NCERT solutions class 11 Business Studies Chapter 5 Emerging Modes of Business

Chapter 5: Emerging Modes of Business

Part I: Short Answer Questions

1. State any three differences between e-business and traditional business. Traditional Business vs. E-Business

Here are the major three differences between traditional and e-Business:

Basis of Comparison	Traditional Business	E-Business
Ease of formation	Difficult to form as there are many formalities for setting up such a business.	Relatively easy to set up.
Setup cost	Very high-cost upfront.	Minimal setup cost.
Market reach	It is restricted only to the area in which it is established.	Nationwide/Global reach as people are connected on the web.

2. How does outsourcing represent a new mode of business? Outsourcing as a Modern Business Paradigm

Outsourcing refers to the activity of handing over non-core activities of the organisation to an external organisation which are specialised in providing such services.

Strategic Benefits:

• Focus on Core Competency: It helps the organisation to concentrate more on their core business.
• Innovation and Utility: It allows companies to develop innovative solutions that make its product more useful for consumers.

Because it fundamentally changes organizational structures by shifting internal tasks to specialized external entities, outsourcing has become a vital new form of business in the current age.

3. Describe briefly any two applications of e-business. Key Applications of E-Business

E-business has revolutionized commerce through various applications. Two major applications are:

a) E-Procurement:

This involves transactions that take place on the web between business firms who are either buyers or sellers. The transactions also involve reverse auctions that involve multiple sellers looking to sell their products to one buyer. In a digital marketplace, there exist many players in the form of multiple buyers and sellers or a single seller.

b) E-Delivery:

This process involves the electronic transfer of movies, games, or software, which is delivered directly to the system of the consumer using high-speed data services. Payments are processed over the internet.

4. What are the ethical concerns involved in outsourcing? Ethical Dilemmas in Outsourcing

While outsourcing provides economic benefits, it raises significant moral questions. The ethical concerns involved are as follows:

1. Exploitation of Vulnerable Labor:

To cut the cost of production, industries present in developed countries shift their production houses to economically weak countries, where labour is cheap, and children and women are exploited. Such steps raise major ethical concerns about outsourcing.

2. Wage Discrimination:

There exists gender-based discrimination in wages among men and women in developing countries, and hence women get a lesser amount of money for working as labour. This business practice raises serious questions and is a matter of profound concern for outsourcing services.

5. Describe the data storage and transmission risks in e-business briefly. Cybersecurity Risks in E-Business

Online transactions pose significant risks to both businesses and consumers.

Data Storage Risks:

Data is exposed to a number of risks while it is stored. It can result in important information being stolen or intentionally modified with the help of hacking or viruses. The data may get corrupted due to such cyber-attacks.

Transmission & Transaction Risks:

The following types of risks can happen when data or transactions are transmitted online:

1. Default on Order: If a seller denies that an order was placed by the buyer or vice-versa.
2. Default on Delivery: Goods may be delivered to the wrong address, or the goods may not get delivered at all.
3. Default on Payment: In some cases, the seller denies receiving the payment while the amount is already debited from the receiver's account.

Part II: Long Answer Questions

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

Business has gone through numerous changes in the last decade and has evolved. The manner in which business is conducted is known as the "mode of business".

The Concept of Emerging Modes:

E-business and Outsourcing are known as the emerging modes of business as they have brought a revolution in the way business is conducted.

E-business deals with conducting business using the internet. It deals with customers and suppliers over the web, and includes electronic inventory management, warehousing, and software development.

Outsourcing is the process of handing over non-core functions of an organisation to some other organisation that has expertise in such areas. It reduces the company's budget for maintaining such manpower in-house and benefits the organization through the enhanced efficiency of specialized employees.

Factors Driving the Trend:

Here are some factors which are responsible for the increasing importance of such trends:

1. Process Innovation: New ideas for doing work, along with innovation, have brought about significant improvement in business processes.
2. Consumer Awareness: Consumers are more aware today, and the demand for higher quality, lower prices, and better customer care has increased.
3. Technological Evolution: Businesses need to evolve continuously with new technologies in order to remain presentable and competitive in the market.

