e Commerce & Business

CHAPTER 5

EMERGING MODES OF BUSINESS

LEARNING OBJECTIVES

After studying this chapter, you should be able to:

• state the meaning of e-business;

• explain the process of online buying and selling as a part ofe-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 doingbusiness;

• discuss the need for business process outsourcing; and

• appreciate the scope of business process outsourcing.

111EMERGING MODES OF BUSINESS

5.1 INTRODUCTION

The way business is done hasundergone fundamental changesduring the last decade or so. Themanner of conducting business isreferred to as the ‘mode of business,’and, the prefix ‘emerging’ underlinesthe fact, that these changes arehappening here and now, and, thatthese trends are likely to continue.In fact, if one were to list thethree strongest trends that areshaping business, these would be:(i) digitisation — the conversion of text,sound, images, video, and othercontent into a series of ones and zeroesthat can be transmitted electronically,(ii) outsourcing, and, (iii) inter -nationalisation and globalisation. Youwill read about international businessin Chapter 11. In this chapter, we willbe familiarising you with the first twodevelopments, i.e., digitisation (a termfrom electronics) of business — alsoreferred to as electronic business(e-business), and Business ProcessOutsourcing (BPO). Before we do so, abrief discussion about the factors

responsible for these two new modesof business would be in order.

The newer modes of business arenot new business. These are rathersimply the new ways of doing businessattributable to a number of factors.You are aware that business as anactivity is aimed at creating utilities orvalue in the form of goods and serviceswhich the household and industrialbuyers purchase for meeting theirneeds and wants. In an effort toimprove the business processes — beit purchase and production,marketing, finance or human resourcesbusiness managers and businessthinkers keep evolving newer and betterways of doing things. Business firmshave to strengthen their capabilities ofcreating utilities and delivering valueto successfully meet the competitivepressures and ever-growing demandsof consumers for better quality, lowerprices, speedier deliveries and bettercustomer care. Besides, the quest forbenefitting from emerging technologiesmeans that business as an activitykeeps evolving.

“Let us do some shopping,” Rita woke up Rekha, her friend from the home-village who had come to Delhi during the vacations. “At this hour well pastmidnight,” said Rekha rubbing her eyes, “Who would be sitting with his shopopen for you?” “Oh! Perhaps I could not convey it properly. We are not goinganywhere! I am talking about online shopping over the internet!” told Rita.“Oh yes! I have heard of online shopping, but have never done any,” Rekhasaid, “What would they be selling over the internet, how will they deliver,What about payment… and why is it that internet has not yet become aspopular in the villages? As Rekha was grappling with these questions, Ritahad already logged on to one of India’s largest online shopping mall.

112 BUSINESS STUDIES

5.2 e-BUSINESS

If the term business is taken to meana wide range of activities comprisingindustry, trade and commerce;e-business may be defined as theconduct of industry, trade andcommerce using the computernetworks. The network you are mostfamiliar with as a student or consumeris the internet. Whereas internet is apublic thorough way, firms use moreprivate, and, hence more securenetworks for more effective and efficientmanagement of their internal functions.e-business versus e-commerce:Though, many a times, the termse-business and e-commerce are usedinterchangeably, yet more precisedefinitions would distinguish betweenthe two. Just as the term ‘business’ isa broader term than ‘commerce’,e-business is a more elaborate termand comprises various business

transactions and functions conductedelectronically, including the morepopular gamut of transactions called‘e-commerce.’ e-commerce covers afirm’s interactions with its customersand suppliers over the internet.e-business includes not onlye-commerce, but also otherelectronically conducted businessfunctions such as production,inventory management, productdevelopment, accounting and financeand human resource management.e-business is, therefore, clearly muchmore than buying and selling over theinternet, i.e., e-commerce.

5.2.1 Scope of e-Business

We have mentioned above that thescope of e-business is quite vast.Almost all types of business functionssuch as production, finance, marketingand personnel administration as well

Figure 5.1 Firm as a link between Network of Suppliers and Customers

B2Btransactions

B2CTransactions

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as managerial activities like planning,organising and controlling can becarried out over computer networks.The other way of looking at the scopeof e-business is to examine it in termsof people or parties involved inelectronic transactions. Viewed fromthis perspective, a firm’s electronictransactions and networks can bevisualised as extending into threedirections viz., (i) B2B which is a firm’sinteractions with other businesses,(ii) B2C i.e., a firm’s interactions withits customers and (iii) intra-B or a firm’sinternal processes.

Figure 5.1 summarises the networkof parties and interactions thatcomprises e-business.

A brief discussion of variousconstituents of e-business and inter-and intra-transactions among them isgiven as below:(i) B2B Commerce: Here, both theparties involved in e-commercetransactions are business firms, and,hence the name B2B, i.e., business-to-business. Creation of utilities ordelivering value requires a business tointeract with a number of other businessfirms which may be suppliers or vendorsof diverse inputs; or else they may bea part of the channel through whicha firm distributes its products tothe consumers. For example, themanufacture of an automobile requiresassembly of a large number ofcomponents which in turn are beingmanufactured elsewhere — within thevicinity of the automobile factory or evenoverseas. To reduce dependence on asingle supplier, the automobile factory

has to cultivate more than one vendorfor each of the components. A networkof computers is used for placing orders,monitoring production and delivery ofcomponents, and making payments.Likewise, a firm may strengthen andimprove its distribution system byexercising a real time (as it happens)control over its stock-in-transit as wellas that with different middlemen indifferent locations. For example, eachconsignment of goods from a warehouseand the stock-at-hand can be monitoredand replenishments and reinforcementscan be set in motion as andwhen needed. Or else, a customer’sspecifications may be routed throughthe dealers to the factory and fedinto the manufacturing system forcustomised production. Use ofe-commerce expedites the movement ofthe information and documents; and oflate, money transfers as well.

Historically, the term e-commerceoriginally meant facilitation of B2Btransactions using Electronic DataInterchange (EDI) technology to sendand receive commercial documents likepurchase orders or invoices.(ii) B2C Commerce: As the nameimplies, B2C (business-to-customers)transactions have business firms atone end and its customers on the otherend. Although, what comes to one’smind instantaneously is onlineshopping, it must be appreciated that‘selling’ is the outcome of the marketingprocess. And, marketing begins wellbefore a product is offered for sale andcontinues even after the product has


History of e-commerce

e-commerce began before personal computers were prevalent and has growninto a multi-billion dollar industry, but where did it come from? By looking at theevolution of e-commerce, it will be easier to judge its trends for the future.

Year Event

1984 EDI, or electronic data interchange, was standardised throughASC X12.* This guaranteed that companies would be able tocomplete transactions with one another reliably.

