commerce-organisation-of-commerce-and-management.pdf

 The Constitution of India Chapter IV A Fundamental Duties ARTICLE 51A Fundamental Duties- It shall be the duty of every citizen of India- (a) to abide by the Constitution and respect its ideals and institutions, the National Flag and th...

 The Constitution of India Chapter IV A Fundamental Duties ARTICLE 51A Fundamental Duties- It shall be the duty of every citizen of India- (a) to abide by the Constitution and respect its ideals and institutions, the National Flag and the National Anthem; (b) to cherish and follow the noble ideals which inspired our national struggle for freedom; (c) to uphold and protect the sovereignty, unity and integrity of India; (d) to defend the country and render national service when called upon to do so; (e) to promote harmony and the spirit of common brotherhood amongst all the people of India transcending religious, linguistic and regional or sectional diversities, to renounce practices derogatory to the dignity of women; (f) to value and preserve the rich heritage of our composite culture; (g) to protect and improve the natural environment including forests, lakes, rivers and wild life and to have compassion for living creatures; (h) to develop the scientific temper, humanism and the spirit of inquiry and reform; (i) to safeguard public property and to abjure violence; (j) to strive towards excellence in all spheres of individual and collective activity so that the nation constantly rises to higher levels of endeavour and achievement; (k) who is a parent or guardian to provide opportunities for education to his child or, as the case may be, ward between the age of six and fourteen years.  The Coordination Committee formed by GR No. Abhyas - 2116/(Pra.Kra.43/16) SD - 4 Dated 25.4.2016 has given approval to prescribe this textbook in its meeting held on 20.06.2019 and it has been decided to implement it from the educational year 2019-20. Organisation of Commerce and Management STANDARD XI 2019 Maharashtra State Bureau of Textbook Production and Curriculum Research, Pune - 411 004 Download DIKSHA App on your smartphone. If you scan the Q.R.Code on this page of your textbook, you will be able to access full text. If you scan the Q.R.Code you will be able to access audio-visual study material relevant to each lesson, provided as teaching and learning aids. First Edition : 2019 © Maharashtra State Bureau of Textbook Production and Second Reprint : 2021 Curriculum Research, Pune- 411 004. Maharashtra State Bureau of Textbook Production and Curriculum Research reserves all rights relating to the book. No part of this book should be reproduced without the written permission of the Director, Maharashtra State Bureau of Textbook Production and curriculum Research, Pune. Cover, Illustrations and Committee Members Computer Drawings Shri. Narayan Patil (Chairman) Shri. Sandip Koli, Artist, Mumbai Dr. Mukund Tapkir (Member) Dr. Prashant Sathe (Member) Shri. Mohan Salvi (Member) Co-ordinator Dr. Jyoti Gaikwad (Member) Ujjwala Shrikant Godbole Shri. Mahesh Athawale (Member) I/C Special Officer for Mathematics Smt. Anantlaxmi Kailasan (Member) Shri. Surendra Nirgude (Member) Smt. Laxmi Pillai (Member) Typesetter Smt. Mrinal Phadke (Member) Smt. Ujjwala Godbole (Member-Secretary) Baladev Computers Production Study Group Members Sachchitanand Aphale Dr. Minal Bhandari Shri. Dnyandeo Yewale Chief Production Officer Dr. Chandan Bora Shri. Amit Gokhale Sanjay Kamble Dr. Rupsen Kamble Shri. Avinash Takawale Production Officer Smt. Mrinal Phadke Shri. Arun Chavan Smt. Madhuri Pawar Smt. Rupali Deshpande Prashant Harne Shri. Sanjay Patil Shri. Manik Ghumai Asst. Production Officer Translators Paper 70 GSM Cream wove Dr. Minal Bhandari Smt. Madhuri Pawar Print Order No. Dr. Chandan Bora Shri. Amit Gokhale Dr. Rupsen Kamble Shri. Dnyandeo Yewale Shri. Sanjay Patil Shri. Manik Ghumai Printer Shri. Avinash Takawale Scrutiny Dr. Minal Bhandari Smt. Madhuri Pawar Publisher Shri. Amit Gokhale Dr. Rupasen Kamble Vivek Uttam Gosavi, Controller Maharashtra State Textbook Bureau, Shri. Sanjay Patil Shri. Dnyandeo Yewale Prabhadevi Mumbai- 400 025 Shri. Narayan Patil Smt. Mrinal Phadke  PREFACE Hello Friends, It gives us immense pleasure to handover this text book of ‘Organisation of Commerce and Management’. It is not merely a text book but it is a guide for future entrepreneurs also. Since morning to night we are using many products and services. How do we get them  ? Where these products are available ? What is the source of these products ? How do we get information about them and how do they reach our hands ? How do we come to know about its name ? Who are the people bringing it to us ? Who does manage these transactions  ? Answers to above questions is nothing but commerce, trade, industry and so many things which we know in our day to day life. Let’s get details of these in the text book of Organisation of Commerce and Management. This book contains eight chapters starting from introduction to business upto management of business. This book contains interesting additional information, activities, pictures, diagrams etc. The exercises given at the end of the topics contain different types of questions to test the conceptual clarity of the students. Every student is given opportunity to express his own opinion, to analyse and justify their answers through application based questions. On the title page QR code is given which will be helpful to the students as it contains additional information, links etc. to get more knowledge and clarity about the contents. It will help the students to improve their learning abilities, skills and understanding level. We are sure that it will lead to simplify teaching learning process. This restructured syllabus is capable enough to enhance the understanding ability of the students. The implementation of this new syllabus will be from the academic year 2019-2020 for std XIth Commerce. The Maharashtra State Bureau of Text-book Production and Curriculum Research is confident that this book will guide the students properly in this competitive world of business. The Maharashtra State Bureau of Text-book Production and Curriculum Research is greatful to the subject committee members, study group, translators, scrutinisers and experts as they have rendered their thorough co-operation in preparation of this book. (Dr. Sunil Magar) Pune Director Date : 20 June 2019 Maharashtra State Bureau of Textbook Indian Solar Date : 30 Jyestha 1941 Production and Curriculum Research, Pune.  ORGANISATION OF COMMERCE AND MANAGEMENT STD XI Competency Statement Unit Topic Competency Statement No. Understand the concept of commerce and business. Understand different economic and non-economic activities Understand the concept and meaning of business. Understand the concept and meaning of profession Introduction to 1 Commerce and Understand the concept and meaning of employment Business Understand role of Profit in business Understand classification of business Student can understand the concept of industry Student can understand the concept of commerce Student can understand different auxiliaries to trade Clearly understand the concept of trade. Know about different types of trade. 2 Trade Understand wholesale and retail trade. Understand import trade and procedure. Understand export trade and procedure. Students understand entrepot trade Understand the meaning and definition of small scale business Small Scale Understand the importance of small business in industry 3 Industry and Understand the advantages and challenges of small scale Business business. Understand steps in setting up of small scale business Students understand concept of private sector organisation Understand meaning of private sector organisation Understand Sole Trading Concern, and its merits and demerits Understand the concept of Partnership and its merits and its demerits Forms of Business 4 Organisation - I Understand the concept to Joint Hindu Family Business and its merits and demerits Understand the concept of Joint Stock Company, its types, merits and demerits Understand the concept of Co-operative Society and its merits and demerits  After going to this unit the student learner would be able to state the meaning of forms of Business Originisation Highlight the distinctive features of Departmental Stores Forms of Business 5 Organisation - II Understand the concept of Statutory Corporation Understand the concept of Government company Understand the concept of Multinational Company Student can understand merits & demeritscof MNC’s. Student understand the different institutions supporting business Institutes Student understand the features of SIDBI 6 Supporting Student understand the features of NABARD Business Students can know the features of Khadi and Village Industries Students understand the working of Mahila Bachat Gat Students understand the features of World Bank Able to state the meaning and definition of Business Environment 7 Business Able to describe importance of Business Environment Environment Able to describe various dimension of Business Environment Understand the impact of New Economic Policy on business and industry. After going through this unit the students would be able to understand the overview of management Introduction to Explain the meaning and definition of management 8 Management Discuss the characteristics of management Understand the different levels of management and their roles Know the management as an Art, Science and Profession  INDEX Sr. No. Chapter Page No. 1 Introduction of Commerce and Business 1 2 Trade 21 3 Small Scale Industry and Business 46 4 Forms of Business Organisation - I 60 5 Forms of Business Organisation - II 95 6 Institutes Supporting Business 117 7 Business Enviroment 138 8 Introduction to Management 153 Answer keys 168  1 Introduction of Commerce and Business 1.1 Introduction 1.2 Non-Economic Activities 1.3 Economic Activities 1.3.1 Business 1.3.2 Profession 1.3.3 Employment 1.4 Business Objectives 1.5 Role of profit in Business 1.6 Classification of Business Activities 1.6.1 Industry 1.6.2 Commerce Distinguish Between Summary Exercise Mayuri, Neha, Rajesh, Charmi and Gautam who were good friends, gathered in the classroom. They were chatting with each other and sharing their experiences. Mrs. Deshmukh, who is a counselor visited the class and asked some questions to everybody. Mrs. Deshmukh : Did you experience during your SSC preparation, your mother served you Tea/Coffee? All : Yes Madam. Mrs. Deshmukh : It means few activities are performed by your mother. Now, Do you gathered in canteen after SSC exam? Ate any food and paid money? All : Yes, Madam. We gathered in canteen. Ate food and paid money for the same. Mrs. Deshmukh : Do you know the difference between Economic and Non-economic activities? Mayur and : Yes Madam. Gautam : When you do any work and in return, you get money is Economic Activity. Neha : Opposite of this is Non-Economic activity. You don’t get any money in return. Mrs. Deshmukh : Could you give an example? Rajesh : Yes Madam, when mother stitches dress for her daughter or mother serves us tea/coffee during exam preparation time it is non-economic activity. But when a tailor stitches a dress for the customer it is an economic activity because he gets money. 