Notes : Internal Trade 1 Class 11 Notes | EduRev

Class 11 : Notes : Internal Trade 1 Class 11 Notes | EduRev

 Page 1


 
76 
 
CHAPTER - 9 
INTERNAL TRADE 
• Introduction:  
Buying and selling the goods and services within the boundaries of a nation are referred to as 
internal trade. 
 
• Important Concept: 
Meaning of Internal Trade: Buying and selling of goods and services within the 
boundaries of a nation are referred as internal trade. Internal trade can be classified into 
two (i) Wholesale trade (ii) Retail trade. 
Whole sale trade: Whole sale trade is concerned with the activities of those persons 
which sell to retailers but who do not sell to ultimate consumers. 
 Services of Wholesalers: 
 Wholesalers provide various services to manufacturers as well as to retailers. 
 Services to Manufacturers: 
(i) Facilitating large scale production. 
(ii) Bearing risk. 
(iii)  Financial assistance. 
(iv)  Expert advice 
(v)  Help in marketing function. 
(vi)  Facilitate production continuity. 
(vii) Storage. 
 Services To Retailers: 
(i) Availability of goods. 
(ii) Marketing support. 
(iii) Credit facilities. 
(iv) More knowledge about products. 
(v) Sharing of risk. 
            Retail Trade:  A retailer is a business enterprise that is engaged in the sale 
            of goods and services directly to the customers. 
            Services of Retailers: 
            Retailers provide various services to manufacturers as well as to consumers. 
            Services to Manufacturers/Wholesalers: 
(i) Help in distribution of goods. 
(ii) Personal selling. 
(iii) Helps in carrying large scale production. 
(iv) Collecting market information. 
Page 2


 
76 
 
CHAPTER - 9 
INTERNAL TRADE 
• Introduction:  
Buying and selling the goods and services within the boundaries of a nation are referred to as 
internal trade. 
 
• Important Concept: 
Meaning of Internal Trade: Buying and selling of goods and services within the 
boundaries of a nation are referred as internal trade. Internal trade can be classified into 
two (i) Wholesale trade (ii) Retail trade. 
Whole sale trade: Whole sale trade is concerned with the activities of those persons 
which sell to retailers but who do not sell to ultimate consumers. 
 Services of Wholesalers: 
 Wholesalers provide various services to manufacturers as well as to retailers. 
 Services to Manufacturers: 
(i) Facilitating large scale production. 
(ii) Bearing risk. 
(iii)  Financial assistance. 
(iv)  Expert advice 
(v)  Help in marketing function. 
(vi)  Facilitate production continuity. 
(vii) Storage. 
 Services To Retailers: 
(i) Availability of goods. 
(ii) Marketing support. 
(iii) Credit facilities. 
(iv) More knowledge about products. 
(v) Sharing of risk. 
            Retail Trade:  A retailer is a business enterprise that is engaged in the sale 
            of goods and services directly to the customers. 
            Services of Retailers: 
            Retailers provide various services to manufacturers as well as to consumers. 
            Services to Manufacturers/Wholesalers: 
(i) Help in distribution of goods. 
(ii) Personal selling. 
(iii) Helps in carrying large scale production. 
(iv) Collecting market information. 
 
77 
 
(v) Helps in increasing sales. 
Services to Consumers: 
(i) Regular availability of products. 
(ii) New product information. 
(iii) Purchasing made conveniently. 
(iv) More selection of products. 
(v) After sales service. 
(vi) Giving credit facilities. 
 
• Types of Retailing Trade: 
      Itinerant retailers: These are traders who do not have fixed place of business and  
     they keep moving from place to place. 
(a) Hawkers and peddlers: They are small producers who carry the products on a bicycle or 
heard. They deal in low value products. 
(b) Market traders: These are small retailers who open their shops on fixed days example on 
Saturday, Friday etc., 
(c) Street traders: These are traders found where there are huge crowds. 
(d) Cheap jacks: They keep on changing their places frequently as they deal with repair of 
watches etc., 
 Fixed shop retailers: They have permanent shops and they do not move from one place 
to another. 
(a) They have more money when compared to itinerant retailers. 
(b) These retailers may be dealing in different type of products. 
(c) These retailers provide greater services to the customers. 
Types: 
(i) General stores:  
(ii) Specialty shops. 
(iii) Street stall holders. 
(iv) Second hand goods shop. 
Departmental stores:  
(i) It is a large store with different types of products. 
(ii) There will be separate departments like medicines, furniture, clothing etc., 
(iii) These stores are located at the heart of the city. 
(iv) These stores are managed by the board of directors. 
(v) These stores have storing facilities also. 
Advantages: 
(i) Attract large number of customers. 
(ii) Buying is made easier. 
Page 3


 
76 
 
CHAPTER - 9 
INTERNAL TRADE 
• Introduction:  
Buying and selling the goods and services within the boundaries of a nation are referred to as 
internal trade. 
 
