CBSE Sample Papers for Class 11 Business Set 5 with Solutions

Students must start practicing the questions from CBSE Sample Papers for Class 11 Business with Solutions Set 5 are designed as per the revised syllabus.

CBSE Sample Papers for Class 11 Business Set 5 with Solutions

Time : 3 Hours
Maximum Marks : 80

General Instructions:

1. This question paper contains 34 questions.
2. Marks are indicated against each question.
3. Answers should be brief and to the point.
4. Answers to the questions carrying 3 marks may be from 50 to 75 words.
5. Answers to the questions carrying 4 marks may be about 150 words.
6. Answers to the questions carrying 6 marks may be about 200 words.
7. Attempt all parts of the questions together.

Question 1.
Saransh and Vishal have their pharmaceutical factory in Jaipur. Their main focus is providing quality products at
reasonable prices. They procure the services of a renowned medicine specialist Mr. Andrews from Germany who gives them feedback about the quality of their products. Because of increasing competition with foreign Pharmaceutical Companies, their market share is decreasing and they are suffering huge losses. To ensure their existence in the market, their management is concentrating on full usage of machines, and reducing wastage, and effective promotion of their products to increase the sales. Identify the economic activity Mr. Andrews performs. [1]
(A) Business
(B) Profession
(C) Employment
(D) Partnership
Answer:
Option (B) is correct.
Explanation: Profession is an economic activity that requires special knowledge and skill to be applied by individuals for earning their living.

Question 2.
It is convenient for sole proprietorship to expand or curtail its business activities. Which feature of sole
proprietorship is highlighted in the above lines. [1]
(A) Limited Resources
(B) Flexibility
(C) Unlimited liability
(D) Quick Decision Making
Answer:
Option (B) is correct
Explanation: In a sole proprietorship firm, all decisions are taken by the proprietor himself. So, there is flexibility.

Question 3.
Though the operations and activities of Global Enterprises extend beyond the physical boundaries of their own
countries, control is mainly exercised by which of the following : [1]
(A) Subsidiaries
(B) Headquarters
(C) Affiliates
(D) Branches
Answer:
Option (B) is correct
Explanation: A place from which a commander performs the functions of command.

Question 4.
Which insurance policy should be taken by the shipping company in order to insure the loss of freight in case
cargo does not reach the destination due to damage or loss in transit? [1]
(A) Ship insurance
(B) Hull insurance
(C) Freight insurance
(D) Cargo insurance
Answer:
Option (C) is correct
Explanation: Freight insurance is a type of marine insurance for reimbursement of loss of freight to the shipping company.

Question 5.
E-business is more comprehensive than e-commerce as e-business includes not only e-commerce but also
comprises various other business transactions and functions conducted electronically. [1]
(A) The statement is true
(B) The statement is false
(C) The statement is partially true
(D) None of the above AE
Answer:
Option (A) is Correct
Explanation: e-business is a more elaborate term and comprises various business transactions and functions conducted electronically, including the more popular gamut of transactions called ‘e-commerce.’ E-commerce covers a firm’s interactions with its customers and suppliers over the internet. E-business includes not only e-commerce, but also other electronically conducted business functions such as production, inventory management, product development, accounting and finance and human resource management. E-business is, therefore, clearly much more than buying and selling over the Internet, i.e., E-commerce.

Question 6.

A flagship initiative of the Government of India intended to build a strong eco-system for nurturing innovation and to generate large scale employment opportunities. Which scheme is identifiable through the symbol? [1]
(A) Mudra Yojana Scheme
(B) Atal Innovation Mission
(C) Start-up India scheme
(D) Stand-up India scheme
Answer:
Option (C) is correct.
Explanation: Start up India is a flagship initiative of the Government of India, intended to build a strong eco-system for nurturing innovation and Start-ups in the country that will drive sustainable economic growth and generate large scale employment opportunities.

Question 7.
Outsourcing of advertising services will come under the scope of ………………… . [1]
(A) BPO
(B) KPO
(C) Both BPO and KPO
(D) Horizontal service provider
Answer:
Option (A) is Correct.
Explanation: Business process outsourcing is contracting out some of a company’s non-core tasks and responsibilities to a third party. It keeps an emphasis on its main activities despite outsourcing non-primary business to a vendor. It is effectively carrying out corporate endeavours outside of the organisation.

