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Karnataka 1st PUC Business Studies Question Bank Chapter 10 Internal Trade
1st PUC Business Studies Internal Trade Text Book Questions and Answers
Short Answer Questions
Question 1.
What is meant by internal trade?
Answer:
Trade relates to exchange of goods and services of figural nature. It involves purchase and sale of goods. Trade bridges the gap between the producer and the consumer. Traders and mercantile agents act as middlemen between the producers and the consumers. Thus, trade helps the producers in selling their output and also helps the consumers in getting the products for the satisfaction of their wants and needs.
Trade is the centre of all business activities. Production, transportation, banking, insurance warehousing, etc. are all directly concerned with trading activities. It is trade which facilitates expansion of business activities throughout the world. On the basis of territorial boundaries of a nation, trading activities could he classified into
(i) Internal trade;
(ii) External trade.
Meaning and Types of Internal Trade
Definition of Internal Trade Internal trade is also known as ‘domestic trade’ or ‘inland trade’. It refers to buying and selling of goods within the boundaries of a nation. The payments for goods are made and received in the national currency. Thus, in India, internal trade involves dealings in goods between traders in India only and in terms of Rupees only. Many wholesalers, retailers and mercantile agents are engaged in the home trade.
They serve to establish links between the producers and the consumers. The basic purpose of internal or home trade is to facilitate the distribution of goods and services throughout the country. Internal trade may take place between states, between towns of the same state or between merchants from the same town.
Features of Internal Trade – The salient features of internal trade are :
- Movement of goods takes place within the boundaries of the country.
- All payments are received and made in the national currency,
- Traders take the help of various modes of transport to effect transfer of goods to the ultimate consumers.
Types of Internal Trade – On the basis of the scale of operations, home trade may be classified into two categories
(i) Wholesale trade, and
(ii) Retail trade.
(i) Wholesale Trade – It involves purchase and sale of goods in bulk. A wholesaler buys goods in bulk directly from the manufacturer and sells them in small lots to retailers. Thus, wholesale trade constitutes a link between the producers/manufacturers on the one hand and the retailers on the other.
(ii) Retail Trade – It refers to the selling of goods by the retailer to the ultimate consumer It, thus, acts as a link between the wholesaler and the final consumer. Retail trade is conducted through a variety of forms – shops, vendors, paddlers, mail order houses, stall holders, departmental stores, multiple-shopes, cooperative stores, super bazars and self-service stores. A retailer is the last link in the chain of intermediaries.
Question 2.
Specify the characteristics of fixed shop retailers.
Answer:
Fixed shop retailers are retail shops who maintain permanent establishments to sell their merchandise. They, therefore, do not move from one place to other to serve their customers. Other characteristics of fixed shop retailers are:
- They have greater resources and operate at a relatively large scale as compared with the itinerant traders.
- These retailers deal in different products, including consumer durables as well as nondurables.
- They have greater credibility in the minds of customers.
- They are in a position to provide greater services to the customers such as-home delivery, repairs, credit facilities, etc.
Question 3.
What purpose is served by wholesalers providing warehousing facilities?
Answer:
Functions of a Wholesaler – A wholesaler performs the following important functions:
(1) Buying and Assembling – A wholesaler purchases different varieties of goods from several widely scattered manufacturers. He anticipates the needs of retailers and buys goods in advance of demand. He collects the goods from different producers and assembles them at one place. Some wholesalers also import goods from foreign countries. Thus, he performs the task of assembling of different types of goods of different manufacturers.
(2) Dispersing-A wholesaler breaks the bulk by dividing goods into small and convenient lots to be sold to retailers scattered all over the country. He sells goods in small lots to retailers according to their choice and keeps then supplied with different varieties of goods. Many wholesalers send their salesmen to take orders from the retailers.
(3) Transporting – A wholesaler provides facilities for the transportation of goods from the producers to his own godown. Sometimes, he also sends goods to retailers in far-flung areas. He saves costs through bulk transportation of goods. Some wholesalers maintain their own vehicles to ensure quicker and better delivery of goods to retailers. In the present world, the services of taking goods from the place at which they are produced to the place of their consumption are performed by the wholesalers quickly and efficiently.
