Business Studies Solution for Class 11 Commerce Business Studies Chapter 5 - Emerging Modes of Business
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Business Studies Solution for Class 11 Commerce Business Studies Chapter 5 - Emerging Modes of Business Page/Excercise 137
e-commerce does not include interactions among the various departments within the business.
e-commerce refers to the process of buying and selling over the Internet. Therefore, it includes interactions with customers and suppliers and interaction among the geographically dispersed units of the business.
Business Studies Solution for Class 11 Commerce Business Studies Chapter 5 - Emerging Modes of Business Page/Excercise 138
Outsourcing restricts only to the contracting out of non-core business processes
The term outsourcing refers to tasks which involve contracting out non-core activities to specialists because of their experience, knowledge and efficiency. This process helps companies to focus on their core competencies and leave the non-core activities to those who are well versed in them.
The payment mechanism typical to e-business is e-cash.
e-cash is a form of electronic money which allows funds to be transferred from one account to another account without the use of actual currency. It helps in purchasing items by various other means such as cheques, credit cards or by money order through a secure online transaction.
A call centre handles both voice-based and non-voice-based business.
Consumer queries are solved in a voice-based business, whereas technical back-end activities are handled in a non-voice-based business. Call centres are so successful that they contribute 70% to the BPO industry revenue.
Contract R&D is not an application of e-business.
Various e-business applications are e-bidding, e-trading, e-delivery, e-promotion and e-procurement. Research and development is still not done through e-business as companies prefer to perform research in-house and keep it under their control.
Relatively difficult because of many formalities
High because of requirement of physical facilities
Response time for meeting customers
Long, with no fixed time limit
Outsourcing has become a global phenomenon and represents a new mode of business. This is due to the following reasons:
- Outsourcing means to hire someone experienced enough to do the work aptly.
- This helps companies to focus on their core competencies and enhance them instead of concentrating on less important or non-core activities.
- Outsourced jobs are given to those agencies which are already performing the same task for many other companies. So, outsourcing companies enjoy the benefit of reduction of cost by 10-20%.
- Because the task is being assigned to an outside agency, any labour-related problem does not concern the outsourcing company. It is supposed to be taken care of by the agency itself.
- The agency to which the task has been outsourced is an experienced company as its core competency would be to perform the work assigned.
Applications of e-business:
- e-procurement: It is an Internet-based transaction to procure goods and services for business. It streamlines the purchasing process and enhances the trade link between multiple buyers and sellers in a digital marketplace and between a single business purchase and many sellers.
- e-delivery: This application instantly delivers multimedia content such as books and videos to the customer's computer through the Internet. It not only delivers multimedia content but also provides consulting, accounting, medical and legal services.
Outsourcing is surrounded by concerns and some limitations. Some of these are confidentiality, sweat shopping, resentment in home countries and ethical concerns.
Outsourcing refers to assigning non-core activities to an outside experienced agency for better outcomes/results at reduced cost. However, companies in developed countries follow the practice of outsourcing non-core activities to agencies in underdeveloped countries. This is done to reduce the cost and to exploit the abundant cheap labour available in underdeveloped countries. In these countries, wage discrimination on the basis of gender, lineate labour laws and child labour are common phenomena. Thus, outsourcing raises ethical concerns when outsourcing work to underdeveloped countries.
The concept of e-business has brought about fundamental changes in the way business is conducted now. However, this change has put a lot of vital information online, i.e. on the Internet. This stored data in various systems is exposed to several risks. Some data storage and transmission risks faced in e-business:
VIRUS: Vital Information Resources Under Siege is a computer program which duplicates itself when an infected program is executed. These viruses can enter one's computer either through e-mails or pen drives or unsafe websites. They disrupt the working of the computer to a great extent which in turn affects the business. Various types of viruses are
Level 1 Virus - Problems with on-screen display
Level 2 Virus - Problems with functioning of the computer
Level 3 Virus - Specific targeted data files are damaged
Level 4 Virus - Complete destruction of the system
Hacking: It refers to an unauthorised intrusion in one's computer or network. This is generally done to erase or misuse the information on one's network for personal advantage or to harm the party. This results in interruption of one's business and to revenue generation.
e-business is conducting business online which includes buying and selling of products and services and all the functions which are conducted electronically. Outsourcing, on the other hand, refers to tasks which involve contracting out non-core activities to specialists to gain from their experience, knowledge and efficiency.
Factors responsible for the growing importance of these trends:
- Enhancement of technology: Improvement in information technology with respect to quality and speed has resulted in an increase in e-business and outsourcing.
- Increasing demands of consumers: There has been an increase in the demand with respect to round-the-clock delivery and customer service. Both trades have been pretty successful in ensuring product delivery way before time and satisfying customers with after sales service.
- Growth of business: Owing to change in time, growth of business is a direct requirement. It can be performed by adapting to new technologies, by innovations and by implementing various different marketing methods. e-business and outsourcing do wonders in facilitating continuous development of business strategies and new technologies.
- Increased demand for good quality products: Consumers are now interested in buying good quality products at the cheapest price available. e-business and outsourcing have been successful in pleasing consumers with the required products at reasonable prices.
