EmErging modEs of BusinEss - NCERT

Chapter 5

EmErging modEs of BusinEss

LEARNING OBJECTIVES

After studying this chapter, you should be able to:

• state the meaning of e-business;

• explain the process of online buying and selling as a part of e-business;

• distinguish e-business from traditional business;

• statebenefitsofswitchingovertoelectronicmode;

• explainrequirementsforafirm’sinitiationintoe-business;

• identify major security concerns of electronic mode of doing business;

• discuss the need for business process outsourcing; and

• appreciate the scope of business process outsourcing.

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114 BUSINESS STUDIES

5.1 introduction

The way business is done hasundergone fundamental changes during the last decade or so. The manner of conducting business is referredtoasthe‘modeofbusiness,’and,theprefix‘emerging’underlinesthe fact, that these changes are happening here andnow, and, thatthese trends are likely to continue. In fact, if one were to list the three strongest trends that are shaping business, thesewould be: (i) digitisation—the conversion oftext,sound,images,video,andothercontent into a series of ones and zeroes that can be transmitted electronically, (ii) outsourcing, and, (iii) inter-nationalisation and globalisation. You willreadaboutinternationalbusinessinChapter11.Inthischapter,wewillbefamiliarisingyouwiththefirsttwodevelopments,i.e.,digitisation(atermfrom electronics) of business — also referred to as electronic business (e-business), and Business Process Outsourcing(BPO).Beforewedoso,a brief discussion about the factors

responsible for thesetwonewmodesofbusinesswouldbeinorder.

Thenewermodesofbusinessarenot new business. These are rathersimplythenewwaysofdoingbusinessattributable to a number of factors. You are aware that business as anactivity is aimed at creatingutilitiesor value in the form of goods andservices which the household andindustrial buyers purchase for meeting theirneedsandwants.Inanefforttoimprovethebusinessprocesses—beitpurchase and production, marketing, financeorhumanresourcesbusinessmanagers and business thinkers keepevolvingnewerandbetterwaysofdoingthings.Businessfirmshaveto strengthen their capabilities of creatingutilitiesanddeliveringvalueto successfullymeet the competitivepressuresandever-growingdemandsofconsumersforbetterquality,lowerprices,speedierdeliveriesandbettercustomer care. Besides, the quest for benefittingfromemergingtechnologiesmeans that business as an activitykeepsevolving.

“Letusdosomeshopping,”RitawokeupRekha,herfriendfromthehome-villagewhohadcometoDelhiduringthevacations.“Atthishourwellpastmidnight,”saidRekha rubbingher eyes, “Whowouldbe sittingwithhis shopopen foryou?”“Oh!PerhapsIcouldnotconveyitproperly.Wearenotgoinganywhere!Iamtalkingaboutonlineshoppingovertheinternet!”toldRita.“Ohyes!Ihaveheardofonlineshopping,buthaveneverdoneany,”Rekhasaid,“Whatwouldtheybesellingovertheinternet,howwilltheydeliver,Whataboutpayment…andwhyisitthatinternethasnotyetbecomeaspopularinthevillages?AsRekhawasgrapplingwiththesequestions,RitahadalreadyloggedontooneofIndia’slargestonlineshoppingmall.

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115EMERGING MODES OF BUSINESS

5.2 e-BusinEss

If the term business is taken to mean awiderangeofactivitiescomprisingindustry, trade and commerce; e-business may be defined as the conduct of industry, trade and commerce using the computer networks.Thenetworkyouaremostfamiliarwithasastudentorconsumeris the internet. Whereas internet is a public thorough way, firmsusemore private, and, hencemoresecurenetworksformoreeffectiveandefficientmanagementoftheirinternalfunctions. e-business versus e-commerce: Though, many a times, the terms e-business and e-commerce are used interchangeably, yet more precise definitionswoulddistinguishbetweenthe two.Justas the term ‘business’is a broader term than ‘commerce’, e-business is a more elaborate term and comprises various business

transactions and functions conducted electronically, including the more popular gamut of transactions called ‘e-commerce.’ e-commerce covers afirm’sinteractionswithitscustomersand suppliers over the internet. e -bus iness inc ludes not only e - c ommerc e , bu t a l s o o the r electronically conducted business functions such as production, inventory management, productdevelopment,accountingandfinanceand human resource management. e-business is, therefore, clearly much morethanbuyingandsellingovertheInternet, i.e., e-commerce.

5.2.1 Scope of e-Business

Wehavementioned above that thescope of e-business is quite vast.Almost all types of business functions suchasproduction,finance,marketingandpersonneladministrationaswell

Figure 5.1 Business to Business e-Commerce

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asmanagerialactivitieslikeplanning,organising and controlling can be carriedoutovercomputernetworks.Theotherwayoflookingatthescopeof e-business is to examine it in termsofpeopleorpartiesinvolvedinelectronic transactions. Viewed fromthis perspective, a firm’s electronictransactions and networks can bevisualised as extending into threedirectionsviz.,(i)B2Bwhichisafirm’sinteractionswith other businesses, (ii)B2Ci.e.,afirm’sinteractionswithits customers and (iii) intra-B or a firm’sinternalprocesses.

A brief discussion of variousconstituents of e-business and inter- and intra-transactions among them is givenasbelow:(i) B2B Commerce: Here, both the parties involved in e-commercetransactionsarebusinessfirms,and,hence thenameB2B, i.e., business-to-business (see Figure 5.1). Creation of uti l i t ies or del ivering valuerequires a business to interactwitha number of other business firms whichmay be suppliers or vendorsofdiverseinputs;orelsetheymaybe apartofthechannelthroughwhich a firm distributes its products to the consumers. For example, the manufacture of an automobile requires assembly of a large number ofcomponentswhichinturnarebeingmanufacturedelsewhere—within thevicinity of the automobile factory orevenoverseas.Toreducedependenceon a single supplier, the automobile factoryhastocultivatemorethanonevendor for each of the components.

A network of computers is used forplacing orders, monitoring production and delivery of components, andmakingpayments.Likewise,afirmmaystrengthenandimproveitsdistributionsystem by exercising a real time (as it happens) control over its stock-in-transitaswellas thatwithdifferentmiddlemen in different locations. For example, each consignment of goods from a warehouse and thestock-at-hand can be monitored and replenishments and reinforcements can be set in mot ion as and whenneeded.Or else, a customer’sspecificationsmayberoutedthroughthe dealers to the factory and fed into the manufacturing system for customised production. Use of e-commerceexpeditesthemovementofthe information and documents; and of late,moneytransfersaswell.

