Previous Year Short & Long Questions With Answers: Internal Trade | Business Studies (BST) Class 11 - Commerce PDF Download

Short Answer Type Questions

Q1: What are the services offered by retailers to wholesalers and consumers?
Ans: Retailers provide the following services:

• They assist clients in choosing the goods to purchase by informing them about new products on the market.
• Additionally, they give distributors information about consumer tastes and preferences, market dynamics, and rival companies.
• By keeping an extensive range of items in stock that cater to consumer desires, they assist customers in selecting the most refined product.
• Retailers also advertise products since they have a direct line to customers and are best positioned to suggest and boost sales for producers and wholesalers.
• They also help make it easier to distribute items to consumers.

Q2: Explain the usefulness of mail-order houses. What type of products are generally handled by them? Specify.
Ans: Mail-order retailers ship their products to customers’ homes. In this company, buyers and sellers rarely have a direct human touch.
Benefits of a mail-order house:

1. Limited funds are needed: A mail-order firm’s building and other infrastructure costs are minimal. As a result, it may be launched with relatively less money.
2. Elimination of intermediaries: Mail-order businesses do away with their influence on intermediaries’ behaviour toward clients. This eventually results in losing customers in favour of a large client.
3. Lack of bad debts: Postal order houses do not offer credit to their clients, and there is also no chance of a bad debt arising from a customer’s failure to pay with cash.
4. Broad Reach: As soon as the items are sent, the seller will be able to give customers throughout the nation information about their possessions.
5. Convenience:With this approach, products are delivered to customers’ homes. The outcome is excellent, and customers will find it simple to acquire these products. Mail-order businesses often handle the following product categories:
   • Standard and graded things.
   • Items that are inexpensive and convenient to carry.
   • Goods that are available and in demand.
   • Things that are simply described using images.

Q3: Which stores sell a certain line of products?
Ans: The  specialty shops sell just certain lines of goods. These retail establishments concentrate on selling a certain line of a product rather than a range of goods from many categories. Speciality stores often have a prominent position from which many consumers may be attracted, and these stores also provide a wide range of products.

Q4: What is meant by internal trade?
Ans: Internal trade is the phrase used to describe the purchasing and selling of commodities and services within national borders. They are not subject to import or customs taxes because they are manufactured domestically and are intended for domestic use. Internal trades come in two flavours: wholesale trade and retail trade.

Q5: Itinerant traders have been an integral trade in India. Analyse the reason for their survival despite competition from large-scale retailers.
Ans: Itinerant traders are business people who travel from one location to another. In other words, they lack a storefront from which to sell their goods. Since they go from one place to another to sell their goods, they are often called mobile merchants. They typically hang out by the  road side and roam around looking for additional customers. They often market inexpensive, uncommon goods.

Despite intense competition from large-scale shops, itinerant sellers can survive because of the factors listed below:

• They often focus on lower-cost necessities, including private items, fruits, and vegetables, etc.
• They have direct interactions with customers, enabling them to deliver better customer service by receiving the proper answer and passing information to manufacturers.
• They move from one location to another , delivering items to customer service departments that make it simple for customers to get the much needed supplies.
• Due to low search quality, travelling merchants find it difficult to store in such locations. Even in remote locations, they provide their services.

Q6: The automatic vending machine should be described as a source of retail trade.
Ans: A novel and valuable type of selling is a vending machine. It is a slot machine that takes money or tokens to operate. A predetermined amount of a product is delivered to the buyer once they enter a coin or token into the machine. The sale of pre-packaged, low-cost items for mass consumption, such as soft drinks, hot beverages, cigarettes, and tickets, is done through vending machines. Mother Dairy offers milk via vending machines in Delhi.
The ease with which items may be handled and money can be collected are why vending machines have grown in popularity. A new supply of consistent weight and quality items is sent to the consumer. Additionally, vending machines may offer items at times and locations when traditional forms of retailing are neither practical nor cost-effective. The cost of labour is reduced. However, the machine’s initial investment is highly significant. Regular maintenance and repairs are needed for the device.
The following are some advantages of vending machines:

• It is convenient for the clients to buy things from the machine.
• Machines offer efficient service.
• Customers become accustomed to self-service thanks to machines.
• Manufacturers must create unique peaks that are tailored to the machine.
• Care must be exercised when routinely restocking the machine’s supply.
• Only edible consumer items, such as candy, chocolate, soft drinks, coffee, etc., can be sold using machines.

Q7: Specify the characteristics of fixed shop retailers.
Ans: Retailers who operate from fixed locations are those who keep a permanent building. They do not have to relocate to offer their services and sell their products.
These are a few of the characteristics:

• Compared to other merchants, they have a more extensive resource base and a more significant operation.
• They deal in consumer durables, non-durables, and other product categories.
• They can provide extra services like home delivery and items on credit.
• Because they are permanently installed, they are more trusted by the customer.

