Unit – X: Internal Trade
Very Short answer Question
(One mark each):
Q.1. What do you mean by internal trade?
Ans: Internal trade means buying and selling of goods and services
within the national boundaries of the country.
Q.2. What is “breaking the bulk” in wholesale trade?
Ans: It is a function of wholesale and it means subdivision.
Q.3. What is meant by retail trade?
Ans: Retail trade means selling in small quantities rather than in
gross.
Q.4. What is the meaning of wholesale trade?
Ans: Wholesale trade means buying the goods in large quantity
directly from the producers and selling them to retailers in small quantity.
Q.5. Define
departmental stores.
Ans: According to Thomas “A large retail establishment having in
the same building a number of departments each of which confine its activities
to one particular branch trade and forms a complete unit in itself”.
Q.6. What is Vending Machine?
Ans: 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.
Q.7. By what name the traders who do
not have a fixed place of business to operate from are known?
Ans. Itinerants
Q.8. Spencer, big Apple and Big Bazaar
are examples of a type of fixed shop what is it?
Ans: Departmental Store
Q.9. Which trade involves buying and selling
of goods and service within the boundaries of a nation?
Ans: Internal
Trade
Short answer type Questions
(Two/Three/five marks each):
Q.1. What is Internal trade? Mention
its types and features.
Ans: When buying and selling of goods and services takes place
within a country, then it is called internal trade. Internal Trade can be
classified into two categories:
a) Wholesale Trade
b) Retail Trade
Wholesale trade: Whole
sale trade is concerned with the activities of those persons which sell to
retailers but who do not sell to ultimate consumers.
Retail Trade: A retailer
is a business enterprise that is engaged in the sale of goods and services
directly to the customers.
The important features of Internal Trade are:
a)
All payments are made in national currency.
b)
There are no restrictions on the movements of
goods.
c)
Several alternative mode of transport are
available for carrying goods.
Q.2. What is Wholesale trade? Explain its services to manufacturer
and retailer. 2015,
2017
Ans: Wholesale 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.
These are the following services offered by the wholesalers to manufactures:
a)
Large Scale Production-Wholesalers purchase large quantities
and facilitate large scale production
b)
Concentration on Production- Wholesalers allow manufacturer to
concentrate on production only & wholesaler handle the distribution
activities
c)
Market Information-Wholesalers provide market
information to manufacturer regarding new product ideas, product modification,
and competitor’s activities.
d) Financial
Assistance- Wholesalers provide financial assistance to manufacturer they
purchase goods on cash .Sometimes they give advances to manufacturer.
e) Risk Bearing:
Wholesalers undertake the risk of dealing in the goods produced by the
manufacturer. He bears the risk of fluctuation in demand and price.
f) Storage
Wholesalers provide storage facilitates for finished goods.
Services
To Retailers:
a) Availability
of goods to retailers: They make available goods to the retailers for the
purpose of sale to the consumers.
b) Marketing
support: Wholesalers provide necessary marketing materials and support to the
retailers.
c) Credit
facilities: They sometimes sale goods on credit to the retailer. It is good
source of finance at cheapest cost for the retailers.
d) More
knowledge about products: They inform the retailers about the new product
manufactured and also inform them about the features of the product.
e) Sharing of
risk: A wholesaler share the risk of fluctuation in demand and price of the
product with the retailers.
Q.3. What is Retail trade? Explain its
services to manufacturer and retailer. 2016,
2019
Ans: 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:
a) The
services offered by retailers to wholesalers:
b) Wholesalers
get a ready market through retailers.
c) Retailers
manage the marketing part like advertising, publicity and promote sales.
d) Retail
provides the information about market to wholesalers which are downloaded to
manufacturer.
e) Retail
provides after sales services.
f) Retailers
help in distribution of goods to final consumers.
The
services offered by retailers to customers:
a) It
provides the availability of the goods and services to the final consumers.
b) As
retailer holds the stock so the customers don’t have to store the goods.
c) It
provides a variety of products and services to the consumers.
d) Retailers
provide after sales services.
e) It
provides credit facilities to the regular customers.
f) Retailer
provides important information to the customers.