Historically, the term e-commerce originallymeant facilitation of B2Btransactions using Electronic DataInterchange(EDI)technologytosendand receive commercial documentslikepurchaseordersorinvoices. (ii) B2C Commerce: As the name implies,B2C(business-to-customers)transactions have business firms atone end and its customers on the other end.Although,what comes toone’smindinstantaneouslyisonlineshopping, it must be appreciated that ‘selling’ is the outcome of themarketing process. And, marketing beginswellbeforeaproductisofferedforsaleandcontinuesevenaftertheproduct has beensold.B2C commerce,

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therefore, entails a wide gamut ofmarketing activitiessuchasidentifyingactivities, promotion and sometimesevendeliveryofproducts(e.g.,musicorfilms) thatarecarriedoutonline.e-Commerce permits conduct of these activitiesatamuchlowercostbuthighspeed. For example, ATM speeds up withdrawalofmoney.

Customers these days are becoming very choosy and desireindividual attention to be given tothem. Not only do they require the

product features to be tailor-made to suit their requirements, but also the convenienceofdeliveryandpaymentat their pleasure. With the onset of e-commerce, all this has become a reality.

Further,B2Cvariantofe-commerceenablesabusinesstobeintouchwithits customers on round-the-clock basis. Companies can conduct online surveys to ascertain as to who is buyingwhatandwhatthecustomersatisfactionlevelis.

Benefits of e-Commerce

1. Business Organisation: (i) Expands the marketplace to national and international markets, (ii) Gradual decline in the cost of operations, (iii) Facilitates‘pull’supplychainmanagement, (iv) Competitiveadvantageovercompetitors, (v) Propertimemanagementandsupportbusinessprocesses,and (vi) Smallfirmsco-existwithbigfirms(win-win). 2. BenefitstoConsumersandSociety (i) Flexibility, (ii) Competitiveprice/discounts/waiveoffs, (iii) More options and choices and Customised products, (iv) QuickandTimelydelivery(digitisedproducts), (v) Employmentpotential, (vi) Facilitatee-Auctionsande-Tenders, (vii) Interactionwithconsumers, (viii) Wideroutreach.

ATM speeds up Withdrawal of Money

e-CommercegreatlyfacilitatesandspeedsuptheentireB2Cprocess.Withdrawalofone’sownmoneyfrombankswas,forexample,atediousprocessinthepast.Onehadtogothroughaseriesofproceduralformalitiesbeforeheorshewasableto get the payment. After the introduction of ATMs, all that is fast becoming a historynow.Thefirstthingthatoccursisthatthecustomerisabletowithdrawhis money, and the rest of the back-end processes take place later.

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p r o d u c t s m a d e a s p e r t h e requirements of the individualcustomer. In a similar vein, closercomputer-based interactions among the other departments makes it poss ib le for the f i rm to reap advantages of efficient inventory and cash management, greater utilisation of plant and machinery, effective handling of customers’ orders,andeffectivehumanresourcemanagement.

Justas intercomfacilitatedvoicecommunication within the office,intranet facilitates multimedia and even 3-D graphic communicationamongorganisationalunitsforwell- informed decisions, permitting better coordination, faster decisions and speedierworkflows.Takeforexample,afirm’sinteractionswithitsemployees,sometimes referred to as B2Ecommerce. Companies are resorting topersonnelrecruitment,interviewingand selection, training, developmentand education via e-commerce(captured in a catch-all phrase ‘e-learning’). Employees can useelectronic catalogues and ordering formsandaccessinventoryinformationfor better interaction with thecustomers.Theycansendfieldreportsvia e-mail and themanagement canhave them on real time basis. Infact, Virtual Private Network (VPN)technologywouldmeanthatemployeesdonothavetocometooffice.Instead,inawaytheofficegoestothemandthey can work fromwherever theyare,andattheirownspeedandtimeconvenience.Meetings can be heldonlineviatele/videoconferencing.

Bynow,youmighthaveformedtheopinionthatB2Cisaone-waytraffic,i.e., from business-to-customers. But do remember that its corollary, C2Bcommerceisverymucharealitywhich provides the consumerswiththe freedom of shopping-at-will.Customers can also make use of call centres set up by companies to make toll free calls to make queries and lodge complaints round the clock at no extra cost to them. The beauty of the process is that one need not set up these call centres or help lines; they may be outsourced. We shall discuss this aspectlaterinthesectiondevotedtoBusiness Process Outsourcing (BPO).(iii) Intra-B Commerce: Here, parties involvedintheelectronictransactionsarefromwithinagivenbusinessfirm,hence, the name intra-B commerce. As noted earlier too, one critical difference betweene-commerceande-businessis that, e-commerce comprises a business firm’s interactionwith itssuppliers, and distributors/otherbusinessfirms(hence,thenameB2B)andcustomers(B2C)overtheinternet.While e-business is amuch widerterm and also includes the use of intranet for managing interactions and dealingsamongvariousdepartmentsandpersonswithinafirm.Itislargelydue to use of intra-B commerce that today it has become possible for the f irms to go in for f lexible manufacturing. Use of computer networksmakes it possible for themarketing department to interact constantly with the productiondepartment and get the customised

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(iv) C2C Commerce: Here, the business originates from the consumer and the ultimate destination is also consumers, thus the name C2Ccommerce (see Figure 5.2). Thistype of commerce is best suited for dealing in goods for which there isno established market mechanism, for example, selling used books or clothes either on cash or barter basis. Thevastspaceoftheinternetallowspersons to globally search for potential buyers. Additionally, e-commerce technology providesmarket systemsecurity to such transactionswhichotherwisewouldhavebeenmissingif the buyers and sellers were to interact in anonymity of one-to-one transactions? An excellent example of thisisfoundateBaywhereconsumersselltheirgoodsandservicestootherconsumers. To make this activity more secure and robust, severaltechnologies have emerged. Firstly,eBayallowsallthesellersandbuyersto rate one another. In this manner, futureprospectivepurchasersmayseethat a particular seller has sold to more than2,000 customers—all ofwhomrate the seller as excellent. In another example,aprospectivepurchasermayseea sellerwhohaspreviously soldonly four times and all four rate the seller poorly. This type of information is helpful. Another technology that hasemergedtosupportC2Cactivitiesis that of the payment intermediary. PayPal is a good example of this kind. Instead of purchasing items directly fromanunknown,untrusted seller;the buyer can instead send the money

toPayPal.Fromthere,PayPalnotifiesthesellerthattheywillholdthemoneyfor themuntil the goods have beenshipped and accepted by the buyer.

