Solution

INTERNAL TRADE

Class 11 - Business Studies

1. i. a. Shalini
Cash on Delivery - COD
b. Subhash Jaglan
Free on Board/Free on Rail - FOB/FOR
c. Miss Anvi Goyal
Cost, Insurance and Freight - CIF
ii. Errors and Omissions Excepted - E & OE: It is a phrase used in an attempt to reduce legal liability for potentially incorrect
information.
2. The wholesaler acts as an intermediary between the manufacturer and retailer. He is very close to the manufacturer. Wholesalers
often purchase goods in bulk quantities from manufacturers. They buy in bulk which enables manufacturers also to produce in
bulk and avail benefits of large-scale production. Once a purchase is made, the wholesalers distribute the goods in small quantities

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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

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time and place utility, thus enabling them to produce goods on a large scale and benefit from the economies of scale.
3. Trade involves buying and selling of goods. It links the producer and the consumer. It is classified as follows:

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i. Internal or home trade.
ii. External or foreign trade.
iii. Entraport
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Auxiliaries to trade mean those activities which support or assist trade. These are an infernal part of commerce in particular and
business activity in general. Main auxiliaries are:
i. Transportation and communication
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ii. Warehousing
iii. Banking and finance
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iv. Insurance
v. Advertising and Promotion
4. i. A Mall: Public Place large people gather for various activities.
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ii. a. "For shopping they... small shops located in a building."

Big sized retail shops
b. "Here, along with goods....entertainment and food."
Multiple services
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c. "The special characteristic....people could come easily."

Centrally located
iii. Automatic Vending Machine - AVM: Electronic machines sell goods in return for payment.
5. 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.
6. a. Arihant will be classified as an ‘Itinerant Retailer’ because he does not have a fixed place of business to operate from.
b. The category of itinerant retailers under which Arihant should be placed is ‘Market Traders’.
c. Main Features of Market Traders are:
i. They deal in low-priced consumer items of daily use, such as fabrics, toys, crockery, vegetables, etc.
ii. They mainly cater to the needs of lower-income customers.
iii. They set up their shop with a temporary structure.
iv. They also sell their goods on gatherings on special occasions such as annual fairs, festivals, etc.
7. Its full name/form is "Errors and Omissions Excepted". E. & O.E. (Errors and Omissions Excepted): It refers to that term that is
used in trade documents to say that mistakes and things that have been forgotten should be taken into account. This term is used in

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 an attempt to reduce legal liability for incorrect or incomplete information supplied in a document such as a price list, invoice,
cash memo, quotation, etc. In legal terms, it seeks to make a statement that information can not be relied upon, or may have
changed by the time of use.
8. i. Facilitating Large-scale Production: ‘He purchases paper in bulk quantities, which enables the manufacturer to take
advantage of economies of scale.’
ii. Financial Assistance: ‘Subodh purchases paper from manufacturers on a cash basis and sometimes even give advance money
for bulk orders.’
iii. Expert Advice: ‘As Subodh is in direct contact with the retailers, he keeps informing the manufacturer about the changes in
customers’ preferences, market conditions, etc.’
9. Single line stores are those stores which deal in one line of the product only. They are situated in market places. There is no such
advantage of specialization. For example- a sweet shop, a chemist shop, stationery shop etc. Speciality stores are those stores
which deal in the particular product of one line of product. They are located in a central place of market. They take advantage of
specialization in a particular segment of the market. For example- sweet shops dealing in Bengali sweets only, garment shop
selling jeans only. Single line stores are more frequently found in local retail markets while speciality stores are found in
wholesale markets.
10. i. Value added is the additional features or economic value that a company adds to its product and services before offering them

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to customers.
ii. Here the amount of ₹ 10,800 on account of GST from Mr. Jagjit Singh has been received, i.e. on 1 50,000 as cost and ₹ 10,000

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as Profit, not on ₹ 69,000 (₹ 50,000 + ₹ 9,000 + ₹ 10,000). It is evident that here no tax on ₹ 9,000 paid on account of GST has
been received by Shaan Garments. In other words, the amount of GST charged from the customer has been only on the cost

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and Profit.
iii. The calculation of the Net amount of GST paid by Shaan Garments is as under:
Net GST Payable = Output Tax - Inputs Tax Credit
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= ₹ 10,800 - ₹ 9,000
= ₹ 1,800
Shaan Garments will have to deposit ₹ 1,800 on account of GST, i.e. at the rate of 18% on the added value (Profit = ₹ 10,000)
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11. Yes, departmental stores make shopping convenient due to the following reasons:
i. These stores are located in central places in heart of the city.
ii. These stores offer a large variety of goods from low price items to very expensive goods under one roof.
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iii. These stores provide attractive services of restrooms, etc.

iv. A departmental store purchases its products directly from manufacturers and thus eliminates middlemen and reduces cost.
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12. a. Bhavesh will be classified as a ‘Fixed Shop Retailer’ because he operates his business from a permanently established shop.
b. Speciality Shop retail trade.
c. The main features of Speciality Shops are:
i. They specialize only in one product of a certain line instead of all products of that line.
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ii. They keep variety of particular product.

iii. They are generally located at central places in order to attract a large number of customers.
13. i. The retailers who have permanent establishments for carrying out business activities are known as fixed shop retailers.
ii. They are the most common type of retailers found in the market place.
iii. They deal with consumer durable as well as non-durable products.
iv. They operate on a large scale and have greater resources.
v. They deal with different products including consumer durables as well as nondurables.
vi. Fixed shop retailers are generally of two types: Small retailers, Large retailers.
vii. They do not move from place to place to serve their customers.
viii. They have credibility in the minds of customers as they provide greater services such as credit facilities, home delivery,
repairs, guarantees, etc.
14. "Spencers", "Big Apple" and "Big Bazar" are examples of departmental stores. A departmental store is a large retail outlet
offering a wide variety of products, classified into well-defined departments under one roof. The main aim of this store is to
satisfy all the needs of the customers.
Merits:
i. Convenience in buying: Departmental stores, provide great convenience to customers by offering a large variety of products
of their requirements under one roof.