1  Mrs. Deshmukh : Very Good ! Mother stitches dress and tailor also stitches dress, the activity is same, but stitching done by mother is Non-Economic activity because she doesn’t get any money whereas a tailor doing the same activity, gets money. So it is an Economic activity. Charmi : Is tailors activity is a business or profession? Mrs. Deshmukh : Well Children, you will have to learn about business, profession and employment in detail. Let us study these different concepts in detail in this chapter. 1.1 INTRODUCTION All human beings require different types of goods and services to satisfy their needs. So they keep themselves busy and do some activity throughout their life. All activities can be classified as economic and non-economic activities. Human Activities Non Economic Activities Economic Activities Business Profession Employment 1.2 Non-Economic Activities Non-economic activities are those human activities which are performed to satisfy personal, social, religious, cultural and sentimental requirement without monetary expectations. For e.g. reading books, serving people, cooking by mother etc. 1.3 Economic Activities Activities that involve production, distribution and consumption of goods and services for money or money’s worth at all levels within a society is called economic activity. For e.g. worker working in a factory. Thus, economic activities facilitate earning livelihood. 1.3.1 Business Business represents organized efforts by an individual or group of individuals’. It is a systematic attempt by business persons to produce goods and services and sell them in the market, to reap the reward by way of profit. It satisfies multiple and complex needs of the society. Production of the goods actually means making of goods. It may be agricultural product or finished goods produced in factories. Goods can be produced with the manpower or with the help of machines. e.g. cultivating piece of land and growing food-grains is an example of agricultural production. However, converting oil seeds into edible oil with the help of man power as well as machine power is an example of manufacturing of the goods. Distribution includes marketing of goods and services. It involves transport, warehousing, advertising which facilitates transfer of goods from producer to the final consumer. 2 q Definition of Business : 1) Prof. Haney - “Business activities are all those human activities which are directed towards the production and processing of wealth.” 2) Prof. Pride, Hughes and Kapoor - “The organized efforts of individuals to produce and sell for a profit, the goods and services that satisfy society’s needs.” q Characteristics / Features of Business : 1) An Economic Activity : Business is an economic activity as it is undertaken to earn money or livelihood. It is not because of love, affection, feelings, sentiment etc. 2) Two Parties : Every business transaction involves an exchange. Minimum two parties are required for exchange i.e. the seller and the buyer. Business transaction is a result of an agreement between the buyer and the seller which may be oral or written. 3) Profit Motive : The basic purpose of business is to earn the profit from its activities. Businessmen try to maximize profits either by increasing the volume of sales or reducing its costs. It is the spine of business which keeps the business going on in the long term. The amount of profit may differ from business to business. 4) Production of Goods and Services : Before exchanging the goods and services, they should be produced by business enterprises. Goods are either manufactured or procured from the supplier, with the aim of selling it further to the consumers for profit. 5) Exchange of Goods and Services : Business involves transfer of goods and services directly or indirectly with money or money’s worth. Monetary exchange is the exchange with money e.g. buying notebook for cash. On the other hand in case of Barter Exchange goods and services are exchanged for some other goods and services. e.g. wheat is exchanged for rice. If goods are produced for own consumption i.e. stitching a dress for a daughter, it cannot be called as a business activity but stitching of dress in a tailoring shop and taking stitching charges for that is a business activity. Similarly, if goods are donated or given as a gift then it cannot be considered as business activity. 6) Dealings in Goods and Services : Every type of business transaction is concerned with either goods or services. In the absence of goods and services business can not take place. These goods are consumer goods or capital goods. However, services created for business purpose are intangible which are essential for doing the business e.g. transportation, banking, insurance etc. Goods Consumer Goods Capital Goods (Tea, Milk, Pencil etc.) (Machinery, Plant, Furniture etc.) 7) Continuity in Dealings : Every business requires regularity in transactions. One single transaction does not constitute business e.g. If a person sells his own motor car and earns profit then it will not be considered as business activity. But if he is a car dealer so he sells and purchases cars regularly then, it is considered as business activity. 3  8) Uncertain Returns: In business, the returns are never predictable or guaranteed. Businessman may earn profit or suffer a loss. 9) Element of Risk : Risk is the key element of every business which is concerned with exposure to loss. It is due to some unfavorable or undesirable event. Every business will have some or the other risk. Intensity of risk can be minimized but can’t be avoided. Certain factors are beyond the control of businessmen like changes in consumer tastes, likes-dislikes, fashions, changes in the methods of production, fire, theft, natural calamities etc. No business is free from the above mentioned factors. 10) Customer Satisfaction : Customer satisfaction is the ultimate aim of all economic activities and business is not an exception to it. Modern business believes in satisfying the customers by providing quality products and services at a reasonable price. The purpose of the business is to create and retain the customers. 1.3.2 Profession Profession is that part of economic activities under which a person uses his educational knowledge and special skill to render services for earning some income. e.g. Doctor, Lawyer, Chartered Accountant etc. q Features : 1) Aim : Every profession is practiced for earning money. Also they render services to their clients and solve their problems. 2) Qualification : A profession can be practiced only after acquiring required qualifications. Each profession has a certain set of body of knowledge. This knowledge has to be acquired only by systematic and formal training. One cannot practice profession, unless this knowledge is acquired. 3) Financial Returns : Professionals get fees in exchange of their services. Income received by professional is not fixed. Professionals can be employed in an organization or self employed. A working Chartered Accountant gets salary but those who practice privately i.e. self-employed get fees. 4) Capital : Profession can be practiced independently or professionals accept a job in any organization. Independent practicing professional requires huge capital for setting his practice. It differs from profession to profession. 5) Registration and Membership : Some professions have a council which regulates the activities of professionals. These professionals have to register themselves with their respective council and get certificate of practice e.g. Bar Council of India for lawyers, ICAI for Chartered Accountants, Indian Medical Association for doctors etc. The code of conduct mentioned by their respective councils must be strictly followed by every professional. Every practicing professional has to acquire membership from the respective council. 6) Non transferability : Profession can not be transferred to other person on the will of professional. e.g. A doctor cannot transfer his medical practice to his son or daughter who has not completed concerned medical education. 7) Nature of Work : Professionals charge fees in exchange of expert services e.g. an architect designs the layout of office for fees. 4 1.3.3 Employment It is an economic activity in which people work for others. There is employer-employee relationship. Employer is the person who offers the job and the person who accepts the job is called employee. Remuneration and terms and conditions are agreed by both of them. q Features 1) Aim : The main aim is to earn money for meeting needs of the employees and employers. 