Chapter 5 Emerging Modes of Business

Difference between E-business & Traditional business are following:
Basis of Distinguish                       E-Business                            Traditional Business
1. Ease of formation                          Simple                                         Difficult
2. Physical presence                      Not Required                                 Required
3. Cost of setting up                  Low as no requirement                          High

                                                    Of Physical facilities

Outsourcing described as the long term contracting out generally the non-core and of late even some of the core activities to captive or to the third party specialists with a view of benefiting from their experience, expertise, efficiency and even investment too. In this, non-core business activities are Outsourced. Sanitation and house-keeping duties are non-core for most organisations. For municipalities and sanitation service providers these activities forms the core of their business activity. In other words, depending upon what business a company is in, there will be some certain activities that are central while others are secondary as the organisations venture to do the experiment with. Outsourcing, they may initially, outsource only the non-core activities. Belau on, as they become comfortable, with managing interdependencies, they may start getting even the core activities which is done by outsiders.

Applications of e-Business are as follows:
(a) E-Procurement : It involves the internet based sales transactions between the business firms, including path reverse actions that facilitate online trade between the single business purchaser and numerous sellers and digital market places that facilitate online trading between the multiple buyers and sellers.

(b) e-trading : It involves securities trading that is online buying and selling of shares and other financial instruments etc. For e.g. Share khan, which is India’s largest online trading firm.

The ethical concerns that who are involved in outsourcing are the society’s ethics and the good policies. This can became very clear with the help of following example- A company in order to cut the costs, outsource manufacturing to a developing or arising country where they use child labour-woman in the factories.
 

Data Storage Risk and Transmission Risk : Data that is stored in the system and the route is exposed to a number of risks. Vital information may be stolen or modified to pursue some certain selfish motives. It can be done through the Virus or by Hacking. Data may also be intercepted in the course of transmission. In order to save the information we can do the use of cryptography.

E-Business and Outsourcing are described as emerging modes of business as they knows the new ways of doing business. Business as an activity foccused at creating utilities or value in the form of goods and services which the household and industrial buyers purchase for meeting their requirements and wants. In an effort to improve the business processes such as production, marketing, finance or human resources business managers and business thinkers have evolved new and better ideas such as outsourcing. Factors that are Responsible for the growth of new trends are: e-Business and Outsourcing, have emerged as the new modes of business because they offer following benefits to us :

(a) Easy formation and low investment: e-business is not so complex to start. Legal requirements are very low. The benefits of Internet technology accrue to big or small business alike. Also, E- business requires very least investment.

(b) Convenience : Internet offers the convenience of 24 hours, 7-days a week and 365 days a year. It allows the personnel to work whereby they can form wherever they are and wherever or whatever they want to do.

(c) Speed : It is very speedy. The buying or selling involves the exchange of information that Internet allows at the click of a Mouse. This benefit becomes more attractive in the case of information intensive products like softwares, movies, music etc. It has also reduced cycle time.

(d) Global Reach/Access : Internet is truly without boundaries. It not only allows the seller an access to the global market but also it affords the buyer a freedom to choose products from almost any part of the world.

The steps that are involved in online trading are as follows :

(a) Registration, (b) Placing an order and (c)Payment mechanism.

(a) Registration : Before oding online shopping we have to register with the online vendor by filling up registration form. Registration means an account that is formed with the online vendor. Password is necessary to be filled otherwise one can use our name and can put in the trouble.

(b) Placing an Order : Items can be added in the shopping cart. Shopping cart is a online record of what we pick up from the store while processing the online store. After selecting what we want to pay, we can checkout and choose our payment method options.

(c) Payment Mechanism : This could be done in many ways :
1. Cash on Delivery : Payment for the goods, ordered on online may be made in cash at the time of delivery.
2. Cheque : Online vendor may arrange for the pickup of the cheque from the customer’s end.

3. Non-Banking Transfer : In this, buyer may transfer the amount for the agreed price of transaction to the account of the online vendor who may then proceed to arrange for the delivery of goods.
4. Creditor Debit Cards : It means as plastic money. Credit cards allows its holder to make purchase on it. The amount due from the card holder to the online seller is assumed by the card issuing bank. Buyer account is debited. Debit cards allows its holder to make purchases through it to the extent of the amount lying in the corresponding account. The movement of transaction is made, the amount which is due as payment is deducted electronically or automatically from the card.
5. Digital cash : This is a form of electronic currency which exists only in cyber space. This type of currency has the actual physical properties, but offers the ability to use real currency in the electronic format.

