Ch. 5 Emerging Modes of Business

Study Notes

Differences Between E-Business and Traditional Business

Formation: E-business can be established with lower initial investment and fewer regulatory hurdles compared to traditional businesses, which often require physical locations and extensive permits.
Setting of Cost: E-business generally has lower operating costs due to reduced overhead expenses, while traditional businesses incur higher costs related to physical storefronts and utilities.
Risk Involved: E-business faces unique risks such as cybersecurity threats and data breaches, whereas traditional businesses encounter risks like theft, property damage, and market competition.

Applications of E-Business

Online Retail: Enables consumers to shop for products and services from anywhere, leading to a wider market reach.
Digital Marketing: Helps businesses promote their products through various online channels, fostering a more targeted audience engagement.

Data Storage and Transmission Risk in E-Business

E-business relies heavily on cloud storage and online data transfer, making it susceptible to data breaches, cyberattacks, and loss of sensitive information.
Regular security upgrades and the implementation of encryption protocols are essential to mitigate these risks.

Factors for the Growing Importance of E-Business

Rapid technological advancements and increased internet penetration have made it easier for businesses to go online.
Changing consumer behaviors favor online shopping, leading to a significant shift in marketing and sales strategies.

Steps Involved in Online Trading (Order Placement)

Customer browses the online catalog and selects desired products.
Customer adds items to the shopping cart and proceeds to checkout.
Payment information is entered, and the order is confirmed.
Order details are sent to the seller for processing and shipment.

Types of E-Business Models

B2C (Business-to-Consumer): Involves businesses selling products directly to consumers via online platforms.
C2C (Consumer-to-Consumer): Facilitates transactions between consumers, typically through online marketplaces.
B2B (Business-to-Business): Involves transactions between businesses, often for supplies or services.

Limitations of Electronic Mode of Doing Business

Security Concerns: High risk of data breaches and fraud can deter consumers from engaging in online transactions.
Technical Issues: System downtimes or software failures can disrupt operations and affect customer trust.
Lack of Personal Connection: Absence of face-to-face interaction can hinder customer relations and brand loyalty.

Benefits of E-Business

Global Reach: Businesses can access a wider audience across various geographic locations.
24/7 Availability: E-business operates around the clock, enhancing customer convenience.
Reduced Costs: Lower operational expenses compared to traditional models.
Scalability: Easier to scale operations based on demand fluctuations.
Data Analysis: Businesses can gather and analyze customer data for improved decision-making.

Types of Transactions in E-Business

Online Purchases: Customers buy goods or services directly through websites.
Digital Services: Offering services such as consulting or tutorials via digital platforms.
Subscription Models: Consumers pay for ongoing access to products or services online.

Difference Between E-Commerce and E-Business

E-Commerce focuses specifically on online transactions involving buying and selling goods and services.
E-Business encompasses all aspects of running a business online, including supply chain management, customer service, and marketing strategies.

Description

Test your knowledge on the differences between e-business and traditional business, including factors like formation, costs, and risks. Explore the applications of e-business and the risks associated with data storage and transmission. Understand why e-business is considered an emerging mode of business and the strengths contributing to its rise.