Business Studies

Business plays a vital role in lives, not only by providing various goods and services but also by offering many opportunities to earn livelihood.

Business Studies Topics

We all live in a very vast and complex business environment. Whether we are poor or rich, the business activities around us have made our lives easy by fulfilling our basic needs and also improving our standard of living. Today’s business activities are changing at a faster speed because of the advancement of science and technology and better communication system.

The judicial machinery set up under the Consumer Protection Act, 1986 consists of consumer courts (forums) at the district, state and national levels. These are known as District forum, State Consumer Disputes Redressal Commission (State Commission) and National Consumer Disputes Redressal Commission (National Commission) separately.

The Consumer Protection Act was passed in 1986 and it came into force from 1 July 1987. The main objectives of the Act are to provide better and all-round protection to consumers and effective safeguards against different types of exploitation such as defective goods, deficient services and unfair trade practices. It also makes provisions for a simple, speedy and inexpensive machinery for redressal of consumers’ grievances.

The consumers have to collectively act against malpractices and take the help of consumer organisations and the government agencies. In fact, consumer protection essentially needs consumer awareness, education and guidance, and it cannot be assured by voluntary business conduct or self-regulation. The following are the various ways and means of consumer protection followed in India.

Duties and responsibilities of consumers are:

Be quality conscious: To put a stop to adulteration and corrupt practices of the manufacturers and traders, it is the duty of every consumer to be conscious of the quality of product they buy. They should look for the standard quality certification marks like ISI, Agmark, FPO, Woolmark, Eco-mark, Hallmark etc. while making the purchases.

John F, Kennedy, the former USA President, in his message to consumer had given six rights to consumers.

The following factors make consumer protection important.

The necessity of adopting measures to protect the interest of consumers arises mainly due to the helpless position of the consumers. There is no denying fact that the consumers have the basic right to be protected from the loss or injury caused on account of defective goods and deficiency of services. But they hardly use their rights due to lack of awareness, ignorance or lethargic attitude.

Consumer protection means safeguarding the interest and rights of consumers. In other words, it refers to the measures adopted for the protection of consumers from unscrupulous and unethical malpractices by the business and to provide them speedy redressal of their grievances.

A consumer is a person who consumes or uses any goods or services. Goods may be consumables like wheat flour, salt, sugar, fruit, etc. or durable items like television, refrigerator, toaster, mixer, bicycle, etc. Services refer to items like electricity, cooking gas, telephone, transportation, film show, etc.

The Eighth Uruguay Round was successful and led to the setting up of the WTO. The WTO, was launched on January 1, 1995 replacing the GATT. Naturally, the GATT members became the members of WTO. It administers the agreements contained in the Final Act of the Uruguay Round.

The main documents which are used in external trade are:

The steps involved in importing goods are:

The procedure generally adopted for exporting goods to a foreign country is:

The traders need support from others in the process of buying and selling. The persons or institutions that provide various kinds of support are termed as facilitators of external trade.

In internal trade, generally buyers and sellers meet together and transactions take place as per their convenience. But in external trade the situation is completely different. It takes a long procedure to buy and sell the goods and services. The business people generally face a number of problems in the process of foreign trade.

External Trade is an important indicator of economic condition of a nation. Both importing and exporting countries are benefited by external trade. While exporting country earns more foreign exchange by exporting its surplus, the importing country at the same time gets the opportunity to use better products and raise the standard of living of its people.

No country in the world possesses everything that is needed by its people. So they all have to depend on others to meet their requirement of certain items. For example, a country may be rich in iron and steel but poor in aluminium. So it has to meet its requirement of aluminium from countries with surplus production of aluminium.

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.

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.

With the advancement in the information technology (use of computers, telephone, internet, etc.) methods of distribution of goods from producers to consumers have witnessed new developments. Today, consumers can conveniently buy products of their choice without leaving their home or office, any time during the day or night.

Some restaurants, card and gift shops, ready-made garments shops carry the same brand name or trademark and have almost the same decoration. They sell the same products, yet they are not chain stores or multiple shops. This is because they are not controlled and managed by a single owner.

This form of retailing makes use of the mail system (postal and courier) to communicate with and deliver the goods to the customers. The mail order retailers place the advertisements in newspapers, magazines, etc. or publicise about their products in booklets, catalogues, brochures and handouts. These advertisements, leaflets, brochures, etc. contain an order form or other details on how to order the product apart from a detailed description of the product being sold.

Consumer Cooperative Store is another form of large scale retail trade which is owned by the cooperative society. When the consumers of a particular area or group find it difficult to get the items of daily necessity they usually form a cooperative society and run the retailing business.

Super Market is another kind of large-scale retail organisation from where we can buy most of our household requirements for a week or a month in one visit. Super Market is a large scale retail store that sells a wide variety of products like food items, vegetables, fruits, groceries, utensils, clothes, electronic appliances, household goods, etc. all under one roof.

In a departmental store, the whole business is carried on in one building and the customers are drawn to it. In multiple shops, big manufacturers approach customers by setting up shops near the customers.

Departmental Store is a large-scale retail shop where a large variety of goods are sold in a single building. The entire building is divided into a number of departments or sections. In each department specific type of goods like stationery items, books, electronic goods, garments, jewellery, etc. are made available. All these departments are centrally controlled under one management.

Small Scale

In every locality, you find fixed shop retailers dealing with goods and services on a small scale. They deal with limited variety and limited quantity of goods and cater to the needs of a local area. They require less capital and provide goods to a limited number of customers. The grocery shops of your locality come under the category of small-scale fixed shop retailing.

