CBSE Class 11 Business Studies Notes : Internal Trade

1. Internal Trade When buying and selling of goods and services takes place within the geographical limits of a country. It is known as internal trade.

The main features of internal trade are

(i) The buying and selling of goods and services takes place within a country.
(ii) The payment are made and received in the home country only.
(iii) There are no or very few formalities to be completed by the traders.

2. Types of Internal Trade Internal trade can be classified into two categories.

(i) Wholesale Trade It refers to the trade in which goods are sold in large quantities. The person who carries on wholesale trade is known as wholesaler.A wholesaler provides many valuable services to the manufacturer as well as the retailer.

(a) Services to Manufacturer

• Facilitating large scale production
• Bearing risk
• Financial assistance
• Expert advice
• Help in marketing function
• Facilitate production continuity
• Storage

(b) Services to Retailer

• Availability of goods
• Marketing support
• Grant of credit
• Specialised knowledge
• Risk sharing

(ii) Retail Trade Retail trade refers to sale of goods in small lots to the final consumers. A retailer buys goods from a wholesaler and sells them to the consumer.

(a) Services to Consumers

• Ready or quick supply
• Wide variety
• Guiding consumers
• Demonstration and after sale services
• Home delivery
• Convenient location
• Credit facility

(b) Services to Wholesaler and Manufacturer

•  Ready market
• Providing information
• Risk bearing
• Distribution of goods to distant places

3. Classification of Retailers

Retailers can be classified on the following basis

(i) Size
(ii) Product mix
(iii) Pricing
(iv) Service level
(v) Form of ownership

4. Types of Retail Trade Keeping in mind all the above criteria, that is size product mix, pricing and service level, the retail trade can be classified in to the following categories

(i) Itinerants retailers
(ii) Fixed shop retailers

5. Itinerants Itinerants refers to retailers who have no fixed place of sale. They move from one place to another in search of customers.

6. Types of Itinerants

(i) Hawkers and Peddlers Hawkers and Pedlars moves from street to street in search of customers.

The main features of hawkers and pedlars are

(a) They sell a variety of goods such as fruits, vegetables, toys etc.
(b) They deal with non-branded and local items.
(c) They supply the goods at the door step of the customer.

(ii) Periodic Market Trader These traders sell their goods on fixed days in different market places. Their weekly market are fixed

The main features of periodic market traders

(a) They sell their goods in the weekly market.
(b) They deal in low price and low quality goods.
(c) These traders also set up shops on the occasion of Diwali, Christmas, etc.

(iii) Street Traders These retailers display their articles on busy street corners, pavements, bus stands etc.

The main features of street traders are

(a) They generally operate near public places such as railway stations.
(b) They deal in a variety of goods such as towels, things of daily use mirrors etc.

(iv) Cheap Jacks They display their goods in hired shops or intents for a temporary period in different localities.

The main features of cheap jacks are

(a) They hire small shops.
(b) They shift from locality depending upon the prospectus of business.
(c) They deal in low price, household articles.

7. Fixed Retailers The retailer having a fixed place of sale are known as fixed shop retailers.

Fixed shop retailers can be further classified into t\VO categories

(i) Small scale fixed retail shops
(ii) Large scale fixed retail shops

8. Small Scale Fixed Retailer

(i) General Stores General stores are small shops located in residential areas.

The main features of general stores are

(a) They have a large variety in each line of product.
(b) They provides free home delivery, credit facility.

(ii) Single Line Stores Single line stores are small shops which deal with one line of products.

The main features of single line stores are

(a) These stores deal with one line of products.
(b) These stores deal in a variety of goods in that line of product.

(iii) Speciality Stores These stores deal in a particular type of product under one product line only.

The main features of speciality stores are

(a) These stores are specialised in one product only.
(b) They keep all the brands of that product.

(iv) Street Shops These shops are situated at street crossings, They are also known as street stalls

The main features of street shops aTe

(a) These shops have a limited space.
(b) These retailers display their goods on tables, stands etc.

(v) Second Hand Goods Shops These shops deal with second-hand goods or used articles such as books.

The main features of second- hand good shop

(a) These shops sell used goods.
(b) The goods are generally priced low because these are used goods.

(vi) Seconds Shops There are the shops to sell goods which are not produced according to the required specification.

The main features of second-hand goods shop

(a) These shops deal in the products which have some manufacturing defect.

(b) Goods are sold at a heavily discounted price.

9. Large Scale Retailers Large scale retailers deal in a large stock of goods and purchase goods in bulk. Features of large scale retailers are.

(i) They require a huge investment.
(ii) They have large size show rooms to sell goods.

The most common forms or types of large scale retailers are

(a) Departmental stores
(b) Multiple shops or chain stores
(c) Mail order retailing
(d) Consumer co-operative stores
(e) Super markets
(f) Franchise

10. Departmental Stores A departmental store is a large retail showroom having a number of departments under one roof each department specialised in one line of product.

(i) Advantages

(a) Convenient shopping
(b) Central location
(c) Economies of scale
(d) Elimination of middleman

(ii) Limitations

(3) High operating cost
(b) Lack of personal attention
(c) High price
(d) Not located in residential colonies
(e) Huge capital

11. Multiple Shops Multiple shops refer to a number of identical retail shops located in different parts of the city.

(i) Advantages
(a) Economies of scale
(b) Standardised products
(c) Public confidence
(d) Division of risk
(e) No, bad debts

(ii) Limitations

(a) Limited variety
(b) Lack of personal touch
(c) Inflexibility
(d) Divided attention
(e) No facilities

12. Mail Order Retailing In mail order retailing seller contact the potential buyers through advertisements and mail publicity

(i) Advantages

(a) Limited capital
(b) Convenience
(c) Wider market
(d) No, bad debts
(e) Elimination of middleman

(ii) Limitations

(a) No personal contact
(b) No personal inspection
(c) Limited variety
(d) Postal delay
(e) Heavy advertising cost

13. Consumer Co-operative Store It can be defined as “A voluntary association of persons based on co-operative principles by buying in common and selling in common”.

(i) Advantages

(a) Reasonable prices
(b) Low operating cost
(c) Cash sales
(d) Economies of scale
(e) Benefits from government

(ii) Limitations

(a) Limited capital
(b) Inefficient management
(c) Lack of incentives
(d) Lack of storage facilities

14. Super Markets Super market are organised by co-operative societies as well as by private traders.

(i) Advantages

(a) Wide choice
(b) Low price
(c) No, bad debts
(d) Convenience in shopping

(ii) Limitations

(a) No credit
(b) Lack of personal touch
(c) High cost
(d) Mis handling of goods
(e) Limited scope

15. Vending Machines A vending machine is a new form of direct retailing. It is a machine operated by coins or tokens. The buyer inserts a coin or token in the machine and receive a specific quantity of product from the machine.

(i) Advantages

(a) Buying round the clock is possible.
(b) The customer gets fresh supply of goods.
(c) No, requirement of salesman.

(ii) Limitations

(a) Initial investment to install the machine is quite high.
(b) Machine requires regular repair and maintenance.
(c) Coins of exact shape and size are required to operate the machine.

16. Role of Commerce and Industry Association is in promotion of internal trade.

(i) Interstate movement of goods
(ii) Octroi and other local levies
(iii) Harmonisation of sales tax structure and value added tax
(iv) Marketing of agro products and related issues
(v) Weights and measures and prevention of duplication
(vi) Excise duty
(vii) Promoting sound infrastructure
(viii) Labour legislation