Its objective is to assists the creation, expansion, and modernization of industrial enterprises exclusively in the private sector.<\/li>\n<\/ul>\nQuestion 36.
\nExplain briefly the import trade procedure.
\nAnswer:
\n(a) Trade inquiry: The importing firm approaches the export firms with the help of trade inquiry they collecting information about their export prices and terms of exports. After receiving a trade inquiry, the exporter will prepare a quotation called a proforma invoice.<\/p>\n
(b) Procurement of import license: There are certain goods that can be imported freely, while others need licensing. The importer needs to consult the Export-Import (EXIM) policy in force to know whether the goods that he or she wants to import are subject to import licensing.<\/p>\n
(c) Obtaining foreign exchange: Since the supplier in the context of an import transa\u00e0tion resides in a foreign country, he\/she demands payment in a foreign currency Payment in foreign currency involves the exchange of Indian currency into foreign currency.<\/p>\n
(d) Placing order or indent: Aller obtaining the import license, the importer place\u0161 an import order or indent with the exporter for the supply of the specified prod\u00fccts. The import order contains information about the price, quantity size, grade, and quality of goods ordered and the instructions relating to packing, shipping, ports of shipment and destination, etc<\/p>\n
(e) Arranging for finance: The importer should make arrangements in advance to pay to the exporter on the arrival of goods at the port. Advanced planning for financing imports is necessary so as to avoid huge demurrages (i.e., penalties) on the imported goods lying uncleared at the port for want of payments.<\/p>\n
(f) Obtaining a letter of credit: If the payment terms agreed between the importer and the overseas supplier is a letter of credit, then the importer should obtain the letter of credit from its bank and forward it to the overseas supplier.<\/p>\n
(g) Receipt of shipment advice: After loading the goods on the vessel, the overseas supplier dispatches the shipment advice to the importer. Shipment advice contains information about the shipment of goods.<\/p>\n
(h) Retirement of import documents: Having shipped the goods, the overseas supplier prepares a set of necessary documents as per the terms of contract and letter of credit and hands it over to his or her banker for their onward transmission and negotiation to the importer in the manner as specified in the letter of credit.<\/p>\n
(i) Arrival of goods: Goods are shipped by the overseas supplier as per the contract. The person in charge of the carrier (ship or airway) informs the officer in charge at the dock or the airport about the arrival of goods in the importing country. He provides the document called import general manifest. import general manifest is a document that contains the details of the imported goods.<\/p>\n
(j) Customs clearance and release of goods: All the goods imported into India have to pass through customs clearance after they cross the Indian borders. Customs clearance is a somewhat tedious process and calls for completing a number of formalities. It is, therefore, advised that importers appoint C&F agents who are well versed with such formalities and play an important role in getting the good’s customs cleared.<\/p>\n
<\/p>\n
Question 37.
\nExplain the principles of insurance.
\nAnswer:
\n(a) Principle of Utmost Good Faith: According to this principle, the insurance contract must be signed by both parties (i.e. insurer and insured) in absolute good faith or belief or trust. The person getting insured must willingly disclose and surrender to the insurer his complete true information regarding the subject matter of insurance.<\/p>\n
Example: If any person has taken a life insurance policy by hiding the fact that he is a cancer patient and later on if he dies because of cancer then the Insurance Company can refuse to pay the compensation as the fact was hidden by the insured.<\/p>\n
(b) Principle of Insurable Interest: As per this principle, the insured must have an insurable interest in the subject matter of insurance. It means the insured should gain by the existence or safety and lose by the destruction of the subject matter of insurance.<\/p>\n
Example: If a person has taken the loan against the security of factory premises then the lender can take the fire insurance policy of that factory without being the owner of the factory because he has a financial interest in the factory premises.<\/p>\n
(c) Principle of Indemnity: According to the principle of indemnity, an insurance contract is signed only for getting protection against unpredicted financial losses arising due to future uncertainties. The insurance contract is not made for making a profit else its sole purpose is to give compensation in case of any damage or loss.<\/p>\n
Example: A person insured a car for 5 lakhs against damage or an accident case. Due to the accident, he suffered a loss of 3 lakhs, then the insurance company will compensate him 3 lakhs not only the policy amount i.e., 5 lakhs as the purpose behind it is to compensate not to make a profit.<\/p>\n
(d) Principle of Contribution: According to this principle, the insured can claim the compensation only to the extent of actual loss either from all insurers in a proportion or from any one insurer.<\/p>\n
Example: A person gets his house insured against fire for 50,000 with insurer A and for 25,000 with insurer B. A loss of 37,500 occurred. Then A is liable to pay 25,000 and B is liable to pay 12,500.<\/p>\n
(e) Principle of Subrogation: According to the principle of subrogation, when the insured is compensated for the losses due to damage to his insured property, then the ownership right of such property shifts to the insurer.<\/p>\n
Example: If a person receives Rs. 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 hold no control over the stock.<\/p>\n
(f) Principle of Mitigation of Loss: According to the Principle of mitigation of loss, the insured must always try his level best to minimize the loss of his insured property, in case of uncertain events like a fire outbreak or blast, etc. The insured must not neglect and behave irresponsibly during such events just because the property is insured.<\/p>\n
Example: If a person has insured his house against ere, then, in case of fire, he or she should take all possible measures to minimize the damage to the property exactly in the manner he or she would have done in absence of the insurance:<\/p>\n
(g) Principle of Causa Proxima: Principle of Causa Proxima (a Latin phrase), or in simple English words, the Principle of Proximate (i.e. Nearest) Cause, means when a loss is caused by more than one causes, the proximate or the nearest cause should be taken into consideration to decide the liability of the insurer.<\/p>\n
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.<\/p>\n
Question 38.
