Emerging Modes of BusinessClass 11 Business Studies Notes

Introduction to Emerging Modes of Business

The way companies operate has changed dramatically in recent years. We call these new ways of doing business "emerging modes of business" because they are happening right now and are expected to grow. Think of it not as a completely new type of business, but a new way of doing the same business activities, like buying, selling, and producing goods.

Two of the most powerful trends shaping modern business are:

• Digitisation: This is the process of converting everything—text, images, sound, and video—into a digital format (a series of ones and zeroes) that can be sent electronically over computer networks. This trend has given rise to e-business.
• Outsourcing: This involves contracting out business functions to other companies.

These changes are driven by companies constantly looking for better ways to operate. They face pressure from competitors and growing demands from customers who want better quality, lower prices, and faster delivery. Technology, especially the internet, has provided the tools to meet these demands in new and efficient ways.

e-Business

e-Business (or electronic business) is the broad term for conducting all kinds of business activities—like industry, trade, and commerce—using computer networks. The most common network we all use is the internet, but companies also use private, more secure networks for their internal operations.

e-Business versus e-Commerce

It's easy to confuse these two terms, but there's a clear difference.

• e-Commerce specifically covers a company's interactions with its customers and suppliers over the internet. This is mainly about buying and selling online.
• e-Business is a much broader concept. It includes e-commerce but also covers all other business functions conducted electronically, such as production, inventory management, product development, accounting, and human resource management.

Scope of e-Business

e-Business is vast and can be understood by looking at the parties involved in the transactions. A company's electronic network can extend in four main directions.

B2B Commerce (Business-to-Business)

In B2B Commerce, both parties in the transaction are business firms. Businesses rarely work in isolation; they need to interact with many other firms, such as suppliers for raw materials or distributors to sell their products.

Historically, B2B transactions used a technology called Electronic Data Interchange (EDI) to send documents like purchase orders and invoices electronically.

B2C Commerce (Business-to-Customer)

B2C Commerce involves transactions between a business and its customers. While online shopping is the most obvious example, B2C is much more. It includes the entire marketing process, from identifying customer needs and promoting products to after-sales service.

Key features of B2C Commerce include:

• 24/7 Business: Companies can be in touch with their customers around the clock.
• Customisation: Businesses can offer products and services tailored to individual customer needs. For example, some companies allow you to build your own PC online or order custom-fit jeans.
• Customer Feedback: Companies can conduct online surveys to understand customer satisfaction and buying habits.
• Convenience: Services like ATMs have made processes like withdrawing money incredibly fast and simple.

It's not just a one-way street. The rise of C2B commerce is also a reality, where consumers can create value for businesses. Furthermore, customers can use company call centres (which may be outsourced) to ask questions or make complaints at any time.

Intra-B Commerce

Intra-B Commerce refers to transactions and interactions that happen within a single business firm. This is a key part of what makes e-business broader than e-commerce. Companies use internal networks (intranets) to connect different departments and employees.

This internal connectivity allows for:

• Better coordination between departments.
• Faster decision-making and workflows.
• Efficient management of inventory, cash, and human resources.
• Interactions with employees, sometimes called B2E (Business-to-Employee) commerce, for activities like online recruitment, training (e-learning), and internal communication.

C2C Commerce (Consumer-to-Consumer)

In C2C Commerce, the transaction is between two consumers. This is perfect for goods that don't have an established market, like used books, clothes, or collectibles. The internet provides a global platform for individuals to find buyers.

• Seller/Buyer Ratings: People can rate each other after a transaction. A seller with thousands of excellent ratings is seen as more trustworthy than one with poor ratings.
• Payment Intermediaries: Services like PayPal act as a secure middleman. A buyer sends money to PayPal, which holds it until the seller ships the goods and the buyer confirms they've received them. Only then is the money released to the seller.

C2C platforms also allow for the formation of consumer forums and groups, where people can share experiences about products and services, creating collective pressure on businesses.

e-Business versus Traditional Business

Conducting business electronically is fundamentally different from the traditional way. Here’s a comparison:

Benefits of e-Business

Switching to an electronic mode of business offers several significant advantages.

• Ease of Formation and Lower Investment: Starting an e-business is relatively simple and requires less capital compared to setting up a physical industry or shop. Success depends more on your network of contacts than on your financial net worth.
• Convenience: The internet allows for business to be conducted '24 hours × 7 days a week × 365 days' a year. Customers can shop anytime, and employees can work from anywhere, offering incredible flexibility.
• Speed: Information is exchanged at the click of a mouse. This drastically reduces the cycle time—the time from when a customer places an order to when it's fulfilled. For digital products like software, music, or e-books, even delivery is instant.
• Global Reach/Access: The internet is borderless. It gives sellers access to a global market and allows buyers to choose products from anywhere in the world. This has been a major driver of globalisation.
• Movement towards a Paperless Society: e-Business significantly reduces paperwork. Many companies now handle their supply chains electronically, and governments are increasingly allowing for the electronic filing of returns and reports, as supported by laws like the Information Technology Act 2000.

