Forms of organization & channels of distribution

DRUG STORE AND BUSINESS
MANAGEMENT
PRESENTED BY,
ANN RAICHEL JOHN,
ASSISTANT PROFESSOR, DEPARTMENT OF PHARMACEUTICAL ANALYSIS

LEARNING OBJECTIVE
1. Classify forms of business organizations
2. Explain salient features, advantages & disadvantages of sole
proprietorship, Joint Hindu Family business, & partnership.
3. Describe kinds of partnership & partners.
Prof. Ann Raichel John, DSBM, II D Pharm 2

WHAT DO YOU MEAN BY BUSINESS
ORGANIZATIONS????

FORMS OF BUSINESS ORGANIZATIONS
The term "business organization" refers to how a business is structured.
It refers to a commercial or industrial enterprise and the people who
constitute it.
When the business is handled by an individual/ group of persons, it is
known as "business organization”

CHOOSING A FORM OF B.O’S
Choice of the business form is governed based on the
different factors:
 Nature of the business
 Scale of operations (i.e.) volume of business(large,
medium, small)/ size of the market area(local, national,
international.
 The degree control desired by the owners.
 Amount of capital required for the establishment and
operation of a business
 The volume of risk and liabilities as well as the
willingness of the owners to bear it.
 Comparative tax liability

CLASSIFICATION

SOLE PROPRIETORSHIP
???
???
Simplest form of business organization.
Also known as one-man business in which one person is solely
responsible for providing capital, for bearing the risk of enterprise &
also for day to day management of the business.

CONTINUES….
When the ownership and management of a business are in control of
one individual the form of business is called sole proprietorship
SALIENT FEATURES:
Quick decision
making
Close contact with
the customers
No sharing in
Profit & Losses.
Flexibility in
pattern
Unlimited liability/
responsibility
Free decision
making
Single
ownership
Business
secrecy
Minimum government
regulations
No Legal
status

CONTINUES….
Authority
Capital
Employment
Formation
Overhead expenses
Customer contact
Business secrecy
Business wind-up
Capital investment
Checks & control
Death of owner
Single management
Unlimited liability
Limited finance
Limited skills and abilities.

PARTNERSHIP FIRM
The Indian partnership act defines Partnership as-
“Relation between persons who have agreed to share the profits of a busines carried on by all or any of
them acting for all”
A partnership is an association of two or more persons who agree to carry on
business for earning and sharing profit among them.
The person who have entered into partnership are individually known as
“Partners” & collectively known as “Partnership”
The business organization runs a partnership is called a “Firm”

SALIENT FEATURES:
Number of
persons
Partnership
deed
Share
transferring
Profit
distribution
LiquidityManagement
Liability
unlimited
Continuity

CONTINUES…
 Business life
 Decision to start
 Efficiency
 Expansion
 Formation
 Finance
 Judgement
 Risk per person
 Unlimited liability
 Lack of harmony
 Lack of stability
 Dishonest partner
 Withdrawal of capital
 Leaving a firm
 Limited resources
 No security
 No public faith

KINDS OF PARTNERSHIP

GENERAL PARTNERSHIP
Liability of each partner is unlimited. As if the firm is not sufficient to
pay off the liabilities.
Private property of partners may be used. Exception to the minor
partner.
 Partnership at will: agreement to carry a business without specifying
any time.
 Particular partnership: agreement to carry business for fixed period.
 Joint venture: agreement for competing for specific project/ work
during fixed periods. The contribution of capitals & sharing a profit/
loss.

LIMITED PARTNERSHIP
Unlimited liability of partners in general partnership discourages
investment in the firm.
Limited partnership liability of partners is limited except that of one/
more partners.
It is not permitted in Indian law. Such partnerships are formed in UK &
US.

KIND OF PARTNERS
ACTIVE PARTNER
• Takes active part in the management of business
• Contributes capital, shared profit & losses of the firm
• He has unlimited liability
SLEEPING PARTNER
• The partner doesn‟t take any active part in the management of
business and contributes capital & shares profit and losses.
• He has unlimited liability.

CONTINUES….
NOMINAL PARTNER
A person who lends his name to the firm as a partner.
However, he neither invest capital nor claims in a profit & share of the
business & doesn‟t take part actively in the management and also, he
bears unlimited liability.
PARTNER IN PROFIT ONLY
A capital is invested with the view to earn, a share in the profit of the firm.
He also has no liability regards to the losses offered by the firm.
Main objective of having such a partner in the firm to make use of his
money & good will. He has unlimited liability.