An important C2C area o finteractive commerce can be theformation of consumers’ forum andpressure groups. Youmight haveheardofYahoogroups.Likeavehicleownerinatrafficjamcanalertothersviamessageonradio(youmusthaveheardtrafficalertsonFM)aboutthetrafficsituationoftheareaheisstuckin;anaggrievedcustomercansharehisexperiencewithaproduct/service/vendorandwarnothersbywritingjustamessageandmakingitknowntotheentire group. And, it is quite possible that the group pressure might result in a solution of this problem.

From the foregoing discussion concerning scope of e-business, it is clear that e-business applications are variedandmany.

e-Business versus Traditional Business

By now, you must have formedan idea as to how e-enabling hasradically transformed the mode of doingbusiness.Table5.1(page124)provides a feature on comparisonbetween traditional business ande-business.

Acomparativeassessmentof thefeatures of traditional and e-business aslistedinTable5.1pointstowardsthedistinctbenefitsandlimitationsofe-businessthatweshalldiscussinthefollowingparagraphs.

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e-commerce makes flexible Manufacturing and Mass Customisation possible

Customisedproductshave traditionally beenmade to order by craftsmen andhave, therefore, been expensive and delivery timeshave been long. Industrialrevolutionmeantthatorganisationscouldengageinmassproductionandcouldsellhomogeneousproducts rolledoutof the factoryata lowercostdue to theeconomiesofscale.Thankstoe-commerce,noworganisationscanoffercustomisedproducts/servicesatlowercosts,thatpreviouslywereonlyassociatedwithmassproducedcommodityitems.Hereareafewexamples:401(k)Forum(US) Customiseseducationalcontentandinvestmentadvicebased

onindividualinterviews.

AcuminCorp.(US) Customises vitamin pills specified by using the Internet.Customersfillinlifestyleandhealthquestionnaire.

Dell(US) BuildyourownPC.

Green Mountain Electricity supplier (but not generator). Customers could selectEnergy Resources sources for their electricity, e.g., hydro, solar, etc. (US)

LeviJeans Tailoredjeansservice.Webservicesuspendedaftercomplaints(OriginalSpin) byretailersbutservicenowofferedthroughretailers.Offers(US) 49,500differentsizesand30stylesforatotalofnearly1.5

million options for a cost of just $55. Orders are sent by net andjeansareproducedandshippedin2-3weeks.

N.V.Nutsbedrijf WestlandsuppliesnaturalgastomanytulipgrowersintheWestland Netherlands. Computers in the greenhouse help greenhouse(Newzealand) ownersmaintaintemperature,CO2output,humidity,lightand

otherfactorsinthemostcost-efficientmanner.

NationalBicycle Custombuiltbicycleswithin2/3daysoftakingtheorder.(Japan)

Simonand TeacherscanordercustomisedbooksspecificallymatchedtoSchuster(US) individualcourseandstudentneeds.XeroxDocuTechprinters

aregeneratinginexcessof125,000customisedbooksamonth.

Skyway(US) Skywayisalogisticscompanyofferingwholeorderdelivery.Shipments frommultiple originswith differentmodes oftransportcanbemergedintransitanddeliveredasasingleorderwithonesetofpaperworktothestoreorconsumer.

SmithKline Createscustomisedstopsmokingprogrammeforcustomers.Beecham(US) Uses call centre questionnaire to generate a series of

personalised communications.

Source: Adapted from http://www.managingchange.com

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5.3 BEnEfits of E-BusinEss

(i) Ease of formation and lower investment requirements: Unlike a host of procedural requirements for setting up an industry, e-business is relativelyeasytostart.Thebenefitsofinternet technology accrue to big or small business alike. In fact, Internet is responsible for the popularity of the phrase: ‘networked individuals and firms are more efficient than networthed individuals.’ This means that even if you do not havemuchof the investment (networth) buthavecontacts (network), youcandofabulous business.

Imagine a restaurant that does not have any requirement of a physicalspace. Yes, youmayhave an online‘menu’representingthebestofcuisinesfromthebestofrestaurantstheworld-over that youhave networkedwith.The customer visits your website,decides the menu, places the order that in turn is routed to the restaurant

located closest to his location. The food isdeliveredandthepaymentcollectedby the restaurant staff and the amount due to you as a client solicitor is credited to your account through an electronic clearing system.(ii) Convenience: Internet offers the convenience of ‘24 hours × 7 days aweek× 365days’ a year businessthatallowedRitaandRekhatogoforshoppingwell aftermidnight. Suchflexibility is available even to theorganisationalpersonnelwherebytheycandoworkfromwherevertheyare,andwhenevertheymaywanttodoit.Yes, e-business is truly a business as enabled and enhanced by electronics andofferstheadvantageofaccessinganything,anywhere,anytime.(iii) Speed: As already noted, much of thebuyingorsellinginvolvesexchangeof information that Internet allowsat theclickofamouse.Thisbenefitbecomesallthemoreattractiveinthecaseofinformation-intensiveproducts

Figure 5.2 Consumer to Consumer e-Commerce (C2C)

Website

Customer

Place advertisement

Want to sell products Want to buy products

Receives money

Receives products

Customer

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the global market; on the other hand, it affords to the buyer a freedom to choose products from almost any partoftheworld.Itwouldnotbeanexaggeration to say that in the absence of internet,globalisationwouldhavebeen considerably restricted in scope and speed.(v) Movement towards a paperless society: Use of Internet has considerably reduced dependence on paperworkandtheattendant‘redtape.’Youknowthat Maruti Udyog does bulk of its sourcing of supplies of materials and components in a paper less fashion. Eventhegovernmentdepartmentsandregulatory authorities are increasingly

such as softwares,movies,music, e-booksandjournalsthatcanevenbedeliveredonline.Cycle time, i.e., thetime taken to complete a cycle from theoriginofdemandtoitsfulfilment, is substantially reduced due to transformation of the business processes from being sequential to becoming parallel or simultaneous. Youknowthatinthedigitalera,moneyis defined as electronic pulses at the speed of light, thanks to the electronic funds transfer technology of e-commerce. (iv) Global reach/access: Internet is trulywithoutboundaries.Ontheonehand,itallowstheselleranaccessto

Box A Some e-Business Applications

e-Procurement: It involvesinternet-basedsalestransactionsbetweenbusinessfirms,includingboth,“reverseauctions”thatfacilitateonlinetradebetweenasinglebusiness purchaser and many sellers, and, digital marketplaces that facilitate onlinetradingbetweenmultiplebuyersandsellers.

