📌 Snapshot
- E business versus e commerce, B2B and C2C, online payments, security risks and outsourcing, with MCQs.
- Why digitisation, outsourcing and globalisation changed how firms sell, buy and serve customers.
- Benefits and limits of e business, a traditional versus e business table, and the three stages of an online order.
- Payment modes, cookies, SSL, cryptography, the four levels of a virus, and what a BPO does for a firm.
📖 Detailed Notes
Written and reviewed by Rohit Singh, Computer Science & Commerce faculty at UniDrill (MCA, Osmania University · 6 years teaching). Based on NCERT Business Studies Class XI, Chapter 5.
What happens between your tap on Buy and the doorbell?
Ananya orders a pair of shoes on her phone at midnight. She registers, adds the shoes to a cart, pays by card and gets a message that they will arrive in three days. No shop was open, no shopkeeper spoke to her. Behind the screen, the seller's system has already told its warehouse, its accounts and its courier partner. When she calls a toll-free number the next day to ask about delivery, a call centre run by another company answers. Two of the biggest changes in modern business sit in this one story: e-business and outsourcing. This chapter explains both and the risks that come with them.
Why "emerging modes"?
A mode of business is the manner in which business is conducted. "Emerging" means the changes are happening now and will continue. The business itself is not new. Only the method is. Firms keep looking for better ways to deliver value because customers want better quality, lower prices, faster delivery and better care. Three trends drive this.
| Trend | Meaning |
|---|---|
| Digitisation | Converting text, sound, images and video into a series of ones and zeroes that can be sent electronically |
| Outsourcing | Handing over a part of the work to an outside specialist |
| Internationalisation and globalisation | Doing business across countries |
e-business and e-commerce: broader and narrower
e-business means conducting industry, trade and commerce using computer networks. The most familiar network is the internet, but firms also use private networks for internal work because they are more secure. e-commerce is the part that covers a firm's dealings with its customers and suppliers over the internet.
| Basis | e-commerce | e-business |
|---|---|---|
| Scope | Buying, selling and related dealings with customers and suppliers | Everything in e-commerce plus production, inventory, product development, accounting, finance and human resources done electronically |
| Network | Mainly the internet | The internet and private networks such as an intranet |
| Relation | A part | The whole |
A simple memory line: just as business is broader than commerce, e-business is broader than e-commerce. CUET mixes this up in assertion-reason questions more than any other point in the chapter.
Beyond the textbook. For the exam: e-business is broader and e-commerce is the narrower part. In reality: many news reports and companies use the two words as if they meant the same thing. Why it matters: an exam answer must keep them separate. If an option says they are identical, it is wrong, even though everyday speech blurs them.
Who is talking to whom: the scope of e-business
Almost every function of a business, such as production, finance, marketing and personnel, and managerial work such as planning, organising and controlling, can run over computer networks. The most tested view is by the parties involved.
| Type | Meaning | Example |
|---|---|---|
| B2B | One business with another | A car factory placing orders, tracking deliveries and paying its component suppliers over a network |
| B2C | A business with its customers | An online store selling shoes to Ananya; an ATM speeding up cash withdrawal |
| C2B | A customer reaches the business, the corollary of B2C | A customer lodges a complaint through a toll-free call centre |
| Intra-B | Within one business, over its intranet | Flexible manufacturing, inventory and order handling inside a single firm |
| B2E | Business to its employees | e-recruitment, e-learning, field reports by mail, working from anywhere through a virtual private network |
| C2C | One consumer to another | A website where people sell used books or clothes, with rating of buyers and sellers |
Four directions form the main scope: B2B, B2C, intra-B and C2C. C2B and B2E are the corollary and the variant. B2B originally meant sending purchase orders and invoices through Electronic Data Interchange (EDI). B2C covers marketing, promotion and sometimes even delivery, such as music or films downloaded online. In C2C, buyers and sellers rate each other, and a payment intermediary can hold money until the goods are shipped and accepted, which builds trust where no market mechanism exists.
