Brief of the Chapter - Emerging Modes of Business

Table of Contents
1. CHAPTER 5: Emerging Modes of Business
2. Emerging Modes of Business - Meaning
3. Scope of e-Business
4. Benefits of e-Business
5. Resources Required for Successful e-Business Implementation
6. Online Transactions
7. Outsourcing or Business Process Outsourcing (BPO)
8. Questions
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CHAPTER 5: Emerging Modes of Business

Emerging Modes of Business - Meaning

In the age of the Internet, commerce has become closely linked with digital technology. This connection has given rise to a new form of commercial activity called electronic commerce (e-commerce) or electronic business (e-business). Through e-business, firms can open virtual shops on the Internet, reach customers across the globe, display product information, accept orders, arrange delivery and receive payments while customers remain at home. E-business covers not only buying and selling of goods but also the electronic delivery of services and information.

Scope of e-Business

The scope of e-business can be understood from the view of parties involved in electronic transactions. Common categories include:

• B2B Commerce (Business-to-Business) - Electronic transactions between two business units or firms. For example, a manufacturer placing orders with a supplier over an online procurement portal.
• B2C Commerce (Business-to-Customer) - Electronic transactions between a firm and end consumers. Customers can search product information, place orders, receive deliveries and make payments online. Firms can gather feedback, run surveys and monitor customer satisfaction through online channels.
• Intra-B Commerce (Within Business) - Electronic transactions and communications between departments or units of the same organisation. For example, the marketing department using an internal portal to request customised products from production according to customer requirements.
MULTIPLE CHOICE QUESTION
Try yourself: What is the scope of e-Business?
A
B2B Commerce
B
B2C Commerce
C
Intra-B Commerce
D
All of the above
View Solution
Correct Answer: DHide Explanation ⌃
- The scope of e-Business includes various modes of commerce such as B2B Commerce, B2C Commerce, and Intra-B Commerce.
- B2B Commerce involves electronic transactions between two firms or business units, such as a producer firm and a supplier firm.
- B2C Commerce refers to business to customer transactions, where a firm interacts with customers through the internet, allowing them to seek information, place orders, make payments, etc.
- Intra-B Commerce involves electronic transactions between different departments within the same business, enabling constant interaction and customization of goods as per customer requirements.
- Therefore, the scope of e-Business encompasses all these modes, making Option D the correct answer.
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• C2C Commerce (Customer-to-Customer) - Transactions between individual customers, often facilitated by an online marketplace. This is useful for buying and selling goods for which organised markets may not exist, for example second-hand cars sold through online classified sites.

Benefits of e-Business

The major benefits of e-business include:

• Worldwide reach - The Internet extends a firm's market beyond local and national boundaries, helping to attract new customers and increase sales.
• Elimination of middlemen - E-business enables direct contact between producers and customers, reducing the role of wholesalers and retailers in many cases and often lowering consumer prices.
• Easy distribution of information and services - Many types of information and digital services can be delivered electronically, simplifying distribution and lowering costs.
• Lower investment required - Compared with setting up a large physical showroom or many branches, an e-business can start with relatively low capital: a computer, Internet access and a website.
• Easy launch of new products - Firms can introduce new products quickly online by providing full product details on their website or marketplace listings. Customers and business partners can learn about new offerings without visiting physical outlets.

Resources Required for Successful e-Business Implementation

To implement e-business successfully, several resources are essential:

• Computer systems - Computers, servers and other hardware form the basic platform for e-business operations.
• Internet connection - Reliable and sufficiently fast Internet connectivity is essential for accessing online markets, processing transactions and communicating with customers and suppliers.
• Web page or Website - A well-designed website (home page) is crucial. It displays products, descriptions, prices, terms and conditions, contact details and provides mechanisms for placing orders.
• Effective telecommunication systems - Telephony, broadband, mobile networks and related infrastructure support online operations and customer contact.

Online Transactions

Online transaction refers to the entire process of receiving information about goods and services, placing an order, receiving delivery and making payment through the Internet. Under this system, buying and selling of goods, information and services can be carried out electronically.

Payment Mechanisms

Payments for online purchases may be made in several ways:

• Cash on Delivery (CoD) - The customer pays in cash (or sometimes by card at delivery) when the goods are physically delivered.
• Net banking / Electronic Fund Transfer (EFT) - Customers transfer funds electronically from their bank account to the vendor's account over the Internet.
• Credit and Debit Cards - Customers use card details (number, issuing bank, validity) to pay online via secure payment gateways.
• Mobile payment systems and UPI - Payments using mobile apps, digital wallets and unified payments (UPI) enable quick transfers and are now widely used.

Security and Safety of e-Transactions

Ensuring security of online transactions is vital. Common measures include:

• Secure communication protocols - Use of HTTPS, SSL/TLS encryption and secure payment gateways to protect data transmitted over the Internet.
• Authentication and verification - Confirming customer and payment details before processing orders; use of two-factor authentication (2FA) and OTPs (one-time passwords).
• Anti-virus and firewall protection - Installing and updating anti-virus software, firewalls and intrusion detection systems to protect systems and data.
• Regulatory and law-enforcement support - Setting up cyber-crime cells and legal frameworks to investigate hacking, fraud and other offences and to take action against perpetrators.
• Compliance standards - Following recognised standards (for example PCI DSS for card payments) to ensure safe handling of payment data.

Outsourcing or Business Process Outsourcing (BPO)

Outsourcing means obtaining certain business functions or services from an external organisation instead of performing them in-house. When these outsourced services are part of operational business processes delivered by third parties, this activity is called Business Process Outsourcing (BPO).

As firms grow in scale and complexity, performing all activities internally can become difficult and costly. Outsourcing allows companies to benefit from the specialisation and expertise of outside vendors.

Need for BPO

BPO is adopted for several reasons:

• Obtaining good quality services - Specialist external providers often deliver higher quality and more efficient services than a firm could develop internally.
• Avoiding fixed investment - Outsourcing avoids the need to create new departments or invest heavily in infrastructure and equipment for non-core activities.
• Smoother running of the business - Outsourcing routine and support tasks enables management to focus on core activities and strategic decisions.

Scope of BPO

Modern businesses outsource a wide range of services. Important outsourced services include:

• Financial services - Accounting, payroll processing, taxation compliance and financial reporting.
• Advertising services - Creative agencies and digital marketing firms manage advertising campaigns, content creation and media planning to improve sales and brand image.
• Courier and logistics services - Delivery of goods, documents and parcels between the company and customers is often handled by specialised courier firms.
• Customer support services - Call centres and help-desk providers manage pre-sales queries, order tracking and after-sales support for products such as televisions, refrigerators and air conditioners.

Questions

1. What is electronic business?
2. What are some limitations of e-businesses?
3. How does e-commerce make mass customisation possible?
4. Explain briefly the need for outsourcing services.
5. Write about advertising services and courier services.
6. Name the essential resources required for e-business.
7. Define online transactions.