NCERT Solutions For Class 11 Business Studies Chapter 4 Business Services

Warehousing means retaining the goods for future use. It implies holding or preservation of goods from time of their production or purchase until their consumption or sale. The warehousing service plays an important role in supply and distribution of goods after their manufacture. It creates the time utility to the producers and consumers. It helps in maintaining balance between demand and supply.

Some of the functions performed by warehousing are

Consolidation: In this the warehouse receives and consolidates materials/ goods from different production plants and dispatches the same to a particular customer on a single transportation shipment.

Break the bulk: The warehouse performs the function of dividing the bulk quantity of goods received from the production plants into smaller quantities. These smaller quantities are then transported according to the requirements of clients to their places of business.

Stock piling: The next function is the seasonal storage of goods to select businesses. Goods or raw materials which are not required immediately for sale or manufacturing are stored in warehouse.

Value added services: Goods sometimes need to be opened and repackaged and labeled again at the time inspection by prospective buyers. Grading according to quantity and dividing goods in smaller lots is another function.

Price stabilization: Warehousing performs the function, warehousing performs the function of stabilising prices by adjusting the supply of goods with the demand situation.

Financing: Warehouse owners advance money to the owners on security of goods and further supply goods on credit terms to customers.

Insurance may be classified as

• Life insurance;
• Fire Insurance and;
• Marine insurance.

Life Insurance: Life insurance may be defined as a contract in which the insurer in consideration of a certain premium, either in a lump sum or by other periodical payments, agrees to pay to the assured or to the person for whose benefit the policy is taken, the assured sum of money, on the happening of a specified event contingent on the human life or at the expiry of certain period.

Life insurance policy protects against uncertainty of life but now there are various types of insurance policies to suit the requirements of an individual.

The various types of life insurance policies are:

• Whole life policy: in this kind of lolicy the amount payable to the insured will not be paid before the death of the insured. The premium will be payable for a fixed period (20 to 30 years) or for the whole life of the assured.
• Endowment life Assurance Policy: The insurer (insurance company) undertakes to pay a specified sum when the insured attains a particular age or on his death which ever is earlier.
• Joint Life policy: This policy is taken up by two or more persons. The premium is paid jointly or by either of them in installments or lump sum. Usually this policy is taken up by husband and wife jointly or by two partners in a partnership firm where the amount is payable to the survivor on the death of either of the two.
• Annuity Policy: Under this policy, the assured sum or policy money is payable after the assured attains a certain age in monthly, quarterly, half yearly or annual installments. This is useful for those who prefer a regular income after a certain age.
• Children’s Endowment Policy: This policy is taken by a person for his/ her children to meet the expenses of their education or marriage.

Fire Insurance: Fire insurance is a contract whereby the insurer , in consideration of the premium paid undertakes to make good any loss or damage caused by fire during a specified period upto the amount specified in the policy. The fire insurance policy is generally taken for a period of one year after which it is renewed from time to time.

A claim for loss by fire must satisfy the two following conditions-

• There must be actual loss and
• Fire must be accidental and non-intentional.

The risk covered by fire insurance contract is the loss resulting from the fire or some other cause, and which is the proximate cause of the loss. If overheating without ignition causes damage, it will not be regarded as a fire loss within the meaning of fire insurance and the loss will not be recoverable from the insurer.

Marine insurance: A marine insurance contract is an agreement whereby the insurer undertakes to indemnify the insured in the manner and to the extent thereby agreed against marine losses. Marine insurance provides protection against loss by marine perils or perils of the sea. Marine insurance is slightly different from other types. There are three things involved i.e ship or hull, cargo or goods and freight.

• Ship or hull insurance – Since the ship is exposed to many dangers at sea, the insurance policy is for indemnifying the insured for losses caused by damage of the ship.
• Cargo insurance – An insurance policy can be issued to cover against the risks to cargo while being transported by sea. The risk may be of theft, lost of goods or on voyage or at port.
• Freight insurance – Shipping company is insured under freight insurance for reimbursing the loss of freight to the shipping company if the cargo does not reach the destination due to damage or loss in transit.

Indian post and telegraph department provides various postal services across India. For providing these services the whole country has been divided into 22 postal circles. These circles manage the functioning of the various head post offices, sub- post offices and branch post offices. There are 154149 post offices and 564701 letter boxes processing 1575 crore mails every year.

The various facilities provided by postal department are broadly categorised into

Financial facilities: These facilities are provided through the post office’s saving schemes like Public Providend Fund ( PPF), Kisan Vikas Patra and National Savings Certificates in addition to normal retail banking functions of monthly income schemes, recurring deposits, savings account, time deposits and money order facility.

Mail facilities: Mail services consist of parcel facilities that is trans- mission of articles from one place to another, registration facility to provide security of the transmitted articles and insurance facility to provide insurance cover for all risks in the course of transmission by post.

