NCERT Solutions for Class 11 Business Studies Chapter 5 - Emerging Modes of Business

Short Answer Questions:

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

Basis	e-Business	Traditional Business
Ease of formation	It is easy to form.	It is difficult to form.
Physical presence	It does not require physical presence.	It requires physical presence.
Locational requirements	There is no requirement for location.	Proximity to the source of raw materials or the market for the products.

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

Ans. Two applications of E-business are discussed below:
e-Procurement: It involves internet-based transactions between two business organisations. It generates online trading transactions of buying and selling between business firms which helps companies maintain and create relationships with distributors, vendors and suppliers. It enables the strengthening of communication and distribution channels.
e-Delivery: It involves electronic delivery of transactions between a business organisation and its customer. It includes physical as well as activities through electronic mode. It also includes pre-sale and pre-service activities. The electronic mode of transaction ensures faster and economical delivery.
For e.g.: computer software, photographs, videos, e-books etc.

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

Ans.

Data theft and storage risk: Data theft or breach can be destructive for a company if it reaches the wrong person. There is a risk that data might be manipulated or modified by wrong people for their selfish motives. It is exposed to the risk of virus and hacking. To make sure data is secure, installation and timely updating of anti-virus programmes is necessary to mitigate risk of systems under the attack of virus.
Transmission Risk: Another risk involved is interception of data in the course of transmission. To protect data against this, cryptography is used. Cryptography refers to the art of protecting information by transforming it into an unreadable format called ‘cyphertext’. Thereafter only those who have a secret key can decrypt the message into ‘plaintext’. It is like coding and decoding.

Long Answer Questions:

1. Why are e-business and outsourcing referred to as the emerging modes of business? Discuss the factors responsible for the growing importance of these trends.

Ans. e-business and outsourcing are referred to as emerging modes of business because they have brought about significant changes in the way businesses conduct their operations. Here are the factors responsible for the growing importance of these trends:

Business Process Improvement: Business managers and thinkers are constantly looking for new and better ways of doing things in an effort to improve business processes. e-business and outsourcing offer new ways to conduct business that can increase efficiency and reduce costs.
Competitive Pressures: To remain competitive, businesses need to strengthen their capabilities of creating value and delivering it efficiently. e-business and outsourcing can help businesses achieve this by offering access to new technologies, specialised expertise, and cost savings.
Consumer Demands: Consumers are increasingly demanding higher quality, lower prices, speedier deliveries, and better customer care. e-business and outsourcing can help businesses meet these demands by providing access to new technologies, improved processes, and specialised expertise.
Emerging Technologies: Business as an activity needs to keep evolving by adopting new trends to benefit from emerging technologies. e-business and outsourcing provide businesses with new ways to conduct their operations and benefit from these emerging technologies.

2. Elaborate the steps involved in online trading.

Ans. Following steps are involved in online trading:

Registration: The initial step in online trading is registration with the online trader by filling up a registration form. The buyer is required to fill in required details like name, phone number, address etc. A password is created for the account which helps the customer to login in future.
Placing an Order: After logging in and reviewing the items, the account holder can select items and add them in the shopping cart. Shopping cart contains the selected items the account holder wishes to buy. The account holder can check out and choose his payment options.
Payment Mechanism: In online trading payment may be made in any of the following ways:
- Cash on Delivery (COD): Payment for goods ordered online is made in cash at the time of physical delivery of the goods.
- Cheque: Another option is that the online vendor may arrange for the pickup of the cheque from the customer’s end. Upon realisation, goods may be delivered.
- Net Banking Transfer: These days banks provide facility to the customers for electronic transfer of funds using internet. Therefore, a buyer can also make use of net banking money transfer to pay for the goods ordered.
- Credit or Debit Cards: These are also called plastic money and are used in payment for online transactions. To accept credit card as an online payment type, the seller first needs a secure means of collecting credit card information from its customer. Debit card allows its holder to make purchases through it to the extent of the amount lying in the corresponding account. The moment any transaction is made, the amount due as payment is deducted electonically from the card.
- Digital Cash: It is a kind of electronic currency which exists only in cyberspace. It has no real physical properties, but offers the ability to use real currency in an electronic format. It is more secure than credit or debit cards.

