.

Poor overall web design - When a website is not well organized or looks

unprofessional, many customers will immediately look elsewhere. Online shoppers have high

standards these days when it comes to how your e-commerce site looks and functions. Your

products should be easy to find and displayed nicely. Customers should be able to search for

what they want and find it. Likewise, shopping cart use should be a streamlined process. Any

hitches in the buying process from start to finish will cost you customers.

Poor customer service options - All e-commerce sites should make it easy to get


questions about products and purchases answered. Too many sites make finding contact

information and accessing company policies challenging for the customer. If customers can't find

the information they need to feel comfortable about a sale, they will probably abandon the sale.

Make sure all of your merchant policies and contact information are prominently displayed on

multiple pages of your website.

Under estimating security concerns of customers - Many websites fail to

recognize how apprehensive some shoppers are to enter their sensitive information into unknown

e-commerce sites.

For businesses that depend on e-commerce, one of the greatest problems is the loss of

personal contact with their customers. For many small enterprises, the thing that sets them apart

from larger corporations is their ability to deliver a personal touch. This competitive advantage

can be lost in trading over the internet.

Making your business stand out on the internet is extremely difficult. This is particularly

true if you are one of a number of businesses selling similar things. You should consult an expert

on internet marketing and search engine ranking if you want to improve your performance in this

area.

After a stuttering start, e-commerce levels across Europe are experiencing robust growth,

fuelled by increased uptake of broadband, a more technologically aware population and ever

improving ecommerce infrastructures. Whilst poor infrastructure is an important issue in limiting

e-commerce uptake in Southern Europe, of equal importance are cultural factors, such as trust

levels in business and attitudes towards distance shopping.

Other variables, such as age and gender, are seeing their influence lessen as the online

population diversifies, with online shopping set to grow fastest amongst older age groups over

the next few years. This is a product of the group’s increased level of online experience, a factor

that has a major influence on every group’s propensity to shop online. Broadband access

continues to be a major driver of e-commerce participation and while other factors, such as the

wider selection of goods, convenience and the ability to simultaneously compare prices, have

also been crucial in driving online shopping, there are still a number of issues that limit the

market’s development. Despite significant strides forward in the domain of security, a significant

number of consumers have fears about releasing personal details online.

Low credit card ownership is also proving to be a barrier in some of Europe’s largest

economies, with a lack of alternative payment mechanisms hindering development. The allure of

the high-street is also largely undimmed and this remains the only place to shop for the 56% of

EU 25 households who have no internet access.


The prospects for the e-commerce sector look very healthy over the next few years, with

our nVision forecast predicting 70% growth in the proportion of people shopping online. By

2013, almost half of Europeans are expected to make a purchase online, up from 21% in 2006.

Numbers are expected to grow most rapidly in Southern Europe, albeit from a very low current

base. Low penetration of broadband internet and underdeveloped attitudes to shopping online

mean that reaching even current Northern European levels remains a distant vision.

Figure 3.2.12: E-commerce forecast

% of adults in selected EU countries making purchases on the internet in the last 3 months, by country

Source: Eurostat/nVision Base: 2,000 per country aged 15+

In North-Western Europe, it is France that is predicted by many to provide much of the

medium-term growth in internet shopping, as the recent upsurge in broadband connections has

not (yet) been mirrored by higher levels of online shopping (and these two factors are usually

directly correlated).

One of the key factors cited for the relatively slow development of e-commerce in France

is the existence of the Minitel system, a internet-like network with basic e-commerce facilities.

The network has been running since 1983 and an estimated 32% of the population still use the

technology.

The Nordic region is, as now, expected to be at the forefront of the e-commerce sector in

2013, with more than three-quarters of adults expected to shop online in Denmark and 60% of


Swedish consumers doing likewise. Staying in the Northern half of the continent, it is in the

Netherlands where growth is set to be the most rapid, predicted to nearly double over the next six

years. The development of the market can be attributed to several factors, including an excellent

telecoms infrastructure, a geographically compact and urbanized society and a technology-savvy

population.

We can build any option ONLINE and OFFLINE payment into electronic store, which

will require the customer.

