Maharashtra Board Class 12 OCM Chapter 5 Emerging Modes of Business Solutions

Class 12 OCM Chapter 5 Exercise Solutions

1. (A) Select The Correct Options And Rewrite The Sentence

Question 1. For online transactions ........................ is required.
(a) registration
(b) trading
(c) business
Answer: (a) registration
In simple words: For online transactions, a user must first register with the platform to create an account and access services. Registration establishes identity and enables participation in online activities.

🎯 Exam Tip: Understanding the initial steps for online business activities like registration is crucial for conceptual clarity.

Question 2. The term 'e-business' is derived from the term ........................ and e-commerce.
(a) Cash
(b) e-pay
(c) e-mail
Answer: (c) e-mail
In simple words: The term 'e-business' combines 'electronic' from e-mail with 'business' and 'e-commerce', signifying business activities conducted electronically. It represents the broader concept of using internet technology for all business operations.

🎯 Exam Tip: Knowing the origin of business terms like 'e-business' helps in grasping their fundamental meaning and scope.

Question 3. The transactions under ........................ are between consumers and consumers.
(a) B2B
(b) C2C
(c) B2C
Answer: (b) C2C
In simple words: Consumer-to-Consumer (C2C) transactions involve individuals selling goods or services directly to other individuals, often facilitated by online platforms. These platforms act as intermediaries, connecting buyers and sellers without direct business involvement.

🎯 Exam Tip: Differentiating between various e-business models (B2B, B2C, C2C) is essential for understanding transaction types and market dynamics.

Question 4. The process of contracting a business function to someone else is called as ........................
(a) Outsourcing
(b) Trading
(c) e-business
Answer: (a) Outsourcing
In simple words: Outsourcing is when a company hires another external company or individual to perform specific business functions or tasks. This helps the primary company focus on its core activities while leveraging external expertise.

🎯 Exam Tip: Accurately identifying key business concepts like outsourcing is vital for explaining modern business practices.

Question 5. In online shopping customers put the product in the ........................
(a) shopping mall
(b) shopping cart
(c) shopping bag
Answer: (b) shopping cart
In simple words: In online shopping, a shopping cart is a virtual tool where customers temporarily store items they intend to purchase. It functions similarly to a physical shopping cart, holding selected products until checkout.

🎯 Exam Tip: Familiarity with common e-commerce terminology, such as 'shopping cart', demonstrates practical understanding of online transactions.

1. (B) Match The Pairs

Question 1.

🎯 Exam Tip: Mastering the connections between different business concepts is key to scoring well in matching questions. Ensure you understand the underlying definitions of each term.

1. (C) Give One Word/Phrase/Term For The Following Statement

Question 1. The stage where the goods bought are delivered to the customer.
Answer: delivery stage
In simple words: The delivery stage is the final phase of a purchase process where the acquired products are physically transported and handed over to the buyer.

🎯 Exam Tip: Precise terminology is important. Ensure you provide the most accurate and concise term for the given description.

Question 2. The term derived from the terms e-mail and e-commerce.
Answer: e-business
In simple words: 'E-business' combines the 'e' from electronic mail and 'e-commerce' to refer to all business activities conducted over the internet. This term encompasses a wider scope than just online transactions.

🎯 Exam Tip: Understanding the etymology of terms can help in remembering their definitions and distinguishing between similar concepts like e-business and e-commerce.

Question 3. The transaction which is done with the help of the internet.
Answer: online transactions
In simple words: Online transactions are commercial exchanges of goods, services, or information that are completed entirely using the internet, involving digital communication and often electronic payments.

🎯 Exam Tip: Be specific in your answer; 'online transactions' clearly defines a transaction conducted via the internet.

Question 4. The first step in online transaction.
Answer: Registration
In simple words: Registration is the initial and mandatory step for conducting online transactions, where a user creates an account by providing personal details to access the platform's services. This step establishes the user's identity within the online system.

🎯 Exam Tip: Identifying the chronological order of steps in a process, like online transactions, is a common evaluation point.

Question 5. The process of contracting a business function to specialized agencies.
Answer: outsourcing
In simple words: Outsourcing involves a company delegating specific tasks or operations to external, specialized third-party providers. This strategy is often used to reduce costs, access specialized expertise, or improve efficiency.

🎯 Exam Tip: Use precise business terminology. 'Outsourcing' is the correct term for delegating business functions to external specialists.

Question 6. Subset of outsourcing.
Answer: BPO
In simple words: Business Process Outsourcing (BPO) is a specific type of outsourcing where an organization contracts out non-core business processes, such as customer service or data entry, to a third-party service provider. It's a key sub-category of the broader outsourcing concept.

🎯 Exam Tip: Understand the hierarchical relationship between concepts; BPO is a direct subset of outsourcing, focusing on process delegation.

Question 7. Sub segment of BPO.
Answer: KPO
In simple words: Knowledge Process Outsourcing (KPO) is a specialized segment of BPO that involves outsourcing knowledge-intensive tasks requiring specialized expertise and analytical skills. It's a more advanced form of outsourcing compared to basic BPO.

🎯 Exam Tip: Distinguishing between BPO and KPO is important. Remember KPO involves higher-level knowledge and analytical work.

Question 8. One of the value added BPO service which involves legal work.
Answer: LPO.
In simple words: Legal Process Outsourcing (LPO) is a type of KPO specifically focused on outsourcing legal services such as drafting documents, conducting legal research, or providing legal advice. It allows law firms and companies to reduce costs on legal tasks.

🎯 Exam Tip: Recognise specific categories within BPO like LPO, which cater to specialized professional services such as legal work.

1. (D) State Whether Following Statement Are True Or False

Question 1. It is easy to set up e-business as compared to traditional business.
Answer: True
In simple words: E-business typically requires less physical infrastructure and initial capital compared to traditional businesses, making it easier and quicker to establish. The internet provides a global platform without the need for a physical storefront.

🎯 Exam Tip: When evaluating statements, consider the key differences between e-business and traditional business models, especially regarding setup costs and operational complexities.

Question 2. The term e-business is derived from the term e-mail and e-commerce.
Answer: True
In simple words: The 'e' in e-business originates from 'electronic' as seen in e-mail, while the 'business' aspect encompasses the broader activities of e-commerce. It signifies the use of electronic means for conducting all business operations.

🎯 Exam Tip: Knowing the origins of terms helps in understanding their meaning and scope. This statement correctly identifies the foundational elements of 'e-business'.

Question 3. e-business allows you to work across the globe in any field.
Answer: True
In simple words: E-business leverages the internet to transcend geographical boundaries, enabling businesses to operate and reach customers or partners anywhere in the world, regardless of their physical location. This global reach applies to various industries and fields.

🎯 Exam Tip: A core advantage of e-business is its global accessibility and reach. This understanding is key to answering questions about its capabilities.

Question 4. LPO stands for legal product outsourcing.
Answer: False
In simple words: LPO stands for Legal Process Outsourcing, not legal product outsourcing. It specifically refers to the outsourcing of various legal services and processes.

🎯 Exam Tip: Be precise with acronyms and their full forms. A small difference in a word can change the entire meaning of a concept.

Question 5. KPO requires advanced analytical and technical skills.
Answer: True
In simple words: Knowledge Process Outsourcing (KPO) deals with high-end, knowledge-intensive tasks that necessitate specialized expertise, critical thinking, and advanced analytical capabilities. It involves intellectual work rather than routine processes.

🎯 Exam Tip: Understanding the difference in skill requirements between KPO (advanced analytical, technical) and BPO (process expertise) is crucial.

