Karnataka 1st PUC Business Studies Question Bank Chapter 5 Emerging Modes of Business
One Mark Questions
Question 1.
State any one strongest trend shaping the present business.
Answer:
Digitization is the strongest trend shaping the present business.
Question 2.
What is digitalisation?
Answer:
The conversion of text, sound, images, video, and other content into a series of ones and zeroes that can be transmitted electronically.
Question 3.
Name the network that is most familiar to students or consumers.
Answer:
Internet is the network which is most familiar to all section of people.
Question 4.
What is e-commerce?
Answer:
E-commerce is conducting the activities of industry, trade, and commerce using computer networks, i.e. internet.
Question 5.
What is B2B?
Answer:
B2B is a Business-To-Business Model in which transactions are done between businesses, such as between a manufacturer and a wholesaler, or between a wholesaler and a retailer.
Question 6.
What is B2C?
Answer:
B2C is Business-To-Customer in which Business transactions conducted directly between a company and consumers who are the end-users of its products or services.
Question 7.
What is Intra-B?
Answer:
If parties involved in electronic transactions are from within a business firm, then it is known as intra-B commerce.
Question 8.
What is C2C?
Answer:
Consumer-To-Consumer is a business model that facilitates the transaction of products or ser¬vices between customers.
Question 9.
What is B2E?
Answer:
Business-to-employee (82E) electronic commerce uses an intra-business network that allows companies to provide products and/or services to their employees. Typically, companies use B2E networks to automate employee-related corporate processes. B2E portals have to be compelling to the people who use them.
Question 10.
Expand BPO.
Answer:
Business Process Outsourcing.
Question 11.
Give an example of a business firm for C2C.
Answer:
eBay, OLX, Quicker, etc.
Question 12.
Give an example for B2C.
Answer:
Amazon.
Question 13.
State any one benefits of e-business.
Answer:
Global reach/access.
Question 14.
State any two limitations of e-business.
Answer:
Two limitations of e-business.
Question 15.
State any one risk of e-business.
Answer:
Transaction risks.
Question 16.
State anyone ways of payment in online transactions.
Answer:
Cash-on Delivery.
Question 17.
What is plastic money?
Answer:
Plastic money made out of plastic is a new and easier way of paying for goods and services. It includes credit cards, debit cards smart cards, etc.
Question 18.
State any one resource required for successful implementation of e-business.
Answer:
Internet Connection.
Question 19.
State any one threat to outsourcing.
Answer:
Confidentiality.
Question 20
Give an example for a captive BPO Unit working in India for its parent company and subsidiaries.
Answer:
Secure Sockets Layer.
Question 21.
Expand SSL.
Answer:
Secure Sockets Layer.
Question 22.
Expand VIRUS.
Answer:
Virus means Vital Information Under Siege.
Question 23.
State any one application of e-business.
Answer:
E- Delivery.
Question 24.
Expand ATM.
Answer:
Automated Teller Machine.
Question 25.
State any one features of outsourcing.
Answer:
Processes may be outsourced to a third party.
Question 26.
State any one demerits of e-business.
Answer:
Less security.
Question 27.
What is a virus?
Answer:
A virus means vital information under Siege. It is a program that replicates itself on other computer systems.
Two Mark Questions
Question 1.
Mention any one strongest trends shaping the present business.
Answer:
(a) Digitisation.
(b) Globalisation.
Question 2.
Distinguish between e-business and e-commerce.
Answer:
Question 3.
What is intra-B commerce?
Answer:
If parties involved in electronic transactions are from within a business firm, then it is known as intra-B commerce.
Question 4.
State any two benefits of e-business. (March – (S) (N) – 2018)
Answer:
Two benefits of e-business are:
(a) Global reach/access
(b) Convenience.
Question 5.
State any two limitations of e-business. (March-S-2019)
Answer:
Two limitations of e-business are:
(a) Dependent on the internet.
(b) Less security.
Question 6.
State any one risk of c-business.
Answer:
The different types of risks in e-business are:
(a) Transaction risks.
