1st PUC Business Studies Question Bank Chapter 5 Emerging Modes of Business

   

Karnataka 1st PUC Business Studies Question Bank Chapter 5 Emerging Modes of Business

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1st PUC Business Studies Emerging Modes of Business Textual Questions and Answers

1st PUC Business Studies Emerging Modes of Business Multiple Choice Questions

Question 1.
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

Question 2.
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:
d. Includes off-shoring

Question 3.
The payment mechanism typical to e-business
a. Cash on Delivery (CoD)
b. Cheques
c. Credit and Debit Cards
d. e-Cash
Answer:
d. e-Cash

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Question 4.
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:
a. Only in-bound voice based business

Question 5.
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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1st PUC Business Studies Emerging Modes of Business Short Answer Questions

Question 1.
State any three differences between e-business and traditional business.
Answer:
Difference between Traditional and e-Business

Basis e-business Traditional Business
Formation It is easy to form. It takes lengthy and complicated procedure to form.
Setting up cost It takes a very nominal cost. It takes huge capital in order to set up.
Risk involved High risk involved as there is no direct contact between the parties. Less risk involved as parties have personal interaction.

Question 2.
How does outsourcing represent a new mode of business?
Answer:
Outsourcing represents a new mode of business as it is a departure from the traditional thinking of self-sufficiency in business. It refers to a long-term contracting out of business activities to captive or third party specialists with a view to benefitting from their experience, expertise, efficiency and even investment. Generally the non-core business activities are outsourced but of late even some of the core activities have started being outsourced.

Outsourcing comprises four key segments: contract manufacturing, contract research, contract sales and informatics. Global competitive pressures for higher quality products at lower costs, demanding customers and emerging technologies have induced a re-look at business processes and hence resulted in outsourcing as a new mode of business which is now being reported to not out of compulsion but out of choice.

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Question 3.
Describe briefly any two applications of e-business.
Answer:
Two applications of e-business are:

(i) e-Procurement
It involves internet-based sales transactions between business firms, including “reverse auctions” that facilitate online trade between a single business purchaser and many sellers and digital market places that facilitate online trading between multiple buyers and sellers.

(ii) e-Communication/e-Promotion
It includes e-mails, publication of online catalogues displaying images of goods, advertisement through banners, pop-ups, opinion polls and customer surveys, etc. Meetings and conferences may be held by through of video conferencing.

Question 4.
What are the ethical concerns involved in outsourcing?
Answer:
Outsourcing has raised certain ethical concerns which need to be considered. In search of cheap labour, manufacturing processes are being outsourced to developing countries where they use child labour/women in the factories and working conditions are unhygienic and even unsafe.

The companies cannot do so in their developed home countries due to stringent laws forbidding use of child labour. This raises the ethical concern whether this sort of cost cutting by using child labour justified. Similarly there is a concern over the ethical aspect of outsourcing the work to countries where gender based wage-discrimination is done and hence women are paid lower wages.

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Question 5.
Describe briefly the data storage and transmission risks in e-business.
Answer:
There are a number of risks to which data is exposed while it is stored or is en-route in a transaction. Vital information may be stolen or modified to pursue individual gains. There can be attacks of VIRUS and hacking. Virus means Vital Information Under Siege.

It is a program which replicates itself on the other computer systems. The effect of computer viruses can range from some annoying on-screen display (Level-1 virus), disruption of functioning (Level-2 virus) damage to target data files (Level-3 virus), to complete destruction of the system (Level-4 virus).

Anti-virus programmes need to be installed and updated on the system and files and disks should be scanned with them to provide protection from virus attacks. Data may be intercepted in the course of transmission. Cryptography is used for protection against such risks. It refers to the art of protecting information by transforming it (encrypting it) into an unreadable format called ‘cyphertext’.

Only those who possess a secret key can decipher (or decrypt) the message into ‘plaintext’ and thus others do not understand your conversation.

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1st PUC Business Studies Emerging Modes of Business Long Answer Questions

Question 1.
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:
During the last decade or so the way of doing business has undergone fundamental changes. The manner of conducting business is referred to as the ‘mode of business’, e-business and outsourcing are referred to as ‘emerging modes of business’ as these have brought about new changes in the way or manner in which business is conducted and it is believed that these trends are likely to continue, e-business may be defined as the conduct of industry, trade and commerce using the computer networks, e- business covers a firm’s interactions with its customers and suppliers over the internet and also other electronically conducted business functions such as production, inventory management, product development, accounting and finance and human resource management.