2) Qualifications : Each job requires some qualification. Skilled or unskilled labour is required as per the nature of the job. For skilled job some specific qualifications are required e.g. Job of nurse. But no specific qualification for unskilled job is necessary. e.g. Office boy. 3) Monetary Returns : Wages or salaries is given as a financial return to employee after completion of work. Wages are decided in advance before appointment. Wages are paid daily or weekly. Salary is paid monthly. Along with salary other benefits like bonus, quarters to stay, subsidized food in canteen etc. also can be given to employees. 4) Capital : No capital is required for employment because employer invests and provides everything to the employee for completing the job. 5) Registration : No registration is required. Every employee has to follow the rules and regulations mentioned in the terms and conditions of employment contract. 6) Non-transferability : Employment cannot be transferred from one person to another e.g.. If a teacher retires, then he cannot transfer his job to his son or daughter. 7) Nature of work : Every employee is expected to complete the work which is given to him. The nature of job decides the nature of work. Activity l Can a businessman, a professional and an employee complete their job independently? Discuss with your teacher. l Suraj owns a travel agency. Through his agency he helps people for all kinds of travel arrangement such as Air bookings, Railway Bookings, arranging tours etc. He charges some amount for the services offered. Is Suraj a professional or a businessman? l Today due to new technology the production can be done in bulk quantity and people also prefer machine made products rather than handmade, yet a ‘Paithani’ a kind of sari and hand-loom coverlet of Solapur have lot of demand in market. In order to find out the reasons, discuss it with your teacher. 5 1.4 BUSINESS OBJECTIVES All business activities are guided by objectives. They are further classified as 1) Economic Objectives 2) Social Objectives 1) Economic Objectives a) Earning Profit : Profit is required for survival of the business and for its growth. b) Searching New Customers : Business organizations have to work hard to create new customers and also to maintain the existing customers. c) Innovations : It is a development or positive change which results into improvement in product or process of production. It has to spend money on R& D (Research and Development), market survey, use of technology etc. d) Best Possible Use of Resources : Resources are scarce and have alternative uses. They should be used to its maximum and should not be wasted. Optimum use of resources ultimately leads to increasing profits. 2) Social Objectives : a) Supplying Quality Products : Every business has to provide quality products to its customers. Quality means a combination of purity, safety, durability, utility etc. b) Avoiding Unfair Trade Practices : Unfair trade practices like black marketing, misleading advertisements, wrong measurement etc. should be avoided. It is important for survival and growth of a business unit. c) Employment Generation : Business is a socio-economic institution. Business should create jobs for skilled and unskilled people. It should provide employment opportunities to economically backward and divyang persons. d) Welfare of Employees : Skilled and unskilled workers are the part of the society. So if employees are properly taken care of, it brings welfare to the society. This can be achieved by providing fair and regular remuneration, good working conditions, impartial personnel policies, offering incentives etc. e) Help to Solve Social Problems : Due to rapid industrialization, many social problems arise like traffic jams, growth of slums, air and water pollution etc. Business should be aware of this and should try to reduce them. f) Contributing to the Welfare of the Society : Business house should take care of general welfare of the society. For that they should give donations for good cause, offering scholarships for higher education etc. 6 1.5 Role of Profit in Business Every business operates with an aim to earn profit that is the excess of revenue over cost. Profit = Revenue - Total cost Role of Profit in Business Returns to Investors Re s al De erar v ve ch rvi lop an Su me d nt Expans d Rew isk ion an Profit Growth ard R F or Re pu e tat as y r e c In cien io c n Means of Effi Livelihood q Role of Profit in Business a) Returns to Investors : The people who invests money in the business expect fair returns on their capital. This is possible if adequate profits are earned by business. b) Research and Development (R&D) : Adequate profit enables a firm to spend more on R & D. This can lead to better technology and lower costs. Innovative products benefit the whole nation. c) Growth and Expansion : Retention of profit is the internal source of funds. This profit can be used for increasing the volume of business through expansion and diversification. The portion of the profit is re-invested in the business for further development. d) Increases Efficiency : Profits facilitate payment of various dues in time. It also motivates the employees working in the organization. This finally leads to increase in overall efficiency of the organization. e) Means of Livelihood :Businessmen earn profits which is their means of livelihood. By earning sufficient profits they can live a decent standard life through satisfaction of various wants. f) Reward for Risks : Profit is considered as a reward for assuming several business risks. Profits also serve as a protection against those risks which cannot be insured e.g. fall in demand, adverse government policy etc. 7  g) Survival : It helps the business to continue to exist in the market. If the business does not make enough profit, it will not survive in the growing competitive environment. Profit means survival in competitive environment. Activity Visit a small shop or a big shopping mall and find out the reasons for why profit is important to them. 1.6 CLASSIFICATION OF BUSINESS ACTIVITIES Business activities may be broadly classified into two categories i) Industry ii) Commerce Industry is concerned with the production of goods and providing services, while commerce is mainly concerned with their distribution. Business Industry Commerce Primary Secondary Tertiary Trade Auxiliaries To Trade Industry Industry Industry 1) Agriculture 1) Manufacturing 1) Transport 1) Transport 2) Extractive 2) Construction 2) Banking 2) Warehousing 3) Genetic 3) Hotel 3) Insurance 4) Tourism 4) Banking 5) Entertainment 5) Advertising 6) Mercantile Home Trade Foreign Trade Agents 7) Communication Wholesale Retail Import Export Entrepot/Re-export Trade Trade 1.6.1 Industry Industry implies the economic activities that are associated with the conversion of resources into goods that are ready for use. This involves production and processing of goods, mining, breeding and rearing of animals. The goods produced may be consumer goods or capital goods. Normally 8 consumer goods are directly consumed by final consumer whereas capital goods are used by another industry for further production of goods. The term industry also means group of firms producing similar or related goods e.g. Sugar industry refers to all manufacturing units producing sugar from sugarcane. Similarly electronic industry would include all firms producing electronic goods. It also creates services like banking, hotel, insurance, tourism etc. Industry creates form utility. It converts the raw material into usable finished products. All this is possible with man power, machine power and large capital investment. Industrial activities are conducted in factories, workshops, sheds or even sometimes at home. It all depends on the size of industry. q Industries may be divided into Three broad categories. A) Primary Industry : Primary industry is concerned with nature. It is a nature-oriented industry. The products of primary industry may be used as the input of secondary industry. Primary industries are of three types. a) Agriculture Industry : This includes farming and cultivation of land. The quality of products depend on many factors like fertility of land, climatic conditions, rainfall etc. b) Extractive Industry : This industry draws out products from natural resources i.e. soil, air and water. Generally the products are in raw form and they are used by manufacturing and construction industries for producing finished products e.g.. extracting oil and minerals from underground, fishing and forestry etc. It may be used in crude form and may be sent to other industries for further processing. c) Genetic Industry : Genetic industries are engaged in reproduction and multiplication of plants and animals. e.g. animal husbandry, sericulture, horticulture etc. B) Secondary Industry : These industries depend on primary industries. They convert the raw material provided by primary industry into finished products. e.g. Tomatoes provided by primary industry are used for making sauce and ketchup. Secondary Industries are of two types. a) Manufacturing Industry : These industries are engaged in transforming raw material into finished product with the help of machine and manpower. The final goods may be capital goods or consumer goods. e.g.. textiles, sugar, paper industry etc. b) Construction Industry : These industries are engaged in the construction of buildings, dams, bridges, roads, tunnels, canals, metro etc. In case of other industries goods can be produced at one place and sold at another place but goods made and sold by these industries are at one place. This is only industry which creates immovable wealth. C) Tertiary Industries : They provide support services to primary and secondary industries. Service facilities are provided by these industries. It includes transport, banking which comes under traditional category whereas in modern times hotel industry, tourism industry, entertainment industry etc. are also included. 