There are following options for E-COMMERCE payment in Moldova:

- Bank card (online payment or non-cash payments) Used to receive payments from both

the physical as well as from legal entities. For payment by bank cards, the site owner should to

get Internet Merchant Account in the acquiring bank.

In Moldova, at the moment, this service provides so far the only bank - VictoriaBank.

- Payment via POS terminal.

Used to receive payments from both the physical as well as from legal entities.

- Cash

Goods paid by the buyer in cash to a cashier in a store or to courier upon receipt of the

goods by the buyer. Intended mainly for receiving payments from individuals. If necessary, we

can integrate the cash payment option into the accounting system of the company.

- CASH-IN terminals

Payment is made in the payment terminals, located at the street.

Used to accept payments from individuals.

- Printed invoices

The buyer must print out and provide it to accountant for a bank transfer

Used to receive payments from legal entities.

- E-invoices

Issued e-invoice is transferred to the banks authorized for service of electronic invoicing

and accepting payments.

Buyer should only go to one of the authorized bank (or branch office), indicate the

number of e-invoice (indicated by ONLINE SHOP after the byer finished their order) and pay

for the goods / service. Intended mainly for receiving payments from individuals.

Soon, in Moldova, it is planning to launch a payment system to serve electronic money

E-money or electronic money could be used to receive payments from both the physical as well

as from legal entities.

Let’s now turn to Moldavia’s e-commerce sector to find if it’s developed enough at

present. PAGE \* MERGEFORMAT 77

Internet in Moldova has not become a tool for business yet, though official statistics

shows over 70% of companies use Internet for business purposes.

Little amount of Moldavian companies have given a try to work in e-commerce field,

cover this market area which is quite new for Moldova. According to the recent research only

22% of individuals involved in trade business use Internet as a tool for developing their business.

It means trade of goods and services and Internet have a weak link between each other.

So, companies involved in trade relations prefer traditional way of commerce, using

Internet in very small proportions. And unfortunately, using Internet for e-commerce (1.8%) and

e-banking services (6.9%) still remains very low.

Constraints as availability of reliable data on e-commerce Moldova market, a lack of

database on major companies involved in e-commerce relations and low transparency of

information in the communication field all these hinders e-business adoption.

Besides, a number of reasons causing stagnation of e-commerce market and holding e-

payments at an early stage of development in Moldova, like followings:

• Low security and trust level of data transportation, as well of digital agreements

• Low level of IT education among potential buyers of goods and services

• Inefficient marketing of e-commerce services, low awareness on behalf of service

providers

• Lack of bank accounts and cards, people still prefer keeping all their money home,

which cut options to pay with electronic money for goods and services

• Low salaries, a small target group can afford delivery taxes, if order on line

• IT equipment and use of on line services are often the last issues on the shopping list,

also because of low incomes

• Addiction and pleasure for shopping customs, people would often prefer visiting stores

in weekends while searching for certain goods, rather than ordering on line with home delivery

• Stores do not encourage use of credit cards, either it is too expensive or new

technologies are not welcomed.

E-money system represents another option for online shopping in Moldova. In order to

use it, each client shall have an account, being able to fill it at the bank or buy special refill-in

cards. This electronic systems money allows customers to pay on line, without using the credit

card.

Having suffered from economic, social, political challenges and difficulties over the years

as one of the former Soviet Union state, Moldova, nevertheless has managed to catch up and

even outstrip some of the countries in terms of IT progress and e-commerce deployment.

However, Moldova has lot things to perfect in order to catch up the leaders. PAGE \* MERGEFORMAT 77

Difficulties and delays in obtaining rights of way and building permits for network

infrastructure remain an important concern for operators in Moldova, particularly as regards the

roll-out of fixed networks and obtaining interconnection. New entrants have identified a variety

of problems with regard to rights of way, such as the granting of specific rights to the incumbent,

lack of transparency in procedures and the unclear division of competences between the different

levels of authority with responsibilities in this field. This has led to disadvantages for new

entrants and significant delays in the deployment of new infrastructure. Mobile network

operators, for instance, have reported persistent problems with regard to the granting of rights to

install mobile masts and antennae, often due to health and environmental concerns.

