11th Std Chapter 4- Business Services.pptx

Business studies NCERT 11th std 4the chapter Business Services

1. BUSINESS SERVICES Chapter 4 SEEMA TIWARI

2. INTRODUCTION Service are those separately identifiable, essentially intangible activities that provides satisfaction of wants, and are not necessarily linked to the sale of a product or another service. A goods is a physical product capable of being delivered to a purchaser and involves the transfer of ownership from seller to customer. Goods are also generally used to refer to commodities or item of all types, except service involved in trade or commerce.

3. NATURE OF SERVICES There are five basic features of services. Intangibility : Services are intangible, i.e., they cannot be touched. They are experiential in nature. One cannot touch entertainment or a doctor’s treatment . Inconsistency : The second important characteristic of services is inconsistency. Since there is no standard tangible product, service have to be performed exclusively each time . Inseparability : Another important characteristic of services is the simultaneous activity of production and consumption being performed. This makes the production and consumption of service seem to be inseparable.

4. NATURE OF SERVICES Inventory : Services have little or no tangible components and, therefore, cannot be stored for a future use. That is, services are perishable and providers can, at best, store some associate goods but not the service itself. This means that the demand and supply needs to be managed as the service has to be performed as and when the customer asks for it. Involvement : One of most important characteristics of services is the participation of the customer in the service delivery process. A customer has the opportunity to get the services modified according to specific requirements.

5. DIFFERENCE BETWEEN GOODS AND SERVICES

6. TYPES OF SERVICES Business services : Business services are those services which are used by business enterprise for conduct of their activities . Social services : Social services are those services that are generally provided voluntarily in pursuit of certain social goals . Personal services : Personal services are those services which are experienced differently by different customers. These services cannot be consistent in nature.

7. BUSINESS SERVICES Business enterprises look towards: Bank for availability of funds Insurance companies for getting their plant, machinery, goods etc. insured Transport companies for transporting raw material & finished goods Telecom and postal services for being in touch with their vendors, suppliers and customers. Today’s globalised world has ushered in a rapid change in the services industry in India. India has been gaining a highly competitive edge over other countries when it comes to services to the developed economies of the world. Many foreign companies are looking to be performed a host of business services. They are even transferring a part of their business operation to be performed in India.

8. BANKING A bank stimulates economic activity in the markets by dealing in money. It mobilizes the saving of people and makes funds available to business financing their capital and revenue expenditure. It also deals in financial instruments and provides financial services for a price i.e. interest, discount, commission etc. Banking can be classified: Commercial banks Cooperative banks Specialized banks Central banks

9. Specialized Banks: Specialized banks are foreign exchange banks, industrial banks, development banks, export-import banks catering to specific needs of these unique activities. These banks provide financial aid to industries, heavy turnkey projects and foreign trade . TYPES OF BANK

10. Central Bank: The central bank of any country supervises, controls and regulates the activities of all the commercial banks of that country. It also acts as a government banker. It controls and coordinates currency and credit policies of any country. The RBI is the central bank of our country.

11. Co-operative Banks: Cooperative Banks are governed by the provisions of State Cooperative Societies Act It is meant essentially for providing cheap credit to their members

12. Commercial Banks These are governed by Indian Banking Regulation Act 1949 and according to it banking means accepting deposits of money from the public for the purpose of lending or investment. There are two types of commercial banks, public sector and private sector banks. Public sectors banks are those in which the government has a major are a number of public sector banks like SBI, PNB, IOB etc Other private sector banks represented by HDFC Bank, ICICI Bank, Kotak Mahindra Bank

13. FUNCTIONS OF A COMMERCIAL BANK 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 important functions are briefly discussed below: Acceptance of deposits Lending of funds Cheque facility Remittance of funds Allied services

14. e-Banking The growth of Internet and e-commerce is dramatically changing everyday life, with the world wide web and e-commerce transforming the world into a digit global village. The latest wave in information technology is internet banking . It is a part of virtual banking and another delivery channel for customers.