Q8: Explain the services offered by wholesalers to manufacturers.
Ans: Wholesalers provide the following services:

• Buying products in bulk from producers, holding them, and then distributing them in small  amounts to retailers.
• Based on wholesalers’ bulk purchases, manufacturers are encouraged to engage in large-scale manufacturing.
• Reduces the need for producers to store the finished products.
• Assists businesses with market data and consumer preferences.

Q9: How would you differentiate between street traders and street shops?
Ans: Street Traders:

• Small vendors that sell inexpensive goods on the street.
• No lasting stores
• Some examples of street traders are those selling newspapers and vegetables.

Street Shops:

• Traders with retail establishments on the sidewalk sell things.
• They have a set of stores.
• Examples of street stores are those selling groceries and Xerox machines.

Long Answer Type Questions

Q1: Imagine life without your local market. What difficulties would a consumer face if there is no retail shop?
Ans: A lack of retail stores can cause many problems since they operate as a bridge between producers and consumers by purchasing products from supermarkets and other retailers and then selling them straight to customers. Life will be challenging for the neighborhood if there are no retail outlets open at that time. People will have to spend a significant amount of money if they purchase an essential item or anything for daily usage. If other retail establishments are accessible by transportation and not far from our home, we can purchase various items when needed. If stores are nearby, we can quickly locate medicine and other essential supplies in an emergency. Otherwise, life would be quite challenging.

They are essential in the following areas:

• Product availability: One of the most important services sellers provide customers is maintaining the widespread availability of different items made by different producers. This enables clients to shop whenever and however they need to.
• Product details: Information on new items, their characteristics, pricing, etc., is provided to customers by stores. This knowledge makes it simpler for clients to choose a product by assisting them in their decision-making process.
• Convenient purchase: Customers can make purchases based on their requirements. They are also widespread. It is open and reasonably near to residential areas. It provides excellent flexibility since customers may acquire things that best fit their demands for a very long period.
• Wide choice: Customers may often find a wide range of products from retailers, including meals, dairy products, and stationery.
• After-sale services: Important ones are offered by retailers in the form of home delivery, after-sales service distribution of replacement components, and customer care.
• Providing credit facilities: Regular purchasers can occasionally get credit facilities from consumers, raising their level of consumption and, consequently, their style of living.

Q2: The most well-known retail trade-in city is the supermarket. . List its advantages and disadvantages.
Ans: A supermarket in  bazaar is a sizable retailing business unit that sells a wide range of consumer goods, including food and grocery items, based on their low margin appeal, wide variety and assortments, self-service capabilities, and a strong emphasis on merchandising appeal.
A supermarket mainly sells food, groceries, and convenience products like clothing, household goods, cosmetics, pharmaceuticals, electronics, etc. The primary retail centre is often where it is located. The price and quality of the items are prominently marked on them, and they are stored in open racks.
A customer may choose products while travelling from counter to counter, pick up the products they’ve chosen, and put them in a trolley. Following his pick, the trolley will be moved to the exit where the entire cost will be calculated, the buyer will pay the cashier, and he will get the products. As a result, the store adheres to the principle of consumer self-help. The salesman doesn’t put any pressure on the clients. That is what draws a lot of people to the grocery.
The supermarket is departmentally structured, allowing customers to purchase a variety of commodities under one roof. Because there are no salespeople to engage with clients at the super Bazar, a supermarket may be distinguished from a department shop. Customers are allowed to select the goods of their choosing. Additionally, a supermarket does not provide other services that a department shop often offers. For instance, supermarkets do not provide free home delivery services or credit sales.

The following are the key characteristics that set a supermarket apart from other retail establishments:

• A supermarket often stocks a full range of grocery and food items and non-food convenience items like medicines, cosmetics, and other household goods.
• Its layout is quite like that of a department shop. Customers may purchase everything they need under one roof.
• Self-service is the guiding philosophy of a supermarket. In a supermarket, there are no salespeople or shop employees to assist or pressure the consumers. Because of this, it is referred to as a self-service store. Consequently, the cost of distribution is reduced.
• A supermarket is a low-cost retail establishment compared to other types of retail establishments. Because of the bulk purchases, lower operating costs, and low-profit margins, the prices of the items are typically lower than those of other sorts.

The benefits of a supermarket are as follows:

• A large-scale retail establishment is a supermarket. It benefits significantly from large-scale purchasing and selling. Due to this and high turnover, its operating expenses are reduced, allowing it to sell items at lower prices. These stores provide customers with an affordable and straightforward way to make purchases.
• Since there are no salesmen to persuade and pressure the clients, much care is put into the product’s packaging. This distinctive aspect of self-service is popular with many individuals. They like having the freedom  to choose products without any external pressure.
• All the consumers’ purchases may be made under one roof. So, a supermarket offers lower-quality products to clients due to high turnover and a lack of salespeople. Additionally, there are cheaper administrative and distribution costs per product unit.
• There is zero risk of bad defaults because supermarkets only accept cash.

