Emerging Modes of BusinessClass 11 Business Studies NCERT Solutions
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Q1Long Answer Questions
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.
Solution
E-business and outsourcing are referred to as 'emerging modes of business' because they represent fundamental changes in the way business is conducted. The prefix 'emerging' highlights that these changes are happening in the present and are trends that are expected to continue and evolve, reshaping how businesses will operate in the future.
The factors responsible for the growing importance of these trends can be categorized as follows:
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Internal Factors: Businesses are constantly seeking improvement and greater efficiency. Business managers and thinkers evolve newer and better ways of doing things to strengthen their capabilities in creating value. This internal drive for optimisation has propelled firms to adopt e-business for speed and efficiency and outsourcing to focus on core competencies.
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External Factors: The business environment is increasingly competitive. There are ever-growing demands from consumers for better quality products, lower prices, speedier deliveries, and improved customer care. E-business helps firms expand their reach and respond to customer needs instantly, while outsourcing can help reduce costs and improve service quality, thereby meeting these competitive pressures.
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Technological Advancement: The quest to benefit from emerging technologies is a major driver. The trend of digitisation—the conversion of all forms of content into a digital format—has enabled e-business. The internet has dismantled time and space constraints, allowing businesses to operate globally and efficiently, which is the foundation of both e-business and global outsourcing.
Q2Long Answer Questions
Elaborate the steps involved in on-line trading.
Solution
Online trading, or shopping, involves a series of steps that a customer follows to purchase goods or services over the internet. The process can be elaborated in three main stages:
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Registration: The first step for a customer is to register with the online vendor. This involves filling out a registration form to create an 'account.' During this process, the customer provides necessary details and sets up a password. This is a crucial step for security, as the password protects the customer's account and 'shopping cart' from being accessed by others.
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Placing an Order: Once registered, the customer can browse the online store's catalogue. As they find items they wish to purchase, they can add them to their 'shopping cart,' which is an online record of selected items. The customer can add or remove items from the cart just as they would in a physical store. After finalising the selection, the customer proceeds to 'checkout' to complete the purchase.
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Payment Mechanism: At the checkout stage, the customer must choose a method of payment. Online vendors typically offer several options:
- Cash-on Delivery (CoD): The customer pays in cash when the goods are physically delivered.
- Cheque: The vendor may arrange to collect a cheque from the customer. The goods are delivered after the cheque is realised.
- Net-banking Transfer: The customer can transfer the payment amount directly from their bank account to the vendor's account using facilities like IMPS, NEFT, or RTGS.
- Credit or Debit Card: Often called 'plastic money,' this is the most common method. The customer provides card details online. The transaction is processed, and the amount is debited from the customer's account or charged to their credit limit.
- Digital Cash: This is a form of electronic currency that exists only in cyberspace. The customer purchases digital cash from a bank and uses it to make payments online.
Q3Long Answer Questions
Evaluate the need for outsourcing and discuss its limitations.
Solution
Based on the provided text, the evaluation of the need for outsourcing and its limitations is as follows:
Need for Outsourcing:
The text suggests that the need for outsourcing arises from the same internal and external pressures that drive the adoption of e-business. Firms are increasingly contracting out business processes to improve efficiency and gain a competitive edge.
- Focus on Core Activities: By outsourcing non-core activities, such as customer support (call centres), companies can concentrate on their primary business functions.
- Quest for Improvement and Efficiency: The text mentions that the trigger for change is the firm's own quest for improvement and efficiency. Outsourcing allows businesses to leverage the specialised skills and infrastructure of other companies, leading to better performance and cost savings.
- Meeting Competitive Pressures: To meet the demands of customers for better and speedier service, companies can outsource processes to firms that can perform them more effectively. For example, the text mentions that call centres can be outsourced to handle customer queries and complaints round the clock.
- Economic Benefits: For countries like India, the text notes that the global outsourcing business has led to significant gains in employment generation, capability building, and contribution to exports and GDP.
Limitations of Outsourcing:
The provided source text does not explicitly discuss the limitations of outsourcing in detail. While it covers the limitations of e-business extensively, a similar section for outsourcing is not included. The only hint of a limitation is the term 'Sweat-shopping' listed in the 'Key Terms' section, which implies potential issues related to the exploitation of labour, such as poor working conditions and low wages, but this is not elaborated upon in the main body of the chapter.
Q4Long Answer Questions
Discuss the salient aspects of B2C commerce.
Solution
B2C (business-to-customers) commerce refers to transactions where business firms are at one end and customers are at the other. The salient aspects of B2C commerce are:
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Wide Scope of Marketing Activities: B2C is not just about online shopping. It encompasses a wide range of marketing activities that precede and follow a sale. This includes identifying customer needs, promoting products, and sometimes even the delivery of digital products like music or software.