CONTINUES…
SECRET PARTNER
A partner who doesn‟t want to be known as a partner of the firm to the outsider.
Though in reality, the partner is called as secret partner. His liability is unlimited.
MINOR PARTNER
A partner which below 18 are minor partners. He doesn‟t enjoy the rights of full-
ship partner in the firm.
Indian partnership act allows a minor partner provided all partners agreed for it.
He shares his profit and property of the following firm. His liability is limited.
On attaining majority, he has a choice to continue as a partner, but if he doesn‟t
give a public notice within 6 months, he continues as a partner and his liability is
unlimited

CONTINUES…
PARTNER BY ESTOPPEL
If an outsider behaves in such a fashion that he is mistaken as partner of
the firm by third party and he will be held liable to all those third party
who extend credit to the firm on the assumption of being a partner. Such
a partner is known as „Partner by estoppel‟
Because of the person having the behavior of the partner, he can‟t deny
the liabilities attached to the position.
In an actual partner, partner by estoppel is not the partner of the firm.
He neither contributes any capital nor take part in the management of
the business

JOINT HINDU FAMILY BUSINESS
A Hindu Undivided Family (HUF) or Joint Hindu Family (JHF) consist of all persons who
lineally descended from a common ancestor and includes their wives and unmarried
daughters (Hindu Law).
When a Joint Hindu family carries on a business, it is called a Joint Hindu family firm.
The members of such firm are not called partners, but known as coparceners
Comes into existence as per the Hindu Inheritance Act of India. This form of business
found only in India
All members of the Hindu Undivided Family(HUF) own the business jointly. The
management & control of the family business is generally in the hands of senior -most
male member of the family who is known as “KARTA”

CONTINUES….
SALIENT FEATURES:
Membership from
birth
Karta has all
rights
Male members
carries business
Liability of
members
Liability of Karta
Shares fluctuates Ask for partition
Unaffected on
death of Karta

CONTINUES…
Cooperative effort
Freedom from Karta
Equal shares
Sharing of knowledge & experience
Security
Smooth running
Limited liability of members
Continuity
Irresponsible & lazy members
Limited resources
Lack of motivation
Unfair to members
Scope of misuse

LEARNING OBJECTIVE
Explain salient features, advantages and disadvantages of joint stock
company.
Explain salient features, advantages and disadvantages of co-operative
society.

CORPORATE BUSINESS ORGANIZATIONS

JOINT STOCK COMPANY
Governed by the company act.
It has to follow various provisions of the act organized to carry on a
business on a large scale because of its capital requirement and risk
obligations are two bundle-some for a single individual or free
individuals to be at themselves.
It is an organization of individuals for gaining profit in which capital is
divided into transferable shares
Eg: State Bank of India, Indian Oil corporation Ltd., Tata Motors, etc.

SALIENT FEATURES
Registration
Running of
business – BODs
Members –
Owners Capital
Withdrawal Legal person Limited liability Common seal
Continuity

CONTINUES…
• Capital
• Management
• Existence of company
• Risk per person
• Qualified and experienced person
• Transferable shares
• Flat rate taxations.
• Costly formation
• Legal formalities
• Control by BODs
• Misuse of position
• Decision
• Cheating
• Exploitation of customers
• No secrecy

TYPES OF JSC
Classified based on 4 different points of view:

Chartered company Statutory company Registered company
Chartered company:
Formed during 17th &
18th century by passing
special charter known as
“royal charter”. Charter
means „agreement‟. The
company doesn‟t exist in
India.
Eg: East India Company.
Statutory company:
Established by passing
special act of parliament.
It is formed to run the
public utility concerns like
railways, water, gas
works, electricity, etc.
Eg: LIC, Air India,
Reserve Bank of India
Registered company:
These companies are very
important. They are
registered under
companies act. The rules
and regulations regarding
its formation, working &
continuity of the company
are mentioned in the
relevant company act.

Unlimited Liability
Liability limited by
guarantee
shares
Unlimited liability:
These are same as sole
proprietorship, (i.e.) each
member has unlimited
liability. If the company
wound up, private
property of the members
can be taken over for the
recovery of dues.
guarantee:
Liability of the members
limited to a specific amount
guaranteed by them. If the
company is wound up, then
the members will have to
repay fixed amount
guaranteed by them.
shares:
Liability of member is
limited by the value of
their shares. If the
company is wound up, the
members will have to
repay amount equal to
their shares.

