Tuesday, September 10, 2019

M.Com Previous Year Solved Papers: Business Environment' 2015 (August - Incomplete)


2015 (August)
COMMERCE
Paper: 101 (Business Environment)
Full Marks – 80
Time – Three Hours
The figures in the margin indicate full marks for the questions.
1. (a) Highlight the relevance of government and business.                        16
Or
(b) Discuss the significance of external business environment with examples.                                 16
Ans: External Environment and its significance
The external environment is made up of micro and macro environment.

Micro Environment: This refers to the factors which influence the prospects of a particular firm; the firm can influence them with certain efforts. They are as follows:
a) Customers: The type and the nature of the customers influence the rate of growth of any firm. The firm has to be very particular about choosing the inputs and transforming them in to the output. The cost factor is subsidiary if the firm is dealing with such customers. If the customers are more commoners the quality of the commodity if less important than the cost of production. The customers want the commodity at a lower price so the firm will have to conscious about the cost in purchasing the inputs, in employment of labour, in packing and such other factors influencing the cost.
b) Competitors:  In modern age an absolute monopoly is a very rare thing. Most of the FIRMS have to work in some type of competition such as Monopolistic Competition or Oligopoly. A Firm has to be particular about the intensity of the competition. If the competition is severe the firm will have to be very particular about keeping the costs at the lowest level so that it can sell the commodity at a competitive price.
c) Suppliers:  The quality of the commodity and the cost of production are considerably influenced by the supplies of the inputs. If the inputs are supplied at economical prices, are of standard quality and if the supply is uninterrupted and timely the firm can produce a standard quality of a commodity and sell it at reasonable prices. Often the firms employ more than one supplier so as to ensure an uninterrupted supply of inputs. If the supplies of inputs are regular, consistent and reliable there is no need to keep a larger quantity in stock.
d) Channel Intermediaries: They refer to the different levels in the chain from the production unit to the final customer. The chain incorporates the stockists, the wholesalers, the distributors, the retailer etc. If there is a high level of efficiency maintained at every part of the chain the commodity can reach the final consumer in good condition and at a reasonable price. So the Firm has to select and maintain efficient intermediaries. The firm has to offer them proper terms
e) Society: The prospects of a firm depend upon the society in which it has to work and sell its products. In a homogenous society the job of the firm is easy. The people have almost the same habits likes and dislikes, values and ethical norms. In a heterogeneous society the job of the firm is difficult. A particular product may be acceptable to a particular section of the society but not acceptable to some other sections. In a country like India a firm has to into consideration all types of sections of the community such as the religious sections, the caste, the sect, language, region etc.
Conclusion: All these forces influence the chances available to a firm to survive and develop.
Macro Environment: The macro environment comprises of those forces which influence all business firms operating in an economy. They can be studied under the following categories: economic environment, political and regulatory environment, social/ cultural environment, demographic environment and technological. The components of these environment are discussed as below:
a) Economic Environment:  The survival and success of each and every business enterprise depend fully on its economic environment. The main factors that affect the economic environment are:
(i) Economic Conditions: The economic conditions of a nation refer to a set of economic factors that have great influence on business organisations and their operations. These include gross domestic product, per capita income, markets for goods and services, availability of capital, foreign exchange reserve, growth of foreign trade, strength of capital market etc. All these help in improving the pace of economic growth.
(ii) Economic Policies: All business activities and operations are directly influenced by the economic policies framed by the government from time to time. Some of the important economic policies are: Industrial policy, Fiscal policy, monetary policy, foreign investment policy and Export –Import policy. The government keeps on changing these policies from time to time in view of the developments taking place in the economic scenario.
