COMMERCE-POINT (DHARMENDRA SIR, 9826488667)

Subject- BUSINESS STUDIES(Class-XI)

(Chapter-5: Emerging modes of Business)
Meaning of e-business:
e-business refers to “carrying on business activities through Internet.” Business activities comprise
of industry, commerce and trade. So e-commerce means conduct of industry, trade and commerce activities
through e-commerce. Firms use not only general Internet facilities for e-business but they also prefer to have
their private and personal Internet facilities for their internal functioning.
Scope of e-business
There are various people and parties involved in electronic transactions. These transactions are extended into
four directions. These are:
1-B2B Commerce:(Business to Business)It is that business activity in which two firms or two business
units make electronic transaction. For example- one can be producer firm and other a supplier
firm.(Computer/Laptop,Automobile,Mobile,etc.)
These transactions may involve:
(a)Collaborations
(b)Commercial negotiations
(c)Inviting tenders
(e)Distribution of goods from manufacturer to various distributors.

2-B2C Commerce:(Business to Customers)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 modern times, call centers can
provide these information. For Example-(Amazon,Flipkart etc.)
These transactions may involve:
(a)Selling and Distribution
(b)After sale service
(c)Promotion and other marketing activities.

3-C2C Commerce:(Customer to Customer)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.(OLX, Car24)
These transactions may involve:
(a)Selling old books,clothes,mobiles,furniture, etc.
(b)Selling antique items
(c)Warning customers about fraudulent suppliers
(d)Information about the quality and durability of product etc

4-Intra B-Commerce: Under it, the parties involved in the electronic transaction are the two departments
of same business. For Example,Interaction between any two departments of one firm, Placing orders and giving
instructions to suppliers, Communication of important information in the whole organisation, Recruitment,
selection and training of employees, Reporting by employees to their managers etc.
These transactions may involve:
(a)Interaction between any two departments of one firm
(b)Placing orders and giving instructions to suppliers
(c)Communication of important information in the whole organisation
(d)Recruitment, selection and training of employees
(e)Reporting by employees to their managers etc.

1
*Importance/Opportunities/Benefits of e-Business:e-business made it possible to work round the
clock and there is no geographical limit for market. Through e-commerce you can reach the customer located in
different parts of the world. The e-commerce trading has offered the following benefits:
1-Worldwide 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 paperless Society – Use of internet has considerably reduced dependence on paper
work.

*Online Transactions-e-business refers to shopping through Internet or online. Online opens up the whole
world as one shop. With a simple click of a computer mouse/Mobile you can order any commodity from any
part of the world. The World Wide Web has expanded the international marketplace which gives the customers
unlimited choices. Due to online transactions e-commerce has created a new and large space in which buyer and
seller can exchange information and also enter into business dealings.
There are four phases of doing business in e-business or online:
1.Registration: Before online shopping one has to register with the online vendor by filling up a registration
form. In this form you have to give a password to protect your account otherwise anyone can log in your
account.
2.Placing an Order: In online transactions the order can be placed by picking and dropping the items in the
shopping cart. Shopping cart is an online record of what you have picked up while browsing online. After being
sure of what you want to buy then check out from shopping cart and choose your payment option.
3.Payment Mechanism: In an online purchase payment is made through:
(a) Cash on delivery: It means the buyer makes payment in cash when goods are delivered to him.
(b) Through cheque: The online seller may send his representative to pick up cheque from the buyer.
(c) Net banking transfer: Modern banks provide facility of electronic fund transfer over the net. The buyer
can transfer funds from his account to the seller's account.
(d) Credit or debit card: These cards are most commonly used medium of online payment. Ninety-five per
cent of online payments are made through credit cards.
(e) Digital cash: This is a cash which exists only in cyberspace. The user of this cash has to deposit funds in
the bank, then bank issues a special software that allows you to withdraw digital cash and you can use
digital cash to make payment.

Security and Safety of e-Business

The security problem of e-commerce can be broadly discussed in following three categories:
Transactional Risks-The common transactional risks of online are:
(a) Default on order taking/giving: Seller may deny that customer ever placed the order.
(b) Default on delivery: Sometimes goods may be delivered at wrong address or goods other than order may
also be delivered.
(c) Default on payment: Sometimes the seller does not get the payment for the goods supplied whereas the
customer claims that the payment was made.
To overcome these problems the seller must confirm that customer has entered the correct information from the
cookies. Cookies are just like caller ID in telephone which provide information like customer’s name, address,
previous purchase record etc.
2
Customer can also protect himself by shopping from well established websites only. Some advertisers also
assure customers regarding seller's identity, sale record, locations etc. Sites such as e-Bay even provide the
rating of seller. To protect payment following steps can be taken:
(i) Credit Card Authentication: This process ensures that the credit card number provided by customer is a
valid one.
(ii) Credit Card Authorization: This system checks whether funds are available in the credit card account of
the customer or not.
(iii) Settlement: Once the product is dispatched or delivered the bank will release the funds and transfer them to
businessman’s bank account.

