CHAPTER 5

EMERGING MODES OF BUSINESS

Mode of Business :- The manner of conducting business is refereed to as the "mode of

Business."
The new modes of business are not new business. They are simply the new ways of doing
business.
E-Business :- It may be defined as the conduct of industry trade and commerce using
the computer networks. E-business mean electronic business.

E-Business and E-commerce

* E-business is a more broader term than e-Commerce.
* E-Commerce course a firm's interactions with its customer's and supplies over the
internet.
* E-Business includes not only e-commerce but also other electronically conducted
business functions such as production, inventory management, product development
accounting and finance and human resources management.

VPN :- Virtual Private Network Technology would mean than employees do not have to
come to office. Instead in a way the office goes to them and they can work from where ever
they are.

Meaning

In this age of Internet, the world commerce has gradually started linking with it, this has
brought a new concept of commerce called ecommerce/e-business. Now we are capable of
reaching the users of Internet all over the world simply by opening a shop on the Internet. The
Internet users can order for the goods, receive their delivery and make their payment while
sitting at their home on the Internet.
Scope of e-Business
It can be understood by the view point of the parties involved and making transactions:
1. B2B Commerce :- it is that business activity in which two firms or twobusiness units
make electronic transaction. For example- one can be a producer firm and other a
supplier firm. e.g. Maruti Udyog buying tyres, doors etc. from other firms.
2. B2C Commerce :- Business to customer. In this one party is a firm and other party is
a customer. On one hand a customer can seek information through Internet about
products, place orders, get some items and make payments and on the other hand the
firm can make a survey any time to know who is buying, and can also know the
satisfaction level of customers. In modem times, call centers can provide these
information.
2. Intra-B Commerce Within business Commerce :- Under it, the parties involved in
the electronic transaction are the two departments of same business. For Example

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 through internet it is possible for the marketing department to interact constantly with
the production department and get, the customized goods made as per the requirement
of customers.
3. C2C Commerce :- Customer to Customer Commerce - Under it, both the parties
involved in electronic transaction are customers. It is required for the buying and selling
of those goods for which there are no established markets. For example-selling old car
through Internet.
4. C2B Commerce :- C2B Commerce provides the Consumers with the freedom of
shopping at will. Customer can make use of call centers to make toll free calls to make
queries and lodge complaints.
5. B2E Commerce :- Companies reporting to personnel recruitment, interview arid
selection and training etc via B2E Commerce.

Benefits of e-Business
The major benefits of e-Business are as follows:

Benefits of e-Business

Movements
World
towards paper
Wide Reach
less society

Elimination Easy Distribution Lower Investment Easy to launch

of Middlemen Process Required new products

1. World wide reach :- Internet gives businessmen an extended market. New customers
come in contact with them. This results in increase in sales.
2. Elimination of Middlemen :- Ever since the e-Business came into existence, the
wholesalers and retailers have started disappearing. Now, most of the producers have
started having, direct contact with customers. As a result the consumer get goods on
less price.
3. Easy Distribution Process :- Many types of information and services be received on
computer through e-business. This has simplified the system of distribution and has
also made it less costly
4. Lower investment required :- In this. you don't require any big showroom or huge
investment. You need only computer and Internet.
5. Easy to launch new products :- Any company can launch its new product in the
market through the medium of E-Business. A complete information about the product
is made available on Internet. In this way the consumer and other businessmen get
information about the new product while sitting at home.
6. Movement towards a paper less Society :- Use of internet has considerably reduced
dependence on paper work.

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Limitation of e-Business
Limitations of e-Business

Low Need for

Delayed Increased People’s
personal technological
delivery risk resistance
touch capabilities

i) Low personal Touch :- (Lacks personal touch with customer as it is conducted over the
internet.)
ii) Incongruence between Order taking/giving and order fulfillment speed. (fast in order
taking but slow in order fulfillment)
iii) Need for Technology Capability and competence of parties to ebusiness. (fairly high
degree of families with computer working, internet facility required.)
iv) Increased risk due to Anonymity and Non-tracebility of Parties :- (Difficult to
establish/check identity & location, someone else may transact in your name risk of
leakage of confidential information such as credit card details.)
v) People Resistance (People have a tendency to resist change due to insecurity).
Finally, to conclude, despite limitations, e-commerce is gaining importance as most of the
limitations of e-business are in the process of being overcome.
Q.1 In which type of e-business transaction, both buyers and sellers are customers ?