National company Multinational company
National company:
Operate within the
boundaries of the country
Multinational company:
Operate in various parts
of the world.

Private company Public company Government company
Private company:
It is run by minimum
two/ maximum 50
members & doesn‟t
allow public
subscription to its
shares. This companies
also restrict the
transfer of their shares
Eg: Cargill, Dell
computers
Public company:
Companies which are run by
minimum 7 members & having no
maximum limit on its members,
offer its shares to the public with a
view to collect large sums of
money. Companies doesn‟t restrict
members for the transfer of their
shares.
Eg: Chevron Corporation, Procter
& Gamble Company
Government company:
At least 51% of the paid-
up capital is held by the
central government or by
any state government or
partly by the central
government & partly by
one/ more state
governments.
Eg: Food Corporation of
India, Air India

COOPERATIVE SOCIETY
It is a voluntary organization of a person who are financially strong with
an aim not to get profits but to overcome disability arising out of
adequate financial resources or with the aim not to earn profit but to
apply weaker sections of the society.
It is registered under Indian Cooperative society act 1912.
The goods produced by such societies are sold in the market.
The profit earned is distribute among the members of the society as a
dividend (sum of money paid regularly) by the company.

SALIENT FEATURES
Registration
Voluntary
organization
Management
Shares Profit distribution
Capital
Cash facility Limited liability

CONTINUES…
• Association
• Legal requirement
• Management
• Co-ordination seen
• Balance in the profit
• Government facility
• Membership
• Shortage of capital
• No efficiency
• No secrecy
• Excessive state regulations
• Lack of motivation
• Competition between the members

ASSESSMENT
• What are different types of partnership? Explain any two.
• Distinguish between Co-operative society and Joint stock company
• Differentiate between „partnership firm‟ & „Joint stock company‟

LEARNING OBJECTIVE
Define & classify channels of distribution
State advantages and disadvantages of Channels of Distributions
Classify middlemen
Explain functional middlemen

CHANNELS OF DISTRIBUTION
Distribution means transfer of goods from the manufacturer to the
consumer.
Distribution channels are various outlets through which product moves
from manufacturer to the consumers.

CLASSIFICATION OF C.O.D

DIRECT SELLING
When the manufacturers selling goods directly to the consumer without
involving any middlemen or intermediate.

INDIRECT SELLING
In this case, there are one or more middlemen or intermediates involve
between manufacturer & consumer like retailer, wholesalers,
distributors, etc.

Here, goods are transferred to intermediates then to consumers;

CHANNELS OF DISTRIBUTION
• Easy availability of goods
• Increase in sale of goods
• Similar price of goods
• Employment opportunities
• Increases price
• Supply not on time
• Artificial scarcity

MIDDLEMEN & TYPES
Middlemen: The person
who act as link between
manufacturers and
consumers.
MIDDLEMEN
FUNCTIONAL
AUCTIONEER
S
BROKERS
COMMISSION
AGENTS
DEL CREDER
AGENTS
C & F AGENTS
MERCHANT
WHOLESALERS
MANUFACTUR
ING WS
RETAILER WS
WS PROPER
RETAILERS
INTINERANT
HAWKERS &
PADDLERS
STREET
TRADERS
MARKET
TRADERS
FIXED SHOP
SMALL SCALE
STREET
STALLS
GENERAL
STORES
LARGE SCALE

FUNCTIONAL MIDDLEMEN

AUCTIONEERS
In an auction, auctioneer has to collect the goods from the sellers,
displays it for buyers & invites „Bids‟ from them.
Bids means price, which the buyer is willing to pay for the goods being
auction.
The buyer who makes the highest bid gets the good.

BROKERS
These are the agents who obtain neither possession nor ownership of the
goods
Their function is to bring the buyers and sellers together.
They are called as selling agent, if they are engaged by seller and buying
agent, if they are engaged by buyer to negotiate the purchase of goods on
their behalf.
The broker gets a certain percentage of commission on the business transacted
by him.

COMMISSION AGENTS
They sales goods on behalf of seller.
They negotiate the sale of goods and make arrangement for the
transfer of title to goods on behalf of seller.
They get certain percentage of commission from the sales made by
them.

DEL-CREDERE AGENTS
They find buyer and also guarantee the payment of price of goods on
their behalf.
In case buyer fails to pay, it is del-credere agents who will pay on his
behalf.
For this additional responsibility, an extra commission is charged by
them.

