INTRODUCTION MODES OF BUSINESS
Meaning:
In this age of internet, the world commerce has gradually started linking with it. This has brought a new concept
of commerce called e-commerce/e-business. Now we are capable of reaching the users of Internet all over the world
simply by opening a shop on the Internet. The Internet users can order for the goods, receive their delivery and make
their payment while sitting at their home on the Internet.
E-business:
Is one of the biggest examples of how the business world has evolved in modern times. The conduct of trade, commerce
and industry via the computer network using the internet is called e-business or electronic business. It is a broad term that
encapsulates all business functions and transactions that are conducted electronically, and not merely sales. From e-commerce
to digitally conducted product development, production, inventory management, finance, human resource management, and
accounting - all come under the purview of e-business.
♦ Benefits of e-Business:
As mentioned in the chapter, students will also gain knowledge of the reasons why the e-business model has surfaced and
achieved popularity. Here are some benefits of e-business:
• Easy and Fast to Set Up: Mostly, setting up an electronic business requires high-speed internet connectivity, computer
devices, and advanced software system
• Not Limited by Geographical Boundaries: There are no geographical barriers in an e-business. Anyone can buy things from
anywhere, provided the business has services in that region.
• Government Subsidies: To promote digitalization, the government often provides subsidies and other advantages to e-businesses.
• The movement towards a paperless Society: The use of the internet has significantly decreased reliance on paperwork.
• Easy to launch new products: Any firm may use e-business to bring a new product into the market. On the Internet, you may get
detailed information on the product. As a result, consumers and other business people may learn about the new product while sitting
at home.
• Easy Distribution Process: Through e-business, many different sorts of information and services may be obtained on a
computer. This has streamlined and reduced the cost of the distribution system.
• Lower Investment required: Business owners and business people do not need a large showroom or a large investment
to run an e-business. All you need is a computer and access to the Internet.
• Elimination of Middlemen: Wholesalers and merchants have been vanishing since the advent of e-Commerce. The majority
of manufacturers have now begun to have direct contact with clients. As a consequence, consumers pay less for items.
♦ Limitation of e-Business:
Despite being one of the fastest emerging modes of business, e-business has some drawbacks as well. The limitations of e-business
according to emerging modes of business are:
• Lack of Trust: The disadvantage of e-business is it lacks direct communication between the seller and the buyer. The consumer
is unable to touch and feel the product in real-time. This can result in distrust and apprehensions
• Security Threats: The personal and financial data of consumers are always on stake if the e-business does not have proper security
measures. It is easier for scammers to lure online buyers into a lucrative deal and do fraud
• Delivery Issues: Longer delivery times than traditional business is another limitation of this model
• Technology Capability and Competency of E-business Participants are Required: E-business necessitates a high level of computer
literacy among the parties involved. This obligation can also be blamed for the so-called digital divide. The term "digital divide"
refers to the separation of society based on one's familiarity or lack thereof with digital technologies.
• Ethical Fallouts: Companies utilise an 'electronic eye' to keep track on your computer files, email account, and internet visits, among
other things, so as to gain knowledge about your interests, preferences etc. It’s unethical in a number of ways.
♦ Resources Required for Successful e-Business Implementation:
• 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.
• Internet connection: Internet connection is very essential and now a days we can get this facility by sitting at home.
• Preparing the web Page: Web page has the greatest importance in the use of e-Business. It is also known as Home Page. Any product
that is to be shown on Internet is displayed on web page.
• Effective telecommunication system: e-business requires an effective telecommunication system in the form of telephone lines etc.
♦ Scope of e-Business:
It can be understood by the view point of the parties involved and making transactions:
• B2B Commerce: It 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.
• 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 this information.
• 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.
• 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.
• C2B Commerce: 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.
• B2E Commerce: Companies reporting to personnel recruitment, interview and selection and training etc. via B2E Commerce.
Process of Online Trading
Registration ⇒ Placing an order ⇒ Payment mechanism
♦ Step 1: Registration:
• When you register with an online retailer, you create an 'account’, by filling up the registration form.
• A "password" must be entered among the numerous details since the areas relating to an individual’s "account" and "shopping
basket" are password protected.
♦ Step 2: Placing an Order:
• You can add products to the shopping cart by dragging and dropping them.
• A shopping cart is an online record of what an individual has added to his cart while visiting an online store.
• Once you've decided what you want to buy, you may 'checkout.'
♦ Step 3: Payment Mechanism:
Purchases through online shopping may be done in a number of ways.
• Cash-on-Delivery: Payment for things ordered online can be made in cash when the goods are delivered physically.
• Cheque: The online merchant may arrange for the customer's cheque to be picked up. After realization, product delivery
may be attempted.
• Net-banking Transfer: Modern banks provide to their customers the facility of electronic transfer of funds over the
Internet using Immediate Payment Service (IMPS), NEFT and RTGS.
• Credit or Debit Cards: The holders of credit cards can enjoy making purchases on credit. The amount owed by the
cardholder to the online seller is assumed by the card issuing bank, which then transfers the transaction's amount to the
seller's credit.
