NIOS Business Studies Solved Paper’ October 2017, NIOS Senior Secondary Solved Papers

NIOS Business Studies 319 Solved Papers


Time: 3 Hours

Maximum Marks: 100


(i) All questions are compulsory.

(ii) Marks allotted are indicated against each question.

(iii) Each question from question No. 1 to 10 has four alternatives – (A), (B), (C) and (D) , out of which one is most appropriate. Choose the correct answer among the four alternatives and writ it in your Answer Book against the Number of the question. No extra time is allotted for attempting multiple choice questions.

1. Which of the following general principles of management states that work should be assigned to a person for which he is best suited?                  1

A. Order.

B. Equity.

C. Division of work.

D. Remuneration.

2. As per Taylor’s techniques of scientific management, who ensures that output agrees to the standard of quality set by the planning development?                  1

A. Speed Boss.

B. Inspector.

C. Gang Boss.

D. Time and Cost Clerk.

3. It clearly indicates what is to be done and what is not to be done in a particular situation.        1

A. Budget.

B. Policy.

C. Method.

D. Rule.

4. Because of which of the following sources of recruitment the organization is deprived of the benefit of inducting fresh blood into its system?                 1

A. Internal sources of recruitment.

B. External sources of recruitment.

C. Both internal and external sources of recruitment.

D. All of the above.

5. Deposits that can be withdrawn by the lender by giving it one day notice are called:               1

A. Call Deposits.

B. Cash Credit.

C. Bank Overdraft.

D. Trade Credit.

6. SEBI was granted statutory recognition in the year:                 1

A. 1956.

B. 1992.

C. 1932.

D. 2013.

7. One who actually uses the product or service is called:               1

A. Customer.

B. Consumer.

C. User.

D. Buyer.

8. The process of designing and producing appropriate container for the product is called:             1

A. Branding.

B. Labeling.

C. Packaging.

D. All of the above.

9. Individuals or institutions who complete all the formalities of loading the goods on the ship on behalf of exporters are called:             1

A. Indent Houses.

B. Export Houses.

C. Clearing Agents.

D. Forwarding Agents.

10. Toys shop is an example of:           1

A. General Store.

B. Speciality Store.

C. Single Line Store.

D. All of the above.

11. How is management multi-disciplinary? Explain.                  3

Ans.  Three Dimensions:

(1) Management of work: It is concerned with performance of tasks in an organisation.

(2) Management of people: It implies dealing with employees as individuals and dealing with individuals as a group.

(3) Management of operations: It is interlinked with both management of work and management of people.

12. What is meant by directing?                             3

Ans. Directing is telling the people what to do and seeing that they do it in best of their ability. This function of management is concerned with guiding the employees in the organisation to achieve organisational goal.

In the words of Koontz and O’Donnell, ”Directing is a complex function that includes all those activities which are designed to encourage subordinates to work effectively and efficiently.”

13. What is meant by Medium Term Finance? List the purposes for which medium-term finance is required.                  3

Ans. Medium-term finance are those which are required for more than one year but less than five years. Medium term fund required for the following purpose:

a) Modernisation and renovation,

b) Special promotional programmes.

c) Heavy advertising.

14. Distinguish between advertising and sales promotion on the basis of               3

a) Objectives;

b) Effect, and

c) Nature.

Ans. Difference between advertising and sales promotion





The activity of generating advertisements of products and services to commercialize them is known as Advertising.

Sales promotion refers to short term use of incentives or other promotional activities that stimulate the customer to buy the product.


It is permanent strategy.

It is a limited time promotion strategy.


It is highly expensive.

It is cost effective.

Best suited for

It is best suited for medium and big enterprises.

It is suitable for all enterprises.


Its main objective is to build brand image and boosting sales.

Its main objective is short term sales push.

 15. State any three types of services provided by retailers to wholesalers.               3

Ans. Services of Retailers: Retailers provide various services to manufacturers as well as to consumers.

Services to Manufacturers/Wholesalers:

a) The services offered by retailers to wholesalers:

b) Wholesalers get a ready market through retailers.

c) Retailers manage the marketing part like advertising, publicity and promote sales.

d) Retail provides the information about market to wholesalers which are downloaded to manufacturer.


