Detailed, Step-by-Step NCERT Solutions for 11 Business Studies Chapter 5 Emerging Modes of Business Questions and Answers were solved by Expert Teachers as per NCERT (CBSE) Book guidelines covering each topic in chapter to ensure complete preparation.
Emerging Modes of Business NCERT Solutions for Class 11 Business Studies Chapter 5
Emerging Modes of Business Questions and Answers Class 11 Business Studies Chapter 5
Tick mark (✓) the most appropriate answer to the following questions :
E-commerce does not include
(a) A business’s interactions with its suppliers.
(b) A business’s interactions with the customers.
(c) Interactions among the various departments within the business.
(d) Interactions among the geographically dispersed units of the business.
(c) Interactions among the various departments within the business.
(a) Restricts only to the contracting out of Information Technology Enabled Services (ITES).
(b) Restricts only to contracting out of non-core business processes.
(c) Includes contracting out of manufacturing and R&D as well as service processes – both core and non-core – but rescticts only to domestic territory.
(d) Includes off-shoring.
(b) Restricts only to contracting out of non-core business processes.
The payment mechanism typical to e-business
(a) Cash on Delivery (COD)
(c) Credit and Debit cards
A call centre handies
(a) Only in-bound voice based business
(b) Only out-bound voice based business
(c) Both voice based and non-voice based business
(d) Both customer facing and back-end business
(a) Only in-bound voice based business
It is not an application of e-business
(a) Online bidding
(b) Online procurement
(c) Online trading
(d) Contract R&D
(d) Contract R&D
Short Answer Questions
State any three differences between e-business and traditional business.
e-Business and Traditional Business – e-business may be defined as the conduct of industry, trade and commerce using the computer networks. It includes all types of business functions such as production, finance, marketing and personite administration as well as managerial activities like planning, organizing and controlling can be carried out over computer networks.
A firm’s e-transactions and network can be visualised as extending into three directions i.e. B2B interactions with other businesses, B2C, business interactions with customers, and intra B commerce.
Difference between Traditional and e-Business
|Basis of distinction||Traditional business||e-business|
|Ease of formation||Difficult||Simple|
|Physical presence||Required||Not required|
|Locational requirements||Proximity to the source of raw materials or the market for the products||None|
|Cost of setting up||High||Low as no requirement of physical facilities|
|Operating cost||High due to fixed charges associated with investment in procurement and storage, production, marketing and distribution facilities||Low as a result of reliance on network of relationships rather than ownership of resources|
|Nature of contract with the supplier and the customer||Indirect through Intermediaries||Direct|
|Nature of internal communication||Hierarchical – from top level management to middle level management to lower level management to operatives||Non-hierarchical. allowinig direct vertical, horizontal and diagonal communication|
|Response time for meeting customers’/ internal requirements||Long||Instantaneous|
|Shape of the organisational structure||Vertical/tall, due to hierarchy or chain of command||Horizontal/flat due to directness of command and communication|
How does outsourcing represent a new mode of business?
Outsourcing represents a new mode of business as it is a departure from the traditional thinking of self-sufficiency in business. It refers to a long-term contracting out of business activities to captive or third party specialists with a view to benefitting from their experience, expertise, efficiency, and even investment.
Generally, the non – core business activities are outsourced but of late even some of the core activities have started being outsourced. Outsourcing comprises four key segments: contract manufacturing, contract research, contract sales and informatics.
Global competitive pressures for higher quality products at lower costs, demanding customers and emerging technologies have induced a re-look at business processes and hence resulted in outsourcing as a new mode of business which is now being reported to not out of compulsion but out of choice.
Describe briefly any two applications of e-business.
e-business includes not only e-commerce but also other electronically conducted business functions such as production, inventory management product development, accounting over finance and human resource management, e-business is, therefore, clearly much more than buying and selling over the internet.
