Menu Top


Emerging Modes of Business

Introduction

The business landscape is constantly evolving, driven by technological advancements, changing consumer behaviour, and increasing competition. In recent times, the advent of the internet and digital technologies has given rise to new and emerging modes of conducting business that differ significantly from traditional approaches.

These emerging modes often leverage technology to enhance efficiency, reach wider markets, and offer new kinds of products and services. Two prominent emerging modes are E-Business and Outsourcing.


E-Business

E-Business (Electronic Business) refers to the conduct of industry, trade, and commerce using computer networks, primarily the internet. It encompasses all business activities conducted electronically, including buying and selling of goods and services (E-commerce), as well as facilitating business processes like production, inventory management, product development, finance, and human resources.

E-Business is broader than E-commerce. E-commerce is a subset of E-Business that specifically deals with electronically facilitated commercial transactions involving the exchange of value across organisational or individual boundaries.

Scope Of E-Business

E-Business has a wide scope, extending beyond mere online buying and selling. It covers various forms of interaction:

1. B2B (Business-to-Business) Commerce

Electronic transactions between businesses. This includes dealing with suppliers, distributors, and other business partners online. Examples: Online procurement platforms, B2B marketplaces, supply chain management systems integrated electronically.

2. B2C (Business-to-Consumer) Commerce

Electronic transactions between businesses and final consumers. This is the most visible aspect of E-business, commonly known as E-commerce. Examples: Online retail websites (e.g., Flipkart, Amazon.in), selling digital goods online, providing online services to consumers.

3. C2C (Consumer-to-Consumer) Commerce

Electronic transactions directly between consumers, usually facilitated by a third-party platform. Examples: Online auction sites (e.g., eBay), online marketplaces where individuals can sell used items.

4. C2B (Consumer-to-Business) Commerce

Where consumers offer goods or services to businesses. Examples: Websites where freelancers offer services to companies, platforms where consumers name their price for products/services (less common).

5. Intra-B (Intra-Business) Commerce

Electronic transactions and interactions within a single business entity. This involves using internal networks (intranets) for communication, collaboration, employee training, and managing internal processes.

6. Government-to-Business (G2B) and Business-to-Government (B2G)

Interaction between businesses and government agencies, including online filing of taxes, applications for licenses, online procurement by government entities.

The scope of E-Business extends to almost all functional areas of a business, including production, marketing, finance, and human resource management, transforming how these functions are performed.


Benefits Of E-Business

E-Business offers numerous benefits to businesses, consumers, and society:

For Businesses:

1. Global Reach

The internet allows businesses to reach customers and markets across the globe, overcoming geographical barriers. A small business in a town in India can sell its products to customers internationally.

2. Cost Savings

E-Business can lead to significant cost reductions in various areas, such as marketing (online advertising is often cheaper than traditional media), distribution (digital goods), communication, and operational overheads (e.g., less need for physical retail space). Transaction costs can also be reduced.

3. Elimination of Middlemen

In many cases, E-business enables businesses to connect directly with customers or suppliers, reducing or eliminating the need for intermediaries, which can increase margins and reduce costs for consumers.

4. Speed and Convenience

Transactions can be completed much faster online. Businesses can respond quickly to customer inquiries and market changes. Customers can shop anytime, anywhere (24/7 availability).

5. Improved Customer Service

E-Business facilitates better customer interaction through online support, FAQs, chatbots, and personalised recommendations.

6. Flexibility

Businesses can easily update product information, prices, and promotions online. Operations can be scaled up or down more flexibly.

7. Streamlined Processes

Integration of various business processes through enterprise resource planning (ERP) systems and supply chain management (SCM) systems enhances efficiency.

For Consumers:

For Society:


Limitations Of E-Business

Despite its numerous advantages, E-Business also faces certain limitations and challenges:

1. Low Personal Touch

The lack of face-to-face interaction can be a disadvantage for businesses that rely heavily on personal relationships or for customers who prefer tactile examination of products (e.g., clothing, furniture).

2. Need for Technological Capability and Internet Connectivity

Successful E-Business requires reliable internet access and digital literacy, which may still be a challenge in some parts of India and globally.

3. Security and Privacy Concerns

Online transactions involve the risk of data theft, fraud, hacking, and misuse of personal information. Building trust and ensuring secure transactions are critical challenges.

4. Difficulty in Delivery of Goods

While digital goods can be delivered instantly, physical goods still require transportation and logistics infrastructure, which can be complex and costly, especially for remote deliveries.

5. High Costs of Technology and Infrastructure

Setting up a robust E-Business platform requires significant investment in hardware, software, website development, and cybersecurity measures.

6. Difficulty in Verifying Authenticity

It can be challenging to verify the identity and trustworthiness of parties involved in online transactions, increasing the risk of scams or fraudulent activities.

7. Legal Issues

Legal frameworks related to E-commerce, digital contracts, intellectual property in the digital space, and consumer protection are still evolving in many jurisdictions.

Addressing these limitations is essential for the continued growth and success of E-Business.


Online Transactions

Online transactions refer to business transactions conducted electronically over the internet. This is a core part of E-commerce and a key aspect of E-Business.

The process of online transactions typically involves three stages:

1. Pre-purchase/Sale Stage

This stage involves advertising, searching for products/sellers, comparing options, reading reviews, and selecting a product. Websites provide catalogues, search functions, and product information.

2. Purchase/Sale Stage

This is the actual transaction phase. It involves:

3. Delivery Stage

This stage involves the delivery of the product or service to the customer.

