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BUSINESS STUDIES, CHAPTER 5 EMERGING MODES OF BUSINESS, E - Business, Electronic business refers to conducting business activities i.e.,buying and selling of, goods through internet., Scope of e-Business, 1.B2B Commerce: It is that business activity in which two firms or two business units, make electronic transaction. For example- one can be producer firm and other a, supplier firm., 2.B2C Commerce: Business to customer. In this one party is a firm and other party is, a customer.A customer can seek information through Internet about products, place, orders and make payments and also the firm can make a survey any time to know, who is buying and can also know the satisfaction level of customers. In modern times,, call centers can provide these information.
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3.C2C Commerce: Under this, both the parties involved in electronic transaction are, customers.It is required for the buying and selling of second hand goods.For exampleselling old car through internet., 4.Intra-B Commerce: Under this, the parties involved in the electronic transaction are, the two departments of same business. For Example, through internet,it is possible, for the marketing department to interact continuously with the production, department and get the customized goods made as per the requirement of, customers., Merits of e - Business, 1.Worldwide reach : Internet gives businessmen,an extended market.The buyers and, sellers from any part of the world can interact with each other., 2.Elimination of Middlemen : Due to e - business, wholesalers and retailers have, started disappearing. Now, most of the producers have started having direct contact, with customers. As a result, the consumer gets goods on less price.
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3.Lower Investment required : In this, sellers don’t require any big showroom or, huge investment.They only need computer and Internet., 4.Speed : Information moves fast through internet,which speeds up the process of, buying and selling., 5. Movement towards a paperless Society : Use of internet has considerably reduced, dependence on paper work., Limitations of e - Business, 1.Lack of personal touch : It lacks personal touch with the customers because, business activities are conducted through internet., 2.Delay in delivery : The transactions of sale and purchased are processed quickly.But, physical delivery of goods may be delayed., 3.Lack of technical experience : Lack of technical experience may cause difficulty in, carrying out business activities of e - business.
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4.Risk of parties : Online transactions carry many risks such as loss of privacy, leakage, of confidential information and identify the sellers because they are from different, locations., 5.Security issues : Many firms use an electric eye to keep track of the e-mail account, of their employees., 6.Government Interference : Sometimes government monitoring can lead to, interference in the business., Online transactions, It refers to transactions taking place between buyers and sellers through internet.It, includes three stages :, 1.Pre - purchase stage : In this stage ,buyer search for relevant website and collects, information about the required product., 2.Purchase stage : In this stage ,buyer selects the required product ,order it and make, the final payment.
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3.Delivery stage : In this stage ,the product is delivered to the buyer after the seller, recieves the payment., Process of online trading :, 1.Registration : Before online shopping, a person has to get registered with the, vendor on the website by filling up an online registration form., 2.Placing an order : After browsing different products,buyer adds the item to, shopping cart.Shopping Cart is an online record of all items that the buyer has, chosen., 3.Payment mechanism : Payment for the purchases through online shopping may be, done in following ways:, • Cash on delivery (COD) - Cash payment can be made at the time of physical, delivery of goods., • Net-banking transfer - The customer can make electronic transfer of funds(EFT), to account of online vendor over the internet.
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• Credit or Debit cards - The customer can make payment for online transaction, through debit or credit card by giving the number and name of bank of card., Security problems or risks in e - business, 1.Transaction risks : Online transactions are prone to following types of transaction, risks :, (i)Default on order taking / giving : If the seller denies the receipt of order or the, buyer denies the placement of order., (ii)Default on delivery : If there is any default on delivery like wrong address or, different product., (iii)Default on payment : If the seller does not get the payment for the goods, supplied,whereas the customer claims that the payment was made., 2.Data storage and Transmission risks : Data stored in the system can be stolen or, modified to pursue some selfish motives or just for fun.
