Business Studies Chapter 10 Solutions NCERT Class 11th
EXERCISES
Short Answer Questions
1. What is meant by internal trade?
Answer: Internal trade refers to the buying and selling of goods and services within the boundaries of a nation. It involves transactions where no custom duty or import duty is levied, and payments are generally made in the legal tender of the country.
2. Specify the characteristics of fixed shop retailers.
Answer: Fixed shop retailers have permanent establishments and generally possess greater resources, enabling them to operate on a larger scale than itinerant traders. They deal in both consumer durables and non-durables and offer enhanced credibility and services such as home delivery, guarantees, repairs, and credit facilities.
3. What purpose is served by wholesalers providing warehousing facilities?
Answer: Wholesalers provide warehousing facilities to store goods that are produced throughout the year, ensuring continuous production for manufacturers. This relieves manufacturers of the burden of maintaining large stocks and helps in making products available when and where needed, thus providing time and place utility.
4. How does market information provided by the wholesalers benefit the manufacturers?
Answer: Market information provided by wholesalers benefits manufacturers by giving them expert advice and insights into customer tastes, market conditions, and competitive activities. This information is crucial for manufacturers to make informed decisions regarding product development, pricing, and marketing strategies.
5. How does the wholesaler help the manufacturer in availing the economies of scale?
Answer: The wholesaler helps the manufacturer in availing the economies of scale by pooling numerous small orders from various retailers. This aggregation of demand enables manufacturers to produce goods in large quantities, thereby achieving economies of large-scale production, which reduces the per-unit cost of production.
6. Distinguish between single line stores and speciality stores. Can you identify such stores in your locality?
Answer:
- Single Line Stores: These stores specialize in a particular line of products, such as men’s wear, children’s garments, or electronics. While they specialize, they might offer a variety within that single line.
- Speciality Stores: These are stores that deal in a specific line of products such as children’s garments, men’s wear, ladies’ shoes, or school uniforms. They provide a wide range of options within their particular category.
In my locality, I have seen single line stores like a shop that only sells men’s clothing and another that only deals in electronic gadgets. There’s also a speciality store nearby that focuses only on school uniforms and related accessories.
7. How would you differentiate between street traders and street shops?
Answer:
- Street Traders (Pavement Vendors): These retailers are typically found at busy locations like railway stations or bus stops. They usually deal in common consumer items such as stationery, eatables, magazines, and ready-made garments, selling directly from the pavement or a makeshift setup.
- Street Stall Holders: Similar to street traders but they have a fixed, though limited, space. They also deal in cheap variety goods like hosiery products, toys, cigarettes, or newspapers, operating from a small, permanent stall rather than just the pavement.
8. Explain the services offered by wholesalers to manufacturers.
Answer: Wholesalers offer several services to manufacturers:
- Facilitating large-scale production: They collect small orders from numerous retailers, enabling manufacturers to produce in bulk and achieve economies of scale.
- Bearing risk: They purchase goods in large quantities and bear risks related to price fluctuations, spoilage, theft, and fire, thereby relieving manufacturers of these burdens.
- Financial assistance: Wholesalers typically make prompt cash payments to manufacturers and may even provide advances for large orders, assisting with working capital.
- Expert advice: They provide valuable market information to manufacturers regarding customer preferences, market conditions, and competitor activities, aiding in product planning.
- Help in marketing function: They manage the distribution of goods to numerous retailers, allowing manufacturers to concentrate on production activities.
- Facilitate production continuity: By taking delivery of goods as they are produced and storing them, wholesalers ensure a continuous production cycle for manufacturers throughout the year.
9. What are the services offered by retailers to wholesalers and consumers?
Answer:
- Services offered by retailers to wholesalers:
- Help in distribution of goods: Retailers are crucial for distributing goods to scattered final consumers, bridging the gap between producers/wholesalers and the market.
- Personal selling: They relieve wholesalers and producers of the burden of personal selling efforts by directly interacting with consumers.
- Enabling large-scale operations: By handling individual sales to consumers, retailers allow manufacturers and wholesalers to focus on larger-scale production and distribution.
- Collecting market information: They provide valuable direct feedback from consumers on tastes, preferences, and attitudes, which is vital for wholesalers and manufacturers.
- Help in promotion: Retailers participate in promotional activities, such as displaying products and offering incentives, which aids in boosting sales.
- Services offered by retailers to consumers:
- Regular availability of products: They ensure a steady supply of various products from different manufacturers, making them accessible to consumers.
