FILE ON

E- COMMERCE

GOVT. P.G. COLLEGE FOR WOMEN,

ROHTAK

HARSHITA

BBA (6th sem.)

ROLL NO. - 1221331010053

UNIVERSITY ROLL NO.-

2108618
 INDEX

SR. NO. PARTICULARS PAGE NO.

1 E- Commerce
• Definition 1- 9

• Features
• Types
• Advantages & Disadvantages
2 Brick and Click Business Model 10- 12

3 Debit Card 13- 15

4 Credit Card 16- 17

5 Applications of E- Commerce 18- 21

6 Virtual organization
• Characteristics 22- 25

• Types
• Pitfalls
• Benefits
E-COMMERCE

Electronic Commerce

commonly known as E-commerce or e-Commerce which denotes different types of

transactions involved in commercial activities. It contains both organisational as well as
individual activities which include the processing and transmission of digitized data such as
text, pictures, sound and video, etc.

E-commerce has developed a new environment with the help of Internet in business
transactions and processing. Here information is provided direct to the consumers about the
products they want to buy and the platform is set for product advertisements. It also permits
negotiations, order for raw materials, settlement of financial transactions etc.

Electronic commerce is a combination of communication services, data management and.

security mechanisms which provides a platform to organizations where they can share
information about the selling of goods and services:

1) Communication Services:

Electronic transfer of information from buyer to seller is supported by communication services.

2) Data Management:

It is exchange and storing of data in a constant, format which enable easy exchange of
information.

3) Security Mechanisms:

Security mechanisms provide following functions:

• Authenticates the source of information

• Guarantees the integrity and privacy of information.

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E-commerce covers many services over the Internet for example, customer service, banking,
billing, marketing, retailing, secure distribution of data, corporate sector purchasing and other
value-added services.

Meaning and Definition of E-commerce:

The term e-commerce (Electronic Commerce) refers to all types of business operations and
transactions that are executed through Internet and other electronic technologies.

"E-commerce is a virtual business environment in which information moves electronically via

Internet related to buying, selling, transportation of goods and services".

According to P.T. Joseph:

"E-Commerce comprises core business processes of buying and selling, goods, services and
information over the internet".

According to Kalakota and Whinston:

"Electronic Commerce can be defined from following four perspectives:

1) Communications Perspective:

Electronic commerce is the delivery of information, products/services, or payments via

telephone lines, computer networks, or any other means.

2) Business Process Perspective:

Electronic commerce is the application of technology toward the automation of business

transactions and workflows.

3) Service Perspective:

Electronic commerce is a tool that addresses the desire of firms, consumers, and management
to cut service costs while improving the quality of goods and increasing the speed of service
delivery.

4) Online Perspective:

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Electronic commerce provides the capability of buying and selling products and information
on the Internet and other online services."

Types of E-Commerce:

Much of the world's business today is carried out over digital networks that connect people and
companies. Several types of e-commerce models are in use today. The major online marketing
domains are given below:

1) B2C (Business to Consumer):

In B2C model of e-commerce, businesses sell products and services to individual consumers
directly. All the products and services are offered online through electronic channels in e-
commerce which supplements the traditional commerce. Internet acts as an electronic channel.

E-Commerce

Examples: www.flipkart.com, www.infibeam.com, www.amazon.in, www.homeshop18.co m

are websites that comes under this category. Through these websites individual can purchase
clothes, mobiles and electronic products etc.

i) Provides better way to deal with suppliers

ii) Provides customer service centres that are physically located

iii) Provides opportunity to return purchase item

iv) Eliminates middlemen

2) B2B (Business to Business):

Business-to Business (B2B) e-commerce model describes electronic transactions between

businesses such as between manufacturer and wholesaler. The major factors in increasing the
acceptance of B2B e-commerce are Internet and dependence of many business operations upon
other businesses for supplying raw materials, utilities and services. It is very fast developing
segment in e-commerce. Company can check and updates purchase orders, invoices, inventory
and shipping status directly through the Internet.

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The advantages of B2B e-commerce model are as follows:

i) Reduces cycle tine of inventory and costs.

ii) Enables business partners to share relevant information timely with accuracy.

iii) Improves supply-chain management among business partners.

iv) Eliminates manual activities and hence reduces errors.

