Class 11

Business Studies
EMERGING MODES OF
BUSINESS

Chapter - 5
E-Business
 E-Business

Business operations such as industry, trade

and commerce using computer networks are
called E-Business
 E-Business
Business functions as well as managerial
activities like production, inventory
management, product development,
accounting and finance, human resource
management etc. can be carried out through
computer networks
E-Commerce
 E-Commerce
Commercial transactions conducted
electronically on the internet

It is only a part of e-Business

 E-Commerce
It covers a firm’s interactions with its
customers and suppliers over the internet
 Scope of
E - Business
Scope of E-Business
Four types of E-Business Transactions

B2B B2C

INTRA-B C2C
 B2B
Business To Business
 B2B Commerce
In this case, commercial transactions take
place between different business
organizations

Eg: Placing of purchase orders, invoices,

quotations etc.
 B2C
Business To Customers
 B2C Commerce
It means Business to Customers
transactions

It include selling of goods, call centers,

ATM facility etc.
 Intra - B
Within the Business
 Intra – B Commerce
Here the transactions take place
within the firm

It includes the use of computer networks in marketing,

finance, production, purchase, human resource,
Research and Development departments etc.
 Intra – B Commerce
It also includes interaction of business with its
employees (B2E) like salary payment,
seeking suggestions from employees etc.
 C2C
Customer To Customer
 C2C Commerce
It is best suited for dealing in goods for
which has no established markets

eBay.com, olx.com, amazon.com, flipkart

etc. allows persons to globally search for
potential buyers
 Differences between
Traditional & E-Business
 Traditional Vs. E-Business

1 Ease of Formation

Traditional E-Business

Difficult Simple
 Traditional Vs. E-Business

2 Physical presence

Traditional E-Business

Required Not required

 Traditional Vs. E-Business

3 Location

Traditional E-Business

Important Not Important

 Traditional Vs. E-Business

4 Cost of setting up

Traditional E-Business

High Cost Low Cost

 Traditional Vs. E-Business

5 Operating cost

Traditional E-Business

High Low
 Traditional Vs. E-Business

6 Contact with suppliers and customers

Traditional E-Business

Indirect through
intermediaries Direct
 Traditional Vs. E-Business

7 Business process and length of cycle

Traditional E-Business

Long time Short time

 Traditional Vs. E-Business

8 Interpersonal touch

Traditional E-Business

More Less
 Traditional Vs. E-Business

9 Ease of going global

Traditional E-Business

Less More
 Traditional Vs. E-Business

10 Employees

Traditional E-Business

Semi-skilled or Technically and

unskilled professionally
qualified
 Traditional Vs. E-Business

11 Transaction risk

Traditional E-Business

Low due to face High due to

to face contact lack of personal
contact
Benefits of
E-Business
 Benefits of E-Business
1 Ease of formation

It is very easy to start due to less legal

formalities and with a limited investment.
 Benefits of E-Business
2 Convenience

Internet offers the convenience of

24 hours business
 Benefits of E-Business
3 Speed

Internet allows faster services.

 Benefits of E-Business
4 Global reach

It provides a boundary less market

 Benefits of E-Business
5 Movement towards a paperless
society

Use of internet has considerably reduced

dependence on paperwork
Limitations of
E-Business
 Limitations of E-Business
1 Low personal touch

There is no face to face contact between the

seller and buyer
 Limitations of E-Business
2 Incongruence between
order and supply

Order taking is very fast, but the delivery of

product takes time
 Limitations of E-Business
3 Need for technology

To access e-business, it requires familiarity

with computer and internet
But it is not accessible for all people
because of digital divide
 Limitations of E-Business
4 High risk

Impersonation, Leakage of confidential

information such as credit card details,
passwords etc. are the reasons for high risk
 Limitations of E-Business
5 People Resistance

Adjustment with new technology creates

stress and a sense of insecurity to the
employees
 Limitations of E-Business
6 Ethical fallouts

Information exchanged through internet may

be stolen or misused by dishonest people
for illegal activities
Online Transactions
Stages involved in
Online Transactions
Stages in Online Transactions

1 Pre purchase/sale stage

Advertising, collection of information etc.

