CHAPTER Pr 9 LEARNING OBJECTIVES 5.1 INTRODUCTION 5.2 e-BUSINESS 5.3 BENEFITS OF e-BUSINESS 5.4 LIMITATIONS OF e-BUSINESS 5.5 ONLINE TRANSACTIONS 5.6 SECURITY PROBLEMS OR RISKS IN e-BUSINESS. 5.7 RESOURCES REQUIRED FOR SUCCESSFUL e-BUSINESS IMPLEMENTATION 5.8 OUTSOURCING 5.1 INTRODUCTION Inthe moder period, there has been considerable change in the manner of conducting business. The ‘emerging modes of business’ indicates the recent trends taking place in the way business isdone. Need for Emerging Modes of Business Business activities always aim to create utilities or value in the form of goods and services, which the buyers purchase to satisfy their needs. In order to meet ever growing competition, quality standards, lower prices, faster order processing and better customer care, there isa need for the business to take benefits of emerging technologies, The three strongest trends that are shaping business are: () e-business (Electronic business); (ii) Outsourcing; (iii) Inter- = | ionalisati isati is iness Is about ' ae and Globalisation. The present chapter is focused ee | | irst two developments and the third one is discussed in ‘Superiorcustomer service, Chapter 10, ‘increase sales and reduce costs. | 51 Scanned with CamScanner82 §.2 @-BUSINESS Electronic business, commonly referred to as ‘eBusiness’ or ‘e-business’, refers to conduct; mg business activities over internet or any other computer network. In the words of Philip Kotler, “Electronic business is the general term for buying and sellin Process that is supported by electronic means”, 5 As business includes wide range of activities like trade, commerce and industry, e-busi, also covers conduct of all these activities electronically. Firms often use other computer networks which are more secure, effective and efficient as compared to internet. e-Business versus e-Commerce Many times, the terms ‘e-business’ and ‘e-commerce’ are used interchangeably. However, in practice, e-business is more than just e-commerce (like business is a broader term than commerce). e-commerce deals only with distribution of goods and services, whereas, e-Business is a wider term. e-Business not only includes e-commerce, but also include other electronically conducted business functions fike production, accounting, finance, personnel, administration, etc. So, it can be safely stated that the scope of e-Business is wider than that of e-Commerce. Scope of e-Business The scope of e-business is quite vast. It includes almost all types of business functions, like activities related to production, finance, marketing, personnel, etc. On the basis of parties involved in electronic transactions, e-business can be classified into four directions: 1, B2B Commerce: The transactions taking place between business firms are referred to Businoss Orparisaten as business to business or B2B transactions. suplgeg For example, an automobile manufacturer (like heals Maruti Udyog) makes several B2B transactions, such as buying tyres, glass for windscreens, > Website door handles, etc. for its vehicles from different business units. Sels B2B transactions form major share (around 80%) of total e-commerce volume. Some Cetera) of the B2B transactions are: (i) Sharing of information; (ii) Commercial negotiations; (iii) Distribution of goods. B2C Commerce: The transactions taking place between business and customers at known as Business-to-customer or B2C transactions. e-Commerce facilitates and specs up the entire B2C process. It enables the business to remain in touch with its custome on round-the-clock basis. For example, withdrawal of one’s own money from banks w= a tedious process in the past. With introduction of ATM, it is now possible to withdraw money round the clock in a convenient and fast manner. Business to Business e-Commerce (628) Scanned with CamScannerpoC transactions may include: (i) Selling and distribution of good: (i) Conducting surveys to determan, (ii) After-sale service. (iv) Promotional activities, ‘Tmine customer's preference. BAC also gives scope for C2B transactions. C2B commerce provides the consumers with the freedom of shopping-at-will. Customers can also make toll free calls to the call centers set up by the companies to make queries and lodge complaints. The volume of 528 transactions is much higher than the volume of B2C transactions. It happens because in order to facilitate a single B2C transaction, there are number of B2B transactions. Forexample, an automobile manufacturer makes several B2B transactions (buying tyres, glass, etc.) before making a single B2C transaction. eonee c2C Commerce: The transactions taking place between two or more customers are known as C2C Commerce.For example, sale of used books and household equipments on cash or barter basis. * Consumers areno longer totally reliant on corporations. They are conducting their own. business transactions and internet allows them to globally search for potential buyers. An excellent example of this is Quikr and OLX, where consumers can sell their goods and services to other consumers. e-commerce technology provides security to such transactions which otherwise would have been missing. Place advertisement Various consumer forums and pressure groups are also formed through which an aggrieved customer can share his experience about a product and warn other customers not to buy such products in which he was cheated. ‘Consumer to Consumer e-Commerce (C2C) Who is Payment Intermediary? Another technology that has emerged to support C2C activities