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Write short notes on e-Business versus e-Commerce.

Despite the fact that, many a times, the terms e-business and e-commerce are used interchangeably, yet more specific definitions would differentiate between the two. While the term ‘business’ is a broader term than ‘commerce’, e-business is a more intricate term and comprises several business transactions and functions done electronically, including the extra popular gamut of transactions called ‘e-commerce.’ e-commerce covers an organisation’s communications with its customers and suppliers through the internet. e-business has in its fold not only e-commerce, but also other electronically conducted business functions such as production, inventory management, product development, accounting & finance and human resource management. e-business is, hence, undoubtedly much more than buying and selling through the internet, i.e., e-commerce.


Write short notes on C2C Commerce.

C2C Commerce: In C2C, the origin of business is the consumer and the destination is also the consumer. Hence it is named as C2C commerce. This kind of commerce is suitable for dealing goods that does not have an established market mechanism, for instance, we can take quote the example of the website of ebay where the person can search for all his requirements and simultaneously can advertise his products as well like selling used books or clothes either on cash or barter basis. The vast space of the internet helps people to globally search for potential buyers. In addition, e-commerce technology provides market system security to these type of transactions which would have been missing if the buyers and sellers had to interact in anonymity of one-to-one transactions. The vital C2C area of interactive commerce is the formation of consumers’ forum and multiple pressure groups. We can quote examples like Yahoo groups and other community groups where any information or even a problem can be shared which might sometimes, even result in solving the problem.


Discuss the several components of e-commerce.

B2B Commerce: According to this, both the parties involved in e-commerce transactions are business organisations, and, therefore the name B2B, i.e., business-to-business. Conception of utilities or delivering value requires a business to communicate with numerous other business organisations which may be suppliers or vendors of diverse inputs; or else they may even be a part of the channel by means of which an organisation distributes its products to the consumers. For instance, the manufacture of an automobile requires assembly of a many large components that are manufactured elsewhere, within the vicinity of the automobile factory or even overseas. To reduce reliance on a single supplier, the automobile factory has to communicate with more than one vendor for each of the components. A network of computers are used for placing orders, monitoring production, speedy delivery of components, and effecting payments. Similarly, an organisation may strengthen and progress its distribution system by exercising a control over its stock-in-transit as well as the various middlemen in different locations. For example, each consignment of goods and the stock-at-hand of a warehouse can be monitored and replenishments and reinforcements could be set in motion whenever required. Or else, a customer’s specifications have to be routed through the dealers to the factory and keened into the manufacturing system for effective and customised production. Using e-commerce expedites the movement of the information and documents; and recently, money transfers are also done through this. The term e-commerce historically means facilitation of B2B transactions using Electronic Data Interchange (EDI) Technology to send and receive viable documents like purchase orders or invoices.


B2C Commerce: As the name suggests, B2C (business-to-customers) transactions have business organisations at one end and its customers on the other end. Although, we instantaneously think of online shopping, it must be greatly appreciated that ‘selling’ is the outcome of the marketing methods. Marketing has begun well before a product is offered for sale and perpetually continues even after the product has been sold. B2C commerce, hence, entails a wide range of marketing activities such as identifying activities, promotion and even delivery of products that are carried out online. e-commerce allows these activities at a much lower cost but at a high speed. For instance, Withdrawing money from the bank was a tedious process, which consumed lot of time but now ATM quickens withdrawal of money. There is a freedom of shopping-at-will. Customers could also make use of call centres set up by companies to dial toll free calls to instigate enquiries and lodge complaints round the clock. The advantage of the process is that one does not have to set up these call centres or help lines; they can also be outsourced. Such centres that undertake this process is known as Business Process Outsourcing (BPO).


List out the benefits and limitations of e-business.

Ease of Formation and Lower Investment Requirements: Unlike a huge list of procedural requirements for setting up an industry, e-business is comparatively easy to start. The benefits of internet technology mount up to big or small business alike

Convenience: Gone are the days, where shopping ate our time and energy, now, internet offers the convenience of ‘24 hours × 7 days a week × 365 days’ a year that allows facilities even at midnight. There are no time restrictions for it. This flexibility is available even to the organisational personnel which enables them access and do their work from wherever they are, and whenever they may want to do it.


Speed: As we have already noted, most of the buying or selling activities involves exchange of information which internet allows at the click of a mouse. This benefit has attracted many in the case of information-intensive products such as softwares, movies, music, e-books and journals which can be delivered online. The time consumed for this process is substantially reduced due to transformation of the business processes being sequential and becoming parallel or simultaneous. As we are all aware that in the digital era, money is also called as electronic pulses due to the quick electronic funds transfer technology of e-commerce.