Pause and predict: A mobile maker runs an e-learning course for its own staff over the company intranet. Which type is this?
Check your answer: B2E, business to employees. It also stays inside one firm, so it is not B2B, which is always between two different businesses.
Pause and predict: A bakery owner uses a toll-free line run by a machine seller to report a faulty oven. Which type is this?
Check your answer: C2B. The customer reaches out to the business with a complaint or a query.
Benefits and limitations
| Benefits | Limitations |
|---|---|
| Ease of formation: low investment and no big premises needed | Low personal touch: unsuitable for products like garments or toiletries that customers like to touch and try |
| Convenience: open 24 hours, 365 days | Order taking is fast but delivery is slow: the physical delivery lags behind |
| Speed: processes move from sequential to simultaneous and money moves as electronic pulses | Need for technology capability: causes a digital divide |
| Global reach: the internet has no boundaries | Anonymity: risks of impersonation, leakage of card details, viruses and hacking |
| Paperless society: supported by the Information Technology Act, 2000 on electronic records and digital signatures | People resistance to new technology |
| Ethical fallouts: employers may track files, mail and websites that staff use |
The digital divide is the division of society on the basis of familiarity with digital technology.
Beyond the textbook. For the exam: the digital divide arises because e-business needs technology capability. In reality: cheaper phones and mobile data have brought many more people online, but gaps remain in skills, language and reliable connectivity. Why it matters: the exam answer stays the same, but the idea helps you recognise a case question that describes villagers who cannot use an online service.
Traditional business vs e-business
This comparison table covers many of the features CUET lifts directly.
| Feature | Traditional business | e-business |
|---|---|---|
| Ease of formation | Difficult | Easy |
| Physical and locational requirement | High | Low |
| Cost of setting up | High | Low |
| Operating cost | High | Low |
| Nature of contact | Face-to-face | Faceless |
| Internal communication | Sequential | Simultaneous |
| Response time | Slow | Instant |
| Organisation shape | Tall | Flat |
| Business process cycle | Long | Short |
| Inter-personal touch | High | Low |
| Physical sampling before buying | Possible | Not possible |
| Going global | Limited | Unlimited |
| Skill needed from staff | Lower skills possible | High skills needed |
| Transaction risk | Low | High |
Placing an online order: three steps and five ways to pay
A transaction passes through three stages: before the sale (advertising, enquiry), the sale itself (negotiation, closing, payment) and delivery. Only the last stage involves the physical movement of goods. The first two are flows of information, which is why e-business can cut cycle time.
| Step | What happens |
|---|---|
| Registration | The buyer opens an account with the vendor. A password protects the account and the cart |
| Placing the order | Items go into a shopping cart, can be added or removed, and the buyer proceeds to checkout |
| Payment | The buyer chooses one of the modes below |
| Payment mode | How it works |
|---|---|
| Cash on delivery | The customer pays when the goods arrive, so the buyer faces no online payment risk |
| Cheque | The buyer sends a cheque, and the goods are sent after it is cleared |
| Net banking | Transfer through the bank website using IMPS, NEFT or RTGS |
| Credit or debit card | Popularly called plastic money, the most used mode for online payments |
| Digital cash | Electronic currency that exists only in cyberspace, drawn from a bank account using special software |
Staying safe: three kinds of risk
| Type of risk | What can go wrong | Defences |
|---|---|---|
| Transaction risk | Either side defaults on the order, on delivery or on payment | Check identity and address, deal with well-known sites, read ratings, and use SSL encryption for card data |
| Data storage and transmission risk | Viruses and hacking damage or steal data | Updated antivirus software and cryptography |
| Threats to intellectual property and privacy | Once data goes on the internet it leaves the private domain, so it can be copied or misused, leading to junk mail and leaks | Careful disclosure, privacy policies and legal protection |
VIRUS stands for "Vital Information Under Siege". It is a program, a series of commands, that copies itself onto other computers. Its effects range from Level 1, a nuisance on the screen, to Level 4, complete destruction of the system.