(4) Warehousing – Wholesalers keep a large stock of goods for retailers. They ensure that the goods are available to retailers at all times. Retailers can replenish their stock from time to time by purchasing goods from the wholesaler. The wholesaler helps to stabilise prices by adjusting supply according to demand. Many wholesalers maintain their own warehouses for storing goods thereby reducing inventory costs and risks of producers and retailers.
(5) Grading and Packaging – Wholesalers undertake grading and packaging of goods which facilitate trade. They break the goods into small lots, repack them and put their own labels or brand names. In this way, they perform the functions of packing, branding and grading. By grading and standardization, they ensure the supply of uniform quality to retailers.
(6) Financing – Wholesalers finance the trade to a large extent. They often buy goods from manufacturers on cash basis and even make advance payments. Wholesalers generally sell goods to retailers on credit.
(7) Risk-bearing – A wholesaler serves as a shock absorber. He bears the risk of changes in demand and damage to goods during storage due to spoilage, theft, etc. He also bears the risk of bad debts by granting credit to retailers. A wholesaler, therefore, face many risks by buying and storing good sin bulk.
(8) Market Information – A wholesaler foresees the market conditions. He collects information from retailers about changes in the tastes, fashions and buying habits of consumers and passes this information to the manufacturers. Some wholesalers also conduct market surveys. On the basis of his vast knowledge of the goods produced by different manufacturers, a wholesaler advises retailers about the goods which will best satisfy the needs of consumers.
(9) Selling and Promoting – Wholesalers employ a salesforce to persuade retailers to display and sell the products. They promote the company’s products. They advertise the goods and also undertake sale promotion activities to push up the sale of their products.
Question 4.
How does market information provided by the wholesalers benefit the manufacturers?
Answer:
Wholesalers provide useful market information to the manufacturers about various aspects like customer’s tastes and preferences, market conditions, competitive activities and the features preferred by the buyers. This information proves extremely beneficial to the manufacturers as it helps them in taking effective decisions regarding their production and marketing strategies.
Question 5.
How does the wholesaler help the manufacturer in availing the economies of scale?
Answer:
Wholesalers serve as a link between retailers and manufacturers. They Collect small orders from a number of retailers and pass on the pool of such orders to manufacturers and make purchases in bulk quantities. This enables the producers to undertake production on a large scale and thus take advantage of the economies of scale.
Question 6.
Distinguish between single-line stores and specialty stores. Can you identify such storeS in your locality?
Answer:
Single line shops and specialty stores are small-scale shops and a common form of retail trade. Such shops are found in every nook and comer of most cities.
Single-line Stores – Such retail organizations deal in a specific line of goods such as books, stationery, shoes, medicines, readymade goods, etc. In other words, the line of business is well defined. For example, a stationery store may keep stocks of numerous stationery items of different qualities, varieties, sizes, designs, etc. to meet the requirements of school students, college students, offices, etc.
Specialty Stores—Speciality stores take the specialization practiced by single-line stores one step further. If a shop selling readymade garments (i.e., single-line store) deals in children’s garments only, it will be called a specialty shop. Another example of a specialty store is a shop dealing in children’s books only. Specialty shops are generally located in central places so as to attract a large number of customers.
Question 7.
How would you differentiate between street traders and street shops?
Answer:
Street Traders:
- The traders who are generally selling their goods on busy street comers, bus stands, etc.
- They deal in a cheap variety of goods.
Street shops:
- These are the platforms used to display the goods for sale.
- They deal in low-priced articles but not that cheap.
Question 8.
Explain the services offered by wholesalers to manufacturers.
Answer:
The major services offered by wholesalers to the producers of goods and services are given as below:
1. Facilitating large scale production:
Wholesalers collect small orders from a number of retailers and pass on the pool of such orders to manufacturers and make purchases in bulk quantities. This enables the producers to undertake production on a large scale and take advantage of the economies of scale.
