Chapter 5 Emerging Modes of Business - BST class 11th

Base

e Business

e Commerce

Meaning

Running business using the internet is known as E-business

E Business includes activities like procurement of  input or raw materials ,or

goods, customer education, supply activities buying and selling product, making monetary transactions etc over internet.

Example Zoom:

e Commerce includes Trading of merchandise, over the internet.

e-Commerce includes activities like buying and selling product, making monetary transactions etc over internet.

Like Amazon, Flip kart , myntra , nayka.etc

Key Difference    

As the term ‘business’ is a broader term than ‘commerce’, e-business is a more elaborate term and comprises various business transactions and functions conducted electronically, including the more popular gamut (

सरगम) of transactions called ‘e-commerce.’

Again look at case studies of ZOOM.

E-Commerce is a narrow concept and it is considered as a subset of E-Business

e-commerce covers a firm’s interactions with its customers and suppliers over the internet.

Look at the example of Amazon , Flip cart , NAYAKA, MYNTRA ETC .

SUPERSET  VS SUBET

E-Business is a broad concept and it is considered as a superset of E-Commerce

e-business includes not only e-commerce, but also other electronically conducted business functions such as production, inventory management, product development, accounting and finance and human resource management e-business is, therefore, clearly much more than buying and selling over the Internet, i.e., e-commerce.

e Commerce is subset of e business . means e commerce is a part of e commerce. It simple meaning is performing online commercial activities, transactions over internet.

Requires

It requires the use of multiple websites, CRMs, ERPs that connect different business processes.

Just Websites

Ideal for

E-business is more appropriate in Business to Business (B2B) context. But it go to b2b2c too. look into example of Zoom.

E-commerce is more appropriate in Business to Customer (B2C) context.

1

B2B Commerce

a firm’s interactions with other businesses

2

B2C Commerce

a firm’s interactions with its customers

3

intra-B Commerce

firm’s internal processes

1

B2B Commerce

B2B is that business activity in which two firms or two business units make

electronic transaction. For example- one can be producer firm and other a supplier firm.

Here, both the parties involved in e-commerce transactions are business firms. Hence the name B2B, i.e., business to-business.

What book says

For example, the manufacture of an automobile requires assembly of a large number of components which in turn are being manufactured elsewhere—within the vicinity of the automobile factory or even overseas. To reduce dependence on a single supplier, the automobile factory has to cultivate more than one vendor for each of the components. A network of computers is used for placing orders, monitoring production and delivery of components, and making payments. Likewise, a firm may strengthen and improve its distribution system by exercising a real time (as it happens) control over its stock-intransit as well as that with different middlemen in different locations. For example, each consignment of goods from a warehouse and the stock-at-hand can be monitored and replenishments and reinforcements can be set in motion as and when needed. Or else, a customer’s specifications may be routed through the dealers to the factory and fed into the manufacturing system for customised production. Use of e-commerce expedites the movement of the information and documents; and of late, money transfers as we

Creation of utilities or delivering value requires a business to interact with a number of other business firms which may be suppliers or vendors of diverse inputs; or else they may be a part of the channel through which a firm distributes its products to the consumers.

Historically, the term e-commerce originally meant facilitation of B2B transactions using Electronic Data Interchange (EDI) technology to send and receive commercial documents like purchase orders or invoices.

2

B2C Commerce:

Business to customer. In this one party is a firm and other party is a

customer. On one hand a customer can seek information through Internet about products, place orders, get some items and make payments and on the other hand the firm can make a survey any time to know who is buying and can also know the satisfaction level of customers. In modern times, call centers can provide these information.

As the name implies, B2C (business-to-customers) transactions have business firms at one end and 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 is offered for sale and continues even after the 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 conduct of these activities at a much lower cost but high speed. For example, ATM speeds up 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, B2C variant of e-commerce enables a business to be in touch with its customers on round-the-clock basis. Companies can conduct online surveys to ascertain as to who is buying what and what the customer satisfaction level is

3

Intra-B Commerce

Intra-B Commerce Within business Commerce - Under it, the parties involved in the

electronic transaction are the two departments of same business. For Example, through

internet it is possible for the marketing department to interact constantly with the

production department and get the customized goods made as per the requirement of customers.

