Important Questions for CBSE Class 11 Business Studies Chapter 10 - Internal Trade

Very Short Answer Questions (1 or 2 Marks)

1. Differentiate between street trader and street shops

Ans: The differences between street trader and street shops are as follows:

2. What do you mean by a Cheap jack type of retail trade?

Ans: Retailers who operate temporary independent stores and continually move their firm from one location to the next, depending on the area's potential. They sell consumer goods as well as services such as watches, shoes, and bucket repair.

3. State any two advantages of supermarkets.

Ans:  Two advantages of supermarkets are-

1. Keep a large variety of goods in various patterns, colors, and sizes so that purchasers can make better choices. 

2. All sales are made in cash, and thus no bad debts exist.

4. Define Internal Trade

Ans: Internal trade refers to the buying and selling of goods and services within a country's borders. Internal Trade has the following characteristics such as:

• Buying and selling takes occur in the home country, 

• Payments made or received in the home country 

• Only a few formalities for traders to complete.

5. List the two broad categories of trade.

Ans: Internal trade can be divided into two distinct categories: 

• Wholesale trade 

• Retail trade.

6. Which shops deal in specific line products?

Ans: Specialized stores deal in specific line products. Rather than selling a variety of products from multiple categories, these retail shops focus on selling a certain line of a product. Specialty stores are typically located in a central location where a big number of clients can be drawn, and they offer a diverse assortment of goods to customers.

7. Give two examples of chain stores

Ans: Walmart and Body Shop.

8. Mail order Houses provide a lot of convenience to the customers, yet they are not very popular. Why? Give one reason.

Ans: Ordering via mail Houses offer a lot of convenience to customers, but they aren't extremely popular because they need a lot of money to spend on product promotion, moreover due to chances of fraud by traders, the consumers are apprehensive regarding this method.

9. What are Vending Machines? Which type of goods are suitable for vending machines?

Ans: In many nations, coin-operated vending machines are handy for selling a variety of things such as hot beverages, platform tickets, milk, soft drinks, chocolates, newspapers, and so on. Vending machines are excellent for selling pre-packaged brands of low-cost products with high turnover and consistent size and weight. The initial cost of installing a vending machine, as well as the ongoing costs of maintenance and repair, are, nevertheless, rather significant.

10. Distinguish between a wholesaler and retailer. Give only one point of difference

Ans: The point of difference between wholesaler and retailer is given below:

Short Answer Questions (3 or 4 Marks)

11. Sandeep& Sons, Delhi orders pearl jewellery from Nasir Bros, Hyderabad. They enter into a contract and make certain that the payment will be made only on receiving the goods at Delhi in their Shop. Identify the term of trade in the above example

Ans: This example is a Cash-On-Delivery (COD) type of trade.

12. Discuss services of retailers to manufacturers and wholesalers.

Ans: The services of retailers to manufacturers and wholesalers are:

• Help in the distribution of goods: Retailers assist in the dissemination of manufacturers products by making them available to end-users who may be dispersed across a vast geographic area. As a result, they supply place utility.

• Personal selling: Retailers relieve producers of this work and considerably assist them in the process of actualizing product sales by engaging in personal selling efforts.

• Enabling large-scale operations: Allows them to function at a somewhat large scale, allowing them to focus totally on their other tasks.

• Collecting market information: Retailers are a significant source of market data about customer tastes, interests, and attitudes, which can help marketers make critical marketing decisions.

• Help in promotion: Manufacturers and distributors must engage in a variety of promotional activities in order to improve product sales. Retailers take part in these activities and encourage product sales.

13. Identify the type of itinerant trader from the following: 

a) Traders who open their shop on a fixed day.

Ans: Market vendors/traders: Small retailers that open their stores at different locations on specific days or dates are known as market vendors/traders. They primarily serve people from lower socioeconomic backgrounds and specialize in low-cost consumer goods. 

b) Petty retailers who have temporary independent shops. 

Ans: Cheap Jacks: Retailers with temporary independent businesses in a business district are known as cheap jacks. They continually move from one location to the next, depending on the area's potential. They sell consumer goods as well as services such as a watch, shoe, and bucket repair.

c) Traders commonly found in populated areas.

Ans: Street Traders: Street traders are the ones who sell consumer items of everyday utility, such as stationery, eatables, readymade clothing, newspapers, and magazines, and are usually found in places where a large floating population congregate, such as around railway stations and bus stops.

