NCERT Solutions for Class 11 Business Studies Chapter 5 Emerging Modes of Business

NCERT
SOLUTIONS
CLASS - 11th

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Book : Business Studies Ncert Solutions | Chapter - 5 Business Studies

Class :11th

Subject : Business Studies
Chapter : 5
Chapter Name : Emerging modes of business

Q1 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

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Q2 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. (b) Restricts only to the contracting out of non-core business processes

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Q3 The payment mechanism typical to e-business

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a. Cash on Delivery (CoD)

b. Cheques

c. Credit and Debit Cards

d. e-Cash

Answer. (d) e-Cash

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Q4 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. (c) Both voice based and non-voice based business

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Q5 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

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Page : 142 , Block Name : Multiple Choice Questions

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

Answer.

Basic of distinction Traditional business e-business

Ease of Formation Difficult Simple

Physical presence Required Not required

Location requirement Proximity to the source of No location required for
row material or the market conducting the business.
for the product

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Q2 How does outsourcing represent a new mode of business?

Answer. Outsourcing refers to the process of long term contracting out the non core activities of
the business enterprise to the third party individuals or enterprises to gain from their experience,
expertise, efficiency and investment. In the latest trends, some companies are outsourcing even
some of their core activities as well to achieve specialisation in them. For example, most
companies have so far appointed their own sanitation staff for maintaining neatness, cleanliness
and overall housekeeping of their premises.

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Q3 Describe briefly any two applications of e-business.

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Answer. The two applications of e-business are as follows - (i) e-procurement - It refers to the
process of procuring goods through an online trading platform by the buyers. The sellers may
get registered on an online platform and then the buyers may interact with the sellers to fulfill
their needs. The trading can be done between one or more sellers and one or more buyers.

e-delivery - The process of online delivery of movies, electronic software, or games etc. through
an online trading platform. It is directly transferred from the computer system of the sellers to the
consumer’s system. The payment for such services is made through net banking or debit or
credit cards.

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Q4 What are the ethical concerns involved in outsourcing?

Answer. Outsourcing is beneficial for many companies but many times, it is done at the cost of
suppression of weaker sections of the society. Generally the developed countries outsource
their activities to developing countries or underdeveloped countries. In these countries, people
hire women labour or child labour in order to cut costs. These workers are tortured and
exploited and are paid low wages for their job. They are forced to work for long and continuous
working hours and aren't provided good working conditions. Hence it neglects the ethical, social
and moral well-being of the workers in these less developing countries.

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

Answer. The following are the data transmission and storage risks in e-business -

i) Data storage risk - The data stored in a computer system is prone to malicious software or
pirated data storage devices. If data gets transmitted in wrong hands then it may misuse the
data to cause loss to the business. The data may also get corrupted if some viruses attach the
computer system.

ii) Transaction risk - It involves risk in order taking, delivery or payment. When the consumer
places an order or pays money or the company actually makes delivery, then it may happen that

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the transaction details may get transmitted to malicious computer systems. This may result in
loss of secrecy in the transaction and the data can be used in wrong way.

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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.

Answer. The traditional modes of conducting businesses are slowly replaced by the new and
fast modes. These include e-business and outsourcing. They are considered the emerging
modes of business.

e-business refers to the process of conducting industrial activities, trade or commerce through
an online platform using a computer system or mobile phones. In this type of business, the firm
caters to the needs of the consumers and suppliers over the Internet and also manages the
activities of the firm like production, inventory management etc. online.

Outsourcing refers to the process of long term contracting out the non core activities of the
business enterprise to the third party individuals or enterprises to gain from their experience,
expertise, efficiency and investment. In the latest trends, some companies are outsourcing even
some of their core activities as well to achieve specialisation in them. Outsourcing comprises
four key segments: contract manufacturing, contract research, contract sales and informatics.

These various factor are responsible for growing of these trend :

1.Business managers and thinkers keep evolving newer and better ways of doing things in an
effort to improve the business processes.
2.Business firms have to strengthen their capabilities of creating utilities and delivering value to
successfully meet the competitive pressures.
3.Consumers have become far more demanding than ever in terms of higher quality, lower
prices, speedier deliveries and better customer care.
4.Business as an activity to keep evolving by adopting new trends in order to benefit from
emerging technologies.

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Q2 Elaborate the steps involved in on-line trading.

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Answer. These are the following steps in online trading :

(i) Registration : Before online shopping, one has to register with the online vendor by filling-up
a registration form. Registration means that you have an ‘account’ with the online vendor.
Among various details that need to be filled in is a ‘password’ as the sections relating to your
‘account’, and ‘shopping cart’ are password protected. Otherwise, anyone can login using your
name and shop in your name. This can put you in trouble.

(ii) Placing an order : You can pick and drop the items in the shopping cart. Shopping cart is an
online record of what you have picked up while browsing the online store. Just as in a physical
store you can put in and take items out of your cart, likewise, you can do so even while
shopping online. After being sure of what you want to buy, you can ‘checkout’ and choose your
payment options.

(iii) Payment mechanism : Payment for the purchases through online shopping may be done in
a number of ways:

Cash-on Delivery (CoD) : As is clear from the name, payment for the goods ordered online may
be made in cash at the time of physical delivery of goods.

Cheque : Alternatively, the online vendor may arrange for the pickup of the cheque from the
customers end. Upon realisation, the delivery of goods may be made.

Net-banking Transfer : Modern banks provide to their customers the facility of electronic transfer
of funds over the Internet using Immediate Payment Services (IMPS), NEFT and RTGS. In this
case, therefore, the buyer may transfer the amount for the agreed price of the transaction to the
account of the online vendor who may, then, proceed to arrange for the delivery of goods.