2 Risk Bearing:
The wholesale merchants deal in goods in their own name, take delivery of the goods and keep the goods purchased in large lots in their warehouses. In the process, they bear lots of risks such as the risk of fall in prices, theft, pilferage, spoilage, fire, etc. To that extent, they relieve the manufacturers from bearing these risks.
3. Financial assistance:
The wholesalers provide financial assistance to the manufacturers in the sense that they generally make cash payments for the goods purchased by them. To that extent, the manufacturers need not block their capital in the stocks. Sometimes they also advance money to the producers for bulk orders placed by them.
4. Expert advice:
As the wholesalers are in direct contact with the retailers, they are in a position to advise the manufacturers about various aspects including customer’s tastes and preferences, market conditions, competitive activities and the features preferred by the buyers. They serve as an important source of market information on these and related aspects.
5. Help in the Marketing Function:
The wholesalers take care of the distribution of goods to a number of retailers who, in turn, sell to a large number of goods to customers spread over a large geographical area.
6. Facilitate Continuity:
The wholesalers facilitate continuity of production ‘activity throughout the year by purchasing the goods as and when they are produced.
7. Storage:
Wholesalers take delivery of goods when the goods are produced in a factory and keep them in their godowns/warehouses.
Question 9.
What are the services offered by retailers to wholesalers and consumers? Services to Manufacturers and Wholesalers.
Answer:
Retailers provide the following valuable services to both wholesalers and consumers. Services Rendered by Retailers – The retailers provide many useful services to manufacturers, wholesalers and help them in selling their products to the consumers. They also provide several services to the consumers which are discussed below;
Services to Manufacturers and Wholesalers – The retailers provide the following services to manufacturers and wholesalers :
(1) Distribution of goods-Retailers act as the last link or outlet for the distribution of goods. They connect the wholesalers and consumers.
(2) Ascertaining customers’ needs – Retailers have direct contact with customers. They help the wholesalers and manufacturers in ascertaining customers’ requirements.
(3) Providing information – On the basis of up-to-date and first-hand information about the likings and preferences of customers, retailers advice the wholesalers/manufacturers to introduce necessary improvements in their products.
Retailers supply valuable information to wholesalers about changes in states, fashion, etc. of consumers. They keep the manufacturers in touch with market conditions. On the basis of this feedback, manufacturers can make suitable improvements in the design, size, quality, etc of their products. Thus, the retailers serve as the -eyes and ears of manufacturers.
(4) Relieving from retail botheration – Retailers relieve the wholesalers of the botheration of dealing with a large number of customers having different requirements, temperament and purchasing power. Retailers provide ready markets for the goods of wholesalers.
(5) Risk sharing – Retailers share risks with manufacturers and wholesalers by keeping stock of their products.
Service to Consumers—The retailers provide the following services to consumers:
(1) Continuous Supply – A retailer makes available to the customers all commodities, even in the smallest possible quantities. The consumers are assured of a continuous supply of goods and they need not store the goods in large quantities.
(2) Wider Choice – A retailer keeps a large variety of goods manufactured by various manufacturers. The consumers are offered a wide choice. He offers an assortment of products to consumers.
(3) Advice to Customers – A retailer gives advice to the customers to help them make a choice of products to satisfy their needs. H advises them about the methods of use and utilities of various products.
(4) Personalised Services – A retailer maintains personal contacts with the customers. He tries to meet their demands. He also satisfies them in case the customers have any complaints. They make arrangements for the supply of goods at the consumer’s doorstep without any extra charge.
(5) Credit Facility – Retailers often grant credit to their customers which is a great service to the customers having a temporary shortage of funds.
(6) Home Delivery – Some retailers provide free home delivery services to their customers.
(7) After-sale Service – Big retailers provide after-sale service, if needed, e.g., repair of goods such as T.V.
(8) Customer’s Convenience – Retailers try to give maximum local convenience to the customers. They are generally situated near residential areas. Some retailers take back or replace the goods found unsuitable by customers.
Long Answer Questions
Question 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:
Itinerants — Itinerants have no fixed place of business. They move from place to place carrying goods on their heads or on the back of animals. They sell goods in small lots of consumers in residential areas. They deal mainly in low-priced articles of daily uses and require a very small investment of capital.
