Business Studies · Ch 10 — Internal Trade
Summary
Summary
- Trade is the buying and selling of goods and services to earn profit. By the geographical location of buyers and sellers it is of two kinds — internal trade (within a country) and external trade (between countries).
- Internal trade attracts no customs or import duty because goods are of domestic production for domestic consumption. It has two broad categories: wholesale trade and retail trade.
- Wholesale trade is buying and selling in large quantities for resale or intermediate use. Wholesalers link manufacturers and retailers and create time and place utility.
- Services to manufacturers: facilitating large-scale production, bearing risk, financial assistance, expert advice, help in marketing, facilitating continuity, and storage.
- Services to retailers: availability of goods, marketing support, grant of credit, specialised knowledge, and risk sharing.
- Retail trade is the sale of goods and services directly to ultimate consumers. Retailers link producers and final consumers.
- Services to manufacturers/wholesalers: help in distribution, personal selling, enabling large-scale operations, collecting market information, and help in promotion.
- Services to consumers: regular availability of products, new-product information, convenience in buying, wide selection, after-sales services, and credit facilities.
- Types of retail trade are classified by size, ownership, merchandise handled, and whether the retailer has a fixed place of business. On the last basis:
- Itinerant retailers (no fixed place): peddlers and hawkers, market traders, street traders, and cheap jacks.
- Fixed shop retailers — small: general stores, speciality shops, street stall holders, second-hand goods shops, and single line stores; large: departmental stores, chain stores/multiple shops, mail order houses, consumer cooperative stores, supermarkets, and vending machines.
- Departmental stores offer a wide variety under one roof (advantages: attract customers, convenience, attractive services, economies of scale, sales promotion; limitations: lack of personal attention, high operating cost, high possibility of loss, inconvenient location).
- Chain stores/multiple shops are networks selling standardised branded goods (advantages: economies of scale, elimination of middlemen, no bad debts, transfer of goods, diffusion of risk, low cost, flexibility; limitations: limited selection, lack of initiative, lack of personal touch, difficulty when demand changes). …