Plus One Business Studies Chapter Wise Questions and Answers Chapter 10 Internal Trade

Kerala Plus One Business Studies Chapter Wise Questions and Answers Chapter 10 Internal Trade

1 Mark Questions and Answers

Question 1.
…….. is a trade that takes place between the people of the same nation.
Answer:
Internal trade (Home trade).

Question 2.
Buying goods in larger quantities from producers and selling them in smaller quantities to retailers is called.
Answer:
Wholesale trade.

Question 3.
……… is the last link in the channel of distribution of goods and services.
Answer:
Retailers.

Question 4.
…….. have close contact with consumers.
Answer:
Retailers.

Question 5.
…….. traders do not have a fixed place of business.
Answer:
Itinerant traders.

Question 6.
…….. carry goods on wheeled carts or on bicycles.
Answer:
Hawkers.

Question 7.
……. carry the products on the head or in baskets or shoulder bags.
Answer:
Pedlars.

Question 8.
Identify the following types of retailers and state two features for each type.
(a) Mohan sells fish on his bicycle.
(b) Anand sells toys, plastic, utensils, etc. in front of a shop on Sundays.
(c) Rajan sells old film magazines and other periodicals in pavements near a railway station.
Answer:

1. Hawkers
2. Market traders
3. Street traders

Question 9.
Identify the middleman – Manufacturer ………..?………… Retailer
Answer:
Wholesaler

Question 10.
Name the type of business.
Answer:

Hawkers

Question 11.
Wholesaler acts as a link between the manufacturer and …………….
Answer:
Retailers

Question 12.
Trade between Bangalore and Bombay is an example of …………… trade
(a) foreign trade
(b) home trade
(c) wholesale trade.
Answer:
(b) Home trade.

Question 13.
Identify the types of retailing business.
(a) Stores dealing with a particular line of goods like books, toys, etc.
(b) Stores dealing with a variety of goods of a particular brand.
(c) Stores dealing with a variety of goods of daily use.
(d) Selling goods on the pavement of a city.
(e) Stores selling used books or garments at a cheaper price.
Answer:

1. Single line store
2. Specialty store
3. General store or variety store
4. Itinerant retailing
5. Secondhand goods shop

Question 14.
Name the method of distribution in the following cases:
(a) The manufacturer approaches the customers directly.
(b) The marketing representative calls the customs over the telephone.
(c) Sale of goods and services by using the internet.
(d) Sale of goods through machines without any human intervention.
Answer:

1. Direct marketing
2. Telemarketing
3. Internet Marketing
4. Automatic vending machine

Question 15.
The shops which are owned by the same proprietor and located in different parts of the city or country are known as:
(a) Departmental store
(b) Super bazar
(c) Multiple shops
(d) Mail-order business
Answer:
(c) Multiple shops.

Question 16.
Which of the following is not an advantage of mail-order business?
(a) It required less capital.
(b) There is no risk of bad debts.
(c) It is not suitable for illiterates.
(d) Home delivery of goods is possible.
Answer:
(c)It is not suitable for illiterates.

Question 17.
It is a large scale retail organisation consisting of many departments each dealing in one item. Identify the type of organisation mentioned here.
Answer:
Departmental undertakings.

Question 18.
Find the odd one? Hawkers, cheap tacks, multiple shops, Street Traders.
Answer:
multiple shop.

Question 19.
“Absence of Salesman is one of the most important features of this shop”. Identify the shop and state it features.
Answer:
Supermarket.

Question 20.
“Post office is the channel through which a type of business is conducted”. Identify the business.
Answer:
Mail order business

Question 21.
Multiple shops are also known as ……………
Answer:
Chain stores.

Question 22.
Bata Shoe Company is an example of …………..
Answer:
Chain stores.

Question 23.
Supermarkets are also known as …………
Answer:
Self Service store

Question 24.
Bulky and perishable goods are not suitable for …………..
Answer:
Mail Order business.

Question 25.
Mail-order business is also known as …………….
Answer:
Shopping by post.

Question 26.
VPP means ……………..
Answer:
Value Payable Post.

Question 27.
“This is an agreement between the parent company and owner of an individual business unit”. Identify the category of retailers from the statement.
Answer:
Franchise.

