Emerging Modes of Business

Meaning of E-business: The term 'E-business' i.e electronic business is derived form the terms e-mail and e-
commerce. E- business or electronic business, is the administration of conducting business via the internet.
This would include the buying and selling of goods or services, along with providing technical or customer
support through the internet.

Scope of E-Business: The scope of e-business is not restricted to only online shopping, it also includes on line
stock, transactions and the use of software. In India, till now business is managed through traditional methods.
Now many businesses are becoming aware of the advantage of e-business and are incorporating this into their
strategies. It also helps in better communication between business house and makes purchasing easier for
large organizations.

1) Business to Business (B2B): In this form the buyer and seller are both business entities and do not
involve individual consumers. Here, both the parties involved in e-commerce transactions are business
firms and hence the name B2B i.e. business to business. Transactions between business firms come
under this category. Business firms interact with each other for a variety of services.
2) Business to Consumer(B2C): B2C means business to Consumers. It is a type of a business where goods
and services are directly sold to the consumers. Customer identifies a need, and searches for the
product or services to satisfy the need. Customers select a vendor and negotiates a price. Customers
receives the product or services, makes payment, gets service and warranty claims. Examples: Flipkart,
Amazon, Snapdeal, Myntra, etc.
3) Consumer to Business(C2B): In this electronic transaction the consumer requests a specific service
from the business. Consumer to Business is a growing arena where the consumer requests a specific
service from the business. It enables buyers to quote their own price for specific goods or services.
E.g. Taxi services, pest control services, door step food delivery, etc.
4) Consumer to Consumer(C2C): It facilitates the online transaction of goods or services between two
people. Consumer to consumer (C2 C) involves the electronically facilitated transactions between
consumers through some third party. A common consumer posts an item for sale and other
consumers bid to purchase it. The sites are only intermediaries, just to match the consumers. E.g. e-
Bay, OLX, Airbnb, etc.
5) Business to Administration (B2A): This part of e-commerce encompasses all transactions conducted
online between business and public administration. For example, registration of companies, payment
of taxes, getting permits etc.
6) Consumer to Administration (C2A): The consumer to Administration model encompasses all
electronic transactions conducted between individuals and public administration. For example, getting
passport, Aadhaar card, licenses etc.

Advantages of E-Business: The main advantage of e-business is people get product information online and
order the product online through cash on delivery or pre payment. In this way seller and buyer both get
advantage of internet platform. (MS-GELC)

1) Movement towards a paperless society: Use of internet has considerably reduced the dependence on
paperwork. Thus, recording and referencing of information has become easy.
2) Speed: This benefit becomes all the more attractive when it comes to information. Much of the buying or
selling involves exchange of information that internet allows at the click of mouse.
3) Global access: Internet is truly without boundaries. On one hand, it allows the seller an access to the
global market. On the other hand, it offers a freedom to the buyer to choose products from almost any
part of the world. No need of face-to-face interaction between buyer and seller.
4) Government support: The government provides favourable environment for setting up of e-business. This
support ensures maximum transparency.
5) Easy payment: The payment in e-business is done by credit card, fund transfer etc. and it is available round
the clock.
6) Ease of formation: The formation of traditional business is difficult, whereas to form e-business is
relatively easy to start.
7) Lower Investment requirements: Investment requirement is low as compared to traditional business as
the store does not have physical existence and can be managed with less manpower so if trader does not
have much of the investment but has contacts (network), he can do fabulous business.
8) Convenience: Internet offers the convenience of 24 X 7 X 365 days a year. Business is going on any time
and flexibility is available. Yes, e-business is truly a business that has enabled and enhanced by electronics
and offers the advantage of accessing anything, anywhere, any time.

Limitations of E-Business: E-business does have certain disadvantages when compared to the traditional way
of doing business.

1) Lack of personal Touch: E-business lacks the personal touch. One cannot touch or feel the products. So it is
difficult for the consumers to check the quality of products.
2) Delivery Time: The delivery of the products takes time. In traditional business you get the product as soon
as you buy it. But that doesn't happen in online business. This time lag often discourages customers.
3) Security issues: There are a lot of people who scam through online business. Also, it is easier for hackers to
get your financial details. It has a few security and integrity issues.
4) Government interference: Sometimes the Government monitoring can lead to interference in the
business.
5) High Risk: High Risk is involved as there is no-direct contact between the parties. In case of frauds, it
becomes difficult to take legal action.

Procedure of Online Transaction:

1) Registration - Before online shopping one has to register with the online vendor by filling up a registration
form. Registration is the first step in online transaction. For online transaction registration is required. The
consumer needs to login a particular website to buy a particular article or service.
2) Placing an Order- It is second step in online transaction. When a customer likes a product or service,
he/she puts the product in the shopping cart. After adding the desired products to the cart, the buyer
decides the quantity and proceeds to the payment option after selecting the required products.
3) Payment - It is the last step in online transaction. The buyer has to select the payment option. These
payment systems are secured with very high-level encryption. The personal financial information is
completely secure. There are 5 types of payments.
a) Cash on Delivery- In this type of payment the buyer pays when he/she receives the product. The
payment is made at the doorstep. The customer can pay in cash or by debit or credit card.
b) Cheque- In this type of payment, the buyer sends a cheque to the seller and the seller sends the
product after the realization of the cheque.
c) Net Banking transfer- In this type of payment, the payment is transferred from the buyer's
account to the seller's account electronically. After the payment is received by the seller, the seller
dispatches the goods to the buyer. It is an electronic facility of transferring funds through the
internet. E.g. NEFT
d) Credit or Debit card - The buyer makes payment through debit or credit card and amount get
deducted from customers account. Debit card or credit card popularly known as "Plastic Money".
They are mostly used for online payments.
e) Digital Cash - Digital Cash is a form of electronic currency that exists only in cyberspace and has
no real physical properties, but offers the ability to use real currency in an electronic format. Eg.
UPI payments.
OUTSOURCING:

Meaning: Outsourcing is the process of contracting some business functions to specialised agencies. The
company benefits in two ways. 1. It reduces its own cost 2. It uses the expertise of the firm which specialises in
a particular kind of service.