Question 6. With the help of outsourcing, company cannot focus on the core areas.
Answer: False
In simple words: Outsourcing actually allows companies to delegate non-core functions to external specialists, thereby freeing up internal resources and management attention to focus more effectively on their core business activities and strategic goals.

🎯 Exam Tip: A primary benefit of outsourcing is its ability to enable companies to concentrate on their core competencies, which contradicts the statement given.

1. (E) Find The Odd One

Question 1. BPO, RTO, LPO, KPO
Answer: RTO
In simple words: BPO (Business Process Outsourcing), LPO (Legal Process Outsourcing), and KPO (Knowledge Process Outsourcing) are all forms of outsourcing services. RTO (Regional Transport Office) is a government agency, making it the odd one out.

🎯 Exam Tip: Grouping related terms and identifying the one that doesn't fit the category is a common type of question. Ensure you know the full forms and functions of each term.

Question 2. B2B, B2C, A2Z, C2C.
Answer: A2Z
In simple words: B2B (Business-to-Business), B2C (Business-to-Consumer), and C2C (Consumer-to-Consumer) are all common e-business transaction models. A2Z is not a recognized e-business transaction model, making it the odd one.

🎯 Exam Tip: Be familiar with standard e-commerce transaction models. "A2Z" refers to a comprehensive range, not a transaction type.

Question 3. Debit card, Credit card, Aadhar card, ATM card.
Answer: Aadhaar card
In simple words: Debit cards, credit cards, and ATM cards are all financial instruments used for transactions and banking. An Aadhaar card, however, is a unique identification document and not primarily a payment or transaction card.

🎯 Exam Tip: Differentiate between financial transaction tools and identification documents. An Aadhaar card serves as proof of identity and address.

1. (F) Complete The Sentences

Question 1. E-business is an abbreviation for ........................
Answer: Electronic business
In simple words: E-business is a shortened form of 'electronic business', emphasizing that all business activities are conducted through electronic networks and digital technologies.

🎯 Exam Tip: Knowing the full form of abbreviations is fundamental for clear communication and understanding in business studies.

Question 2. The term e-business came into existence in the year ........................
Answer: 1997
In simple words: The term 'e-business' was popularized by IBM in 1997 to describe the use of internet technologies to streamline and integrate business processes.

🎯 Exam Tip: Specific historical dates or milestones can be important. Remember 1997 as the year IBM coined and popularized 'e-business'.

Question 3. E-business means using the ........................ to connect people and process.
Answer: Internet
In simple words: E-business fundamentally relies on the internet as its core platform to facilitate communication, data exchange, and process integration between individuals, businesses, and various operations.

🎯 Exam Tip: The internet is the primary medium that enables e-business. This concept is central to its definition and function.

Question 4. E-business is ........... of e-commerce.
Answer: superset
In simple words: E-business is a broader concept that includes all aspects of operating an online business, while e-commerce specifically refers to the buying and selling of goods and services over the internet. Therefore, e-business encompasses e-commerce and more.

🎯 Exam Tip: Differentiating between 'superset' and 'subset' for e-business and e-commerce is a common conceptual test. E-business covers all electronic operations, making it the superset.

Question 5. E-commerce is ........................ of e-business.
Answer: subset
In simple words: E-commerce is a component of e-business, focusing specifically on the financial transactions of buying and selling online. E-business, being a broader term, includes e-commerce along with other electronic business operations like supply chain management and customer service.

🎯 Exam Tip: Remember that e-commerce is a part of e-business. This distinction highlights the scope of each term within the digital business landscape.

Question 6. The process of contracting a business function to specialized agencies is known as ........................
Answer: Outsourcing
In simple words: Outsourcing is the practice where a company hires another organization to perform specific internal business activities, typically to reduce costs or access external expertise. This delegation helps the company focus on its core competencies.

🎯 Exam Tip: This question directly tests the definition of outsourcing. Ensure your answer is concise and accurate.

1. (G) Select The Correct Option And Complete The Following Table

(Business to Business, First step, e-commerce, Payment mechanism, e-business)

🎯 Exam Tip: For table completion questions, carefully match each item with the most appropriate option. Pay attention to specific relationships like superset/subset and chronological steps.

1. (H) Answer In One Sentence

Question 1. What is E-business?
Answer: E-business i.e. electronic business means and includes buying and selling of goods and services along with providing technical or consumer support through internet.
In simple words: E-business encompasses all business activities, including buying, selling, and customer support, conducted electronically via the internet. It leverages digital technology to manage and execute various business operations efficiently.

🎯 Exam Tip: A concise definition that covers the core components (electronic operations, buying/selling, support, internet use) is ideal for a one-sentence answer.

Question 2. What is outsourcing?
Answer: Outsourcing is the process of contracting (transferring) any specific business activity, the non-core functions, of the business to specialised agencies to carry ou for some money consideration.
In simple words: Outsourcing is the practice of hiring an external specialist or agency to perform specific business functions, particularly non-core activities, in exchange for a fee. This helps a company focus on its primary operations.

🎯 Exam Tip: Highlight the key elements: contracting specific (often non-core) activities to specialized external agencies for monetary consideration.

Question 3. What is online transaction?
Answer: Online transaction refers to a process of buying and selling of goods and services with the help of internet.
In simple words: An online transaction is any exchange of goods, services, or money that is completed entirely over the internet, utilizing digital platforms and networks. This includes purchasing, selling, and making payments digitally.

🎯 Exam Tip: Focus on the method of transaction (internet-based) and the scope (buying and selling of goods/services) for a complete definition.

Question 4. What is Shopping cart?
Answer: Shopping cart is an online record of what buyer has picked up while browsing the online store, i.e. number of units, quantity, price, etc.
In simple words: A shopping cart is a virtual list that tracks all the items a customer selects while browsing an online store, storing details like product, quantity, and price before checkout. It acts as a temporary holding space for intended purchases.

🎯 Exam Tip: Describe its function and what information it records. Emphasize its role in facilitating the online shopping process.

Question 5. What is digital cash?
Answer: A form of electronic currency that exists only in cyberspace and has no real physical properties but offers the ability to use as real currency in am electronic format.
In simple words: Digital cash is a virtual form of money that exists purely online, without any physical presence. It allows users to conduct transactions electronically, functioning like traditional currency in the digital realm.

🎯 Exam Tip: Key aspects to mention are its electronic nature, existence in cyberspace, lack of physical form, and functionality as real currency.

Question 6. What is BPO?
Answer: Business Process Outsourcing (BPO) refers to the outsourcing (transferring to perform) of peripheral (not important) activities (functions) of the organisation to am external organisation or a service provider to minimise cost and increase efficiency.
In simple words: BPO is when a company contracts out its non-core business activities, like customer service or data processing, to an external service provider. The goal is to reduce operational costs and improve efficiency by leveraging specialized external resources.

🎯 Exam Tip: Focus on the "peripheral activities" aspect and the objectives of cost minimization and efficiency improvement when defining BPO.

Question 7. What is KPO?
Answer: KPO i.e. Knowledge Process Outsourcing ; described as the functions related to knowledge and information outsourced (transferred to perform) to third party which may be in the same country or in an off shore location.
In simple words: KPO is an advanced form of outsourcing focused on knowledge-intensive tasks that require specialized expertise, analysis, and information processing. These functions are transferred to third parties who can provide higher value due to their specific knowledge.

🎯 Exam Tip: Emphasize the 'knowledge' aspect and the requirement for specialized expertise, distinguishing it from basic BPO services.

