Emerging Modes of Business Class 11 Notes

Emerging modes of business refer to the e-business or e-commerce that are now an integral part of the modern world. Here are the emerging modes of business class 11 notes.

E-Business

E-business may be defined as conducting the activities of industry, trade, and commerce through a computer network. The most commonly used network is the Internet.

E-Business and E-Commerce

E-business has a very wide scope and E-Commerce is just a part of E-Business.

E-Commerce involves buying and selling goods over the Internet while E-Business involves buying and selling, other functions like product development, accounting, finance, inventory management, etc.

Scope of Business

1. B2B: Business to Business e.g. Intex to Apple
2. B2C: Business to Customer e.g. Amazon
3. C2C: Customer to Customer e.g. OLX
4. Intra B: Intra Business

B2B (Business to Business)

B2B commerce involves e-commerce transactions between business firms using EDI technology. It involves various transactions through computer networks such as:

• Placing Order
• Monitoring Production
• Delivery of Components
• Sending and Receiving Orders

B2C (Business to Customer)

B2C transactions are the transactions that take place between business firms and businesses. It is commonly known as Online Shopping.

Also, B2C enables a business to be in touch with customers on a 24*7*365 basis. It provides the following benefits:

• It ensures convenience in delivery and payments.
• The transactions are conducted at a lower cost but with a high speed. E.g. withdrawal of money from ATM.
• It provides services to its customers on a clock basis.

C2C (Business to Customer)

C2C involves transactions between customers. It provides a market for dealing in goods for which there is no established market.

Here the business originates from the customer and the ultimate destination is also the customer. E.g. OLX, Ebay, etc.

Intra B

Intra B involves the transactions within given business firms. It includes the use of the Internet for managing interaction and dealing among various departments.

E.g. through computer networks marketing department can easily interact with production departments to provide information regarding new products. It includes transactions like interaction among departments, training of employees, selection, etc.

It provides the following benefits:

• It facilitates 3D graphic communication and even multimedia among departments.
• It ensures the quick flow of decisions and information, speedy workflow, and better coordination.
• It also facilitates the employees to send their field reports by E-mail.
• It helps the companies to resort to recruitment interviews and selection and training.

Benefits of E-Business

Global Reach

The Internet is boundaryless. It allows the seller to assess the global market. On the other hand, it provides freedom to the buyer to choose products from any part of the world.

Ease of Formation and Lower Investment Requirements

The formation of an e-business is very easy compared to other businesses. As the processor requirements for setting up e-business are very few.

Also, the amount of investment required to start up e-business is very low.

Movement Towards a Paperless Society

Dependence on paperwork has been considerably reduced through the Internet. Many companies and even government departments are going in this direction.

Regulatory authorities have allowed the electronic filing of returns, reports, etc.

Convenience

It enables the firms to be in contact with the customers, other business firms, suppliers, etc. at any time from anywhere. It offers the convenience of round-the-clock business.

Speed

The transformation of information through the internet is very fast. The time taken from the origin of demand to its fulfillment has been reduced especially in the case of information-intensive products like movies, e-books, software, etc.

Limitation of E-Business

People Resistance

People resist entry into e-business because the process of adjusting to new technology and new methods of doing things leads to stress and a sense of insecurity.

Increased Risk Due to Anonymity and Non-Traceability of Parties

Internet transactions occur between cyber personalities. Therefore it becomes difficult to establish the identities of the parties. Also one does not know the location from where the parties are operating which makes it more riskier.

Low Personal Touch

No doubt e-business involves high technology but it lacks the personal touch, hence it is not suitable in the case of products like garments, shoes, etc.

Ethical Fallouts

This business lacks ethics. The company uses an electronic eye to check the email accounts of their employees, computer files used by them, websites visited by them, etc.

Incongruence between Order taking/giving and Order fulfillment speed

Information flows very fast but the physical delivery of product takes time. This incongruence may play on the patience of the customer.

Sometimes due to technical issues, websites take a long time to open which results in frustration among the users.

Online Transaction

E-business refers to shopping through the Internet or online. Online opens up the whole world as one shop.

Process for Online Transactions

Step 1 – Registration

The first step involved in online transactions is to get registered i.e. to have an account with the online vendor.

