1st PUC Business Studies Question Bank Chapter 5 Emerging Modes of Business

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Karnataka 1st PUC Business Studies Question Bank Chapter 5 Emerging Modes of Business

1st PUC Business Studies Emerging Modes of Business Text Book Questions and Answers

Multiple Choice Questions

Question 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

Question 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) Includes off-shoring

Question 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

Question 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) Only in-bound voice based business

Question 5.
It is not an application of e-business
(a) Online bidding
(b) Online procurement
(c) Online trading
(d) Contract R&D
Answer:
(d) Contract R&D

Short Answer Questions

Question 1.
State any three differences between e-business and traditional business.
Answer:

Question 2.
How does outsourcing represent a new mode of business?
Answer:
Outsourcing refers to long-term contracting out generally the non-core and late even some of the core activities to captive or third party specialists with a view to benefiting from their experience, expertise, efficiency, and even investment. Outsourcing is the buzzard these days.

Outsourcing is nothing but allowing someone else to do your work for you so that you may be able to devote your time to more important jobs. Outsourcing helps in improving productivity, reducing cost, focussing on core processes, improving accountability, and securing the latest innovations. Financial, advertising, courier, and customer support services are often outsourced by business enterprises.

Little wonder that outsourcing is fast becoming an emerging model of business. Firms have started increasingly outsourcing one or more of their processes which can be more efficiently and effectively carried out by others. Today, outsourcing is being resorted to not out of compulsion but also out of choice. Some of the major reasons for outsourcing are as follows :

• Focusing of attention
• Quest for excellence
• Cost reduction
• Growth through an alliance
• Fillip to economic development.

(i) Focusing of attention: Business firms are realising the usefulness of focusing on just a few areas where they have a distinct capability or core competence and contracting out the rest of the activities to their outsourcing partners.

(ii) Quest for excellence: Outsourcing enables the business firms to purpose excellence in the activities that they can do the best by virtue of limited focus and excel by extending the capabilities through contracting out the remaining activities to those who excel in performing them.

(iii) Cost reduction: Global competitiveness not only improve global quality, but also global competitive pricing. Division of labour and specialisation, besides improving quality, reduces cost too.

(iv) Growth through alliance: Through outsourcing investment requirements are reduced, the business may be expended rapidly as the number of funds left due to investment by outsourcing partners results in the creation of a large number of business activities. Apart from financing, outsourcing facilities inter-organizational knowledge, sharing, and collaborative learning.

(v) Fillip to economic development: Outsourcing has tremendous growth of entrepreneurship, employment, and exports in the Indian context. Today, in India, industries are the undisputed leader in IT-enabled service due to outsourcing globally in software development.

Question 3.
Describe briefly any two applications of e-business.
Answer:
e-Procurement:
It involves internet-based sales transactions between business firms including both, the reverse auction that facilitates online trade between a single business purchaser and many sellers, and digital marketplaces that facilitate online trading between multiple buyers and sellers.

e- Bidding / e-Auction:
Most shopping sites have quoted for your price whereby you can bid for the goods and services. It also includes e-tendering whereby one may submit tender quotations online.

e- Communication /e- Promotion:
Right from the e-mail, it includes the publication of online catalogs 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.

e-Delivery:
It includes electronic delivery of computer software, photographs, videos, books and journals, and other multimedia content to the user’s computer. It also includes rendering legal, accounting medical, and other consulting services electronically. In fact, the internet provides the firms with opportunities for the outsourcing of a host of information Technology-Enabled services that we will be discussing under business process outsourcing.

e-Trading:
It involves securities trading, that is online buying and selling of shares and other financial instruments. For example, Sharekhan.Com is India’s largest online trading firm

Question 4.
What are the ethical concerns involved in outsourcing?
Answer:
Ethical Concerns in Outsourcing – Under ethical issues, the laws prevailing in the country of outsourcing must be observed. It is not ethical to forbidding the laws of the country where outsourcing takes place.

For example, a shoe company, interested in cutting costs outsources manufacturing to a developing country where child labour or women worked to manufacture such shoes.

Back home, the company cannot do so due to stringoilt laws forbidding the use of child labor. Is cost-cutting by using child labour in countries where it is not out lowed or where are laws are ‘weak’ ethical? Similarly, is it ethical to outsource in work to countries where there exists wage-discrimination on the basis of the sea of the worker

Question 5.
Describe briefly 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 individual gains. There can be attacks of VIRUS and hacking. Virus means Vital Information Under Siege. It is a program which replicates itself on other computer systems.