3.3 Solutions for the successful e-business management on global and local

markets

Next I will try to give a solution for any problem that I mentioned till now.

(A) Problem: Lack of trust

Solution: Confidence of trust

To solve this major problem of trusting in E-Business, a large amount of trust will be

very important to prove to the users that the certain website which the users are accessing are

trust worthy.

The trust makes a website in a good condition and all the users who are using it will feel

comfortable dealing any type of business with them. As the issue of trust occurs in everything in

the internet and E-Business, it is very important that the value of trust is big and it is able to gain

the trust and the loyalty of the users and making sure that they stay loyal to the particular

website. This trust can be achieved by taking few steps which can help gain this trust. The steps

are making sure that all private data about the user are kept safe, well maintained and kept up-

dated.

By doing this we can prevent the lack of trust a users puts towards the particular website.

When we have enough trust amongst the users, an E-Biz website can perform well and at full

speed and makes sure that all the information are kept safe and making sure that no hackers go

through the website and steal users information.

(B) Problem: Unaware of How e-Business Transactions Take Place

Solution: Being aware of e-business transaction

The issue of being unaware of not knowing about how online transaction works can lead

to a lot of issues as stated above. This problem is a threat to users who don’t seem to understand

that their money can be blacked out if hackers hacks their account. To prevent this problem, the


E-Biz has to make sure that they have enhanced versions of security and good transaction system

for the users to cash in their money. By making this transaction system secure, we can no longer

be afraid of hackers. In the mean time, E-Biz needs to teach the users about the online

transaction system. By teaching them how the system functions, users can learn and they too can

be aware of the system’s processes. All this learning will alert the users to be more caution on

their online transaction. E-Biz websites with online transaction systems should list down all the

possibilities of doing online transaction and all the misuses possible.

(C) Problem: Degree of Confidentiality Involves

Solution: Making sure that degree of confidential is reached

Organizations have to keep secured of clients’ personal information and stored in a way

that it is unable to be accessed by other unauthorized users. In order to build the confidence of

users, the system has to be secured and tight so that no bugs or viruses could enter the website or

the transaction system.

This prevention of this system can enlarge the safety and can ensure the safety of the

users using the system and this confidentiality is essential because of the fear towards forgery

and hacking. Confidential are privacy of data and safety of an individual’s property and assets. In

E-Biz, hackers always are on the wait for any loophole to enter the system and hack information

about the user’s confidential folders.

In these folders, there may be a lot of important information which can be useful and

harmful to others. By using this powerful system, hackers will find it difficult to hack the system,

and due to this users will have more confident on the E-Biz website and they will certainly cash

in their money and deal their businesses thru the internet.

(D) Problem: Outdated Law and Regulation

Solution: Updating the law & regulation

Cyber crime is a serious issue and hackers are a real threat to E-Biz. All this threats can

give severe break down on E-Biz websites if proper care is not given. And sometimes users may

think that the law and regulation in the internet are lousy. We have to prove them wrong by

giving updated law & regulations which will help keep an E-Biz safe and secure. Laws &

Regulation are very important to prevent the users to miss use their priority and their freedom

and to not do useless things such as hacking to others account and getting away with it.

These laws must be strict and the people who regulating the laws should be honest and punish all

who misuse the system. Any misuse and misconduct of the system have to pay the penalty.

The Moldovan government published a National Strategy on Information Society

Development (E-Moldova) in March 2005. The Strategy covers a wide range of issues, both with

regard to infrastructure development and the provision of government services. PAGE \* MERGEFORMAT 77

The Strategy is divided into two broad categories: the legislative and procedural

framework and the institutional and regulatory framework. These categories are sub-divided into

short, medium and long–term tasks. In the short-term the Moldovan authorities have set the

following goals:

Privatisation of major state communications enterprises;

Improving the attractiveness of the market for investors;

Development of the law on Electronic Communication to bring it increasingly into line

with the EU regulatory framework;

Improving the monitoring of quality of service, including the establishment of

certification centers;

Creation of a Universal Service fund and roll-out of services to at least 40 percent of

localities;

Creation of a national data transfer network capable of supporting key targets for

communications (28 percent penetration for fixed telephony, 30 percent mobile telephony

penetration, 10 percent of households with Internet access);

Implementation of transitional mobile services en route to the rollout of 3G;

Launching of a Moldovan digital satellite TV service.