e-Bidding/e-Auction:Most shopping sites have ‘Quote your price’ wherebyyoucanbidforthegoodsandservices(suchasairlinetickets!).Italsoincludes e-tenderingwherebyonemaysubmittenderquotationsonline.

e-Communication/e-Promotion: Right from e-mail, it includes publication of online catalogues displaying images of goods, advertisement throughbanners,pop-ups,opinionpolesandcustomersurveys,etc.Meetingsandconferencesmaybeheldbythemeansofvideoconferencing.

e-Delivery: It includes electronic delivery of computer software, photographs,videos,books(e-books)andjournals(e-journals)andothermultimediacontenttotheuser’scomputer.Italsoincludesrenderingoflegal,accounting,medical,andotherconsultingserviceselectronically.Infact,internetprovidesthefirmswiththeopportunitiesforoutsourcingofahostofInformationTechnologyEnabledServices(ITES)thatwewillbediscussingunderbusinessprocessoutsourcing.Now,youcanevenprinttheairlinesandrailwayticketsathome!

e-Trading:Itinvolvessecuritiestrading,thatisonlinebuyingandsellingofsharesandotherfinancialinstruments.Forexample,sharekhan.comisIndia’slargestonlinetradingfirm.

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movinginthisdirectionwherebytheyallowelectronicfilingof returnsandreports. In fact, e-commerce tools are effecting the administrative reformsaimed at speeding up the process of grantingpermissions,approvalsandlicences.Inthisrespect,theprovisionsof Information Technology Act 2000arequitenoteworthy.

5.4 Limitations of E-BusinEss

e-businessisnotallthatrosy.Doingbusiness in the electronic mode suffers fromcertainlimitations.Itisadvisabletobeawareoftheselimitationsaswell.(i) Low personal touch: High-tech it may be, e-business, however, lackswarmthofinterpersonalinteractions.To this extent, it is relatively lesssuitable mode of business in respect of product categories requiring high personal touch such as garments, toiletries, etc.(ii) Incongruence between order taking/giving and order fulfilment speed: Information can flow at theclick of a mouse, but the physical delivery of the product takes time.This incongruence may play on the patience of the customers. At times, due to technical reasons,web sitestake unusually long time to open. This may further frustrate the user. (iii) Need for technology capability and competence of parties to e-business: Apart from the traditional 3R ’s (Read ing , WR i t ing , and ARithmetic), e-business requires a fairly high degree of familiarity of the partieswiththeworldofcomputers.

And, this requirement is responsible forwhatisknownasdigitaldivide,thatisthedivisionofsocietyonthebasisoffamiliarityandnon-familiaritywithdigital technology.(iv) Increased risk due to anonymity and non-traceability of parties: Internet transactions occur betweencyber personalities. As such, it becomes difficulttoestablishtheidentityoftheparties.Moreover,onedoesnotknoweven the location from where theparties may be operating. It is riskier, therefore, transacting through internet. e-business is riskier also in the sense that there are additional hazards of impersonation (someone else may transact in your name) and leakage of confidential information such ascredit card details. Then, there also areproblemsof‘virus,’and‘hacking,’thatyoumusthaveheardof.Ifnot,wewillbedealingwithsecurityandsafetyconcerns of online business. (v) People resistance: The process ofadjustmenttonewtechnologyandnewwayofdoingthingscausesstressand a sense of insecurity. As a result, peoplemay resist an organisation’splans of entry into e-business. (vi) Ethical fallouts: “So, you areplanning to quit, youmay as wellquitrightnow”,saidtheHRmanagershowingheracopyofthee-mailthatshehadwrittentoherfriend.Sabeenawasbothshockedandstunnedastohowherbossgotthroughtohere-mailaccount. Nowadays, companies usean‘electroniceye’tokeeptrackofthecomputer files youuse, your e-mailaccount, thewebsites you visit etc. Is it ethical?

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Table 5.1 Difference between Traditional and e-BusinessBasis of distinction Traditional business e-business

Ease of formation Difficult SimplePhysical presence Required Not required

Locational requirementsProximitytothesourceofraw

materials or the market for the products

None

Cost of setting up High Lowasnorequirementof physical facilities

Operating cost

Highduetofixedchargesassociatedwithinvestment

in procurement and storage, production, marketing and

distribution facilities

Lowasaresultofrelianceonnetworkofrelationships rather thanownershipof

resourcesNatureofcontactwiththe suppliers and the

customers

Indirect through intermediaries Direct

Nature of internal communication

Hierarchical-fromtoplevelmanagementtomiddlelevelmanagementtolowerlevelmanagementtooperatives

Non-hierarchical, allowingdirectvertical,horizontal and diagonal

communicationResponse time for meeting

customers’/internalrequirements

Long Instantaneous

Shapeoftheorganisational structure

Vertical/tall,duetohierarchyor chain of command

Horizontal/flatduetodirectness of command and communication.

Business processes and length of the cycle

Sequentialprecedence-succession relationship,

i.e.,purchase-production/operation - marketing - sales. The, business process cycle

is, therefore, longer

Simultaneous(concurrence) different processes. Business

process cycle is, therefore, shorter

Opportunity for inter-personal touch Much more Less

Opportunity for physical pre-sampling of the

productsMuch more

Less.However,fordigitable products

such an opportunity is tremendous. You

can pre-sample music, books, journals,

software,videos,etc.

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Ease of going global Less Much, as cyber space is trulywithoutboundaries

Governmentpatronage ShrinkingMuch, as IT sector is among the topmost

priorities of the government

Nature of human capital Semi-skilledandeven unskilledmanpowerneeded.

Technically and professionallyqualified

personnel needed

Transaction riskLowduetoarm’slength

transactions and face-to-face contact.

High due to the distance and anonymity

of the parties

5.5 onLinE transactions

Operationally,onemayvisualisethreestagesinvolvedinonlinetransactions.Firstly, the pre-purchase/sale stageincludingadvertisingandinformation-seeking; secondly, the purchase/sale stage comprised of steps such as pricenegotiation,closingofpurchase/sales deal and payment; and thirdly, the delivery stage (see Figure 5.2).Itmay be observed fromFigure 5.2that, except the stage relating to delivery,allotherstagesinvolveflowof information. The information is exchanged in the traditional business modetoo,butatseveretimeandcostconstraints. In face-to-face interaction in traditional business mode, for example,oneneedstotraveltobeableto talk to the other party, requiring travel effort, greater time and costs.Exchange of information through the telephone is also cumbersome. It requires simultaneous presence of both theparties for verbal exchangeof information. Information can be transmitted by post too, but this again is quite a time consuming and

Despite limitations, e-commerce is the wayIt may be pointed out that most of the limitations of e-business discussed above are in the process of beingovercome.Websitesarebecomingmoreandmoreinteractivetoovercometheproblemof‘lowtouch.’Communicationtechnology is continually evolvingto increase the speed and quality of communication through internet. Effortsareontoovercomethedigitaldivide, for example, by resortingto such strategies as setting up of community telecentres in villagesand rural areas in India with theinvolvementofgovernmentagencies,NGOs and international institutions. In order to diffuse e-commerce in all nooks and corners, India has undertakenabout150suchprojects.

