Long Answer Questions: Emerging Modes of Business | Business Studies (BST) Class 11 - Commerce PDF Download

Q1: What are the various requirements for the successful implementation of E-commerce?
Ans: Requirements for successful implementation of E-commerce: Resources Required for E-commerce: E-commerce has tremendous potential in the Indian economy. But it requires the following resources for its successful implementation:

• Computer Hardware: The first requirement for the implementation of e-commerce is the availability of adequate computer hardware. The computer system with the business must have adequate speed, memory, and nodes to handle the expected volume of business transactions. It should provide the necessary internet service provider and application service provides.
• Qualified Personnel: It is essential for the business firm to have technically qualified personnel to make use of computer networks and the internet for business transactions. In particular, the staff must be trained to handle trade inquiries, obtain and process orders from customers and ensure prompt deliveries of goods.
• Well-designed Website: Customers will gain access to the company’s website through their computers linked to any network. To carry out e-commerce, the business enterprise must develop a comprehensive website. This will facilitate communication with customers, other business enterprises, and even government departments. The information should contain business history, nature, and types of products offered along with pictures, graphs, and other technical details. The website may also make available price lists or catalogs of various products.
• Telecommunication Facilities: E-commerce can be carried out by a business enterprise if it has access to an effective telecommunication system. E-commerce will succeed only if adequate telephone lines and internet facilities are available and there is no interruption in these services.
  For the spread of e-commerce among lower-income groups and to the rural areas, it is essential that telecommunication and internet services are adequately available at a reasonable cost, otherwise, e-commerce will remain confined to rich people. The cost of hardware and the price of using the internet must be within the reach of low and middle-income groups.
• Reliable Payment System: For the success of e-commerce, the business enterprise needs to develop an efficient system of receiving payments for the goods sold. Electronic transfer of money from the customers should be facilitated. Similarly, there should be a facility for electronic transfer of any refund to the customers. For this, the business enterprise needs to make arrangements with commercial banks and credit card agencies. An inbuilt system of refunds, in case of the excess amount, is received should be created.

Q2: Write a note on the security of business transactions through E-commerce.
Ans: Security of business transactions in E-commerce: E-commerce can succeed when both buyers and sellers trust the system of exchange. This trust can be generated by ensuring the security of e-commerce transactions.
There are five essential elements for ensuring secure transactions over the Internet.

• Authenticity
• Integrity
• Confidentiality
• Non-reputability of origin
• Non-reputability of receipt
• Authority: Authority means enabling each party in a transaction to ascertain with certainty the identity of the other party.
• Integrity: Integrity implies honesty in dealings.
• Confidentiality: Confidentiality means the privacy of the transactions.
• Non-reputability of origin: Non-reputability of origin refers to ensuring that the parties to a transaction cannot subsequently deny their participation.
• Non-reputability of receipt: Non-reputability of receipt implies that the seller cannot subsequently deny the payment received.

These mechanisms depend upon certification by a trusted third party (such as a government body). Therefore, global electronic commerce requires the establishment of a global certification system.
In order to ensure the security and safety of e-transactions, the following points need to be observed and followed:

• Authorization and Authentication of the documents precisely having no possibility of fraud.
• Confidentiality of the message, that the contents of the message may not be scanned by an unauthorized party.
• The integrity of the message and originality of the contents should be observed.

Secure transactions require that all parties use up-to-date software and hardware. Since consumers are the weakest link, organizations offering e-commerce must take special care to alert them about possible security problems. For example, www.buyandhold.com issued a security alert because some older versions of Netscape Communicator and Microsoft Internet Explorer included a root CA certificate which was set to expire at the end of 1999. The alert encouraged visitors to upgrade their browsers.
It is necessary to make customers feel comfortable about ordering online.

Q3: What are the various opportunities or benefits of E-commerce in the modern business world?
Ans: Opportunities and benefits of E-commerce: E-commerce makes it possible to work round the clock and around the world. It enables companies to be more efficient and flexible in their internal operations, to work more closely with their suppliers, and to be more responsive to the needs and expectations of their customers.
It allows companies to select the best suppliers regardless of their geographical location and to sell to a global market. It also offers business concerns more cost-efficient and time-efficient means of working with customers, suppliers, and development partners.
E-commerce offers several opportunities to suppliers and commensurate benefits to customers. These are given below:

• Global reach/Global choice or access: The Internet is true without boundaries. The boundaries of electronic commerce are not defined by geography or by national borders, but rather by the coverage of computer networks. Since the most important networks are global presence and to conduct business worldwide.
  Access to the global marketplace helps to improve the operations of business firms. It would not be an exaggeration to say that in the absence of the internet, Globalisation would be restricted in scope and speed.
  The corresponding customer benefit is a global choice: a customer can select from all potential suppliers of a required product or service, regardless of their geographical location.
  