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 ii. Attract a large number of customers: Being centrally located, these stores are able to attract a large number of customers
since all type of goods are deal over here.
15. a. Pranav will be classified as a fixed shop retailer.
b. The category of fixed shop retailers under which Pranav should be placed is Speciality shop.
c. The three features of the type of fixed shop retailers are as follows:
i. The amount of capital investment and scale of operation is relatively larger as compared to itinerant retailers.
ii. They deal in a wide variety of goods, including consumer durables as well as non-durables.
iii. They enjoy greater credibility in the minds of buyers and strive to provide greater services to them like free home delivery,
guarantees, repairs, credit facilities etc.

16. Basis Wholesaler Retailer

Wholesaler requires a large amount of capital for

Capital The retailer can manage with small capital.
his business.
Profit The wholesaler sells at a very low-profit margin The retailer sells at a higher profit margin because of expenses
margin due to fast turnover. on the window dressing.
17. A wholesaler provides almost all the relevant information regarding the preferences and expectations of the customers to the

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manufacturer. He also collects information regarding the products of the competitor, price of his product, promotional schemes

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running by competitor for increasing the sale of his product etc. Wholesalers make suggestions about the type and quality of
goods required by the consumers, and he also gives an rough idea regarding the future expected demand of the product. Such
information helps the producer to regulate production according to the changing requirement of the consumer.

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18. The name of their business is 'Departmental Store'. The main characteristics of it are the following:
i. There are many departments under one roof.
ii. All kinds of things are available in them.
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iii. They are generally situated in big cities.
iv. The customers are provided with many free services.
v. Efficient salesmen work here.
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vi. There is a separate manager for every department.
19. i. Hawkers and Pedlars
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ii. Market Traders

iii. Street Traders
iv. Cheap Jacks
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20. Basis of difference Street traders Street shops

Small retailers who generally sell low-priced consumer items on Shops situated on street sides or main
Definition
streets. roads.
Ed

Shops/establishments Do not have permanent shops. Have permanent establishments.

Products Bathroom items, eatables, etc. Clothes, shoes, grocery items, etc.
21. If there are no retail shop, a consumer will face a number of difficulties which are stated below:
i. Without a retail shop, a consumer cannot get a continuous supply of commodities. This would result in the distribution of
goods.
ii. It will be difficult to have a wide choice to purchase a variety of goods manufactured by various manufacturers.
iii. A consumer will miss the personalised services and credit facilities provided by retailers.
iv. A consumer will miss the after-sale services provided by the retail shops.
v. No new product information will be easily available to consumers if retail shops are not there.
22. The name of this source of business is 'Automatic Vending Machine-AVM'.
AVM is an automated machine that provides snacks, beverages, cigarettes, lottery tickets to consumers after cash, a credit card, or
a specially designed card is inserted in the machine.
The following are the main advantages of AVM:
i. Sales are possible at any time, i.e., no bar of time on sales.
ii. The salesman is not needed.
iii. We get the products of similar weight and quality.

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 iv. We get fresh products.
v. The Machine is not difficult to operate.
23. i. Marketing Support
ii. Risk Sharing
24. i. Invoice: A document that records transactions between buyer and seller.
ii. Cash Memo: Document for cash transactions between buyer and seller.
iii. Debit Note: Commercial document issued by buyer to seller.
iv. Credit Note: Commercial document issued by seller to buyer.
25. Wholesalers perform services both to the manufacturer and retailer. They pass on the market information to the manufacturer.
They provide sales assistance to the manufacturer. Advertising and sales promotion activities are mostly undertaken by
wholesalers.
26. The services provided by the retailer to the consumer are as follows:
i. Convenience in buying: Retailers provide goods to consumers according to their requirements. Normally, they are situated
near residential areas and remain open for long hours.
ii. Wide selection: Generally, the retailers keep large varieties of products of different manufacturers. So, they offer a wide
selection to consumers.