Outsourcing represents a new mode of business as it is a departure from the traditional thinking of self-sufficiency in business. It refers to a long-term contracting out of business activities to captive or third party specialists with a view to benefitting from their experience, expertise, efficiency and, even investment. Generally the non-core business activities are outsourced but of late even some of the core activities are being outsourced. Outsourcing comprises four key segments: contract manufacturing, contract research, contract sales and informatics.

The various factors responsible for the growing importance of these trends are:

  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 successfully to 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 has to keep evolving by adopting new trends in order to ‘ benefit from emerging technologies.

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Question 2.
Elaborate the steps involved in on-line trading.
Answer:
The following steps are involved in on-line trading:

(i) Registration.
Before online shopping one has to register with the online vendor by filling up a registration form. In this form one has to give a password to protect the account otherwise anyone can log in your account.

(ii) Placing an Order
In online transactions the order can be placed by picking and dropping the items in the shopping cart. Shopping cart is an online record of what you have picked up while browsing. After being sure of what you want to buy then check out from shopping cart and choose your payment option.

(iii) Payment Mechanism
In an online purchase payment is made through

  • Cash on, delivery
  • Through cheque
  • Net banking transfer
  • Credit or debit card
  • Digital cash

[Note If they ask steps in e-trading then following steps are to be mentioned]

  • Opening bank ale
  • Opening demat account with a depositoiy participant
  • Opening online trading account with stock brokers
  • Trading software installation
  • Bidding and trading in securities

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Question 3.
Evaluate the need for outsourcing and discuss its limitations.
Answer:
Global competitive pressures for higher quality products at lower costs, ever demanding customers and emerging technologies are responsible for the continuing emergence of outsourcing as a mode of business.

Need for outsourcing is outlined in the following points:

(i) Focused Attention
Business firms are realizing that focusing their limited resources on a few areas where they have core competence, and contracting out the rest of the activities to their outsourcing partners can lead to better efficiency and effectiveness.

(ii) Quest for Excellence
Outsourcing enables the firms to pursue excellence by virtue of limited focus and also by extending their capabilities through contracting out the remaining activities to those who excel in performing them.

(iii) Cost Reduction: It has become necessary for firms operating in global markets to maintain quality of products while keeping prices low. Thus, the only way to survival and profitability is cost reduction. The outsourcing partners deliver the same service to a number of organizations and hence benefit from economies of large scale leading to lower cost.

(iv) Growth through Alliance: Investment requirements are reduced when some activities are outsourced. Outsourcing also facilitates inter organizational knowledge sharing and collaborative learning.

(v) Stimulates Economic development: Outsourcing stimulates entrepreneurship, employment and exports in the host countries, e.g., IT sector in India has become undisputed leader as far as global outsourcing in software development and IT-enabled. services are concerned having 60 per cent of the global outsourcing share in the informatics sector.

But there are certain limitations of outsourcing as given below:

(i) Confidentiality
Outsourcing depends on sharing a lot of vital information and knowledge. If the outsourcing partner does not maintain the confidentiality it can harm the interest of the party that outsburces its processes.

(ii) Sweat-Shopping
Outsourcing firms seek to lower their costs by utilizing the low-cost manpower of the host countries. Moreover, the work that is outsourced is not of the type which may build the competency and capability of the outsourcing partner.

(iii) Ethical Concerns
In search of cheap labour, manufacturing processes are being outsourced to developing countries where they use child labour/women in the factories and working conditions are unhygienic and even unsafe. This raises ethical concerns.

(iv) Resentment in the Home Countries
The process of outsourcing manufacturing, marketing, research and development or IT-based services involves contracting out jobs or employment opportunities from the home country which causes resentment particularly if the home country is suffering from the problem of unemployment.

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Question 4.
Discuss the salient aspects of B2C commerce.
Answer:
B2C (Business-to-Customers) transactions have business firms at one end and its customers on the other end.

The salient aspects of B2C Commerce are as follows:

(i) Online Selling
B2C commerce involves selling the products online to customers who register for .online shopping. However, it must be appreciated that ‘selling’ is the outcome of the marketing process.