\nExplain any eight factors that affect the choice of an appropriate source of Business Finance.
\nAnswer:
\n(a) Cost: There are two types of cost viz., the cost of procurement of funds and cost of utilizing the funds. Both these costs should be taken into account while deciding about the source of funds that will be used by an organization.<\/p>\n
(b) Financial strength and stability of operations: The financial strength of a business is also a key determinant. In the choice of source of funds, the business should be in a sound financial position so as to be able to repay the principal amount and interest on the borrowed amount.<\/p>\n
(c) Form of organization and legal status: The form of business organization and status influences the choice of a source for raising money.<\/p>\n
(d) Purpose and time period: Business should plan according to the time period for which the funds are required. A short-term need for example can be met through borrowing funds at a low rate of interest through trade credit, commercial paper, etc. For long-term finance, sources such as the issue of shares and debentures are more appropriate.<\/p>\n
(e) Risk profile: Businesses should evaluate each of the sources of finance in terms of the risk involved. For example, there is the least risk inequity as the share capital has to be repaid only at the time of winding up and dividends need not be paid if no profits are available.<\/p>\n
(f) Control: A particular source of funds may affect the control and power of the owners on the management of a firm. Issue of equity shares may mean dilution of the control.<\/p>\n
(g) Effect on cr\u00eadit worthiness: The dependence of business on certain sources may affect its creditworthiness in the market.<\/p>\n
(h) Flexibility and ease: Another aspect affecting the choice of a source of finance is the flexibility and ease of obtaining funds. Restrictive provisions, detailed investigation, and documentation in case of borrowings from banks and financial institutions.<\/p>\n
<\/p>\n
Question 39.
\nExplain four merits and four demerits of Mail Order Houses.
\nAnswer:
\nMerits
\n(a) Limited capital requirement: Mail order business does not require heavy expenditure on building and other infrastructural facilities. Therefore, it can be started with a relatively low amount of capital.<\/p>\n
(b) Elimination of middlemen: The biggest advantage of mail-order business from the point of view of consumers is that unnecessary middleman between the buyers and sellers are eliminated. This may result in a lot of savings both to the buyers as well as to the sellers.<\/p>\n
(c) Wide reach: Under this system, the goods can be sent to all the places having postal services. This opens a wide scope for business as a large number of people throughout the country can be served through the mail.<\/p>\n
(d) Convenience: Under this system goods are delivered to the doorstep of the customers. This results in great convenience to the customers in buying these products.<\/p>\n
(e) Absence of bad debt: Since the mail-order houses do not extend credit facilities to the customers, there are no chances of any bad debt on account of non-payment of cash by the customers.<\/p>\n
Limitations
\n(a) No credit: Supermarkets sell their products cash basis only. No credit facilities are made available to the buyers. This restricts the purchasing power of buyers from such markets.<\/p>\n
(b) No personal attention: Supermarkets work on the principle of self-service. The customers, therefore, don\u2019t get any personal attention. As a result, such commodities that require personal attention by salespeople cannot be handled effectively in supermarkets.<\/p>\n
(c) Mishandling of goods: Some customers handle the goods kept on the shelf carelessly. This may raise costs in supermarkets.<\/p>\n
(d) High overhead expenses: Supermarket incurs high overhead expenses. As a result, there have not been able to create low-price appeal among the customers.<\/p>\n
(e) Possibility of abuse: This type of business provides a greater possibility of abuse to dishonest traders to cheat the customers by making false claims about the products or not honoring the commitments made through handbills or advertisements.<\/p>\n
(f) High dependence on postal services: The success of mail-order business depends heavily on the availability of efficient postal services at a place. But in a vast country like ours, where many places are still without postal facilities, this type of business has Limited prospects.<\/p>\n
Question 40.
