NCERT Solutions for Class 11th Business Studies Chapter 5 – Emerging Modes of Business
Multiple Choice Questions
1. e-commerce does not include
(a) a business’s interactions with its suppliers
(b) a business’s interactions with its customers
(c) interactions among the various departments within the business
(d) interactions among the geographically dispersed units of the business
Answer (c) Interactions among the various departments within the business are Included in e-business but not In e-commerce
2. Outsourcing
(a) restricts only to the contracting out of Information Technology Enabled Services (ITES)
(b) restricts only to the 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 restricts only to domestic territory
(d) includes off-shoring
Answer (d) Outsourcing Includes contracting out of manufacturing and R & D as well as service processes- both core and non-core- in domestic territory as well as foreign countries.
3. The payment mechanism typical to e-business
(a) Cash on Delivery (CoD)
(b) Cheques
(c) Credit and Debit Cards
(d) e-Cash
Answer (d) e-cash IS a computer generated Internet based system which allows funds to be transferred and items to be purchased by credit cards, cheques or by money order providing secure on-line transaction process
4. A call centre handles
(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
Answer (a) ‘Call centres provide customer-oriented voice based services
5. It is not an application of e-business
(a) Online bidding
(c) Online trading
(b) Online procurement
(d) Contract R&D
Answer (d) Contract R & D is an outsourcing activity not covered under e-business.
Short Answer Type Questions
Question 1. State any three differences between e-business and traditional business.
Answer
Difference between Traditional and e-Buslness
| Basis |
e-buslness |
Traditional Business |
| Formation |
It is easy to form. |
It takes lengthy and complicated Procedure to form. |
| Setting up cost |
It takes a very nominal cost. |
It takes huge capital in order to setup. |
| Risks Involved |
High risk involved as there is no direct contact between the parties. |
Less risk Involved as parties have personal interaction. |
Question 2. How does outsourcing represent a new mode of business?
Answer
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, effictency and even investment. Generally the non-core business acttvitles 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-took at business processes and hence resulted in outsourcing as a new mode of business which is now being resorted to not out of compulsion but out of choice.
Question 3. Describe briefly any two applications of e-business.
Answer
Two applications of e-buslness are
- e-Procurement It involves internet-based sales transactions between business firms, including “reverse auctions” that facilitate online trade between a single business purchaser and many sellers and, digital market places that facilitate online trading between multiple buyers and sellers.
- e-Communication!e-Promotion It includes e-mails, publication of online catalogues displaying images of goods, advertisement through banners, pop-ups, opinion polls and customer surveys, etc. Meetings and conferences may be held by the means of video conferencing.
Question 4. What are the ethical concerns involved in outsourcing?
Answer
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 use of child labour.
This raises the ethical concern 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
Question 5. Describebriefly the data storage and transmission risks in e-business.
Answer
There are a number of risks to which data is exposed while it is stored or is en-route In a transaction. Vital Information may be stolen or modified to pursue mdividual gains There can be attacks of VIRUS and hacking Virus means Vital Information Under Siege It is a program which replicates itself on the other computer systems.
The effect of computer viruses can range from some annoying on-screen display (Level-1 virus), disruption of functioning (Level-2 virus) damage to target data files (Level-3 virus), to complete destruction of the system (Level-4 virus).Anti-Virus programmes need to be installed and updated on the system and hies and disks should be scanned with them to provide protection from virus attacks. Data may be intercepted In the course of transmission.
Cryptography is used for protection against such nsks. It refers to the art of protecting information by transforming it (encrypting It) Into an unreadable format called ‘cyphertext’ Only those who possess a secret key can decipher (or decrypt) the message into ‘plaintext’ and thus others do not understand your conversation.
Long Answer Type Questions
Question 1. 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.
Answer
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.
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 as production, inventory management, product development, accounting and finance and human resource management.
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.
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 to successfully 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 nas to keep evolving by adopting new trends in order to benefit from emerging technologies.
Question 2. Elaborate the steps involved in on-tine trading.
Answer
The following steps are involved in on-line trading
(i) Registration Before online shopping one has to register with the online vendor by filling up a registration form. In this form one has to give a password to protect the account otherwise anyone can log in your account.
(ii) Placing an Order In online transactions the order can be placed by picking and dropping the items in the shopping cart. Shopping cart is an online record of what you have picked up while browsing. After being sure of what you want to buy then check out from shopping cart and choose your payment option.
(iii) Payment through Mechanism In an online purchase payment is made through
(a) Cash on delivery
(b) Through cheque
(c) Net banking transfer
(d) Credit or debit card
(e) Digital cash
(Note If they ask steps In e-trading then following steps are to be mentioned)
(a) Opeaning bank a/c
(b) Opeaning demat account with a depository participant
(c) Opeaning online trading account with stock brockers
(d) Trading software installation
(e) Bidding and trading in securities
Question 3. Evaluate the need for outsourcing and discuss its limitations.
