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e-Business: Benefits and Limitations

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  • Last Updated : 19 Oct, 2022
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What is e-business?

Conducting business activities over the internet or any other computer network is known as e-business or Electronic Business. e-business conducts all business activities, like trade, commerce, and industry; electronically. It is about using the internet and other computer networks and technologies to provide superior customer service, increase sales and reduce costs. Computer networks, which are more secure, effective, and efficient as compared to the internet are often used in e-business. 

In the words of Philip Kotler,“Electronic Business is the general term for buying and selling process that is supported by electronic means.

Benefits of e-business

The benefits of e-business are as follows:

1. Ease of Formation and Lower Investment Requirements: 

The formation of an e-business is very easy. The procedural requirements are not needed, as needed for setting up traditional industry. It does not require any investment in the shop, stock, or display like in the case of traditional business. The success of e-business depends on the network (contacts) and not on investments (net worth). 

2. Convenience: 

e-business is very flexible. The Internet offers the convenience of ‘24 hours × 7 days a week × 365 days’ a year business. Organisational personnel can do work from wherever they are, and whenever they may want to do. Businessmen can remain in touch with their customers, suppliers, etc. 

3. Speed: 

The exchange of information involved in buying and selling is done with the help of the internet at the click of a mouse. This speed is more beneficial in the case of information-intensive products, such as software, movies, music, e-books, and journals that can even be delivered online. Due to the transformation of the business processes, the cycle time, i.e., the time taken to complete a cycle from the origin of demand to its fulfilment, is substantially reduced due to being sequential to becoming parallel or simultaneous. Money can be easily transferred through electronic fund transfer of e-business.

4. Global Reach: 

With the help of e-business, the sellers can operate at the national and global level, as there is a well-developed computerised networking system. The buyers and sellers can also interact with each other from any part of the world. Buyers also have the facility of choosing products from any part of the world.

5. Movement toward a Paperless Society: 

Dependence on paperwork and the attendant ‘red tape’ is considerably reduced due to the use of the Internet, as most of the work is done electronically through computers. Government departments and regulatory authorities are also now increasingly using computers to reduce the use of paper, whereby they allow electronic filing of returns and reports. This also leads to an increase in the speed of the process of granting permissions, approvals, licenses, etc.  

Limitations of e-business

The limitations of e-business are as follows:

1. Low Personal Touch: 

There is no personal touch in e-business even though it is very high-tech, as it lacks interpersonal touch. And because of this, it is not suitable for businesses, which require a personal touch, such as garments, toiletries, etc. 

2. Incongruence between Order taking/giving and Order fulfilment Speed: 

Physical delivery of products may take time, even after the flow of information at a single click of a mouse. So, there is an incongruence between order taking/giving and order fulfilment speed. Users are also frustrated because of technical reasons, such as websites taking an unusually long time to open, servers being unreachable, etc.

3. Need for Technology Capability and Competence of Parties to e-business: 

The parties involved in e-business should be well versed with the technologies and world of computers apart from the traditional 3 R’s (Reading, WRriting, and ARithmetic). And, this requirement leads to the digital divide, which divides society on the basis of familiarity and non-familiarity with digital technology. Many businessmen and customers who are technologically challenged are unable to grab the benefits of e-business.

4. Increased Risk due to Anonymity and non-traceability of Parties: 

It becomes difficult to establish the identity of the parties, as internet transactions occur between cyber personalities. Moreover, it is very difficult to know the location from where the parties may be operating. Therefore, it is riskier to transact through the internet. There are also additional hazards of impersonation (someone else may transact in your name) and leakages of confidential information, such as misuse of OTP and credit card details. Problems of viruses and hacking are also there in e-business.

5. People Resistance: 

There is a lot of resistance by people in the case of e-business. Stress and a sense of insecurity are caused amongst people because of the process of adjustment to new technologies and a new way of doing things. As a result, there is resistance amongst people to an organisation’s plans of entry into e-business. 

6. Ethical Fallouts: 

There are ethical fallouts in businesses because of e-businesses. Companies use an ‘electronic eye’ to keep track of the computer files, e-mail accounts, etc., of employees. Companies use such information against employees, which is unethical.

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