3) C2C (Consumer to Consumer):

Consumer-to-Consumer (C2C) e-commerce is a business model that facilitates the transactions

of product and services between two consumers. In this e-commerce model. consumers sell
product and services directly to other consumers using Internet and Web technologies. An
individual customer uses classified advertisements to advertise or promote different products
and services on web or through online auction sites.

e-Commerce Examples: eBay.com, quicker.com, craigslist.org. gittigidiyor.com. It entails

lower cost for both buyer and seller customers. Using this e-commerce model, customers can
also advertise and sell their products and services to other employees over organizational
Intranet.

4) C2B (Consumer to Business):

Consumer-to Business (C2B) is an e-commerce model where consumers (individuals) sell

products and services which are consumed by businesses and organisations. This model is
opposite to B2C model. In this model. price and value for specific products and services are
created by individuals.

For example: when a customer writes reviews for new product or gives a useful idea for new
product development then he/she is creating value for the company if the company adopts the
review or idea. Company can facilitate C2B model by setting discussions forums on their
websites.

For example: the websites such

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as www.mobshop.com, www.pazaryerim.com and www.priceline.com are organizers of C2B
transactions.

5) Business-to-Government (B2G):

In marketing context, B2G marketing is also known as "public sector marketing". It is derived
from B2B marketing and is comprised of activities such as marketing of products and services
to government agencies. Such marketing is undertaken via various integrated marketing
techniques like advertising, branding, managing public relations, online communication
strategies, etc.

Features of E-commerce:

Following figure shows the features of electronic commerce:

1) Ubiquity:

E-commerce is widespread, that is, it is available everywhere always. It sets free market from
being restricted to a physical space and makes it possible to shop from computer (such as
desktop, laptop). The result is called a market space.

For consumers, ubiquity cuts transaction costs for exploring products in a market. Consumers
can acquire any information whenever and wherever they want, regardless of their location. It
is no longer necessary that buyer spend time and money for traveling to a market. In all, it saves
the cognitive energy needed to transect in a market space.

2) Global Reach:

E-commerce technologies enable a business to easily reach across geographic boundaries

around the earth far more conveniently and effectively as compared to traditional commerce.
Globally. companies are acquiring greater profits and business results by expanding their
business with e-commerce solutions. As a result, the potential market size for e-commerce
merchants is approximately equal to size of online population.

3) Universal Standards:

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Universal Standards are standards shared by all the nations around world. These are technical
standards of Internet for conducting e-commerce. It gives all the ability to connect at the same
"level" and it provides network, externalities that will benefit everyone. Universal technical
standards lower entry costs and minimal search costs.

4) Interactivity:

E-commerce technologies permits two-way communication between customer and sellers

which makes it interactive. It proves as significant feature of e-commerce technology over the
commercial traditional technologies of the 20th century.

5) Information Density:

Information density means total amount and quality of information available over Internet to
all market buyers and sellers. Internet vastly increases information density. Information density
offers better quality information to consumer and merchants. E-commerce technologies
increase accuracy and timeliness of information. For example, flipkart.com store has variety of
products with prices.

6) Richness:

Richness refers to the complexity and content of a message. Richness means all commercial
activity and experience, conducted through a variety of messages. For example, text, pictures,
videos, sound, links, SMS (Short Message Services) etc.

Advantages of E-Commerce:

The advantages/benefits of e-commerce can be divided into two categories:

A) Advantages to Customers –

1) Reduced Prices:

The products available on websites have reduced prices because the different stages of value
chain are decreased between source and destination. The intermediaries such as retail store are
eliminated by the company and they sell their products to consumer directly instead of

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distributing through intermediaries.

2) Global Marketplace:

E-commerce provides global marketplace from where consumers can purchase products
according to their needs situated anywhere in the world.

According to World Trade Organization (WTO), "there are no custom duties put on
products bought and traded globally electronically".

Global Marketplace also provides large collection of products and services to consumers with
their prices.

3) Anytime Access:

Online businesses are open 24 hours. 7 day a week and 365 days in a year and never sleep.
Consumers can do transactions and enquiry about any product/services provided by company
at anytime and anywhere from globe. Consumer can purchase any product in day or night using
Internet connections and computer at single click of mouse.

4) More Choices:

Online businesses provide their consumers more choices of purchasing. Before purchasing any
product, consumer can study products and their features of all major brands.

5) Quicker Delivery:

E-Commerce offers consumer more options and provides quicker delivery of products and
services. Some e-commerce company provides free home delivery service to their consumers.