(b) Data storage and transmission risks.
Question 7.
What is cryptography?
Answer:
It refers to the art of protecting information by transforming it (encrypting it) into an unreadable format called ‘cyphertext’.
Question 8.
What are cookies?
Answer:
A cookie is information that a website puts on your hard disk so that it can remember something about you at a later time. In other words, it is information for future use that is stored by the server on the client-side of a client/server communication.
Question 9.
Stale any two ways of payment ¡n online transaction.
Answer:
The different ways of online payment transactions are:
(a) Cash-on-delivery.
(b) Debit card or credit card.
Question 10.
What is PayPal?
Answer:
PayPal is an electronic commerce (e-commerce) company that facilitates payments between parties through online funds transfers. PayPal allows customers to establish an account on its website, which is connected to a user’s credit card or checking account.
Question 11.
State any two resources required for successful implementation of e-business.
Answer:
The resources required for e-business implementation are:
(a) Internet connection.
(b) Computer system.
Question 12.
Give the meaning of outsourcing. (March – N – 2019)
Answer:
Outsourcing is the process by which a company contracts another company to provide particular services.
Question 13.
Give the meaning of verticals in outsourcing terminology.
Answer:
The hired party service providers are the persons/firms which specialize in one or two industries and scale up to doing a number of processes from non-core to core. Such service providers are called verticals in outsourcing terminology.
Question 14.
Give the meaning of horizontal in outsourcing terminology.
Answer:
The hired party service providers are the persons/firms which specialize in some processes such as Human Resource Management (HRM) and provide their services to a wide base of clients, cutting across industries. Such service providers are called ‘horizontals’ in the outsourcing terminology.
Question 15.
State any two features of outsourcing.
Answer:
Two features of outsourcing are:
(a) Generally non-core business activities are outsourced.
(b) Outsourcing involves contracting out.
Question 16.
State any two treats of outsourcing.
Answer:
(a) Confidentiality.
(b) Sweat-shopping.
Question 17.
State any two directions in which firm electronic transactions are extended.
Answer:
(a) B2B is a firm’s interactions with other businesses.
(b) B2C, i.e. a firm’s interactions with its customers.
Question 18.
State any two needs of outsourcing.
Answer:
Two important needs of outsourcing are:
(a) Focusing of attention.
(b) Quest for excellence
Four Bark Questions
Question 1.
Bring out any four distinctions between traditional business and e-business.
Answer:
Question 2.
Explain the steps involved in online transactions.
Answer:
The following steps are involved in online trading:
(a) Registration: Before online shopping, one has to register with the online vendor by filling- up a registration form. Registration means that you have an ‘account’ with the online vendor. Among various details that need to be filled in is a ‘password’ as the sections relating to your ‘account’.
(b) Selection of product: The buyer should select the product from the menu given on the website. For this purpose, the buyer might have visited the website of two or more vendors and compare price and quantity.
(c) Placing an order: While browsing the website, the buyer should drop the selected item in his shopping cart. Once the products are selected and the order is placed sales take place.
(d) Payment mechanism: When the sale takes place, the buyer should give his payment option. The payment can be made in any one of the following ways:
- Cash-on-Delivery (COD): As is clear from the name, payment for the goods ordered online may be made in cash at the time of physical delivery of goods.
- Cheque: The buyer may send a cheque to the online vendor. In this case, the goods are delivered upon realization of the cheque.
- Net-banking transfer: The buyer may instruct his bank to electronically transfer the amount from his account to the account of an online vendor.
- A debit card or credit card: Popularly referred to as ‘plastic money,’ these cards are the most widely used medium for online transactions.
A credit card allows its holder to make purchases on credit. Later the issuing bank transfers the amount to the online vendor’s account and the buyer’s account is debited.
A debit card allows its holder to make purchases up to a specified amount. The amount is deducted electronically as and when the purchase is made.
(e) Digital cash: This is a form of electronic currency that exists only in cyberspace. This type of currency has no real physical properties but offers the ability to use real currency in an electronic format.
Question 3.
