Business Services

NCERT Solution

Short Answer Questions

Question 1: Define services and goods.

Answer: A good is a physical product which is capable of being delivered to the purchaser. Sale of good involves transfer of ownership to the buyer.

Services are intangible things which fulfill a customer need. A service is experienced by the consumer and for this the consumer needs to interact with the service provider mechanism.


Question 2: What is e-banking. What are the advantages of e-banking?

Answer: Performing banking transactions through internet in which the customer does not interact with a real person is called e-banking. The customer has to access the website of a bank and he can avail of all the services offered by the bank through its online platform. Following are the advantages of e-banking.

Advantages for Customer:

  1. Provision of 24 hour 365 days services.
  2. Customer can make various permitted banking transactions from his house or office or even through his mobile phone.
  3. Unlimited access and enhanced security gives higher level of customer satisfaction.
  4. Customer can develop a sense of financial discipline because each transaction is recorded and stored in the bank’s database.

Advantages for Bank:

  1. Competitive advantage.
  2. Unlimited network for the bank because access is not limited to geographical boundaries.
  3. Helps in reducing the load on branches.

Question 3: Write a note on various telecom services available for enhancing business.

Answer: Various telecom services available for enhancing business are as follows:

  1. Cellular mobile services: These services provide voice, non-voice, messaging service, data services and PCO services. The mobile service enables a customer to communicate while he is on the go.
  2. Radio paging services: Radio paging services provide one-way communication which involves transfer of numeric or alpha numeric data.
  3. Fixed line services: Fixed line services provide voice, data and PCO services.
  4. Cable services: At present cable service can only be utilized for providing one way entertainment services.
  5. VSAT services: Very Small Aperture Terminal is a satellite based communication service. It provides better connectivity and is highly reliable for communication even in remote areas.
  6. DTH Services: Direct to Home is also a satellite based communication service which is utilized for providing one way entertainment services.

Question 4: Explain briefly the principles of insurance with suitable examples.

Answer: Following are the principles of insurance:

  1. Utmost good faith: A contract of insurance is a contract made on good faith. The clause of good faith applies to both; the insurer and the insured. The insured should not hide any relevant information while the contract is being made. Similarly, the insurer should reveal all the related clauses and facts to the insured. For example; a person buying a life insurance policy should not hide any fact regarding his health.
  2. Insurable Interest: The insured must have an insurable interest in the subject matter of insurance. This means that the person who is buying the insurance policy must have some pecuniary interest in the subject matter of insurance. For example; it is not a car which is insured but the pecuniary interest of the owner in the car which is being insured.
  3. Indemnity: All insurance contracts are contracts of indemnity. This means that in case of damage to the insured object, the insurer would pay suitable monetary compensation to the insured. But the principle of indemnity is not applicable to life insurance.
  4. Proximate Cause: According to this principle, only those causes are covered which are clearly mentioned in the contract. When more than one cause is involved then the most direct cause of damage is taken into consideration.
  5. Subrogation: This clause means that the insurer has the right to the property for which insurance has been claimed. For example; when someone’s bike is stolen and the insurance company pays compensation for the mishap, then the insurance company becomes the owner of the bike. This is done so that if the bike is recovered in future, the original owner should not be in a position to get any profit by selling the bike.
  6. Contribution: This clause means that the insurer has the right to call upon other insurers to contribute towards payment for the damage. If a property is insured by more than one insurer, then all the insurers have to share the cost of damage.

Question 5: Explain warehousing and its functions.

Answer: Warehousing involves keeping the physical stock at a central location in scientific and systematic manner and then supplying the goods to point of sale as and when the demand comes. Warehousing involves keeping the goods so that their quality can be preserved.

Functions of Warehousing:

  1. Consolidation: A warehouse aggregates goods from different production centres. For example; potatoes from farms from different parts of a state can be aggregated in a warehouse from where they are further channelized.
  2. Break the Bulk: A warehouse also breaks the bulk. Goods come in bulks to the warehouse and they are sorted into smaller lots and repackaged so that they could be supplied to different customers.
  3. Stockpiling: Seasonal storage of foodgrains and other farm produce is another key function of warehousing. A particular farm item is produced during a particular harvest season but it would be used throughout the year. To facilitate the availability of food grain throughout the year there is always a need to maintain the stock.
  4. Value-added Services: Warehouses also provide some value-added services like transit mixing, packaging and labeling. Grading the product according to quantity and dividing the good into smaller lots is another function of warehouse.
  5. Price stabilization: Warehouses also help in price stabilization. When supply is more than demand, a warehouse prevents prices from nose-diving by holding the stock. Similarly, when production is less than demand; the buffer stock in a warehouse helps in prices from going very high.
  6. Financing: Warehouses also give credit to the owners on security of goods. They also supply goods on credit to customers. Thus, warehouses also play the role of financing.


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