Question 8. What is LPO?
Answer: Legal Process Outsourcing (LPO) is a form of outsourcing in which legal services, ranging from drafting legal documents, performing legal research to offering legal advice are hired or obtained from outside law firm or legal support services company for money consideration.
In simple words: LPO is a type of KPO where legal services, such as drafting documents, legal research, or advice, are outsourced to external law firms or legal support companies. This allows businesses to access legal expertise at potentially lower costs.

🎯 Exam Tip: Clearly state that LPO is a specialized form of KPO, specifically dealing with legal services and their outsourcing to external legal entities.

1. (I) Correct The Underlined Word And Rewrite The Sentence:

Question 1. E-business is hard to start.
Answer: E-business is easy to start.
In simple words: Setting up an e-business is generally considered easier than a traditional business due to lower overheads and the accessibility of online platforms.

🎯 Exam Tip: Understand the comparative ease of setting up e-business due to minimal physical infrastructure requirements.

Question 2. There are five stages of online transactions.
Answer: There are three stages of online transactions.
In simple words: Online transactions typically involve three main stages: pre-purchase/sale, actual purchase/sale, and delivery.

🎯 Exam Tip: Know the correct number and sequence of stages involved in an online transaction process.

Question 3. Registration is the Last step in online transaction.
Answer: Registration is the First step in online transaction.
In simple words: Registration is always the initial step in an online transaction, establishing a user account before any buying or selling activities can commence.

🎯 Exam Tip: Recognize the chronological order of online transaction steps; registration is always at the beginning.

Question 4. Digital cash is form of plastic currency..
Answer: Digital cash is form of electronic currency.
In simple words: Digital cash is a completely electronic form of money, distinct from physical plastic cards like debit or credit cards, which are tangible payment instruments.

🎯 Exam Tip: Differentiate between the nature of currency; digital cash is purely electronic, unlike plastic cards which are physical payment tools.

Question 5. KPO includes less knowledge based and specialized work.
Answer: KPO includes more knowledge based and specialized work.
In simple words: Knowledge Process Outsourcing (KPO) specifically involves tasks that require a high degree of knowledge, analytical skills, and specialization, making it 'more' knowledge-based.

🎯 Exam Tip: Emphasize that KPO deals with complex, knowledge-intensive tasks, requiring a higher level of expertise than typical outsourcing.

1. (J) Arrange In Proper Order

Question 1. Purchase or sale, Delivery stage, Pre purchase or sale.
Answer: Pre purchase or sale, Purchase or sale, Delivery stage.
In simple words: The logical sequence of an online transaction starts with activities before the actual purchase, followed by the purchase itself, and concludes with the delivery of goods or services.

🎯 Exam Tip: Chronological sequencing of events in a process is crucial. Understand the three main phases of any transaction.

Question 2. Placing an order, Cash on delivery, Registration
Answer: Registration, Placing an order, cash on delivery
In simple words: The process begins with registering an account, then placing an order for desired items, and finally, payment via cash on delivery upon receiving the products.

🎯 Exam Tip: Identify the essential steps and their correct order in the online shopping and payment process. Registration always comes first.

2. Explain The Following Term/Concept:

Question 1. E-business.
Answer:(1) E-business is abbreviated form of electronic business which implies application and use of information and communication technologies (ICT) to conduct and complete all business activities. In 1997, International Business Machines (IBM) used this term. It refers to the use of the web, internet, intranets, extranets, etc. to connect people, process and to conduct business.
(2) The entire process of settling up a website, helping the customers navigate through the website, offering available products, discounts, to attract the prospective buyers, e-business establishes more closer relationship between partners, employees, suppliers and helps companies to manage their business efficiently.
In India, till today most of the business firms are managed as per traditional methods. Now most of the businesses are well aware of benefits of e-business and hence they started incorporating e-business in their business policy and strategy. Google pay, swiggy, ola, ebay are the examples of e-business. Various types of 'e' business transactions are B2B, B2C, C2B, C2C, B2A, and C2A.
In simple words: E-business, short for electronic business, involves using information and communication technologies like the internet to conduct all business activities. It facilitates efficient management, strengthens relationships with partners, employees, and suppliers, and includes various transaction models like B2B and B2C.

🎯 Exam Tip: When explaining e-business, define it as broader than e-commerce, mention the role of ICT, its benefits (efficiency, relationships), and provide relevant examples of its types.

Question 2. B2B.
Answer: Business to Business (B2B) : The transactions under B2B include the transactions between one business firm with other business firms. In this type of transactions individual consumers are not involved. In order to get raw materials, catering services, manpower, components of machinery, etc., business firms interact with each other. B2B transactions include supplying ancillary parts/components to manufacturers, providing value added services like catering, providing man power, etc. The business must depend upon one another in order to survive.
In simple words: B2B (Business-to-Business) transactions involve one business firm interacting and exchanging goods or services with another business firm. These transactions are typically for raw materials, components, or support services, and do not involve individual consumers directly.

🎯 Exam Tip: Clearly state that B2B involves transactions solely between businesses, highlighting examples like raw material supply or ancillary services.

Question 3. B2C.
Answer: Business to Consumer (B2C) : The transactions under B2C include transactions between business firms and consumers. When consumer identifies a need or requirement, he searches for the product or services to fulfil his need. He then selects a vendor, negotiates the price, receives product or services, makes payment and gets service and warranty claims. The business firms use their website for different range of marketing activities such as sales or product promotion, product information, reviews about the product or service and delivery of the products at doorstep. In order to get more response from the customers, the cost of products and services is kept low through this method and the speed of transaction is faster, e.g. www.flipkart.com, www.yebhi.com, etc.
In simple words: B2C (Business-to-Consumer) transactions involve business firms selling products or services directly to individual consumers, often through e-commerce websites. This model focuses on meeting consumer needs, marketing, and efficient delivery, providing a wide range of options at competitive prices.

🎯 Exam Tip: Emphasize the direct interaction between businesses and individual consumers, including the typical consumer journey and marketing strategies used in B2C.

Question 4. C2C.
Answer: Consumer to Consumer (C2C) : The transactions under Consumer to Consumer are between two people. Using e-business facility on internet, the consumers can buy and sell goods and services to other consumers, through some third party. A common consumer posts the product or services for sale with the price and other details online and other consumers tries to buy them. The sites are performing the role of intermediaries, just to match the consumers. For buying and selling, internet allows a lot of space for consumers group to be formed. The consumer forums interact with each other for best variety of goods and services. Through such groups redressal of complaints is also possible. One may sell his products through an online retail space operated by eBay or Yahoo! shopping, etc.
In simple words: C2C (Consumer-to-Consumer) transactions enable individuals to buy and sell goods or services directly to each other, typically facilitated by online platforms that act as intermediaries. These platforms help connect consumers, allowing them to list items for sale and engage in peer-to-peer commerce.

🎯 Exam Tip: Highlight the peer-to-peer nature of C2C transactions and the role of third-party platforms in connecting individual buyers and sellers.

Question 5. Outsourcing.
Answer:(1) Outsourcing is a process of allocation of specific business processes or functions to a specialist external service provider or agency for certain monetary consideration. In outsourcing, the service provider or contractor enters into an agreement or formal contract with the company or the firm for providing services against certain monetary charges. After this the service provider, will take the responsibility of carrying out the tasks as per the expectation of the company.
(2) When services such as security, canteen, sanitation, etc. are outsourced by a company, then the security guards, waiters, cooks, sanitation scavangers, etc. are not the employees of the company although they work inside the company premises. They directly work under the control of service provider or contractor. Many organisations, companies, corporate houses, establishments, hospitals, shops, malls, housing societies, offices, etc. outsource their non-core (less important) areas of business such as canteen, sanitation, security services, etc. to outside agencies.
In simple words: Outsourcing involves contracting specific business functions, often non-core activities like security or canteen services, to external specialist agencies for a fee. The external provider takes responsibility for these tasks, allowing the main company to focus on its core operations while benefiting from external expertise and potentially reduced costs.

