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Business Studies Solution for Class 11 Commerce Business Studies Chapter 10 - Internal Trade

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NCERT Textbook Solutions are considered extremely helpful when preparing for your CBSE Class 11 Business Studies exams. TopperLearning study resources infuse profound knowledge, and our Textbook Solutions compiled by our subject experts are no different. Here you will find all the answers to the NCERT textbook questions of Chapter 10 - Internal Trade.

All our solutions for Chapter 10 - Internal Trade are prepared considering the latest CBSE syllabus, and they are amended from time to time. Our free NCERT Textbook Solutions for CBSE Class 11 Business Studies will strengthen your fundamentals in this chapter and can help you to score more marks in the examination. Refer to our Textbook Solutions any time, while doing your homework or while preparing for the exam.

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Business Studies Solution for Class 11 Commerce Business Studies Chapter 10 - Internal Trade Page/Excercise 249

Solution SAQ 1

Internal trade is buying and selling of goods and services within the geographical limits or territory of the nation. The payment for such purchases is made and received in the domestic currency. Internal trade is classified into wholesale trade and retail trade.

Solution SAQ 2

Fixed-shop retailers are retailers who have a fixed place to sell their stock. They sell their products directly to consumers while being at the shop. They do not move from place to place to convince customers to buy from them.

Characteristics of fixed shop retailers:

  1. They have greater resources which help them to operate at a large scale as compared to itinerant traders. However, sometimes they operate on a small scale too.
  2. They deal in a wide range of products from durable to non-durable products.
  3. They create greater credibility in the minds of consumers because of the various services offered by them such as home delivery, credit facility and guarantees for products. 

Solution SAQ 3

Wholesalers buy merchandise in bulk quantities from manufacturers and deliver them to retailers in smaller quantities for further selling to customers. Bulk order and purchase made by wholesalers entitles manufacturers to undertake large-scale production without having to worry about storage facilities as these goods are stored in warehouses.

Solution SAQ 4

Wholesalers are often in contact with retailers and customers. Hence, they are able to provide better information to manufacturers regarding customers' tastes and preferences, needs of customers, recent market trends and level of competition. This helps manufacturers to fulfil customers' demands and make tailor-made products to suit customers' requirements.

Solution SAQ 5

Wholesalers buy goods in bulk quantities from manufacturers and deliver them to retailers in smaller quantities for further sale to customers. During this process, they store the goods in warehouses and bear lots of risks and hence allow the manufacturers to produce on a large scale. Thus, wholesalers help manufacturers to take advantage of economies of scale.

Solution SAQ 6

Single Line Stores

Speciality Stores

Stores dealing in a single product line. 

Stores dealing in a specific line of products.

They offer a wide variety of products. 

They offer various brands for a specific product.

Example: Stores dealing in readymade garments, watches, bags and shoes. 

Example: Stores dealing in children's garments, ladies shoes and consumer electronic goods.

On the basis of these differences, try to identify whether the stores in your area are single line or speciality ones.

Solution SAQ 7

Street Traders

Street Shops

Small retailers selling cheap products on the streets.  

Small shops situated at the streets or roadside selling branded and cheap products.

They are mostly found at places with heavy population or at crowded places. 

They are generally available at every street.

Do not have a permanent establishment. 

Have a permanent establishment.

Examples:  

They deal in vegetables, newspapers and accessories. 

Examples:

They deal in garments, electronic goods and grocery items.

 

Solution SAQ 8

Services are offered by wholesalers to manufacturers:

  1. Facilitates large-scale production: Wholesalers collect various small orders from retailers and pass them to manufacturers. This enables them to produce various goods on a large scale, thereby helping them to take advantage of economies of scale.
  2. Bearing risk: Wholesalers purchase large quantities of goods from manufacturers and store them safely in warehouses. However, this process exposes them to various risks such as fall in prices, theft, fire and spoilage. Thus, they bear the risk and relieve producers of the same.
  3. Financial assistance: Wholesalers generally make payment of products purchased by them in cash. This helps manufacturers not to block their capital in stocks thereby providing financial assistance.
  4. Expert advice: As wholesalers are in direct contact with retailers and indirect contact with customers, they are able to provide vital information to manufacturers regarding the taste of customers, their preferences, market conditions and various competitive activities. 

Solution SAQ 9

Services offered by retailers to wholesalers:

  1. Help in distribution of goods: Retailers help in the distribution of goods in the sense that they sell goods to final consumers who are scattered over a large geographical area.
  2. Collect market information: As retailers are in direct contact with customers, they play an important role in providing information to wholesalers regarding the tastes and preferences of customers and demands of customers.

Services offered by retailers to consumers:

  1. New product information: Many new products are launched in the market every now and then. It is the retailers who make consumers aware of such products either through efficient display of products or through personal selling. This helps consumers to make the right decision with regard to purchase of goods.
  2. Convenience of buying: Retailers generally have their shops located at residential places. This makes it convenient for buyers to purchase products at any point of time.  

Solution LAQ 1

Itinerant traders do not have a fixed place for doing business. They move from one place to another in search of customers. They are also called mobile merchants.

