CBSE Class 11 Business Studies Revision Notes Chapter 5

CBSE Class 11 Business Studies Revision Notes Chapter 5 – Emerging Modes of Business

The Class 11 Business Studies Chapter 5 Notes have precise pointers for each topic that will help students quickly review the material. The chapter covers topics including BPO, e-business, e-commerce, business behaviour modes, its scope, advantages, limitations and causes. Access Extramarks Class 11 Business Studies Chapter 5 Notes with ease for a thorough understanding of the concepts.

E-Commerce and E-Business

E-commerce

E-commerce is the practise of conducting business online or participating in the purchase and selling of goods via the internet. It includes financial transactions as well. Other examples of online e-commerce operations are:

• Purchasing tickets online
• Paying various taxes
• Online transactions
• Items bought or sold online
• Accounting Software Online
• Support for customers online

Examples of e-commerce websites include Amazon, Myntra, Flipkart, Paytm Mall and several others.

E-business

E-business includes using the internet to conduct all forms of business transactions and services. This covers acquiring raw materials, online learning, business dealings, online financial transactions and more. This shows that many different kinds of companies and services are present online.

Examples include e-commerce businesses and their auxiliary internal operations, such as websites for classified ads, auctions, software or hardware developers, etc. In the meantime, the E-Business online activities consist of:

• Establishing an internet store
• Supply chain administration
• Internet-based business transactions (buying and selling products)
• Customer Training
• Financial Business Dealings
• Email Promotion

Scope of E-Business

E-business is the practice of carrying out critical business operations online as well as purchasing and selling goods and services online. A more inclusive phrase than e-commerce is e-business.

E-business encompasses managerial activities like planning, organising, marketing and production that are carried out online. Inventory management, product development, human resource management, accounting and finance are some of the additional e-business responsibilities.

The following four directions can be used to explain the extent of e-business.

B2B Commerce

The two parties to a transaction in business-to-business (B2B) commerce are both businesses. For instance, a company that supports the auto industry can provide the various components that are required in the production of automobiles. For the mutual success of the two businesses, cooperation is required.

An additional example is the online retailer Flipkart, which allows customers to select and pay for things via a smartphone app. They established Ekart Logistics as a separate business to handle product shipping. This could be interpreted as two companies having agreed to work together on a project.

B2C Commerce

In this model of B2C commerce, customers directly interact with business owners and consume the company’s products and services directly.

An example of this model is Netflix, an OTT media company that provides customers with digital content through a paid membership model. Customers subscribe in order to watch the digital content.

Intra-B Commerce

This kind of commerce takes place within the organistion, where the parties involved in the transactions are from a given organisation’s divisions.

Employee hiring and recruitment are among the various intra-business tasks, which involve cooperation between the management, human resources and finance departments.

C2C Commerce

A type of business where transactions take place between customers in a market is known as C2C commerce. This kind of enterprise is appropriate for dealing with goods or products where no market mechanism is present.

eBay is one such example, where users can offer their goods for other users to buy. A similar business concept is employed in India by OLX, a website where users may advertise their used goods for sale along with a price.

Difference Between E-Business and Traditional Business

Benefits of E-Business

Easy to Set Up: 

It is easy to launch an online business. If one has the required hardware, software and internet access, they can start an online business from the comfort of their own home.

More affordable than Traditional Business:

Electronic commerce is significantly more affordable than traditional commerce. On average, a traditional firm requires a far greater amount of funds than an e-enterprise requires. Additionally, the transaction cost of e-commerce is actually lower.

No Geographical Restrictions: 

E-business has no territorial restrictions. Orders can be placed at any time and from any location. 

Flexible Working Hours:

E-business eliminates the time restrictions that location-based businesses face because there are no set business hours. As long as customers have access to the Internet, businesses might be able to connect with website visitors and offer them products or services.

Speed and efficiency:

Online ordering platforms typically process orders and payments more quickly, accurately and affordably than human employees.

The movement toward a paperless society:

The amount of paperwork required is very less because of the use of the internet. E-Commerce solutions are being drawn to administrative reforms to speed up the process of granting rights, permits and licences.

Limitations of E-Business

Ethical Consequences: 

Businesses use an “electronic eye” to monitor users’ computer files, email and internet usage, among other things, in order to learn more about their interests, preferences, etc. Your personal information is saved and accessible on the servers of eCommerce companies. This data can be used or misused, which is not ethical.