B) Advantages to Businesses:

1) Low Barriers to Entries:

In today's world, small and large firms have opportunities to start up and conduct
business on the Internet. Firms entry cost to the Internet is minuscule (Very small)
because they do not need the space for rent. All the business over Internet are virtual
means that there is no need of large number of employees to conduct business.

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2) Increased Potential Market Share:

Businesses are increasing their market share by making their business internet enabled. Online
businesses are accessed at any time to international markets.

3) Low-Cost Advertising:

Internet provides low-cost advertisement as compared to advertisement on newspapers or

television. In today's world, Internet has become inexpensive advertising medium used by firms
for commerce. The different methods of advertising are: e-mail, banners, pop-ups. steaming
video and audio etc.

4) Global Reach:

E-commerce enabled business has ability to reach globally at low cost. They are able send
messages world-wide at any time. Since online businesses are globally accessed so e-commerce
helps to attract new consumers and business clients from anywhere in the world.

Disadvantages of E-Commerce:

The disadvantages/limitations of e-commerce can be divided into two categories:

1) Lack of Security:

Consumer needs to be confident and trust over e-commerce payment providers. Any fraud.
hacking or forgery can break the trust of consumer.

2) Low Bandwidth:

In many countries, network might cause an issue because of low bandwidth.

3) Difficulty in Integrating E-Commerce:

It is difficult to integrate e-commerce software or website with some existing applications and
databases. Vendors need special web servers to, deal with integration problem in addition to
network servers.

4) Not All Customers have Access to Internet:

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Internet access is not universally available so much of the effort made does not actually reach
the consumer. Many potential customers that are living in remote villages have not Internet
access facility.

4) Lack of Touch and Feel:

Consumers may want to touch and feel a product before purchasing online. Online businesses
do. not provide the touch and feel experience to consumer on items such as clothes, shoes etc.

5) Customers Relation Problems:

Organisation needs loyal customers to run their online business for long time. Online
businesses cannot continue without loyal customers in today's competition.

6) Corporate Vulnerability:

Online businesses have high availability of information related to product, price, catalogs, and
others. This information makes web sites vulnerable to access by competition. This process of
extracting business intelligence from competitor's web pages is called Web farming.

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 THE BRICK-AND-CLICK BUSINESS MODEL

Alternative e-commerce strategies reveal different commerce strategies developed with the
help of integration of business processes with new internet technologies. Some of these
alternatives are as follows:

1) Brick and Mortar:

The phrase "brick and mortar' means a physical or tangible asset.

For example, a building, plant, storage facility, production unit, etc. Brick and mortar are one
of the traditional business models which involve the use of websites just for the purpose of
using it as company's brochure. Websites here serve as a means for providing information about
the company. Such companies use the traditional sales methods for generating profits.
However, if the company gets a favorable market feedback, then these companies can expand
further into 'brick and click' companies adding to their online presence.

2) Pure Click:

Unlike brick and mortar companies, pure click companies have pure online presence. Their
entire marketing transaction is undertaken online. These companies are popularly known as
'pure-plays' or 'dotcoms'. The various elements associated with the 'pure click' companies are
Internet Service Providers (ISPs), commercial sites, content sites, transaction sites, enabler
sites, search engines, etc. Some of the popular search engines used by pure click companies are
Google, yahoo, Sify, Alta Vista, etc. These search engines also offer various services like free
mailing, news, weather reports, entertainment, etc., on company's website. Major examples of
'pure click' companies are Flipkart, Amazon, EBay, India times etc.

3) Brick and Click:

Companies that fall under the category of brick and click' model have both online and offline
presence. This means that their marketing and transactional activities are carried on both online

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as well as offline mode. They need to manage their online and offline activities and should
ensure that their online sales do not affect their traditional (offline) sales. They also need to
manage their channel conflicts which may arise among their intermediaries and conflicts
arising in online sales. Some of the companies like Avon and Compaq launched their online
sales models in such a way that it actually supported their traditional offline sales instead of
disrupting it. Similarly, one of the popular store Wal-Mart introduced its subsidiary firm in
January, 2000 namely Walmart.com which helped customer to access its services online
offering more than a million products on internet. This retailing firm involves use of web-based
technology as well as standardized retailing strategies for attracting customers.

Principles Of Brick-and-Click Store

Whether you are running a small, mid-size, or big business, the principles tend to be the same.
That said, here are some principles of a brick-and-click business.