A supermarket has the following drawbacks:

• Certain people place more value on individual attention. Since there are no salespeople in the store, some customers dislike doing their shopping there.
• Supermarkets cannot handle products that require personal explanation by the salesman. It operates on the theory of self-service.
• Some clients abuse the ability for self-service and selection by handling the products carelessly. The supermarket can suffer losses as a result.
• Due to increased overhead costs, a few supermarkets haven’t been able to have prices low enough to attract consumers in scale.
• A supermarket takes significant capital to establish and operate, and to maintain operating costs within manageable ranges, the supermarket’s turnover should be higher. As a result, a supermarket cannot be opened if the required funding is lacking and a significant turnover is not anticipated. In other words, smaller communities are not a good fit for supermarkets.

Q3: Discuss the features of a departmental store. How are they different from multiple shops or chain stores?
Ans: Department stores are substantial businesses that aim to meet all their clients’ needs under one roof. The shop is divided into many categories, each of which deals with a distinct kind of items, such as food, furnishings, drugs, and electronics.

The following characteristics  define departmental stores:

• A department store strives to give excellent service to consumers by offering amenities like bathrooms, restaurants, food stores, etc.
• Stores are placed in busy areas to draw in plenty of consumers.
• A department store serves as both a retail establishment and a warehouse. Every purchase is made straight from the manufacturer.

Chain stores are networks of retail establishments that producers or their agents own. In this structure, businesses with similar aesthetics are developed in various neighbourhoods around the city, whereas department stores are established in the city’s centre. These stores sell branded consumer durable goods, and their displays and merchandising techniques are all the same.

Q4: Write briefly about modern-day telemarketing or teleshops.
Ans: Telemarketing is a type of non-store selling in which the vendor contacts a customer over the phone and completes the deal. The telephone directory and other sources are places where a telemarketer can get potential clients’ names and phone numbers.
Telemarketing may advertise well-known goods and services, including magazine subscriptions, credit card memberships, health and beauty items, and educational assistance. ICICI and Citibank use this strategy to promote their credit cards among consumers.
A telemarketer may utilize a TV network, such as Doordarshan, Metro, Zee TV, or Sony TV channel, to promote the product and its benefits, applications, and pricing. The interested client can contact the advertiser, such as Asian Sky Shop, directly by phone, fax, email, or postal mail to place an order. The manufacturer’s distribution van, a courier, the post office, or another delivery method are all options. At the time of delivery, payment is due. Shopping may be done quite conveniently through telemarketing. In India, it is gaining  popularity.
From the consumer’s perspective, purchasing or “dial-n-order” is an efficient way to purchase. Shopping does not need to go to the store. A credit card can be used to place an order and pay for it over the phone. Teleshopping is not only convenient, but it is also less expensive because there are no intermediaries involved. The rising emphasis on consumers might be responsible for telemarketing’s appeal.
Telemarketing is a more affordable way to do retail business from the seller’s perspective. It reduces spending on salespeople and retail showrooms. Through telemarketing, a business with retail locations or stores in significant cities can also reach clients who live in remote areas. Growing satellite networks have improved Telebuying and Teleselling by raising brand recognition. Over five years, the sector expanded quickly, reaching a scale of 2000 crores with more than one million consultants.
Telemarketing is a key direct marketing tactic in the USA and is increasingly popular in India. Telemarketing, however, has the drawback of not interacting personally with the customers. Additionally, the customer cannot view the items directly before placing a purchase. Teleshopping is not for everyone. When call centres make unwanted calls to them to promote credit cards or personal loans, they become upset.

Q5: Why are consumer cooperative stores considered to be less expensive? What are its relative advantages over other large-scale retailers?
Ans: Aiming to provide items to society’s members at low rates, consumer cooperative stores are established, run, and governed by customers. The elimination of intermediaries is the most attractive feature of consumer cooperatives. Since there is no business motivation, the prices of the items are less high than those found in retail stores. In comparison to large-scale businesses, the capital investment is also lower.

The benefits of a cooperative store are as follows:

• An association of ten persons can create a cooperative and register it by following the necessary procedures.
• Members’ responsibility is limited to the amount of capital they have contributed.
• Each cooperative member has one vote to elect a representative.
• Since there are no middlemen in the network, prices are kept in check.

