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Chapter 10 of the NCERT Class 11 Business Studies deals with Internal Trade. It explains the meaning and types of internal trade, wholesale trade, services of wholesalers to manufacturers and retailers, retail trade, and services of retailers to manufacturers/wholesalers and consumers. It also discusses the departmental stores, chain stores, mail order houses, consumer cooperative stores, supermarkets, vending machines, the role of chambers of commerce and industry in promoting internal trade, and the implementation of GST. These solutions are written in simple, easy-to-understand language and are completely aligned with the latest CBSE pattern and NCERT textbook. You can also download the free PDF for quick revision.
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NCERT Solutions Class 11 Business Studies Chapter 10: Internal Trade
This section provides detailed and student-friendly answers for the Class 11 Business Studies Chapter 10 exercise questions. Each answer is explained clearly to strengthen understanding and exam preparation.
Exercise
Short Answer Questions
1. What is meant by internal trade?
Internal trade refers to the buying and selling of goods and services within the boundaries of a nation, without any customs or import duties, as the goods are part of domestic production meant for domestic consumption.
2. Specify the characteristics of fixed shop retailers.
Fixed shop retailers maintain permanent establishments to sell their merchandise. They do not move from place to place to serve customers. Key characteristics include:
(i) They have greater resources and operate at a relatively large scale compared to itinerant traders.
(ii) They deal in different products, including consumer durables and non-durables.
(iii) They provide greater services to customers, such as home delivery, repairs, credit facilities, etc.
(iv) They have greater credibility in the minds of customers due to their fixed locations.
3. What purpose is served by wholesalers providing warehousing facilities?
Wholesalers provide warehousing facilities to store goods purchased from manufacturers, relieving producers from the burden of storage and associated risks like theft, fire, or spoilage. This allows manufacturers to focus on production while wholesalers hold goods until demanded by retailers.
4. How does market information provided by the wholesalers benefit the manufacturers?
Wholesalers provide valuable market information to manufacturers about customer preferences, tastes, fashion changes, demand fluctuations, and competitive activities. This helps manufacturers adjust production, improve product features, and make informed decisions on pricing and marketing strategies.
5. How does the wholesaler help the manufacturer in availing the economies of scale?
Wholesalers collect small orders from numerous retailers and place bulk orders with manufacturers, enabling producers to undertake large-scale production. This allows manufacturers to achieve economies of scale through continuous production, lower per-unit costs, and efficient resource utilisation.
6. Distinguish between single-line stores and speciality stores. Can you identify such stores in your locality?
Single-line stores deal in a general category of products with different varieties, such as ready-made garment stores selling men’s wear, women’s wear, and kids’ wear. Speciality stores focus on a specific line within a product category, like a store selling only men’s footwear. In my locality, a general electronics store is a single-line store, while a mobile phone accessory shop is a speciality store.
7. How would you differentiate between street traders and street shops?
Street traders do not have a fixed place of business and move along streets selling goods like vegetables or fruits from carts or baskets. Street shops, however, have permanent but makeshift shops on pavements or roadsides, selling items like books or clothes in fixed locations, often near public places.
8. Explain the services offered by wholesalers to manufacturers.
Wholesalers offer the following services to manufacturers:
(i) Facilitating large-scale production by placing bulk orders.
(ii) Bearing risks like price fluctuations, theft, or spoilage.
(iii) Providing financial assistance through cash payments or advances.
(iv) Offering expert advice on market trends and customer preferences.
(v) Assisting in marketing by distributing goods to retailers.
(vi) Ensuring production continuity by purchasing goods as produced.
(vii) Providing storage facilities for finished goods.
9. What are the services offered by retailers to wholesalers and consumers?
Services to wholesalers and manufacturers:
(i) Help in distribution by making goods available to scattered consumers.
(ii) Personal selling efforts to promote products.
(iii) Enabling large-scale operations by handling small sales.
(iv) Collecting market information on consumer trends.
(v) Participating in promotional activities.
Services to consumers:
(i) Regular availability of products.
(ii) Information on new products.
(iii) Convenience in buying small quantities near residences.
(iv) Wide selection of goods.