2 Mark Questions and Answers

Question 1.
“Only the retailers know the pulse of the market” Do you agree? Justify your answer.
Answer:
Yes. Retailers have direct contact with consumers. So they can know the tastes and preferences of consumers. So a retailer occupies an important position in the distribution system.

Question 2.
a) Identify the following types of retailers.
b) State two features of such types of retailers.

1. Chandran is a street fruit seller.
2. Samuel sells vegetables in a wheeled cart.
3. Amar sells mangoes on Sundays at a weekly market.
4. Muneer sells goods by frequently changing the shop.

Answer:
a) Street traders
Features of street traders

1. These traders display their articles on busy streets, bus stand, railway stations, etc.
2. They sell low priced articles like pens, books, magazines, handkerchiefs, etc.

b) Hawkers
Features of Hawkers

1. Hawkers are traders who carry their products in wheeled carts or bicycles.
2. They deal with cheap and light articles like vegetables, fruits, toys, sweets, etc.

c) Market traders
Features of Market traders

1. These traders sell their articles on fixed days in different places.
2. They sell all kinds of goods like vegetables, ready-made garments, stationery, etc.

d) Cheap jacks
Features of Cheap jacks

1. They do not stick to a particular place of business.
2. They hire small shops located in residential areas and sell consumer items like fruits, vegetables, etc.

3 Mark Questions and Answers

Question 1.
Classify the following features under two heads departmental stores and multiple shops.
(a) Each shop deals with the same type of goods.
(b) A wide variety of products is available under one roof.
(c) There is uniformity in the shop’s design and layout.
(d) It aims at the elimination of middlemen.
(e) The products are arranged in separate departments.
(f) It deals in one or two lines of products.

4 Mark Questions and Answers

Question 1.
“These traders have no fixed place of business, but deal in articles of small value having high mobility”. Identify the category of traders and explain two types of such traders.
Itinerant traders.
a) Hawkers and Pedlars:
They deal in light and cheap consumer goods of regular use. Hawkers are traders who carry their products in wheeled carts or bicycles. But pedlars carry their products on their back or head or in shoulder bags. They deal in vegetables, fruits, sweets, toys, etc.

b) Market Traders:
These traders sell their articles on fixed days in different places. They sell all kinds of goods like vegetables, ready-made garments, stationery, etc.

Question 2.
“Such traders do not have fixed place of business”. Identify the type of retailers. Also, explain types of such retailers.
Answer:
Itinerant Retailers:
The retailers who do not have a fixed place of business to operate from are called itinerant retailers. They have to move from one place to another along with their goods in search of consumers.

Characteristics of itinerant retailers.

1. They are small traders having limited resources.
2. They generally deal with consumer products of daily use.
3. They emphasize on providing greater customer services.
4. They do not have any fixed place to operate from.

Types of itinerant retailers

1. Peddlers and hawkers:
They can the products on a bicycle, a hand cart, a cycle-rickshaw or on their heads, and move from place to place to sell their products at the doorstep of the customers. They generally deal with non-standardised and low- value products such as toys, vegetables, fruits, etc.

2. Market traders:
They are the small retailer who open their shops at different places and sell the goods on fixed days such as every Saturday or Tuesday. These trader deals in a single line of goods such as toys, ready-made garment crockery, etc.

3. Street traders:
These traders display their articles on busy streets, bus stand, railway stations, etc. They sell low priced articles like pens, books, magazines, handkerchiefs, etc. They do not change their place of business frequently.

4. Cheap jacks:
They are small retailers who have independent shops of a temporary nature in a business locality. They keep on changing their business from one locality to another but not very frequently. They deal with consumer items such as repair of watches, shoes, buckets, etc.

2. Fixed Shop Retailers:
Retailers who maintain permanent establishment to sell their goods are called fixed shop retailers. Following are the main characteristics of fixed shop retailers:

1. They have greater resources and operate on a relatively large scale.
2. They deal in durable as well as non-durable goods.
3. They provide greater services to the customers such as home delivery, repairs, credit facilities, etc.

Types of Fixed Shop Retailers
The fixed-shop retailers can be classified into two. They are:
(a) Small shop-keepers
(b) Large retailers

Question 3.