1992 ‘Compuserve’ offers online retail products to its customers. Thisgives people the first chance to buy things off their computer.

1994 Netscape arrived. Providing users a simple browser** to surf theinternet and a safe online transaction technology called SecureSockets Layer.***

1995 Two of the biggest names in e-commerce are launched:Amazon.com and e-Bay dot. com

1998 DSL, or Digital Subscriber Line, provides fast, always-on Internetservice to subscribers across California. This prompts people tospend more time, and money, online.

1999 Retail spending over the Internet reaches $20 billion, accordingto Business.com.

2000 The U.S government extended the moratorium on internet taxesuntil at least 2005.

Source: Glossary of e-commerce Terms,http://www.uta.edu/infosys/e_comm/terms/term_a.htm

* American Standard Code for Information Interchange (ASCII): A widely used andinternationally recognised coding system to represent characters in a standard way.ASCII is commonly used for storage within computer systems, and for exchange betweenthem.

** Browser: The generic term for software programs that retrieve, display, and printinformation on World Wide Web. The most popular browsers are Microsoft Internet Explorer,Netscape Navigator and Mosaic. Mosaic was the first browser to introduce graphics.Previously, users were only allowed to view the text of web pages.

*** Secure Socket Layer (SSL): SSL was designed by Netscape for use in electronic commercefor transactions involving confidential information such as credit card numbers. SecureSocket Layer uses a system of public and private key authentication combined with otherschemes to verify electronic signatures. The ability to conduct secure and confidentialtransactions over the internet is critical to the success of electronic commerce. Public key isthe password that the sender uses to encrypt the data and the private key is used by thereceiver of a message to decrypt the data.


been sold. B2C commerce, therefore,entails a wide gamut of marketingactivities such as identifying activities,promotion and sometimes even deliveryof products (e.g., music or films) thatare carried out online. e-commercepermits conduct of these activities at amuch lower cost but high speed. Forexample, ATM speeds up withdrawalof money.

freedom of shopping-at-will. Customerscan also make use of call centres setup by companies to make toll free callsto make queries and lodge complaintsround the clock at no extra cost tothem. The beauty of the process is thatone need not set up these call centresor help lines; they may be outsourced.We shall discuss this aspect later in thesection devoted to Business ProcessOutsourcing (BPO).

ATM speeds up withdrawal of Money

e-commerce greatly facilitates and speeds up the entire B2C process. Withdrawalof one’s own money from banks was, for example, a tedious process in the past.One had to go through a series of procedural formalities before he or she wasable to get the payment. After the introduction of ATMs, all that is fast becominghistory now. The first thing that occurs is that the customer is able to withdrawhis money, and the rest of the back-end processes take place later.

Customers these days are becomingvery choosy and desire individualattention to be given to them. Not onlydo they require the product features betailor-made to suit their requirements,but also the convenience of delivery andpayment at their pleasure. With theonset of e-commerce, all this hasbecome a reality.

Further, B2C variant of e-commerceenables a business to be in touch withits customers on round-the-clockbasis. Companies can conduct onlinesurveys to ascertain as to who isbuying what and what the customersatisfaction level is.

By now, you might have formed theopinion that B2C is a one-way traffic,i.e., from business-to-customers. Butdo remember that its corollary, C2Bcommerce is very much a reality whichprovides the consumers with the

(iii) Intra-B Commerce: Here, partiesinvolved in the electronic transactionsare from within a given business firm,hence, the name intra-B commerce. Asnoted earlier too, one critical differencebetween e-commerce and e-businessis that, e-commerce comprises abusiness firm’s interaction with itssuppliers, and distributors/otherbusiness firms (hence, the name B2B)and customers (B2C) over the internet.While e-business is a much wider termand also includes the use of intranetfor managing interactions anddealings among various departmentsand persons within a firm. It is largelydue to use of intra-B commerce thattoday it has become possible forthe firms to go in for flexiblemanufacturing. Use of computernetworks makes it possible for themarketing department to interact


constantly with the productiondepartment and get the customisedproducts made as per therequirements of the individualcustomer. In a similar vein, closercomputer-based interactions amongthe other departments makes itpossible for the firm to reapadvantages of efficient inventoryand cash management, greaterutilisation of plant and machinery,effective handling of customers’orders, and effective human resourcemanagement.

Just as intercom facilitated voicecommunication within the office,intranet facilitates multimedia and even3-D graphic communication amongorganisational units for well-informed decisions, permitting bettercoordination, faster decisions andspeedier workflows. Take for example,a firm’s interactions with its employees,sometimes referred to as B2Ecommerce. Companies are resorting topersonnel recruitment, interviewingand selection, training, developmentand education via e-commerce(captured in a catch-all phrase‘e-learning’). Employees can useelectronic catalogues and orderingforms and access inventory informationfor better interaction with thecustomers. They can send field reportsvia e-mail and the management canhave them on real time basis. In fact,Virtual Private Network (VPN)technology would mean that employeesdo not have to come to office. Instead,in a way the office goes to them andthey can work from wherever they are,

and at their own speed and timeconvenience. Meetings can be heldonline via tele/ video conferencing.(iv) C2C Commerce: Here, thebusiness originates from the consumerand the ultimate destination is alsoconsumers, thus the name C2Ccommerce. This type of commerce isbest suited for dealing in goods forwhich there is no established marketmechanism, for example, selling usedbooks or clothes either on cash orbarter basis. The vast space ofthe internet allows persons to globallysearch for potential buyers.Additionally, e-commerce technologyprovides market system security tosuch transactions which otherwisewould have been missing ifthe buyers and sellers were tointeract in anonymity of one-to-onetransactions? An excellent example ofthis is found at eBay where consumerssell their goods and services to otherconsumers. To make this activitymore secure and robust, severaltechnologies have emerged. Firstly,eBay allows all the sellers and buyersto rate one another. In this manner,future prospective purchasers may seethat a particular seller has sold to morethan 2,000 customers — all of whomrate the seller as excellent. In anotherexample, a prospective purchaser maysee a seller who has previously soldonly four times and all four rate theseller poorly. This type of informationis helpful. Another technology that hasemerged to support C2C activities isthat of the payment intermediary.PayPal is a good example of this kind.


e-commerce makes flexible Manufacturing andMass Customisation possible

Customised products have traditionally been made to order by craftsmen andhave, therefore, been expensive and delivery times have been long. Industrialrevolution meant that organisations could engage in mass production and couldsell homogeneous products rolled out of the factory at a lower cost due to theeconomies of scale. Thanks to e-commerce, now organisations can offercustomised products/ services at lower costs, that previously were only associatedwith mass produced commodity items. Here are a few examples:

401(k) Forum (US) Customises educational content and investment advice basedon individual interviews.