14. Jyoti has shifted residence to a new settlement colony. There are no retail shops nearby. What difficulties will Jyoti face in the above case?

Ans: Jyoti's challenges in the aforesaid circumstances are listed below: 

• She will be deprived of the convenience of having items available whenever she needs them. 

• She will not be informed about new products that are introduced to the market. 

• She will have to hoard goods, sometimes at higher prices in the absence of retail shops.

• She will face inconvenience because she would have to travel a long distance for everything. 

• She’ll not be able to take advantage of the credit facility, as generally retail shops provide such facilities.

• She will not have access to a wide range of products under one roof.

• She will not be able to take advantage of after-sale services such as home delivery. 

15. Identify the types of retailers in the following statements: 

(a) Rohan displays his goods on bus-stands or pavements. 

Ans: Street traders: They are the retailers who sell consumer items of everyday utility, such as stationery, eatables, readymade clothing, newspapers, and magazines, and are usually found in places where a large floating population congregate, such as around railway stations and bus stops.

(b) Mangal sells goods from one street to another, from one locality to another.

Ans: Peddlers and hawkers: They are little producers or petty traders that sell their items at consumers' doorsteps while travelling from place to place on a bicycle, a hand cart, a cycle-rickshaw, or on their heads. They primarily trade in uncommon and low-value items.

(c) Rajkumar sells only school uniforms.

Ans: Specialty stores: These retail establishments specialize in the sale of a specific line of a product rather than selling a variety of products of various categories. Specialty stores are typically located at a central location where a big number of clients can be drawn, and they offer a diverse assortment of goods to customers.

(d) Deepanshu deals only in second-hand books.

Ans: Second-hand goods stores: These stores sell used or second-hand goods such as books, clothes, autos, furniture, and other household items. These shops selling used goods may be in the form of a stall with very little structure like a table or a temporary platform to display the books or they may have reasonably good infrastructure, as in the case of those selling furniture, used cars, scooters, or motorcycles, which are located at street crossings or in busy streets.

16. A manufacturing Co. opens shops at different locations in India. He sells goods on cash only. The shops have identical decorations. The prices of goods are fixed. In this way they eliminate unnecessary middlemen thus benefiting the consumers.

(a) Identify the type of shop referred to.

Ans: Multiple store or a chain store. There are a lot of chain stores with comparable appearances that have sprouted up in various locations across the country. These various stores usually sell standardized and branded consumer goods with a high turnover of sales. These stores are owned by the same company and use the same merchandising tactics, as well as the same products and displays.

(b) Elaborate characteristics of such shops

Ans: The following are the characteristics of chain stores:

• The goods are dispatched to each of these shops from the head office, which is located in a reasonably populous area where a significant number of clients may be approached. 

• The shop is under the direct supervision of a Branch Manager, who is responsible for its day-to-day management. 

• The head office is in charge of creating policies and ensuring that they are executed.

• The prices of goods in such shops are fixed, and all sales are conducted in cash.

17. Vishal buys goods in larger quantities and sells them to small businessmen. 

(a) Which type of trader is Vishal? 

Ans: Vishal works as a wholesaler. A wholesaler buys the product in bulk from the manufacturer and sell it to the retailer/businessman. Because it acts as an intermediary between manufacturers and retailers, the wholesaler is an important link in the distribution network. The retail stage of distribution is where items are transmitted from the hands of small businessmen to the hands of consumers.

(b) State services to consumers of Retailers.

Ans:  Services to consumers are as follows:

1. Regular availability of products: Maintain consistent availability of numerous products from various manufacturers. This allows buyers to purchase things as and when they are required.

2. New product information: Retailers convey crucial information to customers about the arrival, distinctive characteristics, and other aspects of new products by arranging for effective product display and through their personal selling efforts.

3. Convenience in buying: They offer tiny quantities of goods in close proximity to residential areas and are open for long periods of time. Hence, the customers appreciate the ease and convenience with which they can purchase things.

4. Wide selection: Maintain a diverse inventory of products from various producers. Customers can choose from a large range of products with varied styles, colors and designs as a result of this.

5. After-sales services: Provides after-sales services such as home delivery, spare part supply, and customer assistance.

6. Provide credit facilities: Allow regular customers to apply for credit. As a result, the latter can increase their consumption.

18. Mention differences between departmental store and multiple shops.

Ans: The differences between departmental store and multiple shops are:

19. Explain the features of Departmental store

Ans: The features of a departmental store are:

• Type of Customers:  Provide the best possible service to consumers in the upper section of society for whom pricing is secondary. 

