Emerging Modes of Business

E-business and its scope, its benefits and limitations, how an online purchase works, the risks of online business, and outsourcing of non-core work.

Key ideas

• E-business is carrying on business over computer networks; it is wider than e-commerce, which covers only buying and selling online.
• Its scope covers B2B (between firms), B2C (firm to customer), C2C (between consumers) and intra-B (within one firm).
• Its benefits: easy and cheap to set up, open at all hours, fast, a global reach, and less paper.
• Its limitations: low personal touch, slow delivery compared with fast ordering, need for technical skill, worries about security, and people’s resistance.
• An online purchase runs through registration, placing an order with a shopping cart, choosing how to pay, and delivery.
• Risks are transaction risks (order, delivery, payment), data storage and transmission risks (viruses, hacking) and threats to intellectual property; encryption protects data on the way.
• Outsourcing hands non-core work to specialist outside agencies, so the firm can focus on its core work, gain expertise and cut cost; it raises concerns about confidentiality and working conditions.

Remember

Watch out

• Treating e-business and e-commerce as the same: e-commerce is only one part of e-business.
• Calling a firm’s online purchase from its supplier B2C: firm to firm is B2B.
• Outsourcing a core activity, such as a firm’s own product design: firms outsource non-core work.

Worked example