April 2017

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April 2021 (Coming Soon)

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October 2019

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October 2021 (Coming Soon)

16. State any four objectives of management.                       4

Ans. Management helps in efficient and effective use of available resources of an organisation. Objectives are the end results, towards which all managerial efforts and organisational activities are directed. Objectives of management include:

a) Obtaining maximum output with minimum input:  A successful management must achieve the objectives of the business by making optimum utilization of available resources effectively.

b) Improving efficiency: The management should try to develop and improve the efficiency of the factors of production. Increased productivity of the resources will result in excellent performance.

c) Maximum employer’s and employees’ prosperity: Every management should make sincere efforts to earn maximum profit for the enterprise. It is equally important that the management should pay fair, reasonable and competitive remuneration to employees.

d) Social justice and human betterment: An effective management brings prosperity for employers and employees. Excellent remuneration improves the standard of living of workers. The growth of business generates employment opportunities.

e) Personal or individual objectives: These objectives are related to the employees of the organisation. The main individual objectives of management are competitive salary, personal growth and development, good and healthy working competition and social recognition.

17. Briefly describe the following types of plans:                 4

a) Objectives and

b) Budget.

Ans. Objectives: Objectives are the ends towards which the activities are directed. They are end result of every activity. No planning is possible without setting up of objectives. While enterprise objectives are the basic plan of the firm, a department may also have its own objectives. Though departmental objectives will contribute to the attainment of enterprise objectives but the two sets of goals may entirely be different.

Budget: It is a statement of expected results expressed in numerical terms. A budget is a type of plan expressed in financial terms or in terms of labour hours, units of product, machine hours etc. Budgets are quantitative statements indicating expected results and expenditure required for achieving the goal. For e.g., Cash budget estimates the expected cash inflow and cash outflow over a period of time.

18. ‘The main objective of financial management is to maximize the wealth of shareholders’. State the other important objectives of financial management.              4

Ans.  Objectives of financial management:

Efficient financial management requires existence of some objectives or goals because judgment as to whether or not a financial decision is efficient is to be made in light of some objective. The two main objectives of financial management are:

1) Profit Maximisation: It is traditionally being argued, that the objective of a company is to earn profit, hence the objective of financial management is profit maximisation. Thus, each alternative is to be seen by the finance manager from the view point of profit maximisation.

2) Wealth maximisation: The companies having profit maximisation as its objective may adopt policies yielding handsome profits in the short run which are unhealthy for the growth, survival and overall interests of the business. A company may not undertake planned and prescribed shut-downs of the plant for maintenance, and so on for maximising profits in the short run. Thus, the objective of a firm should be to maximise its value or wealth.

19. Briefly explain the different types of goods classified on the basis of tangibility.           4

Ans. Based on tangibility, the products can be classified as:

a) Tangible Goods: Most goods, whether these are consumer goods or industrial goods and whether these are durable or non-durable, fall in this category as they have a physical form, that can be touched and seen. Thus, all items like groceries, cars, raw-materials, machinery etc. fall in the category of tangible goods.

b) Intangible Goods: Intangible goods refer to services provided to the individual consumers or to the organisational buyers (industrial, commercial, institutional, government etc.). Services are essentially intangible activities which provide want or need satisfaction. Medical treatment, postal, banking and insurance services etc., all fall in this category.

20. What is meant by Internal Trade? Name any four documents used in Internal Trade.           4

Ans. Internal Trade: When buying and selling of goods and services takes place within the geographical boundaries of a country, it is referred to as internal trade. It may take place between buyers and sellers in the same locality, village, town or city; or may be indifferent states, but definitely within the same country. Internal trade is also called domestic trade or home trade.

Documents used in Internal Trade:

1. Performa Invoice: It is a document sent prior to the actual sale to the buyer. It informs the buyer about the amount he is required to pay for the specified goods purchased by him. It provides almost the same information as an invoice provides.

 2. Invoice: It is a document sent by the seller to the buyer when goods are supplied. It is a document which shows the nature rates and terms of payment at which goods will be dispatched.

3. Debit Note: It is a document prepared by one party (either by the seller or the buyer) to inform the other party (either the seller or the buyer) that receiver’s account has been debited with the specified amount and for the specified reasons.

4. Credit Note: It is a document prepared by one party (buyer or seller) to be sent to another party (buyer or seller) to inform the receiver that his account has been credited with the amount mentioned and for the reasons stated therein.