The effects of computer viruses can range from some annoying on-screen display (Level -1 virus) disruption of functioning (Level – 2 viruses) damage to target data files (Level -3 virus to complete destruction of the system (Level – 4 viruses). Anti-virus programs need to be installed and updated on the system and files 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 risks. It refers to the art of protecting information by transforming it (encrypting it) into an unreadable format called ‘ciphertext’. 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 Questions

Question 1.
Why are e-business and outsourcing referred to as the emerging modes of business?
Answer:
During the last decade, the business has undergone fundamental changes, and new emerging business inodes like e-business and outsourcing gaining importance day by day. The three strongest trends that are shaping business are :

(i) Digitisation – Conversion of text, video, sound and images into series of ones and zeroes which may be transmitted electronically.

(ii) Outsourcing – A long-term contracting out the non-core activities to the third party specialises with a view to benefiting from their experience, expertise, efficiency, and investment.

(iii) Internationalisation and globalisation – Introduction of the multinational business unit and strategic alliances.
E-commerce makes it possible to work round the clock and around the world. It allows companies to select the best suppliers regardless of their geographical location and to sell to a global market.

Following are the factors responsible for an emerging trend in e-commerce and outsourcing, (/) Global choice or global presence of business firms.

• Improved quality of services and competitiveness.
• Mass customisation of products and services.
• Shorten the supply chains.
• Substantial price reductions.
• Noval business opportunities.

Outsourcing is essential due to the following benefits :

• Improvement in productivity.
• Reduction in costs.
• Opportunity to focus on core business.
• Improved accountability.
• Benefits of latest developments.

Question 2.
Elaborate on the steps involved in online trading.
Answer:
1. Registration:
Before doing online shopping, one needs to fill up a registration form online, which imbibes that you hold an ‘account’ with the online vendor. Amidst various details ‘password’ is one of the vital sections relating to your ‘account’, and ‘shopping cart’ and it is duly protected, foiling which, anyone can log in using your name and shop in your name. This may prove to be troublesome.

2. Placing an Order:
A shopping cart would be provided for you to pick and drop the items into it. A shopping cart can be defined as an online record of what you have picked up while browsing the online shop similar to a physical shop wherein you can put in and take items out of your cart, that will help you to make sure what you want to buy and can ‘checkout’ and choose your payment options.

3. Payment Mechanism:
The above figure clearly states that payment for the purchases through online shopping may be done through several methods:

• Cash-on Delivery (COD): As the name suggests, payment for the goods ordered online may be paid in cash at the time of physical delivery of goods.
• Cheque: As an alternate option, the online vendor might arrange for the pickup of the cheque from the customer. On realization of the cheque, delivery of goods may be made.
• Net-banking Transfer: Customers are provided with the facility of electronic transfer of funds over the internet. In this case, the buyer can transfer the amount towards the transaction to the goods to the account of the online vendor which will enable him to proceed to arrange for the delivery of goods.

Question 3.
Evaluate the need for outsourcing and discuss its limitations.
Answer:
Need for outsourcing: Outsourcing offers the following benefits:
(1) Improvement in Productivity – Outsourcing support services helps to increase productivity by providing access to a high level of expertise. The service provider is an expert in the concerned area; often this expertise is not available easily within the company itself. The benefit to expertise through outsourcing gave a boost to productivity.

(2) Reduction in Costs – The service provider has shared service centers for several clients. Therefore, the client company benefits from economies of scale. Various company case studies have shown cost savings of 10 to 20 percent. The client company is also able to understand the true cost of the services being provided.

(3) Opportunity to Focus on Core Business – The client company is able to focus on its core processes by outsourcing the non-core processes. For example, by outsourcing advertising services, a company can focus better on the function of selling its products/services. The company can also add a new competency, which is the management of the vendor relationship with the outsourcer.

(4) Improved Accountability – The outsourcer assumes responsibility for the total process. He provides the expertise at a fee. Therefore, he is more responsible for the quality of service provided than the internal staff of the client company.

The outsourcer provides expert service and the client company pays the agreed fee to the outsourcer. Advertising, customer support services, financial services, human resource process, real estate service, etc. are examples of services which are often outsourced.

Limitations of Outsourcing – It will not be out of place to be aware of some limitations which outsourcing is besieged with :

(i) Confidentiality: Outsourcing depends on sharing a lot of vital information and knowledge. If the outsourcing partner lacks confidentiality and the facts pass to the competitors, it can harm the interest of the party that outsources the processes. There is also a risk that outsourcing partners may start up a competitive business of the processes or products outsourced.