In view of the above discussion,it is clear that e-business is here to stay and is poised to reshape the businesses, governance and theeconomies. It is, therefore, appropriate thatwefamiliariseourselveswithhow e-business is conducted.

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expensiveprocess.Internetcomesinasthefourthchannelwhichisfreefrommostoftheproblemsreferredtoabove.In the case of information-intensiveproductsandservicessuchassoftwareandmusic, even delivery can take place online.

What is described here is the process of online trading from a

customer’s standpoint.We will bediscussingtheseller’sperspectiveintheparagraphs on resource requirements fore-business.So,areyoureadywiththe shopping list orwould you liketo rely on your instincts as you take a tour of the shopping mall? Let us followRita andRekha browsingindiatimes.com.

Information Technology Act 2000 paves way for Paperless Society

BelowaregivensomeoftheprovisionsofInformationTechnologyAct2000thathavemadeitpossibletohavepaperlessdealingsinthebusinessworldaswellasinthegovernmentdomain.Legal recognition of electronic records (Section 4):Whereanylawprovidesthatinformationoranyothermattershallbeinwritingorinthetypewrittenorprintedform,then,notwithstandinganythingcontainedinsuchlaw,suchrequirementshallbedeemedtohavebeensatisfiedifsuchinformationormatterisrenderedormadeavailableinanelectronicform;andaccessiblesoastobeusableforasubsequent reference.Legal recognition of digital signatures (Section 5):Whereanylawprovidesthatinformationoranyothermattershallbeauthenticatedbyaffixingthesignatureor any document shall be signed or bear the signature of any person, hence notwithstanding anything contained in such law, such requirement shall bedeemedtohavebeensatisfied,ifsuchinformationormatterisauthenticatedbymeansofdigitalsignatureaffixedinsuchamannerasmaybeprescribedbytheCentralGovernment.Use of electronic records and digital signatures in Government and its agencies (Section 6-1):Whereanylawprovidesforthefilingofanyform,applicationoranyotherdocumentwithanyoffice,authority,bodyoragencyownedorcontrolledbytheappropriateGovernmentinaparticularmanner;theissueorgrantofanylicence,permit,sanctionorapprovalbywhatevernamecalledinaparticularmanner;thereceiptorpaymentofmoneyinaparticularmanner,then,notwithstandinganythingcontainedinanyotherlawforthetimebeinginforce,suchrequirementshallbedeemedtohavebeensatisfiedifsuchfiling,issue,grant,receiptorpayment,asthe case may be, is effected by means of such electronic form as may be prescribed bytheappropriateGovernment.Retention of electronic records (Section 7-1): Where any lawprovides thatdocuments,recordsorinformationshallberetainedforanyspecificperiod,then,thatrequirementshallbedeemedtohavebeensatisfiedifsuchdocuments,recordsor information are retained in the electronic form.Source: Information Technology Act, 2000

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(i ) Registration: Before online shopping, one has to register withthe online vendor by filling-up aregistration form. Registration means that you have an ‘account’ withthe online vendor. Among variousdetails that need to be filled in is a‘password’asthesectionsrelatingtoyour ‘account’, and ‘shopping cart’are password protected.Otherwise,anyone can login using your name and shop in your name. This can put you in trouble.(ii) Placing an order: You can pick and drop the items in the shopping cart.Shoppingcartisanonlinerecordof what you have picked up whilebrowsingtheonlinestore.Justasinaphysical store you can put in and take itemsoutofyourcart, likewise,youcandosoevenwhileshoppingonline.Afterbeingsureofwhatyouwanttobuy, you can ‘checkout’ and chooseyour payment options. (iii) Payment mechanism: Payment for the purchases through online shopping may be done in a number ofways: • Cash-on Delivery (CoD): As is

clear from the name, payment for the goods ordered online may be made in cash at the time of physicaldeliveryofgoods.

• Cheque:Alternatively,theonlinevendormayarrangeforthepickupofthechequefromthecustomer’send.Uponrealisation,thedeliveryof goods may be made.

• Net-banking Transfer: Modern banksprovidetotheircustomersthe facility of electronic transfer

offundsovertheInternetusingImmediate Payment Services(IMPS), NEFT and RTGS. Inthis case, therefore, the buyer may transfer the amount for the agreed price of the transaction to the account of the online vendorwhomay,then,proceedtoarrangeforthedeliveryofgoods.

• Credit or Debit Cards: Popularly referredtoas‘plasticmoney,’thesecards are themostwidelyusedmedium for online transactions. In fact, about 95 per cent of online consumer transactions areexecutedwithacreditcard.Credit card allows its holder tomake purchase on credit. The amount due from the card holder to the online seller is assumed by thecardissuingbank,wholatertransferstheamountinvolvedinthe transaction to the credit of the seller.Buyer’saccountisdebited,whooftenenjoysthefreedomtodeposit the amount in instalments and at his convenience. Debitcard allows its holder tomakepurchases through it to the extent of the amount lying in the corresponding account. The moment any transaction is made, the amount due as payment is deducted electronically from the card.

To accept credit card as an onlinepaymenttype,thesellerfirstneeds a secure means of collecting credit card information from its customer. Payments through credit cards can be processed

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either manually, or through an online authorisation system, such as SSLCertificate (see box on,History of e-commerce).

•Digital Cash: This is a form of electronic currency that exists only in cyberspace. This type of currency has no real physical properties, but offers the ability to use real currency in an electronic format. First you need to pay to abank (videcheque,draft,etc.)an amount equivalent to thedigitalcashthatyouwanttogetissued inyour favour.Thenthebankdealingine-cashwillsendyoua special software (you candownloadonyourharddisk)thatwillallowyoutodrawdigitalcashfromyouraccountwiththebank.You may then use the digital funds tomake purchases over theweb.