🎯 Exam Tip: Provide a clear definition of outsourcing, explain the contractual relationship, and illustrate with practical examples of non-core functions typically outsourced.

Question 6. BPO.
Answer:(1) BPO stands for Business Process Outsourcing. BPO basically refers to the outsourcing of some work or functions of the organisation to third party or service provider to save overall cost of the organisation. In other words, BPO is a business system in which one company hires another company or service provider to do certain process of work (or task) for certain money consideration.
(2) In brief, BPO is a subset of outsourcing that involves the contracting of the operations and responsibilities to a third party to minimise cost and increase efficiency.
In simple words: BPO, or Business Process Outsourcing, is a subset of outsourcing where an organization delegates specific non-primary business functions or tasks to a third-party service provider. The main objectives are to reduce overall costs, improve efficiency, and free up internal resources by transferring these operations and responsibilities.

🎯 Exam Tip: Define BPO as a subset of outsourcing, emphasizing the transfer of non-core operations to a third party with the goals of cost reduction and efficiency.

Question 7. LPO.
Answer:(1) LPO stands for Legal Process Outsourcing. LPO is a type of KPO that renders legal services ranging from drafting legal documents, performing legal research to offering legal advice. LPO implies practice of law firm. It refers to obtaining legal services from outside legal support service company or law firm for certain consideration.
(2) In some industry or organisation in house legal department or a company outsourced legal work to such law firms where it can be done or performed at less cost. For instance, many companies in Europe or US outsource their legal work to Indian law firms where it can be done at considerably lower cost.
In simple words: LPO, or Legal Process Outsourcing, is a specialized form of Knowledge Process Outsourcing (KPO) where legal services are delegated to external legal support companies or law firms. This includes tasks like drafting legal documents, performing legal research, and offering advice, often aimed at reducing costs by leveraging talent in different geographic locations.

🎯 Exam Tip: Clearly explain LPO as a type of KPO, specifically detailing the legal services involved and the common motivation of cost efficiency.

Question 8. KPO.
Answer:(1) KPO stands for Knowledge Process Outsourcing. In KPO, the important functions related to knowledge and information are outsourced (assigned to perform) to third party service providers. KPO is the sub-part (Section) of BPO in which services of outside or third party service provider are hired not only for its ability to do particular business process or function but also to provide expertise it has.
(2) KPO is nothing but the allotment of more important or relatively high level tasks or functions to an outside organisation or to a different group specially in a different geographic location. KPO is a subset of Business Process Outsourcing (BPO). KPO implies outsource of more important or core functions or business process to third party service provider or organisation to perform which may or may not reduce its cost of the parent company but surely assists in value addition.
In simple words: KPO, or Knowledge Process Outsourcing, is a subset of BPO that involves outsourcing high-level, knowledge-intensive tasks requiring specialized expertise, often for value addition rather than just cost reduction. These functions are transferred to external providers who possess specific knowledge and analytical skills, potentially in different geographic locations.

🎯 Exam Tip: Differentiate KPO from BPO by highlighting its focus on knowledge and information, higher-level tasks, and the emphasis on expertise and value addition over mere cost savings.

3. Study The Following Case/Situation And Express Your Opinion

Question 1. Abhay purchases some gift articles online from www.flipkart.com. At the same time Sheetal purchased gift from e-bay.com.
(i) Which website is related to C2C?
(ii) Which website is related to B2C?
(iii) What first step does Abhay need to follow?
Answer:(i) eBay.com website is related to Consumer to Consumer (C2C).
(ii) www.flipkart.com website is related to Business to Consumer (B2C).
(iii) Before online shopping, Abhay has to register with the www.flipkart.com by filling up a registration form. Registration is the first step in online transaction. Abhay needs to login a particular website to buy particular gift articles.
In simple words: eBay.com is a C2C platform where consumers sell to other consumers, while Flipkart.com is a B2C platform where businesses sell to consumers. Abhay, being a first-time buyer on Flipkart, must first register an account before proceeding with any purchases.

🎯 Exam Tip: Accurately classify e-commerce websites into their respective business models (B2C, C2C) and understand the mandatory initial steps for online transactions.

Question 2. Satvik purchases watch from Titan shop and his friend Shambhavi purchases watch from online shopping site.
(i) Which shopping is from traditional business?
(ii) Which shopping is from e-business?
(iii) Which business involved high risk ?
Answer:(i) Purchase of watch by Satvik from Titan shop is an example of traditional business.
(ii) Purchase of watch by Shambhavi from online shopping site is an example of e-business.
(iii) e-business i.e. purchase of watch from online shopping site involves high risk as there is no direct contact between Shambhavi and e-business owner.
In simple words: Satvik's purchase from a physical Titan shop represents traditional business, while Shambhavi's online purchase is an e-business transaction. E-business often carries higher perceived risk due to the lack of direct physical interaction between the buyer and seller.

🎯 Exam Tip: Clearly distinguish between traditional and e-business models and identify the inherent risks associated with online transactions due to indirect contact.

Question 3. Mr. Ved made his payment by cheque at the same time Mr. Shlok made his payment by fund transfer.
(i) Whose payment is faster?
(ii) Whose payment is related to traditional business?
(iii) Whose payment is related to e-business?
Answer:(i) The payment made by Mr. Shlok by fund transfer is faster than payment made
In simple words: Mr. Shlok's payment by fund transfer is faster as it's an electronic method, completing instantly. Mr. Ved's payment by cheque, being a paper-based method, is slower. Fund transfer relates to e-business, whereas cheque payment relates to traditional business.

🎯 Exam Tip: Differentiate between traditional and electronic payment methods, evaluating their speed and classifying them under appropriate business models. Be aware that electronic payments are generally faster.

4. Distinguish Between

Question 1. Traditional business and E-business
Answer:

🎯 Exam Tip: When distinguishing, focus on contrasting key aspects like physical presence, capital, scope, and interaction to score well.

Question 2. E-business and E-commerce
Answer:

🎯 Exam Tip: Remember that e-business is the umbrella term, and e-commerce is the transactional part under that umbrella. This distinction is crucial for understanding digital business models.

Question 3. BPO and KPO
Answer:

🎯 Exam Tip: Understand that KPO is a more specialized form of BPO, demanding higher skills and focusing on intellectual tasks, whereas BPO deals with more repetitive, rule-based processes. Differentiation based on complexity and expertise is key.