Online trading refers to the act of buying and selling products through the Internet and is available to each person interested in shopping online. There are three stages involved in online trading. First is the pre-purchase stage which includes advertising and information seeking. Second is the purchase/sale stage wherein price is negotiated, the deal is confirmed and the payment is done. The last stage is the delivery stage.
Let us understand each stage in detail:
- Registration: Before one can begin with online shopping, one has to register on the website by filing up a registration form. The username and password will be assigned which can be used for further processes.
- Order Placement: After your account is registered, you can check out the stuff you are interested in buying and place them in the shopping cart for buying later or directly proceed to the cart. This is very similar to what we do in a physical store.
- Payment: The next step is to choose the payment option once the items are decided. Various payment options are
- Cash on delivery (COD): As the name suggests, it means that the buyer can make payment for the order at the time of delivery of the product.
- Cheque: Payment is through cheque. After the product is booked, the vendor can arrange for the cheque to be picked up from the buyer. On realisation, the goods can be delivered to the buyer.
- Net banking transfer: This process allows the buyer to transfer funds to the vendor's account over the Internet. After the payment is received, the vendor delivers the product.
- Credit or debit card: Plastic money is majorly used for online shopping. In this payment mode, the person needs to feed in his card information after which he will receive a one-time password (OTP) on his mobile phone which needs to be entered to complete the payment transaction. After confirmation, the vendor starts the delivery process.
- Digital cash: It is an electronic form of currency which does not have any physical presence. This cash has the ability to be used as real currency in cyberspace. Availing of this cash can be done from the bank by transferring amount (in the form of cheque or draft) equal to the digital cash needed. These funds are stored on the computer. It can then be used as cash to make online transactions.
Need for outsourcing:
- Focussed attention: The process helps companies to focus on key areas or activities which are crucial for their success. This helps them to use their resources to the optimum.
- Quest for excellence: This enables companies to pursue excellence, first by working on their core competencies in which they excel and second by assigning the non-core tasks to those who excel in performing them.
- Reduced cost: Work is outsourced to professional agencies with ample amount of experience in those specific tasks. These agencies perform the same tasks for several different companies. Thus, client organisations benefit from cost advantage which arises out of increased output of production (economies of scale). This results in the cost reduction for client organisations, thereby being cost effective.
- Fillip to economic development: Offshore outsourcing (outsourcing work to less developed countries) by different countries helps trigger entrepreneurship, employment and exports in the host countries. Example: The IT sector in India grew because of various outsourcing projects from various countries.
Limitations of Outsourcing:
- Confidentiality: When activities are outsourced, companies have to share a lot of vital information with the agency. This can create problems as the agencies may not be able to maintain confidentiality.
- Sweat shopping: The term refers to hiring of employees/workers at very low wages to work for long hours under poor conditions. Organisations tend to hire such outsourcing agencies to reduce their costs with maximum benefit. Furthermore, the work assigned to employees of these agencies does not help in building the capability of those workers in any manner. In this view, it shows that the firm outsourcing its work is interested only in getting the work done regardless of any development happening on the part of the agency employee.
- Resentment in home country: When companies of a certain country outsource tasks to other countries, they are indirectly outsourcing employment opportunities to others. This creates a sense of resentment among the people from the home country, especially when the particular country is facing unemployment issues.
Business Studies Solution for Class 11 Commerce Business Studies Chapter 5 - Emerging Modes of Business Page/Excercise 139
B2C commerce refers to transactions taking place between business and its customers. It is also known as B2C transactions. These transactions involve
- Promotional activities
- Selling and distribution of products
- After sales service
Salient aspects of B2C commerce:
- The main focus is to carry out transactions which involve selling and after sales service through the Internet.
- It promotes products online, i.e. companies sell their products and services online to customers.
- All the activities under B2C commerce are conducted at a much lower cost with high speed.
- It also takes care of customers' requests and customises the product according to their requirements and provides delivery flexibility and payment options.
- It enables a business to remain in touch with customers round the clock, i.e. 24/7.
Limitations of e-business:
- Low personal touch: E-business is conducted online due to which a personal touch/human interaction which a customer requires remains absent. Hence, it is considered a less suitable mode of business compared to traditional business, especially for products which require a personal touch.
- Delay in delivery: Although selecting and buying of the product happens at a click of a mouse, the delivery takes time. Although customers are aware of the delivery date, they remain impatient. Also, it so happens that the network does not work properly which makes it even more agitating for customers.
- Need for technology capability: Because e-business is done online using a computer, a customer requires knowledge to handle the computer and the Internet. This makes it difficult for those who are not capable enough to handle/run the computer; hence, this limits the scope of business to a certain extent.
E-business faces many limitations. However, it tries to overcome many of these by widening its scope.
- Fair amount of changes are being made in areas which deal with customers. Websites are made interactive for consumers to feel connected to traders and sellers.
- There has been a drastic improvement in communication technology. These improvements have resulted in increased speed and quality of the communication taking place over the web. These help customers to get in touch with various traders all across the globe in hardly any time.
- Special efforts have been taken to set up e-business and overcome digital issues in rural areas with the help of the government, NGOs and international agencies.
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