Chapter 2: Trade
Select the correct option and rewrite the sentence.
_________ is the link between producer and retailer.
OPTIONS
Consumer
Wholesaler
Manufacturer
SOLUTION
Wholesaler is the link between producer and retailer.
Price charged by retailers is generally _______
OPTIONS
higher
lower
fixed
SOLUTION
Price charged by retailers is generally higher.
A Wholesaler invest ___________ capital in the business.
OPTIONS
small
large
less
SOLUTION
A Wholesaler invest large capital in the business.
Retailer is the_________ link in the chain of distribution.
OPTIONS
first
last
second
SOLUTION
Retailer is the last link in the chain of distribution.
Retailers supply information to the ________ through Wholesalers.
OPTIONS
manufacturer
government
consumers
SOLUTION
Retailers supply information to the manufacturer through Wholesalers.
Major items __________ are ch emicals, crude oil and petroleum products, edible oils, electronic goods, gold and silver, pearl and precious stone.
OPTIONS
exported by India
not exported by India
imported by India
SOLUTION
Major items imported by India are chemicals, crude oil and petroleum products, edible oils, electronic goods, gold and silver, pearls and precious stone.
For customs clearance the _________ is prepared by the exporter.
OPTIONS
carting Order
letter of C redit
shipping Bill
For customs clearance the _________ is prepared by the exporter.
OPTIONS
carting Order
letter of C redit
shipping Bill
___________ carry goods on their head in baskets or containers.
OPTIONS
Hawkers
Peddlers
Cheap Jacks
SOLUTION
Peddlers carry goods on their head in baskets or containers.
________ open their shops on market days i.e. on fixed days.
OPTIONS
Street traders
Market T raders
Peddlers
SOLUTION
Market Traders open their shops on market days i.e. on fixed days.
_________ retailers deal in particular goods.
OPTIONS
General Stores
Speciality shop retailers
Second h and goods shops
SOLUTION
Speciality shop retailers deal in particular goods.
_______ is known as a self-service store.
OPTIONS
Department store
Supermarket
Multiple store
SOLUTION
Supermarkets are known as self-service store.
Match the pairs.
SOLUTION
SOLUTION
Give one word/phrase/term:
A person who move daily from place to place to sell goods.
SOLUTION
Itinerant retailor
The middleman between wholesaler and customer.
SOLUTION
Retailor
A retail shop which operates through branches.
SOLUTION
Chain stores
A shop where all goods are available at same price.
SOLUTION
One price shop
A retailer who display his goods on the road.
SOLUTION
Street traders
An order placed by an importer for the supply of certain goods.
SOLUTION
Indent
State True or False.
Wholesaler keeps large stock of goods.
OPTIONS
True
False
Wholesaler deals in small quantity.
OPTIONS
True
False
A retailer has no direct contact with consumers.
OPTIONS
True
False
Super market shops offer home delivery facilities to customer.
OPTIONS
True
False
Departmental store located out of the city
OPTIONS
True
False
Customers cannot bargain in one price shop.
OPTIONS
True
False
Letter of Credit is required for obtaining export license.
OPTIONS
True
False
Buying goods from other country is known as export trade.
OPTIONS
True
False
Maintaining high quality is necessary to sustain in export business.
OPTIONS
True
False
Complete the sentence.
The original form of trade was _________.
SOLUTION
The original form of trade was Barter.
Trade establishes a link between producers and __________.
SOLUTION
Trade establishes a link between producers and consumers.
The wholesaler provides valuable services to manufactures and __________.
SOLUTION
Trade establishes a link between producers and consumers.
The wholesaler purchases a large quantity of goods from the __________.
SOLUTION
The wholesaler purchases a large quantity of goods from the manufacturers.
The wholesaler bears the risk of _________ and market fluctuations
SOLUTION
The wholesaler bears the risk of price and market fluctuations
The wholesaler provides financial support to retailers by way of __________ facility.
SOLUTION
The wholesaler provides financial support to retailers by way of credit facility.
The retailer is the connecting link between the wholesaler and _________.
SOLUTION
The retailer is the connecting link between the wholesaler and consumers.
_________ is a large retail organization which mainly sells wide variety of food and grocery items on th e basis of ‘self-service’.
SOLUTION
Super Market is a large retail organization which mainly sells wide variety of food and grocery items on th e basis of ‘self-service’.
_______ are retail stores owned by a single organization.
SOLUTION
Chain Stores are retail stores owned by a single organization.
The shop where th e prices of all products or goods are same is k now n as ____________.
SOLUTION
The shop where th e prices of all products or goods are same is k now n as one price shop.