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iii. New product information: The retailers through their personal skills, efforts, and effective display of products, provide
information about the arrival, special features, etc. of new products to the customers. This helps the consumers in deciding the

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purchase of those goods.
iv. Regular availability of products: Retailers are located in all places and provide a regular supply of products.
v. After-sales services: Retailer sometimes provide home delivery and after-sales service to consumers.
vi. Provide credit facilities: Retailers often sell goods on credit to their regular customers.
27. a. ‘Vending Machine’ is being referred to in the given case.
b. Three features of Vending Machines are:
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i. Self-service system: Vending machines do not require salesmen or employees. It reduces operating costs.
ii. The need for coins and tokens: Vending machines require coins or tokens to operate the machine.
28. a. Deepa will be classified as a ‘Fixed Shop Retailer’ because she operates his business from a permanently established shop.
b. Second-hand Goods Shop.
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c. Three Features of Second-hand Goods Shop:

i. The shops may be located at street crossings or in busy streets.
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ii. These shops may either be in the form of a stall with a temporary platform or may have reasonably good infrastructure.
iii. The goods are generally sold at lower prices as they are used goods.
29. Services provided by the retailer to the customers are as follows:
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i. Regular availability of the goods: Retailers maintain regular availability of a variety of products from different
manufacturers. This helps the customers to buy the products of their choice as and when they require it.
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ii. Information about the goods: By effectively displaying the goods and through personal selling efforts; retailers provide
important information about the arrival of the new goods, their special features, etc. thus helps them in making their purchase
decision.
iii. Convenience in buying: Firstly, retailers are situated very nearer to the residential areas and remain open for long hours.
Secondly, retailers sell the goods of the desired variety in small quantities according to customers' requirements, therefore,
providing convenience to customers.
iv. Wider choice: Retailers generally keep stock of a wide variety of goods, produced by different manufacturers. This enables
the customers to make their choice out of the wide variety available to select the best good.
v. After-sales service: Retailers sometimes provide home delivery and after-sales service to consumers.
vi. Provide credit facilities: Retailers often sell goods on credit to their regular customers.
30. The name of this organisation is "Chamber of Commerce and Industries". Its main activities are the following:
i. Protecting Business Community: These associations raise their voice against the anti-business government policies. Many a
time the government has to consider the protest of these associations and make changes in its policies.
ii. Information to Members: These associations compile the data related to business from time to time. Based on this data much
positive information is forwarded to the members. Such information proves beneficial for the business.
iii. Role of Spokesman: This association represents the whole business com m unity and faces the press conference. In this way,
by representing the business in front of other parties it protects its interest in an effective and really vigorous way.

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31. Objectives of GST are:
i. To eliminate the cascading impact of taxes on production and distribution cost of goods and services.
ii. Streamlining indirect tax regime.
iii. Growth of revenue in States and Union.
iv. Reduction in transaction costs and unnecessary wastages.
v. Elimination of the multiplicity of taxation.
vi. Ease in doing business.
vii. Uniformity of taxes
viii. One nation one tax.
32. 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.
a. Product information: Retailers provide customers information about new products, their features, prices, etc. This
information helps the customers in deciding which product to buy, thus facilitating their product choice.
b. Wide range of goods : Retail shops generally offer customers a wide variety of goods such as stationery goods, dairy
products and food items.

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c. Convenient locations: Retail shops are generally established close to residential localities. They remain open for long hours,
providing convenience to customers.

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d. Credit facilities: Retailers at times offer goods on credit to their regular customers. This helps customers to maintain their
level of consumption even when they are facing financial difficulties.

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e. Regular availability of products: Retail shops ensure regular and timely availability of goods produced by different
manufactures. Thus, they make it possible for customers to purchase the goods they require as and when the need arises.
f. After-sales services: Many customers look for after-sales services, such as repair of equipment, and many retail shops provide
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these services to its customers or arrange for them.
33. The disadvantages of chain stores are as follows:
i. A limited selection of goods: These stores sell a range of goods produced in their organizations only. Thus, they offer a
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limited choice of goods.
ii. Lack of personal touch: Sometimes, indifferences and lack of personal touch arise in the employees due to lack of
incentives.
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iii. Problems of change in demand: The management has to bear heavy losses when the demand for their goods changes rapidly.
This is because a large amount of stock remains unsold at the central office.
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iv. Lack of initiative: The branch managers are required to follow the instructions received from the head office. Thus, they
become habitual of seeking the guidance of head office in all matters. This kills their initiative to make use of their creative
skills.
v. Aftersales services: Chain stores provide very limited services confined to guarantee and repairs if goods sold are found
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defective.
vi. Business Risk: There is the dispersal of business risk as those shops which are not successful may be closed or shifted to
some other locality.
34. Retailers who do not have any fixed place to carry out their business activities are known as itinerant traders. They have to move
from one place to another along with their goods in search of consumers.
Three types of itinerant traders are as follows:
Peddlars and hawkers: These are the oldest form of retailers. They deal with non-standardized and low-value goods like
fruits, vegetables, ice creams, toys, fabrics, etc., which they carry on a bicycle, hand cart, cycle-rickshaw, or on their head.
They are small traders who move from one place to another to sell their products.They found in streets of residential areas,
places of exhibition, near schools etc.
Market traders: They are also small traders who sell their goods at different places on fixed days. For example, every
Saturday or every Sunday in the 'Saturday market' and 'Sunday market', etc. These traders deal in a single line of goods
such as toys, ready-made garments, fabrics, etc. They deal with low prices, low-quality goods. Hence, they cater to the
needs of the lower-income group.
Street traders: They are also known as pavement traders. These retailers can be seen in areas having a high population
like bus stands, railway stations, etc. They deal in common use products, like newspapers, magazines, toys, stationery
items, etc. They do not change their place of business frequently.

