NCERT Solutions for Class 11 Business Studies Chapter 10 Internal Trade. Study Material in Hindi Medium is available to download in PDF format free. NCERT Solutions and extra questions with study material in English Medium is also given to use free. These solutions cover the entire long and short type question answers of CBSE Textbook exercises.

11th Business Studies Chapter 10 Internal Trade

Class: 11Business Studies
Chapter: 10Internal Trade
Contents: NCERT Solutions and Study Material

Class 11 Business Studies Chapter 10 Solutions

11th B. St. Chapter 10 Short Answer Questions

What is meant by internal trade?

Internal trade also called as domestic trade, is the process of exchanging goods and services within the national boundaries of a country. In other words, the buying and selling of goods and services is within the confined geographical boundaries of a nation. Purchases of goods from a local shop, a mall or an exhibition are all examples of internal trade. The government does not levy customs or import duties on goods and services that are produced within the country for meeting the domestic demand. Only local taxes are levied on internal trade goods and services.
Internal trade can be classified into the following two categories:
(a) Wholesale trade
(b) Retail trade

Specify the characteristics of fixed shop retailers.

Fixed-shop retailers are retailers who have permanent establishments or shops. They sell goods and services from fixed location and do not move from place to place to serve customers.
The following are some of the characteristics of fixed-shop retailers:
(a) Fixed-shop retailers have a large scale operations and huge resources at their disposal.
(b) They deal in a variety of products from consumer durable goods to non-durable goods.
(c) Fixed-shop retailers provide additional services such as free home delivery and credit supply of goods.

What purpose is served by wholesalers providing warehousing facilities?

A wholesaler is essentially a middleman between a manufacturer and a retail establishment. Wholesalers obtain large quantities of products at a lower price and sell them to retailers or other businesses, which sell them from their e-commerce sites or storefronts, usually to end consumers. This bulk purchase of goods enables manufacturers to obtain discounts from manufacturers and also undertake production on a large scale without worrying about storage facilities. By offering warehouses close to the centres of distribution, wholesalers are relieved from collection of goods from several producers. Wholesalers not only provide warehousing facilities such as collection, storage and protection of goods but also facilitate marketing and distribution.

How does market information provided by wholesalers benefit the manufacturers?

Wholesalers provide a variety of information to both manufacturers and customers. They collect information about the tastes and preferences of customers from the market and provide it to the manufacturers which help customise goods accordingly. This information helps manufacturers gain competitive edge by catering to the changing needs of consumers.

How does the wholesaler help the manufacturer in availing the economies of scale?

Wholesalers are mediators between manufacturers and customers. They often purchase goods in bulk quantities from manufacturers. Once a purchase is made, the wholesalers obtain orders from retailers and distribute the goods in small quantities to them for further resale. By obtaining large orders manufacturers undertake production on large scale and take advantage of economies of scale.

Distinguish between single line stores and speciality stores. Can you identify such stores in your locality?
Single Line StoreSpeciality Store
1. Single-line stores are small shops that deal in only one product for example, garments or shoes.1. Speciality stores deal only in a particular type of product from a selected product line for example, men’s clothing..
2. These stores offer a wide variety of the product under one roof.2. These stores generally sell products under a particular brand in which they specialise.
How would you differentiate between street traders and street shops?
Basis of difference Street Traders Street Shops
DefinitionSmall retailers who generally sell low-priced consumer items on streets.Shops situated on street sides or main roads.
Shops/establishmentsDo not have permanent shops.Have permanent establishments.
ProductsStationery items, eatables, newspapers, etc.Clothes, shoes, grocery items, bakery items, etc.
Explain the services offered by the wholesalers to the manufacturers.

Wholesalers offer a wide variety of services to manufacturers. The following are examples of such services:

    • (a) Economies of Scale: Wholesalers purchase goods in bulk from manufacturers and facilitate large-scale production. This 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.
    • (b) They provide storage facilities: When wholesalers purchase goods in bulk quantities from manufacturers, they store these goods in their warehouses. By offering warehouses close to the centres of distribution, wholesalers are relieved from collection of goods from several producers. Wholesalers not only provide warehousing facilities such as collection, storage and protection of goods but also facilitate marketing and distribution.
    • (c) They collect market information: Wholesalers provide a variety of information to both manufacturers and customers. They collect information about the tastes and preferences of customers from the market and provide it to the manufacturers which help customise goods accordingly. This information helps manufacturers gain competitive edge by catering to the changing needs of consumers.
What are the services offered by retailers to wholesalers and consumers?

Retailers offer a variety of services to wholesalers and customers.
Some of these services provided to customers are:
(a) They provide information to customers about the new products in the market, its features and price details.
(b) They help customers buy the product as per their need
(c) They provide after sales services which cannot be directly provided by the manufacturer sometimes.
(d) They help customers get good discounts and credit facility
(e) The customers get timely delivery of product and customer service
Some of these services provided to wholesalers are:
(a) They provide information to wholesalers about the customer preferences and tastes, prevailing market conditions and level of competition in the market.
(b) They enable economies of scale by procuring large orders from the customers store a wide variety of goods
(c) They help in distribution and promotion of goods and services
(d) They create a network for wholesalers and link them to the customers indirectly with market information and personal selling Retailers generally store a wide variety of goods based on consumer tastes and preferences and thus allow customers to choose from the available range of products.