(ii) Online Marketing
B2C commerce includes a wide gamut of marketing activities such as promotion and sometimes even delivery of products (e.g., music or e-books) that are carried out online at a much lower cost but high speed.

(iii) Adaptation to Customer Requirements: B2C commerce has made it possible for firms to manufacture the product with customized features to suit the requirements of the customers and also to provide the convenience of deliveiy and payment to the customers.

(iv) Customer feedback: B2C variant of e-commerce enables a business to be in continuous touch with its customers through online surveys about demand trends and customer satisfaction.

(v) C2B Interactions: B2C is not a one-way traffic, i.e., from business-to-customers. It also covers C2B interactions which provide the consumers with the freedom of shopping-at-will. Customers can also make use of call centers set up by companies to make toll free calls to make queries and lodge complaints round the clock at no extra cost. Outsourcing the call centers or help lines for B2C commerce interactions may be outsourced and are not necessary to be set up by the business itself.

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Question 5.
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 otyn limitations as discussed below:

(i) Low Personal Touch
e-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.

(ii) Incongruence between Order Taking/Giving and Order Fulfillment 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.

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

(iv) 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.

(v) 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.

(vi) Ethical Fallouts
Companies use an ‘electronic eye to keep track of the computer files, e-mail account and the websites visited by 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.

Efforts are on to overcome the digital divide through setting up of community tele-centres in villages and rural areas with the involvement of government agencies, NGOs and international institutions. Thus, we can say that despite limitations, e-business is here to stay and bring a positive change in the businesses, governance and the economies.

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1st PUC Business Studies Emerging Modes of Business Additional Questions And Answers

1st PUC Business Studies Emerging Modes of Business Multiple Choice Questions

Question 1.
By which act government checks restrictive trade?
A. Industrial Policy Act 1991
B. MRTPAct
C. FEMAact
D. None of these
Answer:
B. MRTPAct

Question 2.
Which of the following does not fall within the jurisdiction of MRTP commission?
A. Prevention of Monopolistic Trade practices
B. Prevention of Restrictive trade practices
C. Prohibition of Unfair Trade Practices
D. Regulation of Combinations
Answer:
D. Regulation of Combinations

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Question 3.
Liberalization means
A. Reducing number of reserved industries from 17 to 8
B. Liberating the industry, trade and economy from unwanted restrictions
C. Opening up of economy to the world by attaining international competitiveness
D. Free determination of interest rates
Answer:
B. Liberating the industry, trade and economy from unwanted restrictions

Question 4.
When a company taken over another one and clearly becomes the new owner, the action is called.
A. Merger
B. Acquisition
C. Strategic Alliance
D. None of the above
Answer:
B. Acquisition

Question 5.
Relaxing the restrictions and controls imposed on Business and industry means
A. Liberalisation
B. Privatization
C. Globalisation
D. None of the above
Answer:
A. Liberalisation

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Question 6.
Company images and brand equity is a factor affecting business
A. Externally
B. Internally
C. Government Policy
D. None of these
Answer:
C. Government Policy

Question 7.
Which among the following is not opened for private sector participation
A. Power sector
B. Telecommunication sector
C. Education sector
D. Railways
Answer:
A. Power sector

Question 8.
is an economic system based on the principle of free enterprise.
A. Capitalism
B. Socialism
C. Mixed Economy
D. Marxism
Answer:
D. Marxism

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Question 9.
What are the decisions taken by government of India pertaining to Industrial Sector in the new industrial policy of 1991?
A. VRS to shed the excess load of workers
B. Disinvestment of public sector share holding
C. Referring sick units to BIFR
D. All of the above
Answer:
D. All of the above

Question 10.
A monopolistic trade practice is deemed to be prejudicial to public interest except when
A. Authorized by Central Government
B. Authorized by State Government
C. Authorized by Supreme Court
D. None of the above
Answer:
B. Authorized by State Government

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1st PUC Business Studies Emerging Modes of Business Short Answer Questions

Question 1.
Define e-business.
Answer:
business is also defined as conducting the activities of industry, trade and commerce which are all parts of business, through computer network i.e., internet.

Question 2.
Define outsourcing.
Answer:
‘Outsourcing or outsourcing service’ means going outside one’s own organisation to obtain the specilaised services of various kinds in time and at lower costs. In other words, it is the practice of obtaining specialised services from specialist people outside the organization on a regular basis. In short, it means a task done through a specialised outside agency.