(v) After-sales services like home delivery.
(vi) Credit facilities.
Long Answer Questions
1. 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.
Itinerant traders, also known as mobile or ambulatory traders, are retailers who do not have a fixed place of business and move from one location to another to sell their goods directly to consumers. They include hawkers, peddlers, street vendors, market traders, and cheap jacks. Despite intense competition from large-scale retailers like supermarkets, departmental stores, and chain stores, which offer a wide variety of products under one roof with modern facilities, itinerant traders continue to thrive in India. This survival can be analysed through the following reasons:
(i) Low operational costs: Itinerant traders operate with minimal overheads. They do not need to invest in expensive shop rentals, elaborate displays, or permanent infrastructure. Their setup is simple, often just a cart, basket, or temporary stall, which keeps their costs low.
(ii) Mobility and direct reach: Unlike fixed large-scale retailers confined to specific locations, itinerant traders can move to where the customers are, such as residential colonies, busy streets, markets, or even door-to-door.
(iii) Personal touch and customer relationships: Itinerant traders often build strong personal bonds with customers through regular interactions, bargaining, and customised services. They understand local preferences and offer personalised recommendations, which fosters loyalty.
(iv) Convenience for small purchases: They cater to immediate, small-quantity needs like fresh vegetables, fruits, snacks, or repair services (e.g., cobblers or key makers). Consumers often buy these items impulsively or in small amounts, and itinerant traders make them readily available at odd hours.
(v) Affordability for low-income groups: A significant portion of India’s population belongs to lower-income segments who prioritise low prices over variety or ambience. Itinerant traders sell affordable, sometimes second-hand or unbranded goods, making them accessible to this demographic.
2. Discuss the features of a departmental store. How are they different from multiple shops or chain stores.
Departmental stores are large-scale retail establishments that offer a wide variety of merchandise under one roof, organised into separate departments for different product categories. They are like a collection of speciality shops within a single building, catering to diverse consumer needs. Examples include Big Bazaar or Shoppers Stop in India.
Features of departmental stores:
(i) Large scale and central location: They are big establishments, often multi-storied, located in prime shopping districts or malls to attract a large footfall.
(ii) Wide variety of products: Each department specialises in a specific line of goods, such as clothing, electronics, groceries, cosmetics, or furniture.
(iii) Customer services and amenities: They provide extensive facilities like free home delivery, credit options, after-sales service, restaurants, play areas for children, parking, and restrooms to enhance the shopping experience and encourage longer visits.
(iv) Professional management: Operated as joint stock companies, they have a hierarchical structure with trained staff, modern management techniques, and centralised purchasing but decentralised selling within departments.
(v) Attractive presentation: Goods are displayed appealingly with bright lighting, mirrors, and demonstrations. They often run promotions, discounts, and seasonal sales to boost sales.
Differences from multiple shops or chain stores:
Departmental stores differ from chain stores (also called multiple shops) in several ways:
- Scale and variety: Departmental stores offer a broad range of product categories across departments (e.g., from apparel to appliances), while chain stores specialise in a single line of products (e.g., Bata sells only footwear across its branches).
- Management and control: Departmental stores have centralised purchasing but allow departmental heads some autonomy. Chain stores have fully centralised management, with uniform policies, pricing, and stock transfers across all branches.
- Location and setup: Departmental stores are typically single, large outlets in central areas. Chain stores consist of numerous small to medium-sized branches spread across cities or regions for a wider reach.
- Pricing and flexibility: Departmental stores may have flexible pricing with discounts, but chain stores maintain uniform, fixed prices to ensure consistency. Chain stores can transfer unsold stock between branches, reducing losses, whereas departmental stores risk a higher inventory pile-up.
- Customer experience: Departmental stores focus on a luxurious, all-in-one shopping experience with amenities. Chain stores emphasise convenience, quick service, and standardised products without extensive facilities.
3. Why are consumer cooperative stores considered to be less expensive? What are its relative advantages over other large-scale retailers?
Consumer cooperative stores are retail outlets owned and managed by consumers themselves, who pool resources to buy goods in bulk and sell them to members at fair prices. Examples include Kendriya Bhandar or Sahakari Bhandar in India. They operate on the principle of “one member, one vote” and aim for service rather than maximum profit.