• Location: In the heart of a city, in a central location that caters to a big number of customers. 

• Organization: Due to the vast size of these establishments, they are usually organized as a joint-stock company with a board of directors. 

• Services: A departmental store incorporates both retail and warehouse services. 

• Purchase and sale mechanism: They have centralized purchasing systems and sales are decentralized in several departments.

20. Enumerate the limitation of Multiple shops.

Ans: Limitations of Multiple shops are:

• Limited choice: They do not sell products made by other companies. As a result, consumers have a limited choice of goods. 

• Heavy reliance on top level management:  They have to rely on the top level for all advice, which takes away their ability to use their creative abilities to satisfy customers. 

• Lack of effort: Employees' lack of effort can often lead to indifference and a lack of personal touch. 

• Losses: Because of enormous stocks sitting unsold at the central depot, management may have to bear significant losses.

21. Explain two features, merits, and limitations of supermarket

Ans: Features 

1. Generally carries a full range of food and grocery items, as well as non-food convenience items.

2. Under one roof, they may find a variety of things to meet their needs.

Merits 

1. There are no bad debts because sales are made on a cash basis.

2. The advantages of large-scale buying and selling include decreased operating costs.

 Limitations 

1. Because the principle of self-service is followed, purchasers' purchasing power is limited.

2.  As a result, they do not receive any personal attention.

Long Answer Questions (5 or 6 Marks)

22. Discuss the services of a wholesaler to the manufacturer and retailer.

Ans: Services to Manufacturers

1. Large-scale production facilitation: Wholesalers receive modest orders from a variety of shops and pass them on to manufacturers.

2. Taking chances: Wholesale merchants deal in commodities in their own name, take delivery, and store goods purchased in huge amounts in their warehouses; they face a variety of dangers, including price drops, theft, pilferage, spoilage, and fire.

3. Assistance with finances: They almost always pay in cash for the products they acquire. Sometimes they also advance money to the producers for large orders, so the manufacturers do not need to keep their capital in stockpiles.

4. Expert advice: Because wholesalers have direct contact with retailers, they may provide expert advice to manufacturers on a variety of topics, including customer tastes and preferences, market conditions, competitive activity, and the features that buyers like.

5. Assistance with the marketing function: Wholesalers relieves manufacturers of many marketing responsibilities, allowing them to focus on their core business. They handle the distribution of commodities to a number of retailers, who then sell them to a huge number of customers dispersed over the country.

6. Facilitate production continuity: Wholesalers ensure production continuity by purchasing items as they are produced and holding them until they are needed by retailers or customers.

7. Storage: Wholesalers receive items when they are manufactured in factories and store them in their godowns/warehouses, thus saving time.

Services to Retailers

• Availability of goods: Relieves retailers of the effort of collecting goods from numerous manufacturers and keeping large inventories of the same 

• Marketing support: The wholesalers aid the retailers by performing various marketing duties and providing support. The retailers earn good profit since it helps them increase demand for various new products.

• Credit: Wholesaler credit is usually extended to their frequent customers. As a result, retailers can run their businesses with a modest amount of operating capital.

• Specialized knowledge: Wholesalers specialize in a single product line and are well-versed in the industry; they pass on the benefits of their specialized knowledge to retailers.

• Risk sharing: By purchasing items in smaller quantities, businesses can minimize risks such as storage, pilferage, obsolescence, price reductions, and demand variations.

23. Why are consumer cooperative stores considered to be less expensive? What are their relative advantages over other large scale retailers?

Ans: A consumer cooperative store is a business that is owned, operated, and controlled entirely by consumers. The goal of such stores is to reduce the number of intermediaries who raise the cost of production and, as a result, provide better service to members. 

Cooperative stores typically purchase large quantities of goods directly from manufacturers or wholesalers and resell them to consumers at low costs. The profits made by consumer cooperative stores over the course of a year are used to pay out bonuses to members and to build up general reserves and general welfare funds or similar funds for the members' social and educational benefits. This is why consumer cooperative stores are thought to be a good idea, and are less expensive.

The following are some of the benefits of consumer cooperative stores versus large-scale retailers: 

• Simple and easy to form: A consumer cooperative society is simple to create, and members' liability in a cooperative store is limited to the amount of capital they invest.

• Assists the retailers: Relieves retailers of the effort of collecting goods from numerous manufacturers and keeping large inventories of the same.