is of payment intermediary. In this method, instead of paying the money ‘to an unknown seller, the buyer sends the money to the intermediary, who holds the money til the goods are shipped and accepted by the buyer. For example, PayPal is a safer, easier way to pay and get paid online, 4. Intra-B Commerce: As discussed before, e-Business is wider than e-commerce. e-Business includes not only e-commerce (B2B, B2C and C2C) but also ‘Intra-B Commerce’, Intra-B Commerce refers to interaction and dealings among various departments and persons Within the firm. Scanned with CamScannerBusiness Studies fore, 5 * It includes the use of intranet to interact and deal between various department, persons withina firm. The use of intra-B commerce has facilitated flexible manufac * For example, the marketing department may interact regularly with the Produc ty department and get the products made as per the requirements of the customers Intra-B Commerce transactions may be conducted for: (i) Inventory and cash management (ii) Reporting by employees to their seniors. (iii), Human resource management (iv) Recruitment and selection (v) Training, development and education Companies are also resorting to Virtual Private Network (VPN) technology, through which em, can access to organisations network and can work from anywhere through computer network. > Firm Intra-B Commerce B2B Purchase ¢—> Marketing B2C c2c Production Finance R&D slew clemeanreear aa Do Scanned with CamScannerof formation itis difficult to form. presence Itdoes not e i requirements | There is ee physical presence, | it requires physical presence. Tocation Fequirement for location, |" Locations preferred near raw materials and market. tting uP Low cost - 7 Goat of setting ‘aan f duo to no need for physical | Itinvolves high cost of setting. ‘Gperating cost ‘The operating costs iow. High operating cost due to investment : Tact ji in production, marketing, etc. indirect a ta It has direct contact. Tthas indirect contact through interme- wit suppliers an diaries. customers ‘gut of internal (Communication can flow in any direction. | It involves hierarchical flow of commu- communication nication. time in meeting | It gives instant response. Response takes a lot of time. qustomer’s requirement ‘Oenisational structure | Vertical or tall structure due to chain of | Horizontal or flat structure due to direct command. ‘command and communication. Fisiess Processes and | Short business process cycle. Tris Tong due to number of sequential lengih ofthe cycle processes. Opportunity for inter-| Less opportunity forinter-personaltouch. | More opportunity for inter-personal personal touch touch. ‘Opportunity for physical | It is possible only in case of books, | Itprovides many opportunities for phys- pre-sampling of the prod- | journals, etc. ical pre-sampling of products. pr ucts: Ease of going global “There are more chances of going global. | There are less chances of going global. Government patronage _| Increasing Declining Nalure of human capital Technically and professionally quali Mostly semi-skilled and unskilled manpower. High risk due to lack of personal contact between the parties. Tow risk due to personal contact between the parties. business. * Moreover, e-b * Itdoes notneed. any procedural requirement uusiness does not require inv‘ Of traditional business. * So, benefits of internet technol business depends on network 53 BENEFITS OF e-BUSINESS ————@ —@$#$#$#-—_ Various benefits of e-Business are as follows: 1. Ease of Formation and lower investment requirements: is as needed for setting up traditional industry. estment in shop, stock or display like in case Itis very easy to form and start logy accrue to big or small business alike. Success of (contacts) and not on investment (net worth). Scanned with CamScanner2 3. —“ Business Stucies for Cag, a Conveniencee-business offers the advantage of accessing anything, anywhere, any . It enables the customers to shop at their own convenience at any time (24x7). Itenables th, business firms to remain in touch with their customers, suppliers, etc, Moreover, employex can also access to organisations network (through VPN) and can do work from any Place Speediinformation moves very fast through internet, which speeds up the process buying and selling. + e-business needs very less time to complete the business cycle as the entire process done with the click of a mouse. Some products ate even delivered online, like muse movies, e-books, etc. + Through electronic funds transfer technology of e-commerce, money can be instant transferred. Global Reach: With the help of a well-developed computerised networking system, e-business allows the seller to operate at the national as well as the global level. The buyers and sellers from any part of the world can interact with each other. Buyers get the freedom to choose products from almost any part of the world. Movement towards a paperless society:Use of internet has considerably reduced dependence on paperwork as most of the work is done electronically through computers. Even the government departments and regulatory authorities have started using computes in their workings. For example,people can file their income tax return online. It has also increased the speed of the process of granting permissions, approvals and licenses. Conventional Distribution Channel for movement of Goods and Services as — ees — ee es) (A) and (B): Distribution Channel gets shortened by e-Business ; — = =) " a Scanned with CamScanner