21. What is meant by ‘Work Study’? Briefly describe the different types of studies included in this study.          5

Ans. Work study: Work study is the detailed analysis of an activity with an objective to remove inefficiency and find out the best way to perform the work. Work study includes the following techniques:

a) Fatigue study: It refers to the duration and frequency of rest intervals to complete a particular job. The rest refreshes the workers. They work again with full energy and stamina. Long working hours, poor working conditions, unsuitable work can also be the causes of fatigue. It should be reduced.                

b) Method study: It refers to identify the most suitable, economical way of doing a particular activity. To conduct this study, process chart, operation research technique can be used. The main objective is to minimize the cost of production and maximize the quality of the work. 

c) Motion Study: Motion study is designed to eliminate unnecessary motions and to reinforce necessary motions. It is a close observation of analyzing the body movements of the worker performing the job. This study helps in analyzing that if any element of the job can be eliminated or not.

d) Time study: This study helps in determining the time required by an average skill worker to efficiently perform a particular job. Time study helps in determining the standard time for the job. This standard time is then fixed for the workers for performing the job. So, time study is used to measure precisely the time required in doing every element of a job with the purpose of deciding the fair day’s work.

22. How can employees he motivated? Discuss.                   5

Ans. Each employee has some needs of his own that he wants to fulfill. While directing, it is essential to ensure that any of the unfulfilled need of the individual is being taken care of. A need is a feeling of lack of something and every person tries to take care of that feeling by satisfying/fulfilling what he lacks. The needs of the individual differ from person to person. However, there are certain common needs which are known to exist in most cases. These are known as Physiological needs.

People generally work so as to be able to earn money to satisfy such needs. Once the basic needs are satisfied, people wish to satisfy higher category of needs. They want safety and security and desire to be protected against loss of employment, sickness, accident etc. These are known as Safety and Security needs.

Thereafter, people want to have a sense of belonging to the organisation and to be accepted by fellow workers. These are known as social needs. Similarly, there are people who wish to be considered important and expect that their opinions should be recognised by others. These needs are known as ego needs.

Further, a person may wish to achieve what he thinks is due to him, i.e., he wants to realise his ambition fully. These needs are known as self-actualisation needs. This is called hierarchy of needs concept of motivation developed by Maslow. According to Maslow, an individual has many needs and their order can be determined. If a person satisfies his first need, then he thinks about his next need. After satisfying the second need, he tries to satisfy third need and so on. So needs are the motivators.

Maslow has given hierarchy of needs in the following ways :

a) Physiological needs: these needs include basic requirements for survival and maintenance of human life. The common physiological needs are food, shelter and clothing.

b) Security needs: Once the present day physiological needs are fulfilled then the people start thinking about their future as they want to secure their future by making sure that in future also they continue to satisfy their physiological needs. Under safety and security there are two categories:

Ø  Physical security which means safety from illness, accident, fire etc.

Ø  Economic security which means having sufficient funds to meet the future physiological needs and to come out of physical security threat.

c) Social needs: It means the need for love, affection, companionship, friendship etc. Once the people satisfy their physiological and safety needs then the social need becomes more active and to fulfill the social needs.

d) Esteem needs: These needs are related to the respect and recognition. When the above three needs are satisfied then people start demanding respect for themselves in a group. This need is more common in higher level employees.

e) Self actualization: This need refers to realizing or reaching to the aim of your life. Once the employee becomes what he wants to become it means satisfaction of his actualization need. For example, need to grow, sense of fulfillment.

23. ‘While preparing a financial plan for any business unit some aspects are kept in view so as to ensure its success in meeting the organizational objectives’. Briefly explain any five such aspects.    5

Ans.  Financial Planning is the process of estimating the capital required and determining its composition. It is the process of framing financial policies in relation to procurement, investment and administration of funds of an enterprise. In simple words, it refers to determination of firm’s financial objectives, financial policies and financial procedure. While preparing a financial plan for any business unit, the following aspects should be kept in view so as to ensure the success of such exercise in meeting the organisational objectives.

(a) The plan must be simple: Now-a-days you have a large variety of securities that can be issued to raise capital from the market. But it is considered better to confine to equity shares and simple fixed interest debentures.

(b) It must take a long term view: While estimating the capital needs of a firm and raising the required funds, a long-term view is necessary. It ensures that the plan fully provides for meeting the capital requirement on long term basis and takes care of the changes in capital requirement from year to year.

(c) It must be flexible: While the financial plan is based on long term view, one may not be able to properly visualise the possible developments in future. Not only that, the firm may also change its plans of expansion for various reasons. Hence, it is very necessary that the financial plan is capable of being adjusted and revised without any difficulty and delay so as to meet the requirements of the changed circumstances.