Answer:
Wholesaler
Functions of wholesalers :
(a) Wholesalers purchase, goods in large quantity from manufactures and sells them to retailers in small quantities.
(b) They store goods in their own warehouses
(c) They provide financial assistance to producers and retailers
(d) They make arrangements for the transportation of goods to the retailer’s shop
(e) They maintain a regular supply of goods. It stabilized the price.
(f) They give valuable information to producers and retailers regarding the product and market.

Question 4.
Explain the role of the Chamber of Commerce and Industry in the promotion of internal trade.
Answer:
Role of Chambers of Commerce and Industry in Promotion of Internal Trade.

Association of business and industrial houses are formed to promote and protect their common interest and goals. They undertake the following functions.

1. The chamber of commerce and Industry help in the inter-state movement of goods through various activities.
2. They ensure that the imposition of octroi and other local taxes do not affect trade adversely.
3. They also undertake marketing of agro products and related issues.
4. They interact with the Government to make laws relating to weights and measures and protection of brands.
5. They discuss with the government to get sound infrastructure so that business activities could be undertaken easily.

6 Mark Questions and Answers

Question 1.
A commerce teacher, while going through the topic, internal trade, cites the example of Bata shoe company, having its headquarters in Bombay has its showrooms at different locations of the city as well as various cities all over India. The products of the company carry the same price in all these showrooms.
b) Explain the features of these types of shops.
Answer:
Chain Stores or Multiple Shops
Multiple shop is a system of branch shops operated under centralised management and dealing in a similar line of goods. Branches are located throughout the nation.

Features of multiple shops

1. It deals in one or two lines of products.
2. All branches are dealing in similar goods
3. It has centralized management and a unified system of control
4. It eliminates middlemen.
5. It works on cash and carry the principle
6. It has centralized buying and decentralized selling.
7. There is uniformity in operation in all branches.
8. It deals with goods of daily use and durables.

Advantages

1. It enjoys economies of bulk purchase because the goods for all branches are purchased by head office.
2. There is no risk of bad debts because all sales are on a cash basis.
3. The advertisements for all branches are done by the head office. So there is an economy in the advertisement.
4. Multiple shops are located in towns and cities. They attract a large number of customers.
5. All branches of multiple shops are uniform in style, design, and display of goods.
6. All the branches sell quality goods at uniform prices. It creates public confidence.
7. The economy in large scale buying, centralized management, etc. reduces the cost of operations.
8. Products having no demand in one branch can be transferred to another branch. It reduces business risk.
9. Multiple shops enjoy the benefits of quick turn over because of countrywide location.

Limitations

1. The multiple shops deal only in a limited range of products. So consumers have very little choice.
2. They will not provide any credit facilities to consumers.
3. There is a lack of personal touch between the company and consumers because branches are managed by salaried managers.
4. The branch manager is only a salaried employee. He has no initiative to increase profits.
5. As these shops deal in a limited line of goods, a fall in demand will affect the business.

Question 2.
Alexander wants to deal with a particular commodity alone. He wants to have branches all over the country. Explain to him the suitable type of selling and also state its merits.
Answer:
Chain Stores or Multiple Shops
Multiple shop is a system of branch shops operated under centralised management and dealing in a similar line of goods. Branches are located throughout the nation.

Features of multiple shops

1. It deals in one or two lines of products.
2. All branches are dealing in similar goods
3. It has centralized management and a unified system of control
4. It eliminates middlemen.
5. It works on cash and carry the principle
6. It has centralized buying and decentralized selling.
7. There is uniformity in operation in all branches.
8. It deals with goods of daily use and durables.

Advantages

1. It enjoys economies of bulk purchase because the goods for all branches are purchased by head office.
2. There is no risk of bad debts because all sales are on a cash basis.
3. The advertisements for all branches are done by the head office. So there is an economy in the advertisement.
4. Multiple shops are located in towns and cities. They attract a large number of customers.
5. All branches of multiple shops are uniform in style, design, and display of goods.
6. All the branches sell quality goods at uniform prices. It creates public confidence.
7. The economy in large scale buying, centralized management, etc. reduces the cost of operations.
8. Products having no demand in one branch can be transferred to another branch. It reduces business risk.
9. Multiple shops enjoy the benefits of quick turn over because of countrywide location.