In the medium term (up to 2008-2010), the aim is to:

Move towards next generation ICT networks;

Achieve EU average figures for fixed and mobile telephone use, household Internet use

and universal service;

To launch terrestrial digital TV.

In the long term (post-2010), the aim is to continue developments to match EU ICT

levels.

The Moldovan authorities also intend to continue expanding their e-Government

programme, enhancing the legislative and procedural framework, the technological framework

and the institutional framework.

The National Strategy also supports e-business, e-education, e-science, e-culture, e-

science and e-health.

Two observations can be made regarding the implementation of the National Strategy: it

appears that some of the targets have either been met already or will probably be met (such as

mobile penetration and rollout of new mobile services); on the other hand, it seems that the

privatization of state-owned communications companies is somewhat less of a priority now than

it was when the National Strategy was first prepared.


CONCLUSION AND RECOMANDATIONS

Electronic Business (e-Business) is revolutionizing the way of communication between

internal and external stakeholders in an organization. E-business can lead to competitive

advantage and at the same time, increase profitability.

There are several factors resulting on the success of e-business. One of the most

important factors is trust. Acquiring customers’ trust depends on many things that an e-business

controls. Some relating factors for gaining customers’ trust are: appeal of the website,

product/service offering, branding, quality of service, and trusted seals. Actually, trust can be

viewed from many angles such as transaction, information content, product, technology, and

institution. There are huge numbers of impact on the way businesses think about designing,

developing, and deploying Web-based applications. Web services may be an evolutionary step in

designing distributed applications; however, they are not without problems. Therefore, we have

to concern on the issue which is relating to the security in web-services of e-business.

In conclusion I can say that e-business presents opportunities for all consumers and small

businesses to obtain easy access to the world market via the Internet. In the past, the world

market was readily accessible only to large global companies located mainly in developed

countries. E-business is a new and powerful medium which can help close the digital divide

among countries and achieve global equality in the new world economy. This can only be

accomplished if member countries take balanced steps between consumers and businesses now

and in the future to ensure that an international framework related to E-business benefits both

developed countries and developing countries. In undertaking this initiative, member countries

should take into consideration the viewpoints of both consumers and the industries. "Digital

trade policy" is crucially important from these viewpoints.

This draft proposal reflects our firm belief that the future of the Internet and E-business

shall be for the betterment of all people and all nations. E-business is, and will become more,

vital not only to business, but also to society itself throughout the world. The "quality of life" of

every person in the information society is surely based on reliable and stable system on

networks. The confidence of ordinary people as well as business towards activities on the

Internet is our common public policy goal.

So, I can say that the value of electronic business, an increasingly significant feature of

international trade, is expected to increase dramatically in the new century. In order to participate

in this trade, countries will have to build their capacities to engage in this trade as a priority. The

difficulties, however, of doing this should not be underestimated. Countries need to invest in PAGE \* MERGEFORMAT 77

both physical and human infrastructures, specialized education and training, and provide an

appropriate legal framework for conducting commerce electronically.

E-business is a modern term describing the growing on-line economy. Since the internet

began, thousands of new companies have come into existence and are trading goods and services

electronically. The e-business may be for products sold directly to the consuming public or

directly to other business involved in e-commerce. This is called B2B as short for business to

business trade. E-business is conducted with low overhead costs and in most cases without even

storefronts.

The growth, integration, convergence and sophistication of information technology and

communications are changing society and economy. E-business is an inevitable reality as the

prime promoter of commerce and trade around the world. Due to the technology infrastructure

many of the goods and services can be delivered electronically creating a whole new virtual

economy driven by computers and telecommunications networks.

Generally speaking, global electronic business will improve efficiency, allow firms to cut

inventories, provide better and timelier customer service, and help keep inflation at current low

levels. These benefits are especially evident in international trade. The Internet will help

suppliers and buyers find one another more rapidly, reduce the complexity of finding and filling

out paperwork, and erase borders completely for products available in digital form. Especially

interesting and exciting is the potential of electronic commerce to spur entrepreneurialism in

disadvantaged areas, as the Internet allows small businesses, and individuals in poor countries or

remote areas, to enter markets at low cost.