The emphasis of such traders is on providing greater customer service by making the products available at the very doorstep of the customers.
As they have no fixed business establishments to operate from. They have to keep a limited inventory of merchandise either at home or at some other place. Hawkers, peddlers, street traders, cheap jacks, and market traders are the different types of itinerant vendors.
(1) Hawkers and Paddlers – Peddlers and hawkers are the probably oldest form of retailers in the market. A hawker moves from door to door and street to street carrying goods in wheeled carts or on the back of animals. A paddler goes from house to house carrying goods on his head or back.
Hawkers and peddlers sell a wide variety of articles of daily use such as vegetables, fruits, toys, pens, combs, mirrors, soaps, readymade garments, etc. Both sell goods in small quantities in residential areas, buses, trains and at public places. The main advantage of this form of retailing is the provision of convenient service to the consumers.
(2) Street Traders – Street traders display their goods on pavements and busy street corners. They operate mainly near public places such as railway stations, cinema halls, bus stands and temples. They sell a wide variety of low-priced articles of daily use such as books, newspapers, stationery, readymade garments, etc They are different from market traders in the sense that they do not change their place of business so or equally.
(3) Market Traders – Market traders sell their goods at weekly, fortnightly or monthly bazaars and annual fairs. They display their wares in front of shops which are closed for the weekly holiday. They are a familiar figure in front of a large shopping centre in most towns and cities.
Sunday Bazaar, Magal Bazaar are popular in North India. These traders also set up temporary shops on the occasion of festivals such as Diwali, Christmas, etc. They are mainly catering to a lower-income groups of customers and deal in low-priced consumer items of daily use.
(4) Cheap Jacks – These retailers hire small shops in residential localities for a temporary period. They shift from locality to locality depending on the prospects of getting business. They deal in household articles and low-priced, goods. They also deal in consumer items and provide service to consumers in terms of making the products available where needed.
Question 2.
Discuss the features of a departmental store. How are they different from multiple shops or chain stores.
Answer:
A departmental store is a large establishment offering a wide variety of products, classified into well defined departments, aimed at satisfying practically every customer’s need under one roof.
- A modem departmental store may provide all facilities such as restaurants, travel and information bureau, telephone booth, restrooms, etc. As such they try to provide maximum service to higher class of customers for whom price is of secondary importance.
- These stores are generally located at a central place in the heart of a city, which caters to a large number of customers.
- As the size of these stores is very large, they are generally formed as a joint stock company managed by a board of directors. There is a managing director assisted by a general manager and several department managers;
- A departmental store combines both the functions of retailing as well ais warehousing. They purchase directly from manufacturers and operate separate warehouses. That way they help in eliminating undesirable middlemen between the producers and the customers; and
- They have centralized purchasing arrangements. All the purchases in a department store are made centrally by the purchase department of the store, whereas sales are decentralized in different departments.
Chain stores or multiple shops are networks of retail shops that are owned and operated by manufacturers or intermediaries. Under this type of arrangement, a number of shops with similar appearances are established in localities, spread over different parts of the country in contrast to departmental stores which are established at a central place in the city.
These different types of shops normally deal in standardized and branded consumer products, which have rapid sales turnover. These shops are run by the same organization and have identical merchandising strategies, with identical products and displays.
Question 3.
Why are consumer cooperative stores considered to be less expensive? What are its relative advantages over other large scale retailers?
Answer:
Consumers’ Cooperative Stores – A consumers’ cooperative store is a voluntary association of persons based on cooperative principles. It aims to economise by buying in common and to retain profits by selling in common. It is an association of consumers formed to purchase goods in bulk and to sell them to the members at low prices. It is a store which is owned, managed and controlled by the consumers themselves.
Such a store attempts to eliminate the middlemen and to establish direct contact with the manufacturers. Consumers’ cooperative stores are generally established by middle and low-income persons in big cities. To start a consumer cooperative store, at least ten people have to come together and form a voluntary association and get it registered under Cooperative Societies Act.
