Internal Trade Class 11 Notes Business Studies

1) Trade

Trade refers to the buying and selling of goods and services. It is an activity that involves the exchange of commodities between buyers and sellers.

2) Internal Trade

Internal trade, also known as domestic trade, refers to the exchange of goods and services within the borders of a country. Here are the internal trade class 11 notes.

It involves the buying and selling of products between traders (wholesalers and retailers) within the same country, as opposed to international trade, which occurs across borders.

3) Features of Internal Trade

1. Geographical Scope: Internal trade operates within the boundaries of a country.
2. No Import/Export Involvement: It does not involve international transactions.
3. Standardized Currency: Transactions in internal trade are conducted using the national currency.
4. Variety of Goods: A wide range of products, both manufactured and raw, are traded.
5. Regulations: Internal trade is governed by national laws and regulations.
6. Transport System: Goods are transported within the country, often using road, rail, or air.

4) Types of Internal Trade

a) Wholesale Trade

Wholesale trade involves the purchase and sale of goods in large quantities. Wholesalers act as intermediaries between manufacturers and retailers. They buy goods in bulk and sell them in smaller quantities to retailers or other wholesalers.

Services of Wholesaler:

1. Services to Manufacturer:
   • Facilitating Large-Scale Production: Wholesalers purchase large quantities of goods from manufacturers, ensuring that production continues in bulk.
   • Bearing Risk: Wholesalers assume the risk of holding inventory, reducing the burden on manufacturers.
   • Financial Assistance: They provide financial support to manufacturers by placing bulk orders, ensuring steady cash flow.
   • Expert Advice: Wholesalers offer valuable market insights and advice to manufacturers regarding demand and pricing.
   • Storage: Wholesalers provide storage facilities for goods, reducing the need for manufacturers to maintain large warehouses.
   • Facilitating Production Continuity: By placing continuous orders, wholesalers ensure a stable flow of goods to the market, aiding in uninterrupted production.
2. Services to Retailer:
   • Grant of Credit: Wholesalers offer credit facilities to retailers, making it easier for them to stock goods.
   • Specialized Knowledge: They provide specialized knowledge about the products, market trends, and customer preferences.
   • Risk Sharing: Wholesalers share the risk of unsold goods by buying in bulk and holding stock.
   • Marketing Support: They assist retailers in marketing goods by offering promotional materials or product discounts.

b) Retail Trade

Retail trade involves the sale of goods in small quantities directly to consumers for personal use. Retailers are the final link in the distribution chain, offering products to customers in convenient locations.

Services of Retailer:

1. Services to Customer:
   • Wide Selection: Retailers offer a wide range of products to meet various customer needs.
   • Regular Availability of Products: They ensure products are regularly available, providing consistency to customers.
   • Provide Credit Facility: Retailers often offer credit facilities to customers, enabling them to purchase goods and pay later.
   • After-Sales Services: Retailers provide services like product returns, repairs, or exchanges, ensuring customer satisfaction.
2. Services to Wholesaler/Manufacturer:
   • Personal Selling: Retailers sell products directly to consumers, enhancing product visibility.
   • Helps in Distribution: Retailers play a crucial role in distributing goods to end customers across various regions.
   • Collecting Market Information: Retailers gather valuable consumer feedback, which helps manufacturers in product development and market strategies.
   • Enabling Large-Scale Operations: By reaching many consumers, retailers enable manufacturers to operate on a larger scale.

Sources of Business Finance Class 11 Notes

c) Types of Retail Trade

i) Itinerants

Itinerant traders are those who do not have a permanent shop and keep moving from place to place to sell their goods.

Characteristics of Itinerant Traders:

• They do not have fixed locations.
• They typically sell goods in small quantities.
• Their business is often low investment and low profit.

Types of Itinerant Traders:

1. Peddlers and Hawkers: These traders move from one place to another, carrying goods in baskets or on carts. They typically sell low-cost products like food, household items, or clothing.
2. Market Traders: They set up temporary stalls or kiosks in markets to sell their goods, usually on a particular day or during specific times.
3. Cheap Jacks: These traders sell low-priced goods, often of inferior quality, through direct sales to customers, either door-to-door or on the streets.
4. Street Traders/Pavement Vendors: They sell products like food or clothes on the streets, often without a fixed location.

ii) Fixed Shop Retailers

Fixed shop retailers have permanent business locations where they sell goods to customers.