• Operational flexibility in terms of buyer preferences when it comes to purchases and

deliveries:
• Enhanced customer experience in multiple buyer touchpoints;
• Exponential brand growth, thanks to a wider target audience.

Advantages And Disadvantages of Brick-and-Click Store

Pros of the bricks-and-click business model include:

• You can reach more clients by providing in-enterprise and online channel buying
experiences;
• Real-time analytics from your website shop can help improve in-enterprise experiences;
• Offer solutions based on consumer preferences-one can buy either online or in-
enterprise.

Downsides:

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 • Operation costs can go overboard pretty quick since you have to manage both online
and tangible enterprises;
• This model can be pretty daunting for new businesses due to a steep learning curve;
• Requires more time and commitment before the model eventually becomes successful
in terms of profitability.

What Is an Example of a Brick-and-Click Store?

There are various companies that mimic the characteristics of a brick-and-click business. A
good example is Walmart. The retailer originally started as a brick-and-mortar shop but not but
now supports purchases through its e-business. Typically, clients can order goods online and
have them delivered at their preferred tangible outlet.

Other brick-and-click companies examples include Whole Foods and Target.

How To Implement the Brick-and-Click Model

Typically, implementing this business model depends on your industry and overall business
strategy. Nonetheless, here are some tips to help you get started:

• Use an innovative point of sale (POS) system that seamlessly integrates your
eCommerce site with your tangible enterprise;
• Keep a consistent inventory both online and offline to enhance the customer experience;
• Optimize your shipping and returns policies for both online and in-enterprise deliveries;
• Optimize your eCommerce site to be mobile-responsive;
• Enhance customer engagement across all touchpoints to drive brand loyalty.

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 DEBIT CARD & CREDIT CARD

Debit Card

A debit card, also known as a check card or bank card is a payment card that can be used in
place of cash to make purchases. The term plastic card includes the above and as an identity
document. These are similar to a credit card, but unlike a credit card, the money for the purchase
must be in the cardholder's bank account at the time of a purchase and is immediately
transferred directly from that account to the merchant's account to pay for the purchase.

Some debit cards carry a stored value with which a payment is made (prepaid card), but most
relay a message to the cardholder's bank to withdraw funds from the cardholder's designated
bank account. In some cases, the payment card number is assigned exclusively for use on the
Internet and there is no physical card. This is referred to as a virtual card.

In many countries, the use of debit cards has become so widespread they have overtaken checks
in volume, or have entirely replaced them; in some instances, debit cards have also largely
replaced cash transactions. The development of debit cards, unlike credit cards and charge
cards, has generally been country-specific, resulting in a number of different systems around
the world, which were often incompatible. Since the mid-2000s, a number of initiatives have
allowed debit cards issued in one country to be used in other countries and allowed their use
for internet and phone purchases.

Debit cards usually also allow an instant withdrawal of cash, known as a cash advance, acting
as an ATM card for this purpose. Merchants may also offer cashback facilities to customers, so
that a customer can withdraw cash along with their purchase. There are usually daily limits on
the amount of cash that can be withdrawn. Most debit cards are plastic, but there are cards
made of metal, and rarely wood.

Types of debit card systems

An example of the front of a typical debit card:

1. Issuing bank logo

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2. EMV chip (optional and may depend on the issuing institution or bank)

3. Hologram (this is located on the back on some cards, including most MasterCards)

4. Card number (PAN) (may vary in length but mostly 16-digits with unique last 4 digits.
However, in cases such as Discover. Diner's Club, UnionPay & American Express it has a
unique 15-digit card number)

5. Card brand logo

6. Expiration date

7. Cardholder's name

An example of the reverse side of a typical debit card:

1. Magnetic stripe

2. Signature strip panel

3. Card Security Code

There are currently three ways that debit card transactions are processed: EFTPOS (also known
as online debit or PIN debit), offline debit (also known as signature debit), and the Electronic
Purse Card System. One physical card can include the functions of all three types, so that it can
be used in a number of different circumstances. The 5 major debit card networks are UnionPay,
American Express, Discover, Mastercard, and Visa. Other card networks are STAR, JCB, Pulse
etc. There are many types of debit cards, each accepted only within a particular country or
region, for example Switch (since merged with Maestro) and Solo in the United Kingdom etc.

Online debit system

Online debit cards require electronic authorization of every transaction and the debits are
reflected in the user's account immediately. The transaction may be additionally secured with
the personal identification number (PIN) authentication system: some online cards require such
authentication for every transaction, essentially becoming enhanced automatic teller machine
(ATM) cards.