C & F AGENTS
They operate like company‟s own distribution office. They get commission.
Their functions are as follows:
• Receiving the goods from manufacturer
• Store/ warehousing of these goods
• Receiving/ dispatching orders from manufacturer
• Arranging the dispatch of goods as per the directions of the manufacturer
• Maintaining records of the receipt and dispatch of goods & stock available at
the warehouse.

LEARNING OBJECTIVES
Define and classify Merchant middlemen
Define and classify wholesaler
Explain the functions of wholesaler
Explain the services provided by the wholesalers

MERCHANT MIDDLEMEN
They work for profit.
They possess ownership/
title of goods.
This is main difference of
the Functional & Merchant
middlemen.

WHOLESALERS
Those merchants that acts as intermediaries between the manufacturer & the
retailer.
They buy goods and commodities in large quantities from the producer & sell
them to retailers.
The wholesaler dealing in the pharmaceutical product require the drug license
from the head department of concerned state government.
A wholesaler is called as „stockiest‟ if he deals in items manufactured by a
single firm/ company.
Eg: stockiest of sun pharma, stockiest of Ranbaxy, etc.

WHOLESALERS
MANUFACTURER
WHOLESALERS
RETAILER
WHOLESALERS
WHOLESALER PROPER/
DISTRIBUTOR

Manufacturer wholesaler:
They are engaged in manufacturing activities to some extent.
They sell their own manufacture products as well as products
manufactured by other manufacturer to the retailers.
Retailer wholesaler:
They act as wholesaler as well as retailers.
They purchase goods in a bulk from manufacturer & sell them retail to
customers.

Wholesaler proper:
They concentrate solely on buying & selling goods in large quantities
from manufacturer.
They are also called as distributors.

FUNCTIONS OF WHOLESALERS

SERVICES PROVIDED BY WHOLESALER
Service to manufacturer:
Wholesaler the goods in retails and from
the botheration of collecting orders.
Wholesalers order for a & help in large scale production of
goods.
– normally wholesalers make payment in cash that results in
a quick turnover.
Provides & of goods
accordingly.
– Wholesalers maintain uniform rate of
production by placing advance supply of orders.

Services to Retailers:
– Wholesaler provides variety of goods from different
manufacturer at one place to the retailers.
– Supply of goods from wholesalers is quick as compared
to manufacturer.
– Wholesalers gives discount as he gets.
– wholesalers informs the retailers about the new
product launched in the markets.
– wholesalers deals in the limited number of products &
therefore, gets expert knowledge & from this knowledge retailers gets benefited.
– wholesalers normally buy the goods in large
quantity from the manufacturer and resales in small quantities to the retailer.
- wholesaler provides credit facility to the retailers.
– wholesalers bears most of risks of the business.

Services to consumers:
Sells goods to retailers at and which helps in bringing
in the price of retailers.
Price for the because wholesalers purchases the
goods in large quantities, so cost of production is less & thus the final
price is less.
Wholesalers collect the feedback from & collect
the information about the problems of the consumers
Wholesaler from time to time & thus helps
in the improvement of existing products.

LEARNING OBJECTIVE
Define and classify Retailers
Explain functions of retailers
Explain services provided by retailers

RETAILERS
Retailer is the middlemen between a wholesalers & actual consumer.
Retailers sells the goods to the consumer & maintain intimate contact
with the wholesalers & consumers.
The retailers dealing in pharmaceutical trade is known as „Chemist‟ &
„Pharmacist‟.

EXAMPLES OF RETAILERS

FUNCTIONS OF RETAILERS
Wide
choice to
customers
Risk
bearing
Financing
Transport
ation
Grading
Ready
stock
Market
research
Sales
promotion

SERVICES PROVIDED BY RETAILERS
Services to producer/ wholesaler:
Retailer studies test, like & dislikes of the consumers and through
wholesalers communicates to the manufacturer to enable the
improvement of products accordingly.
Retailer does advertisement by displaying the goods in show windows/
counters/ any other means.
Retailer helps the manufacturer & wholesalers in meeting various
requirements of consumers with easy availability.

Services to consumers:
Retailer provides free home delivery services to the consumers.
Retailer provides credit facilities to the consumers
Retailer maintain ready stocks of the goods as per the demands of the
consumers.
Retailer provides customer satisfaction to the consumers
Retailers provides wide choice of goods to the consumers
Window display – retailer display new product in show window or on the
counter for the information of the customers
Free expert advice – retailer offers free expert advise to the customer about
merits, uses of each product. & also, about the availability of better substitute.