Acumin Corp. (US) Customises vitamin pills specified by using the Internet.Customers fill in lifestyle and health questionnaire.

Dell (US) Build your own PC.

Green Mountain Electricity supplier (but not generator). Customers could selectEnergy Resources sources for their electricity, e.g., hydro, solar, etc.(US)

Levi Jeans Tailored jeans service. Web service suspended after complaints(Original Spin) by retailers but service now offered through retailers. Offers(US) 49,500 different sizes and 30 styles for a total of nearly 1.5

million options for a cost of just $55. Orders are sent by netand jeans are produced and shipped in 2-3 weeks.

N.V. Nutsbedrijf Westland supplies natural gas to many tulip growers in theWestland Netherlands. Computers in the greenhouse help greenhouse(Newzealand) owners maintain temperature, CO2 output, humidity, light and

other factors in the most cost-efficient manner.

National Bicycle Custom built bicycles within 2/3 days of taking the order.(Japan)

Simon and Teachers can order customised books specifically matched toSchuster (US) individual course and student needs. Xerox DocuTech printers

are generating in excess of 125,000 customised books a month.

Skyway (US) Skyway is a logistics company offering whole order delivery.Shipments from multiple origins with different modes oftransport can be merged in transit and delivered as a singleorder with one set of paperwork to the store or consumer.

SmithKline Creates customised stop smoking programme for customers.Beecham (US) Uses call centre questionnaire to generate a series of

personalised communications.

Source: Adapted from http://www.managingchange.com


Facilitating C2C Commerce — The Way Does it

eBay’s Trust and Safety team is responsible for keeping the marketplace a safe,well-lit place for people around the world to trade with one other.

Actively working to enable members to trade safely, eBay fosters trust betweenmembers through the development and enforcement of rules and policies, thecreation of reputation-building programs, and the prevention of fraud.

eBay also works behind-the-scenes to prevent fraud and, in the event a problemoccurs, eBay proactively works with law enforcement and government agenciesthroughout the world to enforce its policies. Rooted in the values of the marketplace,eBay’s policies are aimed at offering a level playing field, encouraging open, honest,and accountable transactions, and creating economic opportunities for everyone.

To help the community trade safely and build trust with one another, eBay offersthe following tools, programs, and resources:

eBay FeedbackeBay feedback is each user’s reputation on eBay. Through positive, negative, andneutral ratings and comments, each eBay member has a Feedback score. Allsellers display this score in the Seller Information box of the item listing page.eBay Feedback fosters trust between people by acting as both an incentive to dothe right thing and as a mark of distinction for those who conduct transactionswith respect, honesty, and fairness.

Buyer ProtectionUsers who see the PayPal Buyer Protection shield buy with confidence knowingthat their purchase is covered up to $500 at no additional cost. For users who arenot using PayPal as their payment system, there is also the eBay StandardPurchase Protection Program which provides up to $200 coverage (minus a $25processing cost) for either items that are not received or items that are not asdescribed in the listing.

Spoof (Fraudulent) Web Site ProtectionThe eBay Toolbar with Account Guard enables eBay members to protect theiraccounts by indicating when they are on an eBay or PayPal site and warningthem when they are on a potentially fraudulent, or spoof, Web site. In addition,eBay helps users prevent and combat fraud by conducting online tutorials onspoof email and educating members on how to report issues to [email protected].

eBay Security CenterThe eBay Security Center provides guidance on buying safely, selling safely, andpaying safely, as well as valuable third-party, government and law-enforcementresources. The Security Center is a valuable resource for all users, from first-timebuyers who want information on safeguarding online transactions to high-volumesellers who want to protect their copyrights.

Source: ww w.ebay.com


Instead of purchasing items directlyfrom an unknown, untrusted seller; thebuyer can instead send the money toPay Pal. From there, PayPal notifies theseller that they will hold the money forthem until the goods have been shippedand accepted by the buyer.

An important C2C area ofinteractive commerce can be theformation of consumers’ forum andpressure groups. You might have heardof Yahoo groups. Like a vehicle ownerin a traffic jam can alert others viamessage on radio (you must haveheard traffic alerts on FM) about thetraffic situation of the area he is stuckin; an aggrieved customer can share hisexperience with a product/service/vendor and warn others by writing justa message and making it known to theentire group. And, it is quite possiblethat the group pressure might resultin a solution of this problem.

From the foregoing discussionconcerning scope of e-business, it isclear that e-business applications arevaried and many.

e-Business versus TraditionalBusiness

By now, you must have formed an ideaas to how e-enabling has radicallytransformed the mode of doingbusiness. Table 5.1 provides a featureon comparison between traditionalbusiness and e-business.

A comparative assessment of thefeatures of traditional and e-businessas listed in Table 5.1 points towardsthe distinct benefits and limitations ofe-business that we shall discuss in thefollowing paragraphs.

5.3 BENEFITS OF e-BUSINESS

(i) Ease of formation and lowerinvestment requirements: Unlike ahost of procedural requirements forsetting up an industry, e-business isrelatively easy to start. The benefits ofinternet technology accrue to big orsmall business alike. In fact, internetis responsible for the popularity of thephrase: ‘networked individuals andfirms are more efficient thannetworthed individuals.’ This meansthat even if you do not have much ofthe investment (networth) but havecontacts (network), you can dofabulous business.

Imagine a restaurant that does nothave any requirement of a physicalspace. Yes, you may have an online‘menu’ representing the best of cuisinesfrom the best of restaurants the world-over that you have networked with. Thecustomer visits your website, decidesthe menu, places the order that in turnis routed to the restaurant locatedclosest to his location. The food isdelivered and the payment collected bythe restaurant staff and the amount dueto you as a client solicitor is credited toyour account through an electronicclearing system.(ii) Convenience: Internet offers theconvenience of ‘24 hours ××××× 7 days aweek ××××× 365 days’ a year business thatallowed Rita and Rekha to go forshopping well after midnight. Suchflexibility is available even to theorganisational personnel whereby theycan do work from wherever they are,and whenever they may want to do it.