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35. i. a. Manufacturers
b. Retailers
ii. a. Services towards Manufacturers:
I. "All his purchase is done on cash and sometimes, he gives even advance payment." (Providing financial help)
II. "Mr. Sharma continues to convey the information to the manufacturers of sarees about the changing demands of the
consumers." (Providing information about demand)
b. Services towards Retailers:
I. "Its benefit reaches the final consumers as well as Mr Sharma's customers." (Benefit of advertisement)
II. "Mr. Sharma keeps informing his customers well in time about the sarees of new designs made by the manufacturers."
(Information about new products)
36. i. This is mail-order business which is also known as shopping by post.
ii. Mail-order business offers the following benefits:
a. Elimination of middlemen which results in lots of savings for both buyers and sellers.
b. It does not require heavy expenditure on building and other infrastructure. Therefore, it can be started with limited capital.
c. Since the mail order business does not extend credit facilities to the customers, there is no risk of bad debts to them.
d. There is no direct contact between parties so it is through advertisement which saves time.

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37. a. The type of retail outlet is described in the above lines is a departmental store.

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b. The two merits of a departmental store are as follows:
(i) Attract a large number of customers since they are typically located in central places.
(ii) Convenience in buying as a wide variety of products are available under one roof.
The two limitations of a departmental store are as follows:

consumers in terms of higher prices.

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(i) High operating cost is incurred in pursuit of offering more services to the customers which are eventually passed on to the

(ii) High possibility of loss as the scale of operation and operating costs are high.
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38. The functions of retailers are as follows:
i. Financing: Retailers provide goods to consumers often on a credit basis to their regular customers. This increases the level of
consumption and hence the standard of living of salaried class.
ii. Supplying market information: Since the retailer is in direct contact with the consumers, he provides information regarding
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their tastes, preferences, and attitudes, etc. to the wholesaler. This information helps them in making important marketing
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decisions.
iii. Convenience in buying: Retailers provide goods to consumers according to their requirements through the door to door
services or by telephone etc. Usually, they are situated near residential areas and remain open for long hours.
iv. Risk bearing: A retailer has to bear the risk if the change in style and fashion occurs when the goods are stored in large
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quantities in the warehouses.

v. After sales services: Retailers sometimes provide home delivery and after sales service to costumers.
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39. i. Chanchal is doing the trade of fresh fruits and vegetables. This is a Local Level Trade. We call it a local level trade because
the trade of such items is limited to one city or village.
ii. Komal is doing the trade of grains and pulses. This is a State Level Trade. We call it so because the trade of these items is
often done in the different parts of the same state.
iii. Kamal is doing the trade of cloth. This is a National Level Trade. We call it so because the trade of cloth is often done between
the states of the same country.
40. Some of the important features of multiple shops are given below:
i. Location: These shops are located in a fairly populous locality where a sufficient number of customers can be approached.
They are located near busy markets.
ii. Centralized manufacturing: The manufacturing/ procurement of merchandise for all the retail units is centralized at the head
office. From the head, office goods are sent to all its branches.
iii. Supervision by Branch Manager: Each retail unit works under the supervision of a branch manager who sends daily reports
to the head office in relation to cash deposits, the requirement of stock, etc.
iv. Pricing policy: The prices of goods in such shops are fixed and uniform for all the units as decided and sales are made strictly
on a cash basis.
41. Both the expectations of the people can be fulfilled only by a wholesale trader. Therefore, it is clear that Bindu and Rekha are
doing wholesale trade. A wholesale trader can do both the desired services in the following manner:

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 i. Control on Market Fluctuations: A wholesaler controls huge fluctuations in the market by stocking goods. Therefore, the
prices remain under control. This directly benefits consumers.
ii. Easy Availability of Goods: The presence of the wholesaler makes it easy for a retailer to get the goods according to the taste
of the consumers at any time. Consequently, all things are readily available to consumers. In the absence of the wholesaler, the
retailers cannot perform this job easily.
42. i. At 'Geeta Pustak Bhandar' only religious books are sold out. This type of shop is known as the Single Product Store. These
traders deal in only one type of goods. They keep all the varieties of this type of goods. For example, there will be religious
books of all religions available with the trader dealing in religious books.
ii. At 'Kapoor Pustak Bhandar' all kinds of books are sold out. This type of shop is known as Single Line Store. These traders
deal in one product. They keep goods of all types of the class, the product of which they deal in.
43. I will suggest the following to Mr. Kapil:
i. Type of Internal Trade:
He should do Wholesale Trade because it will fulfil both of his expectations; namely:
a. A wholesale trader does the buying and selling of goods in a large quantity.
b. He deals in only a few selected/chosen goods.
ii. Selection of Business Organisation:

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He should set up a partnership organisation, because both the characteristics desired by Kapil are present in it, namely:
a. Arrangement of Capital: In a Partnership Organisation a number of partners pool their financial sources; as a result of this,

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the capital takes the form of huge size.
b. Managerial Capacity: A Partnership Organisation has persons possessing several qualities, the mixture of which can do

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the managerial work very efficiently.
44. i. State Taxes
a. VAT/Sales tax
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b. Entertainment Tax (unless it is levied by local bodies)
c. Luxury Tax
d. Taxes on lottery, betting, and gambling.
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e. State cesses and surcharges in so far as they relate to the supply of goods and services.
ii. Central Taxes
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a. Central Excise Duty.