Credit or Debit Cards : Popularly referred to as ‘plastic money,’ these cards are the most widely
used medium for online transactions. In fact, about 95 per cent of online consumer transactions
are executed with a credit card. Credit card allows its holder to make purchase on credit. The
amount due from the card holder to the online seller is assumed by the card issuing bank, who
later transfers the amount involved in the transaction to the credit of the seller. Buyer’s account
is debited, who often enjoys the freedom to deposit the amount in instalments and at his
convenience. Debit card allows its holder to make purchases through it to the extent of the
amount lying in the corresponding account. The moment any transaction is made, the amount
due as payment is deducted electronically from the card.

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Q3 Evaluate the need for outsourcing and discuss its limitations.

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Answer. Today outsourcing is being resorted to not out of compulsion, but also out of choice.
Some of the major reasons of outsourcing are discussed below.

(i) Focusing of attention: You may be good at doing so many things in academics and
Extra-curricular activities, yet you would be better off by focusing your limited time and money
on just a few things for better efficiency and effectiveness. Likewise, business firms are realising
the usefulness of focusing on just a few areas where they have distinct capability or core
competence, and contracting out the rest of the activities to their outsourcing partners.

(ii) Quest for excellence: You are aware of the benefits of division of labour and specialisation.
Outsourcing enables the firms to pursue excellence in two ways. One, they excel themselves in
the activities that they can do the best by virtue of limited focus. And, they excel by extending
their capabilities through contracting out the remaining activities to those who excel in
performing them. 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.

(iii) Cost reduction: Global competitiveness necessitates not only global quality, but also global
competitive pricing. As the prices turn southwards due to competitive pressures, the only way to
survival and profitability is cost reduction. Division of labour and specialisation, besides
improving quality, reduces cost too.

It will not be out of place to be aware of some of the concerns that outsourcing is besieged with.

(i) Confidentiality: Outsourcing depends on sharing a lot of vital information and knowledge. If
the outsourcing partner does not preserve the confidentiality, and, say, for example, passes it
on to competitors, it can harm the interest of the party that outsources its processes. If
outsourcing involves complete processes/products, there is a further risk of the 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 the low-cost manpower of the host countries. Moreover, it is observed
that whether in the manufacturing sector or the IT-sector, 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/ method. So,
what the firm that go in for outsourcing look for is the ‘doing’ skills rather than development of
the ‘thinking’ skills.

(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/women in the factories. Back
home, the company cannot do so due to stringent laws forbidding use of child labour.

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Q4 Discuss the salient aspects of B2C commerce.

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Answer. B2C (business-to-customers) transactions have business firms at one end and its
customers on the other end. Although, what comes to one’s mind instantaneously is online
shopping, it must be appreciated that ‘selling’ is the outcome of the marketing process. And,
marketing begins well before a product is offered for sale and continues even after the product
has been sold. B2C commerce, therefore, entails a wide gamut of marketing activities such as
identifying activities, promotion and sometimes even delivery of products (e.g., music or films)
that are carried out online. E-commerce permits conduct of these activities at a much lower cost
but high speed. For example, ATM speeds up withdrawal of money.

Customers these days are becoming very choosy and desire individual attention to be given to
them. Not only do they require the product features to be tailor-made to suit their requirements,
but also the convenience of delivery and payment at their pleasure. With the onset of
E-commerce, all this has become a reality. Further, B2C variant of e-commerce 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.
By now, you might have formed the opinion that B2C is a one-way traffic, i.e., from
business-to-customers. But do remember that its corollary, C2B commerce is very much a
reality which provides the consumers with the freedom of shopping-at-will. Customers can also
make use of call centres set up by companies to make toll free calls to make queries and lodge
complaints round the clock at no extra cost to them. The beauty of the process is that one need
not set up these call centres or help lines; they may be outsourced. We shall discuss this aspect
later in the section devoted to Business Process Outsourcing (BPO).

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

Answer. e-business has its own limitations as discussed below

1. Low Personal Touch a-business lacks the warmth of interpersonal interactions and
personal touch for satisfaction of customer. Thus, it is relatively less suitable mode of
business for product categories requiring personal touch for convincing the customers such
as garments, etc.

2. Incongruence between Order Taking/Giving and Order Fulfilment Speed In e-business
orders can be placed at the click of a mouse, but the physical delivery of the product takes
time. Customers are sometimes not patient enough to bear with this Incongruence. At times
the users even get frustrated due to technical reasons when web sites take unusually long
time to open.

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3. Need for Technology Capability and Competence of Parties to e-buslness e-business
requires the parties to be fairly familiar with computers and internet. The digital divide has
thus limited the use of e-business

4. Increased Transaction Risk Internet transactions occur between cyber personalities
and it is difficult to establish the identity of the parties or know the location from where the
parties may be operating. e-business is also risky due to additional hazards of
Impersonation and leakage of confidential information such as credit card details. Problems
of ‘virus’ attacks and ‘hacking’ also pose security concerns in e- business.

5. Resistance to Change The process of adjustment to new technology and new way of
doing things causes stress and a sense of insecurity due to change. As a result, people
may resist a change from traditional business to e-business.

6. Ethical Fallouts Companies use an ‘electric eye’ to keep track of the computer files.
e-mail account and the websites visited by the their employees or others who use their
network systems which is not considered right on ethical grounds.

But 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.’
Speed and quality of communication through internet is being Improved through communication
technology innovations.

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