Chapter 5 Emerging Modes of Business

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Exercise 1 ( Page No. : 142 )

  • Q1 State any three differences between e-business and traditional 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

    Q2 How does outsourcing represent a new mode of business?

    Outsourcing refers to a long term contracting out generally the non-core and of 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. In this non-core business activities are Outsourced. Sanitation and house-keeping functions are non-core for most organisations. For municipalities and sanitation service providers these activities comprise the core of their business activity. In other words, depending upon what business a company is in, there will be some activities that are central while others are secondary as the organisations venture to 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 core activities done by outsiders.

    Q3 Describe briefly any two applications of e-business.

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

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

    Q4 What are the ethical concerns involved in outsourcing?

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

    Q5 Describe briefly the data storage and transmission risks in e-business.

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

Exercise 2 ( Page No. : 143 )

  • Q1 Why are e-business and outsourcing referred to as the emerging modes of business? Discuss the factors responsible for the growing importance of these trends.

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

    (a) Easy formation and low investment: e-business is very easy to start. Legal requirements are very less. The benefits of Internet technology accrue to big or small business alike. Also, E- business requires less 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 where by they can from wherever they are and wherever they want to do it.

    (c) Speed : It is very speedy. The buying or selling involves exchange of information that Internet allows at the click of a Mouse. This benefit becomes attractive in the case of information intensive products such as 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.

    Q2 Elaborate the steps involved in on-line trading.

    the steps the steps involved in online trading are as follows :

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

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

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

    (c) Payment Mechanism : This could be done in number of ways :
    1. Cash on Delivery : Payment for the goods ordered on online may be made the in cash the time of its physical 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 : They are referred to as plastic money. Credit cards allows its holder to make purchase on and 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 transaction is made, the amount due as payment is deducted electronically from the card.
    5. Digital cash : This is a form of electronic currency that exists only in cyber space. This type of currency has to real physical properties, but offers the ability to use real currency in an electronic format.

    Q3 Evaluate the need for outsourcing and discuss its limitations.

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

    (b) Quest for Excellence : Outsourcing enables the firm to pursue excellence in two ways. Firstly, they excel themselves in the activities in which they are best they excel by expanding their capabilities. In the quest for excellence, it is necessary 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 necessitate not only quality, but also reduction in cost. Division of labour and specialization reduces 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 requirements are reduced, others have invested in those activities for us. It helps in expanding rapidly. Apart from financial returns, outsourcing facilitates inter organisational knowledge sharing and collaborative learning.

    (e) Fillip to economic development : Outsourcing stimulates 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 does not receive the confidentiality and passes it on to competitors. This can harm to interest of the party that outsources its processes. If outsourcing involves complete process, there is a further risk of outsourcing partner starting up a competitive business.
    (ii) Sweat shopping : As the firms that outsource seek to lower 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 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 jobs. This may cause resentment back in the home country, if the home country is facing the problem of unemployment.

    Q4 Discuss the salient aspects of B2C commerce.

    Ans. B2C (business to customers) implies those transactions which have business firms at one end and its customers on the other end. B2C commerce entails a wide 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 :

    (a) E-commerce permits conducts of various 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 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 ascertain as to who is buying what and what the customer satisfaction level is.

    Q5 Discuss the limitations of electronic mode of doing business. Are these limitations severe enough to restrict its scope? Give reasons for your answer.

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

    (a) Low Personal Touch : It lacks warmth of E-personal relations. To this extent, it is less suitable for products requiring high postal touch such as 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 of customers. At time, website take long time to open. This may further frustrate the user.

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

    (d) 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 risks. Also there are problems of Hacking and Virus.

    (e) People Resistance : The process of adjustment to new technology causes stress and
    insecurity. As a result, 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 track of the computer files 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 to overcome problem of low touch. Communication technology is continually evolving to increase speed and quality of information. Efforts are being made to overcome digital divide.

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