Features:
(1) Open Membership – Membership is open to all those who have a common interest. There is no discrimination on the basis of caste, creed, religion or sex. Minimum number of persons required to form a consumers’ cooperative store is ten.
(2) One Member One Vote – Each member has one vote irrespective of the capital contribution made by him. The organization runs on democratic principles. No member can have under influence on the working of the store. Spirit of cooperation is the guiding force.
(3) Capital – The capital of the store is divided into shares purchased by members.
(4) Cash Sales – The stores sell goods to the members on cash and cany basis. There is no chance of bad debts as sales are made on cash basis only.
(5) Distribution of Surplus —The profits of the store are distributed among the members in proportion to the purchases made by each member during the year. A limited (up to 10 per cent) dividend is paid on the capital.
(6) Management – An executive committee consisting of the president, secretary, etc. manages the store. The members of the executive committee are elected by the members of the store.
Merits:
(1) Consumer Protection – Consumers get better quality goods at a cheaper price. They are protected against the risk of adulteration and overcharging. Consumers themselves are the shopkeepers and, therefore, they can supply their own requirements quickly and economically.
(2) Low Operating Costs – A consumers’ cooperative store need not spend money on advertising, shop decoration, impressive, building, etc. Sales are made on cash basis and as a result there are no bad debts. The benefit of low costs can be passed on to the members in the form of low prices. Wage or salary expenses are also low.
(3) Bulk Buying – The economics of bulk purchases such as discounts, low freight charges, etc. can be obtained. A consumers’ cooperative store makes purchases in large quantities.
(4) Elimination of Middlemen – A consumers’ cooperative store purchases goods directly from manufacturers and” sells them to consumers. It eliminates middlemen. Profiteering and monopoly results in lower prices for the consumer goods to the members.
(5) Higher Standard of Living – The standard of living of members can be improved clue to the availability of better quality goods at lower prices. A consumers’ cooperative store also spends money on welfare activities such as providing education, medical aid, sanitation, etc. It also encourages the habit of thrift and saving among the members.
(6) State Patronage – A consumers’ cooperative store can get assistance and exemptions from the government. It also provides training in self-government and democracy.
(7) Limited liability – The liability of the members in a cooperative store is limited to the extent of the capital contributed by them. Over and above that amount, they are not liable personally to pay the debts of society.
(8) Convenient location – The consumer cooperative stores are generally opened at convenient public places where the members and others can easily buy the products as per their requirements.
Question 4.
Imagine life without your local market. What difficulties would a consumer face if there is no retail shop?
Answer:
A retailer is a business enterprise that is engaged in the sale of goods and services directly to the ultimate consumers in small quantities. There may be different ways of selling the goods viz., personally on phone, or by vending machines. Also, the products may be sold at different places viz., in a store in the locality, at the customer’s house through peddlers and hawkers, or any other place.
Some of the common situations one has to encounter in one’s daily life, for example, are the sale of ball pens or some magic watches or book of jokes in the roadways buses, the sale of cosmetics in your local market or sale of vegetables on the roadside by the small farmer are the examples of retail trading.
General stores are most commonly found in a local market and residential areas. These shops carry stock of the variety of products needed to satisfy the day-to-day needs of the consumers residing in near locations. Such stores remain open for long hours at convenient timings and often provide credit facilities to some regular clients. The biggest advantage of such stores is the convenience to the customers in purchasing products of daily use such as grocery items, soft drinks, toiletry products, stationery, and confectionery.
As most of their customers are residents of the same locality, an important factor contributing to their success is the image of the owner and the rapport one has established with them. In brief, without the existence of these local markets or general stores, the customer faces immense problems for day-to-day requirements necessary for leading life conveniently.
Question 5.
Explain the usefulness of mail-order houses. What type of products are generally handled by them? Specify.
Answer:
Mail order houses are the retail outlets that sell their merchandise through the mail. There is generally no direct personal contact between the buyers and the sellers in this type of trading. For obtaining orders, potential customers are approached through advertisements in newspapers or magazines, circulars, catalogs, samples and bills, and price lists sent to them by post.