Advantages of Outsourcing:

1) Overall cost advantages- It reduces the cost and also saves time and efforts on training cost.
2) Stimulates entrepreneurship, employment and exports- Outsourcing stimulates entrepreneurship,
employment and exports in the country.
3) Low manpower Cost- The manpower cost is much lower than that of the host company.
4) Access to professional, expert and high-Quality services- Mostly the tasks are given to people who are
skilled in that particular field. This provides us with a better level of service and fewer chances of errors.
5) Emphasis on core process rather than the supporting ones- With its help companies can focus on their
core areas which lead to better profits and increase the quality of their products.
6) Investment requirements are reduced - The organization can save on investing in the latest technology,
software and infrastructure and let the outsourcing partner handle the entire infrastructure.
7) Increased efficiency and productivity - There is an increased efficiency and productivity in the non-core
areas of an organization.
8) Knowledge sharing - Outsourcing enables the organization to share knowledge and best practices with
each other, it helps develop both the companies and also boosts goodwill in the industry.

Disadvantages of Outsourcing / Limitations of Outsourcing

1) Lack of customer focus- An outsourced vendor may be catering to the needs of multiple organizations at a
time. In such a situation, he may lack complete focus on an individual organization. As a result, the
organisation may suffer.
2) A threat to security and confidentiality - The confidential information of the organization may be leaked to
the third party, so there are security issues.
3) Dissatisfactory services - Some of the common problem areas with outsourcing include stretched delivery
time and sub-standard quality.
4) Ethical issues - The major ethical issue is taking away employment opportunities from one's own country,
when the function is outsourced to a company from another country.
5) Other disadvantages - i) misunderstanding of the contracts. ii) lack of communication. iii) poor quality and
delayed services.

FORMS OF OUTSOURCING:

Business Process Outsourcing (BPO)

Meaning: BPO is a subset of outsourcing that involves the contracting of the operations and responsibilities of
specific business process to a third-party service provider. BPO refers to the outsourcing of peripheral activities
of the organisation to an external organization to minimize cost and increase efficiency. For example, customer
care centres for various banks, service providers etc.

Advantages of BPO:

1) Productivity improvement: Educated or skilled people perform the task efficiently and thus improve
productivity.
2) Optimum utilization: BPO enables optimum utilization of scarce resources.
3) Reduction in cost: Cost saving can be significant to any business. BPO not only helps to reducing cost but
also increase productivity and increase revenues.
4) Improved human resources: Improved human resources is another great advantage of BPO. Outsourcing
gives a company the ability to get access to skilled and trained man power at low rates.

Disadvantages of BPO:
1) Communication problem: There can be communication gap between the client and vendor companies
due to misunderstanding and miscommunication.
2) Different time zones: The client and the vendor operate in two different time zones. The difference in time
can create many problems during online meeting, communication etc.
3) Loss of control: Due to communication errors, time differences, client company can at times lose control of
the project.

Knowledge Process Outsourcing (KPO)

Definition: According to Margaret Rouse. "KPO is the allocation of relatively high-level tasks to an outside
organisation or a different group within the same organisation.

Meaning: KPO is a form of outsourcing, in which knowledge related and information related work is carried out
by workers in a different company or by a subsidiary of the same organisation. Which may be in the same
country or in an offshore location to save cost.

Advantages:

(1) Cost reduction is possible as Clients get professional services at a cost-effective price.
(2) Business organisations can hire skilled employees from KPO service providers.
(3) High end services are provided at a lower cost to decrease unemployment and benefit their economy.
(4) Provides flexibility in terms of HRM (human resource management) and time management.

Disadvantages:

(1) Security of organisation is questioned.

Legal Process Outsourcing (LPO):

LPO is a type of KPO that is specific to legal services, ranging from drafting legal documents, performing legal
research to offering advice. Legal outsourcing has gained tremendous ground in the past few years in India. It
achieved success by producing service such as document review, legal research and writing, drafting of
briefings etc.

Advantages:

1) One of the most significant advantages of outsourcing legal functions is cost savings.
2) Outsourcing legal work to external vendors allows organisations to access high level talent and niche
expertise that does not exist within the firm.
3) Employing a combination of in-house and external talent allows law firm and organisations to tailor their
liabilities in response to workload and client demands. Flexible staffing also reduces firm overhead.

Disadvantages:

1) There will be problem of authenticity as some important documents need to be shared with the
outsourcing firm.
2) There may be problem of in-depth knowledge of all relevant laws.
3) There will be problem of cultural and language barriers that could hinder communication between
domestic and international team.
4) L.P.O. also gets affected by geographical hurdles between firm and clients.