Limitations

1. The multiple shops deal only in a limited range of products. So consumers have very little choice.
2. They will not provide any credit facilities to consumers.
3. There is a lack of personal touch between the company and consumers because branches are managed by salaried managers.
4. The branch manager is only a salaried employee. He has no initiative to increase profits.
5. As these shops deal in a limited line of goods, a fall in demand will affect the business.

Question 3.
“Post office is the channel through which a type of business is conducted”.
(a) Identify the business. Explain.
(b) State its features, advantages and disadvantages.
Answer:
Mail Order Houses/shopping by Post

Mail-order business is a form of retailing where the business transactions are done through post or mail. Under this system orders for goods, delivery of goods and payment is made through VPP (Value Payable Post). Under this arrangement, the goods are delivered to the customers only on making full payment for the same. There is generally no direct personal contact between the buyers and the sellers in this type of trading.

This type of business is suitable for products that can be:

1. graded and standardised,
2. easily transported at low cost,
3. have ready demand in the market,
4. are available in large quantity throughout the year,
5. involve the least possible competition in the market.
6. can be described through pictures.

Bulky, heavy and perishable products are not suitable for this type of business.

Advantages

1. It needs only limited capital because there is no need for building and other infrastructural facilities.
2. Unnecessary middlemen between the buyers and sellers are eliminated.
3. Since the mail-order houses do not extend credit facilities to the customers, there are no chances of any bad debt.
4. Under this system, goods are delivered at the doorstep of the customers. This results in great convenience to the customers.
5. There is a wider scope for business.
6. It helps to avoid overstocking of goods as goods are collected only when the orders are received.

Disadvantages

1. It has to spend a large amount of advertisement.
2. There is no direct personal contact between the buyer and the seller.
3. The buyer cannot inspect the goods personally before purchasing.
4. They are not suitable for heavy and perishable goods.
5. They do not provide credit facilities to customers.
6. There may be a delay in getting goods.

Question. 4
Distinguish between Wholesalers and Retailers.
Answer:

Types of Retail Trade
Retail trade can be classified into the following two categories on the basis of whether or not they have a fixed place of business.
1. Itinerant Retailers
2.Fixed shop Retailers

Question 5.
Draw a chart showing the types of Retail Trade.
Answer:

8 Mark Questions and Answers

Question 1.
Raja Agencies of Trivandrum buys Honey Biscuits from a company located in Tamil Nadu and supply it to various shops in the district.
(a) You are required to trace out the nature of trade engaged in by the Raja Agencies.
(b) Discuss the various functions performed by them?
Answer:
Wholesale Trade:
Wholesale trade means buying goods in large quantities from the producers and selling them in smaller quantities to the retailers. Wholesalers act as an important link between manufacturers and retailers.

Functions of Wholesaler
1. Buying and assembling:
The wholesalers buy goods from different producers and keep them in a central place.

2. Warehousing:
The goods are to be kept in the I warehouses till they are sold to retailers.

3. Grading and packing:
The goods purchased are sorted out on the basis of quality and size. This is called grading. After grading they are packed in attractive packages.

4. Pricing:
The wholesaler fixes the price of products.

5. Transportation:
The wholesalers move the goods from the production centre to the retail shop.

6. Risk bearing:
They assume the risk like change in demand, spoilage, theft during transportation, etc.

7. Financing:
Wholesalers purchase goods on a cash basis from manufacturers and sell them to the retailers on a credit basis.

8. Market information:
Wholesalers collect various market information for the benefits of manufacturers so that they can change the products accordingly.

Services of Wholesalers to Manufacturers
1. Facilitating large scale production:
As the wholesalers place bulk orders, the producers are able to undertake production on a large scale and take advantage of economies of scale.

2. Risk bearing:
Wholesaler deals in goods in their own name and bears a variety of risks such as the risk of falls in prices, theft, pilferage spoilage, fire, etc.

3. Financial assistance:
Wholesalers provide financial assistance to the manufacturers by making cash payment for the purchased goods.

4. Expert advice:
Wholesaler provides various useful information regarding customer preference, market conditions, etc to the manufacturer.

5. Help in marketing function:
As the wholesalers place bulk orders, it relieves the producer from many marketing activities and he can concentrate on production.

6. Storage facilities:
Wholesalers hold the goods in their own warehouses. It reduces the burden of storage of goods by the manufacturers.