Lack of Personal Touch:

There is a lack of human contact and touch in an e-business model. As it is difficult for customers to physically touch or feel the product, it is challenging for them to assess a product’s quality. In the traditional model, the salesperson makes contact with the customers, which lends a sense of credibility and humanity. This increases customer trust. However, an e-business model loses out on these features.

Security Concerns: 

Many people commit fraud through online commerce. Additionally, hackers can more easily obtain your financial information. Most e-businesses face integrity and security problems. Potential customers become distrustful as a result of this.

Delivery Time: 

In a traditional business, you receive the product right away after purchasing it. However, that is  not the case in online commerce. It takes time for the products to be delivered. This delay frequently turns away customers. In an effort to solve these issues, e-commerce companies promise quick deliveries of products. Amazon now guarantees same-day delivery. Despite being an improvement, this does not fully address the problem.

Technology Capability and Competency of E-business Participants are Required:

The parties involved in e-business must have a high level of computer literacy. The so-called digital divide can also be attributed to this obligation.

The phrase “digital divide” describes how different groups of people in society are based on how unfamiliar or unacquainted they are with digital technologies.

Process of Online Trading

Registration ⇒ Placing an order ⇒ Payment mechanism

Step 1: Registration:

By completing the registration form for an online retailer, you create a user’s “account.”

Due to the fact that the sections pertaining to a user’s “account” and “shopping basket” is password protected, a “password” must be entered among the numerous details.

Step 2: Placing an Order:

Drag and drop operations are used to add items to the shopping cart.

A shopping cart is an electronic record of the items that a person has added to it while browsing an online store.

Users may ‘checkout’ once they have decided on the products to purchase or review the chosen items in their shopping cart. 

Step 3: Payment Mechanism:

Online shopping purchases can be made in a variety of ways.

Cash-on-Delivery: One can pay for online purchases with cash when the items are physically delivered.

Cheque: The online retailer may make arrangements for the customer’s check to be picked up. Product delivery may be tried after realisation.

Net Banking Transfer: Using the Immediate Payment Service (IMPS), NEFT and RTGS; modern banks offer their customers the option of electronic fund transfers over the Internet.

Cards, credit or debit: Credit card owners can take advantage of making purchases on credit. The card issuing bank assumes any debt owed by the cardholder to the online vendor and then transfers the amount of the transaction to the vendor’s credit.

With a debit card, the owner can make purchases up to the balance of the associated account. The amount due as payment is automatically taken out of the card at the time of a transaction.

Digital Cash: Although it has no physical properties, this type of currency enables customers to use real money in an electronic format, like through e-wallets or Paytm.

E-Business Risks

Transaction Risks:

• An order may be cancelled or rejected by the buyer or the seller. One could refer to this as the “default on order taking/giving.”
• The supposedly delivered item either doesn’t arrive, goes to the wrong address, or isn’t what was ordered. This is what “default on delivery” refers to. 
• Even though the customer claims that the payment was made, the vendor does not receive payment for the goods provided. This could be referred to as a “default on payment.”
• Order taking and giving in e-business could therefore be dangerous for the vendor or the customer.

Data Transmission and Storage Risks:

• Data in the systems and transit are exposed to a wide range of dangers.
• Sensitive information might be taken or changed for illegal purposes. 
• Regularly installed and updated antivirus software is helpful for scanning files and discs and defending data files, folders and systems from virus attacks.
• Data transmissions could be intercepted. Cryptography can be used for this. Data is encrypted and then converted into the unintelligible format known as ciphertext through this process. The message can only be decoded and converted to “plaintext” by those with access to the secret key.

Risks of threats to Intellectual Property and Privacy include:

• Once the information is online, it is no longer regarded as private. It becomes harder to stop copies from being made after that.
• Online transaction data may be shared with third parties, who then flood the user’s inbox with marketing and promotional materials.

Outsourcing

It refers to the long-term outsourcing of unnecessary functions to captive or outside experts in order to take advantage of their expertise, efficiency, and in some cases, investment.

Features of Outsourcing

Activities that are interchangeable or fungible: While unique activities cannot be outsourced, non-distinguishable activities can.

Requiring Formal and Codifiable Explicit Knowledge: While a third party can perform the work of an IT programmer, a CEO’s position necessitates management, technical and interpersonal skills.

Measurable Activity: Anything that cannot be measured cannot be outsourced.

No connections between the activity and other jobs: A position cannot be outsourced if it is linked to other crucial organisational functions and is fungible, specialised and measurable.