• Important Concept: 
Meaning of Internal Trade: Buying and selling of goods and services within the 
boundaries of a nation are referred as internal trade. Internal trade can be classified into 
two (i) Wholesale trade (ii) Retail trade. 
Whole sale trade: Whole sale trade is concerned with the activities of those persons 
which sell to retailers but who do not sell to ultimate consumers. 
 Services of Wholesalers: 
 Wholesalers provide various services to manufacturers as well as to retailers. 
 Services to Manufacturers: 
(i) Facilitating large scale production. 
(ii) Bearing risk. 
(iii)  Financial assistance. 
(iv)  Expert advice 
(v)  Help in marketing function. 
(vi)  Facilitate production continuity. 
(vii) Storage. 
 Services To Retailers: 
(i) Availability of goods. 
(ii) Marketing support. 
(iii) Credit facilities. 
(iv) More knowledge about products. 
(v) Sharing of risk. 
            Retail Trade:  A retailer is a business enterprise that is engaged in the sale 
            of goods and services directly to the customers. 
            Services of Retailers: 
            Retailers provide various services to manufacturers as well as to consumers. 
            Services to Manufacturers/Wholesalers: 
(i) Help in distribution of goods. 
(ii) Personal selling. 
(iii) Helps in carrying large scale production. 
(iv) Collecting market information. 
 
77 
 
(v) Helps in increasing sales. 
Services to Consumers: 
(i) Regular availability of products. 
(ii) New product information. 
(iii) Purchasing made conveniently. 
(iv) More selection of products. 
(v) After sales service. 
(vi) Giving credit facilities. 
 
• Types of Retailing Trade: 
      Itinerant retailers: These are traders who do not have fixed place of business and  
     they keep moving from place to place. 
(a) Hawkers and peddlers: They are small producers who carry the products on a bicycle or 
heard. They deal in low value products. 
(b) Market traders: These are small retailers who open their shops on fixed days example on 
Saturday, Friday etc., 
(c) Street traders: These are traders found where there are huge crowds. 
(d) Cheap jacks: They keep on changing their places frequently as they deal with repair of 
watches etc., 
 Fixed shop retailers: They have permanent shops and they do not move from one place 
to another. 
(a) They have more money when compared to itinerant retailers. 
(b) These retailers may be dealing in different type of products. 
(c) These retailers provide greater services to the customers. 
Types: 
(i) General stores:  
(ii) Specialty shops. 
(iii) Street stall holders. 
(iv) Second hand goods shop. 
Departmental stores:  
(i) It is a large store with different types of products. 
(ii) There will be separate departments like medicines, furniture, clothing etc., 
(iii) These stores are located at the heart of the city. 
(iv) These stores are managed by the board of directors. 
(v) These stores have storing facilities also. 
Advantages: 
(i) Attract large number of customers. 
(ii) Buying is made easier. 
 
78 
 
(iii) More services are provided. 
(iv) Benefits of large scale operations. 
(v) Sales get increased by advertising. 
Limitations: 
(i) No personal attention is there. 
(ii) More cost of operating the store. 
(iii) More chances for loss. 
(iv) Far away from home. 
Chain stores: 
(i) These shops are located in popular localities. 
(ii) Goods are dispatched from the head office. 
(iii) Each shop is under the supervision of a branch manager. 
(iv) All the branches are controlled by the head office. 
(v) All sales are made on cash basis. 
(vi) The head office appoints the inspectors who do supervision. 
Advantages: 
(i) Large scale production takes place. 
(ii) Middlemen are avoided. 
(iii) Cash basis. 
(iv) Risk is reduced. 
(v) Low cost due to avoidance of middlemen. 
(vi) Place can be changed if there are no profits. 
Limitations: 
(i)   Limited varieties are available. 
(ii)  No personal touch. 
(iii) Losses in case of change in demand. 
(iv) Delay in decisions. 
  Mail order houses: These retailers sell their products through mail.  
Advantages:  
(i) Less capital. 
(ii) Middlemen are avoided. 
(iii) No bad debt. 
(iv) More customers are reached. 
(v) Goods are delivered at the door step. 
Limitations:  
(i) No personal contact. 
(ii) Heavy expenditure on advertisements. 
(iii) No after sales service. 
Page 4


 
76 
 
CHAPTER - 9 
INTERNAL TRADE 
• Introduction:  
Buying and selling the goods and services within the boundaries of a nation are referred to as 
internal trade. 
 
