NCERT Notes for Class 11 business studies Chapter 5 EMERGING MODES OF BUSINESS

Class 11 business studies Chapter 5 EMERGING MODES OF BUSINESS

NCERT Notes for Class 11 business studies Chapter 5 EMERGING MODES OF BUSINESS, (business studies) exam are Students are taught thru NCERT books in some of state board and CBSE Schools.  As the chapter involves an end, there is an exercise provided to assist students prepare for evaluation.  Students need to clear up those exercises very well because the questions with inside the very last asked from those.

Sometimes, students get stuck with inside the exercises and are not able to clear up all of the questions.  To assist students, solve all of the questions and maintain their studies without a doubt, we have provided step by step NCERT Notes for the students for all classes.  These answers will similarly help students in scoring better marks with the assist of properly illustrated Notes as a way to similarly assist the students and answering the questions right.

NCERT Notes for Class 11 business studies Chapter 5 EMERGING MODES OF BUSINESS

Class 11 business studies Chapter 5 EMERGING MODES OF BUSINESS


  • Modes of business mean the manner in which business is conducting and emerging means changes that are happening today.
  • Today business is facing cut throat competition.
  • Thus, in order to survive and to meet the ever growing demand of the customers, it is essential that the business firms should evolve newer and better ways of doing things.
  • Business carried out today has undergone fundamental changes.

Main changes that were happened in these days are:

a) Digitization-Conversion of text, sound, images, video etc. into a series of ones and zeroes that can be transmitted electronically.

  • Digitisation is the base upon which development of internet, internet banking, development in the field of communication etc. happened.

b) Business Process out sourcing (BPO).

c) Internationalization and Globalization.

E- Business

  • E-business refers to carrying on business activities with the help of internet.
  • Business activities comprise of industry, commerce and trade.
  • So e-business means conduct of industry, trade and commerce activities through internet.
  • These electronic business processes include buying and selling products, serving customers, processing payments, managing production control, collaborating with business partners, sharing information, recruiting employees etc.
  • E-business offers the convenience of 24 hours a day X 7 days a week X 365 days a year businesses-business opens up new avenues for businessmen and improves efficiency of conventional business process, marketing and services.

Scope of e-business (e-Business models)

  • The scope of e-business is very wide.
  • Business functions like production, finance, marketing, personnel etc., and managerial activities such as planning, organizing, staffing and controlling can be carried out effectively through computer networks.
  • Various parties are involved in electronic transactions.
  • Thus on the basis of parties involved the electronic transaction can be classified into the following four categories:

Different models/parts of e-business are:

  1. Business to Business (B2B)
  2. Business to Consumer (B2C)
  3. Business to Government (B2G)
  4. Business to Employees (B2E)
  5. Consumer to Consumer (C2C)

1- Business to Business (B2B)

  • Here, both the parties involved in e-commerce transactions are business firms.
  • So it is called Business to Business (B2B) commerce.
  • It is the exchange of product, services or information between businesses firms with the help of internet.
  • Around 80% of e- commerce transactions are of this type.

Examples – B2B transactions:-

    • Placing order with suppliers
    • Transactions between business firms like trade negotiations.
    • Transfer of goods from one branch to another
    • Making payments to suppliers
    • Receiving and sending documents like purchase orders or invoices.
  • B2B e-commerce helps in eliminating unnecessary inventory buildup for both the buyer and the seller.
  • The reason is that in B2B e-commerce ,sellers know the production schedule of the buyer and the buyer also knows various alternative sources of raw materials.
  • It also removes the geographic fragmentation of the market.

2- Business to Consumer (B2C)

  • E-commerce transactions taking place between business firms and customers are called Business to Customers (B2C) commerce.
  • B2C involves online selling, online advertisement, online payment, online compliant registration, after sales services through online etc.
  • B2C commerce permits conduct of these activities at a much lower cost but high speed.
  • B2C commerce enables a business to be in touch with its customers 24 hours.

Examples – B2C transactions :-

  • Order placed by consumer through online Electronic payment made by consumers Register complaints through online Provide customer support through internet

Business to Government (B2G)

  • B2G means commercial transaction between company and the government through internet.
  • It refers to the use of the internet for licensing procedures and other government related operations.

Examples – B2G transactions:- Payment of tax through online

  • Submitted application for license through online.
  • Seek government clearance through online.

4- Business to Employees (B2E)

  • E-commerce transactions takes place between business and employees are called B2E transactions.

