Class 11 Business Studies

Internal Trade

NCERT Solution

Long Answer Type

Question 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.

Answer: Itinerant traders can be seen in almost every city, town and village of India. In spite of competition from large scale retailers, they still survive. Some of the reasons for their survival are discussed below:

They usually deal in consumer products of daily use; such as toiletry products, fruits and vegetables. These items are usually bought by most of the people in small quantities and many people have to buy them just when they need them the most.

Most of the products sold by itinerant traders are very cheap. Price is a key factor in sustaining their sale.

Itinerant traders provide the convenience of delivering a product wherever the customer needs that product. For example; a vegetable or fruit seller usually delivers the product at the doorstep of customers. People often purchase various items at traffic junctions when the vehicles are idle due to red light. This type of convenience cannot be offered by any other form of retail.

Itinerant traders even go to those places where it is difficult to sustain a shop because of poor level of demand. They provide their services to even the remote areas.

Itinerant traders also sell products in trains and buses; where it is impossible to have a fixed shop.

It can be said that convenience and affordability are two key factors which have helped in sustaining the itinerant traders.

Question 2: Discuss the features of a departmental store. How are they different from multiple shops or chain stores?

Answer: Following are the main features of a departmental store:

  1. A departmental store may provide all facilities such as restaurant, travel and information bureau, telephone booth, restrooms, etc.
  2. These stores are usually placed in a central location in a city so that a large number of customers can be catered to.
  3. These are usually formed as joint stock Company because of the size of the shop.
  4. They purchase directly from the manufacturer and thus can eliminate the middlemen in the process. The benefit of direct buying can be transferred to the customer.
  5. A departmental store has centralized purchasing arrangement. However, the function of sales is decentralized among various departments.
Risk of product obsolescence can be minimized by transferring a product to another store in the chain.
Difference Between Departmental Stores and Chain Stores
Departmental Store Chain Stores
These are not owned by the manufacturer. These are owned by a particular manufacturer.
A particular departmental store has its own visual appeal and branding. All the shops in a chain of stores have similar visual appeal and branding.
Departmental Store sells product of various manufacturers. A chain store sells products of a single manufacturer.
Risk of product obsolescence is high.
Purchase is centralized while sale is decentralized. All functions are decentralized.
May provide credit to some select customers. All sales is done in cash.

Question 3: Why are consumer cooperative stores considered to be less expensive? What are its relative advantages over other large scale retailers?

Answer: A consumer cooperative store directly buys from manufacturer or producer. Elimination of middlemen helps in reducing the price. Since such stores are run on no-profit no-loss basis, hence customers are benefited by lower price.

Some of the advantages of consumer cooperatives are as follows:

Ease of formation: A cooperative can be formed with minimum of ten people. Registration is simple and is done by filling a form with the Registrar of Cooperative Societies.

Limited Liability: Since capital is contributed by each member of the society, hence liability is limited to the contribution of a member.

Democratic Management: Decision making in a cooperative society works on one man one vote principle. Hence, consensual decisions are possible.

Lower Prices: Elimination of middlemen in the buying process helps in reducing the price for the consumer.

Cash Sales: Sale from a cooperative store is done in cash.

Convenient Location: A cooperative store is located in close proximity to the members’ residence. This provides convenience to the customers.

Question 4: Imagine life without your local market. What difficulties would a consumer face if there is no retail shop?

Answer: Retail shops in the neighbourhood provide different types of convenience to consumers. To understand this let us take examples of two residential areas in Delhi. Paryavaran Complex is somewhat old colony somewhere in South Delhi. This colony already has hundreds of general stores, some medicine stores, cloth stores, grocers, butchers, barber’s shops, motor mechanics, etc. Ranaji Enclave is somewhere in North Delhi and is relatively a new colony. This colony does not have single general store. Some grocers come to this area but they come once or twice in a week.

For a lady; living in Paryavaran Complex; it is easy to buy any item of daily use because most of the shops are at walking distance. She also feels safe because of the bustling market in the neighbourhood. Her ten year old child can walk down to the nearby store to buy notebooks and pens.

For a family; living in Ranaji Enclave; life can be quite difficult. They have to drive at least five km before they can find suitable place to buy all the things of household use. They cannot even imagine buying a simple thing after late evenings. They have to buy vegetables on a weekly basis because nothing is available in the vicinity of their house.

These two examples show that retail stores provide lot of convenience to us. We can buy certain items as and when required if some retail stores are within the walking distance from our house. In case of emergency, we can easily get medicine and other necessary items if some shops are nearby. Otherwise, life can be very difficult.

Question 5: Explain the usefulness of mail orders houses. What types of products are generally handled by them? Specify.

Answer: Mail orders houses can be very useful in certain circumstances. Let us analyse their usefulness from the perspective of customers as well as sellers.

Usefulness for Customers: A customer can discover some new and innovative products through various advertisements in print media or on television. Sometimes, a hidden need of a customer can be discovered by looking at advertisements from mail orders houses. Mail order houses also provide the convenience of doorstep delivery for the customer. This saves time which may be lost while going for shopping. This also saves cost on commuting.

Usefulness for Sellers: Setting up a mail order house requires minimum investment because there is no need to create a fancy showroom. This type of retail enables a seller to reach even far flung places in the country. Sales are made against cash hence chances of bad debt are nil.

Types of products which are usually handled by mail orders houses are as follows:

  1. Graded and standardized goods.
  2. Goods which can be easily transported at low cost.
  3. Goods which have ready demand in the market.
  4. Goods which can be easily described through pictures.