• Important Concept: 
Meaning of Internal Trade: Buying and selling of goods and services within the 
boundaries of a nation are referred as internal trade. Internal trade can be classified into 
two (i) Wholesale trade (ii) Retail trade. 
Whole sale trade: Whole sale trade is concerned with the activities of those persons 
which sell to retailers but who do not sell to ultimate consumers. 
 Services of Wholesalers: 
 Wholesalers provide various services to manufacturers as well as to retailers. 
 Services to Manufacturers: 
(i) Facilitating large scale production. 
(ii) Bearing risk. 
(iii)  Financial assistance. 
(iv)  Expert advice 
(v)  Help in marketing function. 
(vi)  Facilitate production continuity. 
(vii) Storage. 
 Services To Retailers: 
(i) Availability of goods. 
(ii) Marketing support. 
(iii) Credit facilities. 
(iv) More knowledge about products. 
(v) Sharing of risk. 
            Retail Trade:  A retailer is a business enterprise that is engaged in the sale 
            of goods and services directly to the customers. 
            Services of Retailers: 
            Retailers provide various services to manufacturers as well as to consumers. 
            Services to Manufacturers/Wholesalers: 
(i) Help in distribution of goods. 
(ii) Personal selling. 
(iii) Helps in carrying large scale production. 
(iv) Collecting market information. 
 
77 
 
(v) Helps in increasing sales. 
Services to Consumers: 
(i) Regular availability of products. 
(ii) New product information. 
(iii) Purchasing made conveniently. 
(iv) More selection of products. 
(v) After sales service. 
(vi) Giving credit facilities. 
 
• Types of Retailing Trade: 
      Itinerant retailers: These are traders who do not have fixed place of business and  
     they keep moving from place to place. 
(a) Hawkers and peddlers: They are small producers who carry the products on a bicycle or 
heard. They deal in low value products. 
(b) Market traders: These are small retailers who open their shops on fixed days example on 
Saturday, Friday etc., 
(c) Street traders: These are traders found where there are huge crowds. 
(d) Cheap jacks: They keep on changing their places frequently as they deal with repair of 
watches etc., 
 Fixed shop retailers: They have permanent shops and they do not move from one place 
to another. 
(a) They have more money when compared to itinerant retailers. 
(b) These retailers may be dealing in different type of products. 
(c) These retailers provide greater services to the customers. 
Types: 
(i) General stores:  
(ii) Specialty shops. 
(iii) Street stall holders. 
(iv) Second hand goods shop. 
Departmental stores:  
(i) It is a large store with different types of products. 
(ii) There will be separate departments like medicines, furniture, clothing etc., 
(iii) These stores are located at the heart of the city. 
(iv) These stores are managed by the board of directors. 
(v) These stores have storing facilities also. 
Advantages: 
(i) Attract large number of customers. 
(ii) Buying is made easier. 
 
78 
 
(iii) More services are provided. 
(iv) Benefits of large scale operations. 
(v) Sales get increased by advertising. 
Limitations: 
(i) No personal attention is there. 
(ii) More cost of operating the store. 
(iii) More chances for loss. 
(iv) Far away from home. 
Chain stores: 
(i) These shops are located in popular localities. 
(ii) Goods are dispatched from the head office. 
(iii) Each shop is under the supervision of a branch manager. 
(iv) All the branches are controlled by the head office. 
(v) All sales are made on cash basis. 
(vi) The head office appoints the inspectors who do supervision. 
Advantages: 
(i) Large scale production takes place. 
(ii) Middlemen are avoided. 
(iii) Cash basis. 
(iv) Risk is reduced. 
(v) Low cost due to avoidance of middlemen. 
(vi) Place can be changed if there are no profits. 
Limitations: 
(i)   Limited varieties are available. 
(ii)  No personal touch. 
(iii) Losses in case of change in demand. 
(iv) Delay in decisions. 
  Mail order houses: These retailers sell their products through mail.  
Advantages:  
(i) Less capital. 
(ii) Middlemen are avoided. 
(iii) No bad debt. 
(iv) More customers are reached. 
(v) Goods are delivered at the door step. 
Limitations:  
(i) No personal contact. 
(ii) Heavy expenditure on advertisements. 
(iii) No after sales service. 
 
