3

ACADEMIA DE STUDII ECONOMICE DIN MOLDOVA

FACULTATEA ECONOMIE MONDIAL I RELAII ECONOMICE
INTERNAIONALE
CATEDRA RELAII ECONOMICE INTERNAIONALE

BERNAZ Marina
PERSPECTIVELE DEZVOLTRII AFACERILOR ELECTRONICE N REPUBLICA
MOLDOVA.
TEZA DE LICENA

Specialitatea Relaii Economice Internaionale



Admis la susinere Susinut de:
ef catedra: studenta gr. EMREI
287
conf. univ. Boris CHISTRUGA BERNAZ Marina

(semnatura) (semnatura)
Conducator stiintific:
dr.in. ec. Eduard
FRUMUSACHI

(semnatura)


Chiinau 2012
4

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
5

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





6

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.
7

- 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, theres
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
8

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.
















9

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
10

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
11

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 ones 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 organizations 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
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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
13

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.








14

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.
15

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:
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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:
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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 todays marketplace want quality products and
information in a quick and easy manner. Ive typed it before and Ill type it again, the internets
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.
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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 todays 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.
19

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.
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Name
Impact (%)
Details and shares
High 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
21

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
22

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
23

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-business
Mode intermittently No breaks
Sales Local Regional expansion
Type of communication
with byer
Telephone, fax, e-mail. Telephone, fax, e-mail.
Byers support Verbally, fax, e-mail Special information pages, the creation of
forums.
Range Established set (Local suppliers) Extended set (2)
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.

24

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
the clock operation mode (or on a "24 hours a day, 365 days a year). Thus, can be substantially
25

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
26

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.
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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
28

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
29

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
yours to try to divert your customers.
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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
advertise a precise disclosure of details with clear terms and conditions on an offer. Advertising
31

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
32

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.






















33

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.
"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 Banks 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
professional banking services to the clients conducting industrial and commercial activity in the
34

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.
EuroCreditBanks 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.
35

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 information
Merchant 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 banks 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 banks managing board and of banks branches within
the process of risk management and internal control procedures.
36

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 banks
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;
37

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.
38

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 2 percent in 2010, with gradual
acceleration to 5 percent by 2012.
39

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.
40

According to product life cycle theory, production is being moved from the country
innovator to country imitator at the products 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
41

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 countrys 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 countrys 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
42

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.
43

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
44

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 Moldovas 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.
45

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
Moldovas 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,
46

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
47

80% of Moldovas 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

48

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.




49

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
50

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
51

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 users 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, Chiinu, 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.
52

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
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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), Revelomputers (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.
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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.







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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
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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.
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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 companys 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;
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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 years 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,
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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 worlds 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 worlds 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,
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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.
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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
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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 groups increased level of online experience, a factor
that has a major influence on every groups 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
markets 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 Europes 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.
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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
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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.
Lets now turn to Moldavias e-commerce sector to find if its developed enough at
present.
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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.
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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 dont seem to understand
that their money can be blacked out if hackers hacks their account. To prevent this problem, the
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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 systems 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 individuals property and assets. In
E-Biz, hackers always are on the wait for any loophole to enter the system and hack information
about the users 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.
68

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 longterm 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.

69

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
70

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,
71

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
customers 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.










72

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4.4 www.money-off.co.uk
4.5 http://www.ftc.gov/bcp/menu-internet.htm
4.6 http://www.wto.org/english/tratop_e/ecom_e/ecom_e.htm: WTO site, E-commerce
gateway



















76

ANNEXES
Annex 1: Comparison between B2B e-markets and B2C e-commerce
Market characteristic B2B e-markets B2C e-commerce
Value/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 catalogues
Security issues Network security and
corporate privacy
Protection of consumer
information and needs
Source: Compiled from various sources; for example the Sculley and Woods (2001) and Morgan Stanley Dean
Witter (2000)
77

Annex 2: The positive and negative implications of e-commerce for developing countries.
Potential and benefits Challenges and dangers
Exponential 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)