NCERT MOST IMPORTANT QUESTIONS CLASS – 11 | Business Studies IMPORTANT QUESTIONS | CHAPTER –5 Emerging Modes of Business | EDUGROWN |

NCERT Most important question:

Question 1.
Define E-commerce and mention its opportunities in the modern business world.
Answer:
Meaning of Electronic Commerce (E-commerce): Internet commerce or E-commerce (electronic-commerce) is on-line electronic technology connected via the internet to assist and enhance a variety of business processes, functions, and systems. Using the Internet for commerce means no physical presence of parties is required.

Electronic commerce is electronic communication among enterprises, including customers, suppliers, business partners, govt, organizations, and financial institutions. It encompasses a broad range of activities like ordering, invoicing, transportation, delivery, and payment can be done electronically.

Definitions of E-commerce: “It is an electronic communication among enterprises, including customers, suppliers, business partners, government organizations and financial institutions. ”- Dr. Janardhan

Thus, we can understand “e-commerce is a general concept covering any business transaction executed electronically between parties such as companies to companies (business-to-business) companies and consumers (business-to-consumer), consumers and consumers, business and the public sector and between consumers and the public sector.

Therefore, we can say that electronic commerce is a generic name for a range of technologies that allows the transfer of business information using electronic means. This would, therefore, include technologies such as Electronic Data Interchange, Universal Product Certification or Article Numbering, geographical positioning System, etc. which allows the exchange of information reducing human intervention to a minimum.

Opportunities of E-commerce: The opportunities of electronic commerce are not just available to large corporations and government departments but many small to medium businesses are also discovering new cost-effective opportunities by using internet-related technology to help their business operations locally or internationally. It makes it possible to work round the clock and around the world. It offers business concerns more cost-efficient and time-efficient.

Moreover, e-commerce offers great opportunities for developing countries. It can help them to enter the prosperous global market place and hence serve to reduce the gap between rich and poor countries.

In today’s business world corporate applications of electronic commerce have focused on computer-to-computer interactions. The output of one computer program becomes the input to another. The system that is used to generate a printed purchase order and mail it to the supplier now sends the purchase order as an electronic data interchange message to a computer at the supplier’s facility. The order is automatically, electronically received, and input by the supplier’s own order processing software and does not have to be keyed in. Payments are similarly automatic with electronic funds transfers (EFT) replacing cheques. It makes no sense to spend money on paper and people when two computers can structure the transaction for a few amount.

E-commerce offers the following opportunities to suppliers and commensurate benefits to consumers:

• Global choice.
• Improved competitiveness or quality of services.
• Personalized products and services.
• Rapid response to needs.
• New products and services.

Question 2.
Give the meaning of E-business.
Answer:
Meaning of E-business: E-business (Electronic business) is the conduct of business on the internet. It involves not only buying and selling but also servicing customers and collaborating with business partners. E-business is the future of all business. It encompasses the use of technologies, processes, and management practices that enhance organizational competitiveness through the strategic use of electronic information.

It goes beyond e-commerce by integrating e-commerce tightly with business operations to improve performance, create value and enable new relationships between businessmen and customers. It involves strengthening relationships with customers and suppliers. It is beneficial to check the competition and useful for developing new product ideas and sources. It is more concerned with re-designing business processes.

Question 3.
What are the various uses on benefits of e-commerce?
Answer:
Uses of E-commerce:
1. Customers search: E-commerce helps in finding customers for the product or service by sending them informative e-mails for the product or service. These e-mails help customers to understand the product and decide as to whether it should be purchased or not. It makes use of a search engine to find an appropriate seller’s website.

2. Pre-sales inquiries: Customers can contact the company’s sales executives through the company web-site to have information about the product price, specification, etc. It may select the desired seller from the advertisement or a friend’s recommendations.

3. Information publishing and dissemination Company web¬site helps in providing the latest information about the price, discount, quality of the product, etc. Web-site can be accessed anywhere in the world.

4. Sales of product: Online sales of products can be made on the website. Customers can choose the product from the catalog of photographs and order online. Payment can be made through cheque, draft, or credit card.

5. Advertising product: E-commerce helps to advertise the product through e-mails, website, telemarketing, etc. Customers can be given the latest information on the e-mail or website.

6. Sales promotions: Sales can be increased by online trading on the internet also helps to provide better customer service by receiving their complaints on the e-mail.

7. Purchasing goods: Suppliers can be found on the internet for a particular product or service. Internet search engines like Google, Yahoo help in locating suppliers from all parts of the world.

8. Funds transfer: Internet banking has the facility of funds transfer from one bank to another. The customers are provided secured identity to carry out such transactions on the internet. Payment may be made through credit card or cheque online.

9. After-sale service: Customers can be provided efficient after-sales service by contacting them via the e-mail address. Customers can put the complaints through companies e-mails.