A modern shopping mall is an ____________ term.
SOLUTION
A modern shopping mall is an American term.
The Letter of Credit is the safest method of payment in _________ trade.
SOLUTION
The Letter of Credit is the safest method of payment in export trade.
Find the odd one
OPTIONS
General Stores
Hawkers
Cheap Jacks
Peddlers
OPTIONS
Departmental Stores
Chain Stores
Market Trader
One Price Shop
OPTIONS
Speciality Shops
Secondhand goods shops
Malls
Authorised Dealers
Select the correct option.
Wholesaler deals in _____ quantity.
OPTIONS
small
large
Departmental store located _______ the city.
OPTIONS
in
out of
Customer cannot bargain in _________
OPTIONS
General stores
one price shop
Retailer operates in ___________ markets
OPTIONS
global
local
Departmental store is a ___________ scale retail shop.
OPTIONS
Large
Small
Supermarket shop requires ___________capital.
OPTIONS
limited
Large
Chain stores are retail store owned by _______ organization.
OPTIONS
many
single
The shop where the prices of all th e products or goods are ___________ is k nown as one price shop.
OPTIONS
different
same
Answer in one sentence
What do you mean by internal trade?
SOLUTION
Trade carried on within the geographical boundaries of a country is called internal trade or domestic trade
Who is known as hawkers?
SOLUTION
A trader who carries the goods on the back of animals or wheel cart for the purpose of selling is called an hawker.
What is the meaning of Peddlers?
SOLUTION
Mobile retailer who carry goods on their head or back and move from one place to another for selling are called paddlers.
What do you mean by fixed shop retailers?
SOLUTION
Fixed shop retailers are those retailers who have a fixed place for their business.
What do you mean by small scale fixed retailers?
SOLUTION
Small scale fixed retailers are those who conduct their business operations on a small scale with variety of goods at a fixed place.
What do you mean by large scale fixed retailer?
SOLUTION
Large scale fixed retailers operate on large scale business at a fixed place.
What is departmental store?
SOLUTION
A departmental store is a large scale retail organisation situated in a central place in the city. It is divided into a number of small retail shops known as departments, selling different goods under one roof.
What is meant by supermarket shop?
SOLUTION
It is a large scale retail organization which sells a wide variety of goods to customers on the basis of self service.
What do you mean by chain store?
SOLUTION
Chain store is a retail shop owned and controlled by a single organization located 1n different parts of the city, with a particular kind of goods.
What is one price shop?
SOLUTION
One price shops are shops where all articles are sold at one standard and fixed price.
What is a mall?
SOLUTION
A mall is a large enclosed shopping complex comprising various stores, business cinema theaters and restaurants.
Correct the underlined word and rewrite the following sentence:
When the trade activities are conducted between two or more countries, it is called internal trade.
SOLUTION
When the trade activities are conducted between two or more countries, it is called as external trade.
Export trade refers to the purchase of good and services from foreign country
SOLUTION
Import trade refers to th e purchase of good and services from foreign country
The price charged in departmental stores is comparatively less.
SOLUTION
The price charged in departmental stores is comparatively high.
Wholesaler requires less capital.
SOLUTION
Retailer requires less capital.
Tariff rates of various countries affect the internal trade.
SOLUTION
Tariff rates of various countries affect the external trade.
Arrange in proper order:
a) Retailer
b) Consumer
c) Producer
d) Wholesaler
SOLUTION
c) Producer
d) Wholesaler
a) Retailer
b) Consumer
a) International Market
b) Local Market
c) National Market
d) State Market
SOLUTION
b) Local Market
d) State Market
c) National Market
a) International Market
a) Import Stage
b) Pre-import Stage
c) Post-import Stage
d) Preliminary Stage
Solution
d) Preliminary Stage
b) Pre-import Stage
a) Import Stage
c) Post-import Stage
Explain the following term/concept:
Wholesale Trade
SOLUTION
(I) When goods are purchased in large quantity from the manufacturers or producers for the purpose of resale to retailers, then it is called as wholesale trade
(II) The person doing wholesale business 1s called wholesaler.
(III) Wholesaler acts as a link between manufacturer and retailer.
Retail Trade.
SOLUTION
(I) When goods are sold in smaller quantities to the final consumers, then it is called as retail trade.
(II) The person doing retail trade is called as retailer.
Foreign Trade.
SOLUTION
(I) Trade carried on between two or more foreign countries is called foreign trade.
(II) Foreign trade depends as political relations between two countries.
(III) Procedure of foreign trade is complex, difficult and lengthy.
Letter Of Credit.