9 1.6.2 Commerce q Meaning Commerce is that part of business activity which is concerned with distribution of goods and services produced by Industry. It includes all those activities which are essential for maintaining a free and un-interrupted flow of goods. Commerce bridges the gap between producers and consumers by exchanges of goods and services for money or money’s worth. Commerce is further divided in Trade and Auxiliaries to Trade. A] Trade : Trade denote buying and selling of goods and services. Trade is an exchange of goods and services with money or money’s worth. Goods are made available to consumers in different markets. Trade facilitates transfer of ownership and possession of goods and services from seller to the buyer. Trade is further Classified as a) Home Trade / Internal Trade : In this trade, buying and selling of goods and services takes place within the geographical boundries of a country. It uses local currency for the exchange of goods and services. It is further divided as follows - i) Wholesale Trade : In wholesale trade, goods are purchased and sold in bulk. A wholesaler purchases in large quantities from the producers and sells in small quantities to the retailers. He is the link between the producer and the retailer. ii) Retail Trade : Retail trade is business activity associated with the sale of goods to the final consumers. A retailer is the one who purchases from the wholesaler or sometimes directly from the producer and sells them in smaller quantities to final consumer. Retailer is the link between wholesaler or sometimes manufacturer and ultimate consumer. b) Foreign Trade / External Trade : When trade takes place between different countries, it is known as foreign trade. When boundaries of two countries are crossed then different currencies are used. It is further divided as : i) Import Trade : When goods and services are purchased from another country it is called as import trade. ii) Export Trade : When goods and services are sold to foreign buyers then it is called as export trade. iii) Entrepot Trade : It is the combination of import/export trade. It involves importing the goods from one country and reselling these goods to another country. e.g. Indian Seller importing goods from Japan and re-exporting same goods to Africa. B] Auxiliaries to Trade All those activities that facilitate smooth flow of goods from manufacturing centers to the consumption centers are called aids to trade or auxiliaries to trade. These activities play supportive role. They help in removing hindrances which arise during the production and distribution of goods and services. Following are various Auxiliaries to Trade. 10  i) Transport : The goods are produced at one place but they are demanded over a wide area. So goods are to be sent to different places where they are demanded. Modes of transport facilitate movement of men and materials from one place to another. ii) Warehousing : There is a gap between production and consumption. Certain goods are produced throughout the year but consumed only in a particular part of the year and vice versa. In the era of mass production, storage is indispensable. The goods should be stored carefully from the time they are produced till the time they are sold. Special arrangement must be made to prevent the loss/damage. Warehouses are also called godowns. Price is maintained at a reasonable level and there is a continuous supply of goods and services. iii) Insurance : There are various risks involved in the business. The goods may be destroyed while in production process or in transit due to accidents or in storage due to fire or theft. The businessmen would like to cover these risks Insurance companies come to their rescue. They undertake to compensate the loss suffered due to such risks. The businessman has to insure his goods and pay premium regularly. Risks cannot be avoided completely but they can be minimized by taking insurance policy. iv) Banking : We require money to start the business and to run it smoothly. Banks supply money. Adequate funds can be obtained from the bank. Bank provides loans, overdraft, cash credit etc. to businessmen. Banks also provide many services like cheques, drafts debit cards, credit cards, online transactions etc. It helps the traders to carry their business activities smoothly. v) Advertising : Advertising is an effective aid in selling the goods. The producer communicates all information about goods and services to create a strong desire in consumer to buy the products. It can be carried in different ways. It can be indoor and outdoor. Communicating with the people when they are in their homes is called indoor advertising. For example, newspaper, radio, TV, etc. Communicating with people when they go out from their homes is called as outdoor advertising e.g. posters, hoardings at prominent places, neon sign board etc. vi) Mercantile Agents : Customers are scattered over a very wide area. It is not possible for seller to contact the customers. This difficulty is solved by mercantile agents. They bridge the gap between buyer and seller. Brokers, Estate Agents etc. are some examples of mercantile agents. vii) Communication : In today’s world there is information explosion The information has to be communicated. There is a need of communication to facilitate the traders, producers and consumers to exchange information with one another. Various means of communication such as cell phones, postal services, email etc. are made available. Activity l Visit an estate broker and find out the duties performed by him for buyers and sellers of property. l Because of extended markets and transport, it is now possible to send farming products anywhere easily and the product can get reasonable value for that. But where products are made in an area and people living in that area have to spend quite a lot, is this fair? Discuss with your teacher. 11 Distinguish and comparative study chart. 1) Industry and commerce Sr. Point of Industry Commerce No. difference 1) Meaning Industry is engaged in production Commerce is engaged in of goods and services distribution of goods and services. 2) Location It is located in factories and It is conducted in markets and workshops offices. 3) Utility It creates form utility It creates place, time and possession utility 4) Resources It uses machine and manpower It requires more manpower 5) Capital Huge capital is required to start Commerce comparatively requires industry less capital 6) Interdependence Industrial activities are Commercial activities cannot be meaningless without commerce started without the production of goods & services. 7) Conducted by Producers and manufacturers Traders, mercantile agents etc. 8) Status Primary Importance Secondary importance 9) Classification Primary, Secondary and Tertiary Trade and Auxiliaries to Trade industry 10) Market force It represents supply side of It represents demand and supply market side of market 2) Business, Profession and Employment Sr. Point of Business Profession Employment No. Difference 1) Meaning In this economic In this economic In this economic activity, goods and activity, expert activity, one person services are produced services are works under and distributed. rendered. another person. 2) Reward / Return Businessmen earn profit. Professional charges An employee fees as a return to receives wages or professionals. salary 3) Capital Capital investment Limited capital No capital investment depends on size and investment is investment is nature of business. required except necessary. the self-employed professional. 4) Nature of work It provides goods and It renders They perform the services to the public. personalized expert work as per service services. contract. 12  Sr. Point of Business Profession Employment No. Difference 5) Qualification No minimum Expert knowledge It is prescribed by qualification is and training in a the employer. prescribed. particular field needed. 6) Decision Making Businessmen are free to Professionals take Employee does not take the decisions. expert decisions in have any power to their profession. take any decision. 7) Risk Profit is uncertain and Fees is generally not Fixed and regular irregular so high risk is certain and regular. pay is given by present. employer as per contract so no risk is involved. 8) Examples Builders, Grocers, Super Doctor, C.A., Clerk, Teacher, market etc. Lawyer etc. Officers etc. 3) Business and Commerce Sr. Point of Business Commerce No. Difference 1) Meaning It is an economic activity which deals It is a part of business which is in production and distribution of concerned with distribution of goods and services. goods and service 2) Concept It is a broader concept as it includes It is a narrow concept as it is a commerce. part of business. 3) Skill It requires technical as well as It requires only marketing skill marketing skill. 4) Classification It is classified into Industry and It is classified as trade and Commerce. auxiliaries to trade. SUMMARY 1.1 Introduction Every person keeps himself engaged in some activity or the other to satisfy his needs. Thus he obtains goods and services. 1.2 Non-Economic Activities Human activities which are undertaken for personal satisfaction without monetary gains. 1.3 Economic Activities Any activity conducted for earning money is called “Economic Activity”. 