COMPARISON BETWEEN WHOLESALER &
RETAILER
Location Not important Important
Window display Not important Important
Aftersales services Not provided Provided
Business Large scale Small scale
Capital requirement Large Small
Direct contact with customers Not there Is there
Margin Less More
Link between Manufacturer & Retailers Wholesalers & Consumers
Reselling Sells goods for reselling Sells goods for consumption
Specificity of the products Deals with specific product Don‟t deals with specific
product

LEARNING OBJECTIVE
Classify retailers
Explain itinerant retailers
Explain small scale fixed shop retailers

CLASSIFICATION
RETAILERS
ITINERANTS
MARKET
TRADERS
HAWKERS &
PADDLERS
STREET TRADERS
FIXED SHOPS
SMALL SCALE
STREET STALL
SECOND HAND
GOODS SHOP
GENERAL STORE
SINGLE LINE
STORE
SPECIALITY STORE
LARGE SCALE
DEPARTMENTAL
STORE
MULTIPLE SHOP
MAIL ORDER
BUSINESS
CO-OPERATIVE STORE
HIRE PURCHASE

ITINERANT RETAILERS
Itinerant retailers don‟t operate from fixed business premises.
But they move from one place to another for selling of goods in a small
load to consumers.
They generally work with very small capital investment.
They mainly deal with low-priced goods of daily use.

CLASSIFICATION
HAWKERS & PEDDLERS
They move from door to door in residential localities.
Goods sold by them are generally small and cheap.
Eg: vegetables, Fruits, Toys, House hold articles

STREET TRADERS:
These traders arrange their grades at busy street corners/ pavements
of busy roads, temples, railway stations, cinema halls, etc.
They offer wide variety of articles of common use.
They generally, deal only in particular line of products.

MARKET TRADERS:
They keep on moving from place to place to sell their goods at weekly,
monthly bazars or annual fair.

FIXED SHOP RETAILERS
Fixed shops retailer setup permanent establishment to sell their goods.
They don‟t move from place to place in search customers but customers
do search for them.
They are fixed at one place.

CLASSIFICATION – SMALL SCALE RETAILERS
STREET STALLS:
Mostly they are located at a street crossing/ in the main street.
It may take the form of a stand with a table/ platform which may be
used for keeping the goods.
Mostly inexpensive articles such as toys, fountain pens, ball pens,
cosmetics are sold in these stalls.

SECOND HAND GOODS SHOP:
They deal only in second hand/ used goods like clothes, books or
furniture.
The owners of such shops collect the goods at private or public
auctions/ by striking direct bargains with house-holders.

GENERAL STORE:
They are generally setup in residential areas.
They are stocked with all kinds of products needed by the local
residents in the cause of their day to day life.
They are great boon/ help to the consumers.
In their absence, consumers would have to run to the central market
for such minor purchases such as toothpaste, toilet soaps, shoelaces,
etc.
They are usually owned/ managed by the single person.

SINGLE LINE STORES:
They sell only a particular kind of item like medical stores
They deal only in medicines.
Generally, these stores are located in residentials localities as well as
central market places.

SPECIALITY STORE:
These retail agencies are specialist form of single line stores.
They specialized not in the products of a particular line, but only one
product of a particular line, but only one product of a certain line.
Eg: selling of only children‟s garments, selling of only men‟s garments,
selling of only women‟s garments instead of selling ready-made
garments of all categories of customers.

LEARNING OBJECTIVES
Define and classify large scale retailers
Explain features, advantages & disadvantages of departmental stores
multiple shops, hire purchase trading system, co-operative store;

RETAILER DEPARTMENTAL STORES:
It is a large-scale retail organization, comprises of number of
departments, each dealing in separate line of products and work under
one roof & one management. It deals in wide range of products.
The main objective of departmental stores is to satisfy customer‟s
needs at one place to reduce botheration on consumers.
Eg: shopping malls.

RETAILERS DEPARTMENTAL STORES
• CONVENIENT
• VARIETY OF GOODS
• LOCATION
• PROFIT
• VARIOUS FACILITIES
• CUSTOMER SATISFACTION
• PLASTIC CURRENCY
• INITIAL COST-HIGH
• LOCATION- DIFFICULT TO DISTANT
PEOPLE
• NO PERSONAL CONTACTS
• NO COORDINATION
• HIGH OVERHEAD EXPENSES- TO
ATTRACT PEOPLE

MULTIPLE SHOPS/ CHAIN STORES:
They are group of stores in the same branch of retail trade.
Single business firm opens a number of branches which are situated at different
localities in the city/ different part of the country.
The main objective to provide facilities near the residence of the customers.
Each branch deals in a similar line of goods, each multiple shop has head office
whose decisions are passed to all the branches.
The prices of all the items are fixed by the head office & all the branches have to
follow the same price.
Supply of items to various branches are direct from head office.
Eg: BATA, DABUR, Apollo, etc.