SOLUTION
(I) A letter of credit is a guarantee issued by the importers bank that it Will honor the payment upto certain amount of export bills to the bank of the exporter.
(II) It is generally demanded by the exporter country.
(III) It gives assurance to exporter country about its payment of goods exported.
One price shop.
SOLUTION
(I) A letter of credit is a guarantee issued by the importers bank that it Will honor the payment upto certain amount of export bills to the bank of the exporter.
(II) It is generally demanded by the exporter country.
(III) It gives assurance to exporter country about its payment of goods exported.
Departmental Store.
SOLUTION
(I) Departmental store is a large scale retail shop having different departments and sections for different type of goods in the same building.
(II) It sells large variety of goods under one roof.
(III)E.g. Shopper stop.
General store.
SOLUTION
(I) General store is a retail shop which deals m a wide variety of goods located m a residential locality
(II) Such store sells goods of daily needs like food grains, soaps, stationery, medicines, oils, biscuits etc.
(III) They provide home delivery to their customers.
(IV) They buy goods from the Wholesalers or directly from the manufacturers.
Mall
SOLUTION
(I) A mall is a large enclosed shopping complex having various stores, restaurant, cinema hall and other business.
(II) E. g. Phoenix Mall, inorbit Mall, etc.
(iii) It is an American term in which one or move building from a complex.
Study the following case/situation and express your opinion.
Sonupant purchases his grocery material every month from nearest Nandulal grocery shop and he purchase wheat, rice and pulses in bulk for whole year from Gorhe and Son’s market yard.
Who is wholesaler?
SOLUTION
Gorhe and son's Market yard.
Sonupant purchases his grocery material every month from nearest Nandulal grocery shop and he purchase wheat, rice and pulses in bulk for whole year from Gorhe and Son’s market yard.
Who is retailer?
SOLUTION
Nandulal grocery shop is the retailer.
Sonupant purchases his grocery material every month from nearest Nandulal grocery shop and he purchase wheat, rice and pulses in bulk for whole year from Gorhe and Son’s market yard.
Any one difference between wholesaler and retailer?
SOLUTION
Goods are sold to retailer for the purpose of sale by wholesaler.
Goods are sold to customer for consumption by the retailer.
Anurag is selling goods to Japan Kavita is buying goods from USA where as Ganesh 1s buying raw material from South Africa and after processing it sells finished goods to Malaysia.
who is exporter?
SOLUTION
Anurag is the exporter.
Anurag is selling goods to Japan Kavita is buying goods from USA where as Ganesh 1s buying raw material from South Africa and after processing it sells finished goods to Malaysia.
Who is importer?
SOLUTION
Kavita is an importer.
Anurag is selling goods to Japan Kavita is buying goods from USA where as Ganesh 1s buying raw material from South Africa and after processing it sells finished goods to Malaysia.
What is Entrepot Trade?
SOLUTION
Enterpot trade is re-exporting of the goods to another country, with or without processing or re-packaging e.g. Ganesh buying raw materials from South Africa and processing it and selling it to Malaysia.
Distinguish between the following:
Wholesaler and Retailer.
SOLUTION
Itinerant Retailers and Non-Itinerant (Fixed shop retailer).
SOLUTION
General stores and specialty stores.
SOLUTION
Department stores and Chain stores.
SOLUTION
Import trade and export trade.
SOLUTION
Answer in brief.
State any four feature of one price shop
SOLUTION
Features of One Price Shop:
(I) Location: One price shops are located in busy centers of the city such as busy trade centers near railway stations, bus stops and other crowded places.
(II) Variety of Goods: In one price shop, the customers are given wide scope to make selection of goods of their choice. However, the price is uniform but quality of the goods may be different.
(III) Cash Sales: In this shop goods are sold on cash basis only. No credit facility is given to the customers. So there is no risk of bad debts.
(IV) Low Priced Articles: In one price shop, the goods are sold to customers for domestic use at lower prices e.g. stationery, cutlery, toys, plastic goods, etc.
(V) Uniform Prices: All the articles of goods are sold in one price shop at the same price. The customers have no scope for bargain in this shop.
(VI) Business Policy: In one price shop, the policy of buying and selling of goods of all the shops are the same one.
State any four features of wholesalers to manufacturers.
SOLUTION
Services of Wholesalers to Manufacturers.
(I) Provide Finance: Wholesaler provides advance to the manufacturers so they can do bulk production. Manufacturer can maintain continuous flow of production.
(II) Collecting Order and Distribution of Goods: Wholesaler collects small orders of goods from the retailers then he collects the goods from manufacturer and distributes it to retailers.
(III) Goods Sale on Large Scale: Wholesaler sells goods to the retailers on large scale on behalf of manufacturers.
