CHAPTER 5 EMERGING MODES OF BUSINESS
Meaning:
e-business (Electronic business) means conducting industry, trade and business using the computer networks. e-business
E-business Vs E-commerce: e-commerce
It means conducting business, trade and e-commerce means buying and selling products and industiy using the computer networks. services over the internet. It makes use of e-mail,
It offers services throughout the year e-funds transfer etc. e-business includes not only e- commerce but also other electronically conducted business functions such as production accounting, finance etc e-commerce covers a firm's interactions with its customers and suppliers over the internet. Buying and selling through internet is called e-commerce.
Scope of e-business:
1.
B2B commerce i.e, business to business transactions : Here both the parties involved in e-commerce transactions are business firms and hence the name B2B.In this the business firm use a network for placing the orders with the suppliers receiving invoice and making payments. During the normal course of business a business has to interact with number of other business firms viz. suppliers, or vendors. Now the modern business represents a complex web of relationship between large number of suppliers, banks, manufactures, wholesalers, retailers etc. They might be connected through an arrangement called extranet.
An extranet is a shared internet deploying e-commerce within a larger business community including vendors, contractors, manufacturers, suppliers and key customers .
When these are integrated they form a supply chain and extranet is accessible only to the members of the supply chain having their distinctive passwords. For eg manufacturer of an automobile requires assembly of large number of components that are being manufactured by a number of firms.
2.
B2C commerce: (Business to customers commerce). The focus of these transactions is carrying out various activities that are involved in selling and after sale services electronically, mostly through internet. The B2C commerce companies sell physical goods to customers online in a more personalized dynamic environment .It facilitates promotion of products online. (Amul.com sells amul products on-line. By this facility the firms keep in touch with the customers any time.
3.
Intra B commerce: Here the parties involved in the transactions are from the given business firm. It facilitates the marketing department to interact constantly with the

production department to get information about customer requirements. The several departments of the company is interlinked through a network called private internet or intranet.
It is a website designed for the use by the employees of an organization. Intranet allows the different departments of the organization having different PC 's or local area network to interact through the organization's website. The firm can get inventory informations of various branches; the human resource department can get information about the staff requirement etc.
4.
C2C commerce: (customer to customer commerce). Here the business starts from the customer and ends with the customer. The seller may sell the services or goods by providing information on the net. This information may be evaluated by the buyer to carry out the transactions. This type of commerce is best suited for dealing in goods for which there is no established markets eg selling old books through internet. Another application of C2C commerce is the formation of consumer Forum (yahoo groups). An aggrieved customer can share his experience with a product/vendor/service and warn others by writing just a message.
Basis
Difference between e-business and traditional business
Traditional business
Ease of formation Difficult e-business
Simple
Physical presence Required Not required
Locational requirements
Proximity to the source f raw materials or the market for the products
Cost of setting up High
None
Low as no requirements of
Length of business cycle
Opportunity for interpersonal touch various business process are long physical facilities
Longer since the relationships among Shorter because of completion of various business process generally at the same time
More Less
Global reach Less More
Nature of human skill
Semi-skilled and even unskilled Technically and manpower professionally qualified personnel needed
Transaction risk Low, face to face contact High due to distance and anonymity of the parties

Benefits of e-commerce:
1.
Ease of formation and lower investment requirements: E -business is easy to start
.Business firms can get quick order supplies from the vendors. They neednot maintain huge stocks and block up their capital.
2.
Convenience: Internet offers services if 24 x 7 x 365 days allowing the customer for shopping in he midnight also
3.
Speed: Much of the buying and selling involves of exchange of information that internet allows at a click of a mouse
4.
Global reach: e-business enables business firms to reach out to customers all over the world who have access to internet. Similarly the buyers have a wider choice and choose the product from any part of the world.
5.
Movement towards a paperless society: Even the government departments and income tax authorities are highly depending on e-filing and e-return. IDEA the cellular mobile companies are is emphasizing on using internet through mobile phones.
6.
Reduced cost: E-business can help reduced advertising cost, exchange of information cost, delivery cost etc.
Limitations of e-business:
1.
Low personal touch: It is less suitable mode of business in respect of product categories requiring high personal touch such as garments furniture, jewellery etc.
2.
Time gap between order taking and order fulfillment: Information can flow in the click of the mouse but the physical delivery of the goods takes time. Some times due to technical reasons the website takes a long time to open.
3.
Need for technology: Apart from the traditional three 3R's(Reading, wRiting, and aRithmatic) e-business requires people with high degree of computer knowledge
4.
Increased risk due to anonymity: It becomes difficult to identify the parties. There is always the danger f hackers who access the files and corrupt accounts.
5.
People resistance: e-business means new ways of doing things which need adjustment with new technology and causes and sense of insecurity. So people resist the plan to enter to e-business
6.
Ethical fall-outs: There is a danger of leaking privacy and personal secrets of employees because of the "electronic eye" to keep a track of the computer files used by the employees, their e-mail accounts etc, which is not ethical.
Payment mechanism in online transactions:
1.
Cash on Delivery(CoD): Payment can be made in cash at the time of physical delivery of goods.
2.
Cheque: The online vendor may collect the cheque from the customer. On realization of the cheque the goods will be delivered to him
3.
Net banking transfer: The customer can make e-transfer of funds on the agreed upon rate to the account of the online vendor over internet
4.
Credit or debit cards: (Plastic money) In fact 95% of the settlement for online transactions are made through credit cards

