Class 12 OCM Chapter 5: Emerging Modes of Business

Key concepts: Emerging Modes of Business

E-business

Conducting all kinds of business activity over the internet, intranet or extranet. It covers buying and selling as well as customer support, and the term was popularised by IBM in 1997.

E-commerce

Only the buying and selling of goods and services online. It is a narrower idea and a subset of e-business, which is the superset.

Types of e-business transactions

B2B, B2C, C2B, C2C, B2A and C2A. They are classified by who is on each side of the transaction: business, consumer or administration.

Online transaction

Buying and selling through the internet. It moves through pre-purchase or sale, actual purchase or sale, and delivery stage, and cannot happen without an internet connection.

Shopping cart

An online record of the items a buyer has picked while browsing a store, with the quantity of each item and its price, before the buyer proceeds to payment.

Outsourcing

Contracting a business function, usually a non-core one like security or sanitation, to a specialised agency under a formal agreement. It cuts cost and lets the firm use expert skills.

BPO and KPO

BPO hands peripheral, low-level processes to an outside firm to save cost. KPO is a subset of BPO that hands over knowledge-based, high-level and more complex work.

Legal process outsourcing (LPO)

A type of KPO for legal services such as drafting documents and legal research. Firms in the US or Europe outsource such work to India to cut cost.

Quick revision: important points

• IBM first used the term e-business in 1997; e-commerce is a subset of e-business.
• Six types: B2B, B2C, C2B, C2C, B2A, C2A. Examples: Flipkart (B2C), eBay (C2C).
• Online steps: Registration, Placing an order, Payment. Payment modes: COD, cheque, net banking, card, digital cash.
• Internet is the fourth channel of trade after face to face, mail and phone.
• Outsourcing forms: BPO, KPO (subset of BPO) and LPO (a type of KPO). BPO can be offshore, onshore or near shore.

Practice MCQs with answers

1. Which company first used the term e-business in 1997?

   1. Microsoft
   2. IBM
   3. Google
   4. Amazon
   Show answer

   Answer: B. IBM
   IBM started using the term e-business in 1997, launching a campaign around it; before that people said e-commerce.

2. The relationship between e-commerce and e-business is that e-commerce is a ______ of e-business.

   1. Superset
   2. Opposite
   3. Synonym
   4. Subset
   Show answer

   Answer: D. Subset
   E-business covers all online business activity, while e-commerce is only the buying and selling part, so it is a subset.

3. A manufacturer buys spare components from a supplier firm through a website. This transaction is of the type

   1. C2C
   2. B2C
   3. B2B
   4. C2A
   Show answer

   Answer: C. B2B
   Both the buyer and the seller are business firms, so the transaction is business to business (B2B).

4. A customer buys shoes from the website of a company like Flipkart. Which type of e-business transaction is this?

   1. B2C
   2. C2C
   3. B2A
   4. C2B
   Show answer

   Answer: A. B2C
   The firm is on one side and an individual consumer is on the other, so it is business to consumer (B2C).

5. On a website like eBay, one consumer posts an item for sale and other consumers bid for it. This is

   1. B2B
   2. C2B
   3. B2A
   4. C2C
   Show answer

   Answer: D. C2C
   The site is only an intermediary between two consumers, so this is consumer to consumer (C2C).

All Class 12 OCM chapters

• Chapter 1: Principles of Management
• Chapter 2: Functions of Management
• Chapter 3: Entrepreneurship Development
• Chapter 4: Business Services
• Chapter 5: Emerging Modes of Business
• Chapter 6: Social Responsibilities of Business
• Chapter 7: Consumer Protection
• Chapter 8: Marketing

Class 12 OCM notes: all chapters