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Question-1

State any three differences between e-business and traditional business.

Solution:

 

S. No e-business Traditional Business
1. Formation of e-business is difficult. Formation of e-business is simple.
2. Physical examination of the products is not possible in e-business since it depends upon internet. The products can be examined physically and felt before buying them. Example, rice, pulses, etc.
3. Shape of organizational structure is either vertical or tall Shape of organizational structure is horizontal or flat

 

Question-2

How does outsourcing represent a new mode of business?

Solution:
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, specialty, efficiency and, also investment, this phenomenon has undoubtedly become global.

Question-3

Describe briefly any two applications of e-business.

Solution:
  1. e-Procurement: This involves internet-based sales transactions between business organizations as well as both, "reverse auctions" that make possible online trade between a single business purchaser and many sellers, and, digital marketplaces that make possible online trading between multiple buyers and sellers.
     
    e-Bidding/e-Auction: Almost all the shopping sites have ‘Quote your price’ where you can bid for the goods and services. It also invites e-tendering where one can submit tender quotations online.
     
    e-Communication/e-Promotion: e-mail communication is another means of promoting an organization’s product. It involves publication of online catalogues displaying images/pictures of goods/products, advertisements can also be published through banners, pop-ups, blogs and customer surveys. Video conference serves as a boon to many corporate companies that aids Meetings and conferences in a smooth manner.
     
    e-Delivery: e-delivery is the instant electronic delivery of computer software, photographs, videos, books (e-books), journals (e-journals) and other multimedia content to the user’s computer at the click of a mouse. It also provides legal, accounting, medical, and other consulting services electronically.
     
    e-Trading: e-Trading can be defined as securities trading, in other words it is online buying and selling of shares and other financial instruments.



  2.  

Question-4

What are the ethical concerns involved in outsourcing?

Solution:
Certain countries ban the use of specific labour in certain industries. For example, women and children are not allowed to work in match-stick industries in India. The purpose of outsourcing to India is not solved if such products are outsourced to India. Similarly, it is not ethical if wag is determined on the basis of the person employed.

Question-5

Describe briefly the data storage and transmission risks in e-business

Solution:
Important information may be stolen or modified to achieve selfish objectives or simply for fun/ adventure. ‘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 ‘cypher text’. It can be deciphered (to decrypt) only by those who possess a secret key the message into ‘plaintext’.

Question-6

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

Solution:
The scope of e-business is gigantic. More or less, all types of business functions such as production, finance, marketing and personnel administration in addition to managerial activities like planning, organizing and controlling are carried out through computer networks. From this perspective, an organization’s electronic transaction and network can be visualized as expanding into three directions viz., (i) B2B which is an organization’s communication with other businesses, (ii) B2C i.e., a organization’s communication with its customers and (iii) intra-B or an organization’s internal processes.
  1. B2B Commerce: According to this, both the parties involved in e-commerce transactions are business organizations, 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 organizations 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 organization 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 is used for placing orders, monitoring production, speedy delivery of components, and effecting payments. Similarly, an organization 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 customized production. Using e-commerce expedites the movement of the information and documents.
      B2C Commerce: As the name suggests, B2C (business-to-customers) transactions have business organizations 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. 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. 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).
      Intra-B Commerce: Here, parties involved in the electronic transactions are from within a given business organization and hence the name intra-B commerce. As noted earlier too, one significant difference between e-commerce and e-business is that, e-commerce is comprised of a business firm’s interaction with its suppliers, and distributors/other business firms and customers (B2C) through the internet. It is basically due to the use of intra-B commerce that now, it has become possible for the organizations to give preference for flexible manufacturing. Use of computer networks enhances possibility for the marketing department to interact consistently with the production department and procure the customized products made as per the requirements of the individual customer. Similarly, closer computer-based interactions among the other departments makes it possible for the organistion to reap the fruits of efficient inventory, cash management, better utilisation of plant and machinery, effective handling of customers’ orders, and also effective human resource management. Just as Intercom facilities enhanced voice communication within the office, intranet facilitates multimedia and also 3-D graphic communication among organizational departments for well-informed decisions that leads to better coordination, quicker decisions and an increase in workflows. For instance, companies can float electronic catalogues that can be used by the employees for ordering forms and access inventory information. Similarly, interviews of the other branches take place in the registered office through online video conference interviews that saves time of travel.
      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.
1) 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.

2) 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.

3) 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 organization to have a captive service provider, i.e., a service provider who will provide services of a given kind to only one organization. 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 organizations 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 organization 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.

Question-7

Elaborate the steps involved in on-line trading.

Solution:
  1. 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.

 

Question-8

Evaluate the need for outsourcing and discuss its limitations.

Solution:
  1. 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 organization to have a captive service provider, i.e., a service provider who will provide services of a given kind to only one organization. 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 organizations 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 organization 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.

Question-9

Discuss the salient aspects of B2C commerce.

Solution:
As the name suggests, B2C (business-to-customers) transactions have business organizations 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).

Question-10

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

Solution:
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.

 





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