Briefly explain the scope of e-business.
Answer:
The scope of e-business:
(a) B2B (Business-To-Business): B2B is a Business-To-Business Model in which transactions is done between businesses, such as between a manufacturer and a wholesaler, or between a wholesaler and a retailer.
(b) B2C (Business-To-Customer): B2C is Business-To-Customer in which Business trans¬actions conducted directly between a company and consumers who are the end-users of its products or services.
(c) C2C (Customer-To-Customer): Consumer-To-Consumer is a business model that facil¬itates the transaction of products or services between customers.
(d) Intra-B Commerce: If parties involved in the electronic transactions are from within a business firm, then it is known as intra-B commerce.
Question 4.
Explain any four benefits of e-business.
Answer:
The benefits or importance are:
(a) Ease formation and lower investment requirements: It is relatively easy to start because legal formalities and capital are less when compared to traditional business.
(b) Convenience: Electronic commerce enables customers to shop or do other transactions 24 hours a day, all year round, from almost any location.
(c) Global Reach/Access: The Internet is true without boundaries. On the one hand, it allows the seller access to the global market; on the other hand, it affords to the buyer the freedom to choose products from almost any part of the world.
(d) Cost-Effective: E-commerce is proved to be highly cost-effective for business concerns as it cuts down the cost of marketing, processing, inventory management, customer care, etc. It also reduces the burden of infrastructure required for conducting business.
Question 5.
Explain any four limitations of e-business.
Answer:
The limitation of e-business is:
(a) Inability to Experience the Product before Purchase: There are many products that consumers want to touch, feel, hear, taste and smell before they buy. E-commerce takes away that luxury.
(b) Less Security: The biggest obstacle in the growth of e-commerce is the issue of security. Internet is not a secured medium of communication. There are tools or options available to hackers whereby they cannot only monitor but also control any data communicated over the internet.
(c) Dependent on Internet: E-business is dependent on the internet. Mechanical failures in the system can cause unpredictable effects on the total processes.
(d) E-commerce Delays Goods: E-business takes more time to deliver the goods into con¬sumer hands when compared to traditional business.
Question 6.
Explain the ways of payment in online transactions.
Answer:
The different ways of online payment are:
(a) Cash-on-Delivery: As is clear from the name, payment for the goods ordered online may be made in cash at the time of physical delivery of goods.
(b) Cheque: The buyer may send a cheque to the online vendor. In this case, the goods are delivered upon realization of the cheque.
(c) Net-banking Transfer: The buyer may instruct his bank to electronically transfer the amount from his account to the account of the online vendor.
(d) Debit Card or Credit Card: Popularly referred to as ‘plastic money,’ these cards are the most widely used medium for online transactions. A credit card allows its holder to make purchases on credit. Later the issuing bank transfers the amount to the online vendor’s account and the buyer’s account is debited.
(e) Digital Cash: This is a form of electronic currency that exists only in cyberspace. This type of currency has no real physical properties but offers the ability to use real currency in an electronic format.
Question 7.
Explain briefly any four reasons to justify the need for Outsourcing.
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.
The need for outsourcing is outlined in the following points:
(a) 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.
(b) 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.
(c) Cost reduction: It has become necessary for firms operating in global markets to maintain the 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.
(d) Growth through alliance: Investment requirements are reduced when some activities are outsourced. Outsourcing also facilitates inter-organizational knowledge sharing and collaborative learning.
(e) Stimulates economic development: Outsourcing stimulates entrepreneurship, employment, and exports in the host countries.
For Example, the IT sector in India has become an undisputed leader as far as global outsourcing in software development and IT-enabled services are concerned having 60% of the global outsourcing share in the informatics sector.
Limitations of Outsourcing:
(a) Confidentiality: Outsourcing depends on sharing a lot of vital information and knowledge. If the outsourcing partner does not preserve the confidentiality and passes it on to competitors, it can harm the interest of the party that outsources its processes.
(b) 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.
