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Published on: 04/10/2019
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1.
What difficulties can a consumer face if there is no retail shop?
2.
Discuss the meaning, features and advantages of Consumer Cooperative Store.
3.
Explain different types of small scale retail shops.
4.
What difficulties will be faced by the consumers if retailers are eliminated from the chain?
5.
Discuss advantages and disadvantages of Mail Order House
6.
What are the differences between departmental stores and multiple shops?
7.
Name and define different large scale retail shops.
8.
Mention different types of Chambers of Commerce in India. Explain any one.
9.
Why are consumers cooperative stores considered to be less expensive? What are its relative advantages over other large scale retailers?
10.
Discuss the features of a departmental store. How are they different from multiple shops or chain stores?
1.
If there is no retailer then the consumer will not get the services provided by retailers to him. These services are as under:
1. The consumers are provided with a wide variety of products as the retailers stock a wide range of products produced by different firms.
2. The retailers provide expert advice on the merits and uses of different products and thereby educate consumers on the product.
3. As ready stock of different varieties are maintained with the retailers, the consumer is not required to maintain enough stock of the products.
4. The consumers are given the facilities of purchasing according to their purchasing power since a wide range of products are maintained with the retailers.
5. The retailer arranges home delivery of the product if necessary and renders after sale service.
2.
Meaning, Features and Advantages of Consumer Cooperative store.
The societies started to help lower and middle class people and protect these sections from the clutches of profit-hungry businessman are called Consumers Cooperative Stores. A consumer's co-operative society is a combination of persons whose aim is to economise by buying in common and retain their profits by selling in common. According to M.C. Sukla, "Consumer Cooperative Store is an economic enterprise set by the consumers for the distribution of fundamental consumption goods,' primarily among the shareholders to the subscriber consumers who are called members of such organization and who have an equal voice in the control of the organization.
Features
Following are some of the essential features of a consumer's cooperative store:
(i) There is no restriction on membership of a consumer co-operative store as any adult person can become a member of a co-operative.
(ii) The members of the consumer co-operative store distribute capital in the form of share. A member can purchase shares of a value of Rs.1000 only. Beyond this, shares are not issued to members.
(iii) The surplus of a store is distributed among the members in the form of dividend. The dividend is paid in proportion to purchases made by the members.
(iv) It adopts the principles of 'one man, one vote'. A man is not allowed vote by proxy system.
(v) The trading of co-operative stores is made on the basis of cash.
(vi) A sale can be made to non-members on the basis of market rate.
(vii) It makes bulk purchases directly from the producers and sell these goods to its members on retail basis.
Advantages
Consumer's Cooperative Store has the following advantages:
(i) It facilitates its members in getting pure and unadulterated goods at a competitive price.
(ii) It develops a state of moral booster to the poor people who develop greater confidence among themselves.
(iii) As the societies are purchasing goods in bulk quantities from the producers, these are in a better position to supply these goods at a competitive price to its members.
(iv) It improves the purchasing power of the members since dividend is paid on the basis of purchases made.
(v) It encourages people to save.
3.
Retail trade is carried on both at small scale and large scale. Small scale retailers are either mobile traders (itinerants) or fixed shops.
Mobile Traders or Itinerants
These retailers have no fixed place of business. They move from place to place and sell articles of daily use near to consumers. These include the following:
1. Hawkers: A hawker moves about in residential localities. He carries his goods in a hand cart or bicycle. He deals in low-priced goods of daily use. E.g. combs, toys, soaps, mirrors, bangles, vegetables, fruits, ice-cream, etc.
2. Peddlers: A peddler also moves from house to house and sells articles of daily use. But he carries his wares on his head or on the back of a mule.
3. Cheap Jacks: A cheap jack hires a small shop in a residential locality for a temporary period. He shifts his business from one locality to another depending on the availability of customers. He deals in low-priced household articles.
4. Pavement dealers or Street Traders: A pavement dealer displays his wares on footpath and outside public places such as railway station, bus stand, cinema, temple, etc. He sells low priced articles like newspapers, magazines, fruits, vegetables, footwear to the passersby. He is also called street trader.