Today, an estimated 85% of electronic commerce takes place within or among

businesses. The goal is to ensure that we take full advantage of these benefits for producers and

consumers, but also to address aspects of electronic commerce such as security, privacy and

consumer protection related to practices by private parties.

I think that our trade policy with respect to electronic commerce begins with some basic

principles: consumers should get the maximum benefits of new technologies; our companies, our

national economy, and our trade partners should be able to use them to the best effect; and we

should maintain high standards of public safety, privacy and consumer protection that help

define the our quality of life. And this leads me to think that the important goal of our country is

that everyone, here and overseas, should have access to the electronic marketplace. Thus,


electronic commerce is ideally suited for developing countries and people with a good idea but

little capital.

In my opinion, the concepts and theories on e-business trust and security can guide the

managers and companies to develop their own unique customer retention strategies. While

developing trust between companies and customers in e-business, managers should understand

that different service qualities might lead to different level of customer buying behavior and

customer retention. The security systems are strongly needed to handle the process of developing

the customer retention strategies in e-business transaction process in an attempt to capture the

relationship within organization and with the customers.

The development and improvement of technologies have brought successful towards e-

business. High technologies have attracted people misuse the technologies such as hackers and

cybercrime which they can access to e-business privacy easily. Thus, e-business companies

should build trust and using security during the business transaction. To provide value to the

customers through service and goods provided, research found that companies should build up

trust and security to protect their customers. Benefits of application trust and security include

improved customer service, build customers trust, avoid the misuse of technologies, protect

customer’s privacy and maintain the companies’ reputation. In order to create an effective

infrastructure for securing E-business, it requires a comprehensive development of several

elements including laws, policies, industry self regulation, technical standards and law

enforcement.

These elements may provide positive environment and infrastructure to support the

growth of e-business and relation with customers. Additionally, the government itself needs to

reexamine existing regulations to ensure protection for the e-business.


BIBLIOGRAPHY

I. Legislation of the Republic of Moldova

I.1 Legea Republicii Moldova privind comerţul electronic, Monitorul Oficial al Republicii

Moldova nr. 138-146/741 din 13.08.2004

I.2 Legea Republicii Moldova cu privire la documentul electronic şi semnătura digitală,

Monitorul Oficial al Republicii Moldova nr. 132-137/710 din 06.08.2004

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II.4 Booz Allen & Hamilton, Windows into the Future: How Lessons from Hollywood Will

Shape the Music Industry, 2001

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II.6 Business Guide to the World Trading System, 2nd Edition, International Trade Centre,

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2000

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health/e-banking/e-business, on-line services, virtual institutes, and their influences on

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Romania, 2002

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internaţional, ASE Bucureşti, Vol. I, 23-24 septembrie, 2004

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Dryden Press, 2002

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international symposium on economic informatics – May 1999,Bucharest, Romania,

1999Communications, Luxemburg, 2002

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White Paper, U.S.A.: Oracle Corporation. 2002

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best practices & solutions, Barcelona 6-8 may 2002, Edition Office Publications of the

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conferinţe ştiinţifice a autorilor de studii de predoctorat, 2001

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Economică, Nr.6, 2001

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martie, 2003

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Tribuna Economică, Nr. 18, 2001

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Informatica Economică, Nr. 1 (13), 2000

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III.18Sistemul informaţional-managerial al organizaţiei, Editura Economica, Bucureşti, 2001

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IV.1 http://onlinebusiness.about.com/

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gateway


http://www.ftc.gov/bcp/menu-internet.htm

http://www.money-off.co.uk/

http://www.project.com/

ANNEXES

Annex 1: Comparison between B2B e-markets and B2C e-commerce

Market characteristic B2B e-markets B2C e-commerceValue/size of transactions Very large value Relatively small, including

mini orders.Buyer-seller relationship Usually long-term, based on

contracts; personal, non-price factors important to buyer; market may be seller- or buyer-driven; integration between market place and traders’ and third party back-end systems.

Mostly short-term and spot sales; transactions between strangers; price being the main consideration for the buyer; market predominantly buyer-driven; no integration with buyers’ systems.