b. Additional Excise Duty.
c. The Excise Duty levied under the medical and Toiletries Preparation Act.
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d. Services Tax.
e. Surcharges and cesses.
45. The disadvantages of departmental stores are as follows:
i. Lack of personal attention: Large size of the store makes it difficult to provide adequate personal attention to all the
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customers.
ii. High possibility of loss: Due to large-scale operations, the possibility of losses are high in these stores. Losses are like loss of
theft, pilferage, etc For example, in case of a change in fashion, the store has to sell out-of-fashion goods in the clearance sale
at heavy discounts.
iii. High operating cost: Because of the various services offered by the store to its customers, the operating cost is high. High
operating cost increases the price of the goods and hence these stores are not attractive for lower-income groups.
iv. Inconvenient location: Since these stores are centrally located, it is not convenient for the purchase of goods required
immediately.
v. High risk: There is a greater risk as the success of departmental store depends on continued prosperity.
46. a. The type of retail trade being described in the above lines is a Mail Order House.
b. The five conditions under which mail-house trading may be considered suitable are as follows:
i. The products can be standardized and graded.
ii. The products can be easily transported at low cost.
iii. The products have ready demand in the market.
iv. The products are available throughout the year and in large quantity.
v. The products can be described through pictures.

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47. Retailers offer a variety of services to wholesalers and customers. Some of these services are listed below.
Services to consumers:
i. Ready or quick supply: The most important service of a retailer to consumers is to maintain regular availability of various
products so that the buyers can buy the products whenever they need it.
ii. Wide variety: Retailers generally keep stock of a variety of products which enables consumers to make their choice out of a
wide selection of goods.
iii. Home delivery: It is an important part of after-sale service and for the buyer’s decision to repeat the purchase of the products.
iv. After Sales Service: Retailers provide after-sales services to the customers in the form of home delivery, the supply of spare
parts, etc.
Services to the wholesalers:
i. Distribution of goods to distant places: Retailers help in the distribution of goods to the final consumers and thus provide place
utility.
ii. Risk bearing: Retailers participate in the promotional activities of the product so that the product becomes popular and then it
is less risk for the wholesalers.
iii. They provide information to wholesalers: Retailers provide information to wholesalers, such as the tastes and preferences of
customers, prevailing market conditions and level of competition in the market. Wholesalers pass on this information to

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manufacturers.
iv. Bulk breaking: wholesalers break large quantities of goods bought from producers into smaller quantities as desired by the

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retailers.
v. Transport: wholesalers assists retailers to distribute goods from their warehouses to the retailer's premises.

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vi. Storage of goods: wholesalers stores the goods bought from the producers until when the retailers require them.
48. The different types of small retailers are as follows:
i. General stores: General stores are the most commonly found in local markets and residential areas. These shops carry stock
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of a variety of products needed to satisfy day to day needs of the consumers.E.g., grocery items, soft drinks, etc. Such stores
remain open for long hours at convenient timings and often provide credit facilities to some of their regular customers.
ii. Specialty shops: These shops deal in a specific line of products like shoes, toys, gifts, children's garments, electronic goods,
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etc. Such shops are becoming very common, particularly in urban areas. In order to attract a large number of customers, these
shops are centrally located.
iii. Street stallholders: These are small retailers generally found at places having a heavy flow of population, such as street
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crossings, main roads, etc. They deal with low-quality goods like toys, hosiery products, etc. They carry business operations in
a very limited space.
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iv. Second-hand goods shop: These retail shops deal in second-hand or used goods like automobiles, furniture, books, etc. They
cater to the needs of people having limited means. The price of the goods sold by them is generally low. Sometimes, these
shops deal in antique items or goods having historical value. In such a case, they charge high prices from customers having a
special interest in such goods.
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v. Single line stores: These stores deal in a single product line such as watches, shoes, tires, ready-made garments, books, etc.
These stores are centrally located and keep a wide variety of items on the same line.
49. Itinerant traders are traders who don't have a fixed place of business to operate from. They have to move from one place to
another along with their goods in search of consumers. They are small traders who invest a very small amount of capital. They
have to keep a limited inventory of merchandise. They normally deal with consumer products of daily use like toys, snacks,
toiletry products, crockery, newspapers and magazines, fruits and vegetables, etc.
Various types of itinerant traders are as follows:
i. Peddlars and hawkers: These are the oldest form of retailers. They deal in non-standardized and low-value goods like fruits,
vegetables, ice creams, toys, fabrics, etc., which they carry on a bicycle, hand cart, cycle-rickshaw, or on their head. They are
small traders who move from one place to another to sell their products.
ii. Market traders: They are also small traders who sell their goods at different places on fixed days. For example, every
Saturday or every Sunday in the 'Saturday market' and 'Sunday market', etc. These traders deal in a single line of goods such
as toys, ready-made garments, fabrics, etc. They deal with low prices, low-quality goods. Hence, they cater to the needs of the
lower-income group.
iii. Street traders: They are also known as pavement traders. These retailers can be seen in areas having a high population like
bus stands, railway stations, etc. They deal in common use products, like newspapers, magazines, toys, stationery items, etc.
They do not change their place of business frequently.