All the relevant information about the products such as the price, features, delivery terms, terms of payment, etc., are described in the advertisement. On receiving the orders, the items are carefully scrutinized with respect to the specifications asked for by the buyers and are complied with through the post office.
There can be different alternatives for receiving payments. First, the customers may be asked to make full payment in advance. Second, the goods may be sent by Value Payable Post (VPP). Under this arrangement, the goods are sent through the post and are delivered to the customers only on making full payment for the same.
Third, the goods may be sent through a bank, which is instructed to deliver the articles to the customers. In this arrangement, there is no risk of bad debt, as the goods are handed over to the buyers only after he makes foil payment. However, there is a need to ensure the buyers that the goods despatched are in accordance with their specifications.
This type of business is not suitable for all types of products. For example, goods that are perishable in nature or are bulky and cannot be easily handled, are not recommended for mail-house trading. Only the goods that can be
- graded and standardised
- easily transported at a low cost
- have ready demand in the market
- are available in large quantity throughout the year
- involve least possible competition in the market and
- can be described through pictures etc., are suitable for this type of trading.
Another important point in this regard is that the mail house business cannot be successfully carried out unless education is widespread. It is so because only literate people can be reached through advertisements and other forms of written communication.
Advantages:
- Limited capital requirement: Mail order business does not require heavy expenditure on building and other infrastructural facilities. Therefore, it can be started with a relatively low amount of capital.
- Elimination of middlemen: The biggest advantage of mail-order business from the point of view of consumers is that unnecessary middlemen between the buyers and sellers are eliminated. This may result in a lot of savings both to the buyers as well as to the sellers.
- Absence of bad debt: Since the mail-order houses do not extend credit facilities to the customers, there are no chances of any bad debt on account of nonpayment of cash by the customers.
- Wide reach: Under this system, the goods can be sent to all the places having postal services. This opens a wide scope for business as a large number of people throughout the country can be served through the mail.
- Convenience: Under this system, goods are delivered to the doorstep of the customers. This results in great convenience to the customers in buying these products.
Mail order houses usually deal only in the goods that can be:
- Graded and standardized
- Easily transported at low cost
- Have ready demand in the market
- Are available in large quantity throughout the year
- Involve best possible competition in the market
- Can be described through pictures etc.
1st PUC Business Studies Internal Trade Additional Questions and Answers
One Mark Questions
Question 1.
What is internal trade?
Answer:
Buying and selling of goods and services within the boundaries of a nation is referred as internal trade.
Question 2.
What is wholesale trade?
Answer:
Wholesale trade refers to buying and selling of goods and services in large quantities for the purpose of resale or intermediate use.
Question 3.
Who is a wholesaler?
Answer:
A wholesaler is a person who buys goods from the producers in bulk quantities and sells them in small quantities to a retailer.
Question 4.
What is retail trade?
Answer:
Retail trade refers to sale of goods in small quantities for the final consumptions.
Question 5.
Who is a retailer?
Answer:
A retailer is a person who buys the goods in large quantities from the wholesalers and sells ‘them in small quantities to the ultimate consumers.
Question 6.
Expand AVM.
Answer:
Automatic Vending Machine
Question 7.
Expand FOB.
Answer:
Free on Board.
Question 8.
Expand CIF
Answer:
Cost, Insurance and Freight Price.
Question 9.
Expand E&OE.
Answer:
Errors and Omissions excepted.
Question 10.
Expand COD.
Answer:
Cash on Delivery.
Question 11.
Name any one type of internal trade.
Answer:
Wholesale Trade.
Question 12.
State one type of Itinerant retailers.
Answer:
Street Traders.
Question 13.
Give an example of a small-scale fixed retail shop.
Answer:
Soaps, Hair oil, and Tooth Paste.
Question 14.
Give an example of a large-scale fixed retail shop.
Answer:
Spencer, Food world and reliance fresh.
Question 15.
Give an example for departmental stores.
Answer:
Spencer.
Question 16.
Give an example for multiple shops.