(d) It must ensure optimal use of funds: The plan should provide for raising reasonable amount of funds. As stated earlier, the business should neither be starved of funds nor have surplus funds. It must be strictly need based and every rupee raised should be effectively utilised. There should be no idle funds.

(e) The cost of funds raised should be fully taken into account and kept at the lowest possible level : It must be ensured that the cost of funds raised is reasonable. The plan should provide for a financial mix (combination of debt and equity) that is most economical in terms of cost of capital, otherwise it will adversely affect the return on shareholders’ funds.

24. ‘The marketing concept is characterized according to the philosophy of the producer’. Briefly describe such philosophies.                                    5

Ans. Different producers lay different emphasis of different aspects of the concept of marketing. The making concept is characterised according to the philosophy of the producer. Seeing the outlook of the producers of the marketing concept may be looked at in the following works:

1) Production concept: The production concept is one of the oldest concepts in business. It holds that consumers will prefer products that are widely available and inexpensive. So, production concept oriented business concentrate on achieving high production which reduces cost and focus on mass distribution.

2) Product concept: This concept holds that consumers will prefer those products that are high in quality and performance and with innovative features. Managers in these organization focus on making superior products and improving them. But the marketer must keep in mind that the customers will buy the best quality product only when they need or want it.

3) Selling concept: Now a days, as the technology advances along with the quantity and quality of the goods, the art of selling the goods are also very essential. The firms which follow the selling concept believe that in order to motivate a customer to buy his product, he must be convinced by aggressive selling and promotional efforts. Firms following selling concept make use of advertising powers and other persuation techniques to influence the customers.

4) Marketing Concept: The marketing concept emerged in the mid 1950’s. The business generally shifted from a product – centered, make and sell philosophy, to a customer centered, sense and respond philosophy. The marketing concept concentrates on the need of the customers. This concept says than product should be designed and produced keeping in mind the need of the customers and try to satisfy the need better than the competitor. The marketing concept holds that the key to achieving organizational goals consist of the company being more effective than competitors in creating, delivering and communicating superior customers value. This concept puts the customers at both the beginning and the end of the business cycle. Every department and every worker should think about the customer and acts as per need of the customer.

5) Consumer concept: As per this concept, companies’ aims at providing consumers separate offers or services. This is possible through one to one marketing.

6) Societal marketing concept: A company must not blindly follow the goal of customer satisfaction because it may lead to many social and environmental ills for example, a customer may want to have drugs so just to satisfy customer the firms should not supply him drugs. This concept requires that company should deliver superior value to the consumer to improve the consumer and the society. It focuses on consumer welfare. Firms should not produce harmful products.

25. ‘For redressal of consumer grievances a complaint must be filed with the appropriate forum’. Who can file the complaint under Consumer Protection Act 1986?             5

Ans. A complaint before an appropriate consumer forum can be made by complainant who can be:

a) Any consumer,

b) Any registered consumer association,

c) Central/state govt.,

d) One or more consumer on behalf of many consumer having same interest,

e) Legal representative of deceased consumer within two years.

“Complaint” can be made in the following cases:

a) An unfair trade practice or a restrictive trade practice has been adopted by any trader;

b) The goods suffer from one or more defect;

c) The services suffer from deficiency in any respect;

d) Price charged for the goods mentioned in the complaint is in excess of the price fixed under any law.

e) Goods which will be hazardous to life and safety.

26. ‘Without proper coordination human efforts may get jeopardized and objectives may not be achieved.’ Do you agree? Give any six reasons in support of your answer.            6

Ans. Importance of co- ordination (Essence of Management):Co-ordination is an integral element or ingredient of all the managerial functions as discussed below: –

a) Coordination through Planning: Planning facilitates co-ordination by integrating the various plans through mutual discussion, exchange of ideas. e.g. – co-ordination between finance budget and purchases budget.

b) Co-ordination through Organizing – Mooney considers co-ordination as the very essence of organizing. In fact when a manager groups and assigns various activities to subordinates, and when he creates department’s co-ordination uppermost in his mind.

c) Co-ordination through Staffing – A manager should bear in mind that the right no. of personnel in various positions with right type of education and skills are taken which will ensure right men on the right job.

d) Co-ordination through Directing – The purpose of giving orders, instructions & guidance to the subordinates is served only when there is a harmony between superiors & subordinates.

e) Co-ordination through Controlling – Manager ensures that there should be co-ordination between actual performance & standard performance to achieve organizational goals.