(ii) Economic System: The world economy is primarily governed by three types of economic systems, viz. Capitalist economy; Socialist economy; and Mixed economy. India has adopted the mixed economy system which implies co-existence of public sector and private sector.
b) Political Environment: This includes the political system, the government policies and attitude towards the business community and the unionism. All these aspects have a bearing on the strategies adopted by the business firms. The stability of the government also influences business and related activities to a great extent. It sends a signal of strength, confidence to various interest groups and investors.
c) Legal Environment:  This refers to set of laws, regulations, which influence the business organisations and their operations. Every business organisation has to obey, and work within the framework of the law. The important legislations that concern the business enterprises include: Companies Act, 1956, Foreign Exchange Management Act, 1999, The Factories Act, 1948, Industrial Disputes Act, 19112, Payment of Gratuity Act, 19112, Industries (Development and Regulation) Act, 1951 etc. Besides, the above legislations, the following are also form part of the legal environment of business.
(i) Provisions of the Constitution
(ii) Judicial Decisions.
d)  Social Environment: The social environment of business includes social factors like customs, traditions, values, beliefs, poverty, literacy, life expectancy rate etc. The social structure and the values that a society cherishes have a considerable influence on the functioning of business firms. For example, during festive seasons there is an increase in the demand for new clothes, sweets, fruits, flower, etc.
e) Technological Environment:  Technological environment include the methods, techniques and approaches adopted for production of goods and services and its distribution. The varying technological environments of different countries affect the designing of products. In the modern competitive age, the pace of technological changes is very fast. Hence, in order to survive and grow in the market, a business has to adopt the technological changes from time to time.
f) Demographic Environment:  This refers to the size, density, distribution and growth rate of population. All these factors have a direct bearing on the demand for various goods and services.
g) Natural Environment:  The natural environment includes geographical and ecological factors that influence the business operations. These factors include the availability of natural resources, weather and climatic condition, location aspect, topographical factors, etc. Business is greatly influenced by the nature of natural environment. For example, sugar factories are set up only at those places where sugarcane can be grown. It is always considered better to establish manufacturing unit near the sources of input.
2. (a) Are controls under planning in India effective? Justify.                     16
Or
(b) Critically argue the role played by MRTP Act in India to minimise the restrictive trade practices.       16 (THIS ACT IS NOW ABOLISHED SO NO QUESTION EXPECTED)
Ans: Monopolistic and Restrictive Trade Practices Act (MRTP Act)
The monopolies and Restrictive Trade Practices Act, 1969, brought into force from 1st June 1970, was a very controversial piece of legislation. The principal objectives of the MRTP Act which extends to the whole of India except to the state of Jammu and Kashmir, viz.:
a)      Prevention of concentration of economic power to the common detriment.
b)      Control of monopolistic, restrictive and unfair trade practices which are prejudicial to public interest.
The MRTP Act was significantly amended in 1982, 1984, 1985 and 1991. After the amendments the first objective has become irrelevant as the relevant provisions to achieve the objective have been deleted. The objectives now are:
a)      Controlling monopolistic trade practices.
b)      Regulating restrictive and unfair trade practices.
Restrictive Trade Practices (RTP):
A trade practice which restricts or reduces competition may be termed as restrictive trade practice. The following are the RTPs as described by section 33(1) of the MRTP Act:
(a) Refusal to deal with persons or classes of persons: Any agreement which restricts or it likely to restrict by any methods, the persons or classes of persons to whom goods are sold or from whom goods are bought.
(b) Tie-in sales or full line forcing: Any agreement requiring purchaser of goods, as a condition of such purchase, to purchase some other goods.
(c) Exclusive dealing agreement: Any agreement restricting in any manner the purchaser in the course of his trade from acquiring or otherwise dealing in any goods other than those of seller or any other goods.
(d) Collective price fixation and tendering: Any agreement to purchase or sell goods or to tender for the sale or purchase of goods only at prices or terms and conditions agreed upon between the sellers or purchaser.
(e) Discriminatory Dealings : Any agreement to grant or allow concession or benefits, including allowances, discounts, rebate or credit, in connection with or by reason of dealings.
(f) Re-sale price maintenance: Any agreement to sell goods on condition that the prices to be charged on resale by the purchaser shall be the prices stipulated by the seller unless it is clearly stated that prices lower than those prices may be charged.
(g) Restriction on output or supply of goods: Exclusive distributorship, territorial restriction and market sharing.
(h) Control of manufacturing process.
(i) Price control arrangements.
(j) Governmental recognition of practice as restriction.