(IV) Economy in Production: Large scale of production is made possible because production of goods is done continuously by the manufacturer.
(V) Market Information: Wholesaler provides latest information of market condition to manufacturer. On the basis of this information manufacturer changes his production policies and regulates production activities.
(VI) Storage: The wholesaler provides storage facilities for the manufacturers’ product of goods. This helps them to fill up the time gap between production and consumption of goods.
Write any four services of retailers to consumers
SOLUTION
Services of Retailers to Customers:
(I) Variety of Goods: Retailer keep different brands of goods which helps the customer to choose.
(II) After Sales Services: After sales services are given for a particular period, which is known as guarantee period for costly and durable goods such as refrigerators, TV. etc. Such services create confidence in minds of consumers for further purchases.
(III) Regular Supply of Goods: Retailer stocks the goods sufficiently which are required by the customers and customers purchases the goods whenever needed.
(IV) Credit Facilities: Retailers provides credit facility to customer which helps him to grow up sales and also it is convenient for the customers to purchase goods.
(V) Home Delivery: Retailer provides home delivery service to the customers which helps him to maintain permanent relationship with the customers.
State any two types of small scale fixed shop retailer.
SOLUTION
Types of Small Scale Shop Retailers:
(I) General Store Retailer: These shops are found in residential areas and offers shopping convenience to the customers. They deal in wide variety of goods so there is scope for choice. They deal in almost all household articles and goods of daily use. They provide credit facilities and have personal relation with their customers. They have fixed place of business so the customers have faith and confidence in dealing with them.
Second Hand Goods Dealers: As the name indicates these shops deal in used or old goods and articles. They buy goods from individual and not from manufacturers or Wholesalers. They repair or overhaul the items. They display them in their shops. Generally people from poor communities prefer to buy from these Shops.
Explain preliminary stage of import procedure.
SOLUTION
Import trade refers to buying of goods and services from another country or countries i.e. a foreign country. The procedure of import trade varies from one country to another country depending upon the policy implemented in that country. Import of goods and services is controlled by the government in most of the countries. India follows the following import procedure, which is divided into four stages.
Preliminary Stage:
(1) Registration: In order to carry out import, the importer has to get himself registered with the authorities given below:
(I) Director General Foreign Trade (DGFT) in order to get an Import-Export Certificate Number.
(II) The Income Tax department to obtain Permanent Account Number.
(III) To carry out GST formalities.
(2) Negotiation or Trade enquiry: The importer must collect information from overseas suppliers regarding the goods he wants to import of a product. It contains details like:
(a) Price (b) Delivery schedule, (c) Credit period and (d) Terms and conditions of sale, payment and delivery.
Explain post-shipment stage of export procedure.
SOLUTION
Post-shipment Stage:
(I) Shipment Advice: On the dispatch of the goods, the exporter sends shipment advice to the importer. Along with it, he also sends the packaging list, commercial invoice and non-negotiable copy of loading.
(II) Presentation of Documents: The necessary documents are presented to the bank for negotiation and realisation of export proceeds.
(III) Realisation of Export incentive: Various incentive like duty drawbacks, refunds of GST if paid etc. is given to the exporter by the concerned authorities.
(IV) Follow up: Exporter has to follow up and find out the buyers reaction on the goods he receives: This
concludes the export procedure.
Justify the following statement:
Wholesaler sells goods in large quantities.
SOLUTION
(I) Wholesaler buys goods in large quantities from the manufacturer and sells it to the retailers according to their orders.
(II) Thus, wholesaler sells goods in large quantities.
Wholesaler maintains price stability.
SOLUTION
(I) A wholesaler is both a buyer and a seller.
(II) He is in a position to maintain price stability by balancing supply and demand factors.
(III) By supplying regular goods to the retailer, he solves the risk of shortage and price fluctuation is reduced.
(IV) Thus, wholesaler maintains price stability.
Retailer provide home delivery of goods to customers.
SOLUTION
(I) Retailer is a person who buys goods on smaller quantities.
(II)Retailer provides home delivery of goods to customer at nominal cost or free of cost.
(III) This helps them to improve relations with the customers and maintain permanent relations with the customers.
(IV) Thus, retailer provide home delivery of goods to customers.
Wholesaler performs various marketing functions.
SOLUTION
(I) The wholesaler carries various marketing functions like warehousing, advertisings, sales promotion, etc. on behalf of the manufacturers.
(II) They also perform various marketing functions like assembling, warehousing, transporting, grading, packing, advertising and financing.
(III) These functions help the retailers and a manufacturers as they can concentrate on the production and selling activities.