Yes, e-business is truly a businessas enabled and enhanced byelectronics and offers the advantageof accessing anything, anywhere,anytime.(iii) Speed: As already noted, much ofthe buying or selling involves exchangeof information that internet allows atthe click of a mouse. This benefitbecomes all the more attractive in thecase of information-intensive productssuch as softwares, movies, music,e-books and journals that can even bedelivered online. Cycle time, i.e., thetime taken to complete a cycle from theorigin of demand to its fulfilment,is substantially reduced due totransformation of the business

processes from being sequential tobecoming parallel or simultaneous.You know that in the digital era, moneyis defined as electronic pulses atthe speed of light, thanks to theelectronic funds transfer technology ofe-commerce.(iv) Global reach/access: Internet istruly without boundaries. On the onehand, it allows the seller an access tothe global market; on the other hand,it affords to the buyer a freedom tochoose products from almost any partof the world. It would not be anexaggeration to say that in the absenceof internet, globalisation would havebeen considerably restricted in scopeand speed.

Box ASome e-Business Applications

e-Procurement: It involves internet-based sales transactions between businessfirms, including both, “reverse auctions” that facilitate online trade between asingle business purchaser and many sellers, and, digital marketplaces thatfacilitate online trading between multiple buyers and sellers.

e-Bidding/e-Auction: Most shopping sites have ‘Quote your price’ whereby youcan bid for the goods and services (such as airline tickets!). It also includese-tendering whereby one may submit tender quotations online.

e-Communication/e-Promotion: Right from e-mail, it includes publication ofonline catalogues displaying images of goods, advertisement through banners,pop-ups, opinion poles and customer surveys, etc. Meetings and conferencesmay be held by the means of video conferencing.

e-Delivery: It includes electronic delivery of computer software, photographs,videos, books (e-books) and journals (e-journals) and other multimedia contentto the user’s computer. It also includes rendering of legal, accounting, medical,and other consulting services electronically. In fact, internet provides the firmswith the opportunities for outsourcing of a host of Information Technology EnabledServices (ITES) that we will be discussing under business process outsourcing.Now, you can even print the airlines and railway tickets at home!

e-Trading: It involves securities trading, that is online buying and selling ofshares and other financial instruments. For example, sharekhan.com is India’slargest online trading firm.


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(v) Movement towards a paperlesssociety: Use of internet hasconsiderably reduced dependence onpaperwork and the attendant ‘red tape.’You know that Maruti Udyog does bulkof its sourcing of supplies of materialsand components in a paper less fashion.Even the government departments andregulatory authorities are increasinglymoving in this direction whereby theyallow electronic filing of returns andreports. In fact, e-commerce tools areeffecting the administrative reformsaimed at speeding up the process ofgranting permissions, approvals andlicences. In this respect, the provisionsof Information Technology Act 2000are quite noteworthy.

5.4 LIMITATIONS OF e-BUSINESS

e-business is not all that rosy. Doingbusiness in the electronic mode suffersfrom certain limitations. It is advisableto be aware of these limitations as well.(i) Low personal touch: High-tech itmay be, e-business, however, lackswarmth of interpersonal interactions. Tothis extent, it is relatively less suitablemode of business in respect of product

categories requiring high personaltouch such as garments, toiletries, etc.(ii) Incongruence between ordertaking/giving and order fulfilmentspeed: Information can flow at the clickof a mouse, but the physical delivery ofthe product takes time. Thisincongruence may play on the patienceof the customers. At times, due totechnical reasons, web sites takeunusually long time to open. This mayfurther frustrate the user.(iii) Need for technology capabilityand competence of parties toe-business: Apart from the traditional3R’s (Reading, WRiting, andARithmetic), e-business requires afairly high degree of familiarity of theparties with the world of computers.And, this requirement is responsible forwhat is known as digital divide, that isthe division of society on the basis offamiliarity and non-familiarity withdigital technology.(iv) Increased risk due to anonymityand non-traceability of parties:Internet transactions occur betweencyber personalities. As such, it becomesdifficult to establish the identity of theparties. Moreover, one does not know

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even the location from where the partiesmay be operating. It is riskier, therefore,transacting through internet.e-business is riskier also in the sensethat there are additional hazards ofimpersonation (someone else maytransact in your name) and leakage ofconfidential information such as credit

card details. Then, there also areproblems of ‘virus,’ and ‘hacking,’ thatyou must have heard of. If not, we willbe dealing with security and safetyconcerns of online business.(v) People resistance: The process ofadjustment to new technology and newway of doing things causes stress and

Information Technology Act 2000 paves way for Paperless Society

Below are given some of the provisions of Information Technology Act 2000 thathave made it possible to have paper less dealings in the business world as wellas in the government domain.

Legal recognition of electronic records (Section 4): Where any law providesthat information or any other matter shall be in writing or in the typewritten orprinted form, then, notwithstanding anything contained in such law, suchrequirement shall be deemed to have been satisfied if such information or matteris rendered or made available in an electronic form; and accessible so as to beusable for a subsequent reference.

Legal recognition of digital signatures (Section 5): Where any law providesthat information or any other matter shall be authenticated by affixing thesignature or any document shall be signed or bear the signature of any person,hence notwithstanding anything contained in such law, such requirement shallbe deemed to have been satisfied, if such information or matter is authenticatedby means of digital signature affixed in such a manner as may be prescribed bythe Central Government.

Use of electronic records and digital signatures in Government and itsagencies (Section 6-1): Where any law provides for the filing of any form,application or any other document with any office, authority, body or agencyowned or controlled by the appropriate Government in a particular manner; theissue or grant of any licence, permit, sanction or approval by whatever namecalled in a particular manner; the receipt or payment of money in a particularmanner, then, notwithstanding anything contained in any other law for thetime being in force, such requirement shall be deemed to have been satisfied ifsuch filing, issue, grant, receipt or payment, as the case may be, is effected bymeans of such electronic form as may be prescribed by the appropriateGovernment.

Retention of electronic records (Section 7-1): Where any law provides thatdocuments, records or information shall be retained for any specific period, then,that requirement shall be deemed to have been satisfied if such documents,records or information are retained in the electronic form.

Source: Information Technology Act, 2000


a sense of insecurity. As a result, peoplemay resist an organisation’s plans ofentry into e-business.(vi) Ethical fallouts: “So, you areplanning to quit, you may as well quitright now”, said the HR managershowing her a copy of the e-mail thatshe had written to her friend. Sabeenawas both shocked and stunned as tohow her boss got through to her e-mailaccount. Nowadays, companies use an‘electronic eye’ to keep track of thecomputer files you use, your e-mailaccount, the websites you visit etc. Is itethical?

Despite limitations, e-commerceis the way

It may be pointed out that most of thelimitations of e-business discussedabove are in the process of beingovercome. Websites are becoming more

and more interactive to overcome theproblem of ‘low touch.’ Communicationtechnology is continually evolving toincrease the speed and quality ofcommunication through internet.Efforts are on to overcome the digitaldivide, for example, by resorting to suchstrategies as setting up of communitytelecentres in villages and rural areasin India with the involvement ofgovernment agencies, NGOs andinternational institutions. In order todiffuse e-commerce in all nooks andcorners, India has undertaken about150 such projects.