Q.4.
Mention various features of wholesale trade and retail trade.
Ans: The features of wholesale trade are:
a) There is
limited range of products and a lot of variety is not offered to the consumer’s
.It generally deals in a few products of the same nature.
b) The
wholesaler’s purchases in large quantities directly from the producers.
c) The goods
are sold to retailers at a higher price .The goods are sold in small quantity.
d) It sells
to the industry or retailers but it does not sell directly to the consumers.
e) The
investment is very high. As he provides financial help to producers and
retailers. It purchase in cash but sells on credit.
The
features of retail trade are:
a) A retailer
is the intermediary between wholesaler and the ultimate consumer. He is the
last link in the chain of distribution.
b) A retailer
buys goods from wholesalers and sells them in small quantities to ultimate
consumers.
c) He
maintains personal contact with his customers.
d) Generally,
a retailer deals in a wide variety of goods.
e) A retailer
usually buys goods on credit and sells on cash basis.
f) Retail
shops are generally situated near to customers.
Q.5. Distinguish between Wholesaler and retailer.
|
BASIS OF DISTINCTION |
WHOLESALER |
RETAILERS |
|
PURCHASE AND SALE |
They purchase goods from manufacturer and
sells to retailer |
They purchase goods from wholesaler and sell
them to consumer. |
|
QUANTITY |
They buy and sell goods in large quantities. |
They buy and sell goods in small quantities |
|
SPECIALISATION |
They specialize in purchase and sale of one
quantity |
They provide all types of goods and they do
not specialize in one type of goods. |
|
CAPITAL |
They require a large amount of capital. |
They require a less amount of capital. |
|
PRICE |
Wholesale price is lower than retail price. |
Retail price is more than wholesale price. |
|
LINK |
Wholesalers are link between manufacturer
and retailer. |
They are a link between wholesaler and
consumer. |
|
LOCATION |
Location of wholesaler shop is not
important. |
Location of a retail shop plays an important
role as it as should be centrally located. |
|
CREDIT TRANSACTION |
They sell goods on credit. |
They sell goods in cash. |
|
SCOPE |
Its scope is vast. |
Its scope is limited. |
Q.6.
What are various types of retail trade? Explain them briefly.
Ans:
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. They have more money when compared
to itinerant retailers. These retailers may be dealing in different type of
products.
Types of fixed shop retailers:
(i) General stores.
(ii) Specialty shops.
(iii) Street stalls holders.
(iv) Second hand goods shop.
Q.7. What is meant by large scale retailing? Mention its forms.
Ans: Large scale retailing means operations
carried on a large scale and sale of goods in small quantity. These are the
most common form of large scale retailing:
a) Departmental
Stores
b) Chain
Stores or multiple shops
c) Mail order
business
d) Consumer
cooperative store
e) Super
Bazaar
Q.8. What is multiple Shop or chain stores? Mention its features,
advantages and limitations.
Ans: Multiple shops are networks of retail
shops of a large merchandising organisation that consists of many branches in
the country. All branches are under central ownership and control. Multiple
Shops are similarly organised and people may find them without any difficulty.
The features of multiple shops are:
a)
They aim on the elimination of middleman.
b)
They specialises on one line of goods.
c)
The range of goods is strictly limited.
d)
All the goods are of same nature.
e)
Sales are decentralized.
f)
All sales are on cash basis.
Advantages:
a) Large
scale production takes place.
b) Middlemen
are avoided.
c) Cash
basis.
d) Risk is
reduced.
e) Low cost
due to avoidance of middlemen.
f) Place can
be changed if there are no profits.
Limitations:
a) Limited
varieties are available.
b) No
personal touch.
c) Losses in
case of change in demand.
d) Delay in
decisions.
e) It
requires a huge amount of capital investments.
f) As there
are many branches there is a possibility of fraud because close supervision is
not possible.
Q.9. Define departmental stores. Mention its merits and demerits. 2016, 2018
Ans: According to Thomas “A large retail
establishment having in the same building a number of departments each of which
confine its activities to one particular branch trade and forms a complete unit
in itself”.