5. Answer In Brief

Question 1. What is Outsourcing? Illustrate with suitable example.
Answer:
(1) Outsourcing is a process of allocation of specific business processes or functions to a specialist external service provider or agency for certain monetary consideration. In outsourcing, the service provider or contractor enters into an agreement or formal contract with the company or the firm for providing services against certain monetary charges. After this the service provider, will take the responsibility of carrying out the tasks as per the expectation of the company.
(2) When services such as security, canteen, sanitation, etc. are outsourced by a company, then the security guards, waiters, cooks, sanitation scavengers, etc. are not the employees of the company although they work inside the company premises. They directly work under the control of service provider or contractor. Many organisations, companies, corporate houses, establishments, hospitals, shops, malls, housing societies, offices, etc. outsource their non-core (less important) areas of business such as canteen, sanitation, security services, etc. to outside agencies.
(3) Similarly arrangements for wedding, anniversary, birthday celebration, etc. can also be outsourced to such agencies. This is because many a time an organisation cannot handle all the functions or aspects of business process internally. Some processes are temporarily required to be performed. In such cases, organisation does not want to recruit and appoint professionals to perform such tasks. Most of the services require finely tuned skills which organisation cannot provide. With increasing global competition, most of the companies are focussing their attention on the improvement of quality of their products. Hence, they outsource their non-core business areas so that they can concentrate fully on their core business activities.
(4) Outsourcing benefits the organisation in two ways, viz. (i) It helps to reduce overall costs and (ii) It can use the expertise of the specialised agencies to perform certain tasks more efficiently.
In simple words: Outsourcing is when a company hires an external specialist to perform specific business activities, especially non-core functions, for a fee. This helps the company reduce costs, access specialized expertise, and focus on its primary business, such as outsourcing security or catering services.

🎯 Exam Tip: Providing a clear, real-world example of outsourcing, such as IT support or customer service, helps demonstrate a practical understanding of the concept and improves answer quality.

Question 2. What is BPO? Explain in detail.
Answer:
(1) BPO stands for Business Process Outsourcing. BPO basically refers to the outsourcing of some work or functions of the organisation to third party or service provider to save overall cost of the organisation. In other words, BPO is a business system in which one company hires another company or service provider to do certain process of work (or task) for certain money consideration.
(2) In brief, BPO is a subset of outsourcing that involves the contracting of the operations and responsibilities to a third party to minimise cost and increase efficiency.
(3) It refers to the outsourcing of less important (non-core) or non-primary activities of the organisation to an external organisation or service provider to minimise the cost and increase efficiency of the organisation.
(4) For instance, customer care centres for various banks, service providers, etc. BPO is less complex and requires process expertise. It also requires good communication skills. It focuses on low level process.
In simple words: BPO, or Business Process Outsourcing, involves a company hiring an external service provider to handle non-core business activities, like customer service or data entry, primarily to reduce operational costs and improve efficiency. It focuses on routine, process-driven tasks.

🎯 Exam Tip: When explaining BPO, highlight its primary goals: cost reduction and efficiency improvement, and mention its focus on peripheral, rather than core, business functions. Concrete examples like call centers strengthen your answer.

Question 3. What is KPO? Explain in detail.
Answer:
(1) KPO stands for Knowledge Process Outsourcing. In KPO, the important functions related to knowledge and information are outsourced (assigned to perform) to third party service providers. KPO is the sub-part (Section) of BPO in which services of outside or third party service provider are hired not only for its ability to do particular business process or function but also to provide expertise it has.
(2) KPO is nothing but the allotment of more important or relatively high level tasks or functions to an outside organisation or to a different group specially in a different geographic location. KPO is a subset of Business Process Outsourcing (BPO). KPO implies outsource of more important or core functions or business process to third party service provider or organisation to perform which may or may not reduce its cost of the parent company but surely assists in value addition.
(3) Thus, in KPO the business processes which are outsourced are exceptionally more specialised and knowledge based in comparison to Business Process Outsourcings. In brief, KPO is a form of outsourcing in which knowledge related and information related work is done or carried out by the workers working in different company or by a subsidiary of the some organisation which may be in the same country or on off shore location to save cost.
(4) In KPO, both core as well as non-core activities are performed. It requires advanced analytical and technical skills and high degree of specialist expertise. Margarent Rouse defines KPO as, “KPO is the allocation of relatively high- level tasks to an outside organisation or a different group within the same organisation"
In simple words: KPO, or Knowledge Process Outsourcing, involves outsourcing specialized, knowledge-intensive tasks that require advanced analytical and technical skills to external providers. Unlike BPO, KPO focuses on value addition and strategic contributions, often involving core business functions, like research and development or legal services.

🎯 Exam Tip: Emphasize that KPO goes beyond BPO by requiring higher-level analytical skills and delivering value addition, rather than just cost savings. Mentioning its focus on knowledge-based tasks is essential.

Question 4. What is LPO? Explain in detail.
Answer:
(1) LPO stands for Legal Process Outsourcing. LPO is a type of KPO that renders legal services ranging from drafting legal documents, performing legal research to offering legal advice. LPO implies practice of law firm. It refers to obtaining legal services from outside legal support service company or law firm for certain consideration.
(2) In some industry or organisation in house legal department or a company outsourced legal work to such law firms where it can be done or performed at less cost. For instance, many companies in Europe or US outsource their legal work to Indian law firms where it can be done at considerably lower cost.
(3) In recent years, LPO an high end industry has been growing rapidly in India. LPO is superficially a media invention which is derived from BPO. LPO has made tremendous progress in India in past few years.
(4) LPO gained success by producing and rendering services such as document review, legal research and writing, drafting of briefings, etc. Important benefits of outsourcing legal functions is cost savings and to access high level talent and niche expertise that may not exist within the firm or company.
In simple words: LPO, or Legal Process Outsourcing, is a specialized form of KPO where legal services like document drafting, legal research, or advice are outsourced to external legal support firms. It helps companies reduce costs for legal work and access specialized legal expertise, often by leveraging lower-cost regions.

🎯 Exam Tip: Define LPO as a subset of KPO specifically for legal services. Highlighting its benefits (cost savings, access to expertise) and common examples like legal research or drafting are key points for a comprehensive answer.

6. Justify The Following Statements

Question 1. It is easy to set up e-business as compared to traditional business,
Answer:
(1) e-business is run, managed and carried out with the help of information technology, i.e. web (internet). However, traditional business is run, managed and carried out in accordance with specific old custom or a trading practices of long lasting.
(2) In traditional business large, physical space is needed, to arrange and display the variety of goods. It needs large amount of capital to have infrastructure, staff and other required facilities, e-business can be started, managed and operated with the help of the internet from any place or even from one's own home. Naturally, it requires very less capital. It is also easy to set up.
(3) In traditional business, time is required to travel, to convince, to negotiate and to interact with the customers. In such process lot of time, energy and money are wasted. While in e-business required information is provided and accepted with terms and conditions more instantly.
(4) e-business is also free from most of the problems as faced by the traditional business. Thus, it is easy to set up e-business.
In simple words: Setting up an e-business is easier than a traditional one because it requires less physical infrastructure, minimal capital, and can operate from anywhere using the internet, allowing for instant communication and transaction.

🎯 Exam Tip: Focus your justification on the reduced resource requirements (capital, physical space, time for interaction) and the pervasive nature of the internet as the core reasons for the ease of setting up an e-business.

Question 2. E-business allows user to work across the globe in any field.
Answer:
(1) e-business i.e. electronic business may be defined as the application of information and technologies to support all the activities of business. It involves electronic buying and supply, chain management, processing orders electronically, online payments via debit or credit cards, handling customer service, etc.
(2) In order to begin with e-business, a business owner must have an internet presence. He has to obtain an e-mail address for communicating the same to the customers and other business associates. This helps speedy communication between business firms and customers. Communication is easy as there is no face to face interaction.
(3) Once the owner of e-business has acquired an electronic means of contact, he may sell goods to the customers residing in any part of the world. There is no need of any wholesalers, retailers, etc. This reduces costs and increases profit. In e-business, goods can be purchased on internet from any place across the globe, payments can be made with the help of debit, credit card, internet banking and the goods are physically delivered at the doorstep of the buyer.
(4) Similarly, he can do trading in any field, e-business uses internet to connect people and processes. The World Wide Web (WWW) offers lot of exposure to e-business on a global platform. International relationship is very strong in e-business. The Government also offers lot of support to e-business. Thus, it allows one to work across the globe in any field he likes.
In simple words: E-business enables global operations because the internet eliminates geographical barriers, allowing businesses to reach customers worldwide, conduct transactions, and offer services regardless of location, supported by various online tools and payment methods.