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 iv. Cheap jacks: They are petty retailers who have independent shops of a temporary nature in a business locality. they deal with
consumer items as well as services such as repair of watches, shoes, etc. They keep on changing their business from one
locality to another.
50. The features of departmental stores are as follows:
i. Departmental stores are centrally located in the heart of a city. Hence, they cater to a large number of customers.
ii. They provide various facilities like telephone booths, rest-rooms, restaurants, etc. to the customers.
iii. Due to large size, these stores are formed as joint ventures managed by the board of directors, consisting of the managing
director, general manager, and manager of each department, etc.
iv. The goods are purchased directly from the manufacturer and are kept in ware-houses. These stores perform the functions of
both retailing as well as warehousing on one hand and on the other hand help in eliminating middlemen between the
manufacturer and customer.
v. In these stores, the purchases are made centrally by the purchasing department while the sales of each department are
decentralized.
vi. Departmental stores aim at satisfying all the needs of customers under one roof. So they have to carry variety of products of
different types.
vii. All the sales in departmental stores are cash basis only.No credit is granted.

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51. a. The type of retail outlet being described is ‘Chain Stores or Multiple Shops’.
b. Five features of Chain Stores are:

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i. Location: These shops are located in populated localities, where a sufficient number of customers can be approached.
ii. Centralised Purchases: The head office makes all the purchases for all these multiple shops. Thereafter, goods are

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dispatched to different shops as per their requirements. It saves the cost of operation of these shops.
iii. Centralised control: All stores are controlled by the head office, which formulates policies and gets them implemented in
different shops.
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iv. Cash sales: All the sales at the multiple shops are made on a cash basis and cash is deposited daily into the bank account
on behalf of the head office and a report is sent to the head office in this regard.
v. Regular inspection: The head office normally appoints inspectors, who inspect the retails shops with respect to the
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quality of customer service provided, adherence to policies of head office, and so on.
52. Features of the GST model are:
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i. There are two components: one levied by the Central (referred to as Central GST), and the other levied by the States
(referred to as State GST), Rates for Central GST and State GST approved appropriately.
ii. The GST is applicable to all transactions of goods and services.
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iii. Since the Central GST and the State GST are treated individually, taxes paid against the Central GST are allowed to be taken
as an input tax credit (ITC) for the Central GST and can be utilized only against the payment of Central GST.
iv. Cross utilization of ITC between the Central GST and the State GST is not permitted except in the case of inter-State supply
of goods and services.
Ed

v. The taxpayer needs to submit periodical returns, in a common format, to both the Central GST authority and to the concerned
State GST authorities.
vi. GST reduces all taxes and single nation single tax prevails there.
53. i. I will suggest to my friends that they should choose the trade of Company Organisation because by setting up this trade they
will have the following advantages:
a. Limited Liability: In a Company Organisation the liability of the shareholders is limited. The company can at the most
demand from them the balance amount on their shares that they owe to it.
b. Continuity: The existence of the company is separate from its members. There is no effect on its life in case of the death
of the shareholders, their bankruptcy or their madness. It is only because of its stable existence that it is considered the
best form of business organisation.
ii. The two values which will be affected by their setting up the retail business are:
a. The consumers have no apprehension of being cheated.
b. Economic help through the credit facility.
54. The usefulness of mail-order houses is stated below:
i. Limited capital requirement:- The investment in building and other infrastructural facilities is minimal.
ii. Elimination of middlemen:- The goods are sold directly to the consumers and the need for any middlemen is eliminated. This
helps to save the cost of distribution, thereby benefitting both the buyer as well as the seller.

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 iii. Absence of bad debt:- In this form of trading only cash sales are made to the customers. Thus, the possibility of any risk of
bad debt is eliminated.
iv. The wide reach of business:- A trader gets wider access to the market as a large number of people across the length and
breadth of the country can be served through the mail.
v. Convenience:- It is very convenient for the customers to procure goods as they are delivered at their doorstep.
Mail order houses usually deal only in the goods that can be:
i. Graded and standardized
ii. Easily transported at low cost
iii. Have ready demand in the market
iv. Are available in large quantity throughout the year
v. Involve least possible competition in the market
vi. Described through pictures, etc.
55. The services of wholesalers to retailers are as follows:
i. Availability of goods: The wholesaler provides a variety of same goods to the retailer and hence relieves him from the burden
of collecting the goods from several manufacturers.
ii. Risk sharing: A retailer does not have to bother about the risk of storage, reduction in price, fluctuation in demand, etc. All

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these risks are borne by the wholesaler.
iii. Grant of credit: The wholesaler grants credit facility to the retailer, thus enabling him to manage his business with a small

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amount of working capital.
iv. Marketing support: The wholesalers undertake advertisements and other sales promotional activities in order to induce

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consumers to purchase the goods.
v. Specialized knowledge: The wholesalers provide useful information to the retailers about the new products, their benefits,
quality, etc. They also advise the retailers regarding the decoration of their shops, allocation of shelf space, and demonstration
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of certain products. Thus all required information is easily available with retailers.
56. Wholesalers offer a wide variety of services to manufacturers. The following are examples of such services:
a. Facilitate large-scale production: Wholesalers purchase goods in bulk from manufacturers and sell them to retailers. This
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bulk purchase made by wholesalers enables manufacturers to undertake production on a large scale without worrying about
storage facilities. Thus, wholesalers facilitate large-scale production.
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b. Provide storage facilities: When wholesalers purchase goods in bulk quantities from manufacturers, they store these goods in
their godowns or warehouses, reducing manufacturers burden of finding proper storage.
c. Collect market information: Wholesalers provide different kinds of information to manufacturers, such as information about
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the tastes and preferences of customers, prevailing market conditions etc.

d. Bearing Risk: The wholesalers deal in goods in their own name, take delivery of the goods and keep them in their warehouses
bearing risks of fall in prices, theft, spoilage, fire, etc.
e. Financial Assistance: The wholesalers provide financial assistance to the manufacturers in the sense that they generally make
Ed

cash payment for the goods purchased by them.

f. Expert Advice: Wholesalers can advice the manufacturers about various aspects like customer’s tastes and preferences,
market conditions, competitive activities and the features preferred by the buyers as they are in touch with retailers.
57. Following points show the difference between the two:
S.
Basis Departmental store Chain-store/multiple stores
No.