• Improved competitiveness/Quality of Service: Electronic commerce enables suppliers to improve competitiveness by becoming “closer to the customer”. As a simple example, many companies are employing electronic commerce technology to offer improved levels of pre-and post-sales support, with increased levels of product information, guidance on product use, and rapid response to customer inquiries.
  The corresponding customer benefit is improved quality of service. Internet is responsible for the popularity of the phrase “networked individuals and firms are more efficient than networked individuals and firms.”
• Mass Customisation/Personalised Products and Services: With electronic interaction, suppliers are able to gather detailed information on the needs of each individual customer and automatically tailor products and services to those individual needs. This results in customized products comparable to those offered by specialized suppliers, but at mass-market prices.
  One simple example is an online magazine that is tailored for the individual reader on each access to emphasize articles likely to be of interest and exclude articles that have already been read. Imagine a restaurant that does not have any requirements of physical space, but an online menu can be presented.
  Customers visit your websites, decides the menu, place the order, food is delivered and the payment collected on an electronic clearing system.
• Shorten or Eradicate Supply Chains/Rapid Response to Needs: E-business is truly a business as enabled and enhanced by electronics and offers the advantages of accessing anything anywhere, anytime. Electronic commerce often allows traditional supply chains to be shortened dramatically. There are many established examples where goods are shipped directly from the manufacturer to the end consumer by-passing the traditional staging posts of wholesaler’s warehouse, retailer’s warehouse, and retail outlet.
  (Typically, the contribution of electronic commerce is not in making such direct distribution feasible since it could also be achieved using paper catalogs and telephone or postal ordering: but rather in making it practical in terms of both cost and time delays.)
  The extreme example arises in the case of products and services that can be delivered electronically when the supply chain can be eradicated entirely. This has massive implications for the entertainment industries (film, video, music, magazines, newspapers), for the information and “detainment” industries (including all forms of publishing), and for companies concerned with the development and distribution of computer software.
  The corresponding customer benefit is the ability to rapidly obtain the precise product that is required, without being limited to those currently in stock at local suppliers.
• Substantial Savings/Substantial Price Reductions: One of the major contributions of electronic commerce is a reduction in transaction costs. While the cost of a business transaction that entails human interaction might be measured in dollars, the cost of conduction a similar transaction electronically might be a few cents or less. Hence any business process involving “routine” interactions between people offers the potential for substantial cost savings, which can, in turn, be transacted into substantial price reductions for customers.

Q4: What is the outsourcing of services? Mention in detail the various services which may be outsourced by a business unit.
Ans: Concept of outsourcing of services: The term ‘outsource’ means getting something from external sources rather than creating it within the organization. For instance, a firm may outsource the ‘advertising activity’ to an advertising agency instead of setting up its own advertising department. Similarly, other services may also be outsourced for better quality service and also to achieve economy.
This practice is called Business Process Outsourcing (BPO). The basic feature of BPO is that’ companies hire out.on contracting those services or tasks which are performed on regular basis’. For example, a business enterprise may outsource the employment of personnel, training of personnel, and payroll accounting to a specialized service provider
Traditionally, industrial organizations have faced the problem of ‘Make or Buy’ certain components or parts. They can compare the costs of both in-house production and outsourcing the components while taking such decisions.
Types of Services: There are several types of services that are offered by business firms to their customers or clients.
The significant services include the following:
(a) Financial services such as underwriting, issue management.
(b) Advertising service.
(c) Customer support services.
(d) Courier service.
(e) Communication services such as STD, ISD, local phone, etc.
(f) Hotel services.
(g) Airlines services.
(h) Banking services.
(l) Health services.
Outsourcing of Financial Services: Big companies require to obtain several financial services from outside or external sources (i.e, outsourcing) because they don’t possess the infrastructure and capability to perform such services.
These include the following:

• Underwing to Securities Most of the companies get their new issues of shares underwritten with the underwriters. Underwriters give a guarantee to the company that entire new issues will be sold to the public. In case, some securities are not subscribed to by the public, the underwriters undertake to purchase them. Underwriters get a small commission per share for their services.
• Merchant Banking: Merchant bankers sponsor capital issues of companies. They help the company in drafting the prospectus, and application forms, compliance with legal formalities, the appointment of the registrar to deal with the share applications and transfers, a listing of securities, the arrangement of underwriters, selection of brokers, publicity, etc.
• Registration of shares: Specialized firm known as registrar to issues deal with share application, registration of share, transfers, etc.
• Depositories: They hold shares of shareholders of different companies in dematerialized (intangible or paperless) form.