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Cost and Speed Efficiency: Conducting marketing and sales activities online through B2C commerce is often done at a much lower cost and with greater speed compared to traditional methods. For example, an ATM, a B2C service, speeds up the process of money withdrawal significantly.
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Customisation and Convenience: B2C commerce excels at meeting the modern customer's desire for personalised products and convenience. Businesses can offer tailor-made products and provide the convenience of delivery and payment at the customer's pleasure.
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Round-the-Clock Interaction: It enables a business to be in touch with its customers on a 24/7 basis. This constant availability allows companies to conduct online surveys to understand customer preferences and satisfaction levels.
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Two-Way Communication: B2C is not just a one-way street from business to customer. It also facilitates C2B (customer-to-business) interactions. Customers can use facilities like toll-free call centres to make queries and lodge complaints, giving them the freedom of 'shopping-at-will'.
Q5Long Answer Questions
Discuss the limitations of electronic mode of doing business. Are these limitations severe enough to restrict its scope? Give reasons for your answer.
Solution
The electronic mode of doing business, or e-business, has several limitations:
- Low Personal Touch: E-business lacks the warmth of face-to-face interaction, making it less suitable for products that require a high degree of personal touch, such as clothing or toiletries.
- Order Fulfilment Speed: While information and orders can be transmitted instantly, the physical delivery of products takes time. This gap between order placement and delivery can test a customer's patience.
- Need for Technical Competence: E-business requires users to be familiar with computers and the internet. This creates a 'digital divide' between those who are digitally literate and those who are not.
- Increased Risk: The anonymity of the internet increases transaction risks. It can be difficult to establish the identity and location of parties, leading to risks of impersonation, default on orders or payments, and leakage of confidential information like credit card details. Hacking and viruses are also significant threats.
- People Resistance: Employees may resist the shift to e-business due to the stress and insecurity associated with adjusting to new technology and new ways of working.
- Ethical Fallouts: E-business raises ethical concerns, such as companies using technology to monitor employees' emails and web usage, which infringes on privacy.
However, these limitations are not severe enough to restrict the scope of e-business. The chapter makes it clear that 'e-commerce is the way' for the following reasons:
- Limitations are Being Overcome: Continuous efforts are being made to address these drawbacks. For example, websites are becoming more interactive to compensate for the low personal touch, and communication technology is constantly evolving to increase speed and quality.
- Bridging the Digital Divide: Initiatives are underway to overcome the digital divide. The text mentions the strategy of setting up community telecentres in rural areas of India to diffuse e-commerce to all corners of the country.
- Reshaping Business and Economies: Despite its limitations, e-business is a powerful force that is here to stay. It is poised to fundamentally reshape businesses, governance, and economies on a global scale.
Q1Short Answer Questions
State any three differences between e-business and traditional business.
Solution
Based on the information provided in the chapter, three key differences between e-business and traditional business are:
- Ease of Formation: Traditional business is difficult to set up, involving significant procedural requirements. In contrast, e-business is relatively simple and easy to start.
- Physical Presence: A traditional business requires a physical presence and a specific location, often chosen for its proximity to raw materials or markets. An e-business does not require a physical presence, as its location is on the internet (cyberspace).
- Cost of Setting Up and Operating: Traditional businesses have a high setup cost due to the need for physical facilities like buildings and equipment. Their operating costs are also high because of fixed charges related to storage, production, and distribution. E-business has a low setup cost as it does not require physical facilities and a lower operating cost as it relies on a network of relationships rather than owning resources.
Q2Short Answer Questions
Describe briefly any two applications of e-business.
Solution
Two applications of e-business described in the chapter are:
- e-Procurement: This involves internet-based sales transactions between business firms. It includes activities like 'reverse auctions,' where a single business purchaser interacts with many sellers online to get the best deal. It also facilitates digital marketplaces where multiple buyers and sellers can trade with each other. This application streamlines the purchasing and supply chain processes for businesses.
- e-Delivery: This application involves the electronic delivery of products and services directly to the user's computer. It is particularly suitable for information-intensive products such as computer software, photographs, videos, e-books, and e-journals. Additionally, services like legal, accounting, and medical consulting can also be rendered electronically through e-delivery.
Q3Short Answer Questions
Describe briefly the data storage and transmission risks in e-business.
Solution
Data storage and transmission risks in e-business refer to the dangers that vital information faces both when stored in computer systems and while being sent across the internet.
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Data Storage Risks: Stored data is vulnerable to being stolen or modified by unauthorised individuals for selfish motives or for malicious fun. A major threat is from computer viruses (Vital Information Under Siege), which are programs that replicate themselves and can cause effects ranging from simple annoyance to the complete destruction of a computer system's data and files.
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Data Transmission Risks: When data is being transmitted online, it can be intercepted by hackers. To counter this, cryptography is used, which involves encrypting (transforming) information into an unreadable format called 'cyphertext'. Only those with a secret key can decrypt the message back into its readable 'plaintext' form, thus protecting it during transmission.