Payment Mechanism in Online Transactions:

Various online payment options are available:

The availability and security of payment options are critical for customer trust and the success of online transactions.


Security And Safety Of E-Transactions: E-Business Risks

Despite the convenience, E-transactions are exposed to various security and safety risks. These risks can lead to financial losses, data breaches, and damage to reputation.

Types of E-Business Risks:

1. Transaction Risks

2. Data and System Risks

3. Intellectual Property Risks

Online content (text, images, software, music) can be easily copied, distributed, or misused, leading to violations of copyright, patents, and trademarks.

4. Privacy Risks

Businesses collect vast amounts of customer data online. There is a risk of misuse of this personal information or unauthorised disclosure.

Measures to Ensure Security and Safety:

Various technologies and practices are used to mitigate these risks:

Despite measures, absolute security cannot be guaranteed, and businesses and users must remain vigilant.


Resources Required For Successful E-Business Implementation

Implementing E-Business successfully requires a combination of resources and capabilities, going beyond just setting up a website.

1. Adequate Computer Hardware and Software

This includes servers, computers, network infrastructure, operating systems, web server software, database management systems, and specialised software for E-commerce (e.g., shopping cart software, payment gateway integration).

2. Technically Qualified Personnel

Staff with expertise in IT, network management, web development, cybersecurity, and digital marketing are essential to build, maintain, and manage the E-Business infrastructure and operations.

3. A Website and Digital Infrastructure

A well-designed and functional website or mobile app that serves as the online storefront or platform. This requires domain registration, web hosting, and reliable internet connectivity.

4. Telecommunication and Network Infrastructure

Reliable high-speed internet access is fundamental. This includes broadband connections, leased lines, and internal network infrastructure.

5. Logistics and Delivery Management

For businesses dealing with physical goods, an efficient system for inventory management, packaging, shipping, and delivery (often involving third-party logistics partners) is crucial.

6. Payment Gateway Integration

Integration with secure online payment gateways or other digital payment systems to process transactions.

7. Marketing and Sales Skills

Expertise in online marketing (e.g., Search Engine Optimisation - SEO, Search Engine Marketing - SEM, social media marketing), customer relationship management, and online sales techniques.

8. Legal and Regulatory Compliance

Understanding and complying with relevant laws (e.g., IT Act, consumer protection laws, data privacy regulations, GST rules for online transactions).

Successful E-Business requires integrating these resources and capabilities effectively to provide a seamless online experience for customers and manage operations efficiently.


Outsourcing: Concept

Outsourcing refers to the practice of contracting out non-core business activities or functions to external specialised agencies. Instead of performing these activities in-house, the company procures them as services from outside firms.

The key idea behind outsourcing is to focus on core competencies while leveraging the expertise and efficiency of external service providers for non-core tasks. This allows businesses to concentrate on what they do best.

Examples of commonly outsourced activities include customer support (call centres), accounting and payroll processing, security services, cleaning and maintenance, IT support, transportation and logistics, advertising, etc.

A specific type of outsourcing related to knowledge-based activities is called Knowledge Process Outsourcing (KPO), involving tasks requiring specialised domain expertise (e.g., research and analysis, legal process outsourcing, medical transcription). Another related term is Business Process Outsourcing (BPO), which typically involves repetitive, non-core tasks (e.g., call centres, data entry).

Scope Of Outsourcing

The scope of outsourcing has expanded significantly over the years, covering a wide range of business functions across various industries:

Essentially, almost any business activity that is not considered a core competency can potentially be outsourced.

Need For Outsourcing

Businesses resort to outsourcing for several compelling reasons:

1. Focusing on Core Competencies

Outsourcing allows a company to concentrate its resources and managerial attention on the activities that provide it with a competitive edge, rather than being bogged down by non-core tasks.

2. Cost Reduction

Outsourcing can lead to cost savings, especially when outsourcing to locations with lower labour costs (offshoring) or when the service provider benefits from economies of scale and specialisation.

3. Access to Specialised Skills and Expertise

External agencies often have specialised expertise, technology, and trained personnel in their specific domain that a company may not possess internally.

4. Improved Efficiency and Productivity

Specialised service providers can often perform the outsourced activity more efficiently and productively due to their focus and expertise.

5. Risk Sharing

Outsourcing can transfer some operational risks associated with the outsourced activity to the service provider.

6. Increased Flexibility

Outsourcing provides flexibility to scale operations up or down quickly in response to changing business needs.

7. Access to Latest Technology

Service providers often invest in the latest technology relevant to their specialised services.

Concerns Over Outsourcing

While offering many benefits, outsourcing also raises certain concerns and challenges:

1. Confidentiality and Security

Sharing sensitive business data with external parties raises concerns about data security and confidentiality. Ensuring that the service provider has adequate security measures is crucial.

2. Ethical Concerns

Outsourcing to countries with lower labour standards or environmental regulations can raise ethical questions.

3. Loss of Control

A company loses direct control over the outsourced activity, which can sometimes lead to quality issues or delays.

4. Quality Issues

Ensuring consistent quality from the service provider can be challenging if standards are not clearly defined and monitored.

5. Hidden Costs

Apart from the service fee, there might be hidden costs associated with managing the outsourcing relationship, communication, and potential disputes.

6. Employment Concerns in Home Country

Outsourcing can sometimes lead to job losses in the home country when activities are shifted abroad, raising social and political concerns.

7. Difficulty in Coordination

Coordinating with an external service provider, especially across different time zones and cultures, can be challenging.

Managing the outsourcing relationship effectively, including clear contracts, performance monitoring, and strong communication, is essential to mitigate these concerns and maximise the benefits.