7. Facilitate production continuity:
The wholesalers facilitate continuity of production activity throughout the year by purchasing the goods as and when these are produced.

Services of Wholesalers to Retailers
1. Availability of goods:
The wholesalers make the products of various manufacturers readily available to the retailers.

2. Marketing support:
They undertake advertisements and other sales promotional activities to induce customers to purchase the goods.

3. Grant of credit:
The wholesalers generally provide credit facilities to the retailers.

4. Specialised knowledge:
Wholesalers know the pulse of the market. They inform the retailers about the new products, their uses, quality, prices, etc.

5. Risk sharing:
Wholesalers sell goods to retailers in small quantities and thus retailers do not face the risk of storage, pilferage, reduction in prices, etc.

Question 2.
Explain the functions of Retailers.
Answer:
Retail Trade
Buying goods in large quantities from the wholesalers and selling them in small quantities to the ultimate consumers is known as retail trade. Retailers serve as an important link between the producers and consumers in the distribution of products and services.

Functions of Retailers

1. A retailer collects different varieties of goods. So he can satisfy different types of customers.
2. A retailer provides market information to wholesalers and manufacturers.
3. A retailer is in close contact with consumers. So he can persuade the consumers to buy the product.
4. Retailers locate their business in residential areas. It helps the consumers to purchase the product easily.
5. The retailers provide credit facilities to the consumers.
6. Retailers provide after-sales services to attract consumers.

Services of Retailers to Manufacturers and Wholesalers

1. Retailers help manufacturers & wholesalers in the distribution of their goods & services to the ultimate consumers.
2. Retailers undertake personal selling efforts and thus, help manufacturers and wholesalers to increase the sale of the products.
3. Retailers help manufacturers and wholesalers to operate production on a large scale by undertaking the distribution of goods.
4. As retailers are in constant touch with customers, they can provide various market information such as the tastes, preferences, and attitudes, etc. of consumers to the producers.
5. Retailers participate in various sales promotional activities conducted by producers and wholesalers.

Services Retailers to Consumers

1. Retailers provide goods to consumers according to their requirements.
2. Retailers keep large varieties of products of different manufacturers. It enables customers to select goods according to their choice.
3. Retailers provide important information about the new products to the consumers.
4. Retailers also provide after-sales services in the form of home delivery etc. to the customers.
5. Retailers often supply goods on credit to the customers.
6. Retailers keep ready stock of the products needed by the consumers.

Question 3.
Explain the services rendered by retailers to consumers.
Answer:
Retail Trade
Buying goods in large quantities from the wholesalers and selling them in small quantities to the ultimate consumers is known as retail trade. Retailers serve as an important link between the producers and consumers in the distribution of products and services.

Functions of Retailers

1. A retailer collects different varieties of goods. So he can satisfy different types of customers.
2. A retailer provides market information to wholesalers and manufacturers.
3. A retailer is in close contact with consumers. So he can persuade the consumers to buy the product.
4. Retailers locate their business in residential areas. It helps the consumers to purchase the product easily.
5. The retailers provide credit facilities to the consumers.
6. Retailers provide after-sales services to attract consumers.

Services of Retailers to Manufacturers and Wholesalers

1. Retailers help manufacturers & wholesalers in the distribution of their goods & services to the ultimate consumers.
2. Retailers undertake personal selling efforts and thus, help manufacturers and wholesalers to increase the sale of the products.
3. Retailers help manufacturers and wholesalers to operate production on a large scale by undertaking the distribution of goods.
4. As retailers are in constant touch with customers, they can provide various market information such as the tastes, preferences, and attitudes, etc. of consumers to the producers.
5. Retailers participate in various sales promotional activities conducted by producers and wholesalers.

Services Retailers to Consumers

1. Retailers provide goods to consumers according to their requirements.
2. Retailers keep large varieties of products of different manufacturers. It enables customers to select goods according to their choice.
3. Retailers provide important information about the new products to the consumers.
4. Retailers also provide after-sales services in the form of home delivery etc. to the customers.
5. Retailers often supply goods on credit to the customers.
6. Retailers keep ready stock of the products needed by the consumers.