The applications of e-business can be presented in these class of business situations such as:
(i) Business to Business (B2B) Application : In such situation, business transactions take place between different business firms. B2B transactions are in practice in several firms including Maruti Udyog, Telco, Bajaj Auto, Kinetic etc. ‘
(ii) Business to Consumer (B2C) Application : Under this situation, transactions take place between business firm and consumers. In B2C transactions firm sell physical goods to consumers, online in personalised environment. In this technique, each transaction represents an individual buying online. In India, Amul Com. sells the Amul brand products online under B2C mode of transaction.
(iii) Consumer to Consumer (C2C) Application : In C2C commerce, the seller may sell his services/goods by providing information on the net. This information may be evaluated by a requester/buyer to carry out the transaction. Similarly, the buyer may also give his requirements to select the desired services.
What are the ethical concerns involved in outsourcing?
Outsourcing has raised certain ethical concerns which need to be considered. In search of cheap labour, manufacturing processes are being outsourced to developing countries where they use child labour/women in the factories, and working conditions are unhygienic and even unsafe.
The companies cannot do so in their developed home countries due to stringent laws forbidding the use of child labor. This raises the ethical concern of 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 wage – discrimination is done and hence women are paid lower wages.
Describe briefly the data storage and transmission risks in e-business.
Online transactions (e-business) are prone to a number of risks. Risks refer to the probability of any mishappening that can result into financial, reputational and psychological losses to the party involved in the transaction. The major risks in e-transactions are data storage and transmission risks.
Data storage and transmission risks – Data stored in the systems and ex-route is exposed to a number of risks. Many times vital information may be missing or changed to pursue selfish motives or for some pleasure. The word VIRUS stands for Vital Information Under Siege is a program which replicates itself due to series of wrong command on the other systems of computer. Installing and timely updating anti¬virus programmes and scanning the files and disks with them provides protection to data files, folders and systems from virus attacks.
Data may be interpreted in the course of transmission. For this, one can use cryptography. It is the art of protecting information by transforming it into an unreadable format called cyphertext.
Long Answer Questions
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. ‘
Discuss the factors responsible for the growing importance of these trends. During the last decade or so the way of doing business has undergone fundamental changes. The manner of conducting business is referred to as the mode of business’, e-business and outsourcing are referred to as ‘emerging modes of business’ as these have brought about new changes in the way or manner in which business is conducted and it is believed that these trends are likely to continue, an e-business may be defined as the conduct of industry, trade and commerce using the computer networks, e-business covers a firm’s interactions with its customers and suppliers over the internet and also other electronically conducted business functions such a production, inventory management, product development, accounting and finance and human resource management.
Outsourcing represents a new model of business as it is a departure from the traditional thinking of self-sufficiency in business. It refers to a long-term contracting out of business activities to captive or third party specialists with a view to benefitting from their experience, expertise, efficiency and, even investment.
Generally, the non – core business activities are outsourced but of late even some of the core activities are being outsourced. Outsourcing comprises four key segments; contract manufacturing, contract research, contract sales and informatics.
The various factors responsible for the growing importance of these trends are:
- Business managers and thinkers keep evolving newer and better ways of doing things in an effort to improve the business processes.
- Business firms have to strengthen their capabilities of creating utilities and delivering Value successfully to meet the competitive pressures.
- Consumers have become far more demanding than ever in terms of higher quality, lower prices, speedier deliveries and better customer care,
- Business as an activity has to keep evolving by adopting new trends in order to benefit from emerging technologies.
Elaborate the steps involved in On-line Trading.
The three stages involved in online transactions. Firstly, the pre-purchase or sale stage including advertising and information seeking. Secondly, the purchase or sale stage comprised of price negotiation, closing of purchase or sales deal and payment and thirdly, the delivery stage of the transaction. Following are the steps involved in online transactions:
(i) Registration – Registration is required for online transaction with the vendor by filling up a registration form. Among various details in account, a ‘password’ for selecting your account and ‘shoppingcart’ are password protected. Otherwise, anyone can logging using your name and shop in your name. .
(ii) Placing an order – After registration one can pick and drop the items in the shopping cart. Shopping cart is an online record of what one have picked up while browsing the online store. After being sure of what one want to why, he can ‘checkout’ and choose his payment options.