Q.2 Identify and discuss the electronic transaction which is the part of e-business and
not of e-commerce. [Hint : Intra B commerce)
Q.3 Mention any one limitation of e-business.
Q.4 Name the essential sources required for e-business.
Difference between Traditional and E-Business
Basis Traditional E-Business
Ease of formation Difficult Simple
Physical Presence Required Not required
Location Near the source of raw material or Anywhere
near the market of the product
Cost of setting up High Low
Operating cost High as investment in procurement, Low relies an ??? of
storage relationship rather than
production, marketing distribution ownership of resources.
facilities.
Nature of contacts with Indirect through intermediaries Direct
the suppliers and the
Customers
Nature of internal Hierarchical from top level mgt to Direct
communication middle level to lower level
management to operatives

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 Response time for Long Instant
meeting customers.
Shape of the Vertical/ tall due to hierarchy Horizontal/flat due to
organizational structure directness of command.
Business process & length Long Sequential precedence Shorter simultaneous
of the cycle. purchase-production-marketing- different processes
sales
Opportunity for
much more. Less
Interpersonal touch.
Ease of going global Less Much
Govt. Patronage Shrinking Much as IT sector is priority
Nature of human capital Semi-Skilled & even unskilled Technically qualified.
manpower
Transaction Risk Low due to face to face contract High due to distance and
anonymity of the parties.
Identify the types of business given below :-
i) Ram, a wholesaler sells bangles, accessories etc. in Chandni Chowk.

ii) Mohan, a businessman sells his products e.g. purses, necklace etc. through
www.amazon.in

Resources Required for Successful e-Business Implementation The resources required for
the e-Business are :
1. Computer system - The presence of computer system is the first requirement of e-
Business. The computer can be linked with Internet by just pressing its keys.
2. Internet connection - Internet connection is very essential and nowadays we can get
this facility by sitting at home.
3. Preparing the web Page - web page has the greatest importance in the use of e-
Business. It is also known as Home Page. Any product that is to be shown on Internet
is displayed on web page.
4. Effective telecommunication system - e-business requires an effective
telecommunication system in the form of telephone lines etc.

On Line Transactions
On line transaction' means receiving information about goods, placing an order. receiving
delivery and making payment through medium of internet. Under this system, the sale purchase
of every type of thing, information and service is possible.

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 Steps involved in Online Purchase

Registration

Placing an Order

Payment Options

Cash on
Net-banking Credit/Debit Digital
Delivery Cheque
Transfer Cards Cash
( COD )

Payment Mechanism
Payment for the purchases through online shopping may be done in following ways .
1. Cash on delivery (COD) - Cash payment can be made at the time of physical delivery
of goods.
2. Net-banking transfer - The customer can make electronic transfer of funds (EFT) to
account of online vendor over the internet.
3. 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 and Safety of e-Transactions

The following methods can be used to ensure security and safety of online transactions.
1. Confirming the details before the delivery of goods - The customer is required to
furnish the details such as credit card no.. card issuer and card validity online.
2. Anti Virus Programmes - Installing and timely updating anti virus programmes
provides protection to data files, folders and system from virus attacks.
3. Cyber crime cells - Govt. may setup special crime cells to look into the cases of
hacking and take necessary action against the hackers.

Risks associated with of e-transactions

1. Transaction Risks.
2. Data storage and transmission risk.
3. Threat to intellectual property and privacy risks.

1. Transaction Risks
a) Seller or Customer denies that order was placed- Default on Order placing/ giving.
b) Goods are delivered at wrong address or good delivered are not as per
specification - Default on delivery.
c) Seller does not get payment whereas customer claims to have made the payment-
Default on payment.

2. Data Storage :- Virus / hacking

Data/information may be hacked.

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3. Threat to intellectual property and privacy risks.
Data may be supplied to others who may start dumping a list of advertisement &
promotional literature into your e-mail box.

Identify the risks associated with e-business transactions given below :-

i) Ranjita ordered a badminton racket and received shuttles instead.

ii) www.specialresearch.com's website was hacked and all the records were corrupted.

Some e-busines application e- procurement

e-bidding/ a-cuction e-
communication/ e-promotion e-
delivery e-trading

Smart Card And ATM's (Automated Teller Machine)

Meaning :- Smart card is a pocket sized card that contains an embedded computer chip, that
stores and transacts data.
Utility :-
1. Smart Cards can store and process lots of data.
2. They provide security as can be used by using unique pin numbers only.
3. Smart card maintain data integrity i.e. information stored in a card can not be erased or
removed accidently.
4. For banking & retail (for withdrawal making payments.)
5. Can replace paper notes as payment can be done using smart cards.