(ii) Sweat-shopping: The outsourcing-seeking firm is interested in lowering down of costs of manpower used. It is observed that what is outsourced is the kind of components or work that does not much build the competency and capability of the outsourcing partner beyond the skills needed to comply with a rigidly prescribed procedure.

(iii) Ethical concerns: Think of a shoe company that, in order to cut costs, outsources manufacturing to a developing country where they use child labour in the factories. Back home, the company cannot do so due to strictly forbidden by law the use of child labour. Is cost-cutting by using child labour in countries where it is not outlawed ethical? Similarly, is it ethical to outsource the work to countries where there exists wage- discrimination on the basis of the sex of the workers?

(iv) Resentment in the home countries: In the course of contracting out marketing, manufacturing, research, and development or IT-based services may cause resentment back in the home country 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:
(i) 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.

(ii) 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.

(iii) Adaptation to Customer Requirements:
B2C commerce has made it possible for firms to manufacture the product with customized features to suit the requirements of the customers and also to provide the convenience of delivery and payment to the customers.

(iv) Customer feedback:
B2C variant of e-commerce enables a business to be in continuous touch with its customers through online surveys about demand trends and customer satisfaction.

(v) 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 centers 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 centers or helplines for B2C commerce interactions may be outsourced and are not necessary to be set up by the business itself.

Question 5.
Discuss the limitations of the electronic mode of doing business. Are these limitations severe enough to restrict its scope? Give reasons for your answer.
Answer:
Limitations of e-Business – E-business is not all that rosy. Doing business in the electronic mode suffers from certain limitations. It is advisable to be aware of these limitations as well:

(i) Low personal touch: High-tech it may be, e-business, however, lacks warmth of interpersonal interactions. To this extent, it is a relatively less suitable mode of business in respect of product categories requiring high personal touch such as garments, toiletries etc.

(ii) Incongruence between order taking/giving and order fulfillment speed: Information can flow at the click of a mouse, but the physical delivery of the product takes time. This incongruence may play on the patience of the customers. At times, due to technical reasons, websites take an unusually long time to open. This may further frustrate the user.

(iii) Need for technology capability and competence of parties to e-business: Apart from the traditional 3R’s (Reading, Writing, and Arithmetic) e-business requires a fairly high degree of familiarity of the parties with the world of computers. And, this requirement is responsible for what is known as the digital divide, that is the division of society on the basis of familiarity and non-familiarity with digital technology.

(iv) Increased risk due to anonymity and non-traceability of parties: Internet transactions occur between cyber personalities. As such, it becomes difficult to establish the identity of the parties. Moreover, one does not know even the location from where the parties may be operating.

It is riskier, therefore, transacting through the internet, e-business is riskier also in the sense that there are additional hazards of impersonation (someone else may transact in your name) and leakage of confidential information such as credit card details’ Then, there also are problems of ‘virus’, and ‘hacking’, that you must have heard of. If hot, we will be dealing with security and safety concession online business.

(v) People resistance: The process of adjustment to new technology and a new way of doing things causes stress and a sense of insecurity. As a result, people may resist an organization’s plans of entry into e-business.

(vi) Ethical fallouts – “So, you are planning to quit, you may as well quit right now”, said the HR manager showing her a copy of the e¬mail that she had written to her friend. Sabeena was both shocked and stunned as to how her boss got through her e-mail account. Nowadays, companies use an ‘electronic eye’ to keep track of the computer files you use. your e-mail account, the websites you visit, etc. It is ethical?

Despite limitations, e-commerce is the way – It may be pointed out that most of the limitations of e-business discussed above are in the process of being overcome. Websites are becoming more and more interactive to overcome the problem of low touch’. Communication technology is continuously evolving to increase the speed and quality of communication through the internet.

Efforts are on to overcome the digital divide, for example, by restoring to such strategies as setting up of community telecentres in villages and rural areas in India with the involvement of government agencies, NGOs, and international institutions. In order to diffuse e-commerce in all books and corners, India has undertaken about 150 such projects.

In view of the above discussion, it is clear that e-business has to stay and is poised to reshape the businesses, governance, and economies. It is, therefore, appropriate that we familiarise ourselves with how e-business is conducted.

1st PUC Business Studies Emerging Modes of Business Additional Questions and Answers

One Mark Questions

Question 1.
What is e-business?
Answer:
Electronic Commerce is sharing business information, maintaining business relationships, and conducting business transactions by means of telecommunications networks.

