NCERT Notes for Class 11 business studies Chapter 10 INTERNAL TRADE

Class 11 business studies Chapter 10 INTERNAL TRADE

NCERT Notes for Class 11 business studies Chapter 10 INTERNAL TRADE, (business studies) exam are Students are taught thru NCERT books in some of state board and CBSE Schools.  As the chapter involves an end, there is an exercise provided to assist students prepare for evaluation.  Students need to clear up those exercises very well because the questions with inside the very last asked from those.

Sometimes, students get stuck with inside the exercises and are not able to clear up all of the questions.  To assist students, solve all of the questions and maintain their studies without a doubt, we have provided step by step NCERT Notes for the students for all classes.  These answers will similarly help students in scoring better marks with the assist of properly illustrated Notes as a way to similarly assist the students and answering the questions right.

NCERT Notes for Class 11 business studies Chapter 10 INTERNAL TRADE

Class 11 business studies Chapter 10 INTERNAL TRADE


  • Trade is the nucleus of commerce.
  • Trade means buying and selling of goods and services for a profit.
  • Trade is of two types – Internal trade and external trade.
  • This chapter discusses the meaning and nature of internal trade and explain its different types.

Internal Trade

  • Trade which takes place within a country is called internal trade.
  • It is also called home trade or domestic trade.
  • In such type of trade both buyer and seller belongs to the same country.
  • The payment is made in their own national currency.
  • In internal trade, trader can use any mode of transport for carrying the goods.

Internal trade is of two types:-

  1. Wholesale Trade
  2. Retail Trade

1-  Whole Sale Trade

  • Wholesale trade means buying of goods in large quantities from producers and selling them in smaller quantities to the retailers.
  • Wholesaler acts as a connecting links between the producer and the retailer.
  • A wholesaler generally specializes in the purchase and sale of a particular line of goods.
  • The main role of a wholesaler is breaking the bulk, ie, buying goods in large quantities and selling them in small quantities.

Producer → Wholesaler → Retailer

Functions of Wholesaler

1- Buying and Assembling

  • The wholesaler buys and assembles goods from different producers and kept them in stock for sale to retailers.

2- Breaking the bulk

  • They purchase goods in large quantity and repack them in small packet for easy delivery to retailers.
  • It is more convenient to retailers.

3- Transporting

  • Wholesalers firstly moves the goods from the producer to his godown and secondly from there to the retail shop.
  • He saves transportation cost through bulk transportation of goods.

4- Risk Bearing

  • Wholesalers assume the risk arising out of change in demand, spoilage, destruction of goods by fire, theft etc. in the course of transportation or storage.

5- Financing

  • Wholesalers provide finance to both manufactures and retailers.
  • Wholesalers purchase goods on cash basis from the manufactures and sell them to the retailers on credit basis.

6- Market Information

  • They collect information about market conditions from retailers and pass it to the producers.
  • They also give information about the new products to the retailers.

7- Pricing

  • The wholesaler fixes the prices of the goods he deal in, and based on this, the retailer determines the consumer price.

8- Grading

  • Wholesalers sort out goods on the basis of quality, size, content, design etc.
  • This is called grading.

Services of Wholesalers

The wholesalers render valuable services to the producers and retailers.

Services to manufactures (Producers)

1- Provide Ready Market

  • They provide ready market to the goods of manufactures by placing bulk orders.

2- Concentration of production

  • A wholesaler relieves the producer from the botheration of finding buyers for his goods.
  • In the absence of the wholesaler, the producer has to deal with numerous retailers.
  • This is more complex and time consuming process.

3- Provide storage facility

  • Producers do not have to make arrangements for warehousing because goods are lifted by wholesalers immediately after they are produced.
  • They take full responsibility for storing the goods.

4- Provide finance

  • Wholesalers make ready payment and sometimes even advance payment to the manufacturer.
  • It enables the manufacture to continue the production without interruption.

5- Economics of scale

  • A wholesaler buys goods in bulk and thereby enables the manufacturer to carry on large scale production.
  • Large scale production results in lower cost of production per unit.

6- Market Information

  • Wholesaler collects information regarding tastes and fashion of consumers from the retailers and passes it on to the producers.
  • Such information enables the manufactures to regulate production in accordance with the changing requirements of the market.