• A debit card permits the holder to make purchases up to the amount of money in the linked account. The moment a transaction
is made, the amount due as payment is deducted electronically from the card.
• Digital Cash: This type of currency has no physical qualities, but it allows you to utilize real money in an electronic format,
such as through e-wallets or PayTm.
♦ E-Business Risks:
• Transaction Risks:
Either the seller or the customer may refuse an order being made or placed. This might be cited as default on order taking/giving.
The supposed delivery doesn't take place, or is delivered at the incorrect address, or product apart from ordered is delivered.
This can be thought of as "default on delivery."
The vendor doesn't get payment for the things provided, despite the fact that the customer states that payment was created.
This might be cited as 'default on payment'.
As a result, order taking/ giving in e-business may pose a danger to the vendor or the client.
• Data storage and Transmission Risks:
Data in the systems and on the way is vulnerable to a variety of threats.
Important data may be stolen or altered for nefarious purposes or merely for fun/ adventure
Antivirus software’s installed and updated on a regular basis prove useful in scanning files and discs, protecting data files,
folders, and systems against virus attacks.
Data could be intercepted during transmission. Cryptography can be used for this. It refers to the process of encrypting data
and transforming it to cyphertext, an unreadable format. Only those with a secret key may decipher (or decrypt) the message
into 'plaintext.'
• Risks of Threats to Intellectual Property and Privacy Include:
Once the material is available on the internet, it is no longer considered private. It got more difficult to protect it from being
copied after that.
Data provided during online transactions may be shared with others, who may begin flooding one’s inbox with advertising
and promotional materials.
Outsourcing
Many activities have to be performed for the successful conduct of business-like productions, buying, selling, advertising etc.
When the scale of business is small, the businessman used to perform these activities easily. However, with the enlargement of
scale of business, this job has become tedious. Therefore, in order to overcome the difficulties connected with the performance
of many activities and to get the benefit of specialization, these services are now obtained from outside the organization. This is
called outsourcing of services or BPO.
Advantages of Outsourcing
To understand better the concept of outsourcing, you must study in-depth the advantages of outsourcing as mentioned in the chapter.
• Cost Advantage: By outsourcing, companies can save their cost, time and effort in hiring and training a permanent in-house skill.
• High-Quality Services: Only a skilled expert with in-depth knowledge in the respective field is assigned the task to ensure improved
quality and fewer errors
• No Setup Cost: In an offshore model, where the company outsources to an overseas agency, there is typically no cost involved in
setting up the infrastructure or owning the latest software.
• Reduced Labour Cost: Companies outsource because the labour cost is cheaper in the outsourcing country.
• Encourage Entrepreneurship, Employment, and Exports: the concept of outsourcing promotes entrepreneurship, employment,
and exports in the country where the outsourcing is performed.
• Passage to High-Quality Services: Only skilled individuals are assigned to specific tasks, resulting in better service and fewer mistakes.
Disadvantages of Outsourcing:
• Poor Quality: Not hiring the right outsourcing company can often result in inferior-quality services and extension of project delivery deadlines
• Lack of Communication & Control: In an offshore model, poor communication and lack of control over business operations are major impediments
• Security Threats: Business-critical data is often under the threat of security breaches
• Less Customer-Centric: Because an outsourced merchant serves numerous firms, they lack focus on the duties of a single company.
• Ethical Issues: Outsourcing provides jobs and wealth for another country rather than the founding country.
Business Process Outsourcing:
As a company grows, the complexities and scope of its business also increase. As such, it becomes cumbersome and costly to manage
diverse functions and operations efficiently. To overcome the challenges of the scale of business and leverage the potential of specialization,
many companies choose Business Process Outsourcing (BPO). The scope of BPO is broad and can range from financial services to customer
support, advertising, courier, software solutions, etc.
Need for BPO:
• 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.
• 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.
• 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.
Scope of BPO:
In modern business many outside services are used. Out of these services, the following are the important ones:
• Financial Services: These services mean those outside services which help the company in some way or other in the
management of finance.
• 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.
• Courier services: These services mean delivering goods, documents. parcels from company to customers and vice-versa.
• Customer support service: These services mean delivering goods to customers and to give after sale services also. Generally,
the manufacturers of TV, Fridge, AC etc. use these services.
KPO (Knowledge Process Outsourcing):
KPO refers to obtaining high end knowledge from outside the organization in order to run the business successfully and in cost
effective manner. Unlike conventional BPO where the focus is on process expertise, in KPO the focus is on knowledge expertise.
Need of KPO:
In today’s competitive environment focus is to concentrate on core specialization areas and outsources the rest of activities. Many
companies have come to realize that by outsourcing the non-case activities not only costs are minimized and efficiency improved
but the total business improves because the focus shifts tokey growth areas of business.
Features of KPO:
• It is the upward shift of BPO
• It focuses on knowledge expertise instead of process expertise.
• It provides all non-case activities.
• It has no pre-determined process to reach a conclusion.
• It offers an alternative career path for the educated.
Scope of KPO/ Services covered KPO:
• Research and Technical analysis.
• Business and Technical analysis.
• Business and Market research.
• Animation and Design.