5.6 sEcurity and safEty of e-transactions: e-BusinEss risks

Online transactions, unlike arm’slength transactions in physical exchange, are prone to a number of risks. Risk refers to the probability of any mishappening that can result into f inancial, reputational or psychological losses to the parties involved in a transaction. Becauseof greater probability of such risks in the case of online transactions, security and safety issues becomes the mos t c ruc ia l concern in e-business. One may broadly discuss these issues under three headings: transaction risks, data storage and t ransmiss ion r i sks , and threat to intellectual property and privacyrisks.( i ) Transaction risks: Online transactions are vulnerable to thefollowingtypesoftransactionrisks:

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• Sellerdeniesthatthecustomereverplaced the order or the customer denies that he ever placed theorder. This may be referred to as ‘default on order taking/giving.’

• The intended delivery does nottake place, goods are deliveredatwrongaddress,orgoodsotherthan orderedmay be delivered.This may be regarded as ‘default on delivery’.

• Sellerdoesnotgetthepaymentforthe goods suppliedwhereas thecustomer claims that the payment wasmade.Thismaybereferredto as ‘default on payment’.

Thus, in e-business risk may arise for the seller or the buyer on account of default on order taking/giving,delivery as well as payment. Suchsituationscanbeavertedbyprovidingfor identity and location/addressverificationatthetimeofregistration,and obtaining authorisation as to theorderconfirmationandpaymentrealisation. For example, in order to confirmthatthecustomerhascorrectlyentered his details in the registration form, thesellermayverify thesamefrom the ‘cookies’. Cookies are verysimilar to the caller id in telephones thatprovidetelemarketerswithsuchrelevantinformationas:theconsumer’sname,addressandpreviouspurchasepayment record. As for customer’sprotection from anonymous sellers, it is always advisable to shop fromwell-establishedshoppingsites.Whileallowing advertisers to sell theirproducts online, these sites assure customers of the sellers’ identities,

locations and service records. SitessuchaseBayevenprovideforratingof the sellers. These sites provideprotection to the customers against defaultondeliveryandreimbursethepayments made up to some extent.

As for the payments, we havealready seen that in almost 95 per cent of the cases people use credit cards for their online purchases. At the time ofconfirmingtheorder,thebuyerisrequired to furnish the details such as the card number, card issuer and cardvalidityonline.Thesedetailsmaybe processed offline; and only aftersatisfying himself or herself about the availability of the credit limits,etc., the sellermay go ahead withthe delivery of goods. Alternatively,e-commerce technology today permits even online processing of the creditcard information. For protecting the credit card details from being misused, shopping malls these days use the encryption technology such asNetscape’s Secure Sockets Layer(SSL).Youcangainsomeinformationabout SSL from box on history ofe-commerce. In the succeeding section,wewill familiarise youwiththe encryption or cryptography — an important tool used for safeguarding against data transmission risks in online transactions.(ii) Data storage and transmission risks: Information is power indeed.Butthinkforamomentifthepowergoesintothewronghands.Datastoredin the systems and en-route is exposed to a number of risks. Vital information maybestolenormodifiedtopursue

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besuppliedtootherswhomaystartdumping a host of advertising andpromotional literature into your e-mail box. You are then at the receiving end,withlittlerespitefromreceivingjunk mails.

5.7 rEsourcEs rEquirEd for succEssfuL E-BusinEss impLEmEntation

Setting up of any business requiresmoney,menandmachines(hardware).For e-business, you require additional resources for developing, operating,maintainingandenhancingawebsitewhere‘site’meanslocationand‘web’meansworldwideweb(www).Simplyspeaking,awebsiteisafirm’slocationon the world wide web. Obviously,website is not a physical location.Rather, it is an online embodiment of allthecontentthatafirmmayliketoprovidetoothers.

5.8 outsourcing: concEpt

Outsourcing is yet another trend that is radically reshaping business. It refers to a long-term contracting out generallythenon-coreandoflateevensomeofthecoreactivitiestocaptive or third party specialists with a view to benef i tt ing from theirexperience, expertise, efficiencyand,eveninvestment.

This simple definition leads oneto the salient features of the concept thatarenotpeculiartoanindustry/businessorcountry,buthavebecomea global phenomenon.

some selfishmotives or simply forfun/adventure.Youmusthaveheardof‘virus’and‘hacking’.Doyouknowthefullformoftheacronym‘VIRUS?’It means Vital Information Under Siege.Actually,virusisaprogram(aseriesofcommands)whichreplicatesitself on the other computer systems. The effect of computer viruses canrange from mere annoyance in terms of some on-screen display (Level-1virus), disruption of functioning(Level-2virus)damagetotargetdatafiles (Level-3 virus), to completedestruction of the system (Level-4virus).Installingandtimelyupdatinganti-virusprogrammesandscanningthefilesanddiskswiththemprovidesprotection to your data files, foldersandsystemsfromvirusattacks.

Datamay be intercepted in thecourse of transmission. For this, one may use cryptography. It refers to the art of protecting information by transforming it (encrypting it) into an unreadableformatcalled‘cyphertext’.Onlythosewhopossessasecretkeycan decipher (or decrypt) the message into ‘plaintext’. This is similar tousing ‘codewords’withsomeonesothat others do not understand your conversation.(iii) Risks of threat to intellectual property and privacy: Internet is an open space. Once the information is available over the internet, itmovesout of the private domain. It thenbecomes difficult to protect it frombeing copied.Data furnished in thecourse of online transactions may

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(i) Outsourcing involves contracting out: Literally, outsourcing means to source from outsidewhat you havehitherto been doing in-house. For example,mostcompanieshavesofarappointedtheirownsanitationstaffformaintaining neatness, cleanliness and overallhousekeepingoftheirpremises.That is, sanitation and housekeeping functionswere being performed in-house. But of late, many companies have started outsourcing theseactivities, i.e., they have entrustedoutside agencies to perform these activitiesfortheirorganisationsonacontractual basis.(ii) Generally non-core business activities are outsourced: Sanitationand housekeeping functions are non-core for most organisations. Of course, for municipalities and sanitations services providers, these activitiescomprise the core of their business activity.Housekeepingisacoreactivityforahotel.Inotherwords,dependinguponwhat business a company is in, therewill be someactivities thatare central and critical to its basic businesspurpose.Otheractivitiesmaybe regarded as secondary or incidental to fulfilling that basic purpose. Thepurpose of a school, for example, is to developachildbymeansofcurricularand co-curricular activities. Clearly,these activities comprise the ‘core’activities.Runningacafeteria/canteenorabookstoreisnon-coreactivityfora school.