Global Reach/Access: Internet has no boundaries. On the contrary, it allows the seller an access to the global market; on the other hand, it helps the buyer giving freedom to choose products from any part of the world. It would definitely not be an exaggeration to say that in the absence of internet, globalisation would have been to a large extent restricted in scope and speed.

Movement towards a Paperless Society: Usage of internet has to a great extent reduced paperwork and time consumption. Many corporate companies does bulk of its sourcing of supplies of materials and components with no paper work. Even the government departments and regulatory authorities have increasingly adoption this mode where they allow electronic filing of returns and reports. In fact, e-commerce tools are implementing the administrative reforms designed at speeding up the process of granting permissions, approvals and licences. In this regard, the provisions of Information Technology Act 2000 are quite remarkable.


Limitations of e-Business : Conducting business in the electronic mode does suffer from certain limitations. It is advisable to be aware of the also.

Low Personal Touch: Though very High-tech it lacks warmth of interpersonal interactions. To this effect, it is comparatively less suitable mode of business with respect to product categories that requires high personal touch.
  Incongruence between Order taking/giving and Order Fulfillment Speed: There is an outflow of information at the click of a mouse, but the actual physical delivery of the product takes a lot of time. This incongruence may cost the patience of the customers. It also happens due to technical reasons where web sites take unusually long time to open. This may further create displeasure and frustration in the user.
  Need for Technology Capability and Competence of Parties to e-Business: Other than the traditional 3R’s (Reading, Writing, and Arithmetic), e-business needs a fairly high degree of familiarity of the parties with the world of computers. And, this "need" is responsible for what is known as digital divide, which is the division of society on the basis of familiarity and non-familiarity with digital technology.
  Increased Risk due to Anonymity and Non-traceability of Parties: Internet transactions happen between cyber personalities. It is becoming hard to establish the identity of the parties. Furthermore, one does not know the location from where the parties may be operating. It is therefore riskier to interact through internet. e-business is also riskier due to additional hazards of impersonation sometimes, leaving somebody else to transact in your name and leakage of confidential information such as banking details and so on. Further, there are also problems of ‘virus,’ and ‘hacking,’ that could condemn your computer.
  Ethical Fallouts: These days companies use an "electronic eye" to keep track of your email account, the websites visited by you, the files being accessed etc. These are some of the ethical fall outs that we can face in our routine.
  Despite Limitations, e-Commerce is the Way: It may be understood that most of the limitations of e-business mentioned above are in the process of being overcome. These days websites are more and more interactive to overcome the problem of ‘low touch.’ Communication technology has steadily evolved to increase the speed and quality of communication through internet. Efforts are being taken to overcome the digital divide, for instance, by resorting to strategies as setting up of community telecentres in villages and rural areas in India with the aid of government agencies, NGOs and international institutions. India has undertaken about 150 projects in order to diffuse e-commerce in all nooks and corners. In concurrence with the above discussion, it is clear that e-business is here to stay and is poised to restructure the businesses, governance and the economies. Hence, it is appropriate that we get familiarised with the process of e-business.



Write in detail about online transaction.

Online Transactions

Operationally, one may visualise three stages involved in online transactions. Firstly, the pre-purchase/sale stage including advertising and information seeking; secondly, the purchase/sale stage comprised of steps such as price negotiation, closing of purchase/sales deal and payment; and thirdly, the delivery stage which can be observed from the above Figure that, except the stage relating to delivery, all other stages involve flow of information. The information is exchanged in the traditional business mode too, but at severe time and cost constraints. In faceto- face interaction in traditional business mode, for instance, one needs to travel to be able to talk to the other party, requiring travel effort, greater time and costs. Swapping of information through the telephone is also unmanageable. It needs synchronization of both the parties for exchange of information orally. Information can also be transmitted by post, but it becomes a time consuming and expensive procedure. Internet walks in as the fourth channel that is free from most of the problems referred above. In the case of information-intensive products and services such as software and music, even delivery can take place online.


Registration: Before doing online shopping, one need to fill up a registration form with the online, which imbibes that you hold an ‘account’ with the online vendor. Amidst various details ‘password’ is one of the vital sections relating to your ‘account’, and ‘shopping cart’ and it is duly protected, failing which, anyone can login using your name and shop in your name. This may prove to be troublesome.


Placing an Order: Shopping cart would be provided for you to pick and drop the items into it. Shopping cart can be defined as an online record of what you have picked up while browsing the online shop similar to a physical shop wherein you can put in and take items out of your cart, that will help you to make sure what you want to buy and can ‘checkout’ and choose your payment options.