Case studies – jssl ,and bombardier

Here, parties involved in the electronic transactions are from within a given business firm, hence, the name intra-B commerce. As noted earlier too, one critical difference between e-commerce and e-business is that, e-commerce comprises a business firm’s interaction with its suppliers, and distributors/other business firms (hence, the name B2B) and customers (B2C) over the internet. While e-business is a much wider term and also includes the use of intranet for managing interactions and dealings among various departments and persons within a firm. It is largely due to use of intra-B commerce that today it has become possible for the firms to go in for flexible manufacturing. Use of computer networks makes it possible for the marketing department to interact constantly with the production department and get the customized p r o d u c t s m a d e a s p e r t h e requirements o f the individual customer. In a similar vein, closer computer-based interactions among the other departments makes it possible for the firm to reap advantages of efficient inventory and cash management, greater utilisation of plant and machinery, effective handling of customers’ orders, and effective human resource management.

Just as intercom facilitated voice communication within the office, intranet facilitates multimedia and even 3-D graphic communication among organisational units for wellinformed decisions, permitting better coordination, faster decisions and speedier workflows.

4

C2C Commerce:

Olx , Car24 etc

C2C Commerce - Customer to Customer Commerce - Under it, both the parties involved in

electronic transaction are customers. It is required for the buying and selling of those goods

for which there are no established markets. For example-selling old car through internet

Here, the business originates from the consumer and the ultimate destination is also consumers, thus the name C2C commerce . This type of commerce is best suited for dealing in goods for which there is no established market mechanism, for example, selling used books or clothes either on cash or barter basis. The vast space of the internet allows persons to globally search for potential buyers. Additionally, e-commerce technology provides market system security to such transactions which otherwise would have been missing if the buyers and sellers were to interact in anonymity of one-to-one transactions? An excellent example of this is found at eBay where consumers sell their goods and services to other consumers. To make this activity more secure and robust, several technologies have emerged. Firstly, eBay allows all the sellers and buyers to rate one another. In this manner, future prospective purchasers may see that a particular seller has sold to more than 2,000 customers—all of whom rate the seller as excellent. In another example, a prospective purchaser may see a seller who has previously sold only four times and all four rate the seller poorly. This type of information is helpful. Another technology that has emerged to support C2C activities is that of the payment intermediary. PayPal is a good example of this kind. Instead of purchasing items directly from an unknown, untrusted seller; the buyer can instead send the money to Pay Pal. From there, PayPal notifies the seller that they will hold the money for them until the goods have been shipped and accepted by the buyer. An important C2C area o f interactive commerce can be the formation of consumers’ forum and pressure groups. You might have heard of Yahoo groups. Like a vehicle owner in a traffic jam can alert others via message on radio (you must have heard traffic alerts on FM) about the traffic situation of the area he is stuck in; an aggrieved customer can share his experience with a product/service/ vendor and warn others by writing just a message and making it known to the entire group. And, it is quite possible that the group pressure might result in a solution of this problem. From the foregoing discussion concerning scope of e-business, it is clear that e-business applications are varied and many.

5

C2B Commerce

24 x7 doubt clearance by ATC.

C2B Commerce provides the Consumers with the freedom of shopping at will. Customer can make use of call centers to make toll free calls to make queries and lodge

‘complaints.

6

B2E Commerce

Companies reporting to personnel recruitment, interview and selection

and training etc, via B2E Commerce.

Take for example, a firm’s interactions with its employees, sometimes referred to a s B2E commerce. Companies are resorting to personnel recruitment, interviewing and selection, training, development and education via e-commerce (captured in a catch-all phrase ‘e-learning’). Employees can use electronic catalogues and ordering forms and access inventory information for better interaction with the customers. They can send field reports via e-mail and the management can have them on real time basis. In fact, Virtual Private Network (VPN) technology would mean that employees do not have to come to office. Instead, in a way the office goes to them and they can work from wherever they are, and at their own speed and time convenience. Meetings can be held online via tele/ video conferencing.

1

Worldwide reach:

2

Elimination of Middlemen, Speed, Convenience

3

Easy Distribution Process

5

Easy to launch new products

4

Lower Investment required

6

Paperless Society

1

Worldwide reach:

Internet gives businessmen an extended market. New customers come

in contact with them. This results in increase in sales.

Internet is truly without boundaries. On the one hand, it allows the seller an access to the global market; on the other hand, it affords to the buyer a freedom to choose products from almost any part of the world. It would not be an exaggeration to say that in the absence of internet, globalization would have been considerably restricted in scope and speed.

2

Elimination of Middlemen, Speed, Convenience

Ever since the e-Business came into existence, the

wholesalers and retailers have started disappearing. Now, most of the producers have started having direct contact with customers, As a result, the consumer get goods on less price.