• Democratic formation: It is run democratically. Each member has one vote, regardless of how many shares he or she owns. 

• No middlemen: The elimination of middlemen leads to cheaper prices for members' consumption items.

• Cash sales: The majority of items sold in consumer cooperative stores are paid for in cash.

• Convenient location: Consumer cooperative stores are typically located in public settings where members and others can easily purchase the goods.

24. Discuss the features of fixed shop retailers? Explain different types of fixed shop small retailers?

Ans: Fixed shop retailers are retail stores that have a constant location where they offer their products. As a result, they do not relocate from one location to another to service their consumers.

Characteristics:

• More resources and the ability to operate on a wide scale.

• Deal with a variety of items, including both consumer durables and nondurables.

• High customer trust exists.

There are four types of Fixed Shop Small Retailers:

1. General stores 

These stores stock a wide range of products necessary to meet the day-to-day needs of customers in the surrounding areas. They stay open for long periods of time at convenient times and frequently offer credit to some of their regular customers.

2. Specialty store

Shops that specialize These retail establishments specialize in the sale of a specific line of a product rather than selling a variety of products of various categories. Specialty stores are typically located in a central location where a big number of clients can be drawn, and they offer a diverse assortment of goods to customers.

3. Street stall holders

Vendors on the street. They cater to roving clients and specialize in low-cost items such as hosiery, toys, cigarettes, soft drinks, and so on. They receive their goods from both local and wholesale sources. Because a stall's total size is so small, it can only hold a minimal amount of merchandise.

4. Second-hand good shops

A store that sells used products These stores sell used or used items such as books, clothing, autos, furniture, and other household items. Second-hand stores may be set up in the form of a stand with very little structure, a table or a makeshift structure, near street crossings or in busy streets.

25. Discuss the features of Mail order houses? State their merits and limitations?

Ans:  Mail order houses are retail establishments that sell their merchandise via mail. In this sort of trading, there is usually no direct personal contact between customers and sellers. 

Features

• Reaching the potential customers: To obtain orders, potential consumers are contacted by newspaper or magazine advertisements, circulars, catalogs, samples and bills, and price lists mailed to them. 

• Careful Inspection: When the orders are received, they are carefully inspected for compliance with the purchasers' specifications, which are carried out through the post office.

• Payment options: There may be a variety of payment options available, such as cash payment, demand draft etc. 

• Suitability: Only goods that can be:

• graded and standardized, 

• easily transported at a low cost, 

• have ready market demand, 

• available in large quantities throughout the year, 

• involve the least amount of market competition, 

• described through pictures and other means are suitable for this type of trading.

Merits of Mail order House

• Less finances required: It may be established with a small amount of money.

• Eliminates middlemen: It eliminates the need for unnecessary middlemen between buyers and sellers. 

• No bad debts: They do not provide credit to its consumers, thus there is no risk of bad debt.

• Market potential: Big market potential because mail can reach a large number of people across the country. 

• Delivery: The goods are delivered at the customer’s place, and hence the customers need not go out to purchase the goods

Limitations of Mail order House

• No personal contact: There is no personal contact between buyers and sellers under the mail order selling system, which increases the chances of misunderstanding and mistrust 

• Investment on product promotion: There is a lot of money spent on product promotion.

• Services: There is no after-sales service, which is crucial for customer satisfaction

• No credit facility: They don't provide credit facilities that discourage the customers from buying goods through this medium.

• Chances of fraud: The chances of fraud exists in such a medium. At times dishonest traders defraud customers by making false claims about products or failing to honour commitments.

26. Uma, a village girl, comes to Delhi to visit her relatives. She goes with her cousin to a shop, which is centrally located. She becomes astonished by the varieties of goods which are sold here. 

(a) Identify this type of shop. 

Ans: A departmental store is a large store that sells a wide range of products organized into well-defined sections, to meet almost every customer's demand under one roof. It is divided into several departments, each of which focuses on a single type of product.

(b) Quoting lines from the above paragraph describe two characteristics of the shop. 

Ans: The following are the characteristics of departmental stores:

1. Central Location: These are located at a central place in the heart of a city which caters to a large number of customers.

Quotation: “She goes with her cousin to a shop, which is centrally located.”

2. Wide range of products under one roof: Departmental stores are known for multifarious products and services with varied styles, colours, designs all available under one roof.

Quotation: “She becomes astonished by the varieties of goods which are sold here.”