Question 3.
What is e-commerce?
Answer:
E-business is a more elaborate term and comprises various business transactions and functions conducted electronically, including the more popular gamut of transactions called e-commerce.

Question 4.
What is BPO?
Answer:
Outsourcing process expertise is called Business Process Outsourcing.

Question 5.
What do you mean by B2B Business?
Answer:
B2B business, i.e., business to business transaction take place between one business firm with other business firms. Under B2B business, a business firm can place orders with its suppliers, monitor delivery of materials and parts and make payment online.

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Question 6.
What do you mean by B2C Business?
Answer:
B2C business includes transactions between a business firm and its customers. Online shopping, online delivery, ATM, etc. are examples of B2C business. Under this System, firms can also conduct online surveys to ascertain who is buying and to what extent the customers are satisfied.

Question 7.
What do you mean by Intra-B Business?
Answer:
Inter – B business involves transactions between the various departments of an organisation. Orders, etc. become possible thanks to intra – B business.

Question 8.
What do you mean by C2C Business?
Answer:
C2C business refers to business transactions taking place between consumers. E-bay, OLX etc where consumers sell their goods and services to other consumers is an example of C2C business.

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Question 9.
What is shopping cart?
Answer:
Shopping cart is an oline record of what we have picked up while browsing the online store.

Question 10.
What is digital cash?
Answer:
Digital cash is a form of electronic currency existing in cyber space.-In case of digital cash, on payment of the amount, the bank issues digital cash in favor of the buyer.

Question 11.
What is digital divide?
Answer:
Digital divide is the division of the society on the basis of familiarity with digital technology.

Question 12.
Give the full form of VIRUS?
Answer:
Vital Information under Siege.

Question 13.
What is hacking in e-business?
Answer:
Hacking means unauthorised entry into a website. Hackers destroy the data and interrupt the messages sent on internet. They interpret confidential information. They misuse such information or modify and even destroy its contents to harm the parties.

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Question 14.
Give the full form of CSS.
Answer:
Customer Support Services.

Question 15.
What are customer support services?
Answer:
Customer support services mean technical, administrative and commercial and even after sales services.

Question 16.
Distinguish between e-business and e-commerce.
Answer:
The terms e-business and e-commerce are often used interchangeably. However, these two terms are different. E-business is a wider term than e-commerce, in the sense that e-commerce is just a part of e-boniness or e-business includes e-commerce. E-business includes not only e-commerce, but also other electronically conducted business transactions, such as product development, production, inventory management, accounting, finance, etc. On the other hand, e-commerce covers just buying and selling of goods and services over the internet.

Question 17.
Distinguish between B2B and B2C types of e-business.
Answer:
The difference between B2B and B2C of e-business:

Business 2 Business Business 2 Customers
1. B2B business, i.e., business to business transaction take place between one business firms with other business firms. 1. B2C business includes transactions between a business firm and its customers.
2. Under B2B business, a business firm can place orders with its suppliers, monitor delivery of materials and parts- and make payment online. 2. Online shopping, online delivery, ATM, etc. are examples of B2C business. Under this system, firms can also conduct online surveys to ascertain who is buying and to what extent the customers are satisfied.

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Question 18.
Name any three requirements for successful implementation of e-business.
Answer:
The three requirements for successful implementation of e-business are:

  1. Well- designed Website: for the successful implementation of e-business, a business enterprise must develop a comprehensive website to communicate effectively with its customers, suppliers and business partners.
  2. Clear Cyber Laws: There should be clear cyber laws. Absence of Clear cyber laws is an impediment in the implementation of e-business.
  3. Effective Telecommunication system: E-business requires an effective telecommunication system in the form of telephone lines, optic fiber cables and internal technology to handle the traffic on the internet.

Question 19.
Mention any three elements off security of e-busincss.
Answer:
The three elements off security of e-business are:-

  1. Encryption: Encryption means converting the message into a code so that unauthorised persons may- not understand it. Only the sender and the receiver of the message know the coding and decoding rules.
  2. Digital Signatures: Under digital signature method, coded digital certificate is issued for each message by a certification authority.
  3. Cyber Crime Cells: The government may set up special cyber crime cells to look into the cases of hacking and to take necessary action against the hackers.