13 1.3.1 Business Business involves production and distribution of goods and services in the market. Features 1) Economic Activity 2) Two Parties 3) Profit Motive 4) Production of goods and services 5) Dealings in goods and services 6) Distribution of goods and services 7) Continuity 8) Uncertain Return 9) Risk 10) Satisfaction of Consumers 1.3.2 Profession Profession is that part of economic activity under which a person uses his knowledge and special skill to render service by charging some fees. Examples: Doctor, Lawyer, etc. Features 1) Aim 2) Qualifications 3) Monetary Returns 4) Capital 5) Requirement of Registration 6) Non-Transferability 7) Nature of work 1.3.3 Employment In this, one person appoints another person to complete the job as per his terms and conditions. Features 1) Aim 2) Qualifications 3) Monetary Returns 4) Capital 5) Registration 6) Non-Transferability 7) Nature of work 1.4 Business Objectives 1) Earning Profits 2) Creation of customers 3) Innovations 4) Supplying quality products 5) Avoiding unfair trade practices 14  6) Employment generation 7) Welfare of employees 8) Help to solve social problems 9) Best possible use of resources 10) Contributing to the welfare of society 1.5 Role of Profit in Business 1) Returns to investors 2) Research and Development (R&D) 3) Growth and Expansion 4) Increase Efficiency 5) Means of livelihood 6) Goodwill 7) Reward for risk taking 8) Survival of Business 1.6 Classification of Business Activities A. Industry : Production of goods and services. Types of Industries 1) Primary Industry : Industry dependent on nature i) Agriculture ii) Extractive iii) Genetic 2) Secondary Industry : They convert the raw material provided by the primary industry into usable finished products. i) Manufacturing Industry ii) Construction Industry 3) Tertiary/Service Industry : They provide services to primary & secondary industries. B. Commerce : Distribution of Goods and Services. It is further classified as follows: 1) Trade : Actual buying and selling of goods and services. Classification of Trade: i) Internal Trade/Home Trade It involves buying and selling of goods and services within the country. ii) External Trade/Foreign Trade The trade that takes place between buyer and seller of two different countries is known as External Trade. Classification of External Trade: 1) Import 2) Export 3) Entrepot / Re-export 15  2) Auxiliaries to Trade : Supporting activities helping smooth functioning of trading activities. They remove obstacles/difficulties to trade. 1) Transport 2) Warehousing 3) Insurance 4) Bank 5) Advertising 6) Mercantile Agents 7) Communication q Career Opportunities 1) A courier agent. 2) Poultry business 3) Tours & travel Agent 4) Agro-based industries. 5) Estate agent, Insurance agent. q Reference Books 1) NCERT Class XI business studies 2) Business Organization : Dr. Neeru Vasisth. 3) Business Organization and Management : Mr. M.C. Shukla 4) Business Organization and Management, Tulsian. 5) Business Organization and Management, J. P Mahajan. EXERCISE Q.1 A) Select the correct option and rewrite the sentence. 1) A Lawyer is........ a) a Professional person b) a Businessman c) an employee 2) Raw material is converted into finished product by.......... industry. a) genetic b) extractive c) manufacturing 3) Actual buying and selling of goods is known as.......... a) profession b) trade c) industry 4) National level code of conduct is prepared for............... a) professionals b) businessmen c) employees 5) Construction of dams is an activity done under............ industry. a) primary b) secondary c) tertiary 6) The problem of distance is solved by.......... a) bank b) transport c) warehousing 7) Commerce is a branch of............ a) business b) industry c) trade 16  8) Monetory Returns in business is called......... a) fees b) salary c) profit 9) A business unit depends upon............for selling its output. a) industry b) society c) employees 10) Warehousing creates.......... utility in goods. a) place b) time c) form B) Match the pairs. Group ‘A’ Group ‘B’ A) Helping disabled person 1) Social objective B) Genetic Industry 2) Foreign Trade C) Local currency 3) Sericulture D) Solve social problems 4) Non-economic activity 5) Internal Trade 6) Mining 7) Profit 8) Economic activity C) Give one word / phrase / term for the following sentences. 1) A regular activity concerned with production and distribution of goods and services for profits. 2) Human activities that are conducted for earning money. 3) Buying and selling of goods against money or money’s worth. 4) Activities that remove all the difficulties in trade. 5) The type of industries that creates immovable wealth. 6) Name the business activity which is concerned with production of goods and services. 7) Name the business activity which is concerned with distribution of goods and services. 8) The activity which provides mobility to men and material. 9) An aid to trade which creates time utility. 10) An occupation by which a person agrees to provide expert services for a fees. D) State True or False. 1) Business is an economic activity. 2) Every profession is practiced for earning money. 3) Primary industries are concerned with nature. 4) Trade includes commerce. 5) Warehousing removes difficulty of time. 6) Trade includes buying and selling of goods and services. 17  7) Profit leads to increase in overall efficiency of the organization. 8) Plant nursery is an example of extractive industry. 9) Industry creates form utility. 10) Retailer is the link between manufacturer and wholesalers. E) Find the odd one 1) Agricultural Industry, Extractive Industry, Genetic Industry, Manufacturing Industry. 2) Import Trade, Export Trade, Wholesale Trade, Entrepot Trade. 3) Banking, Insurance, Transport, Manufacturing. 4) Tea, Milk, Coffee, Machinery. F) Complete the sentences. 1) Economic activities are those activities which are conducted to............. 2)............ includes marketing of goods and services. 3) Business is an............ activity. 4) The basic purpose of............ is to earn profit. 5) Professionals, charge............ in exchange of expert services. 6)............ is the person who offers the work. 7)............ is considered as a reward for assuming several business risks. 8) Industry creates............ utility. 9) In............ trade, goods are purchased and sold in bulk. 10)............ is the link between wholesaler and customer. G) Complete the following table. A B 1) Trade between different countries.................................. 2) Purchases of goods and services.................................. from another country. 3).................................. Selling of goods and services to foreign customer. 4).................................. Link between producer and retailer. (Export trade, External trade, Wholesaler, Import Trade) H) Answer in one sentence. 1) What is an Economic Activity? 2) What is Non-economic Activity? 3) What do you mean by Wholesale Trade? 4) What is the meaning of Retail Trade? 5) What do you mean by Import Trade? 6) What is the meaning of Export Trade? 18  7) What is an Extrepot Trade? 8) What is meant by Auxiliaries to Trade? 9) What is Trade? 10) What do you mean by Commerce? 11) What is Primary Industry? 12) What is Secondary Industry? 13) What do you mean by Genetic Industry? I) Correct the underlined word and rewrite the sentence. 1) Business is non-economic activity. 2) Barter exchange is an exchange with money. 3) Profession can be transferred to other person. 4) Capital is required for employment. 5) Industry creates place utility. 6) Commerce represents supply side of market. 7) The basic purpose of business is to provide services. Q.2 Explain the following terms/concepts. 1) Business 2) Profession 3) Employment 4) Home Trade 5) Foreign Trade 6) Economic Activity 7) Non-economic Activity Q.3 Study the following case/situation and express your opinion. 1) Jaysukh oil mills produce refined oil. The entire production is purchased by Rupesh oil Depot, who in turn sells it to various retailers. Mrs. Prachi purchased 2 kg oil from Balaji Groceries. Identify: i) Wholesaler ii) Retailer iii) Consumer 2) Mr. Pranav is a tin manufacturer in India. Mr. Jack of England sells goods to M/s. Frank Corporation in North America and Mr. Williams of USA buys various goods from Brazil. i) Who is importer? ii) Who is manufacturer? iii) Who is exporter? Q.4 Distinguish between. 1) Industry and Commerce 19  2) Business and Commerce 3) Business and Profession 4) Employment and Profession Q.5 Answer in brief. 1) State any four features of profession 2) State any two types of industries 3) Give two types of Foreign Trade 4) State any four Auxiliaries to Trade 5) State any four features of employment 6) Write any four objectives of business 7) State any four features of business 8) State any two types of primary industry Q.6 Justify the following statements. 1) Retailer is in direct contact with ultimate consumers. 2) Commerce is a wider term than Trade. 3) Risk is inevitable in business activities. 4) Combination of Import-export trade is entrepot trade. 5) Transport creates place utility 6) Industrial activities take place before commerce starts its role. 7) Available resources should be used to its maximum. 8) Wholesaler is a link between retailer and manufacturer. 9) Business is a part of economic activities. Q.7 Attempt the following. 1) What do you mean by commerce? 2) What is the meaning of export trade? 3) State the role of auxiliaries to trade in trading activities. 4) What are the different types of secondary industries? 5) State the types of human activities. 6) Describe the scope of internal trade. 7) How does banking and insurance help trading? Q.8 Answer the following. 1) Give comparative analysis of business, profession and employment. 2) Define business. Explain its features. 3) Describe various objectives of a business. 