11th OCM Chapter 2 Exercise (Trade) Maharashtra Board – Free Resource

11th OCM Chapter 2 Exercise

Chapter 2 – Trade

Q.1 (A) Select the correct option and rewrite the sentences.

1) _____ is the link between producer and retailer.
a) Consumer
b) Wholesaler
c) Manufacturer

2) Price charged by retailers is generally _____.
a) higher
b) lower
c) fixed

3) A wholesaler invest _____ Capital in the business.
a) small
b) large
c) less

4) Retailer is the _____ link in the chain of distribution
a) first
b) last
c) second

5) Retailers supply information to the _____ through wholesalers.
a) manufactures
b) government
c) consumers

6) Major items _____ are chemicals, crude oil and petroleum products, edible oils, electronic goods, gold and silver, pearl and precious stone.
a) exported by India
b) not exported by India
c) imported by India

7) For customs clearance the _____ is prepared by the exporter.
a) carting Order
b) letter of Credit
c) shipping Bill

8) _____ carry goods on their head in baskets or containers.
a) Hawkers
b) Peddlers
c) Cheap Jacks.

9) _____ open their shops on market days i.e. on fixed days.
a) Street traders
b) Market Traders
c) Peddlers

10) _____ retailers deal in particular goods.
a) General Stores
b) Speciality shop retailers
c) Second-hand goods shops.

11) _____ is known as self-service store.
a) Department store
b) Supermarket
c) Multiple stores

Q.1 (B) Match the pairs.

1)

Group A	Group B
a) Departmental Store	1) Carry goods on heads
b) Market traders	2) Uniform Price
c) General shops	3) Business on market day
d) One-price shop	4) Most common shop
e) Peddlers	5) Huge capital
	6) Distribution through branches
	7) Carry goods on carts
	8) Sale used articles
	9) Specialized goods
	10) Authorized dealers

Answers.
a. 5) Huge capital
b. 3) Business on market day
c. 4) Most common shop
d. 2) Uniform Price
e. 1) Carry goods on heads

2)

Group A	Group B
a) Import Trade	1) First step in Import
b) Registration	2) Goods not for own country
c) Entrepot trade	3) Buying goods from other countries
d) Letter of Credit	4) No restrictions
	5) Selling goods to other countries
	6) Creditworthiness of importer
	7) Recovery of dues

Answers.
a. 3) Buying goods from other countries
b. 1) First step in Import
c. 2) Goods not for own country
d. 7) Recovery of dues

Q.1 (C) Give one word/phrase/term for the following statements.

1) A person who moves daily from place to place to sell goods.
Answer: Itinerant Retailer

2) The middleman between wholesaler and consumer.
Answer: Retailer

3) A retail shop which operates through branches.
Answer: Chain stores

4) A shop where all goods are available at same price.
Answer: One price shop

5) A retailer who displays his goods on the road.
Answer: Street traders

6) An order placed by an importer for the supply of certain goods.
Answer: Indent

Solution of other subjects
Solution of all Chapters of OCM
1 – 2 – 3 – 4 – 5 – 6 – 7 – 8

Q.1 (D) State True or False.

1) Wholesaler keeps large stock of goods. (True)

2) Wholesaler deals in small quantities. (False)

3) A retailer has no direct contact with consumers. (False)

4) Supermarket shops offer home delivery facilities to customers. (False)

5) Departmental store located out of the city. (False)

6) Customers cannot bargain in one price shop. (True)

7) Letter of Credit is required for obtaining export license. (True)

8) Buying goods from other countries is known as export trade. (False)

9) Maintaining high quality is necessary to sustain in export business. (True)

Q.1 (E) Find the odd one.

1) General Stores, Hawkers, Cheap Jacks, Peddlers.

2) Departmental Stores, Chain Stores, Market Trader, One Price Shop.

3) Speciality Shops, Secondhand goods shops, Malls, Authorised Dealers.

Q.1 (F) Complete the sentences.

1) The original form of trade was barter.

2) Trade establishes a link between producers and consumers.