In view of the above discussion, itis clear that e-business is here to stayand is poised to reshape the businesses,governance and the economies. It is,therefore, appropriate that wefamiliarise ourselves with howe-business is conducted.

Digital Divide: The Facts

First the figures. The statistics on the basic building block of connectivity —that is the phone lines — are stark.

According to the latest UN Human Development Report, industrialised countries,with only 15 per cent of the world’s population, are home to 88 per cent of allInternet users. Less than 1 per cent of people in South Asia are online eventhough it is home to one-fifth of the world’s population.

The situation is even worse in Africa. With 739 million people, there are only 14million phone lines. That’s fewer than in Manhattan or Tokyo. Eighty percent ofthose lines are in only six countries. There are only 1 million Internet users onthe entire continent compared with 10.5 million in the UK.

Even if telecommunication systems were in place, most of the world’s poor wouldstill be excluded from the information revolution because of illiteracy and a lackof basic computer skills. In Benin, for example, more than 60 per cent ofthe population is illiterate. The other 40 per cent are similarly out of luck.Four-fifths of the Websites are in English, a language understood by only one in10 people on the planet.

Source: http://www.news.bbc.co.uk/.../special_report/1999/10/


5.5 ONLINE TRANSACTIONS

Operationally, one may visualise threestages involved in online transactions.Firstly, the pre-purchase/sale stageincluding advertising and information-seeking; secondly, the purchase/salestage comprised of steps such as pricenegotiation, closing of purchase/salesdeal and payment; and thirdly, thedelivery stage (see Figure 5.2). It maybe observed from Figure 5.2 that, exceptthe stage relating to delivery, all otherstages involve flow of information. Theinformation is exchanged in thetraditional business mode too, but atsevere time and cost constraints. In face-to-face interaction in traditionalbusiness mode, for example, one needsto travel to be able to talk to the otherparty, requiring travel effort, greater timeand costs. Exchange of informationthrough the telephone is alsocumbersome. It requires simultaneouspresence of both the parties for verbalexchange of information. Informationcan be transmitted by post too, but thisagain is quite a time consuming andexpensive process. Internet comes in asthe fourth channel which is free frommost of the problems referred to above.In the case of information-intensiveproducts and services such as softwareand music, even delivery can take placeonline.

What is described here is theprocess of online trading from acustomer’s standpoint. We will bediscussing the seller’s perspective in theparagraphs on resource-requirementsfor e-business. So, are you ready withthe shopping list or would you like to

rely on your instincts as you takea tour of the shopping mall? Letus follow Rita and Rekha browsingindiatimes.com (Exhibit 5.1).(i) Registration: Before onlineshopping, one has to register with theonline vendor by filling-up aregistration form. Registration meansthat you have an ‘account’ with theonline vendor. Among various detailsthat need to be filled in is a ‘password’as the sections relating to your‘account’, and ‘shopping cart’ arepassword protected. Otherwise, anyonecan login using your name and shop inyour name. This can put you in trouble.(ii) Placing an order: You can pickand drop the items in the shopping cart.Shopping cart is an online record ofwhat you have picked up whilebrowsing the online store. Just as in aphysical store you can put in and takeitems out of your cart, likewise, you cando so even while shopping online. Afterbeing sure of what you want to buy,you can ‘checkout’ and choose yourpayment options.(iii) Payment mechanism: It is clearfrom Exhibit 5.1 that payment for thepurchases through online shoppingmay be done in a number of ways:

• Cash-on Delivery (CoD): As isclear from the name, payment forthe goods ordered online may bemade in cash at the time ofphysical delivery of goods.

• Cheque: Alternatively, the onlinevendor may arrange for the pickupof the cheque from the customer’send. Upon realisation, the deliveryof goods may be made.


• Net-banking Transfer: Modernbanks provide to their customers thefacility of electronic transfer of fundsover the net. In this case, therefore,the buyer may transfer the amountfor the agreed price of the transactionto the account of the online vendorwho may, then, proceed to arrangefor the delivery of goods.

• Credit or Debit Cards: Popularlyreferred to as ‘plastic money,’ thesecards are the most widely usedmedium for online transactions. Infact, about 95 per cent of onlineconsumer transactions areexecuted with a credit card. Creditcard allows its holder to makepurchase on credit. The amountdue from the card holder to theonline seller is assumed by the cardissuing bank, who later transfersthe amount involved in the

transaction to the credit of the seller.Buyer’s account is debited, whooften enjoys the freedom to depositthe amount in instalments and athis convenience. Debit card allowsits holder to make purchasesthrough it to the extent of theamount lying in the correspondingaccount. The moment anytransaction is made, the amountdue as payment is deductedelectronically from the card.

To accept credit card as anonline payment type, the seller firstneeds a secure means of collectingcredit card information from itscustomer. Payments through creditcards can be processed eithermanually, or through an onlineauthorisation system, such as SSLCertificate (see box on, History ofe-commerce).

Table 5.2 Telecenters Project in India

Name Number Agency Activityof kiosks

Bhoomi 30 Government of Karnataka Land title

e-chaupal 3500 ITC Procurement

Warna 72 National Informatics Centre (NIC) Cane Factory

Akshaya 617 Kerala e-literacy

Tara Haat 18 Development Alternatives e-training, marketinformation

Drishtee 90 Digital Partners Mandi prices, landtitles

Milk Coops 5000 National Dairy

Development Board Milk Collection

CIC (NE) 30 NIC Internet AccessSource: IIM, Workshop on Scaling up ICT for Poverty Alleviation in India, Ahmedabad,

February 26-27, 2004.


5.6 SECURITY AND SAFETY OF

e-TRANSACTIONS: e-BUSINESS

RISKS

Online transactions, unlike arm’slength transactions in physicalexchange, are prone to a number ofrisks. Risk refers to the probability ofany mishappening that can resultinto f inancial, reputational orpsychological losses to the partiesinvolved in a transaction. Because ofgreater probability of such risks inthe case of online transactions,security and safety issues becomesthe most crucial concern ine-business. One may broadly discussthese issues under three headings:transaction risks, data storageand transmission risks, andthreat to intellectual property andprivacy risks.

