NCERT Class 11 Business Studies Emerging Modes of Business

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EMERGING MODES OF BUSINESS

5.1 INTRODUCTION

The way business is done has undergone fundamental changes during the last decade or so. The manner of conducting business is referred to as the ‘mode of business,’ and, the prefix ‘emerging’ underlines the fact, that these changes are happening here and now, and, that these trends are likely to continue. In fact, if one were to list the three strongest trends that are shaping business, these would be: (i) digitisation —the conversion of text, sound, images, video, and other content into a series of ones and zeroes that can be transmitted electronically, (ii) outsourcing, and, (iii) inter - nationalisation and globalisation. You will read about international business in Chapter 11. In this chapter, we will be familiarising you with the first two developments, i.e., digitisation (a term from electronics) of business— also referred to as electronic business (e-business), and Business Process Outsourcing (BPO). Before we do so, a brief discussion about the factors responsible for these two new modes of business would be in order. The newer modes of business are not new business. These are rather simply the new ways of doing business attributable to a number of factors. You are aware that business as an activity is aimed at creating utilities or value in the form of goods and services which the household and industrial buyers purchase for meeting their needs and wants. In an effort to improve the business processes — be it purchase and production, marketing, finance or human resources business managers and business thinkers keep evolving newer and better ways of doing things. Business firms have to strengthen their capabilities ofcreating utilities and delivering value to successfully meet the competitive pressures and ever-growing demands of consumers for better quality, lower prices, speedier deliveries and better customer care. Besides, the quest for benefitting from emerging technologies means that business as an activity keeps evolving.

5.2 e-BUSINESS

If the term business is taken to mean a wide range of activities comprising industry, trade and commerce; e-business may be defined as the conduct of industry, trade and commerce using the computer networks. The network you are most familiar with as a student or consumer is the internet. Whereas internet is a public thorough way, firms use more private, and, hence more secure networks for more effective and efficient management of their internal functions. e-business versus e-commerce: Though, many a times, the terms e-business and e-commerce are used interchangeably, yet more precise definitions would distinguish between the two. Just as the term ‘business’ is a broader term than ‘commerce’,

e-business is a more elaborate term and comprises various businesstransactions and functions conducted electronically, including the more popular gamut of transactions called ‘e-commerce.’ e-commerce covers a firm’s interactions with its customers and suppliers over the internet. e-business includes not only e-commerce, but also other electronically conducted business functions such as production, inventory management, product development, accounting and finance and human resource management. e-business is, therefore, clearly much more than buying and selling over the internet, i.e., e-commerce.

5.2.1 Scope of e-Business

We have mentioned above that the scope of e-business is quite vast. Almost all types of business functions such as production, finance, marketing and personnel administration as well as managerial activities like planning, organising and controlling can be carried out over computer networks. The other way of looking at the scope of e-business is to examine it in terms of people or parties involved in electronic transactions. Viewed from this perspective, a firm’s electronic transactions and networks can be visualised as extending into three directions viz., (i) B2B which is a firm’s interactions with other businesses, (ii) B2C i.e., a firm’s interactions with its customers and (iii) intra-B or a firm’s internal processes.

EXERCISES

Multiple Choice Questions

Tick mark  the most appropriate answer to the following questions

1. e-commerce does not include

a. A business’s interactions with its suppliers

b. A business’s interactions with its customers

c. Interactions among the various departments within the business

d. Interactions among the geographically dispersed units of the business

2. Outsourcing

a. Restricts only to the contracting out of Information Technology Enabled Services (ITES)

b. Restricts only to the contracting out of non-core business processes

c. Includes contracting out of manufacturing and R&D as well as service processes — both core and non-core— but restricts only  to domestic territory

d. Includes off-shoring

3. The payment mechanism typical to e-business

a. Cash on Delivery (CoD) b. Cheques

c. Credit and Debit Cards d. e-Cash

4. A Call Centre handles

a. Only in-bound voice based business

b. Only out-bound voice based business

c. Both voice based and non-voice based business

d. Both customer facing and back-end business

5. It is not an application of e-business

a. Online bidding b. Online procurement

c. Online trading d. Contract R&D

Short Answer Questions (50 Words)

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

2. How does outsourcing represent a new mode of business?

3. Describe briefly any two applications of e-business.

4. What are the ethical concerns involved in outsourcing?

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

Long Answer Questions

1. 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.

2. Elaborate the steps involved in on-line trading.

3. Evaluate the need for outsourcing and discuss its limitations.

4. Discuss the salient aspects of B2C commerce.

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


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