Reasons for the survival of itinerant traders:

  1. They are small traders who sell their products at the doorstep of customers. In this way, they are able to give personal attention to customers.
  2. They generally sell products of daily use such as fruits, vegetables, dairy products and toiletry products which are always in demand.
  3. They emphasise on providing customer service. They do so by providing home delivery. They also provide credit facility to their regular customers.
  4. They operate with limited resources and their cost of operation is also low. This helps them to sell products to customers at cheap prices as compared to large-scale retailers. 

Solution LAQ 2

A departmental store is a large retail store which offers various goods and services in separate departments fulfilling every customer's needs under one roof.

Features of a departmental store:

  1. They tend to satisfy the needs of all customers, thereby saving their time and energy to purchase different products from different places.
  2. They are specially located at central or well-known places so that they can attract a large number of customers to their stores.
  3. They are generally formed as a Joint Stock Company managed by a Board of Directors, headed by a Managing Director, assisted by a General Manager and several sub-managers.
  4. They combine the functions of retailing and warehousing. This is because they directly purchase products from producers and store the products at their own storehouses. As a result, the operational cost is reduced drastically. Also, it helps in eliminating middlemen between buyers and sellers.
  5. All the purchases in the entire store are made centrally by the purchase division of the store. 

Basis

Department Stores

Multiple Chain Stores

Range of products

Offer various products to customers

Specialised in offering a single line of products to customers

Cash/Credit Basis

Offer credit facilities to regular customers

Sell on cash basis only

Risk

Face greater risk

Face comparatively lesser risk

Location

Located at central places

Located at different places

Services

Maximum customer services are provided

Limited customer services are provided

Types of Customers

Cater to relatively high income group customers

Cater to all types of people ranging from low income group to middle income group

 

Pricing

Do not follow uniform pricing policy for all departments

Follow uniform and fixed pricing policy for all shops

 

Solution LAQ 3

A consumer cooperative store is owned, managed and operated by consumers for their own benefits. It provides goods at reasonable prices to members of the consumer society. The main objective of this society is to provide quality goods and services at the lowest price possible.

Advantages which consumer cooperative stores have over large-scale retailers:

  1. It is simple to form a consumer society. It can be easily formed when any 10 people come together to form a voluntary association and complete formalities and register themselves with the Registrar of Cooperative Societies.
  2. The amount of shares held by the members of the consumer society depends on the liability granted to them. Thus, if a society's liability increases beyond the assets, the members will not be liable to repay debts using their personal assets.
  3. Consumer societies are able to sell goods at lower prices as goods offered by consumer cooperatives are directly purchased from manufacturers and wholesalers, thereby eliminating the role of middlemen.
  4. They operate at convenient public places wherein the members and others can easily buy products at any given time.
  5. They generally sell goods on a cash basis; this reduces the requirement for working capital. 

Business Studies Solution for Class 11 Commerce Business Studies Chapter 10 - Internal Trade Page/Excercise 250

Solution LAQ 4

Retail shops are shops where retailers sell their products to final consumers. Retailers are those who buy goods directly from manufacturers or wholesalers in bulk quantities. They then sell these goods to final customers in small quantities. Thus, they play an essential role because

  1. Regular availability of goods would be hampered without them.
  2. Customers would be deprived of choosing from a wide range of products which are provided by retailers.
  3. Information regarding the new products is passed on by retailers to consumers allowing them to make important decisions regarding products.
  4. They are generally located near residential areas and they remain open for long hours making it easier for customers to approach them.
  5. They also provide after-sales services such as home delivery, credit facilities and more.

Consumers will face the following difficulties in the absence of retail shops:

  1. Non-availability of goods at residential areas
  2. No assistance in selecting a better product
  3. No knowledge about the recent launch of new products
  4. Absence of credit facility
  5. Inconvenience to consumers in purchasing products of their needs 

Solution LAQ 5

Mail order houses are retail outlets which sell their goods through mail. There is no personal contact between buyers and sellers. They advertise their products through advertisements in newspapers, magazines and circulars to inform customers about the features and prices of products and terms of payment.

Usefulness of mail order houses:

  1. Limited capital requirement: They require low capital to conduct business. This is because they do not need money to be invested in a building or any infrastructural facilitates.
  2. Elimination of middlemen: They help in eliminating middlemen between buyers and sellers, thus saving money of both buyers and sellers.
  3. Absence of bad debt: They do not provide credit facilities to customers. Thus, the chance of having bad debt with regards to non-payment of cash is nullified.
  4. Wide reach: It has a wide reach as a large group of people can be served all across the nation having postal services.
  5. Convenience: Customers get the goods delivered at their doorstep resulting in convenience to them.

Types of products handled by them:

  • Graded and standardised
  • Easily transported at low cost
  • Have ready demand in the market
  • Available in bulk quantities throughout the year
  • Involved in least possible competition in the market
  • Can be described through images 

TopperLearning provides step-by-step solutions for each question in each chapter in the NCERT textbook. Access Chapter 10 - Internal Trade here for free.

Our NCERT Solutions for Class 11 Business Studies are by our subject matter experts. These NCERT Textbook Solutions will help you to revise the whole chapter, and you can increase your knowledge of Business Studies. If you would like to know more, please get in touch with our counsellor today!

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