Question 4.
Explain the process of E-business or online transactions.
Answer:
Process of E-commerce Transactions:
1. The cardholder browses items the merchant has for sale: Traditionally, the buyer walks into a bookstore and browse items on the shelves. If he finds something that he likes, he puts it into his shopping cart.

With electronic shopping, the buyer uses his Internet browser to browse items. Arvind Cloth Mills, Surat has for sales on its web pages. If he finds a cloth that interests him, he can add it to his virtual shopping cart. Arvind Cloth Mills Website provides a mechanism for keeping track of the order state, thereby remembering which books the buyer decides to keep in his cart.

2. The cardholder decided which of the items to purchase: With electronic shopping, as well as with traditional shopping, the buyer can remove any or all of the clothing he has placed in his shopping cart. (This functionality is merchant-supplied and is not a part of SET.) He pays only for the ones that he has decided to purchase.

3. The cardholder is presented with an invoice containing the list of items and their price: Traditionally, the buyer takes his clothes to the cash register, and the clerk rings up his purchase and presents him with a total price.

With electronic shopping, the buyer makes his decision to pay via Arvind Cloth Mill’s Website by clicking on a “Pay Now” button or something similar. He is then presented with a sales order electronically, from the cloth mill’s server, or on his computer via his electronic shopping software.

4. The cardholder selects a means of payment: When standing at the checkout counter at the cloth mill, the buyer decides which of the credit cards in his wallet, he wishes to use for his purchase.

Similarly, the buyer may have multiple cards he can choose from to complete his SET transaction.

5. The cardholder gives the merchant order confirmation along with the means of payment: Traditionally, this is as easy as the buyer handing the clerk a credit card.

With SET, the order and payment instructions are digitally signed by the buyer and are then sent to the Arvind Cloth Mill, Surat.

6. The merchant requests authorization for the purchase: With both electronic and traditional shopping, the cloth mill sends an authorization request to its acquire via its payment gateway. The acquire sends this information for processing to the buyer’s issue.

The issue returns with an authorization response. The response includes an indication of whether the authorization request has been approved. In turn, the acquirer responds to Arvind Cloth Mill, Surat with the outcome (acceptance or rejection) of the processing.

7. The merchant delivers goods to the cardholder: The cloth mill’s clerk, in the case of traditional acceptance, give the buyer his clothes and sends him on his way.

Question 5.
What are the various security problems that arise in E-commerce transactions?
Answer:
Security problems related to E-commerce: E-commerce has been facing certain problems that endanger the security and safety of business conditions.

The important problems are discussed below:
1. Hacking: It means unauthorized entry into a website. The hacker can destroy the data on the website which would cause a huge loss to the owner of the website. This would interrupt the business transactions carried out through the website. In several countries, the governments have set cybercrime cells to take action against the crimes committed by the hackers. In recent years, there has been an alarming increase in the cases of hacking.

2. Viruses: There are several viruses that can clean up all the information stored in the computer. The viruses can enter a system through e-mail or disc drive floppies or affected websites. Until the: virus is cleaned out, all operations come to a standstill. In such a situation, the business firm will suffer a loss of revenue. Viruses cause huge loss. of revenue and time to clear the disc drive floppies or websites.

3. Brand-hijacking: The Internet allows the creation of powerful brands in a very short period of time. But brand identity created through radio, T.V., and the press is very costly and time-consuming. The internet brand may overshadow the existing brands causing huge loss to their owners. For instance, Amazon became the leading bookseller brand within a period of about two years and it offered tough challenges to the established names such as Barnes and Noble. As a safeguard, each company should establish its brands in cyberspace without further delay.

4. Impersonation: Hackers may pretend to be customers themselves. They thus make use of stolen credit cards of real customers.

5. Fraudulent trading: A business enterprise operating a website may indulge in fraudulent practices. It may create a fake website, take away money from customers and not supply the product/service to the customer. It may not protect confidential information about customers. Parties to a transaction cannot deny their participation later on.

6. Improper registration of domain names: A dishonest person may register a domain name linked to the established brand name or trademark of another firm. For example, he may register vodafone.com. in his name to sell the domain name to the rightful owner at a price.

Question 6.
What is the meaning of the term ‘outsourcing’?
Answer:
Outsourcing (Introduction): In today’s eta, businesses are more focused on cost control measures as it is not easy to increase prices if a market share has to be retained or improved. Competitive advantage can be realized only when businesses become more efficient in their operations and reduce the cost of inefficiencies. In such a case specialization plays an important role.

During the 1990s, a new trend could be seen wherein the repetitive nature of work was being transferred to outside agencies so that efficiency in day-to-day operations can be achieved and businesses remain focussed on their core competencies. This phenomenon of hiring outside firms for services is known as outsourcing of services. It is a trend that is radically reshipping business. It relates to long term contracting out the non-core activities to third parties. With a view to benefitting from their experience, expertise, efficiency, and investment.