(k) Residual restriction trade practices: Any agreement to enforce the carrying out of any such agreement as is referred to in the foregoing classes.
Remedies under the MRTP Act
Under the Monopolistic and Restrictive Trade Practices Act, 1969, the commission has the power to attend complaint, inquire facts and pass orders regarding any unfair trade practice, monopolistic trade practice and/or restrictive trade practice. The commission can order any person to bring in any books of accounts, or other documents to investigate the matter of such practices. During investigation, if the commission has grounds to believe that any books or papers are being destroyed, mutilated, altered, falsified or secreted, it may authorize any officer of the Commission to search and seizure any such books or papers. The commission after inquiring the case shall pass the remedial order.
The remedies under this Act are:
a)      Temporary Injunction
b)      Compensation
Section 12A Power of the Commission to Grant Temporary Injunctions
Section 12A of the MRTP Act, 1969, accounts for the power of the Commission to grant temporary injunctions. The provisions of the section are:
Where it is proved that any undertaking or any person is carrying on any monopolistic or restrictive, or unfair, trade practice and such monopolistic or restrictive, or unfair, trade practice is likely to affect the interest of any trader, class of traders or of any consumer or public generally, the Commission may, for the purposes of staying or preventing the undertaking, grant a temporary injunction restraining such undertaking or person from carrying on any monopolistic or restrictive, or unfair, trade practice until the conclusion of such inquiry or until further orders.
For the purposes of this section, an inquiry shall be deemed to have commenced upon the receipt of any complaint or reference by the Commission or upon its own knowledge or information reduced to writing by the Commission.
For the removal of doubts, the power of the Commission with respect to temporary injunction includes power to grant a temporary injunction without giving notice to the opposite party.
Section 12B Power of the Commission to Award Compensation
Section 12B provides for the second remedy under this Act. The provision regarding the power of the Commission to award compensation is:
Where any loss or damage is caused to the Central Government or State Government or trader or class of traders or any consumer because of the monopolistic, or restrictive, or unfair, trade practice carried on by any undertaking or any person, then such Government, trader, class of traders or consumer may make an application to the Commission for the recovery of any compensation from that undertaking or person. The recovery shall be of such amount as the Commission may determine as compensation for the loss or damage so caused.
Where any loss or damage is caused to numerous persons having the same interest, then one or more of such persons may, with the permission of the Commission, make an application for the benefit of all the persons so interested.
The Commission after inquiring into the allegations made in the application, shall make an order directing the owner of the undertaking to make payment to the applicant, of the amount determined by it as realizable from the undertaking as compensation for the loss or damage caused to the applicant by reason of any monopolistic or restrictive, or unfair, trade practice carried on by such undertaking or other person.
Where a decree for the recovery of any amount as compensation for any loss or damage has been passed by any court in favor of any, the amount shall be set off against the amount payable under such decree.
Every order made by the Commission, under section 12A granting a temporary injunction or under section 12B awarding compensation, may be enforced by the Commission in the same manner as if it were a decree or order made by a court. In case such orders are not executed by the undertaking or other person, then it shall be lawful for the Commission to send such order to the court.
3. (a) Critically evaluate the monetary policy in the Indian context.                        16
Ans: Monetary Policy: Monetary policy refers to policy formulated and implemented for achieving the following objectives:
a)      Regulating the supply of money including credit money and adjusting it to the needs of the economy
b)      To control the cost of money by regulating the rates of interest.
c)       Directing the supply of money to the required channels in accordance with the plan of priorities prepared by the planning authority.
According to A.G. Hart "A policy which influences the public stock of money substitute of public demand for such assets of both that is policy which influences public liquidity position is known as a monetary policy."
From the above discussion, it is clear that a monetary policy is related to the availability and cost of money supply in the economy in order to attain certain broad objectives.
Importance of monetary policy
 A modern economy is a money economy. All transactions are effected with the help of and through the medium of money. The prices of goods, services and factors are fixed in terms of money. People earn their income in the form of money and spend it in the form of money. So the supply of money creates money income in the hands of the community and expenditure of money generates the demand for different goods and services.