(iii) Payment mechanism – Payment under online transactions may be made in a number of methods such as :
Cash on Delivery (COD) : As the name suggest, payment is made in cash for online transactions when physical delivery of goods reached.
Cheque: Another way of payment is picking up of cheque from the customer’s end. On realisation of payment of cheque, that goods may be delivered.
Net banking transfer: In today’s world, banks provide to their customers the facility of electronic transfer of funds over the net. In such case, the buyer may transfer the amount for the agreed price of the transaction to the account of the online vendor, so that the vendor may proceed to arrange for delivery of goods.
Credit or Debit cards: Debit or credit cards also known as ‘plastic money’ are mostly used as a medium of exchange in online transactions. Almost 99% of online consumer transactions are executed with the help of these cards.
The cardholder is authorised to purchase on credit, the amount due from the cardholder is assumed to be paid by the issuing bank of these cards, who later transfers the amount involved in the transactions to the credit of the vendor. The buyer’s account is debited and the amount of bank will be received generally in instillments at the convenience of the buyers.
Digital cash: This form of money exists only in cyberspace. It has no real physical properties but offers the ability to use real currency in an electronic format.
Evaluate the need for outsourcing and discuss its limitations.
(i) Focusing of attention:
Business firms are realizing the usefulness of focusing on just a few areas where out the rest of the activities to their outsourcing partners. In order to create utilities or value, a business engages in a number of processes, viz., purchase and production, marketing and sales, R&D, accounting and finance, HR and administration, etc., firms need to define or redefine themselves.
They, for example, need to consider whether they would like to be called manufacturing or marketing the scope of business enables them to focus their attention and resources on select activities for better efficiency and effectiveness.
(ii) Quest for excellence:
Outsourcing enables firms to pursue excellence in two ways. One they excel in the activities that they can do the best by virtue of limited focus. And they excel by extending their capabilities through contracting out the remaining activities to those who excel in performing them In the quest for excellence, it is necessary not only to know what you would like to focus on but also what you would like others to do for you.
(iii) Cost reduction:
Global competitiveness necessitates not only global quality but also global competitive pricing. As the prices turn southwards due to competitive pressures, the only way to survival and profitability is cost reduction. Division of labour and specialization, besides improving quality, reduces cost too. This happens due to the economies of large scale accruing to the outsourcing partners as they deliver the same service to a number of organizations.
(iv) Growth through alliance:
To the extend, you can avail of the services of others’, your investment requirements are reduced, others have invested in those activities for you. Even if you may like to have a stake in the business of your outsourcing partners, you profit from not only the low-cost and better quality services provided by them you but also by virtue of a share in the profit from the overall business they do.
Therefore, you can expand rapidly as the same amount of invisible funds result in the creation of a large number of businesses. Apart from financial returns, outsourcing facilities inter-organizational knowledge sharing and collaborative learning. This may also explain the reasons why the firms today are outsourcing not only their routine. Non-core processes. But also seeking to benefit from outsourcing such strategic and core processes as Research and development.
(v) Fillip to economic development:
Outsourcing, more so offshore outsourcing, stimulates entrepreneurship, employment, and exports in the host countries. In India in the IT sector alone, for example, there has been such a tremendous growth of entrepreneurship, employment, and exports that today we are the undisputed leaders as far as global outsourcing in software development and IT-enabled services are concerned. Presently, we have 60 percent of the $ 150 billion global outsourcing share in the informatics sectors.
But there are certain limitations of outsourcing as given below:
Outsourcing depends on sharing a lot of vital information and knowledge. If the outsourcing partner does not preserve the confidentiality, and, say, for example, passes it on to competitors, it can harm the interest of the party that outsources its processes. If outsourcing involves complete processes/products, there is a further risk of the outsourcing partner starting up a competitive business.
