Proliferation of Internet Cafs And the Secret to their Effective Management

A Research Paper Presented to Ms. Ma. Fatima Nolasco College of Business Administration Lyceum of the Philippines Intramuros, Manila

By; Paolo Ongsueco Frank Cedric Descalso Jayralyn Santos Angelica Loreine Ceidoza Roselynn Delos Santos Maryfred Ergo Domingo Mica Nepomuceno

October 2011 CHAPTER 1

Introduction

In the previous discussions we have tried to take a look at on the profile of an average internet caf owner in the Philippines. Sad to say, that most of them are not really professional businessman who came into the industry that armed with sufficient information in order to run their business establishment effectively. Most of the internet caf operators are copy cats in which they saw that it was a very lucrative business and they went into it without even making an assessment of the market in which they would cater to. Most of them are in gaming since this is the framework which started the internet caf industry in the Philippines.

Background of the study If we look closely, we would find out that the internet caf industry in the Philippines is rooted in the video game arcades of the 1980s. Unlike in other countries wherein internet cafes offered first internet related services, the internet cafes in the country can trace it roots to the LAN based computer shops in the 1980s that offered gaming as their primary product. Even with the introduction of a fast internet service this business model has not been updated and up to now I would say a majority of the internet cafes in the country is set up for gaming purposes. Now with the proliferation of internet cafes in a particular area this is becoming to be a problem since the market could not sustain their operations. Is there really a market for internet cafes in the Philippines? Luckily a study was made by Yahoo! and Nielsen on the Internet Habits of Urban Users in the Philippines. This study which was released in March 26, 2009 though it is not really comprehensive since it limits itself in studying the internet habits in major urban center in the country can provide us with enough data that we need to come up with a reasonable conclusion.

According to previous studies conducted by the Commission on Information and Communication Technology, the Philippines have one of the lowest computer penetration rates in Asia. Compared to its neighboring country, only 14% of the total population in the Philippines has a computer at home. What is fascinating about the Yahoo!-Nielsen report is that they found out that 28 percent of Filipinos in national urban centers access the internet in the given month and 5 percent access it on a daily basis. You would have to remember that the poll that they conducted took only 1,200 samples in 22 highly urbanized areas including Metro Manila. If you would add those belonging to the provinces the number of Filipinos accessing the internet would surely be greater. Another interesting fact is that they found out that there is a growing demands for internet access outside of Metro Manila in fact 35% of Filipinos in Cagayan de Oro access the internet in the given time.

The study also showed that internet usage is particularly higher amongst the younger segment of the population. With 50 percent of the total surveyed belongs to the 10 to 19 years age bracket. There is a slow decline of users as the age bracket increases till it reaches the 50 and above bracket wherein it seems that internet usage is not very popular.

Fascinating information that you can get from the study is what the internet users are doing while they are in the internet. Yahoo!-Nielsen found out the following:

Activity Monthly Percentage

Used Email Used Instant Messaging Used Search Played online games Visited Social Networking sites Reading Blogs Digital Photos Upload/download Worked on their personal blog Listen to Internet Radio Download music Read News online Internet SMS Internet Banking Purchased Goods online

63 63 53 53 51 42 33 28 28 25 24 23 3 3

By going through this information you would suffice that the internet caf owner in choosing to cater only to the gaming market is losing a much wider market of internet only activities. Particularly they are only catering to 53% of internet users belonging to the male gender and belonging to the under 20 age bracket. The most important information that the study pointed out is that since the country has a low penetration rate of computers, they found out that 71 percent of the respondents in the given three months period accessed the internet through the internet cafes. 47% of the total time spent in the net is accessed through the internet cafes. Internet Cafes are also a dominant access point for users from the lower socioeconomic levels. This study clearly reveals the customer base of an internet caf in the Philippines.

B. Statement of the problem 1. What are the advantages and disadvantages of having an Internet Caf? 2. Why are Internet Cafs getting more in demand these days? 3. How do owners manage Internet Cafs? 4

4. What are the effective ways of managing them?

C. Significance of the study Most people cannot have their own computers because of its high price. Yet some are not handy like laptop or notebook computers. Cafs are convenient for people because you can find it anywhere.

Nowadays, it can be seen in malls, streets or even beside the schools. We all know that computers are used by means of communication, business means, researches and gaming. Users will be able to create online communities where they will interact, entertain and socialize. Customers will be satisfied in faster internet connection.

D. Scope and Delimitation This study focuses on who will benefit from this paper. Internet Cafs are open to everyone. School children, high school or college students can easily access and do their school projects or even their assignments. Some are office workers, to easily do their business transactions or office works. And also Parents to communicate to their relatives abroad.