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One difficulty with using online debit cards is the necessity of an electronic authorization
device at the point of sale (POS) and sometimes also a separate PINpad to enter the PIN,
although this is becoming commonplace for all card transactions in many countries.

Overall, the online debit card is generally viewed as superior to the offline debit card because
of its more secure authentication system and live status, which alleviates problems with
processing lag on transactions that may only issue online debit cards. Some on-line debit
systems are using the normal authentication processes of Internet banking to provide real-time
online debit transactions.

Electronic purse card system

Smart-card-based electronic purse systems (in which value is stored on the card chip, not in an
externally recorded account, so that machines accepting the card need no network connectivity)
are in use throughout Europe since the mid-1990s, most notably in Germany (Geldkarte),
Austria (Quick Wertkarte), the Netherlands (Chipknip), Belgium (Proton). Switzerland
(CASH) and France (Moneo, which is usually carried by a debit card). In Austria and Germany,
almost all current bank cards now include electronic purses, whereas the electronic purse has
been recently phased out in the Netherlands.

Prepaid debit cards

Nomenclature

Prepaid debit cards are reloadable and can be also called reloadable debit cards.

Users

The primary market for prepaid debit cards has historically been unbanked people that is,
people who do not use banks or credit unions for their financial transactions.

Advantages

Advantages of prepaid debit cards include being safer than carrying cash, worldwide
functionality due to Visa and MasterCard merchant acceptance, not having to worry about
paying a credit card bill or going into debt, the opportunity for anyone over the age of 18 to

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apply and be accepted without checks on creditworthiness, and the option to deposit paychecks
and government benefits directly onto the card for free. A newer advantage is use of EMV
technology and even contactless functionality, which had previously been limited to bank debit
cards and credit cards.

Risks

• If the card provider offers an insecure website for the cardholder to check the balance
on the card, this could give an attacker access to the card information.
• If the user loses the card, and has not somehow registered it, the user likely loses the
money.
• If a provider has technical issues, the money might not be accessible when a user needs
it. Some companies' payment systems do not appear to accept prepaid debit cards.

What Is a Credit Card?

A credit card is a thin rectangular piece of plastic or metal issued by a bank or financial services
company that allows cardholders to borrow funds with which to pay for goods and services
with merchants that accept cards for payment. Credit cards impose the condition that
cardholders pay back the borrowed money, plus any applicable interest, as well as any
additional agreed-upon charges, either in full by the billing date or over time.

In addition to the standard credit line, the credit card issuer may also grant a separate cash line
of credit (LOC) to cardholders, enabling them to borrow money in the form of cash advances
that can be accessed through bank tellers, ATMs, or credit card convenience checks. Such cash
advances typically have different terms, such as no grace period and higher interest rates,
compared with those transactions that access the main credit line. Issuers customarily preset
borrowing limits based on an individual's credit rating. A vast majority of businesses let the
customer make purchases with credit cards, which remain one of today's most popular payment
methodologies for buying consumer goods and services.

KEY TAKEAWAYS

• Credit cards are plastic or metal cards used to pay for items or services using credit.

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 • Credit cards charge interest on the money spent.
• Credit cards may be issued by stores, banks, or other financial institutions and often
offer perks like cash back, discounts, or reward miles.
• Secured credit cards and debit cards offer options for those with little or bad credit.

Understanding Credit Cards

Credit cards typically charge a higher annual percentage rate (APR) vs. other forms of
consumer loans. Interest charges on any unpaid balances charged to the card are typically
imposed approximately one month after a purchase is made (except in cases where there is a
0% APR introductory offer in place for an initial period of time after account opening). unless
previous unpaid balances had been carried forward from a previous month-in which case there
is no grace period granted for new charges.

By law, credit card issuers must offer a grace period of at least 21 days before interest on
purchases can begin to accrue.1 That's why paying off balances before the grace period expires
is a good practice when possible. It is also important to understand whether your issuer accrues
interest daily or monthly. Individuals with poor credit histories often seek secured credit cards,
which require cash deposits, that afford them commensurate lines of credit.

Types of Credit Cards

Most major credit cards-which include Visa, Mastercard. Discover, and American Express-are
issued by banks, credit unions, or other financial institutions. Many credit cards attract
customers by offering incentives such as airline miles, hotel room rentals, gift certificates to
major retailers, and cash back on purchases. These types of credit cards are generally referred
to as rewards credit cards.