15. Benefits :

16. Insurance is a device by which the loss likely to be caused by an uncertain event. It is a contract or agreement under which one party agrees in return for a consideration to pay an agrees amount of money to another party to make a loss, damage or injury to something of value in which the insured has a pecuniary interest as a result of some uncertain event. The agreement/contract is put in writing and is known as ‘policy’. The person whose risk is insured is called ‘ insured’ and the firm which insures the risk of loss is known as insurer/assurance underwriter.

17. FUNCTIONS OF INSURANCE

18. PRINCIPLES OF INSURANCE Utmost good faith: A contract of insurance is a contract of ‘ uberrimae fidei ’ i.e., a contract found on utmost good faith. Both the insurer and the insured should display good faith towards each other in regard to the contract .

19. Insurable Interest : The insured must have an insurable interest in the subject matter of insurance. One fundamental fact of this principle is that ‘it is not the house, ship, machinery, potential liability of life that is insured, but it is the pecuniary interest of the insured in them, which is insured. ’

20. Indemnity : The insurer undertakes to compensate the insured for the loss caused to him/her due to damage or destruction of property insured.

21. Proximate Cause : According to this principle, an insurance policy is designed to provide compensation only for such losses as are caused by the policy . PRINCIPLES OF INSURANCE

22. 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 insured in respect of recovery from an alternative source is involved.

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

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

25. TYPES OF 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 be other periodic 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.

26. TYPES OF LIFE INSURANCE POLICIES Whole life policy : The amount payable to the insured will not be paid before the death of the assured. The sum then becomes payable only to the beneficiaries or their of the deceased. Endowment life assurance policy : The insurer undertakes to pay a specified sum when the insured attains a particular age or on his death which ever is earlier. The sum is payable to his legal heir/s or nominee named therein in case of death of the assured .

27. Joint life policy : This policy is taken up by two more persons. The premium is paid jointly or by either of them in installment or lump sum. The assured sum or policy money is payable upon the death of any one person to the other survivor or survivors. Annuity policy : Under this policy, the assured sum or policy money is payable after in monthly, quarterly, half yearly or annual installments.

28. Children’s endowment policy : This policy is taken by a person for his/her children to meet the expenses of their education or marriage. The agreement states that a certain sum will be paid by the insurer when the children attain a particular age.

29. FIRE INSURANCE Fire insurance is a contract whereby the insured, in consideration of the premium paid, undertakes to make goods any loss or damage caused by fire during a specified in the policy . Normally, the fire insurance policy is for a period of one year after which it is to be renewed from time to time. The premium may be paid either in lump sum or installments.

30. MARINE INSURANCE A marine insurance contract in 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 are collision of ship attacked by the enemies, fire and captured by pirates and actions of the captains and crew of the ship. These perils cause damage, destruction or disappearance of the ship and cargo and non-payment of freight.

31. 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 a sea, the insurance policy is for indemnifying the insured for losses caused by damage to the ship. Cargo insurance : The cargo while being transported by ship is subject to many risks. These may be at port i.e., risk of theft, lost goods or on voyage etc. thus, an insurance policy can be issued to cover against such risks to cargo. Freight insurance : If the cargo does not reach the destination due to damage or loss in transit, the shipping company is not paid freight charges. Freight insurance is for reimbursing the loss of freight to the shipping company i.e., the insured. MARINE INSURANCE

32. Sl.No Basis of difference Life insurance Fire insurance Marine insurance 1 Subject matter T h e s u b j e c t m a t te r of insurance is human life. T h e s u b j e c t m a t te r is a n y physical property or assets. The subject matter is the ship, cargo or freight. 2 Element It has the elements of protection and investment or both. It has only the element of protection and not the element of investment. It has only the element of protection. 3 Insurable interest Insurable interest must be present at the time of affecting the policy but need not be necessary at the time when the claim fails due. Insurable interest on the subject matter must be present both at the time of affecting policy as well as when the claim fails due. Insurable interest must be present at the time when claim fails due or at the time of loss only. 4 Duration Life insurance policy usually exceed a year and is taken for longer periods ranging from 5 to 30 years or whole life. Fire insurance policy usually does not exceed a year. Marine insurance policy is for one or period of voyage or mixed.