4) Explain the importance of profit in business. www 20  2 Trade 2.1 Introduction and meaning 2.2 Types of Trade 2.2.1 Internal Trade A) Wholesale Trade B) Retail Trade : Types of Retail Trade 2.2.2 International Trade A) Export Trade Meaning Export Procedure B) Import Trade Meaning Import Procedure C) Entrepot Trade Distinguish Between Summary Exercise In a small village in Ratnagiri District, Mohan was growing rice. Whatever he could grow, he sold it in his village in retail price. He didn’t know the marketing strategies. One day his friend came to meet him from Pune. When they discussed about their economic growth, Mohan wasn’t ready to reply. His friend Rajiv, who was in marketing field, suggested him that he could develop his farm with mangoes, nuts and jackfruit. He would develop his business with Internal and Foreign trade also. Mohan surprised and asked about the process. Rajiv suggested that Mohan already had some trees of mangoes and jackfruits in his field, he should try to send his goods to big cities like Mumbai and Pune. Ratnagiri’s mangoes are famous and have the mark of ‘Geographical Indication’. His goods could easily sell in these cities. This kind of internal trade would give him big profit. With the profit, he would develop his farm by importing necessary tools for his business. He suggested him that he could take variety of products of mangoes, jackfruits and nuts in commercial way. He would export his goods in foreign countries. Mohan accepted Rajiv’s suggestion and started his business. A farmer become a good businessman by trading his goods. Mohan’s example suggests us that Indian farmers can do a good business with the help of trade. 21 2.1 INTRODUCTION Trade plays a vital role in the economy of every country. The overall development of economy is an outcome of proper functioning of trade. Buying and selling of goods and services for money’s worth is fundamental feature of trade and other is the transfer of ownership of goods and services from one person or entity to another. The original form of trade was barter, the direct exchange of goods and services. After invention and acceptance of common currency i.e. money trade became greatly simplified. MEANING ‘Trade’ means the process of exchange of goods and services. Trade refers to buying and selling of goods and services with an objective of earning profit. Trade establishes a link between producers and consumers and it is carried out by buyers and sellers. 2.2 TYPES OF TRADE On the basis of different criteria, trade can be divided into different types which are as follows. Trade Internal Trade External Trade Wholesale Trade Retail Trade Import Export Entrepot Itinerant Retailers Fixed Shop Retailers 1. Hawkers Small scale Retailers Large scale Retailers 2. Peddlers 1. General Stores 1. Departmental Stores 3. Street Traders 2. Second hand goods shops 2. Supermarket stores 4. Cheap Jacks 3. Authorized dealers 3. Chain stores 5. Market Traders 4. Speciality shops 4. One prices shops 5. Malls 2.2.1 INTERNAL TRADE When the goods and services are purchased or sold within the country it is referred as Internal Trade e.g. purchasing goods from the door salesmen, local shop, exhibition, regional markets, departmental store or a mall are the examples of internal trade. When the buyers and sellers both are from the same country, it is known as internal trade. Trade between two states or cities of same country is also considered as internal trade. As there is a gap between production and consumption, there is a need to have proper channel of distribution. The channel of distribution is very important in the internal trade. Usually, producers are situated at one place whereas the consumers are scattered over a wide area. There is a big gap 22 between producer and consumer. This gap can be shortened by channel of distribution. Channel of distribution helps to make products available at the right time, at the right place and in right quantity through different intermediaries. q Channel of Distribution Producer/Manufacturer Wholesaler Retailer Consumer q Types of Internal Trade : There are two types of Internal Trade i.e. Wholesale Trade and Retail Trade A) WHOLESALE TRADE : When goods are purchased in large quantities from the manufacturer or producer for the purpose of resale to retailers, it is known as wholesale trade. The person who is engaged in wholesale trade is known as a wholesaler. Wholesaler buy goods from manufacturers and sell it to retailers so wholesaler is buyer as well as seller. The Wholesaler may perform different functions in the process of distribution of goods and services. It enables the producers to reach the consumers. q Definition 1) According to Philip Kotler, “Wholesaling includes all activities involved in selling goods or services to those who buy for resale or for business use.” 2) According to Evelyn Thomas, “A true wholesaler is himself neither a manufacturer nor a retailer but act as a link between the two.” q Features of Wholesaler 1) A Wholesaler purchases goods from the producer in large quantities. 2) Wholesaler has to take risk in the process of distribution. 3) A Wholesaler deals with one or few types of goods. 4) A large amount of capital is required in this business. 5) A wholesaler maintains price stability by balancing supply and demand factors. 6) The manufacturers can get direct information about market through wholesalers. 7) A Wholesaler sells the goods to the retailers as per their requirements. 8) A Wholesaler performs the marketing functions like assembling, warehousing, transporting, grading, packing, advertising and financing. Services of Wholesalers The wholesaler provides valuable services to manufactures and a retailers. A) Services to Manufacturers : 1) Large Purchase : A Wholesaler purchases a large quantity of goods from the manufacturer and sell it to retailers by collecting order from retailers. 2) Storage : A Wholesaler has his own storage facility which he uses to fill the time gap between production and consumption of goods 23  3) Transportation : A Wholesaler uses his own transportation to deliver the goods from the place of production. 4) Financial Assistance : A wholesaler is ready to pay the amount in advance to the manufacturer, which can help the manufacturer to produce goods, within short period. 5) Provide Market Information : Manufacturer can get the updated information from wholesaler like market conditions, demand, taste etc. 6) Risk Bearing : A Wholesaler takes a risk in his business by financing and storing large quantity goods. Sometimes he may bear the loss. 7) Marketing Functions : A Wholesaler carries various marketing functions like warehousing, advertising, sales promotion etc. on behalf of the manufacturer. B] Services to Retailers 1) Stock of Goods : A Wholesaler keeps large stock of goods. Therefore retailers can get the goods easily when the consumers ask for the goods. 2) Regular Supply : A Wholesaler assures regular supply of goods to the retailers. Therefore, retailers are free from storing goods. Retailers can supply goods to consumers as and when required by them. 3) Risk Bearing : The wholesaler bears the risk of price and market fluctuations, large stock of goods, therefore, retailers are free from these risks. 4) Financial Support : Wholesalers provide financial support by way of credit facility, discounts etc. Such support increases the effect of working capital of the retailer. 5) Market Information: Wholesalers provide variety of information about market condition of different products. This information is regarding new products, variants of products, new schemes on existing products etc. Sometimes, wholesalers guide retailers about, when to buy, how to buy etc. 6) Sales Promotion : A wholesaler does advertisement and also promotion of the goods which can help the retailer to increase the sales. B) RETAIL TRADE When goods are sold relatively in small quantity to the ultimate consumer by wholesaler or distributor or dealer is known as Retail Trade. The person who is engaged in retail trade is known as retailer. In market there is an existence of some sellers who are doing business at local level or within limited area. Such sellers are providing goods directly to ultimate consumers at reasonable prices. q Definition : 1) According to Oxford Dictionary, “Retail is sale of goods to the public in relatively small quantities for use or consumption rather than for resale.” 2) According to William Stanton, “Retail Trade includes all activities directly related to the sale of goods and services to the ultimate consumer for personal and non business use.” 24 q Features of Retailers : Retailer is the link between the wholesaler and consumers who operates in local markets. He deals in wide variety of goods by investing limited capital. He establishes good relations with consumers. He undertakes less risk than wholesaler. He tries to satisfy demands of different consumers but does not hold large quantity of goods at a time. 1) Retailer is the link between the wholesaler and consumers. 2) He operates in local markets. 3) Retailers deal in wide variety of goods in small quantity. 4) Investment requirement is limited. 5) Less risk and low amount of profit as compared to wholesaler. A) Services to Wholesaler : 1) Connecting Link : The retailer is the connecting link between the wholesaler and consumer. 2) Helps to Distribute : Retailers help to quickly distribute goods. It becomes very important, in case of perishable goods like dairy products, fruits, vegetables, pulses etc. 3) Marketing : If the wholesaler is unable to carry out marketing function, retailers conduct them. Sometimes he handles transportation on his own. Sometimes he tries to solve shortages problem or advertises for better sale. 4) Provide Information : The retailer provides information about changing demands, preferences, likes and dislikes of consumers to the wholesaler. 5) Attract Consumers : The Retailers attract consumers by advertising the products. This activity directly helps the wholesaler to sell the product. 