Cryptography is the art of protecting information by turning ordinary text (plaintext) into unreadable text (ciphertext). Only someone with the secret key can read it. SSL (Secure Sockets Layer) encrypts card details as they travel to the seller. Cookies are small records, like a caller ID, that tell a seller the visitor's name, address and past purchases.
Beyond the textbook. For the exam: cookies are small records that provide a seller with a consumer's details and purchase record. In reality: a cookie is a small text file that a website stores in your browser to remember things such as your login or your cart, and it can also be used to track what you browse, which is why many sites now ask for your consent. Why it matters: it explains why you see the same shoes advertised after one visit, and it shows why privacy is listed as a separate risk.
The Information Technology Act, 2000 supports e-business: Section 4 recognises electronic records and Section 5 gives legal status to digital signatures. Section 6-1 covers government use of electronic records and Section 7-1 covers their retention.
A website is not a physical place. It is the online presence that holds all the content a firm wants to show. Beyond money, men and machines, a firm needs resources to build, run, maintain and improve its website.
Business Process Outsourcing
Outsourcing means handing over a business activity to an outside specialist instead of doing it in-house. Business Process Outsourcing (BPO) applies this to business processes such as customer care, accounts or HR. A firm does this to lower costs and to concentrate on what it does best.
| Term | Meaning |
|---|---|
| Call centre | A BPO unit that handles voice-based dealings with customers |
| Verticals | Services focused on one industry, such as banking BPO |
| Horizontals | Services focused on one function across industries, such as HR BPO |
| Captive BPO | A unit the parent firm owns and runs itself, usually in another country |
| Sweat-shopping | The criticism that some BPO centres demand long shifts and stressful work |
India has gained from the growth of outsourcing through jobs, new skills, exports and a larger national income.
Mini case. Greenleaf Bank in Europe hands its customer care to a call centre in Hyderabad run by a separate firm. The call centre uses the bank's systems to answer queries about statements and cards. This is BPO. If the bank instead set up its own centre in Hyderabad, owned by the bank, it would be a captive BPO. The first is a banking vertical, because the service is built for one industry.
Exam traps
| The trap | Why it's tempting | The truth |
|---|---|---|
| "e-commerce is broader than e-business." | Commerce sounds like the bigger word | e-business is broader and e-commerce is a part of it |
| "C2C and C2B are the same." | Both start with a consumer | C2C is consumer to consumer, while C2B is a customer reaching the business |
| "Intra-B is B2B." | Both involve businesses | B2B is between firms, while intra-B is inside one firm |
| "EDI is a B2C technology." | Customers also use online orders | It was originally used to send orders and invoices between businesses |
| "There are four payment modes." | Cheque is easy to forget | There are five: cash on delivery, cheque, net banking, cards, digital cash |
| "Digital cash is plastic money." | Both are electronic | Plastic money means cards, while digital cash exists only in cyberspace |
| "Cryptography protects card data on the way to the seller." | Both are about encryption | SSL is the card protection, and cryptography is the general method of scrambling data |
| "A Level 1 virus destroys the system." | Level 1 sounds serious | Level 1 is only a nuisance, and Level 4 destroys the system |
60-second revision
| Topic | Lock this in |
|---|---|
| Three trends | Digitisation, outsourcing, globalisation |
| e-business | Broader than e-commerce |
| Scope | B2B, B2C, intra-B, C2C, plus C2B and B2E |
| Benefits | Easy formation, convenience, speed, global reach, paperless |
| Limitations | Low touch, slow delivery, digital divide, anonymity, resistance, ethics |
| Online steps | Registration, order, payment |
| Payment | Cash on delivery, cheque, net banking, cards, digital cash |
| Risks | Transaction, data storage and transmission, IP and privacy |
| VIRUS | Vital Information Under Siege |
| Security tools | SSL, cryptography, antivirus |
| BPO | Call centre, verticals, horizontals, captive unit |
Where this chapter connects
- Previous: Business Services covers e-banking, EFT and communication services that make online transactions possible.