79 
 
(iv) No credit facilities. 
(v) Delivery is delayed. 
(vi) Dependence on postal services. 
Consumer cooperative store: This store is an organization managed and controlled by 
consumers. The cooperative society generally buy in large quantity directly from the 
wholesalers or manufacturers. 
Advantages: 
(i) Easy to form. 
(ii) Limited liability. 
(iii)  Equal treatment to all. 
(iv) Lower prices. 
(v) Cash sales. 
(vi) Convenient location. 
Limitations: (i) No personal contact. (ii) More advertisements. (iii) No after sales service (iv) 
No credit facilities (v) Delay in delivery (vi) More dependence on postal services. 
Consumer Cooperative store: It is owned and managed by the consumers. This is started to 
avoid middlemen. 
Advantages: (i) Easy to form (ii) Limited liability (iii) Equal treatment to all (iv) Low cost (v) 
Sales is made in cash only (vi) Location are there in public places. 
Limitations: (i) Lack of motivation (ii) Less funds (iii) No business training (iv) No patronage. 
Super market: A super market is a big store selling large variety of products. 
Advantages: (i) One roof low cost (ii) Central location (iii) Wide selection (iv) No bad debts (v) 
Benefits of large scale. 
Limitations: (i) No credit (ii) No personal contact (iii) Mishandling of goods (iv)Huge capital (v) 
More overhead expenses. 
Vending machines: 
Vending machines are proving in selling pre packed brands of low priced products which have 
high turnover and which are uniform in size and weight. 
Role of Indian chambers of commerce and industry in promotion of internal trade: 
1. Interstate movement of goods. 
2. Local taxes act as an income. 
3. Value added tax. 
4. Marketing agricultural products. 
5. Using proper weights and measures. 
6. Prevention of duplication brands. 
7. Providing proper roads, electricity, railways. 
8. Flexible labour laws.       
 
Page 5


 
76 
 
CHAPTER - 9 
INTERNAL TRADE 
• Introduction:  
Buying and selling the goods and services within the boundaries of a nation are referred to as 
internal trade. 
 
• Important Concept: 
Meaning of Internal Trade: Buying and selling of goods and services within the 
boundaries of a nation are referred as internal trade. Internal trade can be classified into 
two (i) Wholesale trade (ii) Retail trade. 
Whole sale trade: Whole sale trade is concerned with the activities of those persons 
which sell to retailers but who do not sell to ultimate consumers. 
 Services of Wholesalers: 
 Wholesalers provide various services to manufacturers as well as to retailers. 
 Services to Manufacturers: 
(i) Facilitating large scale production. 
(ii) Bearing risk. 
(iii)  Financial assistance. 
(iv)  Expert advice 
(v)  Help in marketing function. 
(vi)  Facilitate production continuity. 
(vii) Storage. 
 Services To Retailers: 
(i) Availability of goods. 
(ii) Marketing support. 
(iii) Credit facilities. 
(iv) More knowledge about products. 
(v) Sharing of risk. 
            Retail Trade:  A retailer is a business enterprise that is engaged in the sale 
            of goods and services directly to the customers. 
            Services of Retailers: 
            Retailers provide various services to manufacturers as well as to consumers. 
            Services to Manufacturers/Wholesalers: 
(i) Help in distribution of goods. 
(ii) Personal selling. 
(iii) Helps in carrying large scale production. 
(iv) Collecting market information. 
 
77 
 
(v) Helps in increasing sales. 
Services to Consumers: 
(i) Regular availability of products. 
(ii) New product information. 
(iii) Purchasing made conveniently. 
(iv) More selection of products. 
(v) After sales service. 
(vi) Giving credit facilities. 
 
• Types of Retailing Trade: 
      Itinerant retailers: These are traders who do not have fixed place of business and  
     they keep moving from place to place. 
(a) Hawkers and peddlers: They are small producers who carry the products on a bicycle or 
heard. They deal in low value products. 
(b) Market traders: These are small retailers who open their shops on fixed days example on 
Saturday, Friday etc., 
(c) Street traders: These are traders found where there are huge crowds. 
(d) Cheap jacks: They keep on changing their places frequently as they deal with repair of 
watches etc., 
 Fixed shop retailers: They have permanent shops and they do not move from one place 
to another. 
(a) They have more money when compared to itinerant retailers. 
(b) These retailers may be dealing in different type of products. 
(c) These retailers provide greater services to the customers. 
Types: 
(i) General stores:  
(ii) Specialty shops. 
(iii) Street stall holders. 
(iv) Second hand goods shop. 
Departmental stores:  
(i) It is a large store with different types of products. 
(ii) There will be separate departments like medicines, furniture, clothing etc., 
(iii) These stores are located at the heart of the city. 
(iv) These stores are managed by the board of directors. 
(v) These stores have storing facilities also. 
Advantages: 
(i) Attract large number of customers. 
(ii) Buying is made easier. 
 