As the organisations venture toexperiment with outsourcing, theymay initially outsource only the non- core activities.But later on, as they become comfortable withmanaginginterdependencies, they may start getting even the core activitiesperformed by the outsiders. For example, a schoolmay tie-up withsome computer training institute to impart computer education to its students. (iii) Processes may be outsourced to a captive unit or a third party: Think of a large multinational corporation that deals in diverse products andmarkets them to a large number of countries. A number of processes such as recruitment, selection, training, record and payroll (Human Resources), management of accounts receivableand accounts payable (accounting and finance),customersupport/grievancehandling/troubleshooting(marketing)are common to all its subsidiaries operating in different countries. If these processes could be centralised and parcelled out to a business unit created especially for this purpose, this would result in avoidance ofduplication of resources, realisation of efficiencyandeconomy’sperformanceof same activity on a large scale atoneorafewselectlocations,therebyresulting in substantial reduction in costs. Clearly, therefore, if the task of performingsomeactivityinternallyissufficientlylarge,itmaybebeneficialforthefirmtohaveacaptiveservice

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provider,i.e.,aserviceprovidersetupforprovidingservicesofagivenkindtoonlyonefirm.GeneralElectric(GE)is,forinstance,thelargestcaptiveBPOunitinIndiaforprovidingcertainkinds ofservicestotheparentcompanyinthe United States as well as to itssubsidiaries in other countries. Or else, these processes may be parcelled outtothirdpartyserviceproviderswhooperate independently in the market andprovideservicestootherfirmstoo.

Figure 5.4 provides a synopticalviewofhowafirmcanoutsourcesomeofitsactivitiestothecaptiveandthirdpartyserviceproviders.Thehiredpartyserviceprovidersarethepersons/firmswhich specialise in some processessuch as Human Resource Management (HRM)andprovidetheirservicestoawide base of clients, cutting acrossindustries.Suchserviceprovidersarecalled‘horizontals’intheoutsourcingterminology. Else, they may specialise inoneortwoindustriesandscaleuptodoing a number of processes from non-coretocore.Thesearecalled‘verticals.’Astheserviceprovidersmature,theymove simultaneously horizontal andvertical.

The most important reason underlying the use of outsourcing is to benefit from the expertise andexperience of others. Institutions like schools, companies and hospitals can outsourcethecafeteriaactivitytothecateringandnutritionfirmsforwhomtheseactivities comprise the core orheart of their operations. The idea of outsourcingisvaluableasyoutendtogain not only in terms of their expertise and experience and the resultant efficiency,butitalsoallowsyoutolimityourinvestmentandfocusattentiontowhatyourcoreprocessesare.

Little wonder that outsourcingis fast becoming an emerging mode of business. Firms have startedincreasingly outsourcing one or more oftheirprocesseswhichcanbemoreefficiently and effectively carried outbyothers.Whatqualifiesoutsourcing as an emerging mode of business is its increasing acceptance as a fundamental business policy and philosophy, as opposed to the earlier philosophy of ‘doing itallbyyourself’.

Figure 5.4 Types of Outsourcing Service Providers

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5.8.1 Scope of Outsourcing

Outsourcing comprises four key segments: contract manufacturing, contract research, contract sales and informatics (see Figure 5.5).

The term outsourcing has more popularly come to be associated withIT-enabledservicesorBusinessProcess Outsourcing (BPO). In fact, evenmorepopulartermis‘callcentres’providing customer-oriented voicebasedservices.About70percentof

the BPO industry’s revenue comes from call-centers, 20 per cent from high-volume,low-valuedataworkandtheremaining10percentfromhigher-value information work. ‘CustomerCare’ accounts for the bulk of thecallcentreactivitieswith24hours×7days handling of in-bound (customer queriesandgrievances)andout-bound(customersurveys,paymentfollow-upandtelemarketing)traffic.Figure5.5outlinesvarioustypesofoutsourcingactivities.

Figure 5.5 Anatomy of Outsourcing

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5.8.2 Need for Outsourcing

Necessity, they say, is the mother of all inventions.Thiscanbesaidtobetrueevenincaseoftheideaofoutsourcing.As discussed in the introduction to the chapter,globalcompetitivepressuresfor higher quality products at lowercosts,everdemandingcustomers,andemerging technologies are the three major drivers causing a rethink or re-look at business processes. These may be regarded as factors responsible for the continuing emergence of outsourcing as a mode of business. In fact, today outsourcing is being resorted to not out of compulsion, but also out of choice. Some of the major reasons (and also benefits) ofoutsourcingarediscussedbelow.(i) Focusing of attention: You may be good at doing so many things in academics and extra-curricular activities, yet you would be betteroff by focusing your limited time andmoney on just a few things forbetter efficiency and effectiveness.Likewise,businessfirmsarerealisingthe usefulness of focusing on just a few areaswhere they have distinctcapability or core competence, and contractingouttherestoftheactivitiesto their outsourcing partners. You are aware,that,inordertocreateutilitiesor value, a business engages in a number of processes, viz., purchaseand production, marketing and sales, R&D, accounting and finance, HR

and administration etc. Firms need to define or redefine themselves. They,for example, need to consider as to whethertheywould liketobecalled a manufacturing or marketing organisation.Suchawayofdelimitingthe scope of business enables them to focus their attention and resources on selectactivitiesforbetterefficiencyandeffectiveness.(ii) Quest for excellence: You are aware of the benefits of division oflabour and specialisation. Outsourcing enablesthefirmstopursueexcellenceintwoways.One,theyexcelthemselvesin the activities that they can dothe best by virtue of limited focus.And, they excel by extending their capabilities through contracting out theremainingactivitiestothosewhoexcel in performing them. In the quest for excellence, it is necessary not only toknowwhatyouwouldliketofocuson,butalsowhatyouwouldlikeothersto do for you.( i i i ) Cost reduct ion : Globa l competitiveness necessitates notonly global quality, but also global competitive pricing. As the pricesturn southwards due to competitivepressures,theonlywaytosurvivalandprofitabilityiscostreduction.Divisionof labour and specialisation, besides improving quality, reduces cost too.This happens due to the economies of large scale accruing to the outsourcing partners as they deliver the same servicetoanumberoforganisations.Differences in prices of factors of