Services to Retailers

The wholesalers render the following services to retailers.:-

1- Provide credit facility

  • Wholesalers grant liberal credit facilities to retailers.
  • As a result, retailers can carry on a large volume of business even with a small amount of working capital.

2- Warehousing

  • The wholesalers stock the goods and supply them to the retailers as and when they are required.
  • Hence there is no need for the retailers to keep goods in their own warehouse.

3- Risk bearing

  • The wholesalers assume most of the risk connected with marketing such as fluctuation in prices, loss of goods during transits and storage.
  • This reduces the risk of retailers.

4- Expert advice

  • A wholesaler is an expert and specialist in his line of business and he is in a position to give advice to retailers about various matters of his product.

5- Sources of ready supply

  • A wholesaler is always well stocked with different types of goods.
  • Therefore, the retailers are assured of quick and regular supply of their required goods from time to time.

6- Information about new product

  • A wholesaler is in constant touch with producers.
  • Therefore, he has up to date information about new products and new verities of existing products.
  • He passes on such information to retailers.

Retail Trade

  • Retail trade is the final stage in the distribution of goods.
  • It means sale of goods in small lots to the final consumer.
  • A retailer buys goods from wholesalers and sells them in small quantities to the ultimate consumers.
  • He serves as a link between the wholesalers and ultimate consumers.
  • Retailer stocks a wide variety of goods to meet the requirements of his customers.
  • Retailer being directly and intimately in touch with the consumers he is the last link in the chain of distribution.
  • The functions of retailer begin where the functions of wholesaler end.

Functions of Retailers

A retailer performs a number of important marketing functions. They are :-

1- Assembling goods

  • A retailer purchases a wide variety of goods from different producers and stocks them to meet the requirements of his customers.

2- Convenient Location

  • Retailers locate their business in convenient places, generally nearest to the residential areas.
  • Hence, consumers find it easy to make their purchase from retail shops without travelling long distances.

3- Personal Selling

  • Sales promotion is most effective through retailers.
  • As he has direct contact with the customers, he can advice and guide them in selection of goods and can easily persuade them to buy the goods.

4- Provide market information

  • Retailers are in direct personal touch with consumers, they are in a position to give correct market information to wholesalers and manufactures.

5- Financing

  • Retailers generally extend credit facilities to their regular customers.

6- Risk bearing

  • Even though the retailer supplies goods in small quantities, he has to bear the risk of loss due to change in fashion, price, theft, fire etc. of goods.

7- Personal and after sales service

Sometimes retailers provide free home delivery to  battract consumers.

In case of certain products, supply of spare parts, repairs etc. shall also be offered by retailers.

Services of Retailers

The services of retailers can be classified under two heads.

  1. Services to manufacturers / wholesalers
  2. Services to Consumers

Service to Manufactures/ Wholesalers

1- Ready market

  • Retailers provide a ready market for goods at wholesalers and manufactures.
  • They provide a sales outlet for different types of products.

2- Popularized new products

  • They popularize new products through wind display, personal selling, exhibition etc.

3- Providing market Information

  • The retailers, being in close touch with the ultimate consumer, is in a position to give reliable market information to the manufacturer.

4- Sales promotion

  • Sales promotion measures like free gifts coupons etc. can be effectively implemental with the help of retailers.
  • Retailers can easily influence the buyer to purchase a particular product.

Services to Consumers

1- Ready stock

  • Retailers keep ready stock of a wide variety of goods, in his absent the consumer want to store them.

2- Selection of goods

  • The retailer has a large variety of goods according to the taste and fashion of consumers.

3- New product information

  • The retailer brings new products and new verities to the notice of the customers by proper display and personal selling.

4- Freedom to buy small quantities

  • The retailers facilitate the customers to buy goods small quantities according to their requirements and ability.

5- Credit facilities

  • Retailers often supply goods on credit to their regular customers.

6- Provide choice

  • Retailers keep different verities of goods of different producers.
  • This enable the consumers to select goods according to their choice.

Difference between Wholesalers and Retailers

Basis of Difference



1. Scale of business

Organised on a large scale

Organised on a small scale

2. Amount of capital

High capital is required

Comparatively less capital is


3. Direct contact

Direct contact with


Direct contact with consumers

4. Source of supply



5. Link

Link between Manufacturer

and Retailer

Link between wholesaler and


6. Specialisation

Specialisation in one or two

lines of goods

No such specialization. He deals

verities of goods in small quantities

7. Location

Location of business is not


Location of business is important,

usually in residential areas.