Question 2.
Expand B2B.
Answer:
Business to Business

Question 3.
What is Intra-B?
Answer:
This refers to transactions between the parties or persons who are the part of one firm only.

Question 4.
Expand C2C.
Answer:
Consumer to consumer

Question 5.
Write one benefit of the e-business.
Answer:
Global reach

Question 6.
Expand COD.
Answer:
Cash on Delivery.

Question 7.
Mention-one limitation of e-business.
Answer:
Low Personal touch

Question 8.
What are cookies?
Answer:
Cookies is a small piece of data sent from a website and stored on the user’s computer by the user’s web browser while the user is browsing.

Question 9.
Expand BPO.
Answer:
Business Process outsourcing

Question 10.
What is plastic money?
Answer:
Credit Card, Debit card, ATM card etc are, used as alternatives to money such as cash or cheque, and are made of plastic, th% are also called as Plastic money.

Two Marks Questions

Question 1.
Mention the two strongest trends in shaping the business.
Answer:

1. Web-Based Marketing
2. Social Networking

Question 2.
Write two benefits of e-business.
Answer:

• Speed
• 24/7

Question 3.
What do you mean by pay-pal?
Answer:
Pay-pal is an electronic commerce (e-commerce) company that facilitates payments between parties through online funds transfers.

Question 4.
Write any two features of BPO.
Answer:

1. Reallocation of Resources
2. Increases Efficiency.

Five Marks Questions

Question 1.
Briefly explain the Scope of E-Business.
Answer:

1. B2B (business-to-business), also known as e-biz, is the exchange of products, services or information (aka e-commerce) between businesses, rather than between businesses and consumers.
2. B2C (Business to Consumer) is business or transactions conducted directly between a company and consumers who are the end-users of its products or services.
3. The business-to-consumer as a business model differs significantly from the business-to-business model, which refers to commerce between two or more businesses.
4. C2C (Consumer To Consumer), similar to the retail market, the direct object is the end-user shopping Example: eBay, Quikr.
5. C2B (Consumer to Business), Consumer-to-business (C2B) is a business model in which consumers (individuals) create value and businesses consume that value.

Question 2.
What are the benefits of E-Business?
Answer:

1. Cost-Effective Marketing: Most of these online marketing efforts are very low cost Or free, so an e-business allows for highly cost-effective marketing strategies Since e-businesses mostly advertise on the internet the cost of advertising of marketing is less.
2. Flexible Business Hours: E-business breaks down the time barriers that location-based businesses encounter. E-business is active 24/7 which means accessibility of products or services is greater.
3. Eliminates Geographic Boundaries: As long as someone has attempt connection, you may be able to reach and sell your product or service to these visitors to your business website.
4. Reduces Transaction Cost: Running an online business reduces the cost per transaction because it takes less manpower to complete an online transaction. Once you get your website up and running, the customer places the order online, which removes the need for a salesperson.
5. Low Overhead Costs: Running an e-business cut back or out most of the costs involved in running a physical location. E-businesses have less expensive phone, rent and utility bills than businesses with physical locations.

Question 3.
What are the Limitations of E-Business
Answer:
1. Less security:
The biggest obstacle in the growth of e-commerce is the issue of security, Internet is not a secured medium of communication. There are tools or options available to hackers whereby they can not only monitor but also control any data communicated over the internet

2. Less privacy:
The nature of internet technology is such that private information of the online customers can be easily collected and recorded on the server-side. The buying pattern of a customer can be known to an e-shop with the help of certain sophisticated tools. You know that cookies can be used to track customers online.

3. No physical proximity with items purchased:
In certain cases, the customers cannot decide about buying a thing before they can physically examine it. For example, a customer would ideally want to touch and feel the texture of a piece of cloth before buying.

Question 4.
What are the Features of BPO?
Answer:

1. Business process outsourcing: (BPO) is the contracting of a specific business task, such as payroll, to an other party service provider. Usually, BPO is implemented as a cost-saving measure that a company requires to maintain its position in the marketplace.
2. BPO is often divided into two categories: back office outsourcing which includes internal business functions such as billing or purchasing, and front office outsourcing which includes customer-related services such as marketing or technical support. BPO.
3. It provides a wide range of tactical, powerful, flexible tools which in turn helps in achieving the business objectives in a cost-effective and efficient manner.
4. A BPO (business process outsourcing) is a process in which a company delegates some of its business processes to another party on payment of some fee by passing over total control of the process to them This, in turn, cuts the operational costs considerably resulting in huge profits.