The need for outsourcing are as follows :
(a) Focussing of Attention : Business firms are perceiving the usefulness of focusing on just a few areas where they have definite capability or core competency and contracting out the remaining activities to their outsourcing partners. This enables them to focus their attention on some selective activities.

(b) Quest for Excellence : Outsourcing enables the firm to chase the excellence in two ways. Primarily, they excel themselves in the activities in which they are good enough so that they excel by expanding their capabilities. In the quest for excellence, it is important not only to know what you would like to focus on, but also what you would like others to do for you.

(c) Cost Reduction : Global competitiveness required not only the quality, but also reduction in cost. Division of labour and specialization minimize cost and improves quality. This happens due to the economics of large scale accounting outsourcing partners.

(d) Growth through Alliance : To the extent, we can avail of the services of others, our investment necessities are reduced, others have invested in those activities for us which helps in expanding rapidly. Apart from financial returns, outsourcing eases inter organisational knowledge sharing and collaborative learning.

(e) Fillip to economic development : Outsourcing revives the entrepreneurship, employment and exports in the host countries thus, it helps in economic development of the country.

(f) Limitations of Outsourcing Confidentiality : Outsourcing depend on sharing a lot of vital information and knowledge. If the outsourcing partner doesn't receive the confidentiality and passes it on to competitors which can harm to interest of the party that outsources its processes. If outsourcing involves complete process, there is a risk of outsourcing partner starting up a competitive business.
(ii) Sweat shopping : As the firms that outsource seek to minimize their costs they try to get maximum benefit from less cost, man power of host countries. The firm that go in for outsourcing look it is doing stills rather than doing the development of thinking skills.

(iii) Resentment in the home countries : In the course of contracting out, manufacturing, marketing, research and development of IT based services what is ultimately contracted out is employment or the jobs. If the home country is facing the problem of unemployment, may cause resentment back in the home country.

B2C which means business to customers implies those transactions that have business firms at one end and its customers on the other end. B2C commerce entails a wide variety game of marketing activities such as identifying activities, promotion and sometimes even delivery of products that are carried out online. Salient Aspects of B2C Commerce are as given below :

(a) E-commerce permits the conduction of several activities at a much lower cost but high speed. For example ATM speeds up withdrawal money.

(b) Now, customers are becoming very choosy and devious. They want individual attention. Not only they require the product features be tailor made to suit their requirement but also the convenience of delivery. E-commerce has made all this possible.

(c) It enables a business to be in touch with its customers on round the clock basis. Companies can conduct online surveys to a certain as to who is buying what and what is the customer's satisfaction level.

Limitations of Electronic Mode of Doing Business (e-commerce) are given below :

(a) Low Personal Touch : It lacks the warmth of E-personal relations. To this extent, it is very least suitable for products needs high postal touch like garments etc.

(b) Incongruence between order taking/ giving and order fulfilment speed : The physical delivery of goods take home. This incongruence may play on the patience level of the customers. At the time, website may take long time to open. This may frustrate the user.

(c) Need for technology capability and competence of parties: Apart from the tradition 3R’s which means Reading, Writing Arithmetic, e-commerce, requires a familiarity of parties with the world of computers which will led to digital divide.

(d) Increased risk due to Anonymity and Non-traceability of Parties : Internet transactions occur between the cyber personalities. As such, it becomes more difficult to establish the identity of the parties. Moreover, one does not know even the location from where the parties are operating. And also there are problems of Hacking and Virus.

(e) People Resistance : The process of adjustment to the new technology causes the stress and insecurity. As a conclusion, people may resist an organisation’s plan of entry into e-Business.

(f) Ethical fallouts : Now a days companies use an electronic eye to keep the track of computer files that you use, your e-mail account, the websites you visit. Despite is limitations, e-commerce is the way. Most of the limitations are in the process of being overcome. Websites are becoming more and more interactive or attractive to overcome the problem of low touch. Communication technology is continually evolving to increase speed and quality of the information. Efforts are being made to overcome digital divide.