• Digital Cash: This is a form ofelectronic currency that exists onlyin cyberspace. This type ofcurrency has no real physicalproperties, but offers the ability touse real currency in an electronicformat. First you need to pay to abank (vide cheque, draft, etc.) anamount equivalent to the digitalcash that you want to get issuedin your favour. Then the bankdealing in e-cash will send you aspecial software (you candownload on your hard disk) thatwill allow you to draw digital cashfrom your account with the bank.You may then use the digital fundsto make purchases over the web.This type of payment system hopesto resolve the security problemsrelated to the use of credit cardnumbers on the internet.

Figure 5.2 Buying / Selling Process


Notes: 1. Typing of URL address in the address window of the browser leads one to the addressee’shome page, in this case indiatimes.com. From there one can move on to ‘Shopping.’ Home pagemeans the introductory or menu page of a website. A home page usually contains the site’s nameand a directory of its contents. All other pages on a server are usually accessible by following linksfrom the home page. 2. URL, i.e., ‘Uniform Resource Locator’ refers to a world wide web addressthat specifies a specific site, page, graphic, or document on the internet. It is www.indiatimes.comin the present case.

Exhibit 5.1 An Adaptation of ‘Shopping’ Page ofindiatimes.com — India’s Biggest Shopping Mall

Source: adapted from indiatimes.com


(i) Transaction risks: Onlinetransactions are vulnerable to thefollowing types of transaction risks:

• Seller denies that the customerever placed the order or thecustomer denies that he everplaced the order. This may bereferred to as ‘default on ordertaking/giving.’

• The intended delivery does nottake place, goods are delivered atwrong address, or goods otherthan ordered may be delivered.This may be regarded as ‘defaulton delivery’.

• Seller does not get the payment forthe goods supplied whereas thecustomer claims that the paymentwas made. This may be referredto as ‘default on payment’.

Thus, in e-business risk may arisefor the seller or the buyer on accountof default on order taking/giving,delivery as well as payment. Suchsituations can be averted by providingfor identity and location/addressverification at the time of registration,and obtaining authorisation as to theorder confirmation and paymentrealisation. For example, in order toconfirm that the customer has correctlyentered his details in the registrationform, the seller may verify the samefrom the ‘cookies’. Cookies are verysimilar to the caller ID in telephonesthat provide telemarketers with suchrelevant information as: the consumer’sname, address and previous purchasepayment record. As for customer’sprotection from anonymous sellers, itis always advisable to shop from well-

established shopping sites. Whileallowing advertisers to sell theirproducts online, these sites assurecustomers of the sellers’ identities,locations and service records. Sitessuch as eBay even provide for rating ofthe sellers. These sites provideprotection to the customers againstdefault on delivery and reimburse thepayments made up to some extent.

As for the payments, we havealready seen that in almost 95 per centof the cases people use credit cards fortheir online purchases. At the time ofconfirming the order, the buyer isrequired to furnish the details such asthe card number, card issuer and cardvalidity online. These details may beprocessed offline; and only aftersatisfying himself or herself about theavailability of the credit limits, etc., theseller may go ahead with the deliveryof goods. Alternatively, e-commercetechnology today permits even onlineprocessing of the credit cardinformation. For protecting the creditcard details from being misused,shopping malls these days use theencryption technology such asNetscape’s Secure Sockets Layer (SSL).You can gain some information aboutSSL from box on history of e-commerce.In the succeeding section, we willfamiliarise you with the encryption orcryptography — an important toolused for safeguarding against datatransmission risks in onlinetransactions.(ii) Data storage and transmissionrisks: Information is power indeed. Butthink for a moment if the power goes


into the wrong hands. Data stored inthe systems and en-route is exposedto a number of risks. Vital informationmay be stolen or modified to pursuesome selfish motives or simply for fun/adventure. You must have heard of‘virus’ and ‘hacking’. Do you know thefull form of the acronym ‘VIRUS?’ Itmeans Vital Information Under Siege.Actually, virus is a program (a series ofcommands) which replicates itself on theother computer systems. The effect ofcomputer viruses can range from mereannoyance in terms of some on-screendisplay (Level-1 virus), disruption offunctioning (Level-2 virus) damage totarget data files (Level-3 virus), tocomplete destruction of the system(Level-4 virus). Installing and timelyupdating anti-virus programmes andscanning the files and disks with themprovides protection to your data files,folders and systems from virus attacks.

Data may be intercepted in thecourse of transmission. For this, onemay use cryptography. It refers to theart of protecting information bytransforming it (encrypting it) into anunreadable format called ‘cyphertext’.Only those who possess a secret keycan decipher (or decrypt) the messageinto ‘plaintext’. This is similar to using‘code words’ with some one so thatothers do not understand yourconversation.(iii) Risks of threat to intellectualproperty and privacy: Internet is anopen space. Once the information isavailable over the internet, it moves outof the private domain. It then becomesdifficult to protect it from being copied.

Data furnished in the course of onlinetransactions may be supplied to otherswho may start dumping a host ofadvertising and promotional literatureinto your e-mail box. You are then atthe receiving end, with little respite fromreceiving junk mails.

5.7 RESOURCES REQUIRED FOR

SUCCESSFUL e-BUSINESS

IMPLEMENTATION

Setting up of any business requiresmoney, men and machines (hardware).For e-business, you require additionalresources for developing, operating,maintaining and enhancing a websitewhere ‘site’ means location and ‘web’means world wide web (www). Simplyspeaking, a website is a firm’s locationon the world wide web. Obviously,website is not a physical location.Rather, it is an online embodiment ofall the content that a firm may like toprovide to others.

5.8 OUTSOURCING: CONCEPT

Outsourcing is yet another trend thatis radically reshaping business. Itrefers to a long-term contracting outgenerally the non-core and of late evensome of the core activities to captiveor third party specialists with aview to benefitting from theirexperience, expertise, efficiency and,even investment.

This simple definition leads one tothe salient features of the concept thatare not peculiar to an industry/business or country, but have becomea global phenomenon.


Figure 5.3 Types of Outsourcing Service Providers

(i) Outsourcing involves contractingout: Literally, outsourcing means tosource from outside what you havehitherto been doing in-house. Forexample, most companies have so farappointed their own sanitation staff formaintaining neatness, cleanliness andoverall housekeeping of their premises.That is, sanitation and housekeepingfunctions were being performed in-house. But of late, many companieshave started outsourcing theseactivities, i.e., they have entrustedoutside agencies to perform theseactivities for their organisations on acontractual basis.(ii) Generally non-core businessactivities are outsourced: Sanitationand housekeeping functions are non-core for most organisations. Of course,for municipalities and sanitationsservices providers, these activitiescomprise the core of their businessactivity. Housekeeping is a core activityfor a hotel. In other words, dependingupon what business a company is in,there will be some activities that arecentral and critical to its basic businesspurpose. Other activities may beregarded as secondary or incidental to

fulfilling that basic purpose. Thepurpose of a school, for example, is todevelop a child by means of curricularand co-curricular activities. Clearly,these activities comprise the ‘core’activities. Running a cafeteria/canteenor a book store is non-core activity fora school.