3) The wholesaler provides valuable services to manufacturers and retailers.

4) The wholesaler purchases a large quantity of goods from the manufacturers.

5) The wholesaler bears the risk of price and market fluctuations.

6) The wholesaler provides financial support to retailers by way of credit facility.

7) The retailer is the connecting link between the wholesaler and consumers.

8) Supermarket is a large retail organization which mainly sells wide variety of food and grocery items on the basis of ‘self-service’.

9) Chain stores are retail stores owned by a single organization.

10) The shop where the prices of all products or goods are same is known as one price shop.

11) A modern shopping mall is an American term.

12) The Letter of Credit is the safest method of payment in foreign trade.

Q.1 (G) Select the correct option.

1) Wholesaler deals in (small/large) quantity.
Answer: large

2) Departmental store located (in/out of) the city.
Answer: In

3) Customers cannot bargain in (General stores/one price shop).
Answer: One price shop

4) Retailer operates in (global/local) markets.
Answer: Local

5) Departmental store is a (large/small) scale retail shop.
Answer: large

6) Supermarket shop requires (limited/large) capital.
Answer: large

7) Chain stores are retail store owned by (many/single) organization.
Answer: Single

8) The shop where the prices of all the products or goods are (different/same) is known as one price shop.
Answer: Same

Q.1 (H) Answer in one sentence.

1) What do you mean by internal trade?
Answer: 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 shops, exhibitions, etc.

2) Who is known as hawkers?
Answer: Hawkers move from one place to another place, carrying goods in hand cart, moving from the city or place anywhere, where they can sell easily.

3) What is the meaning of peddlers?
Answer: Peddlers are the oldest form of the retailer. Peddlers are those, who carry goods on their heads in baskets or containers.

4) What do you mean by fixed shop retailer?
Answer: Fixed shop retailers are those retailers who do not move from one place to another. They mostly have fixed places.

5) What is meant by small scale fixed retailer?
Answer: The Retailers who conduct their business operations on a small scale and deal in a variety of goods are small scale fixed retailers.

6) What do you mean by large scale fixed retailers?
Answer: 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.

7) What is departmental store?
Answer: A departmental store is a large scale retail shop having different departments (sections) under one roof. It sells a large variety of goods. i.e. food, toys, dresses etc. e.g. Shoppers Stop

8) What is meant by supermarket shop?
Answer: Super Market is a large retail organization which mainly sells wide variety of food and grocery items on the basis of ‘Self-Service’.

9) What is the meaning of chain stores?
Answer: 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.

10) What is one price shop?
Answer: 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.

11) What is mall?
Answer: A Mall is a large enclosed shopping complex containing various stores, businesses and restaurents.

Q.1(I) Correct the underlined word and rewrite the following sentences.

1) When trade activities are conducted between two or more countries, it is called as internal trade.
Answer: External trade

2) Export trade refers to the purchase of good and services from foreign country.
Answer: Import

3) The price charged in departmental stores is comparatively less.
Answer: High

4) Wholesaler requires less capital.
Answer: Retailer

5) Tariff rates of various countries affect the internal trade.
Answer: Foreign trade

Q.1(J) Arrange in proper order.

1) Retailer, consumer, producer, wholesaler
Answer:
a) Producer
b) Wholesaler
c) Retailer
d) Consumer

2) International market, local market, national market, state market
Answer:
a) local market
b) state market
c) national market
d) International market

3) Import stage, Pre-import stage, Post-import stage, preliminary stage
Answer:
a) preliminary stage
b) Pre-import stage
c) Import stage
d) Post-import stage

Q.2 Explain the following terms/concepts.

1) Wholesale Trade
Answer: 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.

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) Retail Trade
Answer: 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.

According to Oxford Dictionary, “Retail is sale of goods to the public in relatively small quantities for use or consumption rather than for resale.”

3) Foreign Trade
Answer: When trade activities are conducted between two or more countries, it is called as ‘Foreign 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.

4) Letter of Credit
Answer: 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.