Question 8.
Shuddh Masala Udyog is a Partnership firm, which deals in trading of all varieties of spices. The partners focus on maximising the profits on the basis of customer satisfaction. Due to increasing competition in the market, the leyel of profits is falling. One of the partners advised to use substandard raw-material, to do little adulteration in products, and to maintain their profit margin. But the other partners opposed it by saying that the consumers can take legal action against the firm. Suggestion came from other partners to cut down the wages of workers and to withdraw the brunch facility given to them, but it was discarded on the ground that it will create discord and unsatisfactory environment. Finally, it was decided that to maintain their profits the firm has to boost its sale and public image by fulfilling the social responsibility

Social responsibility improves public image because of the following reasons? [1]
(A) Mandatory for the business
(B) Legal obligation for business
(C) Satisfied workers and consumers contribute in the success of the business
(D) Avoidance of government interference
Answer:
Option (C) is correct

Question 9.
Which of the following is false regarding equity shares : [1]
(A) Funds raised through equity shares is known as ownership capital
(B) Equity shareholders do not get a fixed dividend
(C) Equity shareholders receive what is left after all other claims on the company’s income and assets have been settled
(D) Liability of equity shareholders is unlimited
Answer:
Option (D) is correct
Explanation: Equity share capital is a prerequisite to the creation of a company. Equity shareholders do not get a fixed dividend but are paid on the basis of earnings by the company. They are referred to as ‘residual owners’ since they receive what is left after all other claims on the company’s income and assets have been settled. They enjoy the reward as well as bear the risk of ownership. Their liability, however, is limited to the extent of capital contributed by them in the company.

Question 10.
Read the following statements: Assertion (A) and Reason(R). Choose the correct alternative from those given below: [1] Assertion (A): Issue of debentures dilutes the control of equity shareholders on management.
Reasoning (R): The debenture issued by a company is an acknowledgment that the company has borrowed a certain amount of money, which it promises to repay at a future date. Debenture holders are, therefore, termed as creditors of the company.
Alternatives:
(A) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
(B) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A)
(C) Assertion (A) is true but Reason (R) is False
(D) Assertion (A) is False but Reason (R) is True
Answer:
Option (D) is correct
Explanation: The issue of debentures does not dilute the control of equity shareholders. They are the creditors of the company.

Question 11.
Investment in equipment in small enterprises which are engaged in rendering services ranges between …………… and ………………. .[1]
(A) 5 lakhs, 1 crore
(B) 5 laths, 2 crores
(C) 10 lakhs, 1 crore
(D) 10 laths, 2 crores
Answer:
Option (D) is correct
Explanation: The limit of investment in plant and machinery for a small enterprise is Rs. 10 lakh to Rs. 2 crore.

Question 12.
A lot of small businesses in India are largely sick units. Which of the following is an internal cause leading to
sickness and closure of such units : [1]
(A) Delayed payment
(B) Shortage of working capital
(C) Lack of skilled and trained labour
(D) Lack of demand for their products
Answer:
Option (C) is correct
Explanation: Small Scale Industries (SSIs) play vital role in the economic development of a country. Some SSIs turn out to be sick due to various reasons. Some of the major causes for sickness in small scale industries are dealt in brief:

1. Inadequacy of working capital
2. Non-availability of credit
3. Poor and obsolete technology
4. Non availability of raw material
5. Marketing problems

Question 13.
Statement I: National Small Industries Corporation (NSIC) was set up in 1955 to promote, aid and foster the growth of small-scale units in India.
Statement II: It supplies imported machines and raw materials to small scale industries on easy hire-purchase schemes.
Choose the correct option from the following: [1]
(A) Statement I is true and II is false
(B) Statement II is true and I is false
(C) Both the statements are true
(D) Both the statements are false
Answer:
Option (C) is correct

Question 14.
Neeru was a daily wage labourer when she decided to be her own boss and transformed herself as a successful businesswoman. She started her small-scale business of making Pickles using organic fruits and vegetables with total investment of ?10 lakhs along with few of her neighbours using their free time at home. She invested ?2 lakhs by selling her jewellery and using personal savings and ?6 lakhs were contributed by her friends who are members of her business. They named their venture as ‘SakhiAachaar’. They launched their new range of pickles using aloe vera, turmeric, and other herbs, for boosting immunity of the users. They were able to supply the entire district. One of the members suggested that they should make herbal candies too. The products made by them were well-liked and appreciated by the people.