Among various details you need to file a password as the section relating to your ‘account’ and ‘shopping cart’ are password protected. The password protects your account.

Step 2 – Placing Order

After selecting the items you can pick and drop the items in the shopping cart. It is an online record of what you have picked.

After being sure that what you want to buy you can check out and choose your payment options.

Step 3 – Payment Mechanism

The payment for the purchase can be made through several ways:

1. COD (Cash on Delivery): Under this the cash payment for the goods ordered is to be made at the time of physical delivery of goods.
2. Cheque: Another alternative is a cheque. The online vendor may arrange for the pick up of the cheque from the customer and realization of the amount the delivery may be made.
3. Net Banking Transfer: The amount of the price of the transaction is transferred by the buyer to the account of the online vendors through electronic transfer funds like IMPS, NEFT, and RTGS.
4. Credit or Debit Cards: It is popularly known as plastic money and about 95% of online transactions are executed with credit cards.
5. Digital Cash: Digital Cash is a type of electronic currency that is found only in cyberspace. It has no real physical properties but still, it can be used as a real currency in an electronic form.

Traditional Business Vs E-Business

E-Business Risk

There are 3 types of E-Business risk:

1) Transaction Risk

Online transactions are subjected to the following transaction risks;

• Default on Delivery: The intended delivery did not take place, or was delivered at the wrong address.
• Default on Order taking/giving: Seller denies that customer ever placed the order of customer deise that he/she ever placed the order.
• Default on Payment: Seller does not get the payment for the goods supplied whereas the customer claims that the payment was made.

To avoid these risks, at the time of registration, the identity and location, address of the buyer must be verified, and authorization to order confirmation and payment realization must be obtained.

2) Data Storage and Transmission Risk

Information is power and it is very dangerous if the power goes into the wrong hands. Data stored in the system is exposed to several risks like viruses and hacking.

• Virus: Vital information under siege is a program that replicated itself on the other computer system and may result in annoyance in terms of home screen and display, damage to data files, disruption of functioning, and destruction.
• Hacking: Hacking means unauthorized entry into a website to destroy the data and information stored in it.
  Virus attacks can be prevented by installing updated anti-virus programs and scanning the files with them.

3) Risk of Threat to Intellectual property and Privacy

Once the information is available on the internet, it becomes difficult to protect it from being copied. There is also the chance of receiving junk mail.

Business Trade and Commerce Class 11 Notes

Outsourcing

Outsourcing can be defined as long-term contracting out the noncore activities to outside agencies specialized in those areas.

The main aim of outsourcing is to obtain the benefits from experience, expertise, efficiency, and investment.

Features of Outsourcing

• Outsourcing involves contracting out.
• Generally, noncore business activities are outsourced.
• The process may be outsourced to a captive unit or a third party. (Captive services providers are set up for providing services of a given kind to only one firm whereas third-party services provide services to other firms also.)

Scope of Outsourcing

The term outsourcing has more popularly come to be associated with business process outsourcing (BPO).

BPO is more popularly known as call centres which provide customer-oriented voice-based services 24 hours * 7 days. About 70% of BPO Industries revenue comes from call centres.

BPO comprises four key segments. These are the common areas where BPO is operating.

• Contract Manufacturing
• Contract Research
• Contract Sales
• Informatics

Need for Outsourcing

1) Focusing on Attention

Outsourcing of non-core activities to outside agencies enables business firms to focus their attention and resources on core activities for better efficiency and effectiveness.

2) Quest for Excellence

Outsourcing enables the organization to focus on those activities that they can do well by their basic strength.

3) Cost Reduction

Outsourcing enables firms to undertake large-scale production and thus achieve economies of scale.

4) Growth Through Alliance

Outsourcing leads to a reduction in investment requirements because the outside agencies have already invested in those activities.

Concerns over Outsourcing

1) Confidentiality

Outsourcing involves the sharing of a lot of information therefore outsourcing agencies are required to preserve the confidentiality of data received from business firms.

2) Ethical Concern

It is unethical to outsource work to countries that have wage discrimination based on the gender of the workers or the agencies that employ child labor.

3) Resentment in the home countries

Outsourcing activities results in more employment but when organisation outsource their activities, it results in resentment in the home country particularly when there is a problem of unemployment in the country.