(c) Ethical concerns: In order to reduce the manufacturing costs manufacturing processes are being outsourced to developing countries where they use child labor/women in the factories and working conditions are unhygienic and even unsafe.
(d) Resentment in the Home Countries: Global enterprises outsource their activities to firms located in countries where labor costs are much less. However, if the home countries of these enterprises are facing unemployment, then this may lead to resentment and disturbances.
Question 8.
Explain the concern over outsourcing.
Answer:
(a) Confidentiality: Outsourcing depends on sharing a lot of vital information and knowledge. If the outsourcing partner does not preserve the confidentiality.
(b) Sweat-shopping: As the firms that outsource seek to lower their costs, they try to get the maximum benefit from the low-cost manpower of the host countries. Moreover, it is observed that the firm that goes in for outsourcing looks for is the ‘doing’ skills rather than the development of the ‘thinking skills.
(c) Ethical Concerns: In order to cut costs, outsource manufacturing to a developing country where they use child labor/women in the factories. Back home, the company cannot do so due to stringent laws forbidding the use of child labor.
(d) Resentment in the Home Countries: In the course of contracting out manufacturing, marketing, research, and development of IT-based services, what is ultimately contracted out is ‘employment’ or jobs. This may cause resentment back in the home country (i.e., the country from which the job is being sourced out) particularly if the home country is suffering from the problem of unemployment.
Question 9.
Explain the concept of outsourcing.
Answer:
Outsourcing ‘is the process by which a company of contracts another company to provide particular services. In other words, it refers to getting the work done through outside expert agencies.
Features of Outsourcing
Outsourcing Involves Contracting Out: Many companies have started outsourcing processes to outside expert agencies (i.e. to other organizations) on a contractual basis. The outsources charges fees for performing his services on a contract basis.
Generally, Non-core Business Activities are Outsourced: Depending upon what business a company is in, there will be some activities that are central and critical to its basic business purpose. Other activities may be regarded as secondary or incidental to fulfilling that basic purpose. Only those activities (other activities) are outsourced to outside agencies.
Processes may be Outsourced to a Third Party: The processes are outsourced to the service provider (i.e. third party) who operates independently in the market and provides services to other firms too.
Question 10.
Explain the risk involved in outsourcing.
Answer:
Transaction risks: Online transactions are vulnerable to the following types of transaction risks:
(a) Seller denies that the customer ever placed the order or the customer denies that he ever placed the order. This may be referred to as ‘default on order taking/giving.’
(b) The intended delivery does not take place, goods are delivered at the wrong address, or goods other than ordered may be delivered. This may be regarded as ‘default on delivery’.
(c) Seller does not get the payment for the goods supplied whereas the customer claims that the payment was made. This may be referred to as ‘default on payment’.
1st PUC Business Studies Emerging Modes of Business Textbook Questions and Answers
Multiple Choice One Mark Questions
Question 1.
e-Commerce docs 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:
(d) Interactions among the geographically dispersed units of 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:
(b) Restricts only to the contracting out of non-core business processes
Question 3.
The payment mechanism most typical to e-business is
(a) Cash on Delivery
(b) Cheques
(c) Credit and Debit Cards
(d) e-Cash
Answer:
(d) e-Cash
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:
(c) Both voice-based and non-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
Short Answer Questions
Question 1.
Distinguish between traditional business and e-business.
Answer:
Question 2.
How does outsourcing represent a new model of business?
Answer:
It refers to a long-term contracting out of business activities to captive or third-party specialists with a view to benefiting from their experience, expertise, efficiency, and even investment. Generally, non-core business activities are outsourced. 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 model of business which is now being reported to not out of compulsion but out of choice.
Question 3.
Describe briefly any two applications of e-business.
Answer:
Two applications of e-business are:
(a) 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 marketplaces that facilitate online trading between multiple buyers and sellers.
(b) E-Communication/ErPromotion: It includes e-mails, publication of online catalogs dis¬playing images of goods, advertisement through banners, pop-ups, opinion polls and customer surveys, etc. Meetings and conferences may be held by the means 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 for the following reason:
(a) In search of cheap labor, manufacturing processes are being outsourced to developing countries where they use child labor/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 the use of child labor. This raises the ethical concern of whether this sort of cost-cutting by using child labor justified.