Answer:
Pizza Hut and Mc. Donald.
Question 17.
Give an example for Supermarkets.
Answer:
Reliance Fresh and Food world.
Question 18.
Give an example for malls.
Answer:
Garuda Mall and Orion Mall.
Question 19.
Who are peddlers?
Answer:
Peddlers are those who carry their goods on their heads and backs from one door to another in the streets for selling the goods.
Question 20.
Who are Hawkers?
Answer:
Hawkers are those who carry their goods on the back of animals or by using wheeled carts from one door to another for selling the articles.
Question 21.
Who are cheap jacks?
Answer:
Cheap jacks are petty retailers who have independent shops of a temporary nature in the business locality.
Two Marks Questions
Question 1.
What do you understand by itinerant retailers?
Answer:
Itinerant retailers are traders who do not have a fixed place of business to operate the business. They keep on moving with their wares from street to street or place to place in search of customers.
Question 2.
What do you mean by small fixed shops?
Answer:
Small scale fixed retail shops are established in every nook and comer of most of the cities. They operate their business with small capital and small stock.
Question 3.
What do you mean by large fixed shops?
Answer:
Large fixed shops established with a large amount of capital, located in important places and markets and towns and cities.
Question 4.
Give the meaning of internal trade documents.
Answer:
The documents which are used in buying and selling of goods within the country is known as internal trade documents.
Question 5.
What is an invoice?
Answer:
An invoice is a statement giving the particulars of the quantity, quality, price of the goods sold.
Question 6.
Give the meaning of the Debit note.
Answer:
When the goods are returned to the supplier or any allowance claimed from the supplier the trader prepares the statement known as debit note.
Question 7.
Give the meaning of the Credit notes.
Answer:
Credit note is a statement containing the details of goods returned as to quantity rates etc.,
Question 8.
What do you understand by Lorry Receipt and Railway receipt?
Answer:
Lorry Receipts:
Means receipts given by Transport Company who ply transport vehicles on road for the goods they had taken for transporting from one location to another. Railway receipt: Railway receipt is a receipt issued by the railway authorities for receipt of goods in the railway.
Question 9.
Give the meaning of E & OE.
Answer:
Errors and omissions excepted is a phrase used in an attempt to reduce legal liability for potentially incorrect or incomplete information supplied in a contractually related document such as a quotation or specification.
Question 10.
State the meaning of AVM.
Answer:
An automatic Vending Machine is an electronic machine used to disperse a product to a consumer after a certain amount of money has been put into the machine.
Question 11.
State any two features of itinerant retailers.
Answer:
- Door to Door Delivery.
- Limited Inventory.
Question 12.
What are second-hand goods shops?
Answer:
Second-hand goods shops are shops that generally sell used goods like books, furniture, and automobiles, etc.,
Question 13.
Give the meaning of specialty shops.
Answer:
Specialty shops are retail stores specialize in the sale of a specific line of goods or products for example shoes, toys, and gifts etc.,
Question 14.
What are multiple shops?
Answer:
A Multiple shop is a retail organisation having branch at different areas dealing in similar line of goods under single ownership and centralised management.
Question 15.
Write the meaning of Departmental stores.
Answer:
It is a fixed shop which sells different kinds of goods under different departments in one building having a separate department for medicines, furniture and electronics.
Question 16.
Which types of goods are suitable for mail order business?
Answer:
Mail-order business means buying and selling by post hence mail order business houses are those retail institutions that receive an order through post and dispatch goods by post parcel.
Question 17.
Name any two internal trade documents.
Answer:
- Invoice
- Debit note
Question 18.
What is meant by FOB price?
Answer:
FOB means the cost of movement of goods on board of Airlines or on board of ship is borne by the seller.
Question 19.
Give any two examples for the chamber of commerce and industry.
Answer:
- Indian chamber of commerce
- Confederation of Indian Industry
Question 20.
State any two functions of the chamber of commerce and industry.
Answer:
- Issuing certificate of origin to the exporter
- Protecting trademarks and patents
Five Marks Questions
Question 1.