8. Dealing in goods

Deals in large quantities

Goods are purchased and sold in

small quantities.

9. Area covered

Large area covered

Relatively small area-local market

Classification of Retailers

Retailers can be broadly classified into two.

  1. Itinerant Traders
  2. Fixed shop Retailers

1- Itinerant Traders

  • These traders are retailers without shops.
  • They do not have fixed shops.
  • They deal in low priced commodities and move from one place to another place.
  • Their special feature is simple and easy formation, low investment and personal touch with business.
  • Itinerants include hawkers, peddlers, cheap jacks, and street and market traders.

(a) Hawkers and peddlers

  • Hawkers and peddlers are the oldest form of retailers.
  • They are petty traders who carry the products on bicycle, a hand cart, a cycle rickshaw or on their heads.
  • Hawkers carry goods on vehicles while peddlers on their backs or heads moving from place to place to sell their merchandise/products at the door steps of the consumers.
  • They generally deal in cheap, non standard commodities such as fruits, vegetables, toys, pen, ice creams, utensils etc.
  • As these traders reach the consumers themselves, so it is very convenient for housewives and general public to purchase goods from them.
  • Prices charged by them is comparatively lower than the prices of commodity in the market, because they need not establish and maintain costly shop.

(b) Market traders

  • They are small retailers who open their shops at different places on fixed dates, such as every Saturday or Sunday.
  • These retailers move from one market to other market.
  • These traders may be dealing in one particular line of merchandise, say readymade garments, toys, crockery etc.
  • They are mainly catering to lower income group of customers and deal in low priced consumer items of daily use.

(c) Street traders

  • Street traders are small retailers who are commonly found at places where huge floating population gathers.
  • They sell consumer goods of daily use near bus stand, railway station, parks etc..
  • They sell goods like books, pens, readymade garments, magazines etc.
  • For consumers it is very convenient buying because they pick up required articles while they are on their way to their destination.
  • They are different from market traders in the sense that they do not change their place of business so frequently.

(c) Cheap Jacks

  • They do business in temporarily rented shops or sheds and move to other localities as opportunities arises.
  • These traders do not stick to a particular place of business.
  • But change of place is not as frequent as in case of hawkers, peddlers or market traders.
  • They deal in cheap consumer items the like fruits, vegetables, sweets, etc.
  • Some of them move from exhibition to exhibition festivals to festivals etc.
  • Their main aim is to avail of the local opportunities.

2- Fixed shop retailers

  • Fixed shop retailers have fixed place of business.
  • They maintain permanent establishment to sell their merchandise.
  • They, therefore, do not move from place to place to sell their merchandise.
  • Compared with itinerant traders, fixed shop retailers have greater resources and operate on a relatively large scale.
  • These shops may differ as regards their size and scale of business.

Difference between Itinerant Traders and Fixed Shop Retailers

Itinerant Traders

Fixed Shop retailers

No fixed place of business

Fixed place of business

Small Scale

May be small or large scale

Move from place to place

They do not move from one place to another

Generally dealing in single line of product

Generally dealing in different line of products

Comparatively lower credibility in the mind of customers

Greater credibility in the minds of consumers because fixed shop retailers are in a position to provide greater services like guarantees,repairs,spares etc.

Fixed shop retailers can be classified into two distinct types on the basis of their size.

(1) Fixed Shop Small Scale Retailers (2) Fixed Shop Large scale Retailers

Fixed Shop Small Scale Retailers

They operate on small capital at a fixed place. They are mainly of six kinds:.

a) General stores

  • General stores are most commonly found in a local market and they generally deal a large variety of products required to meet the day to day needs of the customers.
  • Most of the customer products are available at one shop.
  • Hence consumers can save time and effort in shopping.
  • Most of their customers are residents of the same locality.
  • They generally provide credit facility to some of their regular customers.
  • Limited choice to the customers is the major drawbacks of general stores.

b) Single line stores

  • Such stores deal in one line of goods.
  • Medical stores, cloth stores, book shops, jewelry shops etc. are examples of these stores.
  • A textile shop, say, pulimootil silk house, deals in all types garments such as ladies wear, gents wear, kids wear etc.
  • They often stock goods of different styles , qualities, sizes, designs etc.