Identify the quality of Neeru as an entrepreneur in the above case. [1]
(A) Innovator
(B) Job provider
(C) Risk bearer
(D) All of the above
Answer:
Option (D) is correct

Question 15.
In which of the following cases is a firm’s participation in the export/import operations minimum while most of
the tasks are carried out by some middlemen: [1]
(A) Direct exporting/importing
(B) Indirect exporting/importing
(C) Entrepot
(D) None of the above
Answer:
Option (B) is correct
Explanation: In indirect exporting the manufacturer hires the services of an export intermediary agency to export his goods through the intermediaries.

Question 16.
Statement I: A proforma invoice is a document that contains details as to the quality, grade, design, size, weight and price of the export product.
Statement II: Proforma Invoice is sent by the importer to the exporter.
Choose the correct option from the following: [1]
(A) Statement I is true and II is false
(B) Statement II is true and I is false
(C) Both the statements are true
(D) Both the statements are false
Answer:
Option (A) is correct
Explanation: Proforma invoice is sent by the exporter to the importer talking about the details of the product and the terms on which the export will take place.

Question 17.
Import general manifest is a document on the basis of which unloading of cargo takes place. Who among the following is responsible for preparing the import general manifest:
(A) Importer
(B) Exporter
(C) Person in charge of the carrier
(D) Shipping company
Answer:
Option (C) is correct

Question 18.
Match the objectives given in column I with the suitable concept given in column II. [1]

(A) 1. (iv), 2. (iii), 3. (i), 4. (ii)
(B) 1. (ii), 2. (iii), 3. (iv), 4. (i)
(C) 1. (iii), 2. (iv), 3. (ii), 4. (i)
(D) 1. (iii), 2. (i), 3. (iv), 4. (ii)
Answer:
Option (A) is correct

Question 19.
The principle of indemnity is not applicable to which of the following ? [1]
(A) Fire Insurance
(B) Life Insurance
(C) Marine Insurance
(D) All of these
Answer:
Option (B) is correct
Explanation: All insurance contracts of fire or marine insurance are contracts of indemnity. According to it, the insurer undertakes to put the insured, in the event of loss, in the same position that he occupied immediately before the happening of the event insured against. In other words, the insurer undertakes to compensate the insured for the loss caused to him/her due to damage or destruction of property insured. The compensation payable and the loss suffered are to be measured in terms of money. The principle of indemnity is not applicable to life insurance.

Question 20.
Debentures are a source of raising …………….. finance. [1]
(A) Long-term
(B) Medium-term
(C) Short-term
(D) None of the above
Answer:
Option (A) is correct.
Explanation: Debentures are an important instrument for raising long term debt capital. A company can raise funds through issue of debentures, which bear a fixed rate of interest.

Question 21.
Arun has just passed his 10^th standard and has opted for Business Studies as his optional subject. During his initial classes regarding this subject, he is not able to understand the concept of business. You being the teacher of this subject explain to him any three characteristics of business. [3]
Answer:
Characteristics of business are as follows :

• Economic Activity : Business is an economic activity as it includes exchange of goods and services with the purpose of earning money or livelihood.
• Uncertainty of Returns : In business, the returns on amount invested are not certain. There is even a possibility of loss.
• Profit Earning : The primary objective of business is to earn profit. For this, businessmen make all the possible efforts to increase the volume of sales and reduce cost.

Question 22.
State three reasons as to why is commerce considered as the backbone of industry and other business activities?
[3]
OR
Rohit is not able to understand the difference between Trade and Auxiliaries to Trade. Help him in understanding the same and also give their classifications. [3]
Answer:
Commerce is considered as the backbone of industry because it performs the following functions:

1. Helps in eliminating the hindrances of persons.
2. Helps in eliminating the hindrances of place.
3. Helps in eliminating the hindrances of time.
4. Helps in eliminating the hindrances of finance.
5. Helps in eliminating the hindrances of risk.
6. Helps in eliminating the hindrances of information. [Any three]

OR
Trade involves buying and selling of goods. It links the producer and the consumer. It is classified as follows:

1. Internal or home trade.
2. External or foreign trade.

Auxiliaries to trade means those activities which support or assist trade. These are an internal part of commerce in particular and business activity in general. Main auxiliaries are:

1. (i) Transportation and communication.
2. (ii) Warehousing
3. (iii) Banking and finance
4. (iv) Insurance
5. Advertising

Question 23.
Kiran is a sole proprietor. Over the past decade, her business has grown from operating a neighbourhood corner shop selling gift items, such as artificial jewellery, purses, small bamboo plants, mobile covers, showpieces, photo frames, etc. to a retail chain with three branches in the city. Although she looks after the varied functions in all the branches, she is wondering whether she should form a company to better manage the business. She also has plans to open branches countrywide. On the basis of above information answer the following questions :
(i) State one benefits of remaining a sole proprietor.
(ii) State two benefits of converting to a joint stock company. [3]
Answer:
(i) Sole beneficiary of profits: All the profits earned by the sole proprietorship firm belong solely to the proprietor.