Multiple store/chain stores are located near

A departmental store is located at a central place where a
(i) Location residential areas or in busy markets. Thus,central
large number of customers can be attracted to it.
location is not necessary for chain shops.

These stores aim at satisfying all the needs of customers

Range of The multiple stores deal in a limited range of
(ii) under one roof. So, they have to carry a variety of
product merchandise, mostly standard consumer products.
products of different types.

Departmental stores lay great emphasis on maximum Multiple shops provide very limited services
Services
(iii) services to customers like alteration of garments/ confined to guarantee and repairs it the sold goods
offered
restrooms, restaurants, etc. turn out to be defective.

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 (iv) Pricing The departmental stores do not have a uniform pricing The multiple chain shops sell goods at fixed prices
policy for all the departments; rather they have to and maintain a uniform pricing policy for all the
occasionally offer discounts, rebate, etc. to clear the shops.
unsold stock.
These chain stores cater to different types of
These stores cater to the needs of a relatively high-income
Class of customers including lower-income groups who are
(v) group of customers who care more for the services
customer interested in buying quality goods at a reasonable
provided instead of the prices of goods.
price.

Credit Departmental Stores may provide credit facilities to some Multiple shops make all sales strictly on a cash
(vi)
facilities of their regular customers. basis. No credit facilities allowed to the customers.

58. a. The various types of services Ajay is providing to the retailers are as follows:
a. Availability of goods in a wide variety so as to readily meet the demands of the retailers by procuring them from different
manufacturers.
b. Marketing support by undertaking various activities like advertising and other sales promotional activities to create ready
demand for the goods and support the retailers.

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c. Grant of credit to the retailers so as to enable them to manage their business with a relatively small amount of working
capital.

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d. Specialized knowledge about various aspects may be provided by the wholesalers to the retailers like new products and
their uses, quality, prices, layout of the retail outlet, allocation of shelf space and demonstration techniques, etc.

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b. The two services that Ajay must be extending to the manufacturers are as follows:
i. Facilitating large scale production by accumulating small orders from various retailers and making purchases in bulk
quantities, thereby enabling the producers to reap the advantage of the economies of scale.
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ii. Bearing risk of various types such as theft, pilferage, spoilage, fire, etc. as the wholesalers generally keep a large stock of
goods in their warehouses.
59. The retail outlets which sell their products through the mail are referred to as mail-order houses. This type of trading involves no
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personal contact between the customer and the seller. The trader contacts the customer through advertisement in newspapers or
magazines, circulars, catalogs, and price list is sent to them by post. The advertisement gives the complete description regarding
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price, delivery terms, terms of payments, features, etc. of the product. There is no direct personal contact between the buyers and
the sellers in this type of trading. Limitations:
i. Lack of personal contact: Sometimes, the lack of personal contact between the buyers and the sellers results in
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misunderstanding and mistrust between the two.

ii. No after-sales service: Both buyers and sellers are located very far away from each other and there is no personal contact
between the two. Hence, it is very difficult to provide after-sales services to buyers.
iii. No credit facility: This system fails to provide a credit facility to the customers. So, customers with scarce means are not
Ed

interested in this system.

iv. Delayed delivery: The receipt and execution of orders through mail take a lot of time. So, there is a delay in the delivery of
the products.
v. Not suitable for some products: Mail order business is not suitable for perishable and bulky items which are not handled
easily.
60. Services provided by wholesalers are as follows:
i. Bearing risk: The wholesaler purchases goods in bulk and bears a lot of risk such as a loss by fire, theft, pilferage, risk of fall
in prices.
ii. Storage function: The wholesaler also performs the storage function. The goods are purchased by the wholesalers in large
quantities from the manufacturers and stored at warehouses in order to meet the demand of retailers. The wholesalers act as a
bridge between the production and consumption of goods.
iii. Breaking the bulk: The wholesaler purchases goods from manufacturers in bulk and avails discounts. He sells goods in small
quantities to retailers which saves the retailers from maintaining large stocks.
iv. Advertisement: A wholesaler undertakes advertising and sales promotion of the product which automatically results in the
increase in sales.
v. Market information: Wholesalers inform the retailers about the introduction of new products in the market. He also gets
feedback from the retailers about the needs and preferences of customers. He passes the information to the producer to make