Question 4.
Explain the features, advantages, and disadvantages of departmental stores.
Answer:
Departmental stores:
A departmental store is a large scale retail shop selling a wide variety of goods in different departments under one and management. Each department deals in a separate line of goods like stationery, books, furniture, clothing, etc. Consumers can purchase all goods from the departmental store.

Features of a departmental store

1. It is a large scale retail organization.
2. A number of retail shops in the same building.
3. It offers a wide variety of products under one roof.
4. It is located at central places of the city
5. The products are arranged in separate departments
6. Sales, control, and management are centralized
7. It offers various services and facilities like free home delivery etc.

Advantages
1. Central locations:
As these stores are usually located in central places they attract a large number of customers.

2. Convenience in buying:
By offering a large variety of goods under one roof, the departmental stores provide great convenience to customers in buying almost all goods of their requirements in one place.

3. Attractive services:
A departmental store aims at providing maximum services to the customers.

4. Economy of large-scale operations:
As these stores are organised in a very large-scale, the benefits of large-scale operations are available to them.

5. Mutual advertisement:
All the departments are under one roof, so there is an economy in advertising.

6. Risk distribution:
If there is a loss in one department, it may be compensated for the profit of other departments.

7. Increased sales:
Central location, mutual advertisement, etc. will help a departmental store to increase its sales.

Limitations
1. Lack of personal attention:
Because of the large- scale operations, it is very difficult to provide adequate personal attention to the customers in these stores.

2. Inconvenient location:
As a departmental store is generally situated at a central location, it is not convenient for the consumers who reside away from town.

3. High price:
A departmental store charges a high price for the products because of high operating costs.

4. High operating cost:
As these stores give more emphasis on providing services, their operating costs tend to be high.

5. High advertisement cost:
The success and prosperity of a departmental store depends on advertisement. Therefore, it should spend a large amount on the advertisement.

6. Lack of effective control:
Departmental store works through a large number of departments. It creates so many problems.

7. High risk:
A departmental store keeps a large stock of goods. So changes in fashion, taste, price, etc will affect the profitability of the business.

Question 5.
Explain the features, advantages, and disadvantages of Consumers Co-operative store.
Answer:
Consumer Cooperative Store:
It is a retail store formed by the consumers on the basis of principles of co-operation. These stores are owned and managed by consumers. They deal all types of consumer goods.

Features of Consumers Co-operative

1. It is a voluntary association of consumers.
2. The liability of members is limited.
3. Consumers can purchase quality goods at the lowest cost from these stores.
4. Democratic control is exercised.
5. It eliminates middlemen.

Advantages

1. Consumers can purchase quality goods at the lowest cost from consumers’ co-operative store.
2. There are no bad debts as goods are sold on a cash basis.
3. Economies of large scale purchasing can be enjoyed.
4. Less advertisement expenses are required.
5. It restricts the monopoly and wasteful competition.

Disadvantages

1. A consumer co-operative store can collect low capital. So they cannot start a business on a large scale.
2. The management of a consumer co-operative store is inefficient.
3. It lacks proper warehousing facilities.
4. It will not attract consumers because of no credit facilities.

Question 6.
“Absence of salesman is one of the most important features of this shop”.
a) Identify the shop. Explain
b) State its features, advantages, and disadvantages.
Answer:
Super Markets / Super Bazaar:
Supermarket is a large scale retail organisation selling a wide variety of consumer goods. The important feature of the supermarket is the absence of a salesman to help consumers in selecting goods. Hence the supermarket is also called ‘ Self Service Store’.

Features of Super Market

1. They are located in the center of the town.
2. They sell goods on a cash basis only.
3. They deal with a wide variety of goods.
4. There is no salesman to help consumers.

Advantages

1. Consumers can purchase everything from supermarket
2. There is no bad debt as sales are on a cash basis only.
3. They are located in the centre of the town.
4. It attracts a large number of consumers.
5. Consumers can select goods according to their tastes and preferences.
6. A variety of goods is available in a supermarket.

Disadvantages

1. Large premises at a central location are not available easily.
2. It lacks personal advice of salesman
3. They do not provide credit facilities to customers.
4. The employees in a supermarket do not take initiative to increase sales.
5. It requires a huge capital investment.
6. It is not suitable for products which require personal selling.
7. There is no personal contact with consumers.

One Business Studies Chapter Wise Questions and Answers