(c) Explain advantages of such shops.

Ans: The following are some of the benefits of department stores: 

• They draw a huge number of clients due to their central location.

• Provides a vast range of items under one roof 

• Aims to provide maximum services to clients 

• Organized on a very big scale, allowing them to reap the benefits of large-scale operations, notably in terms of purchasing goods 

• They spend a lot of money on advertising and other promotional efforts to assist them to increase their sales.

27. Nirmala orders a mixer on the basis of an advertisement in a newspaper specifying the features, price, delivery terms. It specified that the terms of payment will be VPP only. 

(i) Identify this type of retail business. 

Ans: Mail order houses are retail establishments that offer their wares via mail. In this sort of business, there is usually no direct human contact between the buyers and sellers. Potential consumers are approached for orders through newspaper or magazine advertisements, circulars, catalogs, samples and bills, and price lists mailed to them. When the orders arrive, they are thoroughly inspected for compliance with the purchasers' demands, which are then carried out through the post office. The goods could be sent using Value Paid Post (VPP). The goods are shipped via post and are only delivered to customers on making this agreement.

(ii) Explain two advantages and two limitations of them

Ans: Advantages

• Less finances required: It may be established with a small amount of money.

• Eliminates middlemen: It eliminates the need for unnecessary middlemen between buyers and sellers. 

Disadvantages:

• No personal contact: There is no personal contact between buyers and sellers under the mail order selling system, which increases the chances of misunderstanding and mistrust 

• Investment on product promotion: There is a lot of money spent on product promotion.

28. A London based manufacturing co. manufacturing washing machines wish to add 2 new products in India namely AC’s and Refrigerators. Out of a lot of 10 applicants the co. chose two wholesale firms (headed by females) whose proposals were very competitive and attractive. The wholesaler firm of AC’s hired the services of a (differently able retailer) Hari at competitive prices to sell AC’s in Delhi, Hari informs his wholesaler firm's head that the consumers of Delhi wish that their houses are cold when they reach their homes in the scorching heat of Delhi. 

(a) Explain three services rendered by retailers to wholesalers or manufacturers. 

Ans: Three services rendered by retailers to wholesalers or manufacturers are as follows:

• Help in the distribution of goods

Assist in the dissemination of their products by making them available to end-users who may be dispersed across a vast geographic area. As a result, they supply place usefulness.

• Personal selling

Retailers relieve producers of this work and considerably assist them in the process of actualizing product sales by engaging in personal selling efforts.

• Enabling large scale operations

Allows them to function at a somewhat large scale, allowing them to focus totally on their other tasks.

(b) Identify two values which are being adhered to in the above paragraph

Ans: The following are the values that are upheld: 

1. Women's Empowerment: The company chose two wholesale enterprises (both led by women) whose proposals were extremely competitive and appealing, resulting in women's empowerment. 

2. Social Concern: The AC wholesaler firm enlisted the help of Hari, a (differently able retailer).

29. Briefly explain the role of Chamber of Commerce and Industry in promoting internal trade?

Ans: Role of Chamber of Commerce in promoting internal trade is as follows:

1. Interstate movement of goods

The Chambers of Commerce and Industry assist in a variety of operations related to the interstate movement of products, including car registration, surface transportation policies, and highway and road building.

2. Octroi and other local levies

These are collected from people entering the state or municipal bonds. The Chambers of Commerce make every effort to ensure that their regulations do not obstruct smooth transportation or local trade.

3. Harmonization of sales tax structure and Value Added Tax

The sales tax is a significant source of revenue for the state. For promoting trade balance, a sensible sales tax structure and uniform rates among states are critical.

4. Weights and Measures and prevention of duplication brands

Weights and measures laws, as well as brand protection laws, are required to defend the interests of both consumers and traders. These must be carefully enforced.

5. Promotion of Agro based products

The chamber of commerce frequently interacts with various agro based associations, consumer cooperatives, farming associations etc., and assists them in selling and promoting their products.

6. Excise duty

The central government's primary source of revenue is the excise tax, which is levied throughout all states. The excise policy has a significant impact on the pricing system.

7. Promoting sound infrastructure

The Chambers of Commerce and Industry meet with government departments to discuss infrastructure investments.

8. Labour legislation

Labor policy that is straightforward and flexible is beneficial to industries that want to maximize productivity and create jobs. The government and the Chambers of Commerce and Industry are continually focusing on such issues.