Now we can conclude that all the functions of management are affected by coordination. Hence coordination is essential for achieving the objectives of the organisation. It is also required for the survival, growth and profitability of the organisation. Coordination encourages team spirit, gives right direction, motivates employees, and makes proper utilisation of resources. Therefore, Coordination is rightly called the “Essence of Management”.

27. Briefly explain the steps in the planning process.                     6

Ans. Steps in the Process of Planning

1. Setting organizational objectives: The first and foremost step in the planning process is setting organizational objectives or goals, which specify what the organisation wants to achieve.

2. Developing planning premises: Planning is concerned with the future, which is uncertain. Therefore, the manager is required to make certain assumptions about the future. These assumptions are called premises.

3. Identifying alternative courses of action: Once objectives are set and assumptions are made, then the next step is to identify all possible alternative courses of action.

4. Evaluating alternative courses: The positive and negative aspects of each proposal need to be evaluated in the light of the objective to be achieved, its feasibility and consequences.

5. Selecting the best possible alternative: This is the real point of decision making. The best/ideal plan has to be adopted, which must be the most feasible, profitable and with least negative consequences. Sometimes, a combination of plans may be selected instead of one best plan.

6. Implementing the plan: Once the plans are developed, they are put into action. For this, the managers communicate the plans to all employees very clearly and allocate them resources (money, machinery, etc.).

7. Follow-up action: The managers monitor the plan carefully to ensure that the premises are holding true in the present condition or not. If not, adjustments are made in the plan.


With the help of a diagram, explain briefly the steps in the process of control.

Ans. Following are the steps of controlling process:

(1) Fixation of standards: the first step of controlling is to set performance standards. Standards are those criteria s on the basis of which the actual performance is measured. Thus, standards serve as benchmarks towards which an organization strives to work. Standards can be set in both quantitative as well as qualitative terms.

(2) Measurement of Actual Performance: the second step in the controlling process is the measurement of actual performance. The measurement of actual performance is done on the basis of pre-determined standards. The measurement of actual performance tells the manager whether the work has been done according to the plan or not.

(3) Comparison of Actual Performance with Standards: At this step, actual performance is compared with the standards and deviations are found out.

(4) Ascertaining reasons for deviation: Deviations are examined the light of pre-determined Deviation Tolerance Limits. If the deviations are within limits they can be avoided. But if they cross the limits, they should be reported to the higher level managers without any delay. There are two important principles regarding this:

a) Principle of Critical Point Control: According to this principle, those activities should be determined in the very outset which have an important role to play in ensuring the actual work progress in accordance with the plans. These are known as Key Result Areas – KRAs. It means that the managers should not be involved in small insignificant activities but should pay more attention to those activities where unfavourable results can cause heavy loss to the enterprise.

b) Management by Exception; Management by exception, is an important principle of management control based on the belief that an attempt to control everything results in controlling nothing. Thus, only significant deviations which go beyond the permissible limit should be brought to the notice of management.  2017

(5) Taking Corrective Action: The last but the most important step in the controlling process is taking corrective action. By now the deviations and their causes become known. Now is the turn of removing the hurdles in the actual work progress. The purpose of corrective action is to bring the actual work progress to the level of expected progress.

28. ‘The amount of working capital required varies from business to business and from period to period’. In the light of the statement briefly describe the factors that affect the working capital requirement of an enterprise.                  6

Ans. Working capital is the capital required for meeting day to day requirements/operations of the business. Simply, it refers to excess of current assets over current liabilities.

Calculation of working capital:

a) Gross working capital: This refers to the total investment made in all the current assets such as stock, debtors, bills receivable etc. It is calculated by adding all the current assets.

b) Net working capital: This refers to excess of current assets over current liabilities. It is calculated as: Net working capital= current assets – current liabilities. If current liabilities are more than current assets then working capital becomes negative.               

Following factors are to be considered before determining the requirement of working capital.

1. Scale of operations: There is a direct link between the scale of business and working capital. Larger business needs more working capital as compared to the small organizations.