Question 20.
State any three benefits of outsourcing.
Answer:
The three benefits of outsourcing are:

  1. Enhancement of business: Outsourcing helps business firm to provide standard quality products and series, and thereby, enhance the volume of business.
  2. Concentration on core tasks: Outsourcing enables business firm to concentrate on core competencies to facilitate better performance of its core task.
  3. Provision of better quality products: Provision of standard quality of products and services can be ensured through outsourcing.

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1st PUC Business Studies Emerging Modes of Business Long Answer Questions

Question 1.
Explain the transaction and data storage and transmission risks of e-business.
Answer:
The various risks involved in online transactions are:

I. Transaction Risks:

  • Default on Order Giving or order taking: Default on order giving or order taking is one of the transaction risks associated with e-business.
  • Default on Order Giving or Order Taking: Default on order giving or order taking is one of the transaction risks associated with e-business.
  • Default on Payment: Default on payment is yet another transaction risk. The customer may claim that the payment was made, but the seller might not have got the payment for the goods supplied.

II Data Storage and Transmission Risks: Data storage and transmission risks also are involved in e-business.

Data stored by computer systems is exposed to several risks. Those risks are:

  • People may steal or distort the data for selfish motives or just for fun.
  • VIRUS (Vital Information under Siege) and hacking are well-known threats.

The data storage and transmission risks can be controlled by installing anti-virus programmes and updating them from time to time.

III. Risks to Intellectual Property and Privacy: Internet is a open space, anybody can copy the data and supply it to others. Lot of advertising and promotional literature may be dumped into our e-mail box. Such junk mail is a great problem. E-business can succeed only when both buyers’ and sellers trust the system of exchange. This trust can be generated by ensuring security of e-business transactions.

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Question 2.
Explain the nature of outsourcing.
Answer:
The natures of outsourcing are:

1. Processes involved in outsourcing may e outsourced to a captive unit or a third party. A capative unit is a service provider set’for providing services of a given kind to only one firm. For example, general electronics is a captive unit in India providing certain kinds of services to its parent company in the U.S.A. as well as , to its subsidiaries in other countries.

2. Outsourcing, generally, involves outsourcing of non-core business activities.
3. Assurance of quality through specilaised outside agencies is an important feature of outsourcing.

4. Every outsourcing relationship involves processes and procedures which are often standardised. But, at the same time, there is some flexibility to ensure its success.
5. The outsourcer charges fees for performing his services on contract basis.

Question 3.
Discuss the benefits and limitation of e-business.
Answer:
E-business offers several benefits to business firms and consumers. They are:

  1. E-business contributes to better customer satisfaction.
  2. E-business helps business firms to enter new and remote markets.
  3. E-business allows firms to select the best Suppliers regardless of their geographical location and to sell to global market.
  4. E-business has the advantage of speed. In e-business, information can be exchanged at the click of a mouse.
  5. E-business’makes possible working round the clock and around the world.

E-business is not free from drawbacks. It suffers from the following limitations:

1. Online business also suffers from the risk of hacking and virus.
2. E-business suffers from human resistance Generally, people oppose new technology and new mode of doing business due to the fear of insecurity and stress.

3. The warmth of inter-personal interaction is lacking in e-business. That is, e-business suffers from limited personal touch. So, e-buSiness is less suitable for products, such as garments, toiletries, etc.

4. E-business also suffers from ethical problems. Many firms use an electronic eye to keep track of the e-mail account, computer files and’websites used by their employees. This implies and attack on the privacy of the staff.

5. In e-business, information can flow at the click of mouse. But the physical delivery of the product takes time. Further, the user may become frustrated when it take along time to open the website due to technical faults.

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Question 4.
Explain the resources required for successful implementation of e-business.
Answer:
Successful implementation of e-business requires certain resources. The various
resources required for the successful implementation-of e-business are:

1. Well- designed Website: For the successful implementation of e-business, a business enterprise must develop a comprehensive website to communicate effectively with its customers, suppliers and business partners. The website should provide detailed information about the firm’s products and services. The data should be supported by suitable pictures, graphs, etc.

2. Clear Cyber Laws: There should be clear cyber laws. Absence of Clear cyber laws is an impediment in the implementation of e-business.

