EXERCISES
Short Answer Questions
1. Define services and goods.
Answer:
- Services: Services are economic activities that are intangible, have an interaction between the provider and consumer, and satisfy a want. They do not result in the ownership of any tangible product.
- Goods: Goods are physical products that can be delivered to a purchaser, and ownership is transferred from the seller to the buyer.
2. What is e-banking? What are the advantages of e-banking?
Answer:
- e-banking: Electronic banking, or e-banking, is a service provided by banks that uses electronic media to conduct banking transactions. It is a part of virtual banking that allows customers with a computer and internet access to use bank services without a physical visit.
- Advantages of e-banking:
- For Customers: It offers 24/7 access to services, allows transactions from various locations, records transactions for financial discipline, and provides unlimited access to the bank’s services, increasing customer satisfaction.
- For Banks: It provides a competitive advantage, creates an unlimited network without physical branches, and reduces the workload on branches through centralized databases and accounting functions.
3. Write a note on various telecom services available for enhancing business.
Answer:
- Cellular Mobile Services: Offer voice and non-voice messages, data services, and PCO services.
- Fixed-Line Services: Provide voice and non-voice messages and data services through an interconnected network of telephones and other devices, mainly using fiber optic cables.
- Cable Services: Offer services for transmitting media, primarily for entertainment, but also have the potential for two-way communication in the future.
- VSAT Services (Very Small Aperture Terminal): A satellite-based communication service, suitable for businesses and government agencies in both urban and rural areas, that supports innovative applications like tele-medicine and tele-education.
- DTH Services (Direct to Home): Satellite-based media services that are received directly by consumers via a dish antenna and a set-top box.
4. Explain briefly the principles of insurance with suitable examples.
Answer:
- Utmost Good Faith (Uberrimae Fidei): Both the insurer and the insured must disclose all material facts to each other. Example: A person applying for a life insurance policy must disclose any pre-existing health conditions.
- Insurable Interest: The insured must have a financial stake in the subject matter. Example: A person can buy fire insurance for their own home but not for their neighbour’s house.
- Indemnity: The insurer compensates the insured for the actual loss suffered, placing them in the same financial position they were in before the loss. Example: If a factory worth Rs. 5 crore is insured for Rs. 10 crore and burns down, the insurer will only pay the actual loss of Rs. 5 crore.
- Proximate Cause (Causa Proxima): The insurer is liable for losses caused by the most direct, dominant, and effective cause specified in the policy. Example: A policy covers damage from fire but not from a riot. If a fire starts during a riot, the insurer must determine if the fire or the riot was the proximate cause of the damage.
- Subrogation: After the insured is compensated for a loss, the insurer gains the right to pursue a third party who may have been responsible for the loss. Example: After an insurer pays for a car damaged in an accident, they can sue the at-fault driver to recover the money.
- Contribution: When a person has insured the same property with multiple insurers, the insurers will share the loss proportionally. The insured cannot claim the full amount from each insurer.
- Mitigation: The insured must take all reasonable steps to minimize the loss or damage to the insured property.
5. Explain warehousing and its functions.
Answer:
- Warehousing: Warehousing involves the systematic storage of goods to preserve their quality, value, and usefulness. In modern terms, it is a key component of logistics, ensuring goods are available in the right quantity, at the right time, and at the right cost.
- Functions of Warehousing:
- Storage: The fundamental function of holding goods until they are needed by the consumer.
- Risk Bearing: Goods stored in a warehouse are exposed to risks like fire, theft, and deterioration. Modern warehouses have advanced security and protection to minimize these risks.
- Financing: Warehouse receipts can be used as collateral to get loans from banks, helping to finance a business.
- Grading and Packaging: Warehouses often provide services for grading, sorting, and packaging goods, adding to their value.
- Transportation: Modern warehouses are often located near transportation hubs, and they sometimes offer transport services to move goods to their final destination.
Long Answer Questions
1. What are services? Explain their distinct characteristics.
Answer:
- Services: Services are economic activities that are performed for a consumer by a provider, but they do not result in the ownership of any tangible product. They are intangible and involve a direct interaction between the provider and the customer to fulfill a want.
- Distinct Characteristics (The Five ‘I’s):
- Intangibility: Services are not physical objects and cannot be touched or seen. Their quality is often experienced during consumption. Example: A movie cannot be touched, only experienced.
- Inconsistency: Because services involve human interaction, they vary with each customer’s specific demands and expectations. Example: A barber’s haircut may differ slightly from one client to another based on their specific requests.
- Inseparability: The production and consumption of a service occur at the same time. Example: A doctor’s treatment is given and received simultaneously.