2. Nature of Business: The manufacturing organizations are required to purchase raw materials, convert them into finished goods, maintain the stock of raw materials; semi finished goods and finished goods before they are offered for sale. They have to block their capital for labour cost, material cost etc, so they need more working capital. In the trading firm processing is not performed. Sales are affected immediately after receiving goods for sale. Thus they do no block their capital and so needs less working capital.

3. Credit allowed: If the inventory is sold only for cash, it requires less working capital as money is not blocked in debtors and bills receivable. But due to increased competition, credit is usually allowed. A liberal credit policy results in higher amount of debtors, so needs more working capital.

4. Credit availed: If goods are purchased only for cash, it requires more working capital. Similarly if credit is received from the creditors, the requirement of working capital decreases.

5. Availability of Raw materials: If the raw materials are easily available in the market and there is no shortage, huge amount need not be blocked in inventories, so it needs less working capital. But if there is shortage of materials, huge inventory is to be maintained leading to larger amount of working capital.

6. Dividend Policies: Dividend policies of a business organisation also influence the requirement of Working Capital. If a business is following a liberal dividend policy, it requires high Working Capital to pay cash dividends where as a firm following a conservative dividend policy will require less amount of Working Capital.


‘The dividend to be paid to equity shareholders is the real issue involved in dividend decision by the management of any company.’ Briefly explain any six factors that guide such decision.

Ans. Dividend Decision: This decision is concerned with distribution of surplus funds. The profit of the firm is distributed among various parties such as creditors, employees, shareholders, debenture holders etc. Under this decision the finance manager decided how much to be distributed in the form of dividend and how much to keep aside as retained earnings.

Factors affecting dividend decision: A firm’s dividend policy is influenced by the large numbers of factors. Some factors affect the amount of dividend and some factors affect types of dividend. The following are the some major factors which influence the dividend policy of the firm.

1. Legal requirements: There is no legal compulsion on the part of a company to distribute dividend. However, there certain condition imposed by law regarding the way dividend is distributed.

2. Firm’s liquidity position: Dividend payout is also affected by firm’s liquidity position. In spite of sufficient retained earnings, the firm may not be able to pay cash dividend if the earnings are not held in cash.

3. Repayment need: A firm uses several forms of debt financing to meet its investment needs. These debts must be repaid at the maturity. If the firm has to retain its profits for the purpose of repaying debt, the dividend payment capacity reduces.

4. Expected rate of return: If a firm has relatively higher expected rate of return on the new investment, the firm prefers to retain the earnings for reinvestment rather than distributing cash dividend.

5. Stability of earning: If a firm has relatively stable earnings, it is more likely to pay relatively larger dividend than a firm with relatively fluctuating earnings.

6. Access to the capital market: If a firm has easy access to capital markets in raising additional financing, it does not require more retained earnings. So a firm’s dividend payment capacity becomes high.

29. ‘A Channel of distribution refers to the vital links connecting the manufacturers and produces and the ultimate consumers/users’. Based on the statement, state the functions of Channels of distribution.                     6

Ans. A channel of distribution is an organised net-work or a system of agencies and institutions which, in combination, perform all the activities required to link producers with users and users with producers to accomplish the marketing task.

According to Philip Kotler, “The distribution is the set of all firms and individuals that assist in the transferring the little of goods and services as they move from producers to customers.”

Primarily a channel of distribution performs the following functions:

a) It helps in establishing a regular contact with the customers and provides them the necessary information relating to the goods.

b) It provides the facility for inspection of goods by the consumers at convenient points to make their choice.

c) It facilitates the transfer of ownership as well as the delivery of goods.

d) It helps in financing by giving credit facility.

e) It assists the provision of after sales services, if necessary.

f) It assumes all risks connected with the carrying out the distribution function.


‘For successful selling the salesperson usually goes through a selling process which involves certain steps’. State these steps before the delivery of goods are ensured.

Ans. Salesmanship simply means selling through personal communication. For successful selling the salesperson usually goes through a selling process which involves the following seven steps.

(1) Prospecting.

(2) Pre approach.

(3) Approach.

(4) Presentation and demonstration.

(5) Answering the queries/objections and their clarification.

(6) Action or ending the process of sale.

(7) Follow up or after sales service.

Prospecting refers to identifying the prospective buyers in his area of operation. Having done this, he has to obtain the necessary information about the customer, his capacity to pay, choice and preferences etc. After this, in pre-approach activity he approaches the customer to gain his attention, greet him and make his presentation i.e., inform the customer about the product, its qualities, price etc. and demonstrate its use, if required. Then he handles the customers queries, persuades him to make his final decision and ends the process of sale with receiving his order and thanking him. Finally he ensures the delivery of goods and provides the necessary after sales service.