What are the Services of Wholesalers to Retailers
Answer:
1. Availability of goods:
Retailers have to maintain adequate stock of varied commodities so that they can offer variety to their customers. The wholesalers make the products of various manufacturers readily available to the retailers.
2. Marketing support:
The wholesalers perform various marketing functions and provide support to the retailers. They undertake advertisements and other sales promotional activities to induce customers to purchase the goods. The retailers are benefitted as it helps them in increasing the demand for various new products.
3. Grant of credit:
The wholesalers generally extend credit facilities to their regular customers. This enables the retailers to manage their business with a relatively small amount of working capital.
4. Specialized knowledge:
The wholesalers specialize in one line of products and know the pulse of the market. They pass on the benefit of their specialized knowledge to the retailers. They inform the retailers about the new products, their uses, quality, prices, etc.
5. Risk sharing:
The wholesalers purchase in bulk and sell in relatively small quantities to the retailers. Being able to manage with purchase of merchandise in smaller quantities, retailers are in a position to avoid the risk of storage, pilferage, obsolescence, reduction in prices, and demand fluctuations in respect of the additional goods that they would have to purchase in case the services of wholesalers are not available.
Question 2.
Briefly explain the role of the Chamber of Commerce and Industry.
Answer:
- Transportation or interstate movement of goods: The Chambers of Commerce and Industry help in many activities concerning the interstate movement of goods which includes registration of vehicles, surface transport policies, construction of highways and roads.
- Octroi and other local levies: Octroi and local taxes are the important sources of revenue of the local government. These are collected on the goods and from people entering the state or the municipal limits.
- Tax structure: The Chambers of Commerce and Industry play an important role in interacting with the government to harmonize the sales tax structure in different states. The sales tax is an important part of the state revenue.
- Marketing of agro products and related issues: Streamlining of local subsidies and marketing policies of organizations selling agro products are some of the areas where the Chambers of Commerce and Industry can really intervene and interact with concerned agencies like farming cooperatives.
- Ensure proper Weights and Measures and prevention of duplication brands: Laws relating to Weights and Measures and protection of brands are necessary to protect the interest of the consumers as well as the traders. They need to be enforced strictly.
Question 3.
Types of Large Scale Fixed Retail Shops.
Answer:
Types of retail trade:
1. Departmental stores:
A departmental store is a large establishment offering a wide variety of products, classified into well-defined departments, aimed at satisfying practically every customer’s need under one roof. It has a number of departments, each one confining its activities to one kind of product.
For example, there may be separate departments for toiletries, medicines, furniture, groceries, electronics, clothing and dress material. Thus, they satisfy diverse market segments with a wide variety of goods and services. Ex: More, Spencer etc.
2. Discount stores:
volumes. Ex: Megamart etc.
3. Convenience store:
Relatively small stores located near residential areas. It is opened for long hours throughout the week. Ex: KB’s fair price etc.
4. Speciality stores:
They carry on a narrow product line, with a deep assortment within the line. Ex: Reebok.
5. Super Market:
A large outlet selling low-cost goods & high volume. Ex: Reliance Fresh, Food World, etc.
6. Off-price retailers/factory outlets:
It is owned & operated by the manufacturer. It normally carries the manufacturer surplus, discontinue, or irregular goods. Ex: Woodlands
7. Catalog showrooms:
They sell a broad selection of high mark-up last-moving branded goods at discount.
8. Mail Order Houses:
Mail order houses are the retail outlets that sell their merchandise through the mail. There is generally no direct personal contact between the buyers and the sellers in this type of trading For obtaining orders, potential customers are approached through advertisements in newspapers or magazines, circulars, catalogues, samples and bills, and price lists sent to them by post. All the relevant information about the products such as the price, features, delivery terms, terms of payment, etc., are described in the advertisement.
9. Chain Stores or Multiple Shops:
Chain stores or multiple shops are networks of retail shops that are owned and operated by manufacturers or intermediaries. Under this type of arrangement, a number of shops with similar appearances are established in local ties spread over different parts of the country. These different types of shops normally deal in standardized and branded consumer products, which have rapid sales turnover.