Q1: What is meant by internal trade?
Ans: Internal trade refers to the process of exchanging goods and services within the national boundaries of a country. In other words, the buying and selling of goods and services within the domestic territory of a country is known as internal trade. Purchases of goods from a local shop, a mall or an exhibition are all examples of internal trade. The government does not levy customs or import duties on goods and services that are produced within the country for meeting the domestic demand.
Internal trade can be classified into the following two categories:
(a) Wholesale trade: It refers to the buying and selling of goods in bulk−that is, the exchange of large quantities of goods meant for resale in local markets.
(b) Retail trade: It refers to the buying and selling of goods in small quantities for final consumption.
Q2: Specify the characteristics of fixed shop retailers.
Ans: As the name suggests, fixed-shop retailers are retailers who have permanent establishments. That is, they sell goods and services from fixed shops and do not move from place to place to serve customers—for example, retailers functioning from fixed establishments in the local grocery market.
The following are some of the characteristics of fixed-shop retailers:
Q3: What purpose is served by wholesalers providing warehousing facilities?
Ans: Wholesalers purchase goods in bulk from manufacturers, store them and distribute them to retailers in small quantities for further resale. This bulk purchase of goods enables manufacturers to undertake production on a large scale without worrying about storage facilities. By offering warehouses close to the centres of distribution, wholesalers provide what is known as ‘place utility’. Wholesalers not only provide warehousing facilities such as collection, storage and protection of goods but also facilitate marketing and distribution, creating ‘time utility’.
Q4: How does market information provided by the wholesalers benefit the manufacturers?
Ans: Wholesalers provide a variety of information to both manufacturers and customers. To manufacturers, they provide information about the tastes and preferences of customers, conditions prevailing in the market, level of competition in the market and types of goods and features demanded by consumers. This information helps manufacturers to cater to the changing needs of consumers.
Q5: How does the wholesaler help the manufacturer in availing the economies of scale?
Ans: Wholesalers often purchase goods in bulk quantities from manufacturers. Once a purchase is made, the wholesalers distribute the goods in small quantities to retailers for further resale. However, during this process, they provide manufacturers with a variety of warehousing facilities such as collection, storage, marketing and distribution of goods. These services reduce the burden on manufacturers by creating time and place utility, thus enabling them to produce goods on a large scale and benefit from the economies of scale.
Q6: Distinguish between single line stores and speciality stores. Can you identify such stores in your locality?
Ans: Single-line stores are small shops that deal in only one product—for example, garments or shoes. However, single-line stores offer a wide variety of the product. For instance, a single-line store that deals in garments will have a wide variety of clothes in all sizes for men, women and children.
Q7: How would you differentiate between street traders and street shops?
Ans:
Q8: Explain the services offered by wholesalers to manufacturers.
Ans: Wholesalers offer a wide variety of services to manufacturers. The following are examples of such services:
Q9: What are the services offered by retailers to wholesalers and consumers?
Ans: Retailers offer a variety of services to wholesalers and customers. Some of these services are listed below.
Q1: Itinerant traders have been an integral part of internal trade in India. Analyse the reasons for their survival in spite of competition from large scale retailers.
Ans: Itinerant traders are retailers who do not have a fixed place of operation. That is, they do not have a shop from where they sell their products. They are also known as mobile traders as they keep moving from place to place in order to sell their products. They are generally found on street sides, and they shift their place of operation in search of more customers. They usually sell low-priced and non-standard goods.The reasons that itinerant traders survive in spite of the tough competition from large-scale retailers can be attributed to the following factors:
Q2: Discuss the features of a departmental store. How are they different from multiple shops or chain stores.
Ans: Department stores are basically large, fixed establishments that deal in a wide variety of products. The following points highlight the features of a department store:
Differences between department stores and multiple shops
Q3: Why are consumers cooperatives stores considered to be less expensive? What are its relative advantages over other large scale retailers?
Ans: Consumer cooperative stores are formed by groups of consumers to provide goods at reasonable prices to members of consumer societies. In such societies, the role of middlemen is eliminated as these societies purchase goods from manufacturers or wholesalers directly and sell them to society members at reasonable rates. As consumer cooperative stores do not aim at profit making, the prices of goods offered by them are much lower than the prices of goods at retail shops. Compared with large-scale retailers, the capital requirement for starting a consumer cooperative society is very low. Thus, consumer cooperative stores do not require much investment, and the goods sold by them are priced lower.
The following are some advantages that consumer cooperative stores have over large-scale retailers:
Q4: Imagine life without your local market. What difficulties would a consumer face if there is no retail shop?
Ans: Retail shops are the final stage of distribution through which retailers directly sell goods to the final consumers. Retail shops act as a link between manufacturers/wholesalers and consumers as they buy goods from manufacturers/wholesalers and sell them directly to consumers. They play an essential role because of the following features.
Q5: Explain the usefulness of mail order houses. What types of products are generally handled by them? Specify?
Ans: Mail-order houses are trading units that use the mail for merchandising their products. These houses inform the customers about the features and prices of products, terms of payment, etc., by placing advertisements in newspapers and magazines or by mailing circulars or price lists to customers.
The following are some of the features of mail-order houses:
Mail-order houses prefer to trade in the following types of goods:
(a) Goods that are easily gradable and standardised.
(b) Those involving low transportation cost.
(c) Those having a high demand in the market.
(d) Those that are readily available in bulk quantities throughout the year.
(e) Those that involve the least competition in the market.
(f) Those that are simple to describe.
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1. What is internal trade and how does it differ from external trade? |
2. What are the main types of internal trade? |
3. What are the advantages of internal trade for a country? |
4. How do transportation and communication affect internal trade? |
5. What role do government policies play in regulating internal trade? |
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