NCERT Solutions for Class 11 Business Studies Chapter 4 - Business Services

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Short Answer Questions:

1. Define services and goods.

Ans. Services refer to intangible actions or efforts performed by individuals or entities for the benefits of other. They are non-material and do not result in the production of a physical object that can be held or touched.
Goods refer to tangible products that are produced or manufactured and can be physically touched, held or consumed. They are typically produced for sale or exchange in the market place and are used to satisfy the needs and wants of consumers.

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

Ans. E-banking, also known as electronic banking, refers to the use of electronic channels, such as the internet, mobile devices, and other electronic means, for conducting various banking activities and transactions. E-banking allows customers to access their bank accounts, conduct transactions, and avail various banking services online without visiting a physical bank branch.

24×7 availability: E-banking allows customers to access their bank accounts and conduct transaction online at any time, providing flexibility and convenience.
Easy access: E-banking can be accessed through mobile phones and computers, making it convenient for customers to conduct transactions whenever and wherever they need.
Reduced load on banks: E-banking enables many functions to be carried out electronically, reducing the workload on banks and streamlining processes.
Time-saving: E-banking eliminates the need for customers to visit banks in person, saving time and effort.

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

Ans. Telecom services are the backbone of every business activity. In the absence of telecommunication every business activity will remain as a dream only. There are lots of developments in convergence of telecom, IT, electronic and media industry worldwide. Government of India has developed Telecom Policy Framework 1999 and Broadband Policy 2004 to realise the dream and India's vision of becoming IT super power by the year 2025.
The various types of telecom services are:

Cellular Mobile Services: It includes all mobile telecom services including voice, non-voice, messages, data service and PCO, services utilising any type of network equipment within their services area. They can also provide direct inter-connectivity with any other type of telecom service provider.
Radio Paging Services: It is an affordable means of communication. It transmits information to persons even when they are mobile. It is a way of information broadcasting solution. Radio paging services are available including tone only, numeric only and alpha/numeric paging.
Fixed Line Services: These are all types of fixed services including voice and non-voice messages and data services to establish linkages for long distance traffic. These are primarily connected through fiber optic cables laid across the country. They provide inter-connectivity with other types of telecom services.

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

Ans. The following are the principles of insurance:

Utmost Good Faith: It is the principle, which states that the insurance contract is based on faith. It is believed that the insurer and the insured will disclose all the important facts to each other.
Example: Ajay, if he is a heart patient, should inform his insurance company about his health issues while buying a life insurance policy.
Insurable Interest: Insurable interest means that the insured must have a financial interest in tine property, life of individual or the object, which is the subject matter of insurance policy.
Example: A businessperson has an insurable interest in his or her land, house and other properties.
Indemnity: The insurer undertakes to put the insured in the event of loss, in the same position that do occupied immediately before the happening of the event insured against.
Example: If an individual suffers a loss of `5 lakh for his in a fire accident, then the insurance company will accept a claim up to `5 lakh and not more.
Subrogation: Subrogation is the principle of insurance under which the insurer becomes the owner of the insured property after making payment to the insured as compensation against the loss caused to the insured property. It means that on receipt of compensation the insured losses the ownership rights on the insured property.
Example: If a person received `2.5 lakh for his or her damaged stock, then the ownership of the stock will be transferred to the insurance company and the person will hold no control over the stock.

5. Explain warehousing and its functions.

Ans. Warehousing refers to the process of storing and managing goods or products in a designated facility, known as warehouse while they are needed for distribution sale, or use.
Functions of warehousing are as follows:

Consolidation: Warehouse receives and consolidates goods from different production stations and dispatches it to customer on a single transporation shipment.
Break the Bulk: Warehouse breaks the bulk received according to the requirements of the client.
Price stabilisation: Warehousing performs the function of stabilising prices by adjusting the supply of goods according to demand.

Long Answer Questions:

1. What are services? Explain their distinct characteristics.

Ans. Services refer to intangible actions or activities that can be identified seperately and are intended to satisfy the needs or desires of the consumer. Unlikely physical products the purchase of services does not involve acquiring any tangible possessions. Services are typically delivered through interactions between the service provider and the consumer.

Characteristics of Services:

Intangible: Services are intangible, i.e., these cannot be seen or touched. We can only feel services or one can only experience them. We cannot find out the quality of service before taking it. One can find out the quality only after experiencing it. So, supplier must try to offer good quality services to customers so that they demand them again after experiencing them.
Inconsistency: Services have to be performed each time according to the demands and expectation of each customer. Same services may be provided differently by different service providers. For example, the banking services provided by nationalised banks are quite different from the banking services provided by private sector or foreign.
Inventory (loss): Services have little or no tangible components and therefore, cannot be stored for future use. There is no need to maintain inventory or stock of services. If service is not consumed immediately then it is a total loss, for e.g., vacant seat in a cinema hall.
Inseparability: The services cannot be separated from the providers services. These are produced and consumed at the same place only. For example, we can separate the medical service provided by a doctor. Doctor and his services are inseparable. Similarly, it applies to lawyer, a chartered accountant, etc.
Involvement: It is the participation of the customer in the service delivery process. A customer has the opportunity to get the service modified according to specific requirements. For e.g., telephone companies provide telephone services but to use this service customer has to make or receive the call.

2. Explain the functions of commercial banks with an example of each.

Ans. The functions of commercial banks :

Acceptance of Deposit: A commercial bank accepts deposits from the people for making investments and granting loans to various economic investors. The money is deposited in banks for the sake of safety as well as to earn interest, the money is deposited in different type of accounts with the bank which are described as below:
(i) Fixed Deposit Account (ii) Current Account (iii) Savings Deposit Account (iv) Recurring Deposit Account.