(IV) Thus, wholesaler performs various marketing functions.
Authorized dealer do not have other product of other manufacturers.
SOLUTION
(I) An authorized dealer only deals with one line of products from one-manufacturers.
(II) They do not have products of other manufacturers.
(III) They promote the goods by providing window display, advertising and also having attractive schemes for selling the goods.
(IV) Thus, authorized dealer do not have other product of other manufacturers.
General stores are generally situated near residential areas.
SOLUTION
(I) General Stores are found in residential areas and offer shopping convenience to the customers.
(II) They deal in wide variety of goods.
(III) They deal with day to day useful goods.
(IV) Thus, general stores are generally situated near residential areas.
Departmental store has centralized management system.
SOLUTION
(I) Departmental stores are generally established by joint stock companies.
(II) Various departments which look like specialized shops are controlled and managed by single management.
(III) The management of departmental store is centralized.
(IV) All departmental store is centralized.
(V) All departments are independent but they are centrally owned managed are controlled.
(VI) Thus, departmental store has centralized management system.
Packing plays an important role in selling product in the supermarket.
SOLUTION
(I) Packing plays an important role in selling products in the supermarket.
(II) Goods are duly packed by giving details of quantity, quality, weight, price, Contents, date of manufacturing and date of expiry.
(III) This is helpful in handling the goods and also makes the goods more attractive and durable.
(IV) Thus, packing plays an important role in selling product in the supermarket.
Chain store sell a limited range of goods.
SOLUTION
(I) Each branch of a chain store deals in the same commodity or in the same line of products.
(II) This enables the store to give better guidelines to the customers,
(III) Thus, chain store sell a limited range of goods.
There is no scape for bargaining in one price shop.
SOLUTION
(I) The goods are priced at one price which is fixed.
(II) There is a fixed and uniform price.
(III) The price are fixed in advance, so there is no scope for bargaining.
(IV) Thus, there is no scope for bargaining in one price shop.
Answer the following:
What are the main features of Wholesaler?
SOLUTION
(A) Meaning.
(I) Wholesalers are those who engage themselves in wholesale trade.
(II) It IS concerned with the buying of goods 1n large quantities from producers and reselling the same in small quantities to the retailers.
(III) Wholesaler is a connecting link between producers on one hand and retailers on the other.
B) Definitions:
Philip Kotler “wholesaling includes all activities involved in selling goods or services to those who buy for resale or for business use.”
(C) Features of Wholesaler:
(I) The wholesaler generally deals in one or few items of goods.
(II) Wholesaler requires a large amount of capital to be invested in the business.
(III)Wholesaler buys goods from the manufacturer in large scale.
(IV) Wholesaler sells the goods to retailers as per their requirement.
(V) Wholesaler has direct contact with manufacturer.
(VI) Wholesaler is located in the same area for convenience of the retailer.
(VII) Wholesaler acts as a real risk bearer in the process of distribution.
(VIII) Wholesaler performs various marketing functions.
Explain the services of retailers to Wholesalers.
SOLUTION
Services of Retailers to Wholesalers.
(I)Create demand: Retailers attracts consumers attention towards new products and arrivals in the market through personal salesmanship.
(II) Helps to Distribute: Retailer helps distributing perishable goods which are having short life. He also performs assembling, grading and packing function.
(III) Marketing: Retailers sometimes carry marketing function for the Wholesalers i.e. handling transportation, solving shortage problems, advertise goods, etc.
(IV) Financing: Wholesaler collects order from customers and take advances from them. Then places order to manufacturer. Retailer collects sales proceeds from customers and passes it to the wholesaler and finally it reaches the manufacturer.
(V) Attracts Consumers: Retailer makes an advertising of goods by displaying in the showroom and thus promote sales. This activity directly helps the wholesaler to sell the product.
(VI) Provides Information: Retailer provides information to the wholesaler regarding market and demand of goods by the customers, likes and dislikes of customers, etc.
(VII)Connecting Link: Retailer purchases goods from wholesaler and sells it to the customer and thus act a middleman.
(VIII) Increase Sales: Retailers help the wholesaler to increase his sales by buying goods from him regularly and at short intervals.
Explain small scale fixed shop retailers.
SOLUTION
Small Scale Fixed Shop Retailers:
Small scale fixed retailers usually run their business operations on a small scale and deal in limited line of goods. Such shops are run by their owners with the help of assistants. These shops are situated in residential areas.
Types of Small Scale Shop Retailers:
(I) General Stores: These shops are found in residential areas and offers shopping convenience to the customers. They deal in Wide variety of goods so there is scope for choice. They deal in almost all household articles and goods of daily use. They provide credit facilities and have personal relation with their customers. They have fixed place of business so the customers have faith and confidence in dealing with them.
