Q.State any three differences between e-business and traditional business.

Three key differences:

• Ease of formation: Traditional business is difficult to set up (many procedures, physical facilities); e-business is simple to form.
• Physical presence: Traditional business requires a physical location and proximity to raw-material sources or markets; e-business needs no physical presence and has no locational requirement.
• Response time: In traditional business the response to customers/suppliers is long; in e-business it is instantaneous.

A 'mode of business' is simply the manner in which business is carried on. Traditional business relies on physical premises, face-to-face contact and a chain of command, whereas e-business is conducted over computer networks. This changes the whole character of how a firm operates. Three of the most important differences are:

• Ease of formation: Setting up a traditional business is difficult — it involves many procedural requirements and the arrangement of physical facilities. e-Business, by contrast, is simple to start, and this ease is available to big and small firms alike.
• Physical presence and location: Traditional business requires a physical presence and must be located close to its raw-material source or its product market. e-Business needs no physical presence and has no locational requirement, since a firm's 'location' is only its website on the World Wide Web, not a physical place.
• Response time: In traditional business the response time is long, because processes are sequential and communication passes through intermediaries and a hierarchy. In e-business the response is instantaneous, as information flows at the click of a mouse.

Other supporting differences (any of which can be used): cost of setting up is high in traditional business but low in e-business; contact with suppliers and customers is indirect (through intermediaries) traditionally but direct in e-business; internal communication is hierarchical in traditional firms but non-hierarchical in e-business; the organisation structure tends to be tall/vertical traditionally and flat/horizontal in e-business; and transaction risk is low in traditional face-to-face dealings but high in e-business owing to the distance and anonymity of the parties.