5) One Price Shop
Answer: 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/-

6) Departmental Store
Answer: 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

According to James Stephenson :
“A big store engaged in the retail trade of variety of articles under the same roof .”

7) General Store
Answer: General store Retailers sell goods that 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.

8) Mall
Answer: A Mall is a large enclosed shopping complex containing various stores, businesses, and restaurants.
A modern shopping mall is an American term in which one or more buildings form a complex.
It is a modern type of shop which enables customers to buy different products from one unit to other units of mall.

Solution of other subjects
Solution of all Chapters of OCM
1 – 2 – 3 – 4 – 5 – 6 – 7 – 8

Q.3 Study the following case/situation and express your opinion.

1) Sonupant purchases his grocery material every month from the nearest Nandulal grocery shop and he purchases wheat, rice and pulses in bulk for whole year from Gorhe and Son’s, Market yard.

i) Who is wholesaler?
ii) Who is retailer?
iii) Any one difference between wholesaler and retailer

Solution:
i) Wholesaler – Gorhe and Son’s Market Yard
ii) Retailer – Nandulal grocery
iii) Wholesaler gets less profit margin as compared to retailer.
The retailer gets more profit margins as compared to wholesaler.

2) Anurag is selling goods to Japan. Kavita is buying goods from USA whereas Ganesh is buying raw material from South Africa and after processing it sells finished goods to Malaysia.

i) Who is exporter?
ii) Who is importer?
iii) What is Entrepot Trade?

Solution:
i) Anurag is exporter.
ii) Kavita is importer.
iii) Entrepot involves importing the goods from one country and reselling these goods to another country.

Q.4 Distinguish between.

1) Wholesaler and Retailer.

Sr. No.	Point of difference	Wholesaler	Retailer
1	Meaning	A person who conducts the wholesale trade is called a wholesaler.	A person who conducts the retail trade is called a Retailer.
2	Capital	Required large capital	Comparatively less capital is required.
3	Link	Links the manufacturer and retailers.	Links wholesalers and customers.
4	Location	Located in Central Market of the city.	Located in various Local Markets of the city.
5	Profit Margin	Less profit margin as compared to retailer.	More profit margins as compared to wholesaler.
6	Prices	Sells goods at lower prices to retailer.	Sells goods at higher prices to consumer .
7	Credit Facility	Offer credit facility to retailer.	Offer credit facility to customer.
8	Warehousing	Requires big warehousing for storing of the goods.	Requires limited warehousing for storing of the goods.
9	Specialization	Specialized in one or a few line of goods.	Specialized in variety of goods.

2) Itinerant and Non-Itinerant Retailers.

Sr. No.	Point of difference	Itinerant Retailers	Non-Itinerant Retailers
1	Meaning	These retailers do not have fixed place of business.	These retailers are those who have a fixed place of their business
2	Capital	Limited capital investment.	Higher capital investment.
3	Stock of goods	They keep limited stock of goods.	They keep large stock of goods.
4	Quality of goods	They sell low quality goods.	They sell quality goods.
5	Variety of goods	They do not offer variety of goods to customer.	They offer variety of goods to customer.
6	Prices	Price is low.	Price is high due to higher overhead cost.
7	Credit facility	They don’t give credit facility to customer.	They provide credit facility to regular customers.
8	Choice of goods	Customers have limited choice for selection of goods.	Customers have more scope for choice of goods.
9	Door to door Service	They offer door to door service.	They do not offer door to door service.

3) General stores and Speciality stores.

Sr. No.	Point of difference	General stores	Speciality stores
1	Meaning	It is a shop dealing with wide range of goods.	It is a shop dealing with specialized products.
2	Location	Located near residential areas.	Located in shopping centers of the city.
3	Prices	Prices of goods are generally low.	Prices of goods are generally high.
4	Type of goods	Day to day required goods are sold.	Only specialized goods are sold.
5	Advertisement	They do not spend on advertisement.	They spend more on advertisement.
6	Variety of Products	Less variety of products.	More variety of products.

4) Departmental stores and Chain store.