30. ‘Retailing these days aims at earning profit by offering customers more choice, more convenience and better facilities’. In the light of the statement, describe any four recent trends that you may have observed in retailing.                        6

Ans. Recent Trends in Retailing: As business has evolved over the ages, retailing, an important and dynamic part of it, has also kept pace with the changes. However, in the recent past there have been such drastic and far-reaching developments in this field that it is said that we are presently experiencing a ‘retailing revolution’, not only in India, but the world over. Retailing has come a long way today in our country, from the local Kirana shops that existed since long, long ago. The focus now is not only on making retailing more convenient for the customer but also on making shopping an enjoyable experience for him/her. The shift in approach in retailing aims at earning profit by offering customers more choice, more convenience and better facilities.

In keeping with the changing lifestyles of consumers where they now have more purchasing power but lesser time, retailers are offering services like free home delivery, pre-packed goods (milk, juice etc.), after sales services, convenience of shopping for different products under one roof (departmental stores) and shopping through the Internet, e-mail, post, SMS or telephone.

1. Many businessmen who were earlier focusing only on manufacturing of products, are now venturing into retailing (vertical integration). They are either opening their own exclusive showrooms/outlets under their brand name or tying up with existing retailers or employing direct selling agents (that link the manufacturer to the consumer by directly selling goods to final consumers, eliminating wholesalers and other retailers from the chain).

2. In order to encourage consumers to buy products, retailers are offering attractive schemes of financing products, especially for consumer durables like refrigerators, television, air-conditioners etc. Very low rates of interest are charged by the retailer for financing the product. Some retailers also have tie-ups with banks for the purpose of providing consumer finance.

3. With a view to offer variety to consumers with convenience and easy accessibility, today retailing includes automatic vending machines. Through these machines, consumers can buy items like newspapers, magazines, chocolates, contraceptives, cold drink cans and so on by inserting requisite denomination of coins and pressing a button. The item gets delivered from the machine without any human intervention.

4. Shopping malls have been another outcome of the ‘retail revolution’ in urban areas. They are like a huge shopping complex, housed in a single building, generally offering services like parking space, recreational facilities like cinema halls, variety of food outlets/restaurants (food courts) apart from a number of shops selling different goods.

5. Another development in recent times has been the use of multiple channels for retailing a single product i.e., selling the product through mail order as well as through departmental stores or through itinerant retailers, general stores as well as over the Internet at the same time.

6. The combination of a super market and a departmental store forms a hypermarket. It is a large scale retail facility which provides enormous range of products under one roof. A consumer can buy all his/her weekly or monthly requirements in one trip from the hypermarket. Thus, we can see that trade within the country (internal trade) may assume different forms, depending on the needs and demands of consumers. Newer features in existing forms or newer forms of retailing keep developing with changing times and changing consumer preference.


Identify and state the consumer rights as provided under the Consumer Protection Act 1986, that have been violated in the following cases:

1) Mohan, a local retailer compelled Kamal to buy edible oil available in his shop.

Ans. The right to choose provides that the consumer must be assured, whenever possible, access to a variety of goods and services at competitive prices. If the market has enough varieties of products at highly competitive prices, the buyers have an opportunity of wide selection. In the given question, right to choose is violated.

2) A chemist sold cough syrup with expiry date over to an old woman.

Ans. Right to be Informed is violated in the given question. The right to be informed is an important component of consumer protection. The consumer must be provided with adequate and accurate information about quality, quantity, purity, standard and the price of the goods and services. Now-a-days the manufacturers provide detailed information about the contents of the product, its quantity, date of manufacturing, date of expiry, maximum retail price, precautions to be taken, etc. on the label and package of the product. Such information helps the consumers in their buying decision and use of the product.

3) A bottle of toilet cleaner containing acid was sold without a proper seal.

Ans. Right to Safety is violated in this case. It is the right of the consumers to be protected against goods and services which are hazardous to health or life. For example, defective vehicles could lead to serious accidents. The same is true of electrical appliances with sub-standard material. Only recently, there were mass protests and boycott of soft drinks due to presence of hazardous pesticides beyond permissible limits. Thus, right to safety is an important right available to the consumer which ensures that the manufacturers shall not produce and sell sub-standard and dangerous products.


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