- New products information: Retailers inform consumers about new products, their features, and arrival through displays and personal selling.
- Convenience in buying: Located often near residential areas, operating for long hours, and selling in small quantities, they offer great convenience.
- Wide selection: They stock a variety of products from different manufacturers, giving consumers ample choice.
- After-sales services: Many retailers provide essential after-sales services like home delivery, installation, spare parts, and repair, enhancing customer satisfaction.
- Provide credit facilities: They often extend credit to regular customers, which can ease financial strain and improve the standard of living.
Long Answer Questions
1. Itinerant traders have been an integral part of internal trade in India. Analyse the reasons for their survival in spite of competition from large scale retailers.
Answer: Itinerant traders, despite competition from large-scale retailers, continue to be an integral part of internal trade in India due to several reasons:
- Doorstep Service: They offer unparalleled convenience by bringing goods directly to the consumers’ doorsteps, especially beneficial for those who cannot easily travel to larger markets (e.g., elderly, homemakers, people in remote areas).
- Low Prices: Generally, itinerant traders have lower overheads (no shop rent, minimal storage costs) which allows them to offer goods, particularly daily-use items, at more competitive or negotiable prices. This attracts lower and middle-income groups.
- Flexibility and Adaptability: They can easily change their location based on demand or specific market days, reaching diverse customer bases that fixed shops might miss.
- Small Capital Requirement: Starting an itinerant trade requires minimal capital, making it accessible for individuals with limited resources to enter the business.
- Credit Facility (Informal): Many peddlers and hawkers develop personal relationships with their regular customers and might offer informal credit, which is often not available from large retailers.
- Access to Remote Areas: They serve as a crucial link in reaching consumers in rural or semi-urban areas where large fixed shops are scarce.
- Specific Product Focus: Some itinerant traders specialize in fresh produce (vegetables, fruits) which consumers prefer to buy daily and locally.
- Cultural Acceptance: In many parts of India, doorstep selling and street markets are deeply ingrained in the cultural fabric, fostering trust and preference.
2. Discuss the features of a departmental store. How are they different from multiple shops or chain stores.
Answer:
- Features of a Departmental Store:
- Wide Variety: Offers a wide range of products, categorized into distinct departments, aiming to fulfill nearly every customer’s need under one roof (e.g., clothing, electronics, groceries, furniture).
- Central Location: Typically situated in central business districts or prominent city areas to attract a large customer base.
- Large-Scale Operations: Operates on a very large scale, often managed as a joint-stock company with professional management.
- Centralized Purchasing, Decentralized Sales: Goods are purchased centrally (often directly from manufacturers), but sales are decentralized within various departments.
- Ancillary Services: Often provides additional services like restaurants, travel bureaus, rest rooms, credit facilities, and home delivery, enhancing the shopping experience.
- High Overheads: Involves substantial capital investment and high operating costs due to large premises, extensive staff, and varied inventory.
- Emphasis on Customer Convenience: Aims to provide a convenient, one-stop shopping experience for a diverse range of products.
- Differences from Multiple Shops or Chain Stores:
- Product Variety: Departmental stores offer a much wider variety of unrelated products under one roof, while multiple shops (chain stores) typically specialize in a particular line of products (e.g., a specific brand of shoes, a type of garment) across all their branches.
- Ownership and Management: Departmental stores are often large independent entities (though they can be part of a chain too, the defining characteristic is the departmentalization of diverse goods). Multiple shops are centrally owned and managed by a manufacturer or a single organization, with each branch operating under strict head office instructions.
- Location Strategy: Departmental stores are usually in central, high-traffic city locations. Multiple shops are strategically located in populous localities across different areas to be close to potential customers.
- Pricing Policy: Departmental stores might have varied pricing strategies across departments. Multiple shops usually follow a uniform pricing policy across all their branches.
- Sales Policy: Departmental stores may offer credit facilities. Multiple shops primarily operate on a cash-and-carry basis to minimize bad debts.
- Flexibility: Departmental stores have less flexibility in shifting location due to large investments. Multiple shops can easily close or relocate unprofitable branches without major repercussions.
- Personal Attention: Departmental stores, due to their size, often lack personal attention to customers. Multiple shops, while standardized, might offer a more focused customer interaction within their specialized product range.
3. Why are consumer cooperative stores considered to be less expensive? What are its relative advantages over other large scale retailers?