(b) 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.
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 that replicates itself on other computer systems. Anti-virus programs 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 ‘cipher text’. Only those who possess a secret key can decipher (or decrypt) the message into ‘plaintext’ and thus others do not understand your conversation.
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:
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 model 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 benefiting from their experience, expertise, efficiency, even investment. Generally, the non-core business activities are outsourced but of late even some of the core activities have started being outsourced.
Question 2.
Elaborate on the steps involved in online trading.
Answer:
The following steps are involved in online trading:
(a) Registration: Before online shopping, one has to register with the online vendor by filling- up a registration form. Registration means that you have an ‘account’ with the online vendor. Among various details that need to be filled in is a ‘password’ as the sections relating to your ‘account’.
(b) Selection of product: The buyer should select the product from the menu given on the website. For this purpose, the buyer might have visited the website of two or more vendors and compare price and quantity.
(c) Placing an order: While browsing the website, the buyer should drop the selected item in his shopping cart. Once the products are selected and the order is placed sales take place.
(d) Payment mechanism: When the sale takes place, the buyer should give his payment option. The payment can be made in any one of the following ways:
- Cash-on-Delivery (COD): As is clear from the name, payment for the goods ordered online may be made in cash at the time of physical delivery of goods.
- Cheque: The buyer may send a cheque to the online vendor. In this case, the goods are delivered upon realization of the cheque.
- Net-banking transfer: The buyer may instruct his bank to electronically transfer the amount from his account to the account of an online vendor.
- A debit card or credit card: Popularly referred to as ‘plastic money,’ these cards are the most widely used medium for online transactions.
A credit card allows its holder to make purchases on credit. Later the issuing bank transfers the amount to the online vendor’s account and the buyer’s account is debited.
A debit card allows its holder to make purchases up to a specified amount. The amount is deducted electronically as and when the purchase is made.
(e) Digital cash: This is a form of electronic currency that exists only in cyberspace. This type of currency has no real physical properties but offers the ability to use real currency in an electronic format.
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.
The need for outsourcing is outlined in the following points:
(a) 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.
(b) 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.
(c) Cost reduction: It has become necessary for firms operating in global markets to maintain the 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.
(d) Growth through alliance: Investment requirements are reduced when some activities are outsourced. Outsourcing also facilitates inter-organizational knowledge sharing and collaborative learning.
(e) Stimulates economic development: Outsourcing stimulates entrepreneurship, employment, and exports in the host countries.
For Example, the IT sector in India has become an undisputed leader as far as global outsourcing in software development and IT-enabled services are concerned having 60% of the global outsourcing share in the informatics sector.
Limitations of Outsourcing:
(a) Confidentiality: Outsourcing depends on sharing a lot of vital information and knowledge. If the outsourcing partner does not preserve the confidentiality and passes it on to competitors, it can harm the interest of the party that outsources its processes.
(b) 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.
(c) Ethical concerns: In order to reduce the manufacturing costs manufacturing processes are being outsourced to developing countries where they use child labor/women in the factories and working conditions are unhygienic and even unsafe.
(d) Resentment in the Home Countries: Global enterprises outsource their activities to firms located in countries where labor costs are much less. However, if the home countries of these enterprises are facing unemployment, then this may lead to resentment and disturbances.
Question 4.
Discuss the salient aspects of B2C commerce.
Answer:
B2C business model sells its product directly to a customer. A customer can view products shown on the website of a business organization. The customer can choose a product and order the same. The website will send a notification to the business organization via email and the organization will dispatch the product/goods to the customer.
Features:
- Lower prices
- Shop 24/7
- Greater searchability
- Shorter delivery times for digital products
- Sharing of information with other consumers
- Improved customer service
- Delay in receiving physical products
- Security and privacy concerns
- Inability to touch, feel, or even smell products prior to the purchase
- Unavailability of micropayments for purchase of small-cost products.