(II) Second Hand Goods Shops: As the name indicates these shops deal in used or old goods and articles. They buy goods from individual and not from manufacturers or wholesalers. They repair or overhaul the items. They display them in their shops. Generally people from poor communities prefer to buy from these shops.
(III) Authorised Dealers: These retailers have an authorized dealership of a particular manufacturer’s goods. They sell of consumers requirement goods like T.V. sets, mobile phones, washing machine, etc.
(IV) Specialty Shops: These retailers deal in particular line of goods. They keep a wide variety of items within the same line of products. They offer goods at reasonable prices. They are popular in cities and towns. They provide wide choice to customers. Normally they carry on business on cash basis.
Explain the services of wholesalers.
SOLUTION
Wholesaler provides services to:
(A) Manufacturers and (B) Retailers
(A) Services of Wholesalers to Manufacturers:
(I) Finance Assistance: Wholesaler provides advance to the manufacturers, so they can do bulk production. Thus, manufacturer can maintain continuous flow of production.
(II) Collecting Order and Distribution of Goods: Wholesaler collects small orders of goods from the retailers then he collects the goods from manufacturer and distributes it to retailers.
(III) Large Purchase: Wholesaler purchases goods on large scale from the manufacturers and sells it to the retailers on behalf of the manufacturers.
(IV) Transportation: Wholesaler sometimes carry the transportation function of manufacturer by himself. So cost and time of manufacturer is saved.
(V) Risk Bearing: He takes a risk of buying goods in big quantity and storing them. This may sometimes lead him to loss.
(VI) Provide Market Information: Wholesaler provides latest information of market condition to manufacturer. On the basis of this information manufacturer changes his production policies and regulates production activities.
(VII) Marketing Function: Wholesaler carries many marketing functions like warehousing, advertising, sales promotion, etc. on behalf of manufacturer.
(VIII) Storage: The wholesaler provides storage facilities for the products manufacture by the producers. This helps them to fill up the time gap between production and consumption of goods.
(B) Services of Wholesaler to Retailers:
(I) Financial Support: Wholesaler provides credit facility, discount facility and financial assistance to their retailers.
(II) Market Information: Wholesaler provides market information to retailers as he has link with various manufacturers. This information is very useful to retailers for purchase of goods.
(III) Risk Bearing: Retailer holds limited stock of goods and avoids the risk of spoilage of goods. Retailer get protected from increase or decrease of prices of goods and fluctuation of demand.
(IV) Stock of Goods: Wholesaler stores the stock of goods for retailers, then retailer supply these goods to customers as per their demands.
(V) Warehousing and Transport: Wholesaler provides the facility of storing of goods as well as transport facility to retailers. They also do home delivery of goods to retailers.
(VI) Regular Supply: Wholesaler assures regular supply of goods to the retailers. Risk of shortage of goods and price fluctuation is reduced.
(VII) Sales Promotion: Wholesaler provides promotional facility to the retailer. He advertises on behalf of retailers and this helps the retailers to increase the sales.
Explain the different services of retailers.
SOLUTION
Retailers provides services to:
(A) Customers and (B) Wholesaler
(A) Services of Retailers to Customers:
(I) Variety of Goods: Retailer keep different brands of goods which helps the customer to choose.
(II) After Sales Services: After sales services are given for a particular period, which is known as guarantee period for costly and durable goods such as refrigerators, TV. etc. Such services create confidence in minds of consumers for further purchases.
(III) Regular Supply of Goods: Retailer stocks the goods sufficiently which are required by the customers and customers purchases the goods whenever needed.
(IV) Credit Facilities: Retailers provides credit facility to customer which helps him to grow up sales and also it is convenient for the customers to purchase goods.
(V) Home Delivery: Retailer provides home delivery service to the customers which helps him to maintain permanent relationship with the customers.
(VI) Information: Retailer is a link between manufacturer and consumer. He provides valuable information from the customers to the manufacturer so that he can modify the product as per the likes and dislikes of the customers. Complaints regarding defects in goods, improper functioning of the product, constant break down, etc. are passed on to the manufacturers.
(VII) Local Convenience: Retailers are generally located near residential areas. Hence, customers can buy the goods whenever they require.
(VIII) Improves Standard of Living: Retailers help customers to increase their standard of living by making available all the latest types of goods produced.
(IX) Sale of Perishable Goods: Perishable goods like milk, meat, fish, vegetables, etc. require quick distribution. Hence, retailer provides this facility as per customers requirement.