🎯 Exam Tip: Emphasize the role of the internet and World Wide Web (WWW) in breaking geographical limitations, enabling businesses to connect with a global audience and conduct diverse operations from any location.

Question 3. Online transaction is done with the help of the internet.
Answer:
(1) Online transactions take place when a process of buying and selling are completed through the internet. For online transaction, registration is required. The consumer needs to login a particular website to buy a particular article or service. The customer's email ID, name, address and other details are saved and safe with the website for further contact.
(2) When a customer likes a product or service, he/she selects, pick ups and drops the items or things in the shopping cart. The shopping cart keeps the systematic and detail record of what items have been picked up while browsing the online store.
(3) The buyer then proceeds to the payment option after selecting all the products. Payment can be made by accepting cash on delivery mode of payment, after receiving physical delivery of goods. The customer may pay in cash or by debit or credit card. The buyer also sends a cheque to the seller and the seller sends the products after the realisation of the cheque.
(4) If the payment is transferred by the buyer from his account to the seller's account electronically, then after the payment is received by the seller, he sends the goods to buyer. The credit card or debit card is also used by the card holder for. making payment of purchases. The amount gets immediately transferred to vendor's bank account. After the successful transfer of funds, goods are delivered by the vendor to buyer. Thus, all the aspects of online transaction are completed with the help of the internet.
In simple words: Online transactions rely entirely on the internet to facilitate buying, selling, and payment processes, from registration and selecting items in a shopping cart to electronic fund transfers and order delivery.

🎯 Exam Tip: Explain the step-by-step process of an online transaction (registration, order placement, payment), emphasizing how each stage is facilitated by internet technologies to clearly justify the statement.

7. Attempt The Following

Question 1. What are the advantages and disadvantages of e-business?
Answer:
[A] Advantages of e-business : The advantages of e-business are explained as follows:
(1) Ease of formation: In comparison to the traditional method of business, e-business is very easy to set up. The advent of internet has afforded entrepreneurs the ability to open small businesses with a minimal overhead.
(2) Lower investment requirements: As compared to traditional business, the investment requirements of e-business are very low. This is because for conducting e-business, the entrepreneurs do not need a large store or professional space, e-business can be managed with minimum manpower. If entrepreneurs have good contact (network), they can do extremely good business with less investments.
(3) Convenience : In e-business, seller and buyer get advantages of internet platform. Internet offers the convenience of 24 × 7 × 365 days a year to both buyer and seller. Business can be done any time with great flexibility. Truly speaking, e-business has enabled and enhanced by electronics. It offers benefits of accessing anything, anytime and from anywhere.
(4) Speed: Web facilitates direct communication between the seller and buyer. It helps the customer to direct or point out his needs and expectation. Similarly, using website seller can show the available products, offer discount and do everything 1 possible to sell his products. Thus, much of buying or selling involves exchange of information through internet at the click of mouse.
(5) Global access : Truly speaking, internet is boundaryless. Internet facilitates and allows the seller an access to the national as well as global market. Internet also offers freedom to buyer to select products from any part of world. There is no need of face to face interaction between buyer and seller. All the things are completed by using internet.
(6) Movement towards a paperless society : Use of internet has considerably reduced its dependence on the paperwork. Due to use of internet, recording and referencing of information are very easy and less time consuming.
(7) Government support : In e-business transactions, cost reduction and availability of products at relatively low prices are possible. This is beneficial to society at large. Hence, government always supports or favours e-business by providing favourable environment for establishing e-business. This support facilitates maximum transparency in the business.
(8) Easy payment : The payment in e-business can be done by credit card, debit card, fund transfer, etc. These facilities are available round the clock.
[B] Disadvantages of e-business : The disadvantages of e-business are explained as follows:
(1) Lack of personal touch : Before buying the products most of the customers want to see, handle, touch, inspect or test the products which is not possible in e-business system. Because of this reasons, most of the customers do not look for online purchase of products on the internet.
(2) Delivery time: In e-business, the delivery of products takes considerable time. In traditional business, immediate delivery of products is given to buyer after he buys the products. The considerable time lag discourages the customer to buy products from e-business. Now a days most of the e-business assures one day delivery. This improvement does not solve the issue completely.
(3) Security issues : The scam through online business by many people cannot be denied. It is also easier for hackers to obtain one's financial details which can be misused for their personal gain. Thus, online business has less security and integrity issues. Because of these reasons the potential buyers are also discouraged to buy anything from e-business.
(4) Government interference : Many a time, the government monitors, interferes and controls the e-business system. This may put a great hurdle on its growth and prosperity.
(5) High risk: In e-business system, transaction risks such as supply of inferior quality of goods, supplied products do not match with the sample shown, high prices, defects in products, cheating, etc. cannot be denied. In case of any fraud, it becomes very difficult to take legal action due to lack of direct contact between the parties.
In simple words: E-business offers advantages like easy setup, low investment, global access, and convenience through 24/7 availability. However, it also presents disadvantages such as a lack of personal touch, potential delivery delays, security concerns regarding financial data, and a higher risk of fraud due to indirect interaction.

🎯 Exam Tip: Structure your answer by clearly separating advantages and disadvantages. For each point, provide a brief explanation. For instance, under advantages, highlight "global reach," and under disadvantages, "security concerns," to ensure clarity and conciseness.

Question 2. What are the types of e-business? Explain.
Answer:
The types of e-business is shown in the following:
e-business-
1. Business to Business (B2B)
2. Business to Consumer (B2C)
3. Consumer to Business (C2B)
4. Consumer to Consumer (C2C)
5. Business to Administration (B2A)
6. Consumer to Administration (C2A)

The type of e-business are explained as follows:
(1) Business to Business (B2B) : The transactions under B2B include the transactions between one business firm with other business firms. In this type of transactions individual consumers are not involved. In order to get raw materials, catering services, manpower, components of machinery, etc., business firms interact with each other. B2B transactions include supplying ancillary parts/components to manufacturers, providing value added services like catering, providing man power, etc. The business must depend upon one another in order to survive.
(2) Business to Consumer (B2C) : The transactions under B2C include transactions between business firms and consumers. When consumer identifies a need or requirement, he searches for the product or services to fulfil his need. He then selects a vendor, negotiates the price, receives product or services, makes payment and gets service and warranty claims. The business firms use their website for different range of marketing activities such as sales or product promotion, product information, reviews about the product or service and delivery of the products at doorstep. In order to get more response from the customers, the cost of products and services is kept low through this method and the speed of transaction is faster, e.g. www.flipkart.com, www.yebhi.com, etc.
(3) Consumer to Business (C2B) : Consumer to Business is rapidly growing where the consumer demands or requests a specific service from the business lender. In this transaction, buyers quote their own price for specific product or services. A consumer who is in need of product or services posts his request with a specific budget. The companies interested in providing services or products review the customer's requirement, negotiate price and finalise the deal. Pest control service, doorstep food delivery, taxi services, etc. are the examples of Consumer to Business transaction.
(4) Consumer to Consumer (C2C) : The transactions under Consumer to Consumer are between two people. Using e-business facility on internet, the consumers can buy and sell goods and services to other consumers, through some third party. A common consumer posts the product or services for sale with the price and other details online and other consumers tries to buy them. The sites are performing the role of intermediaries, just to match the consumers. For buying and selling, internet allows a lot of space for consumers group to be formed. The consumer forums interact with each other for best variety of goods and services. Through such groups redressal of complaints is also possible. One may sell his products through an online retail space operated by eBay or Yahoo! shopping, etc.
(5) Business to Administration (B2A) : The transactions under Business to Administration are between the business and public administration. This part of e-commerce entirely includes all transactions conducted online between firm at one end and public administration on the other end. For instance, registration of companies, filing returns, payment of taxes, getting permits, etc.
(6) Consumer to Administration (C2A) : The transactions under Consumer to Administration are between the Consumer and Public Administration. This part of e-commerce includes entirely all transactions conducted online between consumer at one end and public administration on the other end. For instance, obtaining passport, aadhaar card, licenses, etc.
In simple words: E-business encompasses various models including Business-to-Business (B2B), Business-to-Consumer (B2C), Consumer-to-Business (C2B), Consumer-to-Consumer (C2C), Business-to-Administration (B2A), and Consumer-to-Administration (C2A), each defining the primary parties involved in online transactions.

