Business Services – Class 11 Business Studies Chapter 4 Notes & NCERT PDF

Introduction

How does a petrol pump owner in a village run his business? Petrol and diesel move from refineries by train and tankers (transport), are stored at oil-company depots (warehousing), are ordered through post, mail and phone (communication), are bought on advance payment with bank loans (banking), and the pump, products and staff are protected from risk (insurance). A single business is thus the collective outcome of several business services.

Services are separately identifiable, essentially 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 that can be delivered and whose ownership is transferred.

Key Concepts

4.2 Nature of services — the five Is

Services vs goods: activity vs physical object (watching a movie vs a video cassette); heterogeneous vs homogeneous; intangible vs tangible; inconsistent vs standardised; inseparable vs separable (eating ice cream in a restaurant vs buying it from a store); no stock vs stock; customer involvement vs no involvement.

4.3 Types of services

Business services (banking, insurance, transport, warehousing, communication), social services (voluntary, for social goals, e.g., health care and education by NGOs), and personal services (experienced differently by each customer, e.g., tourism, restaurants).

4.4 Banking

A bank accepts deposits from the public, repayable on demand and withdrawable by cheque or draft, for lending and investment.

Types of banks:

Functions of commercial banks:

e-Banking: banking over the internet or electronic media — ATMs and Point of Sale, EDI, credit cards, electronic cash, and EFT through NEFT and RTGS.

4.5 Insurance

A device by which the loss likely to be caused by an uncertain event is spread over a number of persons who are exposed to it. The written contract is the policy; the person insured is the insured; the company is the insurer/underwriter; the fee is the premium.

Fundamental principle: pay a small, definitely known sum (premium) in place of a possible huge, uncertain loss; the loss is spread over many policyholders.

Functions: providing certainty, protection, risk sharing, and assisting capital formation.

Principles of insurance:

Life insurance: protection plus investment; must be a valid contract, of utmost good faith, with insurable interest at the time the policy is taken; not a contract of indemnity. Examples of insurable interest: in one's own life; a creditor in the debtor's life; a drama company proprietor in the actors' lives.

Policies: whole life (paid only on death), endowment (paid at a specified age or on death, whichever is earlier), joint life (two or more lives; paid to the survivor), annuity (regular instalments after a certain age), children's endowment (for education or marriage).

Fire insurance: usually for one year; a claim needs actual loss and a fire that is accidental and non-intentional. Overheating without ignition is not a fire loss. Insurable interest is needed both when insuring and at the time of loss. It is a contract of strict indemnity — a house insured for ₹4,00,000 gets only the actual loss after depreciation, up to that limit.

Marine insurance: covers ship/hull, cargo and freight against perils of the sea; a contract of indemnity (commercial rather than strict); insurable interest needed at the time of loss; causa proxima applies.

Other types in the book: health (Mediclaim), motor vehicle, burglary, cattle, crop, sports (amateurs only), Amartya Sen Siksha Yojana, Rajeswari Mahila Kalyan Bima Yojana. Social security schemes described: Atal Pension Yojana (ages 18–40, contribute till 60), PM Suraksha Bima Yojana (accident/disability cover), PM Jan Dhan Yojana (zero-balance account with RuPay card), and PM Jeevan Jyoti Bima Yojana (term life cover).

4.6 Communication services

Postal: India is divided into 22 postal circles. Financial facilities include PPF, Kisan Vikas Patra, NSC, money order and savings. Mail facilities include parcels, registration and insurance. Allied facilities include greeting post, media post, direct post, international money transfer (with Western Union, from 185 countries), passport facilities, Speed Post, and e-bill post.

Telecom: cellular mobile, fixed line, cable, VSAT (satellite-based, reliable in remote areas — tele-medicine, tele-education), and DTH (satellite TV via dish antenna and set-top box). Policy frameworks: New Telecom Policy 1999 and Broadband Policy 2004.

4.7 Transportation

Removes the hindrance of place. Box: the NHAI Golden Quadrilateral (Delhi–Kolkata–Chennai–Mumbai) and the North–South (Srinagar–Kanyakumari) and East–West (Silchar–Porbandar) corridors.

4.8 Warehousing

Modern warehouses are logistical service providers: the right quantity, place, time, form and cost.

Key-Facts Sheet

Exam Focus

Key Terms

Common Mistakes