The monetary authority has to maintain a perfect balance between increase in the production of goods and services and increase in the supply of money. If increase in the supply of money exceeds increase in the production of goods and services the result is inflation. On the other hand, if the production of goods and services increases at a fast rate and the supply of money increases at a slow rate the result is recession and maybe depression. Hence the monetary authority has to monitor the growth in production very closely and adjust the money supply to it.
In India the monetary policy is formulated and implemented by the Reserve Bank of India which is an autonomous financial institution. It is expected that the RBI would use professional expertise to control the supply of money to the benefit of the community.
Obstacles In Implementation of Monetary Policy
Through the monetary policy is useful in attaining many goals of economic policy, it is not free from certain limitations. Its scope is limited by certain peculiarities, in developing countries such as India. Some of the important limitations of the monetary policy are given below.
a)      There exists a Non-Monetized Sector: In many developing countries, there is an existence of non-monetized economy in large extent. People live in rural areas where many of the transactions are of the barter type and not monetary type. Similarly, due to non-monetized sector the progress of commercial banks is not up to the mark. This creates a major bottleneck in the implementation of the monetary policy.
b)      Excess Non-Banking Financial Institutions (NBFI): As the economy launch itself into a higher orbit of economic growth and development, the financial sector comes up with great speed. As a result many Non-Banking Financial Institutions (NBFIs) come up. These NBFIs also provide credit in the economy. However, the NBFIs do not come under the purview of a monetary policy and thus nullify the effect of a monetary policy.
c)       Existence of Unorganized Financial Markets:  The financial markets help in implementing the monetary policy. In many developing countries the financial markets especially the money markets are of an unorganized nature and in backward conditions. In many places people like money lenders, traders, and businessman actively take part in money lending. But unfortunately they do not come under the purview of a monetary policy and creates hurdle in the success of a monetary policy.
d)      Higher Liquidity Hinders Monetary Policy: In rapidly growing economy the deposit base of many commercial banks is expanded. This creates excess liquidity in the system. Under this circumstances even if the monetary policy increases the CRR or SLR, it dose not deter commercial banks from credit creation. So the existence of excess liquidity due to high deposit base is a hindrance in the way of successful monetary policy.
e)      Money not appearing in an Economy: Large percentage of money never comes in the mainstream economy. Rich people, traders, businessmen and other people prefer to spend rather than to deposit money in the bank. This shadow money is used for buying precious metals like gold, silver, ornaments, and land and in speculation. This type of lavish spending give rise to inflationary trend in mainstream economy and the monetary policy fails to control it.
f)       Time Lag Affects Success of Monetary Policy: The success of the monetary policy depends on timely implementation of it. However, in many cases unnecessary delay is found in implementation of the monetary policy. Or many times timely directives are not issued by the central bank, then the impact of the monetary policy is wiped out.
g)      Monetary & Fiscal Policy Lacks Coordination: In order to attain a maximum of the above objectives it is unnecessary that both the fiscal and monetary policies should go hand in hand. As both these policies are prepared and implemented by two different authorities, there is a possibility of non-coordination between these two policies. This can harm the interest of the overall economic policy.
These are major obstacles in implementation of monetary policy. If these factors are controlled or kept within limit, then the monetary policy can give expected results. Thus though the monetary policy suffers from these limitations, still it has an immense significance in influencing the process of economic growth and development.
Or
(b) Write a detail note on the fiscal policy of India.
4. (a) Elucidate the redressal machinery under the Consumer Protection Act.                    16
There shall be established for the purposes of this Act, the following agencies, namely,-
a)      The Central Consumer Protection Council established by the Central Government by notification.
b)      The State Consumer Protection Council established by the State Government in the State by notification; and
c)       The District Consumer Protection Council established by the State Government   in each district of the State by notification. The State Government may, if it deems fit, establish more than one District Forum in a district.
1.       The Central Consumer Protection Council: The Central Government may, by notification, establish with effect from such date as it may specify in such notification, a council to be known as the Central Consumer Protection Council (hereinafter referred to as the Central Council).
