- State the meaning of e-business
- Explain the process of online buying and selling as a part of e-business
- Distinguish e-business from traditional business
- State benefits of switching over to electronic mode
- Explain requirements for a firm's initiation into e-business
- Identify major security concerns of electronic mode of doing business
- Discuss the need for business process outsourcing
- Appreciate the scope of business process outsourcing
Emerging Modes of Business
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Revision Notes & Summary
TopChapter 5: Emerging Modes of Business
Learning Objectives
- State the meaning of e-business.
- Explain the process of online buying and selling as a part of e-business.
- Distinguish e-business from traditional business.
- State benefits of switching over to electronic mode.
- Explain requirements for a firm's initiation into e-business.
- Identify major security concerns of electronic mode of doing business.
- Discuss the need for business process outsourcing.
- Appreciate the scope of business process outsourcing.
Introduction
The way business is done has undergone fundamental changes, particularly through:
- Digitisation - Conversion of content into electronic format.
- Outsourcing - Contracting out business processes.
- Internationalisation and Globalisation - Expanding business reach.
E-Business vs Traditional Business
Comparison Table
| Basis of Distinction | Traditional Business | e-Business |
|---|---|---|
| Ease of Formation | Difficult | Simple |
| Physical Presence | Required | Not Required |
| Locational Requirements | Proximity to source | None |
| Cost of Setting Up | High | Low |
| Operating Cost | High | Low |
| Nature of Contact | Indirect | Direct |
| Internal Communication | Hierarchical | Non-hierarchical |
| Response Time | Long | Instantaneous |
| Organizational Structure | Vertical | Horizontal/Flat |
| Business Processes | Sequential | Simultaneous |
| Interpersonal Touch | Much More | Less |
Applications of E-Business
- e-Procurement: Internet-based sales transactions between businesses.
- e-Bidding/e-Auction: Online bidding for goods and services.
- e-Communication/e-Promotion: Online marketing and communication strategies.
- e-Delivery: Electronic delivery of digital content and services.
- e-Trading: Online buying and selling of financial instruments.
Security and Safety of e-Transactions
Types of Risks
- Transaction Risks: Vulnerability in online transactions.
- Data Storage and Transmission Risks: Risks associated with data handling.
- Threat to Intellectual Property and Privacy Risks: Concerns over data protection.
Conclusion
E-business and outsourcing are reshaping business operations, driven by the need for efficiency and competitive advantage. These emerging modes of business continue to evolve, presenting both opportunities and challenges.
Practice Test – MCQs, True/False
TopMultiple Choice Questions
A.
A company experiences increased sales due to global reach.
B.
A customer complains about delayed delivery despite placing an order online.
C.
A firm reduces operational costs by automating inventory management.
D.
An organization enhances customer satisfaction through personalized marketing.
Correct Answer: B
Solution:
A challenge associated with e-business is the incongruence between order taking/giving and order fulfillment speed. This is illustrated by a customer complaining about delayed delivery despite placing an order online.
Chapter Concept:
E-Business Implementation
A.
To store user passwords securely
B.
To verify the identity and details of the customer
C.
To facilitate faster loading of web pages
D.
To encrypt sensitive data during transmission
Correct Answer: B
Solution:
Cookies are used to verify the identity and details of the customer during online transactions.
Chapter Concept:
Online Transactions
A.
By reducing the need for digital infrastructure.
B.
By allowing firms to focus on core activities while outsourcing non-core functions.
C.
By increasing the number of in-house employees.
D.
By limiting the firm's ability to adapt to market changes.
Correct Answer: B
Solution:
BPO enables firms to concentrate on their core competencies by outsourcing non-core functions, thereby increasing efficiency and competitiveness in a global market.
Chapter Concept:
Emerging Business Trends
A.
A customer receives a product different from what was ordered.
B.
A customer's credit card information is stolen during a transaction.
C.
A company outsources its customer service operations to another country.
D.
A business uses an intranet to manage internal communications.
Correct Answer: A
Solution:
Transaction risks in e-business include scenarios where the intended delivery does not take place, goods are delivered at the wrong address, or goods other than ordered are delivered.
Chapter Concept:
Security Concerns in E-Business
A.