5. Market Traders: A market trader sells goods at weekly markets when the shops are closed for weekly holiday. He displays goods outside the closed shops. He deals in low-priced articles of daily use. He may also set up stalls on fairs and exhibitions
Fixed Shops (Small Scale Retail Shops)
Small scale retail shops are the most popular form of retail trade. These may be classified as follows:
1. Street stalls holders: These stalls are located in the main streets or street crossings. A stall is an improvised structure made of tin or wood. The street stall holder displays his goods on a temporary platform and sells toys, stationery, hosiery items, etc. at low prices.
2. Second hand goods shops: These shops sell used or second hand articles such as books, clothes, furniture, etc. They cater to the needs of poor people who cannot afford new articles. These shops collect goods at private and public auctions.
3. General stores: These stores sell a wide variety of products under one roof. For example, a provision store deals in grocery, bread, butter, toothpaste, razor blades, bathing soap, washing powder, soft drinks, confectionery, cosmetics, etc. Consumers can buy most of their daily requirements at one place. Their time and effort is saved. Some of these stores offer free home delivery and monthly credit facilities to regular customers.
4. Single line stores: These stores deal in one line of goods. They keep stock of different sizes, designs and quality of goods in the same line. Bookstores, chemist shops, electrical stores, shoe stores, cloth stores, jeweler shops, etc., are examples of single line stores.
5. Specialty shops: These shops generally specialise in one type of product rather than dealing in a line of products. Shops selling children's garments, educational books, etc., are examples of such shops.
4.
If retailers are removed, it will lead to direct marketing. In general, you cannot save money by "eliminating the middleman" because intermediaries specialize in performing certain tasks that they can perform more cheaply than the manufacturer. Most grocery products are most efficiently sold to the consumer through retail stores that take a modest mark-up-it would not make sense for manufacturers to ship their grocery products in small quantities directly to consumers.
Intermediaries perform tasks such as
1. Moving the goods efficiently (e.g., large quantities are moved from factories or warehouses to retail stores);
2. Breaking bulk (manufacturers sell to a modest number of wholesalers in large quantities-quantities are then gradually broken down as they make their way toward the consumer);
3. Consolidating goods (retail stores carry a wide assortment of goods from different manufacturers-e.g., super markets span from toilet paper to catsup); and
4. Aiding services (e.g., demonstrations and repairs). If these middlemen are eliminated, they will face absence of these functions which will be troublesome for them.
5.
The retail outlets that sell their goods through mail are referred to as mail order houses. There is no personal contact between the buyers and the sellers in this type of trading. The trader contacts the customer through advertisement in newspaper or magazines, circulars, catalogues and price list is sent to them by post. All the information about product such as price, features, delivery terms, terms of payment etc are described in the advertisement. The customers may be asked to make full payment in advance or goods may be sent by VPP (Value Payable Post), under which goods are delivered to the customer only when he makes full payment for the same. The goods may be sent through a bank which delivers them to the customer only when he makes full payment.
Advantages of Mail Order Houses
1. They can be started with low amount of capital as no expenditure on building or other infrastructural facilities are required.
2. They do not require the services of middlemen so they are eliminated.
3. They do not extend credit facilities to the customers and thus there are no chances of bad debts.
4. They can serve people wherever postal services are available.
5. They deliver goods at the doorstep of the customer which result in great convenience to the customers in buying the goods.
Limitations of Mail Order Houses
1. There is no personal contact between the buyers and the sellers. The buyers are not in a position to examine the products before buying.
2. They rely heavily on advertisement and other promotional activities which increases their cost of product.
3. In mail order selling after sales services are absent.
6.
The differences between departmental stores and multiple shops are summarized below:
1. Location: A departmental store is centrally located and attracts customers towards it. On the other hand, multiple shops are situated in different localities and attempt to reach near the customers.
2. Variety of goods: A departmental store deals in a wide variety of products and serves as a universal supplier. On the other hand, a multiple shop specialises in one line of goods.
3. Type of customers: A departmental store caters mainly to rich people, whereas multiple shops cater to the general public.
4. Nature of dealings: A departmental store sells goods both on cash and credit basis. But multiple shops sell goods on cash and carry basis.
5. Services: A departmental store offers banking, post office, restaurant and other facilities to customers. Multiple shops do not offer such services.