Membership:
a)      The Minister in charge of consumer affairs in the Central Government, who shall be its Chairman, and
b)      Such number of other official or non-official members representing such interests as may be prescribed.
Objects of the Central Council
The objects of the Central Council shall be to promote and protect the rights of the consumers such as-
a)      The right to be protected against the marketing of goods [and services] which are hazardous to life and property;
b)      The right to be informed about the quality, quantity, potency, purity, standard and price of goods 1[or services, as the case may be], so as to protect  the consumer against unfair trade practices;
c)       The right to be assured, wherever possible, access to a variety of goods and services at competitive prices;
d)      The right to be heard and to be assured that consumers'  interests will receive due consideration at appropriate forums;
e)      The right to seek redressal against unfair trade practices 1[or restrictive trade practices] or unscrupulous exploitation of consumers; and
f)       The right to consumer education.
Value for filling complaint in district forum: National Consumer Disputes Redressal Commission: The National Consumer Disputes Redressal Commission has jurisdiction to entertain complaints where the value of the goods or services and compensation if any claimed exceeds Rs.1,00,00,000 (ONE CRORE)
2.       The State Consumer Protection Councils
The State Government may, by notification, establish with effect from such date as it may specify in such notification, a council to be known as the Consumer Protection Council (hereinafter referred to as the State Council).
Membership:
a.       The Minister in-charge of consumer affairs in the State Government who shall be its Chairman;
b.      Such number of other official or non-official members representing such interests as may be prescribed by the State Government.
Objects of state council:
The objects of every State Council shall be to promote and protect within the State the rights of the consumers laid down in clauses (a) to (f) of section 6. (Objects of National Council)
a)      The right to be protected against the marketing of goods [and services] which are hazardous to life and property;
b)      The right to be informed about the quality, quantity, potency, purity, standard and price of goods 1[or services, as the case may be], so as to protect  the consumer against unfair trade practices;
c)       The right to be assured, wherever possible, access to a variety of goods and services at competitive prices;
d)      The right to be heard and to be assured that consumers'  interests will receive due consideration at appropriate forums;
e)      The right to seek redressal against unfair trade practices 1[or restrictive trade practices] or unscrupulous exploitation of consumers; and
f)       The right to consumer education.
Value for filling complaint in district forum: The State Consumer Disputes Redress Commission is established in each state and these have jurisdiction to entertain complaints where the value of goods or services and the compensation if any, claimed exceeds Rs.20,00,000 (TWENTY LAKHS) but does not exceed Rs.1,00,00,000 (ONE CRORE).
3.       The District Consumer Protection Council
Section 8-A as inserted by the Consumer Protection (Amendment) Act, 2002. The State government shall establish for every district, by notification, a council to be known as the District Consumer Protection Council.
Membership
The District Consumer Protection Council (hereinafter referred to as the District Council) shall consist of the following members:
a.       The collector of the district (by whatever name called) who shall be its Chairman; and
b.      Such number of other official and non-official members representing such interest as maybe described by the state government.
Objects of the District Council:
The Objects of every District Council shall be to promote and protect within the district the rights of consumers laid down in the clause (a) to (f) of Section 6 (National Consumer Protection Council).
a)      The right to be protected against the marketing of goods [and services] which are hazardous to life and property;
b)      The right to be informed about the quality, quantity, potency, purity, standard and price of goods 1[or services, as the case may be], so as to protect  the consumer against unfair trade practices;
c)       The right to be assured, wherever possible, access to a variety of goods and services at competitive prices;
d)      The right to be heard and to be assured that consumers'  interests will receive due consideration at appropriate forums;
e)      The right to seek redressal against unfair trade practices 1[or restrictive trade practices] or unscrupulous exploitation of consumers; and
f)       The right to consumer education.
Value for filling complaint in district forum: At the lowest level are the District Forums and these are established in each District and have jurisdiction to entertain complaints where the value of goods or services and the compensation if any, claimed does not exceed Rs.20, 00,000 (TWENTY LAKHS), and a complaint can be filed in a District Forum within the local limits of which
a)      The opposite party resides or
b)      Carries on his business or works for gain or
c)       Where the cause of action arises.