Stages in Online Transactions

2 Purchase / sale stage

Price negotiation, finalizing the deal and

making payment
Stages in Online Transactions

3 Delivery stage

Dispatching goods to the buyers

 Procedure for
Online Transactions
Procedure for Online Transactions

a Registration

Before online shopping, one has to register

with the online vendor by filling-up a
registration form
Procedure for Online Transactions

b Placing an order

Here we can add the items in the shopping cart

Shopping cart is an online record of what you
have picked up while browsing the online store
Procedure for Online Transactions

c Payment mechanism

Payment for the purchases through online

shopping may be done in a number of ways
Cash on Delivery(CoD), cheque, net banking,
credit/debit card, digital cash such as Paytm,
Jio money, e-wallets etc.
Security and Safety of
e-Transactions
 Safety & Security of e-Transactions

1 Transaction risks

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
 Safety & Security of e-Transactions

2 Data storage and transmission risk

Vital information may be stolen or modified for

selfish motives or for fun
VIRUS, Hacking, Brand hijacking etc. are some
of risks in e-business
 Safety & Security of e-Transactions

VIRUS
Vital Information Resources Under Siege (attack)

A Virus is a program that attacks the computer

system and destroys or corrupts the data
Installing and updating anti-virus programs is
the solution
Safety & Security of e-Transactions

Hacking
It refers to unauthorized access into website

Hackers often destroy the data and

information which causes huge loss to the
business
Safety & Security of e-Transactions

Cryptography and Cipher Text

It is an act of protecting information by

transforming it into an unreadable format
called cipher text (secret language)
Safety & Security of e-Transactions

Cryptography and Cipher Text

Cryptography relates to the study of encryption

Encryption is translation of data into

secret codes
Cipher text is encrypted text
 Safety & Security of e-Transactions

3 Risk of threat to intellectual property

and privacy

Once the information is published over Internet, it

is difficult to protect it from being copied as it is
an open space
Resources required
for E-Business
 Resources for E-Business

a Adequate computer with

Telecom network
 Resources for E-Business

b Technically qualified and

trained work force
 Resources for E-Business

c Well developed websites

 Resources for E-Business

d Well developed
telecommunication facilities
 Resources for E-Business

e A good system of making payments

using credit instruments
Outsourcing
 Outsourcing

Source from outside

Hiring out non-core activities of business to

third party specialists to take advantage of
their experience, expertise and efficiency in
performing such activities
 Outsourcing
It is popularly known as BPO (Business
Process Outsourcing)
Idea behind this concept is that a business
can concentrate in its core areas and leaving
other activities as BPOs
 Outsourcing Examples

Canteen in a business organization to a hotel

 Outsourcing Examples

Transportation of raw materials in a factory

to a transport agency
 Outsourcing Examples

Selection of employees to a
recruitment agency
Features of
Outsourcing
 Features of Outsourcing

1 Contracting out

Non-core activities can be contracted out to

outside agencies
 Features of Outsourcing

2 Non-core activities are outsourced

An organization should identify its core

activities and non-core activities
Generally non-core activities are entrusted to
BPOs on contractual basis
 Features of Outsourcing

3 Outsourcing through
Captive Unit or Third Party

a. Captive Unit is a part of BPO where an

organization uses a wholly owned subsidiary instead
of a third party in some other countries to minimize
the cost and for the use of resources offshore
 Features of Outsourcing

General Electric Co. US started their own

subsidiary company in India for providing
certain services to the parent company is an
example of captive unit

G E Factory Pune India - Interior

 Features of Outsourcing

b. Third party

Here the process may be outsourced to a third

party service provider who operates
independently in the market
Benefits of
Outsourcing
 Benefits of Outsourcing

1 Focusing attention

Outsourcing helps the business to focus on its

core activities and contracting out the rest
 Benefits of Outsourcing

2 Quest for excellence

Outsourcing enables the business to pursue

excellence in two ways
1. They excel themselves by focusing in core
areas only
2.They excel by availing non-core activities from
specialists
 Benefits of Outsourcing

3 Cost reduction
BPOs helps to reduce the cost through
specialization and division of labour
This happens because they provide the same
service to a number of organizations

India is a preferred destination for BPO for various

global organizations due to low manpower cost
 Benefits of Outsourcing

4 Growth through alliance

Through outsourcing, firms investment

requirements are reduced in non-core areas,
therefore they can expand rapidly
 Benefits of Outsourcing

5 Enhance economic development

Outsourcing stimulates entrepreneurship,

employment and exports in the host countries
which help the economy to develop
Concerns over
Outsourcing
 Concerns over Outsourcing

1 Confidentiality

If the outsourcing partner leaks out secret

information to the competitors, it can harm the
interest of the person who outsources it
 Concerns over Outsourcing

2 Sweat-shopping

A firm that outsources seeks to lower their costs

They will try to get maximum benefit from the low

cost manpower of the host countries
 Concerns over Outsourcing

3 Ethical concerns

Generally BPOs works in developing or under

developed countries, where they use child labour
and wage discrimination for men and women etc.

But it may not be allowed in the country of the person

who outsourcing it
 Concerns over Outsourcing

4 Resentment in the home countries

Outsourcing results in loss of employment in home

countries which may lead to opposition from the
people and government

Eg: When a US company starts a BPO in India, it will

cause for unemployment in US and vice versa