- Next: Formation of a Company turns to the company form that many e-businesses and BPOs use.
- Trade angle: International Business shows how globalisation, one of the three trends, works through trade, investment and outsourcing.
🎯 Practice MCQs
First 3 questions free · create a free account to unlock the rest — answers & explanations included, no payment needed
Q1. Which of the following is NOT one of the three strongest trends shaping business?
▸ Show answer & explanation
Answer: D
The three trends are digitisation, outsourcing and internationalisation and globalisation. Vertical integration is not among them.
Q2. Which statement correctly distinguishes e-business from e-commerce?
▸ Show answer & explanation
Answer: C
e-commerce is a part of e-business. e-business adds electronically conducted functions like production, inventory, accounting and human resources. The other options reverse or merge the two.
Q3. Match List I with List II. List I: (i) B2B (ii) B2C (iii) Intra-B (iv) C2C. List II: (p) A website where people sell used goods to each other (q) A car factory ordering parts electronically from its suppliers (r) An online shop selling directly to a customer (s) Flexible manufacturing coordinated over a firm's own intranet
▸ Show answer & explanation
Answer: A
B2B is business with business, B2C is business with customer, intra-B stays inside the firm and C2C is between consumers. The other options mismatch at least two pairs.
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Q4. Which of the following is NOT a mode of payment for online shopping?
▸ Show answer & explanation
Answer: D
The modes are cash on delivery, cheque, net banking, credit or debit cards and digital cash. A courier delivered demand draft is not a standard online mode.
Q5. Assertion (A): VIRUS stands for Vital Information Under Siege. Reason (R): A virus is a program that copies itself onto other computers and can cause harm ranging from a screen nuisance to total destruction.
▸ Show answer & explanation
Answer: B
Both statements are true. But the reason describes what a virus does, not why the acronym is expanded as it is, so it does not explain the assertion.
Q6. Cookies, in the context of online transactions, are best described as:
▸ Show answer & explanation
Answer: C
Cookies tell a seller about a visitor. Encryption certificates are SSL, bank software relates to digital cash and antivirus programs scan disks.
Q7. A customer uses a company's toll-free number to ask about a delayed order and lodge a complaint. This is an example of:
▸ Show answer & explanation
Answer: C
The customer is reaching out to the business, which is C2B, the corollary of B2C. B2B is between firms and intra-B is inside a firm.
Q8. Which section of the Information Technology Act, 2000 deals with digital signatures?
▸ Show answer & explanation
Answer: B
Section 4 deals with electronic records, Section 5 with digital signatures, Section 6-1 with government use and Section 7-1 with retention.
Q9. Statement I: E-business shortens the business process cycle because work moves from sequential to simultaneous. Statement II: In e-business, money can move as electronic pulses through electronic fund transfer. Which is correct?
▸ Show answer & explanation
Answer: A
Simultaneous processes cut cycle time, and electronic transfer lets money move almost instantly. Both statements are correct.
Q10. Which of the following is a limitation of e-business?
▸ Show answer & explanation
Answer: C
The digital divide arises because e-business needs technology skills and access. The other three are benefits.
Q11. Ritu shops online. She registers on a site, adds a bag to the cart, goes to checkout and pays with her debit card. Her card details are scrambled while travelling to the seller. Which tool is protecting her details?
▸ Show answer & explanation
Answer: C
SSL encrypts card details as they are sent to the seller. A cookie records a visitor's details, and a website and a call centre are not security tools.
Q12. Brightwell Insurance sets up its own customer service centre in another country, which it owns and runs, to handle calls from its policyholders. This arrangement is called:
▸ Show answer & explanation
Answer: B
A captive BPO is a unit owned and operated by the parent firm, usually offshore. A third-party BPO would be run by an outside company.
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