Or
(b) Explain the growth trends of India’s foreign trade.                                   16
Ans: Recent Trends and Developments in India’s Foreign Trade
I. Trade in Merchandise
EXPORTS (including re-exports)
In consonance with the revival exhibited by exports in the last four months, during January,2017 exports continue to show a positive growth of 4.32 per cent in dollar terms (valued at US$ 22115.03 million) and 5.61 per cent in Rupee terms (valued at Rs. 150559.98 crore) as compared to US$ 21199.02 million (Rs. 142568.31 crore) during January,2016.
Cumulative value of exports for the period April-January 2016-17 was US$ 220922.78 million (Rs. 1484473.55 crore) as against US$ 218532.64 million (Rs. 1420572.68 crore) registering a positive growth of 1.09 per cent in Dollar terms and positive growth of 4.50 per cent in Rupee terms over the same period last year.
Non-petroleum exports in January 2017 were valued at US$ 19422.86 million against US$ 19111.38 million in January 2016, an increase of 1.6 %. Non-petroleum exports during April - January 2016-17 were valued at US$ 196254.10 million as compared to US$ 192071.50 million for the corresponding period in 2016, an increase of 2.2%.
The growth in exports is positive for USA (2.63%),EU(5.47%) and Japan(13.43%) but China has exhibited negative growth of (-1.51%) for November 2016 over the corresponding period of previous year as per latest WTO statistics.
IMPORTS
Imports during January 2017 were valued at US$ 31955.94 million (Rs. 217557.32 crore) which was 10.70 per cent higher in Dollar terms and 12.07 per cent higher in Rupee terms over the level of imports valued at US$ 28866.53 million (Rs. 194134.02 crore) in January, 2016. Cumulative value of imports for the period April-January 2016-17 was US$ 307311.86 million (Rs. 2065656.42 crore) as against US$ 326277.38 million (Rs. 2120158.57 crore) registering a negative growth of 5.81 per cent in Dollar terms and 2.57 per cent in Rupee terms over the same period last year.
CRUDE OIL AND NON-OIL IMPORTS:
Oil imports during January, 2017 were valued at US$ 8140.83 million which was 61.07 percent higher than oil imports valued at US$ 5054.29 million in January 2016. Oil imports during April-January, 2016-17 were valued at US$ 69062.66 million which was 5.81 per cent lower than the oil imports of US$ 73321.66 million in the corresponding period last year.
Non-oil imports during January, 2017 were estimated at US$ 23815.11 million which was 0.01 per cent higher than non-oil imports of US$ 23812.24 million in January, 2016. Non-oil imports during April-January 2016-17 were valued at US$ 238249.20 million which was 5.81 per cent lower than the level of such imports valued at US$ 252955.72 million in April-January, 2015-16. 
II. TRADE IN SERVICES (for December, 2016, as per the RBI Press Release dated 15th February 2017)
EXPORTS (Receipts): Exports during December 2016 were valued at US$ 13804 Million (Rs. 93729.71 Crore) registering a positive growth of 3.49 per cent in dollar terms as compared to positive growth of 1.72 per cent during November 2016 (as per RBI’s Press Release for the respective months).
IMPORTS (Payments): Imports during December 2016 were valued at US$ 8294 Million (Rs. 56316.59 Crore) registering a negative growth of 0.35 per cent in dollar terms as compared to positive growth of 8.37 per cent during November 2016 (as per RBI’s Press Release for the respective months).
III.TRADE BALANCE
MERCHANDISE: The trade deficit for April-January, 2016-17 was estimated at US$ 86389.08 million which was 19.82% lower than the deficit of US$ 107744.74 million during April-January, 2015-16.
SERVICES: As per RBI’s Press Release dated 15th February 2017, the trade balance in Services (i.e. net export of Services) for December, 2016 was estimated at US$ 5510 million. The net export of services for April- December, 2016-17 was estimated at US$ 48316 million which is lower than net export of services of US$ 53557 million during April- December, 2015-16. (The data for April-December 2015-16 and 2016-17 has been derived by adding April-December month wise QE data of RBI Press Release).