(c) Specialty shops

  • These types of stores becoming very popular in urban areas.
  • Specialty shop specialize in a single product of a certain line.
  • Shops dealing in children’s book or kids wear, men’s wear, college books etc. instead of all types of books or garments.
  • Eg: Hello Kids-shop for kids, K.P Chacko Kids Jewelry

(d) Street shops

  • These small retailers are commonly found at street crossing or other places where flow of traffic is heavy.
  • These stalls are wooden shops, sometimes placed on tables or platforms having shelves and stands.
  • These stores generally sell low priced consumer goods.
  • They sell goods like magazines, pens, bread, toys etc. Travelling pubic usually depend on these shops.

(e) Second hand Goods shop

  • These retailers deal in second hand or used goods such as books, furniture, car, cloths etc.
  • They sold goods at lower prices.
  • People who can’t afford to buy new articles, generally becomes their customers.

(f) Second shops

  • These are retail shops which are selling goods which have some manufacturing defects.
  • Such goods can’t be sold along with the goods which are produced according to the required specifications.
  • They are known as second shops and the goods they are dealing as second goods.
  • These goods are usually sold at discounted prices.
  • Ease formation, flexibility in operation, direct and personal services, limited capital managerial resources etc. are the main advantages of small scale retail organisations.

Large Scale Retailers

Large scale retailing is the retail trade involving operations on a large scale and the sale of good in small quantities. The most common forms of large scale retailing are.

  1. Departmental stores
  2. Multiple stores/ Chain stores
  3. Mail order Houses
  4. Consumer co-operative stores
  5. Super Markets
  6. Vending machines

a) Departmental stores

  • A departmental store is a large scale retail organization offering a wide variety of products, classified into well defined departments, aimed at satisfying every customer’s need under one roof.
  • A departmental store is a combination of several stores under one roof and unified control.
  • One department deal only one line of goods.
  • There may be separate department for books, furniture, cloth, medicine, electronics etc.
  • Departmental store sells everything from ‘a pin to elephant’.‘ In departmental store the consumers are likely to spend more time while making their shopping.
  • So they provide services like rest rooms, restaurants, telephone free home delivery etc.
  • They are generally organized as Joint Stock Company.
  • In India real departmental stores have not yet come in a big way in the retailing business.

Eg Spencers in Chennai


  1. The size of these stores is generally very large, so they are generally formed as joint stock companies.
  2. These are generally located at a central place in the heart of a city.
  3. A number of retail shops under one roof and one management.
  4. A wide variety of products are available from one departmental store.
  5. The products are arranged in separate departments. Each department deals only one line of product. For eg. Books, furniture etc.
  6. It offers various services and facilities to the consumers like restaurant, travel and information bureau, telephone booth etc. to satisfy the needs of richer and better class of population.
  7. Centralized purchase by purchase department and sales are centralized in different departments.

Advantages of Departmental stores

1- Central location

It is generally established at the center of the city, they attract large number of customers.

2- Shopping convenience

It enables the consumers to buy all their requirements at one place. It saves their time, energy and money.

3- Economies of large scale operation

As it is organized on large scale the economies of large scale operations such as economy in purchasing, transporting, advertising etc can be enjoyed.

4- Consumer services

Free home delivery, restaurants, reading rooms, telephone booth etc. in the store are added attraction to the consumers.

5- Wide choice
  • Consumers can select products of their choice from large stock of different brands.
  • They are assured of high quality of goods purchased by expert’s buyers from the best manufacturers.
6- Mutual Advertisement
  • As all departments are under one roof there is economy in advertising.
7- Risk distribution

If there is a loss in one department, it may be compensated from the earnings of the other departments.

8- Promotion of sales

They are in a position to spend considerable amount of money on advertising and other promotional activities, which help in boosting their sales.

Disadvantages of departmental stores.

1- Lack of Personal attention

As it has to deal with large number of customers, it is difficult to give personal attention to customers.

2- High prices

Due to high cost of operations, the prices charged by departmental stores are comparatively high.

3- High operating cost

High salary to expert, huge rent, expensive services etc. increases the operating cost.

4- Location disadvantages

The number of departmental stores is limited and they are located at central places, so common man finds it difficult to visit these stores for purchasing goods of day-to-day needs.