Lending of funds: Second major function of commercial banks is to provide loans and advances to individuals and business out of the money received through deposits. They get this money as deposits from the public. Various types or methods or procedures to lend money are (i) Cash Credit (ii) Loans (iii) Overdraft (iv) Discounting trade bills etc.
Cheque facility: Banks render a very important service to their customers by collecting their cheques drawn on other banks. The cheque is developed credit instruments for the withdrawal of deposits which service as a convenient and in expensive medium of exchange. For e.g., a businessman can issue a bearer cheque to pay salaries to employees.
Remittance of funds: Banks remit funds for their customers through bank draft from one place to another where they have banches of agencies. The transfer of funds is administered by using bank drafts, pay order or mail transfers. On nominal commission charges. It is also quite safe funds can also be remitted to foreign countries.
Allied Services: In addition to above functions, banks also provide allied services such as bill payments, locker facilities, underwriting service. 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.

3. Write a detailed note on various facilities offered by Indian postal department.

Ans. Indian post and telegraph department provides various postal services across India. For effective postal service the entire country is divided into 22 postal circles. Postal circle manage the day to day functioning of head post office, sub-post offices and branch post office.
The government at national and international levels provides postal service.
The various facilities provided by postal department are broadly categorised are as follows:

Financial Facilities: Various saving schemes are offered by post offices such as Public Provident Fund (PPF), Kisan Vikas Patra, National Savings Certificate, Monthly income schemes, savings account etc. Remittance of foreign exchange on collaboration with Western Union Financial Service, USA is also a part of financial service.
Mail Facilities: Mail services consist of transmission of articles from one place to another along with normal transfer registration facility. They provide security of transits articles and insurance facility that covers all risks in the course of transmission by post.
- Facility to apply passport.
- Postal service has connection with 1000 destination in India and 97 countries where document or things can be sent through Speed Post.
- Facility of media post to corporate for advertising their brands through direct posts, post cards, envelops aerograms, telegrams and letter boxes.

4. Describe various types of insurance and examine the nature of risks protected by each type of insurance.

Ans. Broadly, there are four types of insurance:
(a) Life insurances
(b) Health insurance
(c) Fire Insurance
(d) Marine Insurance

Life insurance: Life insurance is a contract between insurance policyholder and an insurer, where the insurer guarantees to pay a designated beneficiary a sum of money upto the death of the policyholder. In exchange for the coverage, the policyholder typically pays regular premium to the insurance company.
Types of Life Insurance Policies:
1. Whole Life Policy
2. Endowment Life Assurance Policy
3. Annuity Policy
4. Joint Life Policy
5. Children's Endowment Policy
Health Insurance: In this contract, insurer agrees to provide specified health insurance at an agreed upon premium. It provides risk coverage against unforeseen health expenditure.
Fire Insurance: Fire Insurance is a contract whereby the insurer, in consideration of the premium paid, undertakes to compensate the insured for any loss that may result due to the occurrence of fire.
Marine Insurance: Marine insurance is a contract of insurance under which the insurer undertakes to indemnity the insured in the manner and to the extent thereby agreed against marine losses. Marine instance provides protection against loss by marine perils or perils of the sea.

Nature of Risk:

Life insurance: There is element of certainty as death or maturity of period is going to happen so compensation of claim is must.
Fire insurance: There is element of uncertainty and there may not be any claim.
Marine insurance: The loss at sea may not occur and there may not be any claim.

5. Explain in detail the warehousing services.

Ans. Primary warehousing services include the following:

Consolidation: Warehouse receives and consolidates goods from different production stations and dispatches it to customer on a single transportation shipment.

Break the Bulk: Warehouse breaks the bulk received according to the requirements of the client.
Stock piling: The next function of warehousing is the reasonal storage of goods to select business.

Secondary Functions of Warehouse:

Protection of goods: A warehouse provides protection to goods from loss of damage due to heat, dust wind and moisture, etc. It makes special arrangements for different products according to their nature. It cuts down losses due to spoilage and wastage during storage.
Risk Bearing: Warehouses take over the risks incidental to storage of goods. Once goods are handed over to the ware housekeeper for storage, the responsibility of, these goods passes on to the warehouse keeper. Thus, the risk of loss or damage to goods in storage is borne by the warehouse keeper. Since it is bound to return the goods in good condition, the warehouse becomes responsible for any loss, theft or damage etc., thus, it takes all precautions to prevent any mishap.
Financing: When goods are deposited in any warehouse, the depositor gets a receipt, which acts as a proof about the deposit of goods. The warehouse can also issue a document in favour of the owner of the goods, which is called warehouse keeper’s warrant. This warrant is a document of title and can be transferred by simple endorsement and delivery. So while the goods are in custody of the ware housekeeper, the businessmen can obtain loans from banks and other financial institutions keeping this warrant as security. In some cases, warehouses also give advances of money to the depositors for a short period keeping their goods as security.
Processing: Certain commodities are not consumed in the form they are produced. Processing is required to make them consumable. For example, paddy is polished, timber is seasoned, and fruits are ripened, etc. Sometimes warehouses also undertake these activities on behalf of the owners.
Grading and branding: On request warehouses also perform the functions of grading and branding of goods on behalf of the manufacturer, wholesaler or the importer of goods. It also provides facilities for mixing, blending and packaging of goods for the convenience of handling and sale.