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(i)VIRUS (Vital Information Under Siege) : Virus is a program which imitates itself on, other computer systems.It can enter the system through e-mail,disc or floppy and, protected through installing and timely updating anti - virus programmes., (ii)Hacking : It refers to unauthorised access to a computer network., 3.Threat to intellectual property and privacy risks : As internet is an open space ,it is, difficult to protect the day available on internet.The data may be copied and used for, personal gain., Resources required for successful e - business implementation, 1.Computer system - The presence of computer system is the first requirement of eBusiness. The computer can be linked with Internet by just pressing its keys., 2.Internet connection - Internet connection is very essential and now a days we can, get this facility by sitting at home., 3.Preparing the web Page - Web page has the greatest importance in the use of eBusiness. It is also known as Home Page. Any product that is to be shown on Internet, is displayed on web page.
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4.Effective telecommunication system - e-business requires an effective, telecommunication system in the form of telephone lines etc., 5.Systems of recieving payment - The business enterprise must have arrangment, with banks or other agencies to recieve payment for sale of goods and services and, making refunds in case of excess payment., 6.Technically qualified manpower - There must be technical faculty to handle various, aspects of online transactions., OUTSOURCING, It refers to contracting out some of its activities to a third party which were earlier, performed by the organisation., Scope of outsourcing :, 1.Contract manufacturing, , 2.Contract reasearch, , 3.Contract sales, , 4.Information
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Nature of outsourcing, 1.Outsourcing involves contracting out : It involves contracting out an activity from, an outsider., 2.Non - core business activities are outsourced : It is done in non core activities like, housekeeping or security in case of school., 3.Processes may be outsourced to a captive third unit or a third party :, (i) Outsourcing to the captive unit : A large company dealing in diverse products and, markets may create a separate unit., (ii) Outsourcing to a third party : They hire third parties to operate independently., Need /Merits for outsourcing, 1.Focus : Outsourcing provides an opportunity to the organisation to concentrate on, areas which needs more attention for better efficiency and effectiveness., 2.Quest for excellence : The firms can do the best in some areas through its limited, focus.
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3.Cost reduction : Outsourcing reduces cost through economies of large scale ., 4.Growth through alliance : Alliance with outsourcing partners enables growth and, expansion of business as resources saved from outsourcing can be used for, expanding the business., 5.Boosts economic development : Outsourcing promotes economic development, through employment, exports in the countries etc., Concerns/ Limitations of outsourcing, 1.Confidentiality : It reduces confidentiality because a lot of vital information and, knowledge is shared with others.It may cause passing of such information to our, competitors., 2.Sweat shopping :, 3.Ethical concerns : It may lead to unethical behaviour if companies outsource their, work( for cost reduction) from developing countries where women and children are, employed.
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4.Resentment in home countries : It indirectly shifts the employement opportunities, to other countries., Business Process Outsourcing (BPO), BPO is a subset of outsourcing that involves the contracting of a specific business, task, such as human resources and customer services,to a third party service, provider., BPO is divied into two categories :, (i)Back Office Outsourcing : It includes outsourcing of internal business functions such, as billing or purchasing., (ii)Front Office Outsourcing : It inculdes outsourcing of customer related services such, as marketing or technical support.
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Scope of BPO, In modern business many outside services are used. Out of these services, the, following are the important ones:, 1.Financial Services - These services means those outside services which help the, company in some way or other in the management of finance., 2.Advertising services - Advertisement is very necessary for increasing sales. If this, service is obtained from outside agency, it will cost less and the quality of, advertisement will also be good., 3.Courier services - These services means delivering goods, documents,parcels from, company to customers and vice-versa., 4.Customer support service - These services means delivering goods to customers, and to give after sale services also. Generally, the manufacturers of TV, Fridge, AC, etc. use these services.
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Knowledge Process Outsourcing (KPO), KPO is a form of outsourcing that involves contracting knowledge intensive business, processes that require specialised domain expertise to a third party service provider., Need of KPO, In today’s competitive environment focus is to concentrate on core specialization, areas and outsource the rest of activities. Many companies have come to realise that, by outsourcing the non case activities not only costs are minimized and efficiency, improved but the total business improves because the focus shifts tokey growth, areas of business., Scope of KPO/Services covered KPO, 1. Research and Technical analysis., 2. Business and Technical analysis., 3. Business and Market research., 4. Animation and Design.