To generate customer loyalty, many national retailers issue branded versions of credit cards,
secured credit cards are a type of credit card where the cardholder secures the card with a
security deposit. Such cards offer limited lines of credit that are equal in value to the security
deposits, which are often refunded after cardholders demonstrate repeated and responsible card
usage over time.

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E-COMMERCE BUSINESS APPLICATIONS

Now a days nearly every company and organization makes use of the Internet to perform
business deals and transactions, let us take a look at this a little more closely.

eCommerce or Electronic Commerce, that is business done online or electronically with the
use of Internet or any other computer networking system is applied into the four main section
of business given below:

• e-Commerce applications in the Manufacturing Sector

• e-Commerce applications in the Wholesale Sector
• e-Commerce applications in the Retail Sector

• e-Commerce applications in the Service Sector

I will now attempt explain the application of eCommerce in each of these sectors in brief...

e-Commerce applications in Manufacturing

Manufacturing can be defined as the process of collecting and then converting raw materials
into finished, qualitative goods or products for the consumers...

Manufacturing requires a web of various components. contracts personnel etc. working

intricately together and in synch in order to produce goods or services.

Manufacturing requires components, assemblies, transportation, storages, paper works, etc.

eCommerce applied to the supply chain management process helps in reducing the overall costs
drastically and improves quality and efficiency by automating most of the supply chain

eCommerce application in Wholesale

Selling goods or products in large quantities to anyone other than the consumers, take for
example the retailers, industrial/ commercial or other business users or even distributors are
known as wholesalers... 18
Physical assembling, sorting & grading goods in large lots, breaking bulk, repacking &
redistributing in smaller lots is all a part wholesale...

Problems faced by the traditional system of wholesale:

The local wholesalers could not compete with the foreign wholesale enterprises who had
acquired highly advanced management and operational skills over due time.

The wholesale sector was characterized for its high input and low output...

Wholesale operating costs which included staffing, setting up and acquiring land for local
warehouses, establishing distribution centers,ete were extremely high...

Role of eCommerce in wholesale:

Reduced operating costs, access to accurate and correct information on time & quick responses
helps in qualitative and efficient decision making.

Ability of doing global marketing in less time and cheaper

Gaining and catching up to the competitive edge held by foreign wholesalers such as MNC's

Offers a wide and extensive range of information, intermediary and business services.

eCommerce application in Retail

Selling of goods and services to the consumers for their personal consumption and use is known
as retailing...

Take for example... Ebay.com, departmental stores. then services like dentists, doctors. hotels,
etc...

Retailers provide a link between the consumers and the manufacturers and add value to the
product and service by making their sales easier..

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Retailers answer any queries that you may have, they display and demonstrate products to the
consumers before selling it to them... this makes the services by retailers less risky and more
fun to buy products.

They even provide extra services from personal shopping to gift wrapping and home delivery!!

Role of eCommerce in Retailing:

The Internet has made retailing an exciting and challenging field in recent days with various
companies hosting their stores online via the internet.

People can now sit at their computers, open the website they desire to do so and browse their
the catalogues put up by the company (retailer), choose their product and either pay for it online
itself or on delivery... You don't need to step out your room to make a purchase nowadays.

Having your store online helps drastically in cost cutting as companies don't need to purchase
stores, they can cut down on staff. provide services to a much wider audience, etc.

eCommerce application in the Service sector

One of the three main industrial categories of a developed economy is the service sector.

It involves basically the provision of all services such as distribution and sales of goods to other
businesses and consumers such as pest control, entertainment and even services such as
transportation.

It also includes the public utilities and the soft parts of the economy such as insurance, banking.
ucation, insurance, etc...

The service sector focuses mainly on people-to-people services...

Issues faced by the service sector:

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Since services are intangible, its extremely difficult to make customer understand and aware
about their benefits...

Quality of services depends solely on the quality of the individual providing the services.

There's no special technology or anything like in manufacturing to attract people.

Role of eCommerce in the Service Sector

eCommerce helps in improving and increasing the speed of transactions, reduces management
expenditure, increases efficiency and increases competitiveness.