Advertising Services: Business firms depend upon advertising agencies for designing, developing, and disseminating advertisements for their products and services. All big firms need to advertise their goods and services which require specialized handling. They can outsource this assignment to advertising (ad) agencies. Ad agencies help their clients in preparing the advertisement budget, advertisement program, and advertisement copy.
They prepare ad films, documentaries, and other promotional material on behalf of their clients. They also help the clients in choosing the ad media such as TV, radio, newspaper, hoarding, etc.
By entrusting the advertisement assignment to an ad-agency, the business firm is saved of the botheration and cost of employing a copywriter, film-maker, cameraman, and others. This turns out to be economical for the firm in the long-run. Outsourcing also helps to make use of the services of experts of the ad-agency.
Courier Service: Courier service involved delivery of letters, documents, and small parcels from one place to another through private operators known as couriers or courier companies.
The reasons for the popularity of courier services are as under:

• Courier service is faster and more efficient as compared to the postal service.
• Courier service is cheaper as compared to the postal services.
• Courier service is quite reliable.
• It provides personalized services to the clients.
• There is no long queue at the courier companies as is the case with the post offices.
• Courier companies provide the facility collecting the letters from the premises of their regular clients for onward delivery.

Types of Courier Services: Courier forms such as DTH, Overnite Express, and others collect all articles and dispatches to their destinations.
Messenger Service: Under this, letters and documents could be delivered at the local and regional levels generally within a period of 24 hours.
Inter-State Service: This courier service is intended to deliver letters and documents from one state to another within a period of 24 to 48 hours.
Overseas Desk-to-Desk Courier Service: This service offers desk-to-desk document deliveries using air-courier services. Several international couriers with their own fleet of aircraft are operating in this field such as DHL Couriers, Transworld Couriers, Blazeflash Couriers, Express Air, United Parcel Service (UPS), etc.
Customer Support Services: ‘Customer is like a precious ornament which should not be stolen by anyone else.’ The above saying clearly states the importance of customer satisfaction and delight. It is the dissatisfied customer who does not repeat orders with the same seller. He may be dissatisfied because of some problem with the product or because of lack of care in attending to his complaints or inadequate after-sale service.
The term ‘after-sales service’ means responding to a customer with a problem. The problem may relate to ‘product complaints’ during the warranty period and even after that, spare parts, etc. This requires an organized system of efficient customer support services. Customers need home delivery service, repair, and maintenance of consumer durables, information and counseling about brands, and best meet of their needs.
In the present-day competitive environment, every business must take care of the grievances/complaints of the customers and do the needful to please the customers.
There are two options as regards provision of customer support services, namely, creation of customer support services department within the organization, or entering into an arrangement with an outside agency to provide after-sales services on behalf of the organization.
Traditionally, business organizations have organized their own customer support services departments. Such a department is manned by trained personnel to attend to the complaints of their customers.
The quality of after-sales services by this department determines the image of the organization. Every organization can’t afford to have a separate customer support service department because of a shortage of funds and inadequate infrastructure.
In such a case, it is advisable to outsource various customer support services from a reputed agency. Such an agency would take operational responsibility for providing customer support services on behalf of the organization against a stipulated amount of payment every year. If the agency or service provider fails to provide efficient and satisfactory services, the organization can cancel the contract with it and engage some other agency.
Generally, the customers of products like consumer durables (Fridge, TV, Air Conditioner, etc.) are widely spread throughout th€ country. They might need repair services during the ‘warranty period’ or even after that. If such services are not easily available, the image of the manufacturer and his brand will go down in the market. In the past, some TV manufacturers in India failed because they could not provide satisfactory after-sales services to their customers.
In such a situation, it is better to outsource such services to some reputed service provider or agency. The manufacturer will be saved from the botheration of engaging staff and creating the infrastructure for providing after-sales services to the customers.