Examples -B2E transactions:-

  • Salary paid through electronically with the help of e-banking Seek employees suggestions on different matters through online Issue notices to employees as e-mail

5- Consumer to Consumer (C2C)

  • It involves transactions between customers.
  • There are many sites offering free classifieds, auctions forums where individuals can buy and sell products and services.
  • C2C commerce provides a market for dealing in goods for which there is no established selling of used books or cars.

6- M- Commerce (Mobile Commerce)

  • M-Commerce or mobile commerce is the process of buying and selling products and services through wireless handheld devices such as cell phones or PDAs(Personal Digital Assistant).
  • Mobile commerce or M-commerce includes the purchase and sale of a wide range of goods and services, online banking, bill payment, information delivery etc with the help of mobile phone.
  • In its wireless technology is used.


Terms e-commerce and e-Business are used interchangeably but they are distinct concepts. E-commerce means buying and selling of goods and services over the internet. E-commerce is a part of is a wider term than e- commerce. E-business include not only buying and selling of goods and services through internet(e-commerce) but also all internet based transactions like monitoring and exchange information ,customer relationship management, collaborative product designing etc. The scope of e-Business is quite vast. Business functions like production, finance, marketing etc., and managerial activities such as planning, organizing, staffing and controlling can be carried out effectively with the help of computer networks. These all are come under the term of e-business.

Advantages of E-business

Advantages of e-commerce over traditional commerce are the following:

Provide global market for both buyers and sellers

E – Business provides global market for both buyers and sellers. Buyers can select his needed goods from anywhere in the world with the help of internet. In e- business the boundaries of sellers’ market is not defined by geography but by the coverage of computer network, it is worldwide.


Through e-business information can be exchanged, buying and selling etc can be done just with the click of a mouse. This type of sale is more suitable in case of product like software, movies, music etc.


E-business offers the advantage of accessing anything, anywhere, anytime.

Easy to form and lower investment requirements

Unlike physical stores is relatively easy to start. There is no need to construct building, keep stock, decorate shop etc.

Reduced cost of purchase

In e-business a customer can order his goods from his house itself with the help of internet. There is no need to wander here and there in search of a product. This will save his time, money and energy.

Reduced Selling and Marketing cost

In e-business selling and marketing costs are much less as compared to traditional commerce. It can run with very little advertisement cost, staff cost, show room cost etc.

Less effort for sale

E-store will provide all details with images about the available products. So the customer gets a detailed idea about products. So there is no need for the sales executive to explain about the product to each visitor. It greatly saves time consumed per transaction.

Lower advertisement cost

Internet advertisement is cheaper as compared to other audio-visual medias like radio, TV, Newspaper etc.

Equal chance for all

E-commerce enables small and medium sized business firm to set up their business to reach the global market. It is usually accessible only for multinational companies.

Secure and Safe operations.

Usually e-commerce transactions takes place directly with the help of internet, there is no role for middlemen. The use of password maintains privacy, safety and security of transactions.

Enable flexible working practices

It enables people to work from home.

Paperless office work

Use of internet has significantly reduced dependence on paper work. Granting permissions, approvals etc. can be done through online.

Limitations of e-business

Doing business in electronic mode suffers from certain limitations. Some of them are:

1- Low personal touch

E-business is not suitable for business requiring high level of personal touch like medical services.

2- Long time to complete transactions

Information can flow at the click of a mouse, but the physical delivery of the product takes time.

3- High risk due to anonymity and non traceability of the parties

  • It is difficult to identify actual party to the transactions as transactions take place in the name of cyber personalities.
  • One may not know even the location from where parties are transacting.
  • It is riskier, therefore, transaction through internet.

4- Computer literacy is needed

  • Computer literacy is necessary to participate in e-business.
  • It is one of hindrance in the field of e-business.

5- People resistance

  • The process of adjustment to new technology and new way of doing thing causes stress and a sense of insecurity.
  • As a result, people may resist an organization’s plans of entry into e-business.

Difference between e-business and traditional business

Basis of difference e-business Traditional business
Formation Difficult Easy
Setting up cost Low High
Operating cost Low High
Personal touch Nil High
Physical Examination of



Not possible Possible
Business expansion Very scope Difficult
Market Wider Narrow
Physical presence Not required Required
Transaction risk High Low
Nature of human resource Technically and


professionally qualified workforce needed

Semi-skilled and even


unskilled manpower needed.

Resources required for successful e-Business

The following are the resources required for the successful implementation of e-commerce:

Adequate computer hardware

A business unit should procure computers having high speed and memory to handle high volume of business.

1- Technically qualified work force

There should be trained personnel capable of working with computer network and internet.

2- Well designed website

Firms must develop a comprehensive website for effective communication with customers and business partners. It should be attractive and user friendly.