Meaning of Outsourcing Services: Outsourcing is the latest trend in today’s business world, going outside your own organization to obtain specialized services of various kinds. It is called Business Process Outsourcing (BPO), which essentially means getting tasks accomplished through an outside agency. Every outsourcing relationship involves processes and procedures. These are often standardized but it is important that there is some flexibility to ensure that they can evolve with the relationship.

Question 7.
Mention the various characteristics or features of outsourcing.
Answer:
1. Getting work done through outsiders: Outsourcing is the process of getting work done from specialist individuals outside the business. For example, an enterprise hires other agencies for repairing its machines rather than repair them by its staff.

2. Quality job: Through using outsourcing sources people get good quality. For example, a specialized faculty of a particular subject can teach the same subject better than general faculty.

3. Improvement in the number of products: Outsourcing helps to improve the number of products. A specialized courier agency or a transport company serves business better than its own drivers of trucks/ vehicles.

4. Expansion of business: The outsourcing process links growing businesses to a range of state-of-the-art services and, resources using outsourcing resources any business can expand as per its need. For example, using an advertising agency as a source of outsourcing a company/business can inform the features and quality of the product to people in an easy way.

5. Better standard of living- Outsourcing provided the best services to the people. In the modern world, every individual wants to avail of the maximum opportunity of his precious time. That’s why, he wants to use specialists for his different needs, which provides a better standard of living.

Question 8.
Mention in brief the various types of outsourcing.
Answer:
Type of outsourcing: Any non-core business process can be outsourced. Outsourcing of some of the popular services are given below:
1. Financial Services: Big companies require to obtain several financial services from outside or external sources. Every business firm requires some sort of financial service, e.g. payroll accounting services, merchant banking, underwriting, etc.

Manufacturing and commercial firms except for very large size find it more convenient and economical to depend upon outside financial agencies for the various financial services. For example, Reliance Industries may outsource financial services from HSBC Bank for issuing ADRs/GDRs in foreign capital markets.

2. Advertising: All big firms outsource the assignment of advertising their products and services to specialized handling. Business firms generally depend upon advertising agencies for designing, developing, and disseminating advertisements for their products and services. Some big advertisers such as Coca Cola, Pepsi, Hindustan Lever, and others have agreements with advertising agencies. Under the agreement, the advertising agency undertakes to provide all services concerning advertising in return for a fee. Outsourcing also helps to make use of the services of experts of ad-agency.

3. Courier Service: Big business firms have to send letters, parcels, etc. in large numbers. They make use of sendees offered by courier firms such as DTH, Overnight Express, and others. These courier firms collect all articles to be deposited from the offices of client firms and dispatch them to their destinations. Courier service is faster and more efficient, cheaper, quite reliable, and personalized service to clients.

4. Customer Support Service (CSS): ‘Customer is like a precious ornament which should not be stolen by anyone else.’ Several services are offered to customers to support the purchase and use of products. Companies are realizing that customer service is an excellent way to achieves competitive advantage in a highly competitive market.

Customers need home delivery service, repair, and maintenance of consumer durables, information, and counseling about alternate brands that best meet their needs. Business firms can concentrate on the sales function by outsourcing customer support services. For example, GE Capital and some other companies have set up call centers in India to provide support services to their customers in different countries.

Question 9.
Give a brief view of various advantages or need of outsourcing in today’s competitive world.
Answer:
Advantages/need of outsourcing: In today’s business world, outsourcing has become a buzz word to achieve specialization in services due to lack of time and unlimited requirements. Everyone wants more satisfaction in less time so that he uses specialists who create requirements of outsourcing of resources.

The principal needs of outsourcing are classified as follows:
1. Concentration on Core Competency: BPO provides an opportunity to the business to concentrate on core areas of its strength and competence. It can content rule on advertising, financial, courier, and customer services.

2. Enhancement of Business: As we know that every businessman wants more and more profit and personal development. For that, he should try to become distinguished from others by providing standard and specialized quality of a product. In order to achieve this objective, he should use outsourcing resources to make his dreams true.

3. Specialisation: Through outsourcing specialization in business operations can be achieved. This reduces cost and improves the quality of business operations.

4. Obtaining Better Quality of Product Services: The standard of living, of people, is improving day by day. Every individual wants to use the standard quality of goods and services. For this purpose they use outsourcing resources, so that standard quality of goods services could be produced.

5. Big Savings: Outsourcing agencies are competent enough in their services and perform the job at a lesser cost. It results in savings.

6. Avoidance of Labour Problems: Outsourcing requires a lesser number of persons to be employed by the business, so labor problems are also reduced.

7. Lowering the chances of Risk: Outsourcing to a service provider who is a specialist in the field adds to the success of the business firm and lowers the chances of risks.