(a) Define the term 'e-commerce'. (b) State how m-money operates and explain how it can encourage the expansion of e-commerce.

Core Logic

Telegraphic money transfers (e.g., Western Union) allow rapid cross-border funds transmission using Electronic Funds Transfer networks.

• The sender (parents) visits a transfer office, pays the cash sum along with a service fee, and completes a details form specifying the recipient and destination.
• The transmitting office electronically sends the funds, converting the currency to the destination country's currency.
• The recipient (student) visits the destination office and must present appropriate proof of identity (and occasionally a password).
• Once verified, the agent disburses the money in local currency to the student.

Evaluation Rubric / Model Answer

Marks awarded sequentially for the process:

• Sender provides funds, recipient details, and pays a fee at the home office.
• Funds are electronically transmitted and converted to the destination currency.
• Recipient provides ID/password at the destination office.
• Funds are disbursed as cash (or equivalent) quickly to the recipient.

Chapter Mix

Class 10 Business: Background To Business

Core Logic

(a) The most efficient method is a Direct Deposit (via Electronic Funds Transfer)[cite: 18]. (b) Paying 200 employees via direct deposit provides massive administrative and security benefits. Firstly, it saves the employer significant administrative time; they do not have to manually count out physical cash envelopes or handwrite 200 individual cheques[cite: 18]. Secondly, it provides high security for the firm; the employer does not need to store, transport, or guard large, vulnerable sums of cash on the factory premises every payday[cite: 18].

Evaluation Rubric / Model Answer

Award marks for:

• Identification: Direct deposits / EFT[cite: 18].
• Advantage 1: Saves administrative time (no cash counting or cheque writing)[cite: 18].
• Advantage 2: Increased security (eliminates the risk of holding large cash payrolls on site)[cite: 18].

Chapter Mix

Class 10 Business: Background To Business

Core Logic

In international trade, exporters want payment before shipping, while importers are reluctant to pay before receiving the goods. Documentary credit resolves this impasse. The importer arranges for their bank to provide a guarantee (a letter of credit). This guarantees that the exporter will receive the payment as soon as they hand over the required documents of title (shipping documents proving the goods have been dispatched). Therefore, the exporter is safeguarded because the bank guarantees payment before ownership is formally released. The importer is safeguarded because payment is only released to the exporter once verified proof of shipping (documents) is presented.

Evaluation Rubric / Model Answer

Award marks for detailing the dual protection:

• Mechanism: Importer's bank guarantees payment upon presentation of shipping documents.
• Exporter benefit: Guaranteed payment prior to releasing ownership documents.
• Importer benefit: Funds are not released until proof of dispatch/shipping is legally verified.

Chapter Mix

Class 10 Business: Background To Business

Core Logic

Money serves several economic functions that directly counteract barter flaws:

• Function: A medium of exchange.

Resolution: It makes barter completely unnecessary. Buyers and sellers no longer need to find a 'double coincidence of wants'; a seller accepts money and can spend it on anything else.

• Function: A measure of value.

Resolution: It solves the barter problem of establishing complex exchange rates between every possible item. Money provides a universal price tag for all goods.

• Function: A store of value.

Resolution: Solves the barter issue of storing wealth. Perishable bartered goods rot, but money can be saved indefinitely for future use.

Evaluation Rubric / Model Answer

Candidates must clearly pair TWO functions with their respective solutions:

• Medium of exchange arrow$\rightarrow$ Solves the double coincidence of wants.
• Measure of value arrow$\rightarrow$ Solves the difficulty of determining exchange rates.
• Store of value arrow$\rightarrow$ Solves the perishability/inability to store wealth over time.

Chapter Mix

Class 10 Business: Background To Business