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

Ans. Need for outsouring are discussed below:

Focusing of Attention: By outsourcing the routine tasks, the companies can concentrate on more crucial matters. For e.g., by outsourcing the sales promotion function to an advertising agency, the company can concentrate on maintaining quality and on increasing the production capacity.
Reduction in Cost: It has become necessary for firms opening in global markets to maintain quality of products while keeping price low. The outsourcing agencies perform the task for different companies. So, client companies get benefit of economies of scale, generally they save 10 to 20% cost.
Quest for Excellence: Outsourcing helps firms to get excellence in two ways-(i) They can focus only on activities in which they excel. (ii) Contracting out remaining activities to those who excel in performing those activities. For e.g., many firms prefer to give the work of developing software to TCS or Infosys as they are excellent in this area.
Growth through Alliance: By availing services from other firms, your investment requirements are reduced. Company can get dual advantage of profit not only from low investment and better services provided by them to you, but also from the share in profit from business they do for you. Therefore, you can expand rapidly. Apart from financial returns, outsourcing facilitates inter-organisational knowledge, sharing and collaborations. This is the main reason now a days firms not only outsource their routine work but also their core and strategic processes like Research and Development, etc.
Economic growth and Development: Offshore outsourcing stimulates entrepreneurship, employment and exports in the countries (countries from where outsourcing is done). For e.g. India is an undisputed leader in IT and software development as good as global outsourcing is concerned.

There are several limitations to outsourcing, and some of them include:

Confidentiality: Outsourcing requires sharing a lot of vital information and knowledge with the outsourcing partner. If the partner does not maintain confidentiality, it can harm the interest of the party that outsources its processes.
Sweat-Shopping: Outsourcing firms seek to lower their costs by utilising the low-cost manpower of the host countries. However, the work that is outsourced may not build the competency and capability of the outsourcing partner, leading to concerns about the quality of work.
Ethical Concerns: Outsourcing may involve contracting with companies that use child labour or engage in other unethical practices. This raises ethical concerns.
Resentment in the Home Countries: Outsourcing can lead to resentment in the home country if jobs or employment opportunities are contracted out to foreign countries, particularly if the home country is suffering from unemployment.
It is important for companies to carefully consider these limitations before entering into an outsourcing relationship and to take steps to mitigate any potential risks.

4. Discuss the salient aspects of B2C commerce.

Ans. B2C Commerce: The transactions taking place between business units and customers known as B2C transactions. B2C enables the businessman to remain in touch with customers on round-the-clock basis. B2C also gives scope for C2B transactions, le customers can also make use of call centres set up by companies to make toll-free all some promotion activities such as use of music, films to attract the customers are also used in B2C segment.
The salient aspects of B2C commerce are as follows:

Online selling: It refers to the process of selling products to customers who register for online shopping. However, it should be noted that selling is only the outcome of the entire marketing process.
Online marketing: It covers a wide range of activities such as promotion and delivery of products (such as music or e-books) that are carried out online at a lower cost but with high speed.
Adaptation to customer requirements: It has become possible with B2C commerce. Firms can now manufacture products with customized features that cater to the requirements of the customers. B2C commerce also provides convenience in terms of delivery and payment to customers.
Customer feedback: It is another crucial aspect of B2C e-commerce. It enables businesses to stay in touch with their customers through online surveys about demand trends and customer satisfaction. This helps business to improve their products and services to meet the changing demands of customers.

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

Ans. The limitations of electronic mode of doing business are given below:

Low personal Touch: Sometimes a customer prefers human interaction and warmth to better understand the product for example, products which need personal touch like beauty products, garments, fashion accessories etc. can be difficult to trade through e-business.
Product Mismatch and delay: There might be a situation where the product ordered and the product delivered may have a mismatch or the delivery of the product gets delayed. Sometimes even websites take a long time to open which may frustrate the user.
Need for technology: For e-commerce both the parties need to be well versed with the use of applications and payment gateways. Those who are not familiar with digital technology find it difficult to place online orders and restrict e-business growth.
Increased risk: Risk arises due to parties being unknown to each other and situation arises where the buyer may provide false information and may not make the payment promised. It makes e-business risky. There may also be problems of virus and hacking. The risk of customer’s information being leaked is also a problem.
People Resistance: Some businesses have a set customer base and people are resistant to change their ways and adopt new technology which may impact the organisation’s plan to enter into e-business. Change is perceived as a source of stress and insecurity by many.
Ethical Concerns: Data theft or breach can be destructive for a company if it reaches the wrong person. There is a risk that data might be manipulated or exposed to the risk of Virus and hacking. Another risk involved is interception of data in the course of transmission. To protect data against this, cryptography is used.