5- Lack of effective Control

As it works through a large number of departments it creates the problems of effective control and supervision.

b) Multiple shops (Chain Stores)

  • Multiple shop is a large scale retail organization with a number of branches at different places under one ownership and management and dealing in one line of product.
  • These stores are identical in their appearance, sign boards and interior decoration.
  • These groups of branches are known as ‘multiple shops’ in Europe and ‘Chain stores’ in US.
  • Maveli stores, Bata shop, Usha sewing machines etc. are examples for multiple shops functioning in India.
  • Branches of the shop are located throughout the nation.
  • They specializes in one or two lines of goods.
  • The goods required by the branches are supplied by the head office.
  • The branches only sell the goods at the prices fixed by the head office on cash basis.
  • Chain stores completely avoid middlemen.
  • The idea behind the formation of chain stores is to eat up the profit at the manufacturing and sale stage of goods.
  • Chain stores may be established by a manufacturer or by a merchant.

Examples. Bata shoe stores, McDonald etc.

Features chain stores

  1. It deals only one or two lines of product.
  2. Each branch deals the same type of goods.
  3. There is uniformity in shop design and lay out.
  4. It has centralized management purchasing and pricing.
  5. It’s aim is to eliminate middleman.
  6. It works on the basis of cash and carry principle.
  7. It has centralized buying and decentralized selling.

Advantages chain stores

1- Economies of buying
  • As all purchases are made by the central office for all branches.
  • They enjoy the gain of large scale buying such as higher discount, lower rates, less transportation cost, advertisement etc.
2- No bad debts
  • The multiple shop sells goods mostly on cash basis. Hence there is no risk of bad debts.
3- Low cost of operation
  • The economy in large scale buying, centralized management, economy in advertisement, cash sales etc. will help the store to operate at a low cost.
4- Public confidence
  • All the branches of the shop sell standard goods at uniform price.
  • This creates public confidence.
5- Flexibility
  • If one store runs out of stock, goods can be easily transferred from a nearby store belonging to the same chain.
  • Such inter – branch transfers help to avoid loss due to shortage or surplus of stock.
6- Economy in advertisement
  • There is economy in advertisement because it is done by the head office and not by the branches.
7- Better turnover
  • Multiple shop attain quick and better turn over by locating branches all over the country.
8- Easy identification of stocks
  • Chain shops have uniform external appearance and interior display, so it can be easily identified even by ordinary illiterate persons.

Disadvantages of chain stores

1- Absence of choice
  • As multiple shops deal in limited line of products, generally one brand, so they can’t offer choice.
2- No credit facilities
  • No credit facilities are provided by these shops to customers.
  • This would affect the volume of sales of the shop.
3- No personal contact
  • The company and the customers have no direct contact as the business of the branches is managed by the salaried branch manager.
4- Lack of flexibility
  • Chain shops are centrally controlled.
  • As such, there is no scope for branch managers to adjust prices, market techniques etc. to exploit local needs and opportunities.
5- No initiative
  • The branch manager has no initiative of his own.
  • It is centrally controlled and the branch Manager has little powers.
  • He can’t change the product line or marketing technique etc.

Difference between Departmental stores and Multiple shops

Basis of differences

Departmental stores

Multiple shops

1. Types of goods

Deals in all types of goods

Deals in limited line of goods

2. Location

Located at central place

Located at a number of places

3. Transferability

of goods

There is no scope for mutual transfer of goods from one department to another.

Goods can be transferred from one branch to another.

4. Pricing

Prices charged in a departmental store are not fixed and uniform.

Prices charged in chain stores are uniform and fixed.

5. Supplier

They collect the products of various manufacturers.

They deal in products of only one manufacturer.

6. Services

They provide various services to customers like free home delivery to goods, rest rooms, telephone etc.

No such services are provided by multiple shops.

7. Risk

Greater risk departmental flexibility.

is stores.

involved There is

in no

In chain store risk is low as unprofitable branches can be closed or shifted to some other locality.

8. Types of


It attracts customers belonging to higher income group.

They attract





9. Credit sales

Departmental stores usually credit facilities to regular customers.

Credit facilities are not offered.

10.Size of stores

It requires large building to accommodate several departments.

It needs small size of shops.

11. Satisfaction of needs.

It satisfies almost all needs of customers as they provide varying of goods.

It meet only limited needs of the customers because they del only limited line of products.