Scope of outsourcing

The cost of investing in back-end operations is decreased with outsourcing. As a result, the company can use its resources for its ongoing development and expansion plans. Building the company’s credibility involves having a live person respond to customer questions and issues.

                                                       Outsourcing(Global/Local)

                                              ⇙                                                            ⇘

                                 IT Based                                                                    Non IT based

                          ⇙                     ⇘                                                      ⇙                               ⇘

        Customer facing                  Backend                        Customer facing              Backend

      ⇙                    ⇘                       ⇙         ⇘                                  ⇙                        ⇙         ⇘

Voice based     Non voice   Non core      Core          Marketing    Manufacturing   Research

      ⇓                                           ⇓                    ⇓

Inbound                                  HR                 Banking

Outbound                    Administration       Insurance

                                            Accounting

                                            Finance

Need for Outsourcing:

Businesses are realising the value of concentrating on a small number of areas where they excel or have core competency while outsourcing the remaining tasks to their outsourcing partners.

By focusing their attention and resources on a few key operations, they may be able to narrow the scope of their business and increase efficiency and effectiveness.

Quest of Excellence

• The use of outsourcing enables businesses to pursue excellence. One is that people who have a narrow focus excel at what they are best at.
• Additionally, they succeed by enhancing their abilities by delegating the remaining tasks to experts.

Cost Reduction

• Specialisation and the division of labour raise quality while reducing costs.
• This happens when outsourcing partners offer the same service to numerous organisations, thereby releasing economies of scale.
• The fact that different production inputs are priced differently in different nations also helps to reduce costs.

Fillip to Economic Development

• Offshore outsourcing, in particular, promotes entrepreneurship, job growth and exports in the host countries (i.e., the countries from where outsourcing is done).

Growth Through Alliance

• The need for investments is reduced to the extent that one can use other people’s services. This is because others may have already made these investments.
• The same amount of investible funds can therefore support numerous businesses in terms of growth. Outsourcing promotes collaborative learning and information sharing across organisations.

Concern Over Outsourcing

Confidentiality

The surplus exchange of crucial knowledge and information is necessary for outsourcing. It may be detrimental to the interests of the party outsourcing its operations, and there is even a chance that information about that company may be obtained by rival firms.

Sweat Shopping

As a result, companies that outsource focus more on developing “doing” skills than “thinking” skills.

Ethical Concerns

Companies outsource their work to another nation where it is carried out unethically to reduce costs. For instance, child labour is used to complete tasks.

Resentment in the Home Countries

In the process of outsourcing manufacturing, marketing, R&D or IT-based services, “employment” or jobs are ultimately contracted out from one country to another. Especially if unemployment is a problem in the home country, this might make people bitter there.

A Complete Guide to Business Studies Class 11 Chapter 5 Notes

Highlights of Business Studies Class 11 Chapter 5 Notes

• Definition of e-business
• Security of e-transactions and online transactions
• E-business limitations and benefits
• The concept of outsourcing

Definition of E-Business and E-Commerce

E-business is defined as the use of a computer network to manage industry, trade and commerce. It includes e-commerce and other business operations and transactions that take place online. E-commerce, on the other hand, is the interaction that takes place online between businesses and their clients and suppliers. It is just one aspect of an e-business, which also includes operations like product development, finance, accounting and inventory management that are carried out electronically. 

Class 11 Business Studies Chapter 5 notes: The Benefits of E-Business

Many businessmen around the world now prefer to conduct their business in this manner. The following list of many business benefits serves as justification for this.

• Simple to set up
• More affordable than traditional business
• No territorial boundaries
• Flexible working hours
• Speed and efficiency
• The movement towards a paperless society

Limitations of E-Business

In Chapter 5 of the Business Studies Class 11 Notes, students will also learn about the drawbacks of doing business online, which will help them develop clear concepts about various aspects of business studies. The following is a list of these restrictions:

• Ethical consequences
• Lack of personal touch
• Security concerns
• Delivery time
• Technology capability and competency of E-business participants are required

Online Trading: A Brief Discussion

There are three phases to online trading:

• Registration 
• Placing an order 
• Payment mechanism

Creating a profile with the online retailer is referred to as registration. The next step is placing an order, which requires the customer to select and add the items to their shopping cart. If they are certain of the items they want to purchase, they can proceed to the checkout. The payment mechanism, or the method the customer chooses to pay by, is the final stage. For instance, it might be accomplished through net banking, credit or debit cards, digital currency, cash on delivery or by writing a check.