Types of Fixed Shop Retailers:

1. Small Shopkeepers:

1. General Store: A store offering a wide variety of daily-use items like groceries, toiletries, etc.
2. Specialty Shops: These shops focus on a specific category of goods, such as books, electronics, or clothing.
3. Street Stall Holders: They operate small stalls on streets, usually offering limited types of products.
4. Second-Hand Goods Shop: These shops deal with used or pre-owned goods like furniture, clothing, or books.

2. Large Retailers:

Departmental Stores

Advantages:

• Wide Product Range: Departmental stores offer a wide variety of products, ranging from clothing and electronics to household goods, all under one roof, making them convenient for consumers.
• Convenience: Customers can find everything they need in a single location, saving time and effort.
• After-Sales Services: These stores often offer services such as returns, exchanges, repairs, and customer assistance, which enhances customer satisfaction.
• Attractive Displays: Products are well organized and displayed, improving the shopping experience.

Limitations:

• High Operational Costs: Departmental stores often have significant overhead costs due to their large size, staff requirements, and maintenance of various departments.
• Impersonal Service: Due to the large size and high volume of customers, the personal attention that some consumers prefer may be lacking.
• Price Range: They may not offer the lowest prices compared to smaller specialized retailers, as their expenses are higher.

Chain Stores

Advantages:

• Economies of Scale: Chain stores benefit from bulk purchasing, reducing the cost of goods. This allows them to offer lower prices to consumers compared to individual stores.
• Brand Recognition: Since chain stores have multiple outlets, they build strong brand recognition and trust among consumers.
• Standardization: Chain stores offer a standardized shopping experience, ensuring consistency in products, pricing, and service across different locations.
• Wider Reach: Chain stores can serve customers in various locations, making their goods more accessible to a larger audience.

Limitations:

• Limited Product Variety: Due to their standardization, chain stores often offer a limited range of products within each category, especially in comparison to specialized or independent stores.
• Lack of Flexibility: The uniformity of chain stores means there is less flexibility to adjust to local market needs or preferences.
• High Competition: Large chain stores face stiff competition from both smaller stores and other chains, making it difficult to maintain profit margins.

Supermarkets

Advantages:

• Lower Prices: Supermarkets typically offer goods at lower prices compared to small independent stores due to bulk purchasing and efficient supply chains.
• Wide Variety of Goods: They offer a broad selection of products, primarily focusing on food and household items, which cater to the everyday needs of consumers.
• Convenience: Supermarkets are usually located in residential areas, making it easier for customers to purchase goods.
• Self-Service: Customers can browse freely and select products without assistance, making shopping faster and more efficient.

Limitations:

• Limited Personal Service: As self-service is the model, customers may not receive the level of personalized service they expect, such as assistance in choosing products or asking questions.
• Limited Non-Food Items: While supermarkets offer a wide range of food items, their variety of non-food products like electronics, clothing, and appliances may be limited compared to specialty stores.
• Pressure on Local Retailers: The widespread presence of supermarkets often leads to the closure of smaller local retailers, impacting small businesses.

Consumer Cooperative Societies

Advantages:

• Lower Prices: Consumer cooperatives offer goods at lower prices as they are owned by the consumers themselves and aim for the welfare of the members, not for profit.
• Profit Sharing: Members of a consumer cooperative share the profits, making it beneficial for those who shop regularly at the cooperative.
• Democratic Control: Consumer cooperatives are managed democratically, with members having a say in decision-making and operations.
• Quality Assurance: Products sold by cooperatives are often of good quality because the focus is on consumer benefit rather than maximizing profit.

Limitations:

• Limited Product Variety: Consumer cooperatives typically offer a more limited range of products than larger commercial stores or chain retailers.
• Slow Decision-Making: Because of the democratic decision-making process, actions may take longer to implement, which can sometimes make it difficult for cooperatives to quickly respond to market changes.
• Limited Reach: Consumer cooperatives are often smaller in scale and are limited in geographic reach compared to large retail chains or supermarkets.

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