(ii) (a) Scope for expansion: A company can arrange for large financial resources as compared to other forms of business organisations i.e., sole proprietorship, partnership, etc. It can raise additional capital from the public by issuing shares or debentures, through loans from banks and financial institutions, etc.

(b) One of the biggest drawing factors of a joint stock company is the limited liability of its members. Their liability is only limited up to the unpaid amount on their shares. Since their personal wealth is safe, they are encouraged to invest in joint stock companies.

Question 24.
State any three agency functions of a Commercial Bank. [3]
OR
Why are banks called debtors as well as creditors? [3]
Answer:
Agency functions of a Commercial Banks are as follows:

1. Collection and payment of cheques.
2. Purchase and sale of securities.
3. Advise customers on financial

OR
Debtor is a person who owes some amount of money to a person and creditor is a person who has to collect money from a person or to whom a person owes money.

A bank owes money to its depositors that is why it is called debtor. On the other hand, a bank grants loan also and all those who have taken loan owe money to banks. That is why a bank is also called creditor. A bank is a debtor for its depositors and creditor for its loan holders.

Question 25.
Comment on the following features of co-operative society: [4]
(i) Legal status,
(ii) Control.
OR
Explain the following terms in brief:
(i) Perpetual succession.
(ii) Common seal. [4]
Answer:
(i) Legal Status: It is compulsory for a co-operative society to get registered under Co-operative Societies Act 1912. This accords a separate identity to the society which is distinct from its members. As a result of being a separate legal entity it is not affected by the entry and exit of its members.

(ii) Control: In a co-operative society, the power to take decisions lies in the hands of an elected managing committee. Through the right to vote every member is given a chance to participate in the management and all the decisions taken by the management committee on the basis of majority
OR
(i) Perpetual succession: A company being a creation of the law, can be brought to an end only by law. It will only cease to exist when a specific procedure for its closure, called winding up, is completed. Members may come and go out, but the company continues to exist.

(ii) Common seal: The company being an artificial person acts through its Board of Directors. The Board of Directors enters into an agreement with others by indicating the company’s approval through a common seal.

Question 26.
State two merits and two demerits of a government company. [4]
OR
Explain any four features of a Multinational Company. [4]
Answer:
The limitations of government company are:

(i) Provisions of Companies Act not relevant: In some government company, the government is the only shareholder. The management and administration lie in the hands of the government. Some of the provisions of the Companies Act do not have much relevance.

(ii) Evades constitutional responsibility: In some of the companies, the provisions of the Companies Act do not have much relevance because the government is the only shareholder. These companies are not directly answerable to the parliament; thus, they evade constitutional responsibility, which an enterprise financed by the government should have.

Some of the merits are:

1. Ease of formation : A separate Act of the Parliament is not required for setting up a government company, as it is established under the Indian Companies Act, 2013.
2. Autonomy: A government company has full autonomy in doing its business operations and in all business decisions. It can take any decision which is favourable for the company for its effective growth.

OR
Four features of an MNC are explained below:

1. International operations: Global MNCs run their foreign operations by establishing branches or subsidiary companies in host countries.
2. Giant size: MNCs have huge base of assets and revenues because of their huge size operations spread in a number of countries.
3. Centralised control: MNCs have a centralised control system. All the decisions for subsidiaries or branches are taken by the headquarters of MNCs. Headquarter of MNCs exercise control over their foreign subsidiaries.
4. Modern technology and management practices: Most of the MNCs compete in the international markets on the basis of their modem technology and efficient management practices. In fact, these global enterprises are sources of spreading of modern technology and management practices in the world.

Question 27.
Ram Kapoor Publications is a very old publishing house where all the work is done in a traditional manner. It
appointed a new CEO for the company. On analysis, the CEO found out that a lot of activities being done in the publishing house can be done from outside at a less cost and in a better way. To implement his ideas, he held a meeting of the managers of the company. In the meeting he informed the managers that from now on, the company will only focus on the core areas of operation and the remaining activities will be outsourced for perfection and to save time and money. [4]
(a) Which two concepts did the new CEO give effect to?
(b) Give two examples each of the concepts identified.
Answer:
(a) BPO and KPO
Business Process Outsourcing (BPO) has gained ample importance, by providing services related to marketing, human resources, customer support, technical support, etc.