Payment Mechanism: The above figure clearly states that payment for the purchases through online shopping may be done through several methods:

Cash-on Delivery (CoD): As the name suggests, payment for the goods ordered online may be paid in cash at the time of physical delivery of goods.
  Cheque: As an alternate option, the online vendor might arrange for the pickup of the cheque from the customer. On realization of the cheque, delivery of goods may be made.
  Net-banking Transfer: Customers are provided with the facility of electronic transfer of funds over the internet. In this case, the buyer can transfer the amount towards the transaction to the goods to the account of the online vendor which will enable him to proceed to arrange for the delivery of goods.
  Credit or Debit Cards: Credit or Debit cards are commonly referred to as ‘plastic money’. These cards are the most extensively used medium for online transactions. In fact, more than 95 per cent of online transactions are affected with a credit card. Credit card permits its holder to make purchase on credit. The amount due by the card holder to the online seller is paid by the credit card issuing bank, which in turn transfers the amount utilized in the transaction to the credit of the seller. Buyer’s account is debited, who enjoys the liberty to repay the amount in monthly installments and at his convenience. Debit card permits its holder to carry out purchases through it to the degree of the amount lying in the respective account. As the transaction is made, the amount due as payment is immediately deducted vide electronic transfer from the card. In order to accept credit card as an online payment type, the seller has to secure a means of collecting credit card information from its customer. Payments effected through credit cards are processed either manually, or through an online authorisation system called SSL Certificate (see box on, History of e-commerce).



What are the risks associated with online transactions?

Transaction Risks: Online transactions are susceptible to the following types of risks: Denial of transaction by the seller or the denial by the customer of placing the order. This issue may be to addressed as ‘default on order taking/giving.’
  The planned delivery does not take place at the right destination or delivery of goods other than ordered by the customer. This may be regarded as ‘default on delivery’.
  In some instances the Seller does not receive the payment for goods delivered whereas the customer claims that the payment was already made. This may be addressed to as ‘default on payment’.

Hence, in e-business risk may be due to the seller or the buyer on account of default on order taking/giving, delivery and payment. These situations can be averted by providing an identity and location/address for verification at the time of registration, and receiving an authorisation as to the order confirmation and payment realization by mainting a payment record through cookies. While permitting advertisers to sell their products online, these sites assure the customers of the sellers’ identities, locations and service records. There are sites like eBay that provide rating of the sellers and protection to the customers against default on delivery and reimbursement of payments. As far as the payments are concerned, the seller has to identify the buyer’s credit limit and accordingly process the payment to avoid risk factors. Alternatively, e-commerce technology today permits even online processing of the credit card information like card number, name and validity of the card. In order to protect the credit card details being misused, shopping malls using the encryption technology like Netscape’s Secure Sockets Layer (SSL), which is an important tool for safeguarding against data transmission risks in online transactions.


Data Storage and Transmission Risks: Information can be compared to power indeed. But when the power goes into the wrong hands, data stored in the system and en-route is prone to a number of risks. Important information may be stolen or modified to achieve selfish objectives or simply for fun/ adventure. As we are aware of ‘virus’ and ‘hacking’, the full form of the acronym ‘VIRUS?’ means Vital Information Under Siege. Basically, virus is a program that replicates itself on the other computer systems. The effect of computer viruses range from sheer annoyance to some on-screen display (Level-1 virus), disturbance in functioning (Level-2 virus) damaging target data files (Level-3 virus), which leads to complete destruction of the system (Level-4 virus). By installing and updating anti-virus programmes on a timely basis will scan the files and disks for virus attacks thereby providing protection to your data files, folders and systems. Data can be intercepted in the course of transmission by using cryptography. Cryptography refers to the process of protecting information by converting it (encrypting it) into an unreadable format known as ‘cyphertext’. It can be deciphered (to decrypt) only by those who possess a secret key the message into ‘plaintext’. This is in other words equal to using ‘code words’ with some one so that others do not comprehend your conversation.


Risks of Threat to Intellectual Property and Privacy: Internet is an open that gives more room for information and moves out of the private domain. So is it difficult to protect it from being misused or copied. Data furnished during online transactions may be provided to others who may start loading a host of advertising and promotional literature on to your e-mail inbox. You are the recipient with little respite from receiving rubbish mails.


Describe the concept and scope for outsourcing.

Concept: Outsourcing is hitherto another trend that is fundamentally reshaping business. It refers to a long-term contract generally, the non-core. Recently, even some of the core activities are outsourced to a third party specialists with a view to benefit from their experience, speciality, efficiency and, also investment, this phenomenon has undoubtedly become global.

Outsourcing Involves Contracting Out: Factually, outsourcing means to source from outside what had been taking place in-house. For instance, most companies have so far appointed sanitation staff under Sanitation and Housekeeping department for maintaining cleanliness and overall housekeeping of their premises. But now the scenario has changed with many companies by having outsourced these activities, by entrusting outside agencies to carry out these activities on contractual basis for their organizations.