3

Easy Distribution Process

Many types of information and services be received on

computer through e-business. This has simplified the system of distribution and has also

made it less costly.

5

Easy to launch new products

The benefits of internet technology accrue to big or small business alike.

Any company can launch its new product in the market

through the medium of E-Business. A complete information about the product is made

available on Internet. In this way the consumer and other businessmen get information

about the new product while sitting at home,

4

Lower Investment required

In this, you don't require any big showroom or huge

investment. You need only computer and Internet.

6

Paperless Society

 Use of internet has considerably reduced

dependence on paper work.

Use of Internet has considerably reduced dependence on paperwork and the ‘red tape.’ You know that Maruti Udyog does bulk of its sourcing of supplies of materials and components in a paper less fashion. Even the government departments and regulatory authorities are increasingly moving in this direction whereby they allow electronic filing of returns and reports. In fact, e-commerce tools are effecting the administrative reforms aimed at speeding up the process of granting permissions, approvals and licences. In this respect, the provisions of Information Technology Act 2000 are quite noteworthy

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 contact with the suppliers and the customers

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, allowing 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 chin of command

Horizontal/flat due to directness of command and communication.

Business processes and length of the cycle

Sequential precedence succession relationship, i.e., purchase - production/ operation - marketing - sales. The, business process cycle is, therefore, longer

Simultaneous (concurrence) different processes. Business process cycle is, therefore, shorter

Opportunity for interpersonal touch

Much more

Less

Opportunity for physical pre-sampling of the products

Much more

Less. However, for digitable products such an opportunity is tremendous. You can pre-sample music, books, journals, software, videos, etc.

Ease of going global

Less

Much, as cyber space is truly without boundaries

Government patronage

Shrinking

Much, as IT sector is among the topmost priorities of the government

Nature of human capital

Semi-skilled and even unskilled manpower needed.

Technically and professionally qualified personnel needed

Transaction risk

Low due to arm’s length transactions and face-to-face contact.

High due to the distance and anonymity of the parties

1

Computer system

- The presence of computer system is the first requirement of e-

Business. The computer can be linked with Internet by just pressing its keys

2

Internet connection

- Internet connection is very essential and now a days we can get this. facility by sitting at home

3

Preparing the web Page

- web page has the greatest importance in the use of e-Business.

Itis also known as Home Page. Any product that is to be shown on Internet is displayed on

web page.

4

Effective telecommunication system

e-business requires an effective

telecommunication system in the form of telephone lines etc.

On Line Transactions

1

Cash on delivery (COD)

Cash payment can be made at the time of physical delivery of

goods.

2

Net-banking transfer

The customer can make electronic transfer of funds(EFT) to account

of online vendor over the internet.

3

Credit or Debit cards

The customer can make payment for online transaction through.

debit or credit card by giving the number and name of bank of card.

Security and Safety of e-Transactions

1

Confirming the details before the delivery of goods

- The customer is required to furnish

the details such as credit card no., card issuer and card validity online.

2

Anti VirusProgrammes

- Installing and timely updating antivirus programmes provides

protection to data files, folders and system from virus attacks.

3

Cyber crime cells

- Govt. may setup special crime cells to look into the cases of hacking and

take necessary action against the hackers.

1

Outsourcing involves contracting out

2

Generally non-core business activities are outsourced

3

Processes may be outsourced to a captive unit or a third party

1

Outsourcing involves contracting out:

Outsourcing means to source from outside what you have hitherto been doing in-house.

EXAMPLE – ISS SANITAION OUTSOUCING

For example- Most companies used to appoint their own sanitation staff for maintaining neatness, cleanliness and overall housekeeping of their premises. That is, sanitation and housekeeping functions were being performed inhouse. But of late, many companies have started outsourcing these activities, i.e., they have entrusted outside agencies to perform these activities for their organisations on a contractual basis.

2

Generally non-core business activities are outsourced:

Depending upon what business a company is in, there will be some activities that are central and critical to its basic business purpose. Other activities may be regarded as secondary or incidental to fulfilling that basic purpose.

EXAMPLE SCHOLL

The purpose of a school, for example, is to develop a child by means of curricular and co-curricular activities. Clearly, these activities comprise the ‘core’ activities.

Running a cafeteria/canteen or a book store is non-core activity for a school.

As the organisations venture to experiment with outsourcing, they may initially outsource only the noncore activities. But later on, as they become comfortable with managing interdependencies, they may start getting even the core activities performed by the outsiders. For example, a school may tie-up with some computer training institute to impart computer education to its students.