78 
 
(iii) More services are provided. 
(iv) Benefits of large scale operations. 
(v) Sales get increased by advertising. 
Limitations: 
(i) No personal attention is there. 
(ii) More cost of operating the store. 
(iii) More chances for loss. 
(iv) Far away from home. 
Chain stores: 
(i) These shops are located in popular localities. 
(ii) Goods are dispatched from the head office. 
(iii) Each shop is under the supervision of a branch manager. 
(iv) All the branches are controlled by the head office. 
(v) All sales are made on cash basis. 
(vi) The head office appoints the inspectors who do supervision. 
Advantages: 
(i) Large scale production takes place. 
(ii) Middlemen are avoided. 
(iii) Cash basis. 
(iv) Risk is reduced. 
(v) Low cost due to avoidance of middlemen. 
(vi) Place can be changed if there are no profits. 
Limitations: 
(i)   Limited varieties are available. 
(ii)  No personal touch. 
(iii) Losses in case of change in demand. 
(iv) Delay in decisions. 
  Mail order houses: These retailers sell their products through mail.  
Advantages:  
(i) Less capital. 
(ii) Middlemen are avoided. 
(iii) No bad debt. 
(iv) More customers are reached. 
(v) Goods are delivered at the door step. 
Limitations:  
(i) No personal contact. 
(ii) Heavy expenditure on advertisements. 
(iii) No after sales service. 
 
79 
 
(iv) No credit facilities. 
(v) Delivery is delayed. 
(vi) Dependence on postal services. 
Consumer cooperative store: This store is an organization managed and controlled by 
consumers. The cooperative society generally buy in large quantity directly from the 
wholesalers or manufacturers. 
Advantages: 
(i) Easy to form. 
(ii) Limited liability. 
(iii)  Equal treatment to all. 
(iv) Lower prices. 
(v) Cash sales. 
(vi) Convenient location. 
Limitations: (i) No personal contact. (ii) More advertisements. (iii) No after sales service (iv) 
No credit facilities (v) Delay in delivery (vi) More dependence on postal services. 
Consumer Cooperative store: It is owned and managed by the consumers. This is started to 
avoid middlemen. 
Advantages: (i) Easy to form (ii) Limited liability (iii) Equal treatment to all (iv) Low cost (v) 
Sales is made in cash only (vi) Location are there in public places. 
Limitations: (i) Lack of motivation (ii) Less funds (iii) No business training (iv) No patronage. 
Super market: A super market is a big store selling large variety of products. 
Advantages: (i) One roof low cost (ii) Central location (iii) Wide selection (iv) No bad debts (v) 
Benefits of large scale. 
Limitations: (i) No credit (ii) No personal contact (iii) Mishandling of goods (iv)Huge capital (v) 
More overhead expenses. 
Vending machines: 
Vending machines are proving in selling pre packed brands of low priced products which have 
high turnover and which are uniform in size and weight. 
Role of Indian chambers of commerce and industry in promotion of internal trade: 
1. Interstate movement of goods. 
2. Local taxes act as an income. 
3. Value added tax. 
4. Marketing agricultural products. 
5. Using proper weights and measures. 
6. Prevention of duplication brands. 
7. Providing proper roads, electricity, railways. 
8. Flexible labour laws.       
 
 
80 
 
• Key Concepts in Nutshell 
 
   Meaning of Wholesale Trade: 
 Purchase and sale of goods and services in large quantities for the purpose of  
resale . 
 Wholesalers perform a number of functions in the process of distribution of 
 Goods and services and provide valuable services to manufacturers and  
                    Retailers. 
 
    Meaning Of Retail Trade: 
 A retailer is a business enterprise what is engaged in the sale of goods and 
services directly to the ultimate consumers. 
 Retailers serve as a link between producers and final consumers. 
 They provide useful service to consumers, wholesalers and manufacturers in the 
distribution of goods and services. 
 
DISTRIBUTION OF GOODS 
 
      
Departmental stores: 
 Departmental stores are located at the heart of the city. 
 They aim at satisfying all the needs of the customers under one roof. 
 They provide services like restaurant to the consumers. 
 Their price policies are not uniform. 
 They satisfy the needs of the higher income group. 
 Goods are sold only on credit basis also. 
    Multiple shops: 
 Multiple shops are located at residential areas. 
 These shops offer only specialized products. 
 They provide only limited service to the customers. 
  The pricing policies are uniform. 
 These shops satisfy the needs of all income groups. 
 Goods are sold only on cash basis. 
PRODUCER 
WHOLESALER RETAILER CONSUMER 
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