6) Create Demand : Through personal salesmanship retailer attracts consumer’s attention towards new goods and arrivals in the market. To create demand for new goods, the retailer puts new goods for window display. B) Services to Consumers : 1) Regular Supply of Goods : The retailer stores sufficient quantity of goods as per the requirement of consumers. Goods are available to the consumers as and when they are in need. 2) Local Convenience : Retailers are normally situated near residential areas. This offers local convenience to the consumers as they can purchase goods as per their convenience and timings. 3) Home Delivery : Many retailers provide home delivery of goods to the customers at nominal cost or free of cost. This improves the relations between the consumers and retailers. 4) Variety of Goods : Many retailers keep different variety of goods, this offers the consumers for proper selection of the required commodity of their choice. 5) Credit Facilities : The retailer gives credit facility to their regular consumer, which helps the consumers to purchase goods as and when they are in need. It helps many consumers 25  who are in short of money. Credit facility by retailer creates large customer base for the business. 6) After Sale Services : Some retailers do provide after sales services to consumer for durable products such as laptop, mobiles, television sets, music systems, refrigerators etc. at cheaper rates. Such services create confidence in minds of consumers for further purchases. 7) Information : Retailers provide valuable information about goods, their qualities as well as varieties, new arrivals in the market which helps to choose better product. Such information facilitates quick buying for consumers and helps to build good image in mind of consumers. Types of Retailers Retailers Itinerant Retailers Fixed shop Retailers 1. Hawkers Small scale fixed Retailers Large scale fixed Retailers 2. Peddlers 1. General Stores 1. Departmental Stores 3. Street Traders 2. Second hand goods Shop 2. Supermarket Stores 4. Cheap Jacks 3. Authorized Dealers 3. Chain Stores 5. Market Traders 4. Speciality Shops 4. One Price Shops 5. Malls A) Itinerant Retailer : Itinerant retailers are those retailers who do not have a fixed place or fixed shop for their business. 1) Hawkers : Hawkers are one of the oldest types of retailers. They move from one place to another place, carrying goods in hand cart, moving from the city or place anywhere, where they can sell easily. They require limited capital. They move on street by shouting loudly or announcing the names and prices of the goods. They deal in seasonal vegetables, fruits, some other items like household cheap articles, bangles, clips etc. 2) Peddlers : Peddlers are the oldest form of retailers. Peddlers are those, who carry goods on their head in baskets or container. They deal in low quality goods of day to day use on cash basis, such as vegetables, fruits, fish, utensils, soaps etc. 3) Street Traders : These retailers do their business on footpaths of busy street of cities and towns. They prefer crowded places like market places, bus stops, railway stations, school, colleges, etc. They set up temporary stalls on the roadside. They sell items like handbags, ready-made garments, toys, electronic goods, etc. Their prices of goods are reasonable. They do not change their place of business frequently. 26  4) Cheap Jacks : Cheap Jacks have independent shops having temporary setup. They keep changing places of their business depending upon responses they get from consumers. Cheap Jacks have a fixed shop for a particular period. They deal in variety of goods like cutlery, crockery, socks, shampoos etc. The quality of goods is inferior. 5) Market Traders : Market traders open their shops on market days i.e. on different places on fixed days. Usually many villages and town have some day of the week known as the market day. On that day various retailers come and set their temporary shops at the particular village or town. They deal in various goods like vegetables, pulses, fruits, toys, spices, ready-made garments, daily utensils etc. It is also called as weekly market. B) Fixed Shop Retailer Fixed shop retailers are those retailers who do not move from one place to another. They mostly have fixed places. They can further be classified into small scale fixed retailer and large scale fixed retailer. q Small scale fixed retailer The Retailers who conduct their business operations on a small scale and deal in variety of goods are small scale shop retailers. They offer shopping convenience to the customers as they are situated in the same locality e.g. General stores, medical store, laundry, etc. q Types of small scale fixed retailers 1) General Stores : General store Retailers sell goods which are required by people for their day to day needs like food grains, soaps, stationery, medicines, oils, toffees, biscuits, plastic goods, footwear, umbrella, pens etc. These shops are generally situated near residential areas of the city or town. They provide home delivery of goods. They have variety of goods in each item. They buy the goods from wholesalers or buy directly from manufacturers. 2) Second hand Goods Shop : These retailers purchase and sell used goods e.g. They deal in books, furniture, TV. Set, clothes, cars etc. After repairing the goods and setting them in working conditions, the goods are sold to the consumers. Generally consumers from weak financial background purchase goods from them. As prices of these goods are cheap, they lack quality, durability and guarantee. 3) Authorized Dealer : These retailers have authorized dealership of particular manufacturer’s goods. They deal in goods like T. V. Sets, washing machines, automobiles, music systems etc. Authorized dealers try to maximize sale of goods, because they get good commission from manufacturers. Authorized dealers do not have products of other manufactures, except for whom they are working as authorized dealers. They promote the goods by window display, advertisements and attractive schemes. 4) Speciality Shops : These retailers deal in particular line of goods. They keep a wide variety of item of same line of the product. e.g. A toy shop may keep only toys of different types. Other examples of speciality shop retailer are sports material, ready-made dresses, leather goods, plastic goods, watches, books etc. They offer goods at varying price range. They provide a wide choice to the customers. They give advice to the customers as they have expert knowledge about the product. 27 Large scale fixed Retailers The retailers who conduct their business operations on a large scale by investing huge capital, selling variety of quality goods are large scale shop retailers. These retailers have come into existence because of urbanization. These are fixed shops located at different localities of the cities. Types of Large Scale Fixed Retailers 1) Departmental Stores : A departmental store is a large scale retail shop having different departments (sections) under one roof. Each section deals in a particular type of goods, All the departments are organized and managed by one management. It sells a large variety of goods. i.e. food, toys, dresses etc. e.g. Shoppers Stop q According to James Stephenson : “A big store engaged in the retail trade of variety of articles under the same roof  .” q According to G. B. Giles : “A departmental store is a collection of shops under one roof and ownership, each shop or department specializing in selling a special range of goods”. Features of Departmental stores 1) Shopping convenience : Departmental stores provide a wider range of goods and services under one roof hence provides maximum shopping convenience. Customers can fulfill their wants of goods at different price levels. 2) Centralized Management : In departmental stores all the departments are independent but they are centrally owned, managed and controlled e.g. advertising, accounting, recruitment of staff, etc. All activities of departmental stores are managed at central level. 3) Wide variety of Goods : Departmental stores provide a wide variety of goods of different brands, designs and colours. 4) Specialization : Each department section deals in a separate line of product or goods with specialized services e.g. Electronics section, kitchen ware section etc. 5) Central location : A departmental store prefers central place of the city. So the location becomes easy for customers to access. 6) Huge Capital : Departmental store requires large capital investment. This capital is required for spacious place, storing of variety goods, salary to staff, advertisement, electricity etc. 7) No Credit Facility : Departmental stores work on cash basis or they accept credit cards but do not offer credit facility. 2) Super Market Shop Super Market is a large retail organization which mainly sells wide variety of food and grocery items on the basis of ‘Self-Service’. Supermarket is a large retailing shop, where goods are kept on open racks, buyers have to select products, place them in a trolley or a box, bring them near the gate, where a clerk 28  prepares the bill on a counter for the goods selected, the buyer pays the bill and takes delivery of goods. q Definition : “A large store selling a wide variety of consumer goods, particularly food and small articles of household requirements.” e.g. Big Bazaar, D-mart, Reliance Fresh etc. are some of the examples of supermarket. Features of Super Market Shop : 1) Location - Super markets are generally situated at the central location of the city where there is population concentration. 2) Types of Goods : In super market goods of day to day requirement are sold e.g. food, grains, tinned food, bakery products, groceries, stationery etc. At times goods which are not available with small retailers are available in super market. 