(c ) Mail order business

  • Mail order business is a form of retail business where they sell their merchandise through mail.
  • There is generally no personal contact between the buyers and the sellers in this type of trading.
  • Under mail order business for obtaining orders, potential customers are approached through advertisement in news papers, magazines and TV, catalogues, and price lists sent to them by post.
  • All information relevant to the products are described in the advertisement.
  • On receiving orders, the mail order houses packs goods and send parcels by V.P.P.(Value Payable Post).
  • The postman delivered goods to the customer on receipt of payment.
  • Thus, mail order business is shopping by post from the customers view point and ‘selling by post’ from the sellers view point.

There can be different alternatives for receiving payments:

  1. Customers may be asked to make full payment in advance
  2. Value Payable Post (VPP)-under this system goods are sent through post and are delivered to the customers only on making full payment for the same.
  3. Goods may be sent through a bank. Bank handed over the goods to the buyer only after he makes full payment.


  1. The whole business is conducted by post. There is no face – to- face contact between the seller and the buyer.
  2. It may be started at any where even at home. Location of business is not important.
  3. It may be started with less capital.
  4. There is no need to keep stock. It need to keep stock. It need to purchase goods only after getting orders.
  5. No middlemen are involved.

Advantages of mail order business

  1. Limited Capital : –This type of business can be started with limited capital as it does not require huge buildings, fixtures and fittings and stock of goods.
  2. Convenience in buying :– Goods are available at the door steps of customer. Hence it is free from troubles, inconveniences and expenses of going to bazar.
  3. Avoidance of middlemen:- Avoidance of middle man help in reducing the cost of marketing.
  4. No bad debts :- There is no risk of bad debts as sales are made on cash basis.
  5. Lower cost :- Elimination of middle man result in avoiding expenses like sales man salary, shop maintenance etc. It makes possible to fix a reasonable price or lower prices.
  6. Wider scope:- Area of operating is very wide. Even international trade is possible.
  7. Avoidance of ever stocking of goods ;- Goods are collected only after receiving the order. Hence there is no need for stocking large quantities of goods.

Disadvantages of mail order business

  1. Heavy expenses on advertising: – Mail order business depends on advertisements. It has to spend a large amount on advertisement as compared to other forms of retail business.
  2. Absence of personal contact: – There are no direct contacts with the buyer and seller.
  3. No Personal inspection: – Buyer can’t inspects the goods before buying it.
  4. Not suitable for all items: – Only limited type of goods can be sold on this basis.
  5. Delay in delivery: – Goods are not available in due time.
  6. Absence of credit facility :- Goods are sold only on cash basis. Credit facility is not available.
  7. Unsuitable to illiterate class: – Mail order business is based on advertisement. It is not suitable for illiterate class as they are unable to know about the product.


  • Consumers co-operative store is a large scale retail organization owned, managed and controlled by consumers themselves.
  • The objective such organization is to eliminate middlemen and thereby reduce the cost of merchandise.
  • Consumer co-operative store deals all type of consumer goods of daily use such as grocery stationery, utensils dress materials etc.
  • It purchases goods in bulk, and sells in small lots to customers.
  • The profit earned by them are utilized to declare bonus to members and strengthening the general reserve and general welfare funds, or similar funds for social and educational benefits of the members.
  • The minimum number of members to form a consumer cooperative store is 10.
  • The capital for this store is raised by the issue of shares to its members.
  • The elected managing committee manages day to day activities.
  • Each member has single vote irrespective of the number of shares held by them.

Advantages of consumers co-operative stores

1- Easy Formation

Any ten people can come together to form a voluntary association and get themselves registered with the Registrar of Cooperative Societies by completing certain formalities.

2- Limited Liability

The liabilities of members are limited to the capital contributed by them.

3- Economies of large scale

Economies of large scale purchasing are enjoyed because goods are purchased in bulk quantity.

4- Democratic Management
  • It is managed by managing committee, who are the elected representatives of members.
  • Each member has single vote irrespective of the number of shares held by them.
5- Lower Price
  • It purchases goods in bulk from manufactures and whole sealers and sell them to members and others.
  • Elimination of middlemen results in lower prices.

Disadvantages of consumers co-operative stores

1- Limited Capital

  • The primary source of fund for a cooperative store is the money raised from members by issue of shares; it is limited and generally insufficient.
  • Shortage fund is a challenge for their growth and expansion.

2- Lack of initiative

  • It is managed by people who work on honorary basis; there is lack of initiative and motivation amongst them to work hard.

3- Lack of business training

  • The people who manage the consumer cooperative stores lacks expertise as they are not trained in running a business smoothly.