Limitations of e-Business

Despite its many benefits, e-business is not without its challenges.

• Low Personal Touch: e-Business lacks the warmth of face-to-face interaction. This makes it less suitable for products that require a high degree of personal touch, like clothing or cosmetics, where customers might want to see or try the product first.
• Incongruence between Order and Fulfilment Speed: While you can place an order instantly, the physical delivery of the product takes time. This gap can frustrate customers. Slow-loading websites can also be a source of frustration.
• Need for Technology Capability: Both buyers and sellers need to be comfortable with computer technology. This requirement has led to a digital divide, which is the gap between those who are familiar with digital technology and those who are not.
• Increased Risk: Online transactions happen between "cyber personalities," making it hard to confirm who you are dealing with. This creates risks of impersonation and leakage of confidential information like credit card details. Security threats like viruses and hacking are also major concerns.
• People Resistance: New technology and new ways of working can cause stress and insecurity among employees. As a result, people within an organisation might resist the shift to e-business.
• Ethical Fallouts: The technology that enables e-business also allows for increased monitoring. Companies can track employees' emails, computer files, and the websites they visit, which raises serious ethical questions about privacy.

Online Transactions

The process of buying something online can be broken down into three main stages:

1. Pre-Purchase/Sale Stage: This involves activities like advertising and the customer searching for information.
2. Purchase/Sale Stage: This includes price negotiation, placing an order, and making the payment.
3. Delivery Stage: This is when the product is physically delivered to the customer (unless it's a digital product that can be downloaded).

From a customer's point of view, here are the steps involved in online shopping:

Registration

Before you can shop, you usually need to register with the online seller by filling out a form. This creates an "account" for you. You will also create a password to protect your account and your shopping cart, preventing others from shopping in your name.

Placing an Order

As you browse the online store, you can add items to your shopping cart. This is an online record of what you've selected. You can add or remove items just like you would with a physical cart. Once you are sure about your purchase, you proceed to "checkout."

Payment Mechanism

There are several ways to pay for your online purchases:

• Cash-on Delivery (CoD): You pay in cash when the goods are physically delivered to you.
• Cheque: The seller may arrange to pick up a cheque from you. The goods are delivered after the cheque is cleared.
• Net-banking Transfer: You can transfer funds electronically from your bank account to the seller's account using services like IMPS, NEFT, or RTGS.
• Credit or Debit Cards: Often called "plastic money," this is the most common method for online payments. A credit card allows you to buy on credit, while a debit card deducts the amount directly from your bank account.
• Digital Cash: This is a form of electronic currency that exists only in cyberspace. You pay a bank for a certain amount of digital cash, which you can then use to make purchases online.

Security and Safety of e-Transactions: e-Business Risks

Online transactions are more prone to risks than face-to-face transactions. Security is therefore a major concern. These risks can be grouped into three categories.

Transaction Risks

These risks relate to the core parts of the transaction itself.

• Default on order taking/giving: The seller might deny you ever placed an order, or you (the customer) might deny placing it.
• Default on delivery: The goods are not delivered, are sent to the wrong address, or are not what you ordered.
• Default on payment: The seller doesn't receive payment, even though the customer claims they paid.

To prevent these issues, sellers use identity verification during registration (sometimes using cookies, which are small files that store information about a user) and require order confirmations. For customers, it is always safer to shop from well-established and reputable websites.

Data Storage and Transmission Risks

Information stored on computer systems or sent over the internet is vulnerable to theft or modification.

• Virus: A VIRUS stands for Vital Information Under Siege. It is a computer program that replicates itself and can cause anything from minor annoyance to the complete destruction of a system. Using and regularly updating anti-virus software is essential for protection.
• Hacking: This refers to unauthorised access to a computer system.
• Interception: Data can be intercepted while it is being transmitted. To protect against this, businesses use cryptography, which is the art of encrypting (transforming) information into an unreadable format. Only someone with the secret key can decrypt it back into a readable form. Technologies like Secure Sockets Layer (SSL) are used to encrypt sensitive information like credit card details during a transaction.

Risks of Threat to Intellectual Property and Privacy

Once information is on the internet, it's hard to protect it from being copied. Furthermore, personal data you provide during a transaction might be sold to other companies, leading to a flood of junk mail and promotional emails in your inbox, which raises serious privacy concerns.

Resources Required for Successful e-business Implementation

To run an e-business, you need more than just money, people, and machines. The central resource required is a well-developed website. A website is a company's online location on the World Wide Web (www). It's not a physical place but an online embodiment of all the content and services a company wants to provide to its customers and partners. Developing, operating, maintaining, and enhancing this website requires significant additional resources.