3

Processes may be outsourced

Processes may be outsourced to a captive unit or a third party

The Figure provides a synoptical view of how a firm can outsource some of its activities to the captive and third party service providers.

I

Captive services providers

Service can be , Accounting , Pay roll , Staffing , Marketing etc .

A large multinational corporation that deals in diverse products and markets them to a large number of countries. A number of processes such as recruitment, selection, training, record and payroll (Human Resources), management of accounts receivable and accounts payable (accounting and finance), customer support/grievance handling /troubleshooting (marketing) are common to all its subsidiaries operating in different countries. If these processes could be centralized and parcelled out to a business unit created especially for this purpose, this would result in avoidance of duplication of resources, realisation of efficiency and economy’s performance of same activity on a large scale at one or a few select locations, thereby resulting in substantial reduction in costs. Clearly, therefore, if the task of performing some activity internally is sufficiently large,

II

Third party service providers:

Third party BPO Bole to sourcing to some other compan. now other company can be provider of two different kind of services.

These processes may be parcelled out to third party service providers who operate independently in the market and provide services to other firms too.

(a) Verticals: they may specialise in one or two industries and scale up to doing a number of processes from noncore to core. These are called ‘verticals.’ As the service providers mature, they move simultaneously horizontal and vertical.

(b)Horizontals: The hired party service providers are the persons/firms which specialise in some processes such as Human Resource Management (HRM) and provide their services to a wide base of clients, cutting across industries. Such service providers are called ‘horizontals’ in the outsourcing terminology.

1

Focusing on Core Competency with full attention:

2

Quest for excellence

3

Cost reduction:

4

Growth through alliance:

5

Fillip to economic development:

1

Focusing on Core Competency with full attention:

Business firms are realising the usefulness of focusing on just a few areas where they have distinct capability or core competence. So they are  contracting 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.

For example, They need to consider as to whether they would like to be called a manufacturing or marketing organisation. Such a way of delimiting the scope of business enables them to focus their attention and resources on select activities for better efficiency and effectiveness

2

Quest for excellence

Outsourcing enables the firms to pursue excellence in two ways. One, they excel themselves 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.

3

Cost reduction:

Cost  can be reduced significantly by outsourcing non core area.  

This happens due to the economies of large scale accruing to the outsourcing partners as they deliver the same service to a number of organisations.

Differences in prices of factors of production across the countries are also a factor contributing to cost reduction.

 For example, India is a preferred destination for global outsourcing of Research and Development, manufacturing, software development and IT enabled services (ITES) because of large scale availability of required manpower at lower costs.

4

Growth through alliance:

outsourcing facilitates 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.

5

Fillip to economic development:

Outsourcing, more so offshore outsourcing, stimulates entrepreneurship, employment and exports in the host countries (i.e., the countries from where outsourcing is done). 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 per cent of the $150 billion (1 billion = Rs. 100 crores) global outsourcing share in the informatics sector.

1

Obtaining Good Quality services

If a company attempts to perform all the activities itself,

there is every possibility of quality of services being affected adversely. In order to avoid this

difficulty, the need for obtaining services from outside is felt.

2

Avoiding Fixed Investment in Services

If a company attempts to get these services from

within the organization itself, it has to establish different departments for this purpose

which involves huge investment. Therefore, it appears justified to get these services from.

outside the organization at a little cost.

3

Smooth running of business

- outsourcing of services is needed in order to run the

business smoothly. The attention of businessman gets distracted from various small things

and will be focused on the main activity.

1

Financial Services

Financial services helps some way or other in the management of finance.

2

Advertising services

Advertisement is very necessary for increasing sales. If this service Is, obtained from outside agency, it will cost less and the quality of advertisement will also be

good.

3

Courier services

These services means delivering goods, documents. parcels from company to customers and vice-versa.

4

Customer support service

These services means delivering goods to customers and to give

after sale services also. Generally, the manufacturers of TV, Fridge, AC etc. use these services

1

Upward shift

 It is the upward shift of BPO

2

knowledge expertise

It focuses on knowledge expertise instead of process expertise,

3

Non core  activities

 It provides all non core  activities

4

pre-determined process

It has no pre-determined process to reach a conclusion

5

Career for educated class

It offers an alternative career path for the educated

1

Legal Research

2

Research and Technical analysis.

3

Business and Technical analysis

4

Business and Market research

5

Animation and Design

6

CAD OE CAM Application

7

Business research and Analysis

8

Intellectual property

9

Web development

10

Content Writing

11

Data Analysis

12

Medical Transcription

13

Software programming

14

Human resources Activities