Q.1. Why e-commerce has become so important in recent days of demonetisation and replacement of currency? Explain in short.
Ans. e-commerce has become so important in recent days of demonetisation because of following benefits:
(i) No physical currency is required to make payment for commerce transaction made. e-money or online payments are made which becomes convenient for buyers and sellers.
(ii) e-commerce creates a wide market because of wide use of internet globally, e-commerce has covered almost the entire world, so demonetisation has hardly affected business profits / operations.
(iii) e-commerce not only gives facility of online payment through debit card, credit card, EFT etc, but also inculcates a sense of financial discipline as well as security of transactions, proving very economical in the times of demonetisation.
Q.2. Define B2B commerce.
Ans. B2B commerce i.e. business to business involves e-commerce transactions between business firms using Electronic Data Interchange (EDI) technology. It involves the following transactions:
(i) Placing orders.
(ii) Monitoring production.
(iii) Delivery of components.
(iv) Movement of information, money transfer, etc.
(v) Creation of utilities.
(vi) Sending and receiving documents like purchase order or invoices.
Q. 3. Define e-business.
Ans. e-business, also known as electronic business, is the conduct of business on the internet. Its scope is not only confined to buying and selling of products but also servicing customers and collaborating with business partners. In simple words, it can be defined as the administration of conducting business via internet. The activities of a business are as follows:
(i) Business to Business commerce.
(ii) Consumer to Consumer commerce
(iii) Business to Consumer commerce.
(iv) Intra-business commerce.
Q.4. ‘e-business can be handled effectively by suitably qualified personnel and a welldesigned system’. Comment this statement.
Ans. This statement indicates that the following systems are necessary for successful e-business implementation:
(i) Proper computerised system: There should be a proper computerised system consisting of computer hardware and matching computer software.
(ii) Effective telecommunication: Effective telecommunication should be used as a channel of communicating with others.
(iii) Well-designed websites: Websites meant for e-business should be designed in such a way that it is effective in providing information to customers and serves as a means of product promotion.
(iv) Suitable payment mechanism: Payment mechanism involved in e-business should be such which suits the customers of different types.
Q. 5. Explain the need for outsourcing.
Ans. (i) Focused approach: Every business has limited resources and every manager has limited time. Outsourcing can help business to shift its focus from peripheral activities towards work that serves the customers and helps managers to set their priorities more clearly.
(ii) Make faster deliveries to customers: Outsourcing helps us to make quicker deliveries to customers. An outsourcing partner will be able to provide faster deliverables and one in turn will be able to make quick deliveries to his customers. It also helps to save time.
(iii) Operational efficiency: Outsourcing gives an organisation exposure to vendor specialised systems. Specialisation provides more efficiency that allows for a quicker turn around time and higher levels of quality.
(iv) Benefits of latest development: With the help of outsourcing the benefits of latest development could be derived by the concern in the most economical manner.
(v) Improved customer satisfaction: With timely delivery and high quality services one can impress his customers. Outsourcing leads to increased customer satisfaction and they will remain loyal to the organisation.
Q. 6. Define BPO. State the scope of BPO.
Ans. Business Process Outsourcing means contracting out non-core business activities to the outside agency expert and specialised in that area.
Scope of BPO
(i) Financial Services
(iii) Courier Services
(iv) Customer support Services
Q. 7. Explain briefly the suitability of outsourcing to captive units and to third party service providers.
Ans. If the task of performing some activity is common and sufficiently large to all subsidiaries of a parent company to be done at a centralised place. It may be beneficial to outsource it to a captive unit whereas if the activity is to be done at a smaller scale, to be done by different independent service provider then the firm may resort to third party outsourcing.
Q. 8. State any three differences between e-business and traditional business.
Ans. The three differences between e-business and traditional business are:
(i) The formation of e-business is easy while formation of traditional business is relatively difficult.
(ii) The start up and operating cost is low in e-business as assets are normally not purchased but business is done through network of relationships while in traditional business high expense incurred on start up and its operation.
(iii) Physical presence of seller or salesperson is not required in e-business while this is required in traditional business.
Q. 9. How does outsourcing represent a new mode of business?
Ans. Outsourcing has become emerging mode of business as it allows a company to focus on its core functions while leaving less important activities to specialised agencies. This has made industries focus on research and development for the continuous innovation of sophisticated products, increasing their need to outsource less important functions. Research has led to the development of better products for consumers, along with round-the-clock customer care services.
Q. 10. Describe briefly any two applications of e-business.
Ans. The two applications of e-business are:
(i) B2B: Business to Business commerce involves business transactions between business organisations. All business firms buy (or sell) raw materials, machines and other inputs and services to carry out their business processes. In doing so, firms have to maintain a good relationship with their distributors, suppliers and vendors. In this context, B2B e-commerce enables businesspersons to strengthen their communication and distribution networks, facilitating the smooth transfer of information, technological know-how and money.
(ii) B2C: Business-to-Customers involves transactions between a business firm and its customers. B2C e-commerce transactions not only include activities such as sale or purchase of goods and services but also other marketing activities through the online mode. It basically involves pre-sale activities (such as promoting products through advertisements) and presale services (such as providing product information and cash-on-delivery services) besides post-sale services (such as customer care services). e-commerce enables business firms to conduct these activities faster and at much lower costs.
Q. 11. What are the ethical concerns involved in outsourcing?
Ans. Outsourcing has also raised some ethical concerns. For reducing the overall cost of production, the industries of developed countries outsource their production activities to less developed and developing countries where labour is abundant and available at lower rates. The labour force in these countries are children or women and working conditions are unhygienic and even unsafe. The companies cannot do so in their developed home countries due to stringent laws forbidding use of child labour. This raises the ethical concern whether this sort of cost cutting by using child labour justified. Similarly there is a concern over the ethical aspect of outsourcing the work to countries where gender based wagediscrimination is done and hence women are paid lower wages.
Q. 12. Describe briefly the data storage and transmission risks in e-business.
Ans. Data storage risk: Data stored in a system is subject to various kinds of risks, especially during business transactions. If data gets into the wrong hands, it may be used by individuals to fulfil their own purposes. In addition, because of malicious and pirated computer software, the data stored may get corrupted by virus attacks.
Transaction risk: Online transactions are highly prone to the following risks.
(i) Default on order taking or giving: Such a situation arises when either the seller denies that the buyer has placed an order, or the buyer denies that he or she has placed an order.
(ii) Default on delivery: This refers to the situation where the wrong goods are delivered at the right place, or the right goods are delivered at the wrong place, or the goods are not delivered.
(iii) Default on payment: This refers to the situation in which the seller does not receive payment, while the buyer claims that he or she has made payment.