- Inventory (Less): Services cannot be stored for later use. They are perishable. Example: A vacant seat on a bus cannot be stored and sold later.
- Involvement: The customer’s participation is a key part of the service delivery process. Example: A patient must describe their symptoms for a doctor to provide a diagnosis.
2. Explain the functions of commercial banks with an example of each.
Answer:
- Acceptance of Deposits: Banks accept money from the public through different types of accounts, such as current, savings, and fixed deposits. Example: A person opens a savings account to safely store money and earn interest.
- Lending of Funds: Banks lend the money they have collected as deposits to individuals and businesses in the form of loans and advances. Example: A business takes a loan from a bank to purchase new machinery.
- Cheque Facility: Banks provide chequebooks to their account holders, which serve as a convenient way to make payments and transfer money. They also handle the collection of cheques drawn on other banks. Example: A person writes a cheque to pay for groceries instead of using cash.
- Remittance of Funds: Banks facilitate the transfer of money from one location to another using instruments like bank drafts and pay orders. Example: A student in one city receives money from their parents in another city via a bank draft.
- Allied Services: Commercial banks provide a wide range of other services, including locker facilities for valuables, underwriting of securities, payment of insurance premiums, and collection of dividends on behalf of their customers. Example: A person uses a bank’s locker facility to store important documents and jewelry.
3. Write a detailed note on various facilities offered by the Indian Postal Department.
Answer: The Indian Postal Department, under the Ministry of Communications, offers a wide range of mail, financial, retail, and logistics services across the country, especially in rural and remote areas.
Major Facilities:
- Mail Services
- Handles the delivery of letters, parcels, and speed post.
- Offers registered post, express parcel, and business mail services.
- Financial Services
- Offers Post Office Savings Accounts, Recurring Deposits (RD), Fixed Deposits (TD), and Monthly Income Schemes (MIS).
- Introduced India Post Payments Bank (IPPB) for mobile banking, QR code-based payments, and digital financial inclusion.
- Insurance Services
- Provides Postal Life Insurance (PLI) for government and semi-government employees.
- Offers Rural Postal Life Insurance (RPLI) targeting people in rural areas.
- Retail Services
- Sells government forms, collects utility bills, and assists with passport applications through the Post Office Passport Seva Kendras.
- Distributes old-age pensions, welfare scheme payments, and supports Aadhaar services in some branches.
- Logistics and Business Solutions
- Offers Speed Post and Logistics Post for e-commerce deliveries and bulk consignments.
- Provides Business Parcel, Express Parcel, and Retail Post services for businesses.
4. Describe various types of insurance and examine the nature of risks protected by each type of insurance.
Answer:
- Life Insurance: Protects against the risk of premature death or provides financial security in old age. The insurer pays a sum of money to the nominee upon the death of the insured or to the insured upon the completion of a specific term.
- Fire Insurance: Protects against the risk of loss or damage caused by fire. The insurer compensates the insured for the loss of property due to fire, up to the value specified in the policy.
- Marine Insurance: Protects against losses caused by “perils of the sea.” This includes damage to the ship, the cargo, or the freight. It covers risks associated with sea voyages.
- Cattle Insurance: Protects against the risk of death of animals due to accidents, disease, or complications during pregnancy.
- Crop Insurance: Protects farmers against the risk of financial loss from crop failure caused by events like drought, floods, or other natural disasters.
- Sports Insurance: Offers protection to amateur sportsmen against risks related to equipment, personal belongings, personal accidents, and legal liability.
5. Explain in detail the warehousing services.
Answer:
- Warehousing: The storage of goods in a systematic and organized manner. The primary purpose is to preserve the goods’ quality and value.
- Functions:
- Storage: Holding goods from the time of production until they are needed for consumption.
- Risk Bearing: While in storage, goods are protected from risks like theft, fire, and spoilage. Modern warehouses are equipped with advanced security and climate control to minimize these risks.
- Financing: Warehouse receipts can be used as collateral to secure loans, which helps businesses maintain cash flow.
- Grading, Blending, and Packaging: Warehouses often provide value-added services like sorting, grading, and packaging goods to meet specific market requirements.
- Types of Warehouses:
- Private Warehouses: Owned or leased and operated by a company for storing their own goods. They offer full control and are suitable for businesses with large, regular storage needs.
- Public Warehouses: These are available to the public for storing goods for a fee. They are often used by small manufacturers or traders who do not have their own storage facilities.
- Bonded Warehouses: Licensed by the government to store imported goods until customs duty and other taxes are paid. This allows importers to pay duties in installments and also provides facilities for sorting and packaging goods before they are moved.