Answer:
- Why Consumer Cooperative Stores are Less Expensive: Consumer cooperative stores are considered less expensive primarily because they operate with the objective of providing quality goods at reasonable prices to their members, rather than maximizing profits. This is achieved through:
- Elimination of Middlemen: They directly purchase goods in bulk from manufacturers or producers, cutting out the profits of wholesalers and sometimes even retailers in the traditional distribution channel. This directly translates to lower prices for consumers.
- Voluntary Service: Management and staff often work on a voluntary or honorary basis, which significantly reduces labor costs.
- Limited Overhead Costs: While they have fixed shops, they often operate with simpler setups compared to large commercial retailers, keeping operational costs low.
- Cash Sales: Most consumer cooperative stores operate on a cash basis, eliminating the risk of bad debts and the administrative costs associated with managing credit.
- Relative Advantages over Other Large-Scale Retailers:
- Democratic Management: Each member typically has one vote, regardless of the number of shares held. This democratic control ensures that the store operates in the best interest of its members (consumers), unlike profit-driven corporations.
- Ease of Formation: They are relatively easy to form, requiring a minimum of ten members to register under the Cooperative Societies Act.
- Lower Prices: As explained above, the elimination of middlemen and focus on service over profit directly leads to more affordable prices for consumers.
- Quality Goods: With direct procurement and member oversight, there’s a higher likelihood of ensuring the quality and genuineness of products sold.
- Convenient Locations: Often established in residential areas or places convenient for members, ensuring easy access to daily necessities.
- Limited Liability: Members’ liability is typically limited to the amount of capital contributed, reducing personal financial risk.
- Promotes Self-Help: Fosters a spirit of cooperation and self-help among consumers to meet their needs collectively.
4. Imagine life without your local market. What difficulties would a consumer face if there is no retail shop?
Answer: A life without local markets or retail shops would pose serious challenges for consumers. Retailers form the crucial last link in the distribution chain, and their absence would cause the following difficulties:
- Inaccessibility to Daily Needs: Consumers would find it difficult to access essential items like food, groceries, medicines, and toiletries, as there would be no nearby purchase points.
- Dependence on Producers: Individuals would be forced to contact manufacturers or farmers directly for every product, which is highly impractical due to distance, small purchasing capacity, and coordination issues.
- Lack of Variety and Choice: Without retailers bringing together goods from multiple producers, consumers would face limited options, reducing their ability to find suitable products.
- No Product Guidance: Retailers often help buyers choose suitable items by explaining features, quality, and usage. In their absence, consumers would miss this valuable personal assistance.
- No Credit Facility: Many consumers, especially in local communities, rely on informal credit from shopkeepers. Without this, financial pressure during emergencies would increase.
- No After-Sales Services: Services such as home delivery, installation, replacement, or repairs would not be available, especially for electronics and appliances.
- Logistical Burden on Households: Every household would need to manage procurement, storage, and transportation of goods on its own, which would be inefficient and expensive.
- Higher Costs: Buying directly from producers or distant sources would prevent bulk buying or efficient delivery, leading to higher prices per unit.
- Loss of Employment: The retail sector employs millions—from small vendors to store workers. Eliminating retail shops would lead to massive job losses and economic instability.
- No Feedback Loop: Retailers act as a bridge between consumers and manufacturers, offering insights into customer preferences. Without this, producers would lack direction in product development.
Without retail shops, the entire system of product distribution would collapse. Consumers would face inconvenience, higher costs, fewer choices, and reduced service quality, significantly affecting their standard of living and economic security.
5. Explain the usefulness of mail orders houses. What type of products are generally handled by them? Specify.
Answer:
Usefulness of Mail Order Houses:
Mail order houses are retail businesses that sell products without direct personal contact, using catalogs, advertisements, or online platforms. Their key advantages include:
- Wide Reach: They can serve customers in remote and rural areas using postal or courier services.
- No Middlemen: Goods are sold directly to consumers, reducing costs.
- Low Capital Needs: No need for physical shops or large staff, making them economical to run.
- Reduced Risk of Bad Debts: Products are dispatched after receiving payment.
- Customer Convenience: Products are delivered to the doorstep, saving time and effort.
- Product Information: Catalogs provide clear descriptions, helping customers make informed choices.
Types of Products Handled:
Mail order houses usually deal in:
- Graded and Standardized products like branded clothes, packaged foods, or electronics.
- Lightweight and Non-Fragile items suitable for easy shipping.
- High-Demand and Bulk-Available goods that can be advertised widely.
- Non-Perishable products with longer shelf life.
Examples: Books, cosmetics, small gadgets, garments, stationery, and household items.
Not Suitable For: Perishable goods, bulky furniture, or items needing physical inspection.