🎯 Exam Tip: Clearly define each type of e-business by identifying the two parties involved (e.g., Business and Consumer for B2C) and provide a concise example for each. A structured approach helps demonstrate comprehensive knowledge.

Question 3. What are the advantages of outsourcing?
Answer:
Advantages: The advantages of outsourcing are explained as follows:
(1) Overall cost advantages : Outsourcing reduces cost. Outsourcing avoids the need to hire employees in houses. Hence, recruitment and training costs can be eliminated or minimised. It S also saves time and efforts on training the employees. Similarly, cost of outsourcing services is much less than recruiting work force for the company.
(2) Stimulates entrepreneurship, employment and experts : Outsourcing encourages and stimulates entrepreneurship, employment and expertness in the country from where outsourcing is done.
(3) Low manpower cost : In every organisation manpower is required to operate machineries, to do routine work, to perform jobs, to administer and manage business affairs. Recruitment and appointment of personnel on permanent basis are costly. Manpower through outsourcing is available at a lower cost. Outsourcing is beneficial in some portions of business process.
(4) Access to professional, expert and high quality services : Usually the non-core areas or tasks are given to the people who are expert, specialised and skilled in that particular field. These people provide better level of services. They commit less errors and avoid wastage and misuse.
(5) Emphasis on core process rather than the supporting ones: Outsourcing supporting the business processes, facilitates the organisation to concentration on its core (more important) areas to improve the quality of its products and services. This in turn leads to better profits and increase output and turnover.
(6) Investment requirements are reduced : By outsourcing the non-core areas, the organisation can easily save on investing in the latest technology. These organisation allow the outsourcing partners to handle the entire infrastructure. Thus, the organisation itself is required to manage only remaining portion of business process. Hence, investment requirements of the organisation are very less.
(7) Increased efficiency and productivity : Many a time tasks are outsourced to the vendors who are specialised in their fields. Outsourced vendors have deep knowledge, experience, specific equipment and technical expertise. They give performance or do assigned task much better than the ones at the outsourcing organisation. As a result the tasks can be completed faster, with greater efficiency and with better quality output.
(8) Knowledge sharing : Most of the times tasks are outsourced to the vendors who are specialised and expert in their fields. While working together outsourced partners (vendors) share their knowledge, experience, technical expertise, etc. with the employees of the organisation. This is one of the prime advantages of outsourcing. Organisation also uses and shares particular kind of service. Thus, outsourcing helps to develop both the companies and also boosts goodwill in the industry.
In simple words: Outsourcing offers advantages like significant cost reduction, access to specialized expertise, increased efficiency, and allowing the core business to focus on its primary activities. It also promotes entrepreneurship and facilitates knowledge sharing.

🎯 Exam Tip: When listing advantages, group similar benefits (e.g., cost-related, efficiency-related) to provide a clear and organized answer. Emphasize how outsourcing contributes to strategic focus and resource optimization.

Question 4. What are the disadvantages of outsourcing ?
Answer:
Disadvantages of outsourcing : The disadvantages of outsourcing are explained as follows:
(1) Lack of customer focus : An outsourced vendor may be catering to the expertise needs of several companies at a time. In such cases, the vendors may lack complete focus on outsourcing company's needs or tasks. As a result, the quality of the outsourced service may not be up to the mark.
(2) A threat to security and confidentiality : When an organisation outsources some portions of business process, it involves a risk of exposing its confidential information to a third party. Similarly, there is danger of the misuse of company's confidential information by the contractors. So outsourcing involves security issues.
(3) Dissatisfactory services : In case the organisation does not select right partner for outsourcing, it has to face several problems such as substandard quality output, delayed delivery, inappropriate categorisation of responsibilities, etc. It has to compromise on the quality of outsourcing.
(4) Ethical issues : In some cases, the company outsourcing its non-core areas, ignores ethical issues related to outsourcing. When the functions of the organisation are outsourced to a company from another country, the employment opportunities from one's own country get reduced, which in turn aggravates the unemployment problem.
(5) Other disadvantages :
1. Misunderstanding of contracts ultimately creates many problems for the organisations.
2. Lack of effective communication also creates many problems to the organisations outsourcing their functions.
3. Some times the quality of the outsourced service is not up to the mark, poor and delayed services. In such cases company has to suffer heavy loss on account of wastage.
In simple words: Outsourcing carries disadvantages such as potential lack of customer focus from vendors, risks to security and confidentiality of sensitive data, possibilities of unsatisfactory service quality, ethical concerns regarding job displacement, and challenges stemming from contract misunderstandings and communication gaps.

🎯 Exam Tip: For disadvantages, focus on risks and potential negative impacts on the organization and its stakeholders. Points on security, quality control, and ethical considerations are crucial for a balanced answer.

8. Answer The Following

Question 1. Explain the steps involved in online transaction.
Answer:
In online transaction there are three stages, viz. pre-purchase/sale, actual purchase/ sale and delivery stage. Online transaction involves the following steps:
(1) Registration : Registration is compulsory for online transactions. One who wants to do online shopping is required to register his name with online vendor by filling up a registration form. The consumer is required to login a particular website. The customer's details such as email ID, name, address and other information are saved and are safe with the website along with a 'Password' relating to the registered 'account' and 'Shopping cart'. To avoid misuse by anyone 'Account' and 'Shopping Cart' are password protected.
(2) Placing an order : The online shopper can select, pick up and drop the items or things in the shopping cart. The shopping cart keeps the systematic and detail record of what items or things have been picked up, quantity to be bought, the price of each product while browsing the online store. After confirmation, the customer or shopper has to choose a payment option.
(3) Payment : Making payment is the last step in online transaction. The buyer is required to select the payment option. The payment systems in online transactions are secured with very high level encryption. Because of these arrangements, the personal financial information gets completely secured. Payment can be made in one of the following ways:
(i) Cash on Delivery (COD) : According to Cash on Delivery mode of payment, after receiving physical delivery of goods, payments is effected at the doorstep of the customer. The customer can make payment in cash or through debit or credit card.
(ii) Cheque : Under this mode of payment, the S vendor collects the cheque from the customer and j after realisation of the cheque, delivery of the goods is given to the buyer.
(iii) Net banking transfer : Under this mode, the payment is made by buyer to vendor by transfer of funds through the internet. The buyer transfers the agreed purchase amount to the online vendor's account. It is an electronic facility i of transferring funds though the internet. After receiving the amount, the vendor delivers the goods to the buyer.
(iv) Credit or Debit Cards : Credit card and Debit card are also called Plastic Money. The vendor gets the amount from the buyer through credit or debit card. The amount gets immediately transferred to vendor's bank account. After the successful transfer of funds, goods are delivered by the vendor to buyer.
(v) Digital Cash : Digital cash is a form of electronic currency which has no reed physical properties. However, digital cash offers the ability to use real currency in an electronic format.
In simple words: Online transactions involve three main steps: registration, where a user creates an account; placing an order, where items are selected and added to a shopping cart; and payment, which can be done through various secure methods like Cash on Delivery, net banking, or credit/debit cards.