MULTIPLE SHOPS/ CHAIN STORES
• LESS COST
• LOCATION- CONVENIENT TO CUSTOMERS
• CUSTOMER FAITH
• REGULARITY IS MAINTAINED
• UNIFORMITY IN SALES PROMOTION
• NO MIDDLEMEN
• NO BAD DEBITS
• UNIFORM POLICIES ALL OVER BRANCHES
• LIMITED RANGE OF PRODUCTS
• NO EFFECTIVE CONTROL
• LIMITED FREEDOM FOR STAFFS
• NO EXTRA RECREATION
• NO PERSONAL CONTACT

MAIL-ORDER BUSINESS:
It is a type of retail in
which all the business
activities take place
through mail(post).
Manufacturer sell their
products direct to
consumers without
involving middlemen.

MANUFACTURER MAIL ORDER BUSINESS:
Mail order business is established by the manufacturer for the selling
goods manufactured by them thus, eliminating middlemen
DEPARTMENTAL MAIL ORDER BUSINESS:
Departmental mail order business established by the department of
departmental stores to execute outside orders
MIDDLEMEN(RETAILER) ORDER BUSINESS:
Established by retailers to sale the goods to consumers by mail.

MAIL-ORDER BUSINESS
• VERY USEFUL- REMOTE AREAS
• NO SHOPS/SHOWROOMS REQUIRED
• BAD DEBITS ARE LESS
• SMALL CAPITAL REQUIREMENT
• GETS WIDE MARKET- LESS EXPENSE
• NO MIDDLEMEN
• CAN‟T EXAMINE PRODUCTS
• NO CREDIT FACILITIES
• RISK OF CHEATING
• NO PERSONAL CONTACT
• MORE PRICE FOR ADVERTISEMENT
• WASTAGE OF TIME & MONEY
• ILLITERATE CUSTOMERS- NO BENEFITS
• RISK OF DAMAGE PRODUCT

CONSUMER COOPERATIVE STORES:
Customer from a society will be running the retail business by
themselves.
The basic purpose is to eliminate the middlemen.
Capital required is collected by the member through purchase of
shares.
Here, the member purchases their requirement in a bulk from
manufacturer/ wholesalers at wholesalers at wholesaler price and sell
them to the members at market rate.
A part of profit earned in the business distributed among the members
in the form of „Bonus of Purchases‟.

CONSUMER COOPERATIVE STORE:
• LOW PRICE- BETTER QUALITY
• MEMBER CAN INCREASE
INVESTMENT
• CONSUMER CONTROLLED
• LOW OVERHEAD EXPENSES
• LACK OF ABILITY, EXPERIENCE &
BUSINESS TRAINING
• LESS FINANCIAL RESOURCES- NO
LARGE SCALE
• DIFFICULT TO MAINTAIN HARMONY
• UNDER CONTROL OF STATE CO-
OPERATIVE ACT

HIRE PURCHASE TRADING SYSTEM
To buy the goods in instalment. In this purchaser gets the possession of
goods without paying the full amount to the seller.
A part of payment is made at the time of purchase and rest is made in
instalments.
The buyer becomes owner of goods only after payment of total price.
If purchaser doesn‟t pay the instalment, the seller is free to carry the
goods.
The whole system is based on the agreement between the seller &
buyer with or without guarenteer.
It is usually carried out in the case of luxurious articles like car, TV,
fridge, etc.

HIRE PURCHASE TRADING SYSTEM
• FACILITY IS PROVIDED FOR COSTLY
PURCHASE
• SMALL SCALE CAN UTILIZE WELL
• INCREASES SALES OF COSTLY &
LUXURIOUS GOODS
• INVESTMENT OF MONEY
ELSEWHERE
• UNNECESSARY PURCHASING
• LARGE SCALE CAPITAL TO FINANCE
THIS BUSINESS
• FINAL PRICE IS HIGH FOR
INSTALLMENT THAN THE NORMAL
PURCHASE

Forms of organization & channels of distribution

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