Sr. No.	Point of difference	Departmental store	Chain store
1	Meaning	It is large scale retail store having various departments or sections selling different goods under one roof.	It is a retail shop owned, controlled and managed by a single organization selling one line of product, located in different parts of city.
2	Variety of goods	Deals with variety of goods in large scale.	Deals with goods of one particular manufacturer only.
3	Location	It is situated at the central location in the city.	It is situated in different parts of the city and country.
4	Capital	Requires large capital for investment.	Comparatively less capital is required.
5	Price	The price charged is very high.	The price is comparatively less.
6	Operating cost	Operating cost is very high.	Operating cost is low.

5) Import Trade and Export Trade.

Sr. No.	Point of difference	Import Trade	Export Trade
1	Meaning	Import trade refers to the purchase of goods and services from foreign country.	Export trade refers to the selling of goods and services to foreign country.
2	Person involved	The person who is involved in import trade is called an importer.	The person who is involved in export trade is called an Exporter.
3	Objective	To meet the demand for goods that are not available in the domestic country.	To increase the market share or global presence.
4	Example	India buying oil from Gulf countries.	India selling mangoes to gulf countries.
5	Stages	It includes the following stages: a) Preliminary Stage b) Pre-Import Stage c) Import Stage d) Post-Import Stage	It includes the following stages: a) Preliminary Stage b) Pre-shipment Stage c) Shipment Stage d) Post-Shipment Stage

Q.5 Answer in brief.

1) State any four features of one price shop.

Answer: The shop where the prices of all the products or goods are same is known as One Price shop.

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 a 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.

2) State any four services of wholesalers to manufacturers.

Answer:
1) Large Purchase
A Wholesaler purchases a large number of goods from the manufacturer and sells it to retailers by collecting orders from retailers.

2) Storage
A Wholesaler has his own storage facility which he uses to fill the time gap between production and consumption of goods24

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 a short period.

5) Provide Market Information
Manufacturers can get updated information from wholesalers like market conditions, demand, taste, etc.

3) Write any four services of retailers to consumers.

Answer:
1) Regular Supply of Goods
The retailer stores a 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 a 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 facilities to their regular consumer, which helps the consumers to purchase goods as and when they are in need. It helps many consumers who are in short of money. Credit facility by retailer creates large customer base for the business.

4) State any two types of small scale fixed shop retailer.

Answer:
The Retailers who conduct their business operations on a small scale and deal in a 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 stores, laundry, etc.

1) General Stores
General store Retailers sell goods that 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 a 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. deal in books, furniture, and 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 backgrounds purchase goods from them. As the prices of these goods are cheap, they lack quality, durability, and guarantee.

5) Explain the preliminary stage of Import procedure.

Answer:
Import trade refers to the purchase of goods and services from a foreign country.

Preliminary Stage

1) Registration
The Importer has to get himself registered with various authorities as follows:
i) Directorate General Foreign Trade to obtain Import-Export Certificate Number.
ii) Income Tax authority to obtain Permanent Account Number.
iii) Formalities regarding GST.

2) Negotiation
The importer must hold negotiations with overseas suppliers regarding
i) Price of goods
ii) Delivery Schedule
iii) Credit Period
iv) Terms and Conditions regarding sale, payment, and delivery

6) Explain post-shipment stage of export procedure.

Answer:
Export trade refers to the sale of goods and services to a foreign country.

Post Shipment Stage of Export Procedure

1) Shipment Advice
The exporter sends shipment advice to the importer informing him about the dispatch of goods. He also sends a copy of the packaging list, commercial invoice, and non-negotiable copy of loading along with an advice letter.

2) Presentation of Documents
The exporter submits all necessary documents to the bank for negotiation and realization of export proceeds.

3) Realization of Export Incentive
The exporter makes an arrangement to obtain export incentives from the concerned authorities. The incentive includes duty drawbacks, refund of GST if paid, etc.

4) Follow-Up
The exporter should always have a follow-up after export to find buyer’s reactions towards the goods.