\nWhat is a joint venture and explains the merits and demerits?
\nAnswer:
\nA joint venture means establishing a firm that is jointly owned by two or more otherwise independent fi\u00edms. In the widest sense of the term, it can also be described as any form of association which implies collaboration for more than a transitory period.<\/p>\n
Advantages:
\n(a) Since the local partner also contributes to the equity capital of such a venture, the international firm finds it financially less burdensome to expand globally.
\n(b) Joint ventures make it possible to execute large projects requiring huge capital outlays and manpower.
\n(c) The foreign business firm benefits from a local partner\u2019s knowledge of the host countries regarding the competitive conditions, culture, language, political systems, and business systems.
\n(d) In many cases entering into a foreign market is very costly and risky. This can be avoided by sharing costs and\/or risks with a local partner under joint venture agreements.<\/p>\n
Limitations:
\n(a) Foreign firms entering into joint ventures share the technology and trade secrets with local firms in foreign countries, thus always running the risks of such technology and secrets being disclosed to others.
\n(b) The dual ownership arrangement may lead to conflicts, resulting in a battle for control between the investing firms.<\/p>\n
Section – E (PRACTICAL ORIENTED QUESTIONS)<\/span><\/p>\nV. Answer any two of the following questions: ( 2 \u00d7 5 = 10 )<\/span><\/p>\nQuestion 41.
\nAs the owner of a business unit, what risks are faced by you in running it?
\nAnswer:
\nThe risk faced by the owner while mining a business unit are:<\/p>\n
\n- Market information risk<\/li>\n
- Consumer taste and preferences risk<\/li>\n
- Government policy risk<\/li>\n
- Capital risk<\/li>\n
- Operational risk.<\/li>\n<\/ol>\n
<\/p>\n
Question 42.
\nGive a list of any live institutions which support small businesses in India.
\nAnswer:
\nFive institutions that support small businesses in India are:
\n(a) National Ba\u00f1k for Agriculture and Rural Development (NABARD)
\n(b) National Small Industrial Corporation (NSIC)
\n(c) Small Industrial Development Bank of India (SIDBI)
\n(d) Rural and Women Entrepreneurship Development (RWED)
\n(e) District Industries Centres (DICs).<\/p>\n
Question 43.
\nMention any five foreign trade promotion measures and schemes undertaken by the Government of India.
\nAnswer:
\nFive foreign trade promotion measures and schemes are undertaken by the Government of India to boost up foreign trade are:
\n(a) Duty drawback scheme.
\n(b) Advance licence sheme.
\n(c) Exemption from payment of sales taxes.
\n(d) Export promotion capital goods scheme.
\n(e) Export finance at concessional rates of interest.
\n(f) Export of services.
\n(g) Export processing zones.
\n(h) 100 percent export-oriented unit.<\/p>\n","protected":false},"excerpt":{"rendered":"
Students can Download 1st PUC Business Studies Previous Year Question Paper March 2018 (South), Karnataka 1st PUC Business Studies Model Question Papers with Answers helps you to revise the complete Karnataka State Board Syllabus. Karnataka 1st PUC Business Studies Previous Year Question Paper March 2018 (South) Time: 3.15 Hours Max Marks: 100 Instructions to candidates: …<\/p>\n","protected":false},"author":5,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[81],"tags":[],"jetpack_sharing_enabled":true,"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/kseebsolutions.guru\/wp-json\/wp\/v2\/posts\/90552"}],"collection":[{"href":"https:\/\/kseebsolutions.guru\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/kseebsolutions.guru\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/kseebsolutions.guru\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/kseebsolutions.guru\/wp-json\/wp\/v2\/comments?post=90552"}],"version-history":[{"count":0,"href":"https:\/\/kseebsolutions.guru\/wp-json\/wp\/v2\/posts\/90552\/revisions"}],"wp:attachment":[{"href":"https:\/\/kseebsolutions.guru\/wp-json\/wp\/v2\/media?parent=90552"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/kseebsolutions.guru\/wp-json\/wp\/v2\/categories?post=90552"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/kseebsolutions.guru\/wp-json\/wp\/v2\/tags?post=90552"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}