You can classify the retailing business on the basis of size as small scale, medium scale and large scales. On the basis of forms of ownership, it may be sole proprietorship, partnership, cooperative society or joint stock company. But the most common way of classifying retailing business is whether they have any fixed place of business or not.

Wholesale trade

  1. Number of items: Deals in a few items.

  2. Quantity of goods bought and sold: Large

  3. Source of purchase: Manufacturers

  4. Main activity: Sells goods for resale.

  5. Amount of capital required: Large

  6. Nature of relationship with producers or consumers: Direct link with the producers and indirect link with the consumers.

  7. Location: Located in the same area along with other wholesalers dealing in similar product.

  8. Display: Does not require elaborate display of goods.

Both wholesalers and retailers act as a link between producers and consumers in the chain of distribution of products. They are called middlemen as they come in the middle, i.e., between the producers and the consumers in the chain of distribution.

Retail trade refers to buying goods from the manufacturers or wholesalers and selling the same to the ultimate consumers. The retail trader generally deals in a variety of goods. Those who are engaged in retail trade are called retailers. Retailers sell goods in small quantities as per the requirement of consumers.

Wholesale trade refers to buying of goods in large quantity from producers or manufacturer for sale to other traders or buyers in small quantities. Those who are engaged in wholesale trade are called wholesalers. They act as a link between the manufacturers or producers and the small traders. Generally, they specialise and deal in one or a few products.

The goods produced in a country may be sold within the country or outside the country. 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 in different states, but definitely within the same country. Internal trade is also called domestic trade or home trade.

Sometimes we get a small pack of tea, shampoo, soap or floor cleaner free from the manufacturer or producers. Have you ever thought why do companies distribute their products free like this? Because, their main intention is to attract the consumers’ attention towards the product and then make them feel tempted to buy the product. This is a tool of sales promotion.

Advertising

  1. Objectives: Objectives of advertising is to to create a favourable consideration for the product.

  2. Effect: It has a long term effect.

  3. Nature: Advertising is recurring in nature.

In the market, sometimes we see the special offer like "Buy one get one free offer"; on a particular brand of tea there was 50 gm extra in a 250 gm pack or one glass or bowl free with 500 gm. pack. There are innumerable examples where the manufacturer or the seller tries to tempt you to buy his product by offering discounts, extra quantity or a chance to win grand prizes, etc. All such activities are known as sales promotion.

In the market, you find a number of shops selling the same product but you prefer to go to a particular shop only. Why? This happens primarily because of the way the staff of the shop attend to you. The salesperson at the counter welcomes you with a smile, shows keen interest in your purchase and explains about the different varieties of the product in such a way that it become easier for you to take a decision.

Once your friend had gone to a readymade garment shop to buy a pant for his younger brother. The salesperson showed him the latest collection of garments. By the time the process of sale concluded, he had also purchased one for him. The reason for such unplanned purchase was the effect of salesmanship. The salesperson at the counter first assessed his interest in the new fabric available and then persuaded him to buy it.

Advertising media are the means through which messages regarding products and services are transmitted from the advertising firm to people at whom that product is targeted. Many types of media are available for the purpose.

In today’s competitive world there are innumerable products competing with each other. Hence, it is necessary that information regarding features, prices and availability of the product is frequently communicated to the consumers so as to ensure a reasonable market share for the manufacturer. Not only that, it also helps the consumers to make a right choice.

Publicity is like advertising. But it is the news carried in the mass media about a product or about an organisation. But money is not paid for it publicity. Publicity can be positive or negative. Publicity is a powerful tool of communication as it can make or break a product or company.

While watching a movie in the cinema hall or a television at home you must have noticed that suddenly there is a break and a model appears on the screen displaying a product, indicating its special features, prices, etc. This is followed by similar appearances relating to other products before the movie is resumed. These displays are known as advertisements which are used by different firms to inform a targeted group of customers about their product, its quality, availability, price etc.

Promotion refers to the process of informing and persuading the consumers to buy certain product. By using this process, the marketeers convey persuasive message and information to its potential customers.

Choice of an appropriate distribution channel is very important as the pricing as well as promotion strategy are dependent upon the distribution channel selected. Not only that, the route which the product follows in its journey from the manufacturer to the consumer also involves certain costs. This in turn, affects not only the price of the product but also the profits.

While a manufacturer of a product is located at one place, its consumers are located at innumerable places spread all over the country or the world. The manufacturer has to ensure the availability of his goods to the consumers at convenient points for their purchase. He may do so directly or through a chain of middlemen like distributors, wholesalers and retailers.

1. Cost Based Pricing

Under this method, price of the product is fixed by adding the amount of desired profit margin to the cost of the product. If a particular soap costs the marketeer Rs. 8 and he desires a profit of 25%, the price of the soap is fixed at Rs 8 + (8 x 25 / 100) = Rs. 10. While calculating the price in this way, all costs (variable as well as fixed) incurred in manufacturing the product are taken into consideration.

Price is the consideration in terms of money paid by consumers for the bundle of benefits he or she derives by using the product or service. In simple terms, it is the exchange value of goods and services in terms of money. Pricing (determination of price to be charged) is another important element of marketing mix and it plays a crucial role in the success of a product in the market.

In order to optimise the product requirements by the consumers, importance should be given to the following elements or components of product mix:

Product refers to the goods and services offered by the organisation for sale. Here, the marketers have to recognise that consumers are not simply interested in the physical features of a product but a set of tangible and intangible attributes that satisfy their wants.