Data Storage Risk

Vital information can be stolen or modified to pursue some selfish motive or just for fun. The common storage
risks are:
(a) Virus (Vital Information Under Seize): Some of the computer viruses are deadly. They clean up all the
information stored in the computer memory. The viruses can enter the computer through e-mail or disc or
floppies. Viruses hamper the functioning of business. Viruses bring the things to a standstill, causing huge
loss of revenue and employee time.
(b) Hacking: Hacking refers to unauthorised entry into a website. Hackers often destroy the data and
information which causes huge losses to the owner because it would interrupt the business transactions.
This problem can be solved by:
(i) Setting up special crime cell: The government has set up a special crime cell to look into the crimes
committed by the hackers and take necessary action against the criminals.
(ii) Encryption:It refers to converting the message into a code so that unauthorized person may not understand
it.
(iii) Digital signature:Under this method a coded digital certificate is issued by certification authority. This will
help in checking the identity of the sender.

*Resources Required for Successful e-Business Implementation:

e-business is becoming a very popular way of trading among various business firms. However, before
conducting business electronically the business firms must have necessary resources. The resources required for
successful implementation of e-commerce 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 now a days 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.

5-Technically trained and qualified work force

6-System of Receipts and Payments Electronically

3
E-BUSINESS V/S TRADITIONAL BUSINESS
Basis of Difference e-business Traditional Business
1. Formation Easy to form Difficult to form
2. Personal touch No personal touch Personal touch is present specially in sole
proprietorship and partnership
3. Setting up cost Low High
4. Operating cost Low High
5. Physical examination Not possible Possible
of goods
6. Ease of expansion Much, as Internet has no Difficult, as various legal formalities are to
geographical boundaries be completed
7. Human resource Technically qualified and IT Semi-skilled and skilled labour required
required professionals are required
8. Risk involved High risk as there is no direct Less as parties have personal interaction
contact between the parties
9. Distribution channel No distribution channel used as Various intermediaries such as wholesaler,
manufacturers prefer to sell retailers etc. are involved
directly to customers .
10. Length of business Shorter, because various Longer, because one process is carried out at
cycle processes can be carried out one time for example, purchase then
simultaneously production then sale etc

*OUTSOURCING CONCEPT
Over the last decade, a new type of business within service sector has become popular in the world. It is called
the Business Process Outsourcing (BPO).
BPO refers to getting a business task accomplished through an outside agency.like-IT companies,
Advertisement Agencies, Banking, etc.

Nature/Features of B.P.O.
1.-BPO involves contracting out- outside agencies to perform these activities for their organisations on
contractual basis.
2.-Generally non core business activities are outsource-Organisation prefer initially to outsource non core
activities example security services, sanitation - services.
For example-A school educating students is a core activity, where as running a canteen, uniform counter,
etc. are non core activities. They prefer to outsource, canteen book shop, uniform counters, etc.

*Most of the business firms are opting for outsourcing the following types of services:
(a)Financial Services
(b)Advertising Services
(c)Courier Services
(d)Customer Support Services

*Advantages/Need/Benefits of BPO:
1-Focussing of Attention
2-Reduction in Cost
3-Quest for Excellence (like use TCS)
4-Growth through alliance
5-Economic growth and Development

4
*Scope of BPO-BPO is more popularly known as call centres which provide customer oriented voice based
services on 24 hours × 7 days .About 70% of BPO industry’s revenue come from call centre.
*BPO Comprises of four key segments. These are the common areas where BPO is operating.
(i)Contract Manufacturing
(ii)Contract Research
(iii)Contract Sales
(iv)Informatics.

*KNOWLEDGE PROCESS OUTSOURCING (KPO):-In KPO business, firms get knowledge

related and information related work done from an outside firm. This involves high value work carried by
highly skilled staff. KPO firms, in addition to providing expertise and consultancy services.
Features of KPO:
1.-Main difference between BPO and KPO is that KPO usually focussed on knowledge intensive business
processes that require significant expertise.
2.-The main aim of KPO is to create value for client by providing business expertise rather than process
expertise,
3.-KPO involves advanced analytical thinking, technical skills and decisive judgement based on experience.
4.-KPO increases efficiency and results in cost saving.
5.-Common services included in KPO are:Research services, Legal process, Patent services, Data analytics,
Editorial process, Valuation etc
Most common barrier in KPO is Process Transparency. Many organisations cannot find out which decisions
are taken by whom and rely so much on informal social process.

*SMART CARD-Smart card is a small plastic card embedded with a memory chip and often a
microprocessor and a battery used for information, storage, management and authentication.

*It looks like and also works like a credit card but it is not having magnetic strips on its back.

*A smart card is more secure than a magnetic strip card. It is mostly used as a financial transaction card as it
can be loaded with digital money and can be used till the balance is zero. E.g. Sim Card, Health Care Card,
Metro Card etc.

Utility/Application of Smart Card:

1-Telecommunication
2-Loyalty and Stored Value
3-E-commerce
4-Bank Issues Smart Cards:example, VISA, MASTER CARD etc.
5-Medical/Health Care Cards

*ATM-Automated Teller Machine (ATM). The person who makes payments and accepts deposits in bank is
known as Teller. The ATM refers to mechanical and Automatic Teller to giving cash and taking deposits etc.

------------------------------*******************************************---------------------------------