3. Effective Telecommunication system: E-business requires an effective telecommunication system in the form of telephone lines, optic fiber cables and internal technology to handle the traffic on the internet. E-business cannot be successful if telephone lines are getting frequently disconnected, and it is difficult to access the internet. The problem of Digital divide also must be solved to make e-business available to common man. It must be noted that the cost of hardware and the price of using the internet must be within the reach of low and middle income groups.

4. Adequate Computer Hardware: The business firm should have adequate computer hard ware. It must procure and install computers with necessary speed, memory and nodes to handle the expected volume of business. The firm should also provide the necessary Internet Service Provider and Application Service Provider Server and Portals, and e-mail facilities.

5. Security and Safety of Business Transactions: Though e-business is supposed to be safe and secure because of its digital or electronic code system, it is subject to security and safety risks, such as brand hijacking, hacking, which destroys the data and information, viruses which can enter the system and clean up the data and information stored up by the computer, etc.

6. Technically Qualified and Responsive Workforce: A Well-trained work force, capable of working easily with the internet and computer networks, is essential for e-business. The staff must also be trained to handle sales enquiries, processing orders and ensuring prompt delivery. There should be proper co-ordination between receipt of order, delivery of goods and receipt’of payment so as to minimise errors.

7. Psyche of the People: The psyche of the people is one of the factors required for the successful implementation of e-business. For instance, in India, the psyche of the people is one of the obstacles in the development of e-business. Psychologically, the Indian Consumers, at least the older generation, do not like to buy thing without touching and feeling them.

8. System of Receiving Payments: A fool-proof system of receiving payment for the goods sold must be developed. Adequate information should be made available to enable the customer to calculate the amount to be paid. An inbuilt system of refund, in case excess amount is received, should be created. Business firms must make arrangements with banks and credit card agencies to facilitate electronic receipts and payments of money.

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Question 5.
How can security of e-business transactions be ensured?
Answer:
The security of e-business transactions can be ensured by bearing in mind the following elements:

  1. Authenticity: Authenticity means enabling each party in a e-business transaction to ascertain with certainty the indentify of the other party.
  2. Integrity: Integrity implies honesty in dealings.
  3. Confidentiality: Confidentiality means privacy of the transactions.
  4. Non-repudiability of origin: Non-repudiability of origin implies that the origin of the transaction is not denied.
  5. Non-repudiability of receipt: Non-repudiability of receipt implies that the seller cannot subsequently deny the payment received

It may also be noted that the above elements of security of e-business depend upon certification by a trusted third party, say, a Government body. That means that the security of e-business requires the establishment of global certification system. Further, all the parties concerned with e-business must assume their responsibilities to ensure security of transactions.

Question 6.
Explain the concept and nature of outsourcing. Also state its advantages.
Answer:
The nature of outsourcing are:

1. Processes involved in outsourcing may be outsourced to a captive unit or a third party. A capative unit is a service provider set for providing services of a given kind to only one firm. For example, general electronics is a captive unit in India providing certain kinds of services to its parent company in the U.S.A. as well as to its subsidiaries in other countries.

2. Outsourcing, generally, involves outsourcing of non-core business activities.
3. Assurance of quality through specilaised outside agencies is an important feature of outsourcing.

4. Every outsourcing relationship involves processes and procedures which are often standardised. But, at the same time, there is some flexibility to ensure its success.
5. The outsourcer charges fees for performing his services on contract basis.

Concepts of outsourcing are:

  1. Outsourcing is quite necessary, as it does not simply cut cost but also serves to increase productivity and revenue of a business firm.
  2. Outsourcing is needed, as it contributes to increases accountability on outsourcers and requires them to maintain top level services.
  3. Outsourcing is desirable because it facilitates operational control. Outsourcing develops methods to monitor results and determine overall process of improvement.

Advantages of Outsourcing:
Outsourcing has, several advantages they are:

  1. Provision of better quality products: Provision of standard quality of products and services can be ensured through outsourcing.
  2. Enhancement of business: Outsourcing helps a business firm to provide standard quality products and services, and thereby, enhance the volume of business.
  3. Getting specilaised services at lower costs: Outsourcing helps a business firm to get specilaised services at lower costs, and thereby, improve its savings and earnings.
  4. Concentration on core tasks: Outsourcing enables a business firm to concentrate on core competencies to facilitate better performance of its core tasks.
  5. Reduction of labour: When an enterprises used outsourcing for certain services, it can run its business With less number of employees. Reduction in number employees helps the enterprise to avoid or reduce about problems.

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