(B) Services of Retailers to Wholesaler:
(I) Create demand: Retailers attracts consumers attention towards new products and arrivals in the market through personal salesmanship.
(II) Helps to Distribute: Retailer helps distributing perishable goods which are having short life. He also performs assembling, grading and packing function.
(III) Marketing: Retailers sometimes carry marketing function for the wholesalers i.e. handling transportation, solving shortage problems, advertise goods, etc.
(IV) Financing: Wholesaler collects order from customers and take advances from them. Then places order to finally it reaches the manufacturer. Retailer collects sales proceeds from customer and passes it to the Wholesaler and finally it reaches the Manufacturer.
(V) Attracts Consumers: Retailer makes an advertising of goods by displaying in the showroom and thus promote sales. This activity directly helps the wholesaler to sell the product.
(VI) Provides Information: Retailer provides information to the wholesaler regarding market and demand of goods by the customers, likes and dislikes of customers, etc.
Define import trade. Explain its procedure in detail.
SOLUTION
Import trade refers to buying of goods and services from another country or countries i.e. a foreign country. The procedure of import trade varies from one country to another country depending upon the policy implemented in that country. Import of goods and services is controlled by the government in most of the countries India follows the following import procedure, which is divided into four stages.
[A] 1st Stage: Preliminary Stage:
1) Registration: In order to carry out import, the importer has to get himself registered with the authorities given below:
(I) Director General Foreign Trade (DGFT) in order to get an Import-Export Certificate Number
(II) The Income Tax department to obtain Permanent Account Number.
(III) To carry out GST formalities.
2) Negotiation or Trade enquiry: The importer must collect information from overseas suppliers regarding the goods he wants to import of a product. It contains details like
(a) Price (b) Delivery schedule, (c) Credit period and (d) Terms and conditions of sale, payment and delivery.
[B] 2nd Stage: Pre import Stage:
(I) Import License / Quota Certificate: The Export Import (EXIM) Policy of our country indicates which goods need license for import and which can be imported freely. For goods that require a license, the importer should get a quota certificate and acquire the license. At the time of importing goods, the IEC number is to be mentioned.
(II) Foreign Exchange Clearance: The exporter has to be paid in foreign exchange by the importer as he resides in a foreign country. For this the Indian currency has to be exchanged for foreign currency. This is done by Exchange Control Department of the Reserve Bank of India (RBI). The importer has to get the foreign exchange sanctioned. For this he applies in a prescribed form to a bank authorised by RBI. After scrutiny of the documents, the necessary foreign exchange is sanctioned.
(III) Placing an Order: Once the foreign exchange clearance is obtained from RBI the importer places an import order with the exporter for supply of goods. This order contains information on all aspects relating to the goods to be imported. These include quality, quantity, size, grade, price, packing and shipping, ports of shipment, insurance, delivery schedule and modes of payment. This order is called as indent.
(IV) Letter of Credit: If the exporter agrees to a letter of credit, then the importer obtains it from his bank and forwards it to the exporter. It minimises the risk of non-payment for the exporter At the same time the importer should arrange for sufficient funds to be paid on delivery of the goods.
(V) Clearing and Forwarding Agent: The importer then appoints C & F agent to look after the various customs formalities and documentation work With respect to import of goods.
(VI) Shipment Advice: Once the goods are loaded on the vessel, the exporter sends a shipment advice to the importer. This document contains details about the goods, invoice number, bill of lading and name of the vessel, the port of export and date of sailing of the vessel. This will help the importer for custom clearance and unloading of goods.
[C] Stage: Import Stage:
(I) Receipt of Document: The importer receives the documents sent by the exporter through his bank. They are as follows Bill of Lading, Certificate of Origin, Certificate of Inspection, Packing List, Commercial Invoice, etc.
(II) Bill of Entry: The clearing and forwarding agents, then prepare a bill of entry. This bill is presented to the dock superintendent for release of goods. The bill of entry has details like number of packages, quality of good and price of goods.
(III) Delivery Order: For taking delivery of the goods a delivery order is needed. This is obtained from the shipping company by the C & F agent. Once this is received the freight charges are paid and goods are allowed to be unloaded from the ship.
(IV) Customer Clearance: The importer has to present the Bill of Lading, Bill of Entry and Packing List to the customer authority who will certify it and give customs clearance.
[D] 4th stage: Posts Import Stage:
Various duties have to paid in order to take the goods out of port are:
(I) Port Trust Dues: The clearing and forwarding agent has to make the payment of port trust dues.
(II) Customer Duty: Also paid by the clearing and forwarding agent to the custom authorities.
