Saturday, December 10, 2016

Business Studies - Class 11: Internal Trade

Unit – X: Internal Trade
Very Short answer Question (One mark each):
Q.1. What do you mean by internal trade?
Ans: Internal trade means buying and selling of goods and services within the national boundaries of the country.
Q.2. What is “breaking the bulk” in wholesale trade?
Ans: It is a function of wholesale and it means subdivision.
Q.3. What is meant by retail trade?
Ans: Retail trade means selling in small quantities rather than in gross.
Q.4. What is the meaning of wholesale trade?
Ans: Wholesale trade means buying the goods in large quantity directly from the producers and selling them to retailers in small quantity.
Q.5. Define departmental stores.
Ans: According to Thomas “A large retail establishment having in the same building a number of departments each of which confine its activities to one particular branch trade and forms a complete unit in itself”.
Q.6. What is Vending Machine?
Ans: Vending machines are proving in selling pre packed brands of low priced products which have high turnover and which are uniform in size and weight.
Q.7. By what name the traders who do not have a fixed place of business to operate from are known?

Ans. Itinerants
Q.8. Spencer, big Apple and Big Bazaar are examples of a type of fixed shop what is it?
Ans: Departmental Store
Q.9. Which trade involves buying and selling of goods and service within the boundaries of a nation?
Ans: Internal Trade

Short answer type Questions (Two/Three/five marks each):
Q.1. What is Internal trade? Mention its types and features.
Ans: When buying and selling of goods and services takes place within a country, then it is called internal trade. Internal Trade can be classified into two categories:
a) Wholesale Trade
b) Retail Trade
Wholesale trade: Whole sale trade is concerned with the activities of those persons which sell to retailers but who do not sell to ultimate consumers.
Retail Trade: A retailer is a business enterprise that is engaged in the sale of goods and services directly to the customers.
The important features of Internal Trade are:
a)      All payments are made in national currency.
b)      There are no restrictions on the movements of goods.
c)       Several alternative mode of transport are available for carrying goods.


Q.2. What is Wholesale trade? Explain its services to manufacturer and retailer.
Ans: Wholesale trade: Whole sale trade is concerned with the activities of those persons which sell to retailers but who do not sell to ultimate consumers.
Services of Wholesalers: Wholesalers provide various services to manufacturers as well as to retailers. These are the following services offered by the wholesalers to manufactures:
a)      Large Scale Production-Wholesalers purchase large quantities and facilitate large scale production
b)      Concentration on Production- Wholesalers allow manufacturer to concentrate on production only & wholesaler handle the distribution activities
c)       Market Information-Wholesalers provide market information to manufacturer regarding new product ideas, product modification, and competitor’s activities.
d)      Financial Assistance- Wholesalers provide financial assistance to manufacturer they purchase goods on cash .Sometimes they give advances to manufacturer.
e)      Risk Bearing: Wholesalers undertake the risk of dealing in the goods produced by the manufacturer. He bears the risk of fluctuation in demand and price.
f)       Storage Wholesalers provide storage facilitates for finished goods.
Services To Retailers:
a)      Availability of goods to retailers.
b)      Marketing support.
c)       Credit facilities.
d)      More knowledge about products.
e)      Sharing of risk.
Q.3. What is Retail trade? Explain its services to manufacturer and retailer.
Ans: Retail Trade: A retailer is a business enterprise that is engaged in the sale of goods and services directly to the customers.
Services of Retailers: Retailers provide various services to manufacturers as well as to consumers.
Services to Manufacturers/Wholesalers:
a)      The services offered by retailers to wholesalers:
b)      Wholesalers get a ready market through retailers.
c)       Retailers manage the marketing part like advertising, publicity and promote sales.
d)      Retail provides the information about market to wholesalers which are downloaded to manufacturer.
e)      Retail provides after sales services.
f)       Retailers help in distribution of goods to final consumers.
The services offered by retailers to customers:
a)      It provides the availability of the goods and services to the final consumers.
b)      As retailer holds the stock so the customers don’t have to store the goods.
c)       It provides a variety of products and services to the consumers.
d)      Retailers provide after sales services.
e)      It provides credit facilities to the regular customers.
f)       Retailer provides important information to the customers.
Q.4. Mention various features of wholesale trade and retail trade.
Ans: The features of wholesale trade are:
a)      There is limited range of products and a lot of variety is not offered to the consumer’s .It generally deals in a few products of the same nature.
b)      The wholesaler’s purchases in large quantities directly from the producers.
c)       The goods are sold to retailers at a higher price .The goods are sold in small quantity.
d)      It sells to the industry or retailers but it does not sell directly to the consumers.
e)      The investment is very high. As he provides financial help to producers and retailers. It purchase in cash but sells on credit.
The features of retail trade are:


a)      A retailer is the intermediary between wholesaler and the ultimate consumer. He is the last link in the chain of distribution.
b)      A retailer buys goods from wholesalers and sells them in small quantities to ultimate consumers.
c)       He maintains personal contact with his customers.
d)      Generally, a retailer deals in a wide variety of goods.
e)      A retailer usually buys goods on credit and sells on cash basis.
f)       Retail shops are generally situated near to customers.
Q.5. Distinguish between Wholesaler and retailer.
BASIS OF DISTINCTION
WHOLESALER
RETAILERS
PURCHASE AND SALE
They purchase goods from manufacturer and sells to retailer
They purchase goods from wholesaler and sell them to consumer.
QUANTITY
They buy and sell goods in large quantities.
They buy and sell goods in small quantities
SPECIALISATION
They specialize in purchase and sale of one quantity
They provide all types of goods and they do not specialize in one type of goods.
CAPITAL
They require a large amount of capital.
They require a less amount of capital.
PRICE
Wholesale price is lower than retail price.
Retail price is more than wholesale price.
LINK
Wholesalers are link between manufacturer and retailer.
They are a link between wholesaler and consumer.
LOCATION
Location of wholesaler shop is not important.
Location of a retail shop plays an important role as it as should be centrally located.
CREDIT TRANSACTION
They sell goods on credit.
They sell goods in cash.
SCOPE
Its scope is vast.
Its scope is limited.
Q.6. What are various types of retail trade? Explain them briefly.
Ans: Types of Retailing Trade:
Itinerant retailers: These are traders who do not have fixed place of business and they keep moving from place to place.
(a) Hawkers and peddlers: They are small producers who carry the products on a bicycle or heard. They deal in low value products.
(b) Market traders: These are small retailers who open their shops on fixed days example on Saturday, Friday etc.
(c) Street traders: These are traders found where there are huge crowds.
(d) Cheap jacks: They keep on changing their places frequently as they deal with repair of watches etc.
Fixed shop retailers: They have permanent shops and they do not move from one place to another. They have more money when compared to itinerant retailers. These retailers may be dealing in different type of products.
Types of fixed shop retailers:
(i) General stores.
(ii) Specialty shops.
(iii) Street stalls holders.
(iv) Second hand goods shop.
Q.7. What is meant by large scale retailing? Mention its forms.
Ans: Large scale retailing means operations carried on a large scale and sale of goods in small quantity. These are the most common form of large scale retailing:
a)      Departmental Stores
b)      Chain Stores or multiple shops
c)       Mail order business
d)      Consumer cooperative store
e)      Super Bazaar
Q.8. What is multiple Shop or chain stores? Mention its features, advantages and limitations.
Ans: Multiple shops are networks of retail shops of a large merchandising organisation that consists of many branches in the country. All branches are under central ownership and control. Multiple Shops are similarly organised and people may find them without any difficulty.
The features of multiple shops are:


a)      They aim on the elimination of middleman.
b)      They specialises on one line of goods.
c)       The range of goods is strictly limited.
d)      All the goods are of same nature.
e)      Sales are decentralized.
f)       All sales are on cash basis.
Advantages:
a)      Large scale production takes place.
b)      Middlemen are avoided.
c)       Cash basis.
d)      Risk is reduced.
e)      Low cost due to avoidance of middlemen.
f)       Place can be changed if there are no profits.
Limitations:
a)      Limited varieties are available.
b)      No personal touch.
c)       Losses in case of change in demand.
d)      Delay in decisions.
e)      It requires a huge amount of capital investments.
f)       As there are many branches there is a possibility of fraud because close supervision is not possible.
Q.9. Define departmental stores. Mention its merits and demerits.
Ans: According to Thomas “A large retail establishment having in the same building a number of departments each of which confine its activities to one particular branch trade and forms a complete unit in itself”.
Advantages:
a)      Attract large number of customers.
b)      Buying is made easier.
c)       More services are provided.
d)      Benefits of large scale operations.
e)      Sales get increased by advertising.
Limitations:
a)      No personal attention is there.
b)      More cost of operating the store.
c)       More chances for loss.
d)      Far away from home.
Q.10. Discuss the features of Departmental Stores. Distinguish between Departmental Stores and Multiple Shops.
Ans: These are the features of Departmental Stores:
a)      A Departmental Store supplies a wide variety of goods. It tries to satisfy expected human wants under one roof.
b)      Departmental store is situated in the centre of cities where maximum number of crowd gathers.
c)       In departmental stores there are various departments but the sales and management control are centralised.
d)      They use advertising as a tool of marketing.