Participants Many participants interacting in a given transaction – networks of suppliers; partners and buyers.

Many consumers dealing directly with single sellers (one supplier, many consumers).

Functionality requirements High degree of functionality required; factors other than price information essential.

Less functionality required beyond price information.

Pricing Negotiated prices, long-term contracts, auctions, catalogue prices.

Fixed prices, mainly catalogue.

Payment system Credit cards, bank credit, electronic account-to-account payments.

Credit cards, electronic account-to-account payments.

Order fulfillment Stringent requirements regarding availability of products and particulars of fulfillment; global express deliveries.

Fulfillment requirements more flexible and less stringent, global express deliveries.

Infrastructure requirements More complex, customized Minimum requirement – a browser with Internet access.

Entry conditions Cost of technology and economies of scale may create entry barriers, especially for sellers.

No major entry barriers

Network effects Beneficial to both sellers and buyers

Beneficial to sellers and less to buyers

Intermediaries Intermediaries are bypassed but also used in some cases

Intermediaries are bypassed

Product designation Custom-made according to specification

Standardized

Sales procedures On-line catalogues, tender On-line cataloguesSecurity issues Network security and

corporate privacyProtection of consumer information and needs

Source: Compiled from various sources; for example the Sculley and Woods (2001) and Morgan Stanley Dean

Witter (2000)


Annex 2: The positive and negative implications of e-commerce for developing countries.

Potential and benefits Challenges and dangersExponential growth in e-commerce trade will lead to overall increase in world trade.

The developed and wired world will benefit the most.

About 80% of e-commerce growth will be in B2B trade. There is therefore a potential opportunity for businesses to link to supply chains.

Existing supply chains could be destroyed and dependence on large transnational may grow.

E-commerce could lead to faster transfer of technology and growth of information technology industries in developing countries.

IT multinationals may be the sole beneficiaries if local industry is weak.

Giant corporations will emerge, but so will small enterprises that are able to offer similar services at lower cost.

For developing countries, this will mean great opportunities but also greater threats from multinationals.

Access to information on markets, opportunities and supply chains will increase.

Greater access from some would exclude those without access from some of the benefits of e-commerce.

E-commerce can help overcome the drawback of distance from developed markets.

Multinationals can use the same technology to access local markets in developing countries.

Exporting SMEs can establish virtual shops more cheaply than actual stores abroad.

Maintenance, upgrading and marketing costs are high. Issues of security, payment mechanisms and assured supplies need to be addressed.

SMEs could rely less on middlemen, intermediaries, agents.

Internet services providers and portals may emerge as the new power brokers.

SMEs could generate new business by expanding into digital commerce.

Many SMEs and developing countries may not have the expertise to do this.

Companies will locate their services wherever they have access to competitive skills.

Developing countries that can provide a skilled labor force at lower costs could benefit.

Developing countries may have a comparative advantage in providing back office operations (such as call centers, data processing) because their labor costs are lower.

Employees will need familiarity with the English language and computing skills. Firms will have to develop a strategy for moving up the value chain in the software industry.

E-commerce enables new suppliers to enter markets abroad and integrate with global supply chains.

Danger of cutting out existing suppliers in developing countries.

Consumers in developing countries may be able to buy goods at lower price.

Local producers in developing countries may lose existing local customers.

Producers in developing countries could parts and components more cheaply.

This may further marginalize local suppliers.

Financial institutions and processes such as electronic fund transfers are growing and modernizing.

Foreign banks and multinational credit card companies may be the major beneficiaries.

Allows for increased publicity and advertising possibilities.

Cost of effective advertising on the Internet may be out of reach for SMEs in developing countries.

Increased efficiencies and transparencies in public procurement could bring competition to and improvements in, public-sector purchasing.

Compulsory e-commerce-based supply requirements may preclude existing suppliers with no Internet access.

Movement of persons such as skilled information technology professionals could decline as access to the Internet becomes locally available, thus reducing the brain drain from developing countries.

Additional opportunities for moving up the digital commerce chain may suffer.

Source: Didar Singh, Electronic Commerce: Issues for the South (South Centre, Geneva)


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