(III) Insurance Premium: Under the FOB (Free of Board) impact, the importer has to make the payment of Insurance Premium.
(IV) Payment of Freight: The shipping contract will lay down the amount of freight to be paid and it has to be paid by the importer for getting clearance of goods.
(V) Exporters Payment: The exporter draws a bill of exchange on the importer according to the terms and conditions of the contract.
(VI) Follow Up: It is the duty of the importer to take a follow up of the goods. If there are any discrepancies in the Order or goods it has to be intimated to the exporter. Thus, the procedure of importing goods comes to an end.
What is export trade? Explain its procedure in detail.
SOLUTION
Trade between two countries is called International Trade. It can be import or export trade. Export trade refers to selling of goods and services to other country or foreign countries Export procedure is as follows:
There are four stages which help in simplify the export procedure.
[A] Preliminary Stage: This is the first stage which includes the following steps.
1) Registration: The exporter gets himself registered with various authorities in order to conduct export trade like
(I) Director General of Foreign Trade 1n order to obtain Import Export Certificate Number
(II) Income Tax Authority to obtain Permanent Account Number.
(III) Export Promotion Council (EPC) and GST authority.
2) Appointment of Agent: The exporters are supposed to appoint an agent in the foreign country who will look after the order or book order for the exporter.
[B] Pre-shipment Stage:
(I) Receipt of Order: When the exporter receives an order he has to check the details of the order. He also check the restriction of import in the importer’s country.
(II) Letter of Credit: The exporter has to obtain a letter of credit from the importer, which is used to clear the foreign exchanges and other restrictions.
(III) Pre-shipment Finance: The exporter has to meet his working capital needs and for that he has to obtain the pre-shipment finance from his bankers.
(IV) Production of goods: If the exporter is a manufacturer, then he has to produce the goods according to the order placed by the importer, otherwise he has get the necessary goods arranged from his suppliers.
(V) Packaging: Packaging plays a very important role in export business. Goods have to be packed as per the requirement of the importer and it should protect the goods in transit, preserve the quality of goods and carry out promotion of goods.
(VI) ECGC Cover (Export Credit and Guarantee Corporation): In order to protect the goods and cover the credit risks, the exporter must obtain an cover of ECGC. The ECGC covers the risk upto 90%, if the importer fails to make the payment.
(VII) GST formalities (Goods and Service Tax): All formalities regarding GST must be complied With by the exporter.
(VIII) Marine Insurance: For exporting the goods, it is mandatory for the exporter to take a marine insurance policy for the goods exported. This insurance is under CIF (Cost, Insurance and freight) contract.
(IX) Clearing and Forwarding Agents (C & F agents): The exporter has to appoint a clearing and forwarding agent to carry out the necessary formalities of customs. They are also called custom house agents.
[C] Shipment Stage:
(I) Processing of Document: The exporter prepares the shipping bill and gets all the documents Processed at the customs house as required for the export of good
(II) Examination of Goods: The clearing and forwarding agents obtain a document called carting order from the Port Trust Authorities, which allows the exporter to take the goods inside the dock area
(III) Loading of Goods: On examination of the goods, the ‘Customs Examiner’ issues order called Let Export order. This is given to the clearing and forwarding agent by the ‘Customers Preventative Officer (CPO). The goods are then loaded on the ship and the captain of the ship issue a receipt called the ‘Mates Receipt’. Then the C & F agent obtain the Bill of Lading.
[D] Post-shipment Stage:
(I) Shipment Advice: On the dispatch of the goods, the exporter sends shipment advice to the importer Along with it, he also sends the packaging list, commercial invoice and non-negotiable copy of loading.
(II) Presentation of Documents: The necessary documents are presented to the bank for negotiation and realisation of export proceeds.
(III) Realisation of Export incentive: Various incentives like duty drawbacks, refunds of GST if paid etc. are given to the exporter by the concerned authorities.
(IV) Follow up: Exporter has to follow up and find out the buyers reaction on the goods he receives. This concludes the export procedure.
Balbharati Solutions for Organisation of Commerce and Management (OCM) 11th Standard HSC Maharashtra State Board Chapterwise List - Free
The answers for the Balbharati books are the best study material for students. These Balbharati Solutions for Organisation of Commerce and Management (OCM) 11th Standard HSC Maharashtra State Board will help students understand the concepts better.
• Chapter 1: Introduction of Commerce and Business
• Chapter 3: Small Scale Industry and Business
• Chapter 4: Forms of Business Organisation - 1
• Chapter 5: Forms of Business Organisation - 2
• Chapter 6: Institutes Supporting Business
• Chapter 7: Business Environment
• Chapter 8: Introduction to Management