OVERALL TRADE BALANCE: Overall the trade balance has improved. Taking merchandise and services together, overall trade deficit for April- January 2016-17 is estimated at US$ 38073.08 million which is 29.7 percent lower in Dollar terms than the level of US$ 54187.74 million during April-January 2015-16. (Services data pertains to April-December 2016-17 as December 2016 is the latest data available as per RBI’s Press Release dated 15th February 2017)
5. (a) How far has structural reforms made an impact on reducing poverty and provision for food security?        16
Or
(b) Discuss the need, significance and importance of e-commerce.                         16
Ans: Meaning of E-Commerce: E – Commerce also known as Electronic Commerce refers to a firm’s interactions with its customers and suppliers over internet. It includes purchase and sales of goods and services, transfer of funds and data from one party to another party. These types of business transactions can be done in four ways: Business to Business (B2B), Business to customer (B2C), Intra-B commerce, Customer to Customer (C2C) and Customer to Business (C2B). Amazon, Flipkart, Shopify, Olx, Myntra are some examples of e-commerce websites.
Types of E-Commerce business
(i) B2B Commerce: Here, both the parties involved in e-commerce transactions are business firms, and, hence the name B2B, i.e., business-to-business. Creation of utilities or delivering value requires a business to interact with a number of other business firms which may be suppliers or vendors of diverse inputs; or else they may be a part of the channel through which a firm distributes its products to the consumers. For example, the manufacture of an automobile requires assembly of a large number of components which in turn are being manufactured elsewhere— within the vicinity of the automobile factory or even overseas. To reduce dependence on a single supplier, the automobile factory has to cultivate more than one vendor for each of the components. A network of computers is used for placing orders, monitoring production and delivery of components, and making payments. Likewise, a firm may strengthen and improve its distribution system by exercising a real time (as it happens) control over its stock-in-transit as well as that with different middlemen in different locations.
(ii) B2C Commerce: As the name implies, B2C (business-to-customers) transactions have business firms at one end and its customers on the other end. B2C commerce entails a wide range of marketing activities such as identifying activities, promotion and sometimes even delivery of products (e.g., music or films) that are carried out online. E-commerce permits conduct of these activities at a much lower cost but high speed. For example, ATM speeds up withdrawal of money.
(iii) Intra-B Commerce: Here, parties involved in the electronic transactions are from within a given business firm, hence, the name intra-B commerce.
(iv) C2C Commerce: Here, the business originates from the consumer and the ultimate destination is also consumers, thus the name C2C commerce. This type of commerce is best suited for dealing in goods for which there is no established market mechanism, for example, selling used books or clothes either on cash or barter basis. The vast space of the internet allows persons to globally search for potential buyers. OLX, PayPal is a good example of this kind.
(v) C2B Commerce: Consumer-to-business (C2B) is a business model where a consumer makes a product or service that is consumed by an organization to complete its business process. The C2B methodology is completely opposite of the  traditional business-to-consumer (B2C) model, where a business produces services and products for consumer consumption.
Need of E-Commerce
In present world, E-Commerce is very effective because it provides many opportunities not only to the producers but also to the wholesalers, retailers and customers which are stated below:
a)      Opportunity to producers: E-Business enables producers to select the best suppliers regardless of their geographical location. The producers can acquire quality raw materials and latest production technology from new suppliers.
b)      Opportunity to wholesaler / distributes: Wholesaler by taking the advantage of e-business can work more closely with their suppliers and they can be more responsive to the needs and expectations of their retailers and customers
c)       Opportunity to retailer: A retailer can save his existence by linking his business with the on – line Distribution. There fore the retailers who have the capacity to link their business with the online, E-business is a good opportunity
d)      Opportunity to customer: Customers can purchase required quality products and services at competitive prices from suppliers anywhere in the world.
Role of E-Commerce
Advantages of E-Commerce
(i) Ease of formation and lower investment requirements: Unlike a traditional business, e-commerce business very easy to start with low investment. It is not necessary to build an infrastructure for business and it can be started  at the convenience of home by developing an e-commerce website. Customer can visit websites and place order over internet. It increases the customer base of business.