11th B St Chapter 10 Long Answer Questions

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 means travelling from place to place. Itinerant retailers have no fixed place of business. They move from place to place for selling their goods to the consumers. Itinerant sell in small quantities. They invest a very small amount of capital. They deal in varieties of goods. They are generally found on street sides, and they shift their place of operation in search of more customers. They usually sell cheaply priced and non-standard goods.
The reasons that itinerant traders survive in spite of the tough competition from large-scale retailers can be attributed to the following factors:
(a) Itinerant traders generally trade in cost effective goods that are of daily use to customers. There is no additional cost of storage and advertising which may add up to the final product. Hence, the prices of their goods are lower than the prices of goods sold by large-scale retailers.
(b) Itinerant traders deal directly with consumers and provide better customer interaction. They develop customer bonding as they supply goods to customers at their doorstep, they provide greater customer-care services and incorporate feedback in the product.
(c)They move from place to place and provide goods at the customer’s doorstep without the need of customer going to a particular place.
(d) Itinerant traders have a larger customer reach as they travel to different places for selling products. They even cover the remote areas which are out of reach of large retailers.

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

A department store is a retail establishment offering a wide range of consumer goods in different areas of the store, each area specializing in a product category. Some stores are one of many within a larger retail chain, while others are independent retailers. The following points highlight the features of a department store:
(a) The departmental stores are usually large and have all products under one roof available to customers for their convenience.
(b) Department stores are generally located in central areas so as to attract a large number of customers.
(c) The management in department 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.
(d) Department stores provide discounts and low prices to consumer as they purchase goods directly from manufacturers by eliminating the role of middlemen.
(e) Departmental store make centralized bulk purchases 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 department store, which follow a decentralised policy for sales.

Differences between department stores and multiple shops
Basis of difference Department stores Multiple shops
Products LineThe variety of products offered to customers is versatile and flexible.They deal and specialise in a single line of product.
Customer facilitiesThey offer a wide variety of customer services and even offer credit or EMI facilities to some customers.Limited customer services and the sales are usually in cash.
LocationThey are located in central parts of cities so as to attract a large number of customers.They have multiple locations and are spread across cities or towns.
Pricing policyNo fixed pricing policy, as the prices of products vary across departments.They follow a fixed pricing policy across all the shops.
Type of customerThey usually cater to higher income class of customers who are willing to pay more for a product.They cater to all types of customers in general.
Why are consumer’s cooperatives stores considered to be less expensive? What are its relative advantages over other large scale retailers?

Consumer cooperative stores are formed by groups of consumers with the objective of providing goods at reasonable prices to members of consumer societies. They purchase the goods in bulk directly from wholesaler or manufacturer and sell them to society members at reasonable rates. The prices of goods offered are much lower as consumer cooperative stores do not run with the aim of profit making.
The following are some advantages that consumer cooperative stores have over large-scale retailers:

    1. Easy set-up: The process of setting up of consumer society is easy as it requires ten people to get registered with the registrar.
    2. Democratic management: Consumer cooperative stores are managed and controlled by managing committees elected by members.
    3. Limited liability: The liability of the members of consumer cooperative societies is limited to the amount of shares held or capital contributed by them.
    4. Low price of goods: As the goods offered by consumer cooperatives are directly purchased from manufacturers and wholesalers, the role of middlemen is eliminated and consumer societies are able to sell goods at lower prices.
    5. Geographical advantage: The consumer stores are located at convenient locations and are within the reach of customers.
Imagine a life without your local markets. What difficulties would a consumer face if there is no retail shop?

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:

    1. 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.
    2. Wide variety of goods: Retail shops generally offer customers a wide variety of goods such as stationery goods, dairy products and food items.
    3. Geographical advantage: Retail shops are generally established close to residential localities. They remain open for long hours, providing convenience to customers.
    4. 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.
    5. 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.
    6. After-sales services: Many customers look for after-sales services, such as repair of equipment, and many retail shops provide these services to its customers or arrange for them.
Explain the usefulness of mail order houses. What types of products are generally handled by them? Specify?

Mail-order houses are trading units that use the mail for merchandising their products. These houses inform the customers about the features and prices of products, terms of payment, etc., by placing advertisements in newspapers and magazines or by mailing circulars or price lists to customers.
The following are some of the features of mail-order houses:

    1. Wide geographical reach: They reach the consumers at large as they send goods via mail. The sellers are able to pass on information about their merchandise to customers spread all over the country.
    2. Convenience: Mail-order houses deliver goods at the doorstep of the customers, providing their customers convenience in terms of time and effort in making purchases.
    3. Reduced costs: Due to elimination of middlemen, mail-order houses deal with consumers directly and provide them with goods at reasonable prices.
    4. Limited capital requirement: The mail order houses require low setup cost and the amount of capital required is usually low. This is because they do not require large capital assets like buildings for stocking inventory.
    5. Faulty customers: The chances of bad debts are avoided as they do not provide credit facilities to the customer and they are asked to make on line payments up front.

Mail-order houses generally deal in goods that are non-perishable and easily transferable. They do not trade in perishable goods, bulky goods and goods that cannot be easily handled. This is because they deliver products through postal services. Mail-order houses prefer to trade in the following types of goods:

    • (a) Gradable and standardised
    • (b) Goods with low transportation cost
    • (c) Highly demanded
    • (d) Readily available in bulk quantities
    • (e) Those that involve the least competition in the market
    • (f) Simple to describe
Last Edited: January 27, 2022