As the firms that outsource seek to lower their costs, they try to get the maximum benefit from the low-cost manpower of the host countries. Moreover, it is observed that whether in the manufacturing sector or the IT-sector, what is outsourced is the kind of components or work that does not much build the competency and capability of the outsourcing partner beyond the skills needed to comply with a rigidly prescribed procedure/ method. So, what the firm that go in for outsourcing look for is the ‘doing’ skills rather than the development of the ‘thinking’ skills.
(C) Ethical concerns:
Think of a shoe company that, in order to cut costs, outsources manufacturing to a developing country where they use child labour/women in the factories. Back home, the company cannot do so due to stringent laws forbidding the use of child labour. Is cost-cutting by using child labour in countries where it is not outlawed or where the laws are ‘weak’, ethical? Similarly, is it ethical to outsource the work to countries where there exists wage-discrimination on the basis of the sex of the worker?
(D) Resentment in the home countries:
In the course of contracting out manufacturing, marketing, Research, and Development or IT-based services, what is ultimately contracted out is ‘employment’ or jobs. This may cause resentment back in the home country (i.e., the country from which the job is being sourced out) particularly if the home country is suffering from the problem of unemployment.
Discuss the salient aspects of B2C commerce.
B2C Commerce: As the name implies, B2C (business-to-customers) transactions have business firms at one end mid its customers on the other end. Although what comes to one’s mind instantaneously is online shopping, it must be appreciated that ‘selling’ is the outcome of the marketing process.
And, marketing begins well before a product has been sold. B2C commerce, therefore, entails a wide gamut of marketing activities such as identifying activities, promotion, and sometimes even delivery of products (e.g.., music or films) that are carried out online. E-commerce permits the conduct of these activities at a much lower cost but high speed.
For example, ATM speeds up the withdrawal of money. Customers these days are becoming very choosy and desire individual attention to be given to them. Not only do they require the product features to be tailor-made to suit their requirements, but also the convenience of delivery and payment at their pleasure. With the onset of e-commerce, all this has become a reality.
Further, the B2C variant of e-commerce enables a business to be in touch with its customers on a round-the-clock basis. Companies can conduct the online surveys to ascertain as to who is buying what and what the customer satisfaction level is. By now, you might have formed the opinion that B2C is one-way traffic, i.e., from business-to-customers.
But do remember that its corollary, C2B commerce is very much reality which provides the Consumers with the freedom of shopping-at-will. Customers can also use call-centers set up by companies to make toll-free calls to make queries and lodge complaints round the clock at no extra cost to them. The beauty of the process is that one need not set up these call centers or helplines; they may be outsourced.
Discuss the limitations of the electronic mode of doing business. Are these limitations serve enough to restrict its scope. Give reasons for your answer.
e-business has its own limitations as discussed below:
(i) Low Personal Touch:
e-business lacks the warmth of interpersonal interactions and personal touch for the satisfaction of customers. Thus, it is a relatively less suitable mode of business for product categories requiring personal touch for convincing the customers such as garments, etc.
(ii) Incongruence between Order Taking / Giving and Order Fulfillment Speed:
In e-business, orders can be placed at the click of a mouse, but the physical delivery of the product takes time. Customers are sometimes not patient enough to bear with this incongruence. At times the users even get frustrated due to technical reasons when websites take an unusually long time to open.
(iii) Need for Technology:
Capability and Competence of Parties to e-business requires the parties to be fairly familiar with computers and the internet. The digital divide has thus limited the use of e-business.
(iv) Increased Transaction:
Risk Internet transactions occur between cyber personalities and it is difficult to establish the identity of the parties or know the location from where the parties may be operating, e-business is also risky due to additional hazards of impersonation and leakage of confidential information such as credit card details. Problems of virus attacks and ‘hacking’ also pose security concerns in e-business.
(v) Resistance to Change:
The process of adjustment to new technology and a new way of doing things causes stress and a sense of insecurity due to change. As a result, people may resist a change from traditional business to e-business.
(vi) Ethical Fallouts:
Companies use an ‘electronic eye’ to keep track of the computer files, email account, and the websites visited by their employees or others who use their network systems which are not considered right on ethical grounds.