Pre-purchase stage
B.
Purchase stage
C.
Delivery stage
D.
Post-delivery stage
Correct Answer: D
Solution:
Online transactions involve three stages: pre-purchase, purchase, and delivery. There is no post-delivery stage mentioned.
Chapter Concept:
Online Transactions
A.
A local grocery store expanding its physical locations to rural areas.
B.
An international car manufacturer using a digital platform to manage its supply chain in real-time.
C.
A traditional bookstore increasing its inventory of physical books.
D.
A clothing retailer hiring more in-store sales staff to improve customer service.
Correct Answer: B
Solution:
Digitization allows businesses to manage complex processes like supply chains in real-time using digital platforms, enhancing efficiency and responsiveness.
Chapter Concept:
Emerging Business Trends
A.
It requires a high degree of personal interaction.
B.
It is limited to local markets.
C.
There is a risk of increased anonymity and non-traceability of parties.
D.
It is more expensive to set up compared to traditional business.
Correct Answer: C
Solution:
E-business faces the limitation of increased anonymity and non-traceability of parties, which can pose security risks.
Chapter Concept:
E-Business
A.
High personal touch
B.
Low personal touch
C.
Instantaneous physical delivery
D.
No need for technology competence
Correct Answer: B
Solution:
E-business lacks the warmth of interpersonal interactions, making it less suitable for product categories requiring high personal touch.
Chapter Concept:
Limitations of E-Business
A.
Increased transaction costs
B.
Increased risk of impersonation
C.
Increased need for physical infrastructure
D.
Increased regulatory compliance
Correct Answer: B
Solution:
E-business transactions are riskier due to the anonymity and non-traceability of parties, leading to risks such as impersonation and leakage of confidential information.
Chapter Concept:
Limitations of E-Business
A.
To increase personal interaction with customers
B.
To expand the marketplace to national and international markets
C.
To reduce the need for skilled labor
D.
To increase the physical presence of the business
Correct Answer: B
Solution:
E-business allows businesses to expand their reach to national and international markets, offering a competitive advantage.
Chapter Concept:
E-Commerce vs E-Business
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Emerging Modes of Business
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Locked • Full Phase AssessmentStep 3: Redemption Arena
Locked • AI Weakness TrackerTrue or False
Correct Answer: True
Solution:
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.
Chapter Concept :
E-Business
Correct Answer: True
Solution:
E-commerce allows businesses to manage their supply chains more effectively by using real-time data to respond to consumer demand, thus providing a competitive advantage.
Chapter Concept :
Benefits of E-Commerce
Correct Answer: False
Solution:
E-business encompasses a wide range of business functions conducted electronically, including production, inventory management, product development, accounting and finance, and human resource management, not just buying and selling over the internet.
Chapter Concept :
E-Business
Correct Answer: True
Solution:
E-commerce facilitates 'pull' supply chain management, which allows businesses to respond to customer demand more effectively, providing a competitive advantage.
Chapter Concept :
Benefits of E-Commerce
Correct Answer: True
Solution:
E-business is a broader term that encompasses e-commerce and other business functions conducted electronically, as stated in the text.
Chapter Concept :
Emerging Business Trends
Correct Answer: True
Solution:
The pre-purchase stage of online transactions involves activities like advertising and information-seeking, as outlined in the excerpt.
Chapter Concept :
Online Transactions
Correct Answer: True
Solution:
The excerpt discusses the need for business process outsourcing to improve efficiency and focus on core activities, indicating that BPO is utilized for these purposes.
Chapter Concept :
Business Process Outsourcing (BPO)
Correct Answer: True
Solution:
Transaction risks in e-business can arise from defaults on order taking/giving, where either the seller or the customer denies the placement of an order.
Chapter Concept :
Security Concerns in E-Business
Correct Answer: True
Solution:
E-business faces challenges such as low personal touch, the need for technology capability, and increased transaction risks due to anonymity and non-traceability.
Chapter Concept :
Limitations of E-Business
Correct Answer: False
Solution:
E-business is a broader term that includes not only buying and selling over the internet (e-commerce) but also other electronic business functions such as production, inventory management, product development, accounting, finance, and human resource management.
Chapter Concept :
Emerging Business Trends
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