6. Pricing: Different departments of a departmental store may sell goods at different prices. But all the multiple shops sell goods at the same prices.
7. Decoration and display: Every department of a departmental store may have different decoration and display. But all the multiple shops of an owner have uniform shop decoration and window display. A departmental store advertises at local level, whereas multiple shops advertise at national level.
8. Object: A departmental store aims at providing everything at one place. Multiple shop system, on the other hand, is an attempt to eliminate middlemen and establish direct contact between the manufacturer and consumers.
9. Flexibility: In a departmental store quick adjustment can be made according to local changes. One line of goods can be substituted by others. Multiple shop system lacks such flexibility.
10. Control: In a departmental store, heads of departments have considerable discretion in the management of operations. Branch managers in a multiple shop system have to follow the policies and procedures laid down by the head office.
11. Ownership: A departmental store is generally owned and established by a retail trader. On the other hand, multiple shop system usually operates under the ownership and management of a manufacturer or a wholesaler.
12. Risk: Risk involved in a departmental store is relatively greater because success depends on the prosperity of a single location. In multiple shops system risks are spread over different shops located in different areas.
7.
The retail trade is conducted now on a large scale. The mass production of goods and the concentration of population in urban centers has necessitated the establishment of large-scale retail trading houses. There are many advantages of retailing on a large scale.
However, in spite of the economies of large scale retailing, the small-scale units could not be eliminated because of the various special advantages possessed by them. Some of the more prominent large-scale retail organizations are as follows:
1. Departmental Stores.
2. Multiple Shops or Chain Stores.
3. Mail Order Houses.
4. Super Markets.
5. Consumer Cooperative Stores.
6. Vending Machines.
1. Departmental Stores: A departmental store is a large-scale retail organisation having a number of departments under one roof. Each department specialises in one particular kind of trade. All these departments are centrally organized and are under one united management and control. A departmental store is an organization of several retail stores carried on in one building and under united controlled management. The basic objective of a departmental store is to provide a large variety or merchandise from a pin to an aeroplane at one place.
2. Multiple Shops or Chain Stores: A multiple shop system is a network of branch shops, situated at different localities in the city or in different parts of the country, under a centralised management and dealing in similar lines of goods. Such multiple shops are very common and popular in the west and are known as Chain Stores. According to J.L. Fri, "Chain Stores is a group of stores handling similar lines of merchandise with single ownership and centralised location."
The Federal Trade Commission defined a chain store as "an organization owing a controlling interest in two or more establishments which sell substantially similar merchandise at retail prices."
3. Mail Order Sale Houses: A Mail Order Sale is a retail business where orders are placed by post or mail and goods are received either by registered parcel or V.P.P. i.e., Value Payable Post. Under such a type of selling, the seller advertises his products in the leading dailies and magazines of the area and the intending buyers respond to such advertisements by requesting for catalogues and price lists from the seller. The buyers do not inspect the goods before purchasing but place orders on the basis of the advertisements which they see in the newspapers and magazines.
After orders are received from customers, the goods are dispatched by v.P.P. or registered mail. The postman of the buyer's locality delivers the goods to him and takes the payment for the same. Thus the post office plays a vital role in such type of sale, and it is because of this type of sale is also sometimes referred to as "Shopping by Post".
4. Super Markets: The supermarket is a large-scale retail institution specialising in necessaries and convenience goods. They have huge premises and generally deal in food and non-food articles. In the words of M. M. Zimmerman, "A supermarket is a departmentalised retail establishment having four basic departments viz, self-service grocery, meat produce, dairy products plus other household departments, doing a maximum business. It may be entirely owner operated or have some of the departments leased out on a concession basis."
Supermarkets came into existence in the USA during the Great Depression of the thirties. However, the original supermarkets were established by independent merchants who dealt mainly in food products.
5. Consumer Co-Operative Stores: A consumer co-operative is a retail business which is owned by the consumers themselves. Their basic objective is to eliminate middlemen. The consumers join together and manage the business and the profit thus earned is retained among themselves in the proportion of their contribution. The society purchases in bulk and avails the discounts and sells in small lots to the members. Some of the co-operative stores are run on a large-scale basis while others are small in size and nature.