Solution of other subjects
Solution of all Chapters of OCM
1 – 2 – 3 – 4 – 5 – 6 – 7 – 8

Q.6 Justify the following statements.

1) Wholesaler sells goods in large quantities.

Answer:
a) 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.
b) The person who is engaged in wholesale trade is known as a wholesaler.
c) A Wholesaler purchases goods from the producer in large quantities.
d) Thus, the wholesaler sells goods in large quantities.

2) Wholesaler maintains price stability.

Answer:
a) Wholesalers buy goods from manufacturers and sell it to retailers so the wholesaler is buyer as well as seller.
b) A wholesaler maintains price stability by balancing supply and demand factors.
c) By supplying regular goods to the retailer, the wholesaler solves the risk of shortage, and price fluctuation is reduced.
d) Thus, the wholesaler maintains price stability.

3) Retailers provide home delivery of goods to customers.

Answer:
a) Retailer is a person who buys goods in smaller quantities.
b) Retailers provide home delivery of goods to the customers at nominal cost or free of cost.
c) This improves the relations between the consumers and retailers.
d) Thus, retailers provide home delivery of goods to customers.

4) Wholesaler performs various marketing functions.

Answer:
a) A Wholesaler carries various marketing functions like warehousing, advertising, sales promotion, etc. on behalf of the manufacturer.
b) They also perform other marketing functions like assembling, transporting, grading, packing, and financing.
c) These functions help the retailers and manufacturers as they can concentrate on the production and selling activities.
d) Thus, the wholesaler performs various marketing functions.

5) Authorized dealer do not have other products of other manufacturers.

Answer:
a) These retailers have authorized dealership of particular manufacturer’s goods.
b) Authorized dealers try to maximize the sale of goods because they get good commission from manufacturers.
c) Authorized dealers do not have products of other manufacturers, except for whom they are
working as authorized dealers.
d) Thus, Authorized dealers do not have other products of other manufacturers.

6) General stores are generally situated near residential areas.

Answer:
a) General store Retailers sell goods that 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.
b) They have a variety of goods in each item.
c) They provide home delivery of goods.
d) Thus, general stores are generally situated near residential areas.

7) Departmental store has a centralized management system.

Answer:
a) A departmental store is a large-scale retail shop having different departments (sections) under one roof.
b) All the departments are organized and managed by one management.
c) In departmental stores all the departments are independent but they are centrally owned, managed, and controlled.
d) All activities of departmental stores are managed at the central level.
e) Thus, the departmental store has a centralized management system.

8) Packing plays an important role in selling the product in the supermarket.

Answer:
a) Packing plays an important role in selling products in the supermarket.
b) Goods are duly packed by giving details of quantity, quality, weight, price, contents, date of manufacturing, and date of expiry.
c) This is helpful in handling the goods and also makes the goods more attractive and durable.
d) Thus, packing plays an important role in selling products in the supermarket.

9) Chain stores sell a limited range of goods.

Answer:
a) Chain stores are retail stores owned by a single organization.
b) Chain stores sell a limited range of goods produced by a particular manufacturer.
c) Each branch of a chain store deals in the same commodity or in the same line of products.
d) This enables the store to give better guidelines to the customers.
e) Thus, chain stores sell a limited range of goods.

10) There is no scope for bargaining in one price shop.

Answer:
a) The shop where the prices of all the products or goods are the same is known as One Price shop.
b) This shop sells a large variety of goods for daily use at low prices.
c) The products irrespective of their size and quality are sold at one common uniform price.
d) The price is fixed in advance.
e) Thus, there is no scope for bargaining in one price shop.

Solution of other subjects
Solution of all Chapters of OCM
1 – 2 – 3 – 4 – 5 – 6 – 7 – 8

Q.7 Answer the following.

1) What are the main features of a wholesaler?

Answer:
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. Wholesalers buy goods from manufacturers and sell them to retailers so the wholesaler is the buyer as well as the seller.

Definition
According to Philip Kotler, “Wholesaling includes all activities involved in selling goods or services to those who buy for resale or for business use.”