ATM - Meaning and Utility

ATM is a computerized machine that provides the customers of banks the facility of accessing
their accounts with a magnetically encoded plastic card a card number.
* To use an ATM, a customer uses that card, inserts/swipe it in the ATM and used the
password.
* A customer can perform many function on ATM's like withdrawal of money, making
payments/ bills get accounts information etc.

Utility
* Works 24x 7 so transactions can be done anytime, anywhere.
* Convenient location -ATM's are located at convenient places. So customer need not go
to bank.

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* Reduces workload of bank staff.
* Useful while traveling go not need to carry cash while travelling.

Q.1 Shreya is busy housewife. She has many tasks like depositing, withdrawing money,
payments, mobile recharge, balance inquiry etc. She want to get the work done at one
place. Suggests her the best alternative.

Q.2 Ramu goes to withdraw money form ATM. He Swaps his card and payment is debited
from his account by he doesn't get the payment. What can he do now ?

Key-terms
E-business — Process of performing business activities
electronically (Internet)
VIRUS — Vital Information and Resources Under Siege
e-Trending — Online buying and selling of securities
Digital Cash — Electronic cash existing in cyberspace
e-commerce — Firms interactions with its customers and suppliers
over internet
BPO — Process of contracting out non-core business activities
to third parties
B2B Commerce — Electronically conducted business transactions
between business to business.
B2C Commerce — Electronically conducted business transactions to
customers
Intra B Commerce — Business transactions within a given business firm
C2C Commerce — Business transactions between consumer to consumer
Digitisation — Transmission of text, sound, images etc.,
electronically

Multiple Choice Questions

1. e-Business includes
(a) e-commerce (b) Production
(c) Product development (d) All of the above
2. Digitisation means transmission of __________.
(a) text (b) sound
(c) images (d) all of the these
3. Complaint lodged by a customer at the company’s call centre is a type of
____________ of e-business transaction

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 (a) C2B Commerce (b) B2C Commerce
(c) Intro B Commerce (d) C2C Commerce
4) B2B Commerce means:
(a) Firm’s interactions with other business
(b) Firm’s interactions with its customers
(c) Firm’s internal processes
(d) None of the above
5. The payment mechanism typical to e-business
(a) Cash on Delivery (COD) (b) Cheques
(c) Credit & Debit Cards (d) e-cash
6. It is not an application of e-business
(a) Online bidding (b) Online procurement
(c) Online trading (d) Contract R & D
7. Use of ATM to withdrew money is an example of
(a) B2B Commerce (b) B2C Commerce
(c) C2C (d) C2B Commerce
8. Level-2 Virus means
(a) Annoyance in terms of some on-screen display
(b) Damage to target data files
(c) destruction of the system
(d) disruption of functioning
9. Outsourcing
(a) Restricts only to the contracting out of Information Technology Enabled Services
(ITES)
(b) Restricts only to the contracting out of non-care business processes.
(c) Restricts contracting out of manufacturing
(d) Includes off-sharing
10) Factoring facility is _________ type of outsourcing services
(a) Advertising Services
(b) Financial Services
(c) Courier Services
(d) Customer Support Services

One Word Answer

1. What does ‘e’ stand for in e-business?
2. How much of the BPO industry’s revenue comes from ‘call centres’?
3. Write full form of VIRUS.

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4. Captive BPO unit provides services of a given kind to how many firms?
5. Write an advantage of e-commerce.

True & False

1. e-business provides customer’s wider choice.
2. Sweet-shopping means benefit of low cost manpower.
3. Outsourcing means ‘do it all by yourself’.
4. ‘Converting the message into a code so that unauthorised persons may not understand
it’ is called Encryption.
5. A website means a firm’s location on the www.
6. Digital cash is also called ‘Plastic Money’.
7. Generally, core activities are outsourced.
8. Verticals are the firms which provide their services to wide base of clients, cutting
across industries.
9. Outsourcing firms may use child labour in order to cut costs. It is an ethical concern.
10. An unauthorised entry into a website refers to ‘Hacking’.