3- System of receiving payments

There should be a proper system of receiving payment for the goods sold. The business units must arrange with banks, credit card agencies etc. to facilitate receipts and payments.

4- Effective telecommunication system

Proper reach of telephone lines, high speed internet and well established courier services are essential prerequisites for e-Business.

Online Transactions

Procedures followed in e –commerce

Normal steps involved in an e-commerce business are:

1- Registration

  • Before making online shopping one has to register with online vendor by filling up a registration form.
  • Registration means that you have an account with the online vendor.
  • Your “account” and shopping cart are protected with password.
  • Otherwise, anyone can login using your name and shop in your name.

2- Placing an order

  • You can pick and drop the items into the shopping cart.
  • Shopping cart is an online record of what you have picked up while browsing the online store.
  • After selecting the item you want to by, you can checkout and choose your payment options.

3- Payment options

  • In e-commerce Payment can be done in any of the following methods:

a) Cash on delivery (COD)

  • Here payment is effected in cash at the time of physical delivery of goods.

b) Cheque

  • Here payment is made through cheque, but delivery of goods is made only after realization of cheque.

c) Credit Card (Plastic Money)

  • Credit Card is the most widely used medium for online transactions.
  • In fact, about 95%of online consumer transactions are executed with a credit card.
  • Credit card allows its holder to make purchase goods on credit.
  • The amount due from the card holder to the online seller is assumed by the card issuing bank, who later transfers the money involved in the transactions to the credit of the seller.
  • Buyer’s account is debited, who often enjoys the freedom to deposit the amount in installments and at his convenience.

d) Debit Card

  • Debit card allows its holder to make purchases through it to the extent of the amount lying in the corresponding account the payment is deducted electronically from the account of the card holder.

e) Net banking transfer

  • Modern banks provide to their customers the facility of electronic transfer of funds over the net.
  • Here the customer transfers the fund to the account of the online vendor, who will then proceed to arrange for delivery of goods.

f) Digital cash

  • This is a form of electronic currency that exists only in cyberspace.
  • This type of currency has no physical properties, but offers the ability to use as real currency in an electronic format to purchase goods and services in online.
  • To get digital currency you want to pay an amount equivalent to the digital cash to the bank who give digital currency.
  • Then the bank dealing in e-cash will send you special software that you can download on your computer.
  • That software allows you to draw digital cash from your account with bank.
  • You may then use the digital funds to make purchase over web.
  • This help to overcome the security problems related to the use of credit card numbers on the internet.

Risks of e-busyness

E-business involves many risks. Some of them are:

1. Transaction Risk

  • Online transactions are subjected to following transaction risks:
  • There may be ‘default on order taking or giving’.
  • Such a situation arises when buyer denies that he has placed the order or seller denies that the buyer has ever placed the order.
  • There may be ‘default on delivery of goods’.
  • Such a situation arises when seller delivered goods at wrong address or wrong delivery of goods.
  • There are chances of ‘default on payment’ ie. when the buyer claims that he has made the payment but the supplier has not received the amount.
  • In order to avoid the above risks, at the time of registration, identity and location address of the buyer must be verified and authorization as to order confirmation and payment realization must be obtained.

2- Data Storage and Transmission Risks

  • Another important risk associated with e-business is VIRUS (Vital Information under Seige) and hacking.
  • VIRUS may result in disruption of functioning or complete destruction of the system.
  • Hacking means unauthorized entry into a website in order to destroy the data and information stored in it.
  • VIRUS attack can be prevented by installing updated anti VIRUS programmes.
  • Risks of threat to customers private information’s Security is the most obvious risk for any online merchant.
  • Online traders required to store sensitive information about their customers.
  • They are responsible for handling their customers’ information in a safe manner.
  • When information relating to an electronic transaction is transmitted without proper internet security safeguards, hackers can capture the transactions and collect sensitive information such as credit card details, PIN number etc.

Business Process Outsourcing (BPO)

  • Traditionally, all major business enterprises were performing all their activities and services internally.
  • But modern business enterprises concentrate only on core activities and entrust other routine processes and services to agencies outside who have expert in that services. This is called BPO.
  • Business Process Outsourcing (BPO) is a new type of business activity.
  • It refers to get the task of business task accomplished through an outside agency.
  • Functions like maintenance of accounts, recruitment of employees, their training and development, payroll accounting, outsourcing canteen to an outside agency etc.
  • Thus the company can concentrate on matters that are crucial to their business like, manufacturing, product management, marketing etc.

Eg. In a manufacturing company production and research & development are core activities.

  • Non-core activities like cleaning and canteen facilities can be out sourced to other agencies on a contractual basis.