Features of Wholesaler
1) A Wholesaler purchases goods from the producer in large quantities.
2) Wholesaler has to take risks in the process of distribution.
3) A Wholesaler deals with one or a 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.

2) Explain the services of retailers to wholesalers.

Answer:
Following are the Services of retailers to Wholesalers:

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 the case of perishable goods like dairy products, fruits, vegetables, pulses, etc.

3) Marketing

If the wholesaler is unable to carry out marketing functions, retailers conduct them. Sometimes he handles transportation on his own. Sometimes he tries to solve shortages problem or advertises for a better sales.

4) Provide Information

The retailer provides information about changing demands, preferences, likes, and dislikes of consumers to the wholesaler.

5) Attract Consumers

Retailers attract consumers by advertising their products. This activity directly helps the wholesaler to sell the product.

6) Create Demand

Through personal salesmanship, retailer attracts consumers’ attention towards new goods and arrivals in the market. To create demand for new goods, the retailer puts new goods on a window display.

3) Explain small-scale fixed shop retailers.

Answer:
The Retailers who conduct their business operations on a small scale and deal in a 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 stores, laundry, etc.

1) Economic Objectives

a) Earning Profit

Profit is required for survival of the business and for its growth.

Types of small-scale fixed retailers

1) General Stores

General store Retailers sell goods that 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.

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 backgrounds purchase goods from them.

3) Authorized Dealer

These retailers have authorized dealerships of particular manufacturers’ 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.

4) Speciality Shops

These retailers deal in a particular line of goods. They keep a wide variety of items of same line of the product. e.g. A toy shop may keep only toys of different types. Other examples of speciality shop retailers are sports materials, ready-made dresses, leather goods, plastic goods, watches, books, etc.

4) Explain the services of wholesalers.

Answer:
The wholesaler provides valuable services to manufacturers and retailers.

A) Services to Manufacturers

1) Large Purchase

A Wholesaler purchases a large number of goods from the manufacturer and sells them to retailers by collecting orders from retailers.

2) Storage

A Wholesaler has its own storage facility which he uses to fill the time gap between the production and consumption of goods.

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 a short period.

5) Provide Market Information

A manufacturer can get updated information from wholesalers 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 the working capital of the retailer.

5) Market Information

Wholesalers provide a variety of information about the 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 advertisements and also promotions of the goods which can help the retailer to increase sales.

5) Explain the different services of retailers.

Answer:
The retailers provide valuable services to wholesalers and customers.

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 sales.

4) Provide Information

The retailer provides information about changing demands, preferences, likes, and dislikes of consumers to the wholesaler.

5) Attract Consumers

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 consumers’ attention towards new goods and arrivals in the market. To create demand for new goods, the retailer puts new goods on window display.

B) Services to Consumers

1) Regular Supply of Goods

The retailer stores a 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 a 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 facilities to their regular consumer, which helps the consumers to purchase goods as and when they are in need. It helps many consumers who are in short of

6) Define import trade. Explain its procedure in detail.

Answer:
Import trade refers to the purchase of goods and services from a foreign country. The procedure for import trade differs from country to country depending upon the import policy, statutory requirements, and customs policies of different countries. In almost all countries of the world import trade is controlled by the government.

Import Procedure

A) Preliminary Stage

1) Registration:
The Importer has to get himself registered with various authorities as follows:

i) Directorate General Foreign Trade to obtain Import-Export Certificate Number.
ii) Income Tax authority to obtain Permanent Account Number.
iii) Formalities regarding GST.

2) Negotiation:
The importer must hold negotiations with overseas suppliers regarding

i) Price of goods
ii) Delivery schedule
iii) Credit Period
iv) Terms and Conditions regarding sale, payment, and delivery

B) Pre-Import Stage

1) Quota Certificate

Certain items are subjected to quota restrictions. The Importer needs to obtain import quota certificate from government authorities.

2) Foreign Exchange Clearance

The Importer needs to obtain foreign exchange clearance from RBI. The Importer should forward the application for the same through his bank.