Advantages:
a) Attract
large number of customers.
b) Buying is
made easier.
c) More
services are provided.
d) Benefits
of large scale operations.
e) Sales get
increased by advertising.
Limitations:
a) No
personal attention is there.
b) More cost
of operating the store.
c) More
chances for loss.
d) Far away
from home.
Q.10. Discuss the features of Departmental Stores. Distinguish
between Departmental Stores and Multiple Shops.
Ans: These are the features of Departmental
Stores:
a) A
Departmental Store supplies a wide variety of goods. It tries to satisfy
expected human wants under one roof.
b) Departmental
store is situated in the centre of cities where maximum number of crowd
gathers.
c) In
departmental stores there are various departments but the sales and management
control are centralised.
d) They use
advertising as a tool of marketing.
The
Distinction between Departmental Stores and Multiple Stores are:
|
BASIS OF DISTINCTION |
DEPARTMENTAL STORE |
MULTIPLE SHOPS |
|
LOCATION |
They are located at the centre or shopping
areas of big cities |
They are located at different areas of
cities |
|
PURPOSE |
Its purpose is to attract customers |
Its purpose is to approach customers |
|
INVESTMENT |
Its investment is comparatively more because
it maintains variety of goods. |
It requires less investment. |
|
CREDIT FACILITIES |
They provide credit facilities. |
They do not provide credit facilities. |
|
BUYING & SELLING |
Buying is decentralized and selling is
centralized. |
Buying is centralized and selling is
decentralized. |
|
FLEXIBILITY |
It is flexible |
It is not flexible |
|
APPEARANCE |
Decoration is not uniform |
Uniformity of decoration for identification |
|
PRICE |
Different Prices |
Same Price |
|
NATURE OF GOODS |
Luxury Goods |
Necessities |
Q.11. What
are consumer cooperative stores? Mention its features, merits and demerits. 2015, 2017
Ans: Consumer cooperative store: This
store is an organization managed and controlled by consumers. The cooperative
societies generally buy in large quantity directly from the wholesalers or
manufacturers.
The features of Consumer cooperative
Stores are:
a) It is a
voluntary association of consumers registered under Cooperative Societies Act
b) Membership
is open to all
c) The store
has a share capital of a small face value
d) Everybody
has to pay entrance fees
e) The
liability of members is limited by shares
f) Store
sells on cash basis
g) Minimum
advertising is undertaken
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.
Q.12. What do you mean by super market? State its features.
Ans: Super bazaar is large retailing organisation
and facilitates a customer to buy various types of goods under one roof. It
does not have any sales man too convince the customers. The customers can
choose commodities of their choice.
Features of Super Market
a) Goods are
sold on cash basis only
b) Self
Service is its principle
c) It
supplies a wide variety of Goods
d) Goods are
properly packed and contain a label showing its identification, content, price
quantity.
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.
Q.13. What is mail order business? Mention its advantages and
disadvantages.
Ans: Mail order business: In such types of
business, retailers sell their products through mail.
Advantages:
a) Less
capital.
b) Middlemen
are avoided.
c) No bad
debt.
d) More
customers are reached.
e) Goods are
delivered at the door step.
Limitations:
a) No
personal contact.
b) Heavy
expenditure on advertisements.
c) No after
sales service.
d) No credit
facilities.
e) Delivery
is delayed.
f) Dependence
on postal services.
Q.14. What type of Products are offered by mail order houses?
Ans: These are the following products which are handed by mail
order houses:
a) They
should not be perishable
b) They
should be lighter which can be sent easily by mail.
c) They
should be valuable as compared to its weight.
d) They
should have regular demand and it should be popular in market.
e) They
should be standardized and branded goods.
Q.15.
Write a brief note on the role of chamber of commerce and industry in promotion
of internal trade.
Ans: Role of Indian chambers of commerce
and industry in promotion of internal trade:
a) Interstate
movement of goods.
b) Local
taxes act as an income.
c) Value
added tax.
d) Marketing
agricultural products.
e) Using
proper weights and measures.
f) Prevention
of duplication brands.
g) Providing
proper roads, electricity, railways.
h) Flexible labour laws.