Answers
Multiple Choice Questions
1. (d) 2. (d) 3. (a)
4. (a) 5. (d) 6. (a)
7. (c) 8. (d) 9. (b)
10. (b)
One Word Answer
1. Electronic
2. 70%
3. Vital Information Resources Under Sieze
4. Only one
5. World Wide Reach

True & False

1. T 2. T 3. F
4. T 5. T 6. F
7. F 8. F 9. T
10. T

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VERY SHORT ANSWER QUESTIONS (I MARKS)
Q.1 What does e stand for in e-business
Q.2 What is 'e' commerce?
Q. 3 Jyoti Wanted to set her Mobile phone but does not get any buyer. On her friends
suggestion she posted the mobile on sale on www.olx.com and found a buyer within two
days. Name the type of e-business.
Q.4 Give the full form of COD
Q.5 What is outsourcing?
Q.6 Ram stays in a hostel in USA and his parents stay in Mumbai Ram birthday is in five
days and his parents wish to gift him a pair of branded shoes. How can they gift?
Q.7 Which programme imitates itself on other computers systems and can damage the data
and can even lead to complete destruction of the system.
Q.8 Why is India a preferred destination for BPO ?
Q.9 Out of e-business and traditional business, which one enjoys ease of going global ?
Q.10 Which method of payment is mostly used for making online transactions.
Q.11 Name two services that can be outsourced.
Q.12 Name some things whose possessions can be taken via computer.
Q.13 Can the possession of a car be taken by computer transaction?
Q.14 A person orders pizza online and makes the payments also but he doesn't get the delivery.
What type of risk is being referred here?

Short Answer Questions 3/4 Marks

Q.15 Distinguish between e-commerce and e-business. Q.16 What do you mean by:-
i) B2B Commerce ii) B2C Commerce
iii) Intra B- Commerce iv) C2C Commerce
Q.17 Justify the need for business process outsourcing by giving any three points ?
Q. 18 Why are e-business and outsourcing referred to as the emerging modes of business ?
Discuss the facts responsible for the growing importance of these trends ?
Q.19 Briefly discuss the various modes of payment for goods purchased through online
shopping.
Q. 20 www.xyz.com an e-business portal sells clothes and accessories. Nisha buys some
clothes from them and makes epayment for it. But when the clothes arrive, they are
found to be defective. The e-business portal takes the clothes and refunds her payment.
What values according to you are being presented by the portal ?
Q. 21 A shoe co. in order to cut costs, out sources manufacturers to developing countries where
they use child labour in the factories. By Outsourcing its work is the company ethically
right ? What values are being neglected by him ?
Q. 22 A Firm uses services of another form for advertising courier service, factoring services
and customer support service for its firm. Identify the emerging mode of business used.
Where as another firm uses another firm's services for Research and development. Are both
the modes used of same category. If no identify the modes used and explain.

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Q.22 Mr. Supriyo who is from West Bengal wants to send some books to his brother in Delhi.
Which mode will he use ? Why are these services getting popular? Explain any 3 points.

LONG ANSWER QUESTION (5/6 MARKS)

Q 23. Elaborate the steps involved in online trading?
Q24. Explain Nature and need for outsourcing service?
Q.25 www.olx.in, www.quicker.com etc are examples of websites used to conduct
business. Dipti's sofa set got spoiled in rain. Her friend suggested that she should
change the fabric so that it looks new and put it for sale on www.olx.com Dipti
followed her friend's advice and got her sofa repaired so that it looks better and
uploaded nicely clicked pictures on www.olx.com in without disclosing the fact that
it was damaged from inside. She found a customer and sold it for Rs. 9,000. After one
week the buyer found the real state of sofa set and called Dipti but she did not answer
any of the call.
(i) Name the type of business in above case.
(ii) Which values did Dipti ignore while selling her sofa set?
(iii) Explain two advantages and disadvantages of ecommerce
Q.26 What do you understand by e-business. Explain briefly any tour benefits of e-business.
Q. 27 Explain any four limitations of electronic mode of doing business. Are these limitations
severe enough to restrict its scope? Give reasons for your answer.
Q. 28 Discuss the various points of difference between e-business and traditional business.
Q.29 Ravi, the manufacturer of watches, hands over the promotional job to some advertising
agency after manufacturing it to avoid time wastage and concentrate on core activities
of business.
a) What is being done here by handing over the job to some other agency ?
b) Which work is being outsourced here ? Why ?
Q.30 Which type of e-business transaction is depicted below :-
i) Selling of old clothes on e-bay.
ii) Managing stock and cash accounts of an organization.
iii) Maruti Udyog buying security lock system from Auto-cars.
iv) Withdraws money form ATM.
v) Collecting daily report of employees on e-mail.
vi) Registering complaints online in company's call centre.

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