Postal department also offers allied facilities like:

• Greeting post: A range of delightful greeting cards for every occasion.
• Media post: An innovative and effective vehicle for Indian corporates to advertise envelopes, aerograms, telegrams and also through letter boxes.

Banks perform a variety of functions. Some of them are the basic or primary functions of a bank while others are agency or general utility services in nature.

The following are the basic functions:

Acceptance of deposit: Banks accept deposits and pay interest on them as these deposits from the basis of loans given by banks. These deposits are taken through current account, saving accounts and fixed deposits. Current account and saving accounts deposits can be withdrawn anytime but fixed deposits are time deposits with fixed maturity. High rate of interest is paid on fixed deposits as compared to savings accounts.

Lending of funds: The second activity of commercial banks is to provide loans and advances out of the money received through deposits in the form of overdrafts, cash credits, discounting trade bills, term loans, consumer credit and other miscellaneous advances. These funds lent out by banks contribute to trade, industry, transport and other business activities.

Cheque facility: Banks collects cheques of their customers drawn on other banks. Cheque is a credit instrument used for withdrawal of deposits.

There are two types of cheques, mainly

• bearer cheques: These are encashable immediately at the bank counters and
• crossed cheques: These are to be deposited only in the payees account.

Remittance of funds: Commercial banks provide facility of fund transfer from one place to another on account of the interconnectivity of branches. The transfer of funds is administered by using bank drafts, pay orders or mail transfers on which the bank charges a nominal commission. The bank issues a draft for the amount on its own branches at other places or other banks at those places. The payee can present the draft on the drawee bank at this place and collect the amount.

Allied services: In addition to the above, banks provide allied services such as bill payments, locker facilities, underwriting services. They also perform other services like buying and selling of shares and debentures on instructions and other personal services like payment of insurance premium, collection of dividend etc.

Services are intangible activities which are separately identifiable and provide satisfaction of wants. Their purchase does not result in the ownership of anything physical. Services involve an interaction to be realized between the service provider and the consumer.

There are five characteristics of services as below:

• Intangibility: Services cannot be touched, they can only be experienced and hence the quality of the service cannot be determined without using it. Thus the service providers work on creating desired service so that the customer is satisfied by the experience. For example – treatment by the doctor should be a favourable experience.
• Inconsistency: Services have to be performed each time according to different customers demand as there is no standard tangible product on offer. Service providers have to continuously modify their product to closely meet the requirement of the customers. For example mobile services.
• Inseparability: Activities of production and consumption are performed simultaneously in case of services which makes the production and consumption of services to be inseparable as services have to be consumed as and when they are produced.
• Absence of inventory: Services are intangible and perishable and hence cannot be stored for future use. This implies that the supply needs to be managed according to demand as the service has to be performed as and when the customers asks for it. For example flight ticket can be stored but flight journey can be experienced only when the airlines provide it.
• Involvement: Participation of the customer in the service delivery process is an important characteristic. A customer has the opportunity to get the services modified according to specific requirements.

Warehousing means retaining the goods for future use. It implies holding or preservation of goods from time of their production or purchase until their consumption or sale. The warehousing service plays an important role in supply and distribution of goods after their manufacture. It creates the time utility to the producers and consumers. It helps in maintaining balance between demand and supply.

Some of the functions performed by warehousing are:

Consolidation: In this the warehouse receives and consolidates materials/ goods from different production plants and dispatches the same to a particular customer on a single transportation shipment.

Break the bulk: The warehouse performs the function of dividing the bulk quantity of goods received from the production plants into smaller quantities. These smaller quantities are then transported according to the requirements of clients to their places of business.

Stock piling: The next function is the seasonal storage of goods to select businesses. Goods or raw materials which are not required immediately for sale or manufacturing are stored in warehouses.

Value added services: Goods sometimes need to be opened and repackaged and labeled again at the time inspection by prospective buyers. Grading according to quantity and dividing goods in smaller lots is another function.

Price stabilization: Warehousing performs the function, warehousing performs the function of stabilising prices by adjusting the supply of goods with the demand situation.

Financing: Warehouse owners advance money to the owners on security of goods and further supply goods on credit terms to customers.

The following are the principles of insurance:

Utmost Good Faith: The insurer and the insured both must show good faith towards each other and give correct information about the subject matter of insurance and the terms of policy, the absence of which may make the contract void. All contracts of insurance require both the parties to disclose all the facts correctly & honestly.

• Example: If Sonia is a heart patient, she should inform the insurance company about this while buying the policy.

Indemnity: This principle states that the insurer undertakes to compensate the insured for the loss caused to him due to damage of the property insured. All insurance contracts of fire and marine insurance are the contract of indemnity. This principle is not applicable to life insurance.

• Example: If an individual suffers a loss of 2 lakhs in an accident then the company will accept a claim up to Rs 2 lakhs and not more.