2. Elaborate on the steps involved in online trading. The Mechanism of Online Trading

Online trading involves a systematic, digital process. The steps involved are:

Step A: Registration

Register for online shopping with the vendor and set up secure passwords to ensure the safety of the account and personal information.

Step B: Placing an Order

Browse through the digital catalog, select the required products, add them to the digital cart, and place the order for the items.

Step C: Payment Mechanism

Payment is done through various online purchase mechanisms such as cash on delivery, electronic funds transfer, credit or debit cards, digital cheques, and net banking.

3. Evaluate the need for outsourcing and discuss its limitations. Evaluating Outsourcing: Needs and Limitations

Outsourcing refers to the process where non-core business activities are given on contract to agencies specialised in such work, allowing the business to concentrate on areas of prime importance.

The Need/Advantages of Outsourcing:

1. Focus on Core Competency: It helps an organisation shift focus to core areas, helping them come up with more innovation in the market.
2. Increased Efficiency: The work that is outsourced to a specialist organisation helps in drastically increasing the operational efficiency of the parent organisation.
3. Cost Reduction: A large-scale organisation will find it difficult to cut down costs in back-office operations if the office is located in a high-cost native country; outsourcing makes the same work highly economical.

The Limitations of Outsourcing:

1. Confidentiality Risks: Information leaks can occur if the external organisation performing the function chooses to share sensitive data with rival organisations.
2. Quality Compromise: Quality may suffer if the outsourced agency prioritizes earning more profit over maintaining service standards by cutting corners.
3. Ethical and Social Unrest: Countries to which work is outsourced may experience social unrest or disturbances, and it can cause job losses in the home country.

4. Discuss the salient aspects of B2C commerce. Salient Features of B2C (Business-to-Consumer) Commerce

B2C commerce involves interactions directly between a business and the final consumer. Here are its salient aspects:

1. 24/7 Accessibility: It provides consumers with round-the-clock access with the help of regional and global support centres.
2. Global Reach: Products can be promoted across geographies, resulting in reaching a massively expanded consumer base.
3. Cost-Effective Marketing: The cost of advertising is significantly lower as it utilizes online promotional tools such as social media and dedicated websites.
4. Flexible Payment Methods: Consumers are able to pay using multiple options such as debit cards, credit cards, net banking, or cash on delivery. Attractive EMI options are also provided.
5. Mass Customization: Customers can easily get products customised to their specific tastes and preferences before ordering.

5. Discuss the limitations of the electronic mode of doing business. Are these limitations severe enough to restrict its scope? Give reasons for your answer. Limitations of E-Business and Future Scope Inherent Limitations of Electronic Business:

1. Security Threats: E-business is highly prone to cyber threats in the form of phishing, unknown fraudulent sellers, virus attacks, and the severe leakage of card details.
2. Lack of Personal Touch: Unlike traditional businesses, buyers and sellers are not physically present. Consumers cannot touch or feel the product before buying, which is why in some areas, people still prefer traditional methods.
3. Digital Divide: Online businesses require a basic knowledge of computers or smartphones. It can be quite confusing for people who are not technologically savvy. Furthermore, issues like server crashing and poor internet connectivity deter consumers.

Is the Scope Restricted? (The Future Outlook):

No, these limitations are not severe enough to restrict its long-term scope.

Despite the challenges, e-commerce is rapidly gaining popularity. Major advancements are being made on the technology front, and extensive efforts are underway to educate the public about internet-enabled technologies. Websites have become incredibly user-friendly, bridging the gap created by the lack of personal touch. Moreover, the deep penetration of mobile broadband and 5G across the length and breadth of India will only accelerate the expansion of e-commerce, making online purchasing a standard norm rather than an exception.