Outsourcing of Non-core Business Activities: The non core functions of most organizations are Sanitation and housekeeping but, depending upon what business a company is in, there will be certain activities that are classified as core and non core functions based on its business purpose. Non core activities are considered as secondary or incidental. For example, in a school, the management functions of the school are considered as core activities and running a cafeteria or a computer training programme is considered as noncore function which is generally outsourced to outsiders which serves as an added advantage to students.


Processes that can be Outsourced to a Captive Unit or a Third Party: When we think of a large multinational company that deals in diverse products and exports them to a large number of countries, many processes such as recruitment, selection, training, record and payroll (Human Resources), management, accounting and finance, customer support, grievance handling are some common activities outsourced to its subsidiaries operating in different countries. If the task of performing some activity internally is large, it can be beneficial for the organisation to have a captive service provider, i.e., a service provider who will provide services of a given kind to only one organisation. General Electric (GE) is, for example, the biggest captive BPO unit in India provides certain kinds of services to the parent company in the United States and also to its subsidiaries in other countries. Besides, these processes may be outsourced to third party service providers who function independently and provide services to other organisations too. The above Figure shows a synoptical view of outsource by a company to the captive and third party service providers. The hired party service providers are the persons/firms who specialize in some processes like Human Resource Management (HRM). These service providers are known as ‘horizontals’ in the outsourcing terminology. They may also specialize in one or two industries and carry out a number of processes ranging from non-core to core. These are known as ‘verticals.’ On maturity of service providers, they become simultaneously horizontal and vertical. Outsourcing the non core activities allows the organisation to limit their investment and focus on the core processes. The increased acceptance from the organizations that outsource, qualifies outsourcing as an emerging mode of business


Scope of Outsourcing : Outsourcing underlines four key segments viz., contract manufacturing, contract research, contract sales and informatics. This term outsourcing has popularly come to be related to IT -enabled services or Business Process Outsourcing (BPO). Actually, even more popular term is ‘call centres’ that provides customer-oriented voice based services activities 24 hrs × 7 days handling in-bound queries and grievances, and out-bound surveys, payment follow-up and telemarketing. Approximately, 70 per cent of the BPO industry’s proceeds originate from call-centers, 20 per cent from high-volume, low-value data jobs and the remaining 10 per cent is from higher value information work.


List out the need for outsourcing and the concern for outsourcing.

Need for Outsourcing: We can recollect the saying "Necessity is the mother of all inventions", which is true even in case of outsourcing. With the global competitive pressures for high quality products at lower costs, ever demanding customers, and evolution of newer technologies are the three major causes for re-look at business processes. Generally, outsourcing is being resorted to not out of compulsion, but also out of choice. Some of the major reasons for outsourcing are explained below.


Focusing of Attention: Business firms are realising the fact and usefulness of focusing on the core functions and outsourcing the rest of the activities to their outsourcing partners. An organisation needs to define or redefine themselves, they need to consider as to whether they would like to be called after their core function or the noncore function. This process of delimiting the scope of business enables them to focus their attention on the core functions that results in a quest for excellence, better efficiency and effectiveness

Cost Reduction: Global competitiveness enhances not only global quality, but also global competitive pricing. When the prices turn southwards because of competitive pressures, the only solution to survival and profitability is cost reduction. Division of labour and specialisation, besides improving quality, reduces cost in a big way. This happens when the economies of large scale accruing to the outsourcing partners when they deliver the same service to a number of organisations. Differences in prices of factors of production to other countries are also a factor contributing to cost reduction. For instance, India is a favoured destination for global outsourcing of Research and Development (R&D), Manufacturing, Software Development and Information Technology Enabled services (ITES) due to large scale availability of manpower at lower costs.


Growth through Alliance: When there is a possibility to avail the services of others, the investment requirements slash down. Even if you want to have a stake in the business of your outsourcing partners, you receive gains from not only the low-cost and better quality services provided by them, but also, by virtue of a share in the gains from the overall business carried out. Hence, one can expand rapidly with the same amount of capital funds and result in creation of a large number of businesses. Other than the financial returns, outsourcing provides inter-organizational knowledge, sharing and collaborative learning. This explains the reasons why today there is outsourcing,

Concerns Over Outsourcing : It is good to be aware of some of the concerns that outsourcing is besieged with.

Confidentiality: Outsourcing depends on sharing a important information and knowledge. When the outsourcing partner fails to preserve the confidentiality, and, for instance, passes it on to competitors, it can prove hazardous to the party that outsources its processes. If the activities are completely outsourced there is a further risk of the outsourcing partner setting up a competitive business.

Ethical Concerns: In order to cut costs, a company outsources manufacturing to a developing country where they children and women are exploited in factories. This shows ethical concerns.

Resentment in the Home Countries: Outsourcing job to other countries may lead to resentment back in the home country, especially, if the home country suffers from unemployment.

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