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production across the countries are also a factor contributing to cost reduction. For example, India is a preferred dest inat ion for global outsourcing of Research and Development,manufacturing,softwaredevelopmentandITenabledservices(ITES)becauseoflargescaleavailabilityofrequiredmanpoweratlowercosts.(iv) Growth through alliance: To the extentyoucanavailoftheservicesofothers,yourinvestmentrequirementsarereduced,othershave investedinthoseactivitiesforyou.Evenifyoumayliketohaveastakeinthebusinessofyouroutsourcingpartners,youprofitfromnotonlythelow-costandbetterqualityservicesprovidedby themtoyoubutalsobyvirtueofashareintheprofit fromtheoverallbusinesstheydo. Therefore, you can expand rapidly asthesameamountofinvestiblefundsresult in creation of a large number of businesses. Apart from financialreturns, outsourcing facilitates inter-organisationalknowledgesharingandcollaborativelearning.Thismayalsoexplain the reasons why the firmstoday are outsourcing not only their routine, non-core processes, but also seeking to benefit from outsourcingsuch strategic and core processes as ResearchandDevelopment.(v) Fillip to economic development: Outsourcing, more so offshore out-sourcing, stimulates entrepreneurship, employment and exports in the host countries (i.e., the countries from whereoutsourcingisdone).InIndiain

the IT sector alone, for example, there hasbeensuchatremendousgrowthof entrepreneurship, employment and exports that today we are theundisputed leaders as far as global outsourcinginsoftwaredevelopmentandIT-enabledservicesareconcerned.Presently, we have 60 per cent ofthe$150billion (1billion=Rs.100crores) global outsourcing share in the informatics sector.

5.8.3 Concerns over Outsourcing

Itwillnotbeoutofplacetobeawareofsome of the concerns that outsourcing isbesiegedwith.(i) Confidentiality: Outsourcing depends on sharing a lot of vitalinformation and knowledge. If theoutsourcingpartnerdoesnotpreservethe confidentiality, and, say, for example, passes it on to competitors, it can harm the interest of the party that outsources its processes. If outsourcing involves completeprocesses/products,thereisafurtherrisk of the outsourcing partner starting upacompetitivebusiness. (ii) Sweat-shopping: Asthefirmsthatoutsource seek to lower their costs,theytrytogetmaximumbenefitfromthe low-costmanpower of the hostcountries.Moreover,itisobservedthatwhetherinthemanufacturingsectorortheIT-sector,whatisoutsourcedisthekindofcomponentsorworkthatdoesnot much build the competency and capability of the outsourcing partner beyond the skills needed to comply with a rigidly prescribedprocedure/

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Key Terms

e-Business e-Commerce BrowserVirus SecureSocketsLayer(SSL) Onlinetradinge-Trading e-Procurement e-Biddinge-Cash Business Process Outsourcing Call CentresVerticals Horizontals CaptiveBPOunitsSweat-shopping

method.So,whatthefirmthatgoinforoutsourcinglookforisthe‘doing’skillsratherthandevelopmentofthe‘thinking’skills.(iii) Ethical concerns: Think of a shoe company that, in order to cut costs, outsources manufacturing to adevelopingcountrywheretheyusechildlabour/womeninthefactories.Back home, the company cannot do so duetostringentlawsforbiddinguseofchild labour. Is cost cutting by using childlabourincountrieswhereitisnotoutlawedorwherethelawsare‘weak’,ethical? Similarly, is it ethical tooutsourcetheworktocountrieswherethere existswage-discrimination onthebasisofsexoftheworker? (iv) Resentment in the home countries: In the course of contracting

out manufacturing, marketing, Research and Development or IT-basedservices,what isultimatelycontracted out is ‘employment’ orjobs. This may cause resentment back in the home country (i.e., the country fromwhich the job is beingsourced out) particularly if the home country is suffering from the problem of unemployment.

The aforementioned concerns, however,donotseemtomattermuchas the global outsourcing continues to flourish. As India emerges as aglobal outsourcing hub, the industry is forecast to explode at exponential rates—from23,000peopleand$10millionperannumin1998tooveramillionpeopleandrevenuesinexcessof$20billionby2008.

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SUMMARY

Theworldofbusiness ischanging.e-businessandoutsourcingarethetwomostobviousexpressionsofthischange.Thetriggerforthechangeowesitsorigintobothinternalandexternalforces.Internally,itisthebusinessfirm’sownquestforimprovementandefficiencythathaspropelleditintoe-businessand outsourcing. Externally, the evermounting competitive pressures andeverdemandingcustomershavebeentheforcebehindthechange.

Electronic mode of doing business, or e-business as it is referred to, presents thefirmwithpromisingopportunitiesforanything,anywhereandanytimetoitscustomers,thereby,dismantlingthetimeandspace/locationalconstraintson its performance. Though e-business is high-tech, it suffers from the limitationofbeinglowinpersonaltouch.Thecustomersasaresultdonotgetattendedtoonan interpersonalbasis.Besides, thereareconcernsoversecurity of e-transactions andprivacy of thosewho transact business overtheinternet.Thebenefitsofe-commercealsoseemtohaveaccruedunevenlyacrosscountriesandacrossregionswithinacountry.

Apart from becoming digital, the firms are also resorting to a departurefrom the erstwhile ‘do it all by yourself’ mindset. They are increasinglycontracting outmanufacturing, R and D as well as of business processesirrespective ofwhether theseare IT enabledornot. India is ridinghighonthe global outsourcing business and has gained considerably in terms of employment generation, capability building and contribution to exports andGDP.

Together, the two trends of e-business and outsourcing are reshaping theway business is andwill be conducted. Interestingly, both e-business andoutsourcingarecontinuingtoevolve,andthatiswhythesearereferredtoasthe emerging modes of business.

EXERCISES

Short Answer Questions

1. Stateanythreedifferencesbetweene-businessandtraditionalbusiness.

2. Howdoesoutsourcingrepresentanewmodeofbusiness?

3. Describebrieflyanytwoapplicationsofe-business.

4. Whataretheethicalconcernsinvolvedinoutsourcing?

5. Describebrieflythedatastorageandtransmissionrisksine-business.

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Long Answer Questions

1. Why are e-business and outsourcing referred to as the emerging modes of business?Discuss the factors responsible for the growing importance ofthese trends.

2. Elaboratethestepsinvolvedinon-linetrading.

3. Evaluatetheneedforoutsourcinganddiscussitslimitations.

4. DiscussthesalientaspectsofB2Ccommerce.

5. Discuss the limitations of electronic mode of doing business. Are theselimitations severe enough to restrict its scope? Give reasons for your answer.

Projects/Assignments

1. Compare and contrast the products and their prices available on theinternet and in retail shops. Is the quality, customer satisfaction and other factors the same?

2. Study any business unit/company which is using e-commerce, e-business as a way of doing business. Interview some people working there and find out the advantages in practical business in terms of its costs also.

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Documents

EmErging modEs of BusinEss - NCERT