33. 5 Indemnity Life insurance is not based on the principle of indemnity. The sum assured is paid either on the happening of certain event of on maturity of the policy. Fire insurance is a contract of indemnity. The insured can claim only the actual amount of loss from the insurer. The loss due to the fire is indemnified subject to the maximum limit of the policy. Marine insurance is a contract of indemnity. The insured can claim the market value of the ship and cost of goods destroyed at sea and the loss will be indemnified. 6 Loss measurement Loss is not measurable. Loss is measurable. Loss is measurable. 7 Surrender value or paid up value Life insurance policy has a surrender value or paid up value. Fire insurance does not have any surrender value or paid up value. Marine insurance does not have any surrender value or paid up value. 8 Policy amount One can insure for any amount in life insurance. In fire insurance, the amount of the policy cannot be more than the value of the subject matter. In marine insurance the amount of the policy can be the ship or cargo. 9 Contingency There is an element of certainty. The event i.e., death of maturity or policy is bound to happen. Therefore a claim will be present. The event i.e., destruction by fire may not happen. There is an element of uncertainty and there may be no claim. The event i.e., loss at sea may not occur and there may be no claim. There is an element of uncertainty.

34. COMMUNICATION SERVICES Communication services are helpful to the business for establishing links with the outside world viz., suppliers, customers, competitors etc. business does exist in isolation, it has to communicate with others for transmission of ideas and information.

35. COMMUNICATION SERVICES Postal services 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 day-to-day functioning of the various head post offices, sub-post offices and branch post office. Through their regional and divisional level arrangements the various facilities provided by postal departmental are broadly categorized into: Financial facilities Mail facilities

36. World class telecommunications infrastructure is the key to rapid economic and social development of the country. It is in fact the backbone of every business activity. In today’s world the dream of doing business across continents will remain a dream in the absence of telecom infrastructure. There have been far reaching developments in convergence of telecom, IT, consumer electronics and media industries worldwide. New telecom policy framework 1999 an broadband policy 2004 were developed by the government of India. TELECOM SERVICES

37. There various types of telecom services are: Cellular mobile services Radio paging services Fixed line services Cable services VSAT services DTH services

38. TRANSPORTATION Transportation companies freight services together with supporting and auxiliary services by all modes of transportation i.e., rail, road, air and sea for the movement of goods and international carriage of passengers.

39. Warehousing: The warehouse was initially viewed as a static unit for keeping and storing goods in a scientific and systematic manner so as to maintain their original quality value and usefulness. They are used by manufacturers, importers, exporters, wholesalers, transport, business, customs etc., in India.

40. Types of Warehouses Private warehouses : Private warehouses are operated, owned or leased by a company handling their own goods, such as retail chain stores or multi-brand multi-product companies . Public warehouses : Public warehouses can be used for usage for storage of goods by traders, manufacturers or any member of the public after the payment of a storage fee or changes. The government regulates the operations of the warehouse by issuing licenses Bonded warehouses : Bonded warehouses are licensed by the government to accept imported goods prior to payment of tax and customs duty. These are goods which are imported from other countries. Importers are not permitted to remove goods from the docks or the airport till customs duty is paid.

41. Types of Warehouses Government warehouses : These warehouses are fully owned and managed by the government. The government manages them through organizations set up in the public sector. For example, Food Corporation, and Central Warehousing Corporation. Cooperative warehouses : Some marketing cooperative societies or agricultural cooperative societies have set up their own warehouses for members of their cooperative society.

42. FUNCTIONING OF WAREHOUSE Consolidation : In this function 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 pilling : The next function of warehousing 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.

43. FUNCTIONING OF WAREHOUSE Value added services : Certain value added services are also provided by the warehouses, such as in transit mixing, packaging and labeling. Price stabilization : By adjusting the supply of goods with the demand situation, warehousing performs the function of stabilizing prices. Financing : Warehouse owners advance money to the owners on security of goods and further supply goods on credit terms to customers.