Q6: What purpose is served by wholesalers providing warehouse facilities?
Ans: For the following reasons, wholesalers offer warehouse facilities:

• They buy products in bulk from producers. Small amounts of the acquired products should be stored and distributed to retailers.
• They are referred to as places of use since they are located close to the distribution centre.
• Thanks to distributors’ bulk purchases, manufacturers may carry out large-scale production without worrying about storage concerns.

Q7: A franchise is a nuisance in the realm of modern marketing. What are its advantages and disadvantages?
Ans: A franchise is a commercial concession allowing a corporation or individual to provide a retailer with the right to sell their goods or services in a particular location. In exchange for royalties, the owner of a product (referred to as a franchisor) authorizes another business entity (referred to as a franchisee) to sell the product.
The franchise is “a continuing relationship in which franchisee provides a licensed privilege to do business plus assistance in training, organizing, merchandising, and management in return for a consideration from the franchise.” The franchise is the right or privilege to use an established business system. An arrangement between a franchisor and a franchisee is a franchising operation.
Thus, a franchise is a system in which the provider of a good or service gives the franchisee the only authority to sell that good or service in a certain region under a set of rules. The franchiser is the proprietor of the good or service who authorises the distribution. The franchisee is the individual or business that purchases the rights or franchise.
A franchise system is where a producer gives merchants the sole authority to sell their goods or services in particular locations. These merchants are obligated to advertise and market the goods in a particular way. The terms and conditions of the franchisee are outlined in a written agreement between the franchisor (supply) and the independent franchisee (retailers).
Many kinds of businesses use the franchising model. Some examples of consumer goods where the franchise is well-liked include cosmetics, ready-made clothing, televisions, VCRs, music systems, computers, machinery and equipment, cars, service of consumer durables, computer training, and real estate. Franchises in India include Wimpy, Nirulas, Essex Farms, Snow-white Drycleaners, and others.
In exchange for enabling the use of the trademark and offering training, the franchiser receives either a set payment or recurring royalties. The franchisee pays for a reputable, established company. He receives expert counsel and assistance from the franchisor with national sales advertising. Typically, a product or service’s franchised locations use the same trademark, standardised insignia, standardised goods, and business practices. The franchisee is required to raise his capital.

The following are the franchise’s key benefits:

• Existing Brands: The franchisee is granted permission to utilise the franchisor’s well-known brand name or trademark. Association with a well-known brand offers access to a ready market. A franchise enables a rapid and straightforward company launch. Due to the popularity of the items, the franchisee has better possibilities for success.
• Standardised Goods and Services: The calibre of the franchisee’s goods and services significantly impacts the franchisor’s reputation. The franchisor ensures that goods and services are uniform throughout all the franchised stores. He supplies the raw ingredients and closely monitors the product quality. By providing high-quality goods, the franchisee can satisfy his clients.
• Support for Advertising: The franchisor continues to advertise. The benefits of such advertising and the goodwill or reputation of the franchisor are passed on to the franchisee. The items are highly publicised in various media, and consumers know them. The franchisee finds it simpler to encourage product sales.
• Financial Support: The franchisor provides the franchisee with various financial supports, including short-term financing, cheaper down payments, flexible payback options, etc. Plant and equipment, accounts receivable, etc., are all eligible for financial help.
• Franchisers offer technical and management training to franchisees, as well as to their workforce. Before starting a franchise, advice and training are given on how to run the business profitably and professionally, as well as in inventory management, accounting, sales promotion, advertising, etc. Along with continuous business support, aid is also offered with site selection and market research.

The following drawbacks of the franchise system exist:

• Fees and Royalties: The price of a franchise includes the cost of a licence and the cost of the first application procedure. It is not refundable and must be paid when the franchise agreement is signed. Other expenses include the down payment for equipment, store decorating, office furnishings, opening-day promotions, etc. The franchise is responsible for covering training-related travel and housing costs. Additionally, he is required to make ongoing royalty payments.
• Lack of Flexibility: The franchisee lacks the freedom to operate a firm on their terms. He must abide by the restrictions put in place by the franchisor to guarantee the calibre and consistency of the standards for the Goods or Services. All products utilised by the franchisee must meet strict quality requirements. The freedom to buy is likewise constrained.
• Limited Product Line: The franchiser controls the goods and services offered at the franchisee’s location. The franchisee may introduce only the goods that the franchisor has approved.
• Limitations on Franchise Sales: The franchiser must approve any sales, transfers, or assignments of ownership interests. Even after the transaction is authorised, the new franchisee must abide by the franchise’s rules and regulations.
• The franchiser cannot handle or manage the franchisees like his workers, which is a disadvantage. If by any chance, they believe they are not being treated fairly or do not perceive benefits in the franchise network, franchisees tend to become rather outspoken and demanding. In-depth communication is required and travelling to franchisees in far-off locations can be expensive. The franchiser is responsible for covering all administrative, training, advertising, legal, and other related costs.