As the organisations venture toexperiment with outsourcing, they mayinitially outsource only the non-core activities. But later on, as theybecome comfortable with managinginterdependencies, they may startgetting even the core activitiesperformed by the outsiders. Forexample, a school may tie-up with somecomputer training institute to impartcomputer education to its students.(iii) Processes may be outsourced toa captive unit or a third party: Thinkof a large multinational corporationthat deals in diverse products andmarkets them to a large number ofcountries. A number of processes suchas recruitment, selection, training,record and payroll (Human Resources),management of accounts receivableand accounts payable (accounting andfinance), customer support/grievance


handling /troubleshooting (marketing)are common to all its subsidiariesoperating in different countries. If theseprocesses could be centralised andparcelled out to a business unit createdespecially for this purpose, this wouldresult in avoidance of duplication ofresources, realisation of efficiency andeconomy’s performance of same activityon a large scale at one or a few selectlocations, thereby resulting insubstantial reduction in costs. Clearly,therefore, if the task of performing someactivity internally is sufficiently large,it may be beneficial for the firm to havea captive service provider, i.e., a serviceprovider set up for providing servicesof a given kind to only one firm. GeneralElectric (GE) is, for instance, the largestcaptive BPO unit in India for providingcertain kinds of services to the parentcompany in the United States as wellas to its subsidiaries in other countries.Or else, these processes may beparcelled out to third party serviceproviders who operate independentlyin the market and provide services toother firms too.

Figure 5.3 provides a synopticalview of how a firm can outsource someof its activities to the captive and thirdparty service providers. The hired partyservice providers are the persons/firmswhich specialise in some processessuch as Human Resource Management(HRM) and provide their services to awide base of clients, cutting acrossindustries. Such service providers arecalled ‘horizontals’ in the outsourcingterminology. Else, they may specialisein one or two industries and scale upto doing a number of processes from

non-core to core. These are called‘verticals.’ As the service providersmature, they move simultaneouslyhorizontal and vertical.

The most important reasonunderlying the use of outsourcing isto benefit from the expertise andexperience of others. Institutions likeschools, companies and hospitals canoutsource the cafeteria activity to thecatering and nutrition firms for whomthese activities comprise the core orheart of their operations. The idea ofoutsourcing is valuable as you tend togain not only in terms of their expertiseand experience and the resultantefficiency, but it also allows you to limityour investment and focus attention towhat your core processes are.

Little wonder that outsourcing isfast becoming an emerging mode ofbusiness. Firms have startedincreasingly outsourcing one or moreof their processes which can be moreefficiently and effectively carried out byothers. What qualifies outsourcingas an emerging mode of businessis its increasing acceptance as afundamental business policy andphilosophy, as opposed to the earlierphilosophy of ‘doing it all by yourself ’.

5.8.1 Scope of Outsourcing

Outsourcing comprises four keysegments: contract manufacturing,contract research, contract sales andinformatics (see Figure 5.4).

The term outsourcing has morepopularly come to be associated withIT -enabled services or BusinessProcess Outsourcing (BPO). In fact,


even more popular term is ‘call centres’providing customer-oriented voicebased services. About 70 per cent ofthe BPO industry’s revenue comesfrom call-centers, 20 per cent fromhigh-volume, low-value data work andthe remaining 10 per cent from higher-value information work. ‘Customer Care’accounts for the bulk of the call centeractivities with 24 hrs × 7 days handlingof in-bound (customer queries andgrievances) and out-bound (customersurveys, payment follow-up andtelemarketing) traffic. Figure 5.5 outlinesvarious types of outsourcing activities.

5.8.2 Need for Outsourcing

Necessity, they say, is the mother of allinventions. This can be said to be trueeven in case of the idea of outsourcing.As discussed in the introduction to thechapter, global competitive pressures

for higher quality products at lowercosts, ever demanding customers, andemerging technologies are the threemajor drivers causing a rethink orre-look at business processes. Thesemay be regarded as factors responsiblefor the continuing emergence ofoutsourcing as a mode of business. Infact, today outsourcing is beingresorted to not out of compulsion,but also out of choice. Some of themajor reasons (and also benefits) ofoutsourcing are discussed below.(i) Focusing of attention: You may begood at doing so many things inacademics and extra-curricularactivities, yet you would be better off byfocusing your limited time and moneyon just a few things for better efficiencyand effectiveness. Likewise, businessfirms are realising the usefulness offocusing on just a few areas where they

Figure 5.4 Scope of Outsourcing

Source: www.cygnusindia.com


have distinct capability or corecompetence, and contracting out therest of the activities to their outsourcingpartners. You are aware, that, in orderto create utilities or value, a businessengages in a number of processes, viz.,purchase and production, marketingand sales, R&D, accounting andfinance, HR and administration etc.Firms need to define or redefine

themselves. They, for example, need toconsider as to whether they would liketo be called a manufacturing ormarketing organisation. Such a way ofdelimiting the scope of businessenables them to focus their attentionand resources on select activities forbetter efficiency and effectiveness.(ii) Quest for excellence: You areaware of the benefits of division of labour

Figure 5.5 Anatomy of Outsourcing


and specialisation. Outsourcingenables the firms to pursue excellencein two ways. One, they excel themselvesin the activities that they can do thebest by virtue of limited focus. And,they excel by extending theircapabilities through contracting outthe remaining activities to those whoexcel in performing them. In the questfor excellence, it is necessary not onlyto know what you would like to focuson, but also what you would likeothers to do for you.(iii) Cost reduction: Globalcompetitiveness necessitates not onlyglobal quality, but also globalcompetitive pricing. As the prices turnsouthwards due to competitivepressures, the only way to survival andprofitability is cost reduction. Divisionof labour and specialisation, besidesimproving quality, reduces cost too.This happens due to the economies oflarge scale accruing to the outsourcingpartners as they deliver the sameservice to a number of organisations.Differences in prices of factors ofproduction across the countriesare also a factor contributing tocost reduction. For example, Indiais a preferred destination forglobal outsourcing of Research andDevelopment, manufacturing, softwaredevelopment and IT enabled services(ITES) because of large scale availabilityof required manpower at lower costs.(iv) Growth through alliance: To theextent you can avail of the services ofothers, your investment requirementsare reduced, others have invested inthose activities for you. Even if you may

like to have a stake in the business ofyour outsourcing partners, you profitfrom not only the low-cost and betterquality services provided by them toyou but also by virtue of a share in theprofit from the overall business they do.Therefore, you can expand rapidly asthe same amount of investible fundsresult in creation of a large number ofbusinesses. Apart from financialreturns, outsourcing facilitates inter-organisational knowledge sharing andcollaborative learning. This may alsoexplain the reasons why the firms todayare outsourcing not only their routine,non-core processes, but also seekingto benefit from outsourcing suchstrategic and core processes asResearch and Development.(v) Fillip to economic development:Outsourcing, more so offshore out-sourcing, stimulates entrepreneurship,employment and exports in the hostcountries (i.e., the countries from whereoutsourcing is done). In India in the ITsector alone, for example, there hasbeen such a tremendous growth ofentrepreneurship, employment andexports that today we are theundisputed leaders as far as globaloutsourcing in software developmentand IT-enabled services are concerned.Presently, we have 60 per cent of the$150 billion (1 billion = Rs. 100 crores)global outsourcing share in theinformatics sector.