E. Materials and Methods In this research, we do brain storming, listing down the questions and eliminating it to prepare the specific questions related to our topic. Surveys allow your readers to envision the points you make in the rest of your article by providing hard data to which they can relate. Of course, most writers don't have the

time to conduct scientific surveys depending on the researchers instruction and numbers of participants needed for the paper. You can still make surveys work for you in your articles. We surveyed 10 owners of Internet Cafs within Metro, Manila 1 in the mall, 4 along the streets, and 5 beside the Universities.

F. Definition of Terms LAN (local area network) - it supplies networking capability to a group of computers in close proximity to each other such as in an office building, a school, or a home. A LAN is useful for sharing resources like files, printers, games or other applications. A LAN in turn often connects to other LANs, and to the Internet or other WAN. Yahoo! - is an Internet portal that incorporates a search engine and a directory of World Wide Web sites organized in a hierarchy of topic categories. As a directory, it provides both new and seasoned Web users the reassurance of a structured view of hundreds of thousands of Web sites and millions of Web pages. It also provides one of the best ways to search the Web for a given topic. Since Yahoo is associated with the most popular Web search sites, if a search argument doesn't lead to a Yahoo topic page, it will still lead to results from the six or seven popular search engine sites Yahoo links to. Nielsen - designating or of a rating (sense) used to measure the size of a TV audience. Commission on information and Communication Technology - the primary policy, planning, coordinating, implementing, regulating, and administrative entity of the executive branch of the Philippine Government that will promote, develop, and regulate integrated and strategic information and communications technology (ICT) systems and reliable and cost efficient communication facilities and services. Proliferation - to cause, increase in number or extent.

E-mail - is a system for sending and receiving messages electronically over a computer network. E-mail is asynchronous and does not require the receiver of the message to be online at the time the message is sent or received. It allows a user to distribute messages to large numbers of recipients instantaneously.

CHAPTER 2 Discussion

An Internet caf or cybercaf is a place which provides internet access to the public, usually for a fee. These businesses usually provide snacks and drinks, hence the caf in the name. The fee for using a computer is usually charged as a time-based rate.

The advantages and disadvantages of an Internet Caf are numerous. The biggest factor for aspiring entrepreneurs is the lack of capital. The labor does not need to be skilled. Furnishings do not have to be expensive and computers are quiet cheaper. There are much ancillary revenue opportunities.

The main advantages to cafe businesses are that it makes the Internet accessible for people who do not own a computer of their own. People who would struggle to pay for internet access at home, per month, also benefit from this low cost alternative.

A disadvantage is that these cafes do not always provide secure environments for web access and valuable information is more at risk of being stolen by identity thieves.

These risks are shared by computers available for access in hotels, even wireless connections in cafes and public places. These computers sometimes have key-loggers; a program that saves your user names, passwords and sites that they were used to access.

A danger of using even programs like Sky type, which would ordinarily be free to other computers connected to the internet around the world, means that your credit details are stored by the company in case you were to ever call a landline number. By using login details on an unsecure computer, 8

hackers can hack into your account and, without having your credit card details, can still make phone calls on your anywhere in the world which are subsequently charged to your account.

With these issues presenting themselves to internet cafes and the like, it points to the growing pressure for better protection as users will have little choice other than to avoid using caf and Wi-Fi hotspots to surf the web.

As there is no way of knowing who has accessed the computer before you, another user may have unknowingly opened an email allowing a Trojan program, like a key-logger that puts you at risk when logging onto your own email accounts, onto the system. Experts suggest that internet cafes should only be used for finding information rather than accessing sensitive information.

If changes are not made then the disadvantages of internet cafe businesses will force themselves out of business.

Internet cafes are an interesting example of a service that has all the markings of being obsolete, but are in actuality still in great demand. Even as technology becomes more complex, we wont see them fade away any time soonafter all, if you want to engage in PC gaming, its nice to have someone else pick up the bill for a suitable computer.

Most of Internet Cafes owners are not really professional businessmen who came into the industry that is armed with sufficient information in order to run their business establishment effectively. Most of the internet cafe operators are copy cats in which they saw that it was a very lucrative business 9

and they went into it without even making an assessment of the market in which they would cater to. Most of them are in gaming since this is the framework which started the internet cafe industry in the Philippines. Owners of Internet Cafes hire a computer literate person. That would be the server of an internet shop. The manager also should have a background field in computers. They make promos to get more people to buy hours in the business.

The traditional ways of managing a business is not enough to effectively run a unique business like an internet cafe, and caf owners are continuously trying to find the most effective ways to managing it.

There are some of these owners who have been selling their strategies and software for years now, but it is hard to find one who has provided the solutions to the crucial aspects that often come up in the business, including billing and management.