6. Vending Machines: Such selling machines are extensively used in the west. The vending machine is operated by inserting a coin and the buyer can get the articles. Vending machines are usually acquired to sell articles like cigarettes, soft drinks, chocolates, candles etc. Railway platform and bus tickets are also sold by this method. The articles sold by a vending machine are pre-packed and labeled and are usually of reputed brands. The goods should be uniform in size and shape and less bulky in weight. The installation of such machines is an expensive affair and it needs regular maintenance also. Such machines are quite attractive in appearance and installed at busy shopping centers.
8.
In India, Chambers of Commerce have been organised at both regional and national levels.
1. Regional Chambers of Commerce
(i) Indian Chamber of Commerce (Kolkata)
(ii) Bengal Chamber of Commerce (Kolkata)
(iii) Indian Merchants Chamber (Mumbai)
(iv) Mewari Chamber of Commerce (Mumbai)
(v) Madras Chamber of Commerce (Chennai)
(vi) Punjab, Haryana and Delhi Chambers of Commerce (New Delhi).
2. National Chambers of Commerce
(i) Federation of Indian Chambers of Commerce and Industry (FICCI)
(ii) Confederation of Indian Industry (CII)
(iii) Associated Chambers of Commerce and Industry (ASSOCHAM)
(iv) All India Organizations of Employers (AlOE)
FICCI:
The Federation of Indian Chambers of Commerce and Industry (FICCl) was established in 1926 in New Delhi. It acts as an apex central body of businessmen in India. It consists of both individual and corporate members.
Its membership consists of 50 chambers of commerce and trade associations, 200 overseas members, and 1500 associate members. Its management is vested in an executive committee. FICCI acts as a representative body of Indian business. It is a non-government, not-for-profit organization. FICCI draws its membership from the corporate sector, both private and public, including SMEs and MNCs. The chamber has an indirect membership of over 2, 50,000 companies from various regional Chambers of Commerce. It is involved in sector specific business policy consensus building, and business promotion and networking. It is headquartered in the national capital New Delhi and has presence in 11 states in India and 8 countries across the world.
9.
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 largescale retailers
(a) Democratic management: Consumer cooperative stores are democratic organisations as they are managed and controlled by elected managing committees of consumer societies. The members of managing committees are elected by the members of consumer societies on the principle of 'one member, one vote'.
(b) Limited liability: The liability of the members of consumer cooperative societies is limited to the amount of shares held by them. Thus, in case a society's liabilities increase beyond the assets, the members will not be liable to repay the debts using their personal assets.
(c) Low price of goods: As the goods offered by consumer cooperatives are directly purchased from manufacturers and wholesalers, the role of middlemen is eliminated. Therefore, consumer societies are able to sell goods at lower prices.
10.
Departmental stores are basically large, fixed establishments that deal in a Wide variety of products. The following points highlight the features of a departmental store.
(a) Central locations: Department stores are generally located in central areas so as to attract a large number of customers.
(b) Defined hierarchy: The management in departmental stores follows the same hierarchy that is generally followed in any joint stock company. That is, the top management consists of a board of directors, with the managing director, the general manager and the department managers under it in that order.
(c) Absence of middlemen: Departmental stores purchase goods directly from manufacturers and sell them to customers. Thus, they eliminate the role of middlemen.
(d) Centralised purchase with decentralised sales: In a departmental store, the purchases from manufacturers are handled by a single division that follows a centralised purchase policy.On the other hand, the sales are handled by the respective sections of the departmental store, which follow a decentralised policy for sales.
| Basis of difference | Departmental Stores | Multiple Shops |
|---|---|---|
| Variety of products | They offer a wide variety of products to customers. | They deal in a single line of product and specialise in it |
| Customer service | They offer a wide variety of customer services. | They offer limited customer services |
| Location | They are located in central parts of cities so as to attract a large number of customers. | They have multiple locations-that is they are spread across cities or towns |
| Pricing policy | They do not follow a fixed pricing policy as the prices of products vary across departments | They follow a fixed pricing policy across all the shops that are part of a particular chain |
| Cost of failure | They have a very high cost of failure because of the huge initial and operating expenses | They have a limited cost of failure because the initial investment is not very large and the losses of one shop can be covered by the profits of others. |
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