Eg. A T.V manufacturing firm can concentrate on, production process & quality standers.

  • Functions like accounting, advertisement, after sales services etc can be entrusted to an outside agency who renter such services in professional way.

Scope / areas of outsourcing (Services offered by Indian BPO companies)

Indian BPO companies offer varied services, such as, customer support, technical support, telemarketing, insurance processing, data processing, forms processing, bookkeeping and internet / online / web research.

Customer support services: 24/7 inbound / outbound call center services that address customer queries and concerns through phone, email and live chat.

Technical support services: Installation, product support, running support, troubleshooting, usage support and problem resolution for computer software, hardware, peripherals and internet infrastructure.

Telemarketing services: Interacting with potential customers and creating interest for the customer’s services/ products. Promoting and cross selling to existing customers

IT help desk services: Level 1 and 2 multi-channel support, system problem resolutions, technical problem resolution, office productivity tools support, answering product usage queries and performing remote diagnostics.

Insurance processing: New business acquisition and promotion, claims processing, policy maintenance and policy management.

Data entry and data processing: Data entry from paper, books, images, e-books, yellow pages, web sites, business cards, printed documents, software applications, receipts, bills, catalogs and mailing lists.

Data conversion services: Data conversion for databases, word processors, spreadsheets and software applications. Data conversion of raw data into PDF, HTML, Word or Acrobat formats.

Bookkeeping and accounting services: Maintenance of the customer’s general ledger, accounts receivables, accounts payables, financial statements, bank reconciliations and assets / equipment ledgers.

Form processing services: Online form processing, payroll processing, medical billing, insurance claim forms processing and medical forms processing.

Online research: Internet search, product research, market research, surveys, analysis, web research and mailing list research.

Need/Advantages of out sourcing

In today’s business world outsourcing is an inevitable word. It is because of lack of time, unlimited requirements, need of perfection etc. Need or advantages of outsourcing are :

1. Concentrate on core competency

  • BPO provides an opportunity to the business to concentrate on core areas.
  • It will enable better performance.

2. Cost reduction

  • Outsourcing agencies are specialists in their activities.
  • They can perform the same job at a lower cost.
  • It will reduce the cost of production.

3. Convenience and less investment

  • To the extent you can avail of the services of others, your investment requirements are reduced and others have invested in those activities for you.

4. Specialization

  • Through outsourcing specialization in business operation can be achieved.
  • This reduces cost and improves the quality of business operations.

5. Avoidance of labour problems

  • Outsourcing help a business to reduce its labour force.
  • So labour problems can be reduced to an extent.

6. Economic growth and development

  • It generates employment opportunities.
  • Offshore outsourcing stimulates entrepreneurship, employment and exports in host countries.
  • In India IT companies utilizing the full advantages of out sourcing business from foreign countries.

7. Benefits from expertise and experience of others

  • Service providers are very expert and specialists in their field.
  • Experts can do the work with high speed and less wastage.
  • More over outsourcing agencies often act as consultant for that particular function

Limitations of Outsourcing

Outsourcing, in spite of various advantages has the following limitations.

1- Lack of confidentially

  • Out sourcing depends on sharing a lot of vital information and knowledge.
  • If the outsourcing partner does not preserve the confidentiality, and, say, for example passes it on to the competitors, it can harm the interest of the party that outsources its process.

2- Resentment in the home country

  • Outsourcing jobs to a foreign country reduces employment opportunities in the home country and increases unemployment.

3- Cultural and language differences

  • The company who undertake our work may not fully understand the culture, needs and expectations of the client company.

4- Ethical concerns

  • In order to cut costs a company out sources its work to a developing country where they use child labour in the factories.
  • In their home country they cannot do so because of strict law.
  • It is not ethical.

BPO Industry in India

  • In India, Business Process Outsourcing (BPO) is the fastest growing segment of the ITES (Information Technology Enabled Services) industry.
  • Factors such as economy of scale, business risk mitigation, cost advantage, utilization improvement and superior competency have all lead to the growth of the Indian BPO industry.
  • Business process outsourcing in India, which started around the mid-90s, has now grown by leaps and bounds.
  • India is now the world’s favored market for BPO companies, among other competitors, such as, Australia, China, Philippines and Ireland.
  • The BPO boom in India is credited to cheap labor costs and India’s huge talent pool of skilled, English- speaking professionals.
  • Research by the National Association of Software Services and Companies (NASSCOM) has revealed that quality orientation among leading BPO companies, 24/7 services, India’s unique geographic location and the investor friendly tax structure in India have all made the BPO industry in India very popular.

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