The Distinction between Departmental Stores and Multiple Stores are:
BASIS OF DISTINCTION
DEPARTMENTAL STORE
MULTIPLE SHOPS
LOCATION
They are located at the centre or shopping areas of big cities
They are located at different areas of cities
PURPOSE
Its purpose is to attract customers
Its purpose is to approach customers
INVESTMENT
Its investment is comparatively more because it maintains variety of goods.
It requires less investment.
CREDIT FACILITIES
They provide credit facilities.
They do not provide credit facilities.
BUYING & SELLING
Buying is decentralized and selling is centralized.
Buying is centralized and selling is decentralized.
FLEXIBILITY
It is flexible
It is not flexible
APPEARANCE
Decoration is not uniform
Uniformity of decoration for identification
PRICE
Different Prices
Same Price
NATURE OF GOODS
Luxury Goods
Necessities
Q.11. What are consumer cooperative stores? Mention its features, merits and demerits.
Ans: Consumer cooperative store: This store is an organization managed and controlled by consumers. The cooperative societies generally buy in large quantity directly from the wholesalers or manufacturers.
The features of Consumer cooperative Stores are:
a)      It is a voluntary association of consumers registered under Cooperative Societies Act
b)      Membership is open to all
c)       The store has a share capital of a small face value
d)      Everybody has to pay entrance fees
e)      The liability of members is limited by shares
f)       Store sells on cash basis
g)      Minimum advertising is undertaken
Advantages: (i) Easy to form (ii) Limited liability (iii) Equal treatment to all (iv) Low cost (v) Sales is made in cash only (vi) Location are there in public places.
Limitations: (i) Lack of motivation (ii) Less funds (iii) No business training (iv) No patronage.
Q.12. What do you mean by super market? State its features.
Ans: Super bazaar is large retailing organisation and facilitates a customer to buy various types of goods under one roof. It does not have any sales man too convince the customers. The customers can choose commodities of their choice.
Features of Super Market
a)      Goods are sold on cash basis only
b)      Self Service is its principle
c)       It supplies a wide variety of Goods
d)      Goods are properly packed and contain a label showing its identification, content, price quantity.
Advantages: (i) One roof low cost (ii) Central location (iii) Wide selection (iv) No bad debts (v) Benefits of large scale.
Limitations: (i) No credit (ii) No personal contact (iii) Mishandling of goods (iv) Huge capital (v) More overhead expenses.
Q.13. What is mail order business? Mention its advantages and disadvantages.
Ans: Mail order business: In such types of business, retailers sell their products through mail.
Advantages:
a)      Less capital.
b)      Middlemen are avoided.
c)       No bad debt.
d)      More customers are reached.
e)      Goods are delivered at the door step.
Limitations:
a)      No personal contact.
b)      Heavy expenditure on advertisements.
c)       No after sales service.
d)      No credit facilities.
e)      Delivery is delayed.
f)       Dependence on postal services.
Q.14. What type of Products are offered by mail order houses?
Ans: These are the following products which are handed by mail order houses:
a)      They should not be perishable
b)      They should be lighter which can be sent easily by mail.
c)       They should be valuable as compared to its weight.
d)      They should have regular demand and it should be popular in market.
e)      They should be standardized and branded goods.
Q.15. Write a brief note on the role of chamber of commerce and industry in promotion of internal trade.
Ans: Role of Indian chambers of commerce and industry in promotion of internal trade:
a)      Interstate movement of goods.
b)      Local taxes act as an income.
c)       Value added tax.
d)      Marketing agricultural products.
e)      Using proper weights and measures.
f)       Prevention of duplication brands.
g)      Providing proper roads, electricity, railways.

h)      Flexible labour laws. 

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