Answer
Global competitive pressures for higher quality products at lower costs. ever demanding customers and emerging technologies are responsible for the continuing emergence of outsourcing as a mode of business. Need for outsourcing is outlined in the following points
- Focussed Attention Business firms are realising that focusing their limited resources on a few areas where they have core competence, and contracting out the rest of the activities to their outsourcing partners can lead to better efficiency and effectiveness.
- Quest for Excellence Outsourcing enables the firms to pursue excellence by virtue of limited focus and also by extending their capabilities through contracting out the remaining activities to those who excel in performing them.
- Cost Reduction It has become necessary for firms operating In global markets to maintain quality of products while keeping prices low. Thus, the only way to survival and profitability is cost reduction. The outsourCing partners deliver the same service to a number of organisations and hence benefit from economies of large scale leading to lower cost.
- Growth through Alliance Investment requirements are reduced when some activities are outsourced.
Outsourcing also facilitates inter organisational knowledge sharing and collaborative learning
- Stimulates Economic Development Outsourcing stimulates entrepreneurship. employment and exports in the host countries e g . IT sector in India has become undisputed leader as far as global outsourcing in software development and IT·enabled services are concerned having 60 per cent of the global outsourcing share in the informatics sector
But there are certain limitations of outsourcing as given below
- Confidentiality Outsourcing depends on shaflng a lot of vital Information and knowledge. If the outsourcing partner does not maintain the confidentiality It can harm the interest of the party that outsources Its processes.
- Sweat·Shopplng Outsourcing firms seek to lower their costs by utilising the low-cost manpower of the host countnes. Moreover the work that is outsourced IS not of the type which may build the competency and capability of the outsourcing partner.
- Ethical Concerns 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 This raises ethical concerns.
- Resentment in the Home Countries The process of outsourcing manufacturing. marketing, research and development or IT·based services involves contracltng out Jobs or employment opportunities from the home country which causes resentment particularly if the home country is suffering from the problem of unemployment.
Question 4. Discuss the salient aspects of B2C commerce.
Answer B2C (Business-to-Customers) transactions have business firms at one end and its customers on the other end. The salient aspects of B2C Commerce are as follows
- Online Selling B2C commerce involves selling the products online to customers who register for online shopping However. it must be appreciated that ‘selling is the outcome of the marketing process.
- Online Marketing B2C commerce includes a wide gamut of marketing activities such as promotion and sometimes even delivery of products (e.g music or e-books) that are carried out online at a much lower cost but high speed.
- Adaptation to Customer Requirements B2C commerce has made it possible for firms to manufacture the product with customised features to suit the requirements of the customers and also to provide the convenience of delivery and payment to the customers.
- Customer Feedback B2C variant of e-cornmerce enables a business to be in continuous touch with its customers through online surveys about demand trends and customer satisfaction.
- C2B Interactions B2C is not a one-way traffic, i.e., from business-to-customers. It also covers C2B interactions which provide the consumers with the freedom of shopping-at-will. Customers can also make use of call centres set up by companies to make toll free calls to make queries and lodge complaints round the clock at no extra cost.
Outsourcing
The call centres or help lines for 82C commerce interactions may be outsourced and are not necessary to be set up by the business itself
Question 5. Discuss the limitations of electronic mode of doing business. Are these limitations severe enough to restrict its scope? Give reasons for your answer.
Answer
e-business has its own limitations as discussed below
- Low Personal Touch a-business lacks the warmth of interpersonal interactions and personal touch for satisfaction of customer. Thus, it is relatively less suitable mode of business for product categories requiring personal touch for convincing the customers such as garments, etc.
- Incongruence between Order Taking/Giving and Order Fulfilment 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 web sites take unusually long time to open.
- Need for Technology Capability and Competence of Parties to e-buslness e-business requires the parties to be fairly familiar with computers and internet. The digital divide has thus limited the use of e-buslness
- 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.
- Resistance to Change The process of adjustment to new technology and 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.
- Ethical Fallouts Companies use an ‘electroruc eye’ to keep track of the computer files. e-mail account and the websites visited by the their employees or others who use their network systems which is not considered right on ethical grounds.
But most of the limitations of e-busmsss discussed above are In the process of being overcome. Websites are becoming more and more interactive to overcome the problem of ‘low touch.’ Speed and quality of communication through internet is being Improved through communication technology innovatlons.
Efforts are on to overcome the digital divide through setting up of community tale-centres in villages and rural areas with the involvement of government agencies, NGOs and international institutions. Thus, we can say that despite limitations, e-business is here to stay and bring a positive change In the businesses governance and the economies.
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