5.
Digital cash or e-cash: For this he needs to pay through cheque, draft etc,to the bank dealing in e-cash an amount equivalent to the digital cash. The bank will send him a special software which he can download on his hard disk, and draw digital cash from the account with the bank.
It is used as a generic term for cash value stored in electronic form on the chip of a smart card
. In this transaction the value is directly transferred from customer's chip to the seller chip.
6.
Smart cards; It was first introduced by Motorola in 1977. A smart card contains a programmable chip, a combination od RAM and ROM storage and an operating system all embedded in the plastic card.lt encrypts digital cash on a chip and can be refilled by connecting to a bank. The smart card carries more information than can be accommodated in a card with a magnetic strip and hence it is called SMART.
Security and safety of e-transactions: e-business risks:
1.
Transactions risk: The following are the transaction risks:- a) Default on order taking: Both the seller and the buyer can blame each other saying that they have placed the order and not placed the order respectively. b)Default on delivery: Delivery does not take place or goods are delivered at wrong addresses or wrong goods are delivered c)Default on payment: Seller does not get the payment whereas the customer claims
2.
that the payment was made
Data storage and transmission risk: The following are these risks; a) VIRUS( Vital Information Under Siege): It is a computer program that clones itself when an infected piece of program is executed. Virus may enter the system through e-mail, website, or storage devices, and destroy the information stored in the computer.
Level-1 virus: annoyance in terms of some on screen display
Level 2 virus: disruption of functioning
Level 3 virus: damage to target data files
Level 4 virus: complete destruction of the system b) Hacking: It means unauthorized into website. Hackers intercept messages sent on internet. They misuse these information for their advantage, or modify and even destroy the information.
3.
Risks of threat to intellectual property and privacy: a) The information available over internet may be copied by other online vendors who may start sending the customer promotional message to his e-mail box b) The online vendor may not protect confidential information of his customers
(BRAND HIJACKING) c) Hackers may make use of stolen credit cards of real customers
Security and safety of e- transactions
1.
Verification for the cookies: In order to confirm that the customer has correctly entered his details in the registration form, the on line vendor may verify the same from the
"cookies'". These are very similar to the caller ID in telephone that provide tele-marketers

with relevant information about the customer such as name address previous payment record etc.
2.
Cryptography/Encryption technology: Cryptography refers to the art of protecting the information by transforming it (encrypting) into an understandable format called
"cyphertext". Only those who possess a secret key can transform the message into plain text. Encryption means concerting the message into a code so that unauthorized persons may not understand it.
3.
Cyber crime cells
4.
Anti-virus programmes
5.
Confirming the order before the delivery of goods
6.
Digital signatures : It is used to authenticate the sender of the message and to check the integrity of the message ie. It has not been altered in transit. It requires a digital ID also known as digital certificate.
Outsourcing or BPO means contracting out non-core and routine activities to outside agencies with a view to benefitting from their experience expertise and efficiency
Features:
1.
BPO involves contracting out: It involves contracting out some activities to be performed by others which used to be performed by the organization itself. These others may be either captive units of the organizing or independent service providers.
2.
Generally non core business activities are outsourced: a)Financial services: Financial activities like issue of shares, issue of
debentures,raising loans, investment of funds etc. b)Advertising service: Like designing the advertisement, selecting the media
and arranging time for advertisement.
c) Courier services: to carry business letters parcels etc to various destinations at comparatively cheaper rates.
d) Customer support services: This is after sales services. Many business organization do not have their own service departments but they hire these services.
3 Service must be outsourced to a captive unit or a third party: a: Captive BPO unit: provides services of a given kind to only one firm b.
Horizontals: Persons/firms which provide services to a wide base of clients, cutting across industries c.
Verticals: They may specialize in one or two industries and scale upto doing a number of processes from noncore to core.

NEED FOR BPO :
1.
Quest for excellence/ benefits of specialization: The company can get the expertise of third parties specialists. The outside agency can give expert advice to the client company for the better management.
2.
Cost reduction: The outsourcing agencies can get the work done more economically due to economies of large scale services to a number of companies. Therefore charges paid to outsourcing agencies will be much less than what the enterprise would itself spend on the performance of routine activities and functions.
3.
Convenience and less investment: The firm is saved from hiring more employees and maintaining huge labour force which they can hire from outsiders.
4.
Economic growth and development: Division of labour and specialization helps to maximize productivity and profits. The countries economy also grows. In outsourcing every function is performed by the organization most competent to do it.
5.
Focus on core activities: An organization can concentrate on its core activities which are directly related to the achievement of its objectives.
Scope of BPO:
1.
Customer support services: Answering customers call through voice mail, e-mail, chat etc
2.
Technical support services: Finding and providing solutions for customers problems related to hard ware, soft ware etc.
3.
Sales and telemarketing services: Interacting with customers for selling or promoting goods or services.
4.
Administrative support: indexing, form processing, data entry, document conversion etc.
5.
Customer relationship management(CRM) : Services such as taking orders, customer service, technical help desk etc.
6.
Finance and accounting: Internal auditing, travel expense, credit and debit analysis, collection, invoicing, etc
7.
Human resource management: recruitment, training, database management, contract worker management etc
KNOWLEDGE PROCESS OUTSOURCING Vs BUSINESS PROCESS
OUTSOURCING
KPO usually focuses knowledge intensive business processes that require significant domain expertise. The personnel of KPO firm are much more qualified than those of a BPO firm. They also get higher salaries.
The profiles of people being hired to serve are people with MBA's and medical, engineering, design or other specialist business skills. BPO is just technical IT services.

Central theme of KPO is to create value for the client by providing business expertise rather than process expertise.
KPO activities are of the following types:
1.
Investment research services (equity, fixed income securities etc)
2.
Business research services
3.
Market research services
4.
Data analysis and interpretation
5.
Legal process outsourcing
6.
Patent research services.