4- Inefficient management

  • The cooperative stores are not managed by professional managers and may lead to its closure.


  • A super market is a large scale retail shop selling a wide variety of consumer goods.
  • They are more attractive to consumers because of wide variety, low price, self service and huge collection of merchandise.
  • They usually traded branded and widely used consumer goods such as grocery, clothes, house hold goods, medicine etc.
  • Goods are kept on racks with clearly labeled price and quality tags in super markets.
  • The absence of salesmen is the distinctive feature of super Bazar.
  • Hence they are also called “self service store”.
  • Products are properly packed and placed in separate sections in order to make convenient purchase to consumers.
  • The customers move into the store to pick up goods of their requirements, bring them to the cash counter, make payment and take home.
  • Only cash sales are allowed here.


  1. They are generally located at the central locations to secure high turnover.
  2. They sell goods on cash basis only.
  3. They deal in wide variety (complete line) of goods.
  4. They operated on the self service principles.
  5. They have low sales overhead as no salesmen are employed.

Advantages of super markets

1- One roof, low cost
  • Super markets offer a wide variety of products at low cost under one roof.
  • They are not only convenient but also economical to the buyers for making their purchases.
2- Wide Selection
  • Super markets keep wide variety of goods of different designs, colour etc.
  • which enable the buyer to make better selection.
3- No bad debts
  • Sales are on cash basis, so there is no chance for bad debts.
4- Complete freedom to buyers
  • There is no sales man.
  • Buyer is free to take his decision.
5-Shopping convenience
  • All the required goods of daily need are available at one place.
  • It save customer’s time and energy.

Disadvantages of super markets

1- No personal attention
  • Super market works on the principle of self service.
  • The customers, therefore, do not get any personal attention at the time of their purchase.
2- No credit
  • In supermarkets no credit facilities are made available to consumers.
  • This restricts the purchasing power of buyers from such markets.
3- Huge capital expenditure
  • Establishment and running a supermarket requires huge investment.
  • This can be successful only in big towns.
4- Difficulty of space
  • Large premises at central location are not available easily.
  • It is not suitable for products which require personal selling.

f) Vending machines

  • A revolution in the marketing method is the emergence of vending machines.
  • These are coin operated machines found very suitable in selling products like hot beverages, platform tickets, soft drinks, news papers etc.
  • Absence of sales man is the special feature of this machine.
  • It is useful techniques of selling low priced goods of standard quality and uniform size.
  • At present, vending machines are working as Automated Teller Machines (ATM) in the banking services.

Advantages of vending machines

  1. Vending machines are useful for selling pre-packed items of low priced products, with uniform size and weight.
  2. As like ATM its working time is 24×7.
  3. It is very convenient for both buyer and seller.

Disadvantages of wending machines

  1. Initial cost of the machine and its maintenance charges on regular basis and repair are quite high.
  2. Consumers can’t see the product before buying.
  3. Return of goods is impossible in case of vending machine.

Role of commerce and industry associations in promotion of internal trade

  • Associations of commerce and industries are formed to promote and protect their common interests.
  • Associations concerned with commerce in our country are Associated Chamber of Commerce and Industry (ASSOCHAM), Confederation of Indian Industry (CII) and Federation of Indian Chambers of Commerce and Industry (FICCI).
  • These three national level associations act as guardians of trade, commerce and industry.
  • These associations make negotiations with the government relating to matters connected with trade and industry.
  • Government, at the time of presentation of budget, usually convene meeting of these associations and accept their suggestions.
  • These associations usually intervene in the following matters to protect the interest of trade, commerce and industry.
    1. They influence the government at the time of framing policies regarding interstate movement of goods.
    2. Otroi and other local taxes are charged by local self government at the time of entering goods to the municipal limit. Commerce organization plays an important role to minimize these levies.
    3. A rational structure of the sales tax and its uniform rates across states, are important for promoting a balance in trade. The chambers of commerce and Industry play an important role in interacting with government to develop a harmonies sales tax structure
    4. The Chambers of Commerce and Industry and the government are constantly interacting on labour issues.
    5. The Chambers of Commerce and Industry hold discussion with government agencies to improve infrastructure like road, port, electricity, and railway etc. That are very crucial for the development of trade.
    6. The Chambers of Commerce and Industry interact with government to formulate laws relating to weights, protection of brands, prevention of duplication etc.

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