5.8.3 Concerns over Outsourcing

It will not be out of place to be aware ofsome of the concerns that outsourcingis besieged with.(i) Confidentiality: Outsourcingdepends on sharing a lot of vital


information and knowledge. If theoutsourcing partner does not preservethe confidentiality, and, say, forexample, passes it on to competitors, itcan harm the interest of the party thatoutsources its processes. If outsourcinginvolves complete processes/products,there is a further risk of the outsourcingpartner starting up a competitivebusiness.(ii) Sweat-shopping: As the firms thatoutsource seek to lower their costs,they try to get maximum benefit fromthe low-cost manpower of the hostcountries. Moreover, it is observed thatwhether in the manufacturing sector orthe IT-sector, what is outsourced is thekind of components or work that doesnot much build the competency andcapability of the outsourcing partnerbeyond the skills needed to complywith a rigidly prescribed procedure/method. So, what the firm that go infor outsourcing look for is the ‘doing’skills rather than development of the‘thinking’ skills.(iii) Ethical concerns: Think of a shoecompany that, in order to cut costs,outsources manufacturing to adeveloping country where they usechild labour/women in the factories.

Back home, the company cannot do sodue to stringent laws forbidding use ofchild labour. Is cost cutting by usingchild labour in countries where it is notoutlawed or where the laws are ‘weak’,ethical? Similarly, is it ethical tooutsource the work to countries wherethere exists wage-discrimination on thebasis of sex of the worker?(iv) Resentment in the homecountries: In the course of contractingout manufacturing, marketing,Research and Development orIT-based services, what is ultimatelycontracted out is ‘employment’ or jobs.This may cause resentment back in thehome country (i.e., the country fromwhich the job is being sourced out)particularly if the home country issuffering from the problem ofunemployment.

The aforementioned concerns,however, do not seem to matter muchas the global outsourcing continues toflourish. As India emerges as a globaloutsourcing hub, the industry isforecast to explode at exponentialrates — from 23,000 people and $ 10million per annum in 1998 to over amillion people and revenues in excessof $ 20 billion by 2008.

Key Terms

e-Business e-Commerce Browser

Virus Secure Sockets Layer (SSL) Online trading

e-Trading e-Procurement e-Bidding

e-Cash Business Process Outsourcing Call Centres

Verticals Horizontals Captive BPO units

Sweat-shopping


SUMMARY

The world of business is changing. e-business and outsourcing are the twomost obvious expressions of this change. The trigger for the change owesits origin to both internal and external forces. Internally, it is the businessfirm’s own quest for improvement and efficiency that has propelled it intoe-business and outsourcing. Externally, the ever mounting competitivepressures and ever demanding customers have been the force behind thechange.

Electronic mode of doing business, or e-business as it is referred to, presentsthe firm with promising opportunities for anything, anywhere and anytimeto its customers, thereby, dismantling the time and space/locationalconstraints on its performance. Though e-business is high-tech, it suffersfrom the limitation of being low in personal touch. The customers as aresult do not get attended to on an interpersonal basis. Besides, there areconcerns over security of e-transactions and privacy of those who transactbusiness over the internet. The benefits of e-commerce also seem to haveaccrued unevenly across countries and across regions within a country.

Apart from becoming digital, the firms are also resorting to a departurefrom the erstwhile ‘do it all by yourself’ mindset. They are increasinglycontracting out manufacturing, R and D as well as of business processesirrespective of whether these are IT enabled or not. India is riding high onthe global outsourcing business and has gained considerably in termsof employment generation, capability building and contribution to exportsand GDP.

Together, the two trends of e-business and outsourcing are reshaping theway business is and will be conducted. Interestingly, both e-business andoutsourcing are continuing to evolve, and that is why these are referred toas the emerging modes of business.

EXERCISES

Multiple Choice Questions

Tick mark ( ) the most appropriate answer to the following 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 thebusiness

d. Interactions among the geographically dispersed units of thebusiness


2. Outsourcing

a. Restricts only to the contracting out of Information TechnologyEnabled Services (ITES)

b. Restricts only to the contracting out of non-core businessprocesses

c. Includes contracting out of manufacturing and R&D as well asservice processes — both core and non-core — but restricts onlyto domestic territory

d. Includes off-shoring

3. The payment mechanism typical to e-business

a. Cash on Delivery (CoD) b. Cheques

c. Credit and Debit Cards d. e-Cash

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

5. It is not an application of e-business

a. Online bidding b. Online procurement

c. Online trading d. Contract R&D

Short Answer Questions (50 Words)

1. State any three differences between e-business and traditionalbusiness.

2. How does outsourcing represent a new mode of business?

3. Describe briefly any two applications of e-business.

4. What are the ethical concerns involved in outsourcing?

5. Describe briefly the data storage and transmission risks in e-business.

Long Answer Questions

1. Why are e-business and outsourcing referred to as the emerging modesof business? Discuss the factors responsible for the growing importanceof these trends.

2. Elaborate the steps involved in on-line trading.

3. Evaluate the need for outsourcing and discuss its limitations.


4. Discuss the salient aspects of B2C commerce.

5. Discuss the limitations of electronic mode of doing business. Are theselimitations severe enough to restrict its scope? Give reasons for youranswer.

Projects/Assignments

1. Compare and contrast the products and their prices available on theinternet and in retail shops. Is the quality, customer satisfaction andother factors the same?

2. Study any business unit/company which is using e-commerce,e-business as a way of doing business. Interview some people workingthere and find out the advantages in practical business in terms of itscosts also.

e Commerce & Business

Documents

secure socket layer

credit card numbers

human resource management

electronic data interchange

party service providers

ebay security center

world wide web

business process cycle