Knowledge Process Outsourcing or KPO is a subset of BPO. KPO involves outsourcing of core functions which may or may not give cost benefit to the parent company but surely helps in value addition. The processes which are outsourced to KPOs are usually more specialized and knowledge based as compared to BPOs. Services included in KPO are related to R&D, capital and insurance market services, legal services, biotechnology, animation and design, etc.

(b) Example of BPO

1. Customer care, i.e., call centre, help desk, etc.
2. Human resources, i.e., recruitment and selection, training and placement, payroll processing, etc.
3. Technical support
4. Services related to finance and accounting
5. Website services, i.e., web hosting, etc.
6. Transcription

Example of KPO

1. Investment research services
2. Market research services
3. Data analytics
4. Business research services
5. Legal process outsourcing
6. Engineering process outsourcing, etc.

Question 28.
Explain the following functions of wholesaler: [4]
(a) Storage Function
(b) Market Information
Answer:
Storage function: The wholesaler also performs the storage function. The goods are purchased by the wholesalers from the manufacturers and stored at warehouses in order to meet the demand of retailers. The wholesalers act as bridge between the production and consumption of goods.

Market information: Wholesalers inform the retailers about the introduction of new products in the market. He also gets feedback from the retailers about the needs and preferences of customers. He passes the information to the producer to make necessary changes in the products

Question 29.
Define service. Name the services which are related to the following cases: [4]
(i) The services which help in removing hindrance of knowledge.
(ii) The services which help in removing hindrance of place.
(iii) The services which help in removing hindrance of time.
(iv) The services which help in removing hindrance of risk.
Answer:
Services are the non-physical, intangible parts of our economy, as opposed to goods, which we can touch or handle. Services, such as banking, education, medical treatment, and transportation make up the majority of the economies of the rich nations. They also represent most of the emerging nations’ economies.

The services which are related to the following cases:
(i) Advertisement Segment
(ii) Transport Segment
(iii) Warehousing Segment
(iv) Insurance Segment

Question 30.
“The motive of service dominates the working of co-operative society”. How? [4]
Answer:
The co-operative societies lays emphasis on the values of mutual help and welfare. If any surplus is generated as a result of its operations, it is distributed amongst the members as dividend in conformity with the bye-laws of the society. Therefore it can be said that co-operative societies i.e., aim is to earn some profit for the benefit of its members

Question 31.
(i) Explain the following merits of trade credit:
(a) Simplicity
(b) Flexibility
(c) No extra financial burden
(d) State any two points of difference between Owner’s Fund and Borrowed Funds. [3 + 3 = 6]
OR
(i) Explain the following types of Debentures
(a) Secured and unsecured debentures
(b) Zero interest debentures (ZID) burden
(c) Registered and bearer debentures
(ii) State two points of difference between Shares and Debentures. [3 + 3 = 6]
Answer:
(i) (a) Simplicity: The operation of trade credit method is very simple. It requires just an understanding of the seller of items required by a buyer who wants to avail trade credit.
(b) Flexibility: It is a flexible source of finance. The amount of trade credit may be adjusted according to the need of the buyer.
(c) No extra financial burden: Trade credit is available without any interest. Interest is charged only in the case of delay in payment of trade credit.

(ii) Owner’s Fund and Borrowed Fund

OR
(i) (a) Secured and unsecured debentures: The debentures which create a charge on the assets of the company are called secured debentures and which do not create any charge are known as unsecured debentures.
(b) Registered and bearer debentures: The debentures which are duly recorded in the register of debenture holders maintained by the company and can be transferred only through a regular instrument of transfer are known as registered debentures while the bearer debentures are those which are transferable by mere delivery.
(c) Zero interest debentures (ZID): The debentures which do not carry any explicit rate of interest are known as zero interest debentures. The return to the investor is equal to the difference between the face value of the debentures and its issued price.