🎯 Exam Tip: Clearly delineate the three primary stages: Registration, Order Placement, and Payment. For the payment stage, enumerate and briefly explain at least three common methods to show thorough understanding.

Question 1. Explain the steps involved in online transaction.
Answer: In online transaction there are three stages, viz. pre-purchase/sale, actual purchase/ sale and delivery stage. Online transaction involves the following steps:
(1) Registration : Registration is compulsory for online transactions. One who wants to do online shopping is required to register his name with online vendor by filling up a registration form. The consumer is required to login a particular website. The customer's details such as email ID, name, address and other information are saved and are safe with the website along with a 'Password' relating to the registered 'account' and 'Shopping cart'. To avoid misuse by anyone 'Account' and 'Shopping Cart' are password protected.
(2) Placing an order : The online shopper can select, pick up and drop the items or things in the shopping cart. The shopping cart keeps the systematic and detail record of what items or things have been picked up, quantity to be bought, the price of each product while browsing the online store. After confirmation, the customer or shopper has to choose a payment option.
(3) Payment : Making payment is the last step in online transaction. The buyer is required to select the payment option. The payment systems in online transactions are secured with very high level encryption. Because of these arrangements, the personal financial information gets completely secured. Payment can be made in one of the following ways:
(i) Cash on Delivery (COD) : According to Cash on Delivery mode of payment, after receiving physical delivery of goods, payments is effected at the doorstep of the customer. The customer can make payment in cash or through debit or credit card.
(ii) Cheque : Under this mode of payment, the S vendor collects the cheque from the customer and j after realisation of the cheque, delivery of the goods is given to the buyer.
(iii) Net banking transfer : Under this mode, the payment is made by buyer to vendor by transfer of funds through the internet. The buyer transfers the agreed purchase amount to the online vendor's account. It is an electronic facility i of transferring funds though the internet. After receiving the amount, the vendor delivers the goods to the buyer.
(iv) Credit or Debit Cards : Credit card and Debit card are also called Plastic Money. The vendor gets the amount from the buyer through credit or debit card. The amount gets immediately transferred to vendor's bank account. After the successful transfer of funds, goods are delivered by the vendor to buyer.
(v) Digital Cash : Digital cash is a form of electronic currency which has no reed physical properties. However, digital cash offers the ability to use real currency in an electronic format.
In simple words: Online transactions involve three stages: registration, placing an order, and making payment through various digital or traditional methods, with security features ensuring safe financial transactions.

🎯 Exam Tip: Focus on the sequential steps and diverse payment options available in online transactions, as this demonstrates a comprehensive understanding of e-commerce processes.

Question 2. What is Outsourcing? Explain the advantages and disadvantages of outsourcing.
Answer:
[A] Meaning: Outsourcing is a process of allocation of specific business processes or functions to a specialist external service provider or agency for certain monetary consideration. In outsourcing, the service provider or contractor enters into an agreement or formal contract with the company or the firm for providing services against certain monetary charges. After this the service provider, will take the responsibility of carrying out the tasks as per the expectation of the company.
[B] Advantages : The advantages of outsourcing are explained as follows:
(1) Overall cost advantages : Outsourcing reduces cost. Outsourcing avoids the need to hire employees in houses. Hence, recruitment and training costs can be eliminated or minimised. It is also saves time and efforts on training the employees. Similarly, cost of outsourcing services is much less than recruiting work force for the company.
(2) Stimulates entrepreneurship, employment and experts : Outsourcing encourages and stimulates entrepreneurship, employment and expertness in the country from where outsourcing is done.
(3) Low manpower cost : In every organisation manpower is required to operate machineries, to do routine work, to perform jobs, to administer and manage business affairs. Recruitment and appointment of personnel on permanent basis are costly. Manpower through outsourcing is available at a lower cost. Outsourcing is beneficial in some portions of business process.
(4) Access to professional, expert and high quality services : Usually the non-core areas or tasks are given to the people who are expert, specialised and skilled in that particular field. These people provide better level of services. They commit less errors and avoid wastage and misuse.
(5) Emphasis on core process rather than the supporting ones: Outsourcing supporting the business processes, facilitates the organisation to concentration on its core (more important) areas to improve the quality of its products and services. This in turn leads to better profits and increase output and turnover.
(6) Investment requirements are reduced : By outsourcing the non-core areas, the organisation can easily save on investing in the latest technology. These organisation allow the outsourcing partners to handle the entire infrastructure. Thus, the organisation itself is required to manage only remaining portion of business process. Hence, investment requirements of the organisation are very less.
(7) Increased efficiency and productivity : Many a time tasks are outsourced to the vendors who are specialised in their fields. Outsourced vendors have deep knowledge, experience, specific equipment and technical expertise. They give performance or do assigned task much better than the ones at the outsourcing organisation. As a result the tasks can be completed faster, with greater efficiency and with better quality output.
(8) Knowledge sharing : Most of the times tasks are outsourced to the vendors who are specialised and expert in their fields. While working together outsourced partners (vendors) share their knowledge, experience, technical expertise, etc. with the employees of the organisation. This is one of the prime advantages of outsourcing. Organisation also uses and shares particular kind of service. Thus, outsourcing helps to develop both the companies and also boosts goodwill in the industry.
[C] Disadvantages of outsourcing : The disadvantages of outsourcing are explained as follows:
(1) Lack of customer focus : An outsourced vendor may be catering to the expertise needs of several companies at a time. In such cases, the vendors may lack complete focus on outsourcing company's needs or tasks. As a result, the quality of the outsourced service may not be up to the mark.
(2) A threat to security and confidentiality : When an organisation outsources some portions of business process, it involves a risk of exposing its confidential information to a third party. Similarly, there is danger of the misuse of company's confidential information by the contractors. So outsourcing involves security issues.
(3) Dissatisfactory services : In case the organisation does not select right partner for outsourcing, it has to face several problems such as substandard quality output, delayed delivery, inappropriate categorisation of responsibilities, etc. It has to compromise on the quality of outsourcing.
(4) Ethical issues : In some cases, the company outsourcing its non-core areas, ignores ethical issues related to outsourcing. When the functions of the organisation are outsourced to a company from another country, the employment opportunities from one's own country get reduced, which in turn aggravates the unemployment problem.
(5) Other disadvantages :
1. Misunderstanding of contracts ultimately creates many problems for the organisations.
2. Lack of effective communication also creates many problems to the organisations outsourcing their functions.
3. Some times the quality of the outsourced service is not up to the mark, poor and delayed services. In such cases company has to suffer heavy loss on account of wastage.
In simple words: Outsourcing involves entrusting specific business functions to external specialists for monetary consideration. Its advantages include cost reduction, increased efficiency, access to expertise, and better focus on core activities, while disadvantages involve potential lack of customer focus, security risks, ethical issues, and communication problems.

🎯 Exam Tip: When explaining outsourcing, ensure you cover both its definition and a balanced view of its pros and cons, as questions often require a comprehensive analysis of the concept. Provide specific examples for clarity.

OCM 12th Commerce Textbook Solutions Digest

Class 12