Helps the insurance, banking and mainly all the financial sectors, real estate,
telecommunications, tourism, logistics, and postal services

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 VIRTUAL ORGANISATION

Definition:
This new form of organisation, i.e. virtual organisation emerged in 1990 and is also known as
digital organisation, network organisation or modular organisation. Simply speaking, a virtual
organisation is a network of cooperation made possible by, what is called ICT, i.e. Information
and Communication Technology, which is flexible and comes to meet the dynamics of the
market.

Alternatively speaking, the virtual organisation is a social network in which all the horizontal
and vertical boundaries are removed. In this sense, it is a boundary less organisation. It consists
of individual's working out of physically dispersed work places, or even individuals working
from mobile devices and not tied to any particular workspace. The ICT is the backbone of
virtual organisation.

It is the ICT that coordinates the activities, combines the workers' skills and resources with an
objective to achieve the common goal set by a virtual organisation. Managers in these
organisations coordinate and control external relations with the help of computer network links.
The virtual form of organisation is increasing in India also. Nike, Reebok, Puma, Dell
Computers, HLL, etc., are the prominent companies working virtually.

While considering the issue of flexibility, organisations may have several options like flexi-
time, part-time work, job-sharing, and home-based working. Here, one of the most important
issues involved is attaining flexibility to respond to changes both internal and external - is
determining the extent of control or the amount of autonomy the virtual organisations will
impose on their members.

This is because of the paradox of flexibility itself. That is: while an organisation must possess
some procedures that enhance its flexibility to avoid the state of rigidity, on the one hand, and
simultaneously also have some stability to avoid chaos, on the other.

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Characteristics:

A virtual organisation has the following characteristics:

1. Flat organisation

2. Dynamic

3. Informal communication

4. Power flexibility

5. Multi-disciplinary (virtual) teams

6. Vague organisational boundaries

7. Goal orientation

8. Customer orientation

9. Home-work

10. Absence of apparent structure

11. Sharing of information

12. Staffed by knowledge workers.

In fact, this list of the characteristics of virtual organisation is not an exhaustive one but
illustrative only. One can add more characteristics to this list.

Types of virtual organisations:

Depending on the degree or spectrum of virtuality, virtual organisations can be classified into
three broad types as follows:

1. Telecommuters

2. Outsourcing employees/competencies

3. Completely virtual

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A brief description of these follows in turn.

Telecommuters:

These companies have employees who work from their homes. They interact with the work-
place via personal computers connected with a modem to the phone lines. Examples of
companies using some forms of telecommuting are Dow Chemicals. Xerox, Coherent
Technologies Inc., etc.

Outsourcing Employees/Competencies:

These companies are characterised by the outsourcing of all/most core competencies. Areas for
outsourcing include marketing and sales, human resources, finance, research and development,
engineering, manufacturing, information system, etc. In such case, virtual organisation does its
own on one or two core areas of competence but with excellence. For example, Nike performs
in product design and marketing very well and relies on outsources for information technology
as a means for maintaining inter-organisational coordination.

Completely Virtual:

These companies metaphorically described as companies without walls that are tightly linked
to a large network of suppliers, distributors, retailers and customers as well as to strategic and
joint venture partners. Atlanta Committee for the Olympic Games (ACOG) in 1996 and the
development efforts of the PC by the IBM are the examples of completely virtual organisations.

Features of virtual organisation:

Information is power.

The absence of information and knowledge renders virtual teams to emasculate and ineffective.
Information technology, i.e., seamless web electronic communication media does not allow
happening this and keeps the organisation going.

According to Pattanayak, following are the salient features of virtual organisations:

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Technology:

New technology has transformed the traditional ways of working. In particular, the worlds of
computing and telephony are coming together to open up a whole new range of responsibilities.
Computer Telephony Integrations (CTI) will usher in a new revolution to the desktop. The CTI
has traditionally been used in all call centre applications

E-mail Integration:

Integrating Short Message Service (SMS) into the existing e-mail infrastructure allows the
whole organisation to take advantages of SMS products such as 'Express Way'.

Office System Integration:

SMS technology can greatly enhance the existing or new office systems, e. g., phone messages
can be sent via SMS rather than returning it in a message book.

Voice Mail Alert:

SMS technology added to the existing voice mail system builds an effective method of
receiving voice mail alerts.

Mobile Data:

This enables a laptop to retrieve information anywhere through the mobile phone network.

Mobile data communications revolutionize where and how work is done. In the past, corpo-
rate information has been inaccessible from many places where it is needed. One's ability to
link laptop to mobile phone keeps one connected to his/her virtual organisation from anywhere.

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