3) Self Service : Super market operates on self service style. There are no salesmen around in the shop. The Customers can select the goods from the information printed on the products. 4) Reasonable Prices : As super market buys goods on large scale, they pass on the benefits to their customers by selling the goods at reasonable prices. 5) Capital : Super market shop requires large capital, it is established by co-operative societies and private limited companies such as Reliance Fresh, Tata Group, Grahak Peth etc. 6) Cash Sales : Goods are sold only on cash basis. No credit facilities are given to the customers. Some schemes are introduced such as cash back scheme, loyalty programme, etc. to increase cash sales. 7) Attractive Packing : Packing plays important role in selling the product in the supermarket. Goods are duly packed, by giving details of quantity, quality, weight, price, contents etc. 8) Impulsive Buying : Customers get induced to buy unwanted items just because of attractive packing and sales promotion schemes. The customers become impulsive buyers. Activity Visit any large scale shop in your city and note down the things you can get there, compare the prices of the same goods in small shops. 3) Chain Stores : Chain stores are retail store owned by a single organization. Chain store is a network of a number of branches situated at different localities in the city or in different parts of the country. They are owned, managed and controlled by its head office. The appearance is same in internal and external display e.g. the furniture, the name boards, the staffs uniform are same in colour and design. 29 q Definition : According to James Stephenson, “ A Chain store shops consists of a number of similar shops owned by a single business firm.” According to Clark and Clark : “Chain stores system consists of a number of retail store, which sell similar products are centrally owned and operated under one management,” In India the retail shops like Bata Stores, Raymond Stores, Vijay Sales, Croma etc. are examples of chain stores. Features of Chain Stores : 1) Low and Uniform Price : Due to centralized buying from head office, prices are less. Low operational expenses and low cost of the goods leads to low price of commodities. There is uniformity in price in all chain stores. 2) Uniformity : Every chain store has the same style of external and internal layouts with same interiors, colours, display, etc. Hence the customers can easily identify the chain store. 3) Limited Range of Goods : Chain stores sell a limited range of goods produced by a particular manufacturer. Manufacturers open the chain stores by themselves or through distributors. e.g. Bata shops sells footwear manufactured by Bata Shoes Company Ltd only. 4) Large Investment : Chain store requires large financial investment. A large number of branches have to be managed in terms of salary of staff, advertisement, decoration, etc. So there is a need of large investment. 5) Distribution through Branches : Chain store purchases in large scale from the producer and then distributes them through its branches. 6) Cash Sales : Chain stores sell their goods on cash basis only. Cash sales avoides the problem of bad-debits. 7) Quality of Goods : The chain stores sell standardized and branded goods. The quality of goods is assured to customers in chain stores. 4) One Price Shop : The shop where the prices of all the products or goods are same is known as One Price shop. This shop sells a large variety of goods of daily use at low prices. The products irrespective of their size and quality are sold at one common uniform price. The price are fixed in advance. Goods like gift articles, watches, shampoos, hair products, household articles, crockery, etc. e.g. shops selling goods for Rs. 49/-, Rs. 99/-, Rs. 199/- Activity Visit one price shop near your locality. 30 Features of One Price Shop : 1) Uniform Price : All the goods whether big or small in size are sold goods at one standard fixed price. There is no scope for bargaining. 2) Low Price : Usually the price of the goods is reasonable and low. 3) Variety of Goods : These shops usually deal in variety of small sized goods. There is a wide scope of choice of goods e.g. stationery, toys, fun games, play cards, cosmetics etc. 4) Location : These shops are located in busy centers of the city such as busy trade streets near railway stations, bus stops, etc. Sometimes this shop is temporarily set up in fairs or exhibitions. 5) Cash Sales : In this shop goods are sold on cash basis only. No credit facility is given to customers and so there is no risk of bad debts. 6) Less Capital : Due to small goods these stores require less amount of capital. 5) Mall : A Mall is a large enclosed shopping complex containing various stores, businesses and restaurents. A modern shopping mall is an American term in which one or more buildings form a complex. It is modern type of shop which enables customer to buy different products from one unit to other units of mall. From the late 20th Century entertainment venues such as movie theatres and restaurants began to be included. Now a days, the popularity of mall is increasing because of variety of things available at one place. e.g. Phonix Mall, Inorbit Mall. There is a thin line of difference between various retail shops such as departmental stores, chain store, mall etc. q Recent trend in Retail Trade : Now a days Online retail form of buying and selling of goods become more popular in Indian scenario. This form is very easy platform for seller as less investment is required, no need of storage and warehousing, no need of face to face interaction with customers. Their focus is on prompt service and quality. Following are very popular examples of online retail forms. e.g. Flipkart, Amazon, Shopclues, Myntra etc. 2.2.2 International Trade In Ancient India, international trade was conducted for various quality products like silk, hand- loom, ornaments, weapons etc. When the trade activities are conducted between two or more countries, it is called as ‘International Trade’. The political relations between two countries also influence the trade between them. International trade procedure is always complex, difficult and lengthy. Various factors like government policies, economy, international market, international laws, currency etc. influence the trade activities. Most economists globally agree that international trade helps to boost the nation’s wealth. The consumers get variety of goods and services due to International trade. 31 A) EXPORT TRADE Export trade referes to sale of goods and services to foreign country. Export procedure A) Preliminary B) Pre-shipment C) Shipment D) Post-Shipment Stage Stage Stage Stage 1) Registration 1) Receipt of order 1) Processing 1) Shipment Advice 2) Appointment 2) Letter of credit 2) Examination 2) Presentation of of Agent of goods document 3) Pre-shipment 3) Loading of 3) Realization of Finance goods incentives 4) Production 4) Follow up 5) Packaging 6) ECGC cover (Export Credit and Guarantee Corporation) 7) GST formalities (Goods and Services Tax) 8) Marine Insurance 9) C & F agents (clearing and forwarding) q Export Procedure A) Preliminary Stage 1) Registration : The exporter has to get himself registered with various authorities as follows: i) Directorate General of Foreign Trade to obtain Import-Export Certificate number. ii) Income Tax authority to obtain Permanent Account Number. iii) Other Authority like EPC (Export Promotion Council) and GST authority. 2) Appointment of agent : After registration the exporter appoints agents or sales representative abroad to book orders. The exporter may also open sales office in foreign country. B) Pre- shipment Stage 1) Receipt of Order : As soon as the order is received the exporter must verify and confirm the order. The exporter checks on the ‘Restriction on Import’ in Importer’s country. 2) Letter of Credit : The exporter requests importer to issue a letter of credit in his favour. The receipt of ‘letter of credit’ from importer’s bank will clear the foreign exchange and other restrictions. 3) Preshipment Finance : The exporter obtain pre shipment finance from his banker to meet working capital requirement. 32  4) Production of Goods : The exporter has to produce goods as per buyer’s need. If the exporter is not a manufacturer then he will get the ordered goods from the local supplier. 5) Packaging : The goods must be properly packed because packing plays three important roles. i) Protection of goods in transit ii) Preservation of quality of goods iii) Promotion of goods 6) ECGC Cover (Export Credit and Guarantee Corporation) : The exporter may obtain cover from ECGC. Such cover protects exporter against credit risk. e.g. If the importer fails to make the payment of bill, the exporter can be covered from ECGC to the extent of 90 % of the loss. 7) GST formalities (Goods and Services Tax) : The exporter needs to complete GST formalities regarding export trade. 8) Marine Insurance : The exporter has to obtain marine insurance under CIF (cost, insurance and freight) contract. He has to pay necessary insurance premium and obtain insurance policy. 9) C & F agents (Clearing and Forwarding) : In export trade C & F agents are known as custom house agents. These agents are responsible for forwarding the goods. C) Shipment Stage : 1) Processing of Document : Exporter prepares the shipping bill and gets all the documents processed at customs house. 2) Examination of Goods : The C&F agent obtain carting order from the PTA (Port Trust Authority) to cart the goods inside the docks. 3) Loading of Goods : After examining the goods CE (Customs Examiner) issues ‘Let Export’ order. The C&F agent then obtains ‘Let Ship Order’ from Custom Preventive Officer (CPO). The goods are then loaded on ship for which a Mate’s receipt’ i