3) Order Placement

After obtaining foreign exchange clearances from RBI, the importer places an order with the overseas suppliers. This order is called as indent. The importer negotiates the terms and conditions of the import contract and places the order.

4) Letter of Credit (LC)

The exporter normally requests LC. The LC is an undertaking given by the importer’s bank guaranteeing the payment to the exporter on behalf of the importer. The LC is the safest method of payment in foreign trade. Therefore the importer has to obtain LC from his bank in favour of the exporter.

5) Clearing and Forwarding Agent (C & F Agents)

The importer has to appoint C& F agents to undertake various custom formalities and documentation work in respect of import of goods.

6) Shipment Advice

The shipment advice enables the importer to make necessary arrangement for custom clearance and unloading of goods sent by the Exporter.

C) Import Stage

1) Receipt of Document

The importer receives the documents sent by the exporter through his bank. The documents include :
a) Bill of Lading
b) Packing List
c) Commercial Invoice
d) Certificate of Origin
e) Certificate of Inspection etc.

2) Bill of Entry

C & F agents prepare a bill of entry which is required for custom clearance. The bill of entry gives details about number of packages quality of goods, price of goods etc.

3) Delivery Orde

The C & F agent obtain a delivery order from the shipping company. The shipping company gives the delivery order on payment of freight. Delivery order helps to unload the goods from vessel.

4) Custom Clearance

The purpose of custom clearance is to get the document certified by custom authority. The document includes bill of lading, bill of entry, and packing list.

D) Post- Import Stage

1) Port Trust Dues

The C & F agents has to make payments of port trust dues.

2) Custom Duty

The C and F agent has to make payment to custom authorities in respect of importing goods.

3) Insurance Premium

The Importer has to make payment under FOB (Free on Board) contract.

4) Payment of Freight

The Importer has to make payment of freight under shipping contract.

5) Exporter’s Payment

The importer has to make payment to the exporter as per the terms of contract. The exporter draws a bills of exchange for the payment.

6) Follow up

The importer needs to take follow up in respect of import of goods. If there are any discrepancies importer should inform to the exporter.

7) What is export trade? Explain its procedure in detail.

Answer:
Export trade refers to the sale of goods and services to a foreign country.

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 authorities like EPC (Export Promotion Council) and GST authority.

2) Appointment of agent

After registration, the exporter appoints agents or sales representatives abroad to book orders. The exporter may also open a sales office in a 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 the importer to issue a letter of credit in his favour. The receipt of ‘letter of credit’ from the importer’s bank will clear the foreign exchange and other restrictions.

3) Pre-shipment Finance

The exporter obtain pre-shipment finance from his banker to meet working capital requirement.

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 exporters 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 a necessary insurance premium and obtain an 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 the 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’ is obtained. The C&F agents approach shipping companies and obtains a Bill of Lading.

D) Post Shipment Stage

1) Shipment Advice

The exporter sends shipment advice to the importer informing him about dispatch of goods. He also sends copy of packaging list, commercial invoice and non-negotiable copy of loading along with advice letter.

2) Presentation of Documents

The exporter submits all necessary documents to the bank for negotiation and realization of export proceeds.

3) Realization of Export Incentive

The exporter makes an arrangement to obtain export incentive from the concerned authorities. The incentive includes duty drawbacks, refund of GST, if paid etc.

4) Follow-Up

Exporters should always have follow up after export to find buyer’s reactions towards the goods.

Solution of other subjects
Solution of all Chapters of OCM
1 – 2 – 3 – 4 – 5 – 6 – 7 – 8

11th OCM Textbook Solutions

Chapter Name	Solution Link
1) Introduction of Commerce and Business	Click Here
2) Trade	Click Here
3) Small Scale Industry and Business	Click Here
4) Forms of Business Organisation – I	Click Here
5) Forms of Business Organisation – II	Click Here
6) Institutes Supporting Business	Click Here
7) Business Environment	Click Here
8) Introduction to Management	Click Here

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