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 necessary changes in the products.
vi. Facilitating continuity of production: By purchasing goods as and when these are produced.
61. i. Convenient shopping: A departmental store offers a large variety of products under one roof. A customer need not go from
one place to another for the search of products. Customers can thus save time and effort involved in making purchases of
different products.
ii. Wide choice of products: Departmental stores provide a wide variety of products which enable the customers to choose from
a lot of alternatives. Thus, these are capable to cater to the needs of all types of customers.
iii. Economies of scale: A departmental store enjoys economies of scale as it operates on a larger scale. A large volume of goods
are bought by these stores and as a result, they enjoy benefits in the form of discounts given by the manufacturer. Middlemen
are eliminated due to direct purchases so cost is saved.
iv. Services: A wide variety of services are provided by departmental stores, which includes telephone booth, home delivery, post
office, and other entertainment facilities.
v. Location: It is generally located in the heart of the city where people from all parts of the city can reach conveniently.
vi. Credit Facility: Usually departmental stores offer credit facilities to their regular customers.
62. a. Chain Store or Multiple Shop is being described in the above lines.
b. The four features of Chain Store or Multiple Shop being described are as follows:

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i. The cost of operation of these stores is relatively less as the manufacturing/ procurement of merchandise for all is done
centrally by the head office and then forwarded to different retail units as per their requirements.

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ii. Each retail shop is headed by a Branch Manager, who is directly answerable to the head office for its day-to-day
functioning.

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iii. Multiple Shops are fixed price shops where sales are made only on a cash basis. They deposit the revenue daily into a
local bank account on behalf of the head office.
iv. The inspectors appointed on behalf of the head office undertake day-to-day supervision of these shops.
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63. The type of retail outlet being highlighted is ‘Departmental Store’.
Three Advantages of Departmental Stores are:
a. Attract a large number of customers: These stores are generally located in the center of the city. As a result, they are able to
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attract a large number of customers.
b. Convenience in buying: A departmental store offers a wide range of goods. Customers do not have to run from one shop to
another because they can do all shopping under one roof.
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c. Attractive services: Most of the departmental stores provide numerous services to their customers, like liberal credit, free
home delivery, execution of telephone orders, telephone facilities, etc. All such services make shopping a pleasant experience.
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Two limitations of Departmental Stores are:

a. Lack of personal attention: There is a lack of personal touch in a departmental store as it is very difficult to give personal
attention to a large number of customers visiting the store every day.
b. High operating cost: The operating cost of running the departmental stores is very high due to the extensive services and
Ed

facilities offered by them to the customers.

64. A departmental store is a large retail trading organization. It has several departments, which are classified and organized
accordingly. Departments are made as per different types of goods to be sold. These are also called as 'Universal Providers' or
'One spot shopping'.
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:
i. Central locations: Department stores are generally located in central areas so as to attract a large number of customers.
ii. 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.
iii. Absence of middlemen: Departmental stores purchase goods directly from manufacturers and sell them to customers. Thus,
they eliminate the role of middlemen.
iv. 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.
Differences between Departmental stores and Multiple shops:
Basis of difference Departmental Stores Multiple Shops

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 Variety of products Wide varieties of different products Limited product range

Types of Customer High income group Different types of customers

Location Centrally located Different localities

Pricing policy Prices are neither fixed nor uniform Fixed and uniform prices for all the shops

Decoration There is no uniformity of decoration Uniformity of decoration for the easy identification of products

65. a. The various types of retailing services Irish is providing to his customers are as follows:
i. A wide selection of goods is offered by the retailers who stock goods of different manufacturers, thereby enabling the
consumers to exercise a free choice.
ii. New products information is facilitated by retailers through the effective display of products and useful talks with the
buyers.
b. The two other services provided by a retailer to his customers are as follows:
i. After-sales services are provided by the retailers to promote buyer's purchase decision and also foster repeat purchase in
varied forms like home delivery, the supply of spare parts and attending to grievances of the customers.
ii. Provide credit facilities to their regular buyers and enables them to increase their level of consumption and consequently

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their standard of living.

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c. The two services that Irish must be extending to the wholesalers are as follows:
i. Help in the distribution of goods by making the goods available to the final consumers, who may be spread over a large
geographic area.

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ii. Collecting market information by the virtue of being in direct touch with the buyers such as their tastes, preferences, and
attitudes of about the firm's products and facilitating marketing decisions of the enterprise.
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66. The consumer cooperative store is a very popular form of retailing. Under this system, consumers themselves come together to
form a cooperative society. Consumer cooperative stores can be defined as ‘a voluntary association of persons based on
cooperative principles by buying in common and selling in common’.
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Advantages:
i. Reasonable prices: Cooperative stores provide goods at reasonable prices to its members by eliminating middlemen from the
distribution chain.
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ii. Low operating cost: Cooperative stores do not spend huge amounts on advertising or display, decoration of showrooms etc.
the benefits of low cost are passed on to the members only.
iii. Cash sales: Cooperative stores sell goods only on a cash basis to their members, so there are no chances of bad debts.
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iv. Economies of scale: Cooperative stores buy goods directly from the manufacturers in bulk. The economies of bulk purchase
such as a discount, low freight etc. can be obtained.
v. Democratic management: Cooperative consumer’s stores work on the principle of one man one vote. There are no special
voting rights given to the members who have purchased a large number of shares.
Ed

vi. Benefits from the government: A consumer cooperative store gets lots of benefits from the government in the form of
assistance and exemption in tax etc.
vii. Convenient Location: The consumer cooperative stores are generally opened at convenient public places where the members
and others can easily buy the products as per their requirements.
viii. Limited Liability: The liability of the members in a cooperative store is limited to the extent of the capital contributed by
them.

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