Consumer cooperatives are seen as less expensive because they eliminate middlemen and unnecessary profits. They purchase goods directly from manufacturers or wholesalers in large quantities, securing discounts and lower costs. Profits, if any, are distributed as dividends to members or reinvested, rather than maximised for shareholders.
Relative advantages over other large-scale retailers are:
(i) Democratic control and member benefits: Owned by consumers, they prioritise member welfare with dividends, bonuses, and patronage refunds. Other large retailers are profit-oriented, benefiting owners or shareholders more than customers.
(ii) Lower prices and quality assurance: Bulk buying ensures competitive pricing and genuine products, avoiding adulteration. Large retailers may charge higher markups for branding or ambience.
(iii) Community focus and social welfare: They promote self-help, education, and ethical practices, often supporting local producers. Other retailers focus on commercial expansion.
(iv) Credit facilities for members: Members can buy on credit, which is limited or absent in cash-based large retailers like supermarkets.
(v) Reduced exploitation: By cutting out intermediaries, they protect consumers from high prices or shortages. Large retailers may engage in aggressive marketing or monopolistic practices.
4. Imagine life without your local market. What difficulties would a consumer face if there is no retail shop?
Local markets, comprising small retail shops like general stores, kirana shops, or fixed vendors, are essential for everyday consumer needs. Imagining life without them highlights their role in convenience and accessibility. Without retail shops, consumers would face numerous difficulties:
(i) Inconvenience in procurement: Consumers would have to travel long distances to wholesalers or manufacturers for basic items like groceries, toiletries, or medicines.
(ii) Lack of small-quantity purchases: Retail shops allow buying in small amounts suited to immediate needs or budgets. Without them, consumers might be forced to buy in bulk from wholesalers, risking wastage or tying up money in excess stock.
(iii) Absence of variety and choice: Local shops offer a mix of branded, unbranded, and local products. Without them, options would be limited to what large suppliers provide, reducing customisation based on preferences or affordability.
(iv) No credit or personal services: Many local retailers extend credit to regular customers or provide home delivery. Without this, cash-strapped consumers, especially in rural areas, would struggle, and services like product advice or exchanges would be unavailable.
(v) Impact on emergency needs: For urgent items like milk, bread, or repairs, consumers would face delays. This could disrupt daily routines, particularly for working individuals or families.
5. Explain the usefulness of mail-order houses. What type of products are generally handled by them? Specify.
Mail order houses, also known as mail order businesses, are retail formats where goods are sold through mail, catalogues, or online orders without direct personal contact between buyer and seller. Customers place orders via post, phone, or website, and goods are delivered by mail or courier. Examples include Amazon (in its early form) or traditional catalogue companies.
Usefulness of mail-order houses:
(i) Wide geographical reach: They can serve customers in remote or rural areas where physical stores are absent, eliminating the need for travel and expanding market access.
(ii) Convenience for buyers: Shopping can be done from home at any time, ideal for busy individuals, the elderly, or those with mobility issues. No need to visit stores or deal with crowds.
(iii) Elimination of middlemen: Direct selling from seller to buyer reduces costs, allowing competitive pricing and higher profits for the business.
(iv) Large-scale operations: They benefit from economies of scale through bulk purchasing and efficient inventory management, often with money-back guarantees to build trust.
(v) Customised marketing: Through catalogues or emails, they provide detailed product information, enabling informed choices without physical inspection.
Types of products handled by mail-order Houses:
Mail order houses handle products that are non-perishable, easy to describe, standardised, and lightweight for shipping. Specific examples include:
- Books, magazines, and stationery (e.g., educational materials).
- Clothing and accessories (e.g., ready-made garments, jewellery).
- Electronics and gadgets (e.g., watches, cameras, small appliances).
- Cosmetics and toiletries (e.g., perfumes, creams).
- Household items (e.g., kitchenware, toys).
- Medicines and health products (e.g., over-the-counter drugs).
Also Read: CBSE Class 10 Economics Chapter 3 NCERT Solutions
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