(ii) Convenience: Internet offers the convenience of ‘24 hours × 7 days a week × 365 days’ a year business that allowed any customer to go for shopping well after midnight. Such flexibility is available even to the organisational personnel whereby they can do work from wherever they are, and whenever they may want to do it. E-business is truly a business as enabled and enhanced by electronics and offers the advantage of accessing anything, anywhere, anytime.
(iii) Speed: As already noted, much of the buying or selling involves exchange of information that internet allows at the click of a mouse. This benefit becomes all the more attractive in the case of information-intensive products such as softwares, movies, music, e-books and journals that can even be delivered online. Cycle time, i.e., the time taken to complete a cycle from the origin of demand to its fulfillment, is substantially reduced due to transformation of the business processes from being sequential to becoming parallel or simultaneous.
(iv) Global reach/access: Internet is truly without boundaries. On the one hand, it allows the seller an access to the global market; on the other hand, it affords to the buyer a freedom to choose products from almost any part of the world. It would not be an exaggeration to say that in the absence of internet, globalisation would have been considerably restricted in scope and speed.
(v) Marketing of goods: E-commerce involves not only purchase and sale of goods and services but it started before the development of the product. Due to which product awareness is created amongst the customer before launch. Best example of this type of sale is Redme.
Limitations of E-Commerce
E-Commerce is not all that rosy. Doing business in the electronic mode suffers from certain limitations. It is advisable to be aware of these limitations as well.
(i) Low personal touch: High-tech it may be, e-commerce, however, lacks personal contact between buyers and sellers. To this extent, it is relatively less suitable mode of business in respect of product categories requiring high personal touch such as garments, toiletries, etc.
(ii) Incongruence between order taking/giving and order fulfillment speed: Information can flow at the click of a mouse, but the physical delivery of the product takes time. This incongruence may play on the patience of the customers. At times, due to technical reasons, web sites take unusually long time to open. This may further frustrate the user.
(iii) Need for technology capability and competence of parties to e-business: Apart from the traditional 3R’s (Reading, Writing, and Arithmetic), e-business requires a fairly high degree of familiarity of the parties with the world of computers. And, this requirement is responsible for what is known as digital divide that is the division of society on the basis of familiarity and non-familiarity with digital technology.
(iv) Increased risk due to anonymity and non-traceability of parties: Internet transactions occur between cyber personalities. As such, it becomes difficult to establish the identity of the parties. Moreover, one does not know even the location from where the parties may be operating. It is riskier, therefore, transacting through internet. e-business is riskier also in the sense that there are additional hazards of impersonation (someone else may transact in your name) and leakage of confidential information such as credit card details. Then, there also are problems of ‘virus,’ and ‘hacking,’ that you must have heard of. If not, we will be dealing with security and safety concerns of online business.
(v) People resistance: The process of adjustment to new technology and new way of doing things causes stress and a sense of insecurity. As a result, people may resist an organisation’s plans of entry into e-commerce.
(vi) Ethical fallouts: Stealing and selling of customer’s data is now a common practice which is against the ethics of business. Nowadays, companies use an ‘electronic eye’ to keep track of the computer files we use, our e-mail account, the websites we visit etc. Is it ethical?
Despite limitations, e-commerce is the way
It may be pointed out that most of the limitations of e-commerce discussed above are in the process of being overcome. Websites are becoming more and more interactive to overcome the problem of ‘low touch.’ Communication technology is continually evolving to increase the speed and quality of communication through internet. Efforts are on to overcome the digital divide, for example, by resorting to such strategies as setting up of community telecentres in villages and rural areas in India with the involvement of government agencies, NGOs and international institutions. In order to diffuse e-commerce in all nooks and corners, India has undertaken about 150 such projects. In view of the above discussion, it is clear that e-business is here to stay and is poised to reshape the businesses, governance and the economies. It is, therefore, appropriate that we familiarise ourselves with how e-business is conducted.

No comments:

Post a Comment

Kindly give your valuable feedback to improve this website.

Popular Posts for the Day