Insurable Interest: Insurable Interest refers to some pecuniary interest in the subject matter of insurance contract. As per this principle, the insured must have an interest in the protection of the thing or life insured, so that he will suffer financially on the happening of the event against which he is insured. In case of life insurance, it is necessary to have insurable interest at the time of taking the policy. In case of marine, it should be present at the time of loss. In fire insurance policies, insurable interest must be present both at the time of taking the policy & at the time of loss.

• Example: A business person has an insurable interest in his or her land, house and other properties.

Proximate cause: When the loss is the result of two or more causes the proximate cause means the direct, the most dominant and most effective cause of which the loss is a natural consequence.

• Example : If an individual suffers a loss in a fire accident, then this should already be a part of the contract in order for this person to claim the insurance amount.

Subrogation: It refers to the right of the insurer to stand in the place of the insured, after settlement of a claim, as far as the right of the insured in respect of recovery from an alternative source is involved.

• Example: If a person receives `1 lakh for his or her damaged stock, then the ownership of the stock will be transferred to the insurance company and the person will have no hold on the stock.

Contribution: As per this principle it is the right of an insurer who has paid claim under insurance, to call upon other liable insurers to contributor for the loss payment.

• Example: If a person A insures his house for ` 2 lakh with the insurer B and for ` 1 Lakh with another insurer C then in incase of a loss of ` 90000, insurer B and insurer C together will pay A ` 90,000 and not more.

Mitigation: This principle states that it is the duty of the insured to take reasonable steps to minimize the loss or damage to the insured property.

• Example: If a person has insured his house against fire, then, in case of fire he or she should take all possible measures to minimise the damage, to the property in the manner he or she would have done in the absence of insurance.

The various telecom services available for enhancing business are:

• Cellular mobile services: These include all types of telecom services including sending/receiving voice calls and messages and even video calls.
• Fixed line services: These include all types of voice and non-voice data services to establish linkages of long distance traffic.
• VSAT services: It is a satellite based communication service. It offers a highly flexible and reliable communication services.
• Cable services: These are services within a licensed area of operation to operate one way entertainment related media services.
• DTH services: DTH stands for direct-to-home- DTH service is a type of telecom service provided by DTH companies. The companies transmit TV channels to customers through satellites. The customers can watch multiple channels by installing a small dish antenna and a set –top- box connected to their television set.

E-banking refers to the use of electronic medium for conducting various banking operations such as transferring money, checking accounts and applying for loan. These services are provided by commercial banks to make it easy for their accountholders to conduct banking transaction online from anywhere and at anytime.

The advantages of e-banking from bank’s point of view:

• It proves to be a competitive advantage to the bank.
• It provides unlimited network to the bank, which is not just limited to its branches.
• It reduces load on branches as it takes over some of the accounting functions & establishes centralised database.
• It lowers transaction costs.

The advantages of e-banking from customer’s point of view:

• It provides 24 x 7 services.
• Transactions can be made by customers from home or office or while travelling through mobile telephone.
• By offering unlimited access & greater security, banks gain higher customer satisfaction.
• It inculcates financial discipline in customers.

Services are intangible activities that provide satisfaction of wants, and are not necessarily linked to the sale of a product or another service. A good is a physical product capable of being delivered to a purchaser and involves the transfer of ownership from seller to consumer.

c) Central Warehousing Corporation.

Explanation:

CWC stands for Central Warehousing Corporation. It is a government organisation that manages and operates the warehouses owned by the government.

c) indemnity contract.

Explanation:

Indemnity contract states that the insurer undertakes to compensate the insured for the loss caused to him due to damage of the property insured. All insurance contracts of fire and marine insurance are the contract of indemnity. This principle is not applicable to life insurance.

c) lending of funds.

Explanation:

Insurance is a contract in writing under which one party (insurer) promises to compensate the other party (insured) in case of loss as per the premium. It is a protection against risks. Insurance does not involve lending of funds. Lending is a function of commercial bank. Insurer takes premiums from all the insured members. At the time of happening of a risk, the affected member is compensated by the insurer out of the collected funds. In this way insurance shares the risk among a large pool of members. Insurer receives a huge amount by way of premiums from the policy holders. This money is invested in various income generating schemes. In this way insurance helps in capital formation in a country.

b) flexibility.

Explanation:

Warehouse – It is a place for the storage and preservation of goods in proper condition. It is an establishment for the accumulation of goods. Warehousing – It means retaining the goods for future use. It implies holding or preservation of goods from time of their production or purchase until their consumption or sale. The warehousing service plays an important role in supply and distribution of goods after their manufacture. It creates the time utility to the producers and consumers. It helps in maintaining balance between demand and supply.

c) cellular Companies.

Explanation:

Direct to Home is a satellite based media service provided by cellular companies.