(ii) The difference between shares and debentures:

Question 32.
Adhaya limited; a famous group of promoters gets a contract of promoting a toy manufacturing company. Discuss
in brief the steps which are required to be followed to form a toy manufacturing company (A Public Limited Company). [6]
OR
Write short notes on the following: [6]
(i) Minimum subscription.
(ii) Statement in lieu of prospectus.
(iii) Preliminary contracts.
Answer:
The steps which are followed to form a toy manufacturing company (A Public Limited Company) are:
(i) Application for registration: An application in the prescribed format, duly signed by all the partners is to be submitted to the registrar of companies, containing the following information:
(a) Name of the company.
(b) Location of the company.
(c) Memorandum of association.
(d) Articles of association.
(e) Written consent of directors.
(f) Names and addresses of the directors.
(g) Statutory declaration announcing that all the information is true and all the requirements of the act have been duly fulfilled.

(ii) Fees: Required amount of fees is to be deposited with the registrar of companies.

(iii) Issuance of certificate: When the registrar is satisfied with all the formalities, he enters the company’s name in the register and issues a certificate of incorporation.
OR
(i) Minimum subscription: Shares of a private company can easily be allotted without receiving minimum subscription. However, prior to issuing the shares to the public at large, a public company must be in receipt of minimum subscriptions. According to SEBI guidelines, minimum subscription has been fixed at 90% of the entire issue. No allotment shall be made of any share capital of a company offered to the public for subscription unless the amount stated in the prospectus as the minimum amount has been subscribed, according to section 69(1) of the Companies Act.

(ii) Statement in lieu of prospectus: When the company promoters do not want to approach the public for the purchase of the shares, and the promoters are in a position to get the subscriptions from the shares and debentures from a limited circle of their friends, relatives and connections, then in that case, no prospectus needs to be filed and issued. But the applicants who want to purchase the shares have to file “statement in lieu of prospectus” before the allotment of shares. This statement must be duly signed by all the persons named therein as directors. The statement is only required for filing and contains the similar information as required in the prospectus.

(iii) Preliminary contracts: These are the contracts which are signed by the promoters with the third parties before the company’s incorporation.

Question 33.
(a) “Protection of small-scale industries (SSI) by the Government is essential for equality of opportunity”. [3 + 3 = 6]
(i) Why do you think this statement is correct?
(ii) State any two features of small-scale industries,
(b) “Small industries are small in size but play a big role in development of rural areas”.
(i) What is the role of small-scale industries in rural areas?
(ii) State any one problem faced by small-scale business in India.
Answer:
(a) (i) The given statement is correct. Small-scale industries occupy a very important place in the industrial structure of the country. However, they cannot compete with the big industrial firms. They can flourish only when they are protected from the large firms. The government has reserved production of a number of products for the small-scale industry. Moreover, small-scale industries were also given concessions, so steps taken by the government for then- growth are justified.

(ii) (a) Simple managerial structure: It is managed by owners only. Thus, can 1 reap the benefits of direct motivation, secrecy, flexibility, etc.
(b) Labour intensive techniques: There is pre-dominance of labour. These units use labour intensive techniques of production instead of mechanised methods of production

(b) (i) Small-scale industries help in employment generation in the rural areas. It helps in reducing migration of rural people to urban areas and reduces the inequalities of income. The rural areas are able to develop because of SSIs.
(ii) (a) Quality: The weakest point of . small- scale units is maintaining the quality. These business firms have neither adequate resource to invest in quality research nor the expertise to upgrade technology for improving the quality of their products.
(b) Technology: The technology used by these firms is usually outdated. As a result, the production is uneconomical and low.

Question 34.
Puma stores are networks of retail shops owned and operated by Puma Company. These shops operate indifferent
parts of country. One can easily identify these shops in any part of the country as they have same appearance; even their interior is also identical. All the shops are supplied the goods from head office only. Even store sell some goods at uniform prices. [6]
(i) State and explain the type of retail store mentioned in above case.
(ii) State any four features of retail store identified in (i).
Answer:
(i) Chain store
Chain stores or multiple shops are networks of retail shops, which are owned by the single business enterprise. Under this type of arrangement, a number of shops with similar appearance are established in localities, spread over different parts of the country. These different shops normally deal in standardised and branded consumer products, which have rapid sales turnover.

(ii) Features of chain store:
(a) Location: These shops are located in fairly populous localities, where sufficient number of customers can be approached. The idea is to serve the customers at a point which is nearest to their residence or work place, rather than attracting them to a central place.

(b) Centralised purchase: The manufacturing/ procurement of merchandise for all the retail units is centralised at the head office, from where the goods are dispatched to each of these shops according to their requirements.

(c) Branch manager: Each retail shop is under the direct supervision of a Branch Manager, who sends daily report to head office in respect of sales, inventory and cash receipts.

(d) Centralised control: The head office controls all the stores and formulates policies to be followed by them. [6]