There is obviously no point in spending too much of your time trying out ineffective management strategies and software; it will only end up in less than satisfying results, the worst of which is having to spend your time, money and effort restoring all ruined files and programs in your computers.

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There are a lot of internet caf businessmen who emphasizes over and over again how important having good software to help manage the business but only a few of them are willing to show how to streamline the caf business, how to achieve costumers satisfaction and more. Cafs offer Installing a plug-ins basic such as set Flash, of Office Shockwave, Real applications: Player

providing a basic imaging application which allows clients to open photos, print them, generating income from the printing.

CHAPTER 3 Summary, Conclusion and Recommendations This chapter discusses the summary of findings, conclusion and recommendation of the proposed system.

Summary of Findings The researcher come up with the study entitled Proliferation of Internet cafes and Effective Management that will give challenges and lesson how to built an own business like internet cafes. This research was used a descriptive research method wherein data from documents and interviews were answered by the respective correspondent. In engaging an internet cafs it have an advantages and disadvantages and you might take risks. In overall in our research paper we found out are as follows: 1. Not all internet cafes have a business permit and also weve seen difficulties to build his/her internet cafes.

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2. In every business sometimes it decides a partnership. The reasons are: a. it may share capital and less expenses if youre a sole proprietorship, b. vice-versa if your operation time until in the evening and their responsibility it can divide. 3. In internet cafes they earn higher profit during weekdays but sometimes it depends on the customer and the days. And also weve estimate that there PC rentals is on cheaper price but it can earn more profit in a month. 4. All of the managers that we interact they set a rules and regulation inside the internet cafes to secure the safety of each customers and the computers that weve been used.

CONCLUSIONS The researchers of this study concluded that establishing computer cafs not just helps business minded persons start a business but it also enables persons to use computers even if they dont have their own personal computers at home. The system is educational in the way that they will improve their managerial skills. Most probably people who are engaged in this kind of business achieves higher income rather than those who starts business common to its nature, due to the fact that almost all sorts of people uses computer and not half of it has their own computers at home.

It is difficult to start a computer caf business if you are lacking of financial support. Most of our correspondents started out their business with a capital of 101,000-200,000.

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In order to have a properly handled business, the owners should set rules. It is better to have a business partner in establishing an internet caf business. It is difficult to engage in this kind of business. It is a necessity in establishing a computer caf that owners should conduct a business permit.

During weekdays, higher income is earned rather than other days. In conceptualizing the name of your caf, friends are a big help. Expect big expenses monthly. In managing your business, the owner must have a system. The said business is surely a hit because based on our correspondents, their salaries are increasing.

RECOMMENDATION The following recommendations are given to support the computer rental service business.

A)

Government support

The industry needs nurturing. The government is urging, therefore, to provide the following:

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1)

Make this computer companies major project contractors for the government

information system development, Such contacts will make these companies expand their business.

2)

Increase investment in these companies. Capital build up will be need for

equipment programs, development of marketing information net work and organization build up. Investment maybe generate locally or from foreign resources.

3)

Provide high level marketing viability for these companies. The presence and

support of government officials may accomplish this in the marketing efforts of these companies.

4)

Provide access to banking and financial institution for low-interest loans.

B. Industry support

A) Small soft ware and rental companies should be encourage forming consortium type or arrangement or association in order to avoid cut-throat. B) To be sub-contractors of large software business especially in activities and/or services which the small computer rental service centers can efficiently provide.

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C) staff.

Conduct of training programs by the industry association for center manager and

D)

Provide a reasonable wage or compensation, together with an attractive package

of incentives, to computer trained personnel and/or computer science graduates thus encouraging them to stay in the country rather going abroad for employment.

Bibliography: Electronic Media http://www.ulop.net/forum%3Ffunc%3Dview&catid%3D4&id%3D142550 http://www.associatedcontent.com/article/262837/how_to_conduct_a_survey_for_an_article.html http://compnetworking.about.com/cs/lanvlanwan/g/bldef_lan.htm http://whatis.techtarget.com/definition/0,,sid9_gci213411,00.html http://www.yourdictionary.com/nielsen http://en.wikipedia.org/wiki/Commission_on_Information_and_Communications_Technology_(Philippin es)

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http://www.thefreedictionary.com/e-mail http://www.britannica.com/bps/dictionary?query=proliferation http://www.webopedia.com/TERM/I/instant_messaging.html http://www.webopedia.com/TERM/S/social_networking_site.html http://education.yahoo.com/reference/dictionary/entry/suffice http://www.wordiq.com/definition/Socio-economic http://www.definition-of.net/lucrative

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