Class 11 NCERT Solutions: Chapter 4 Business Services Exercise 4.1 (Business Studies)

Exercise 4.1

Short Answer Questions

Question 1: Define services and goods.

Answer: Service is an intangible activity that also aims at satisfying the needs and wants of a consumer. Services are intangible in nature; i.e., they are non-physical objects that cannot be seen, felt, or touched, but can be experienced by the consumer. The ownership of services cannot be transferred from one person to another. Services cannot be produced as they are performed as and when required by the customer. For example, eating dinner at a restaurant, Urbanclap services at home, etc. The three different types of services are business services, social services, and personal services. Business services are further classified as Banking, Insurance, Warehousing, Transportation, and Communication.

Goods is an item or product that satisfies the needs and wants of a consumer, provides them utility, and are ready for resale to the consumer. Goods are tangible in nature; i.e., they are physical objects that can be touched, felt, or seen. The ownership of goods can be transferred from one person to another or from the seller to the buyer. Goods can be produced according to their demand in the market. For example, mobile phones, watches, television, etc. On the basis of Durability, goods can be classified into two types: durable and non-durable goods. However, on the basis of consumption, goods can be classified as consumer goods and producer goods. Besides, goods can also be categorized as unsought goods, specialty goods, convenience goods, and shopping goods. 

Question 2: What is e-banking? What are the advantages of e-banking?

Answer: e-banking is the result of the internet and e-commerce. e-Banking is a service provided by banks, in which a customer is allowed to conduct transactions using the internet. It is an electronic payment system that allows users(customers) of any financial institution (banks, insurance companies, brokerage firms, etc.) to perform financial transactions using the internet. Usually, this service is offered by banks which gives their customers the facilities of online banking through which they can have access to their accounts within a few seconds and click. Online Banking includes the facilities such as Account Statements, Fund transfers, Account Opening, Financial Product Information, etc. There is no need for any human operator to respond to the customers. 

Advantages of e-banking:

Benefits of e-Banking to Customers

• e-banking covers digital payments, which have transparency.
• It usually supports 24×7 access to banking services. So customers can avail services as per their time. 
• It is a very convenient and easy-to-use service for customers as they do not have to visit the bank branches every time.

Benefits of e-Banking to Banks

• It reduces banks’ transaction costs. Operation cost per unit service decreases.
• It is completely electronically managed, which reduces the chance of mistakes in the transaction.
• Banks can easily attract customers for various offers via phone calls, emails, and apps, as the customer doesn’t have to visit the branches anymore for any product-specific information.
• Banks have to hire less people and also it will reduce the branch size and area, which helps in overall revenue growth.

Question 3: Write a note on various telecom services available for enhancing business.

Answer: Telecom Service is a type of communication service in which electronic devices are used for the exchange of information. It provides faster, cheaper and more reliable means of communication. It is the key to the country’s fast economic and social development. In fact, it is the backbone of all corporate activities. The notion of doing business across continents will remain a fantasy in today’s world if there is a lack of telecom infrastructure. Globally, there have been significant advancements in the convergence of the telecom, IT, consumer electronics, and media industries. Rapid economic and social development of the country is possible with the help of telecommunication infrastructure facilities. 

Difference telecom services that are available for the enhancement of business are as follows:

1. Cellular Mobile Services: These are all forms of mobile telecom services that use any type of network equipment within their service area, including voice and non-voice messaging, data services, and PCO services. They can also offer direct interconnection with any other type of service provider for telecommunications. Vodafone, Reliance, BSNL, and Airtel are some examples.

2. Fixed Line Services: All types of fixed services, including voice and non-voice communications, and data services are provided to establish linkages for long-distance traffic. Fiber Optic cables are used to provide networks. They also provide interconnectivity with other types of telecom services.

3. Cable Services: Cable services are a one-way transmission of entertainment-related services to subscribers within a licensed area of operations. They are expected to become two-way in future.

4. VSAT Services: VSAT means Very Small Aperture Terminal. It is a two-way satellite-based communication service. It provides enterprises and government organisations with a highly adaptable and dependable communication solution in both urban and rural locations. In comparison to land-based services, VSAT provides the assurance of reliable and consistent service. It may be utilised to give innovative applications, such as telemedicine, online newspapers, market rates, and tele-education even in our country’s most remote areas.

5. DTH Services: DTH (Direct to Home) is another satellite-based media service offered by cellular carriers. With the help of a small dish antenna and a set-top box, one may get media services straight from a satellite. The DTH service provider offers a diverse selection of channels. It may be seen on our television without using the services of a cable network services provider.

Question 4: Explain briefly the principles of insurance with suitable examples.

Answer: A contract signed between two parties, through which one party agrees or promises to cover the loss suffered by another party by receiving some money (consideration) in return, is known as Insurance.

Different principles of insurance are as follows:

1. Principle of Utmost Good Faith: An insurance contract is a contract of ‘uberrimae fidei’. It means that it is a contract formed in utmost good faith. This Principle of Utmost Good Faith states that both the parties of an insurance contract should have good faith towards each other. Also, each party should communicate the terms and conditions in a non-ambiguous manner to the other. In other words, the insurer is obligated to provide precise details about the contract to the insured, who, in turn, should provide all the details regarding the subject matter (for which the insurance is being taken) to the former. Simply put, this principle requires both parties to be transparent with each other. If the insured fails to disclose the material facts during the formation of contract, the insurance contract will be voidable at the option of the insurer. The same goes for the insurer, as they are also obligated to clear all terms and conditions of the insurance contract.

Material Fact is a fact that can influence the decision of the insurer for accepting or rejecting the risk, changing the premium rate, or fixing the conditions of insurance.

For example, Ankit, a heavy drinker and smoker took a health insurance policy. He failed to disclose his tobacco consumption habit to the insurance company. Later in life, he was diagnosed with cancer. In this case, the insurance company will not be obligated to carry the financial burden because Ankit withheld crucial information about his habit.

2. Principle of Proximate Cause: Any loss can be caused because of two reasons: Insured Perils and Uninsured Perils. The Principle of Proximate Cause states that the insurer is only liable for the losses when they are proximately caused by the perils stated in the insurance policy. When an insured faces a loss because of two or more causes, then the most dominant and effective cause is the proximate cause. The insurer is not liable for any loss caused by an uninsured peril or cause.  In other words, if an insured faces a loss because of more than two causes, then the insurance company will investigate the subject’s most recent cause of loss. The company is bound to compensate the insured if the immediate cause is the one for which the subject is insured. However, if the immediate cause, happens to be other than what the insurance policy states, then no compensation shall be provided to the insured. However, if the causes of loss include a combination of different insured and uninsured perils, the assessment of the claim becomes difficult for the insurance company.

For example, A building’s wall was engulfed in flames, and the local government ordered it to be dismantled. The adjacent building was destroyed during the destruction. The owner of the adjacent building had a fire insurance policy. In this case, the owner of the adjacent building will get the insurance money, as fire is the nearest cause of the destruction and it is covered in the perils of the insurance contract.

In a similar case, a fire-damaged building’s wall collapsed because of a storm before it could be restored, causing damage to the next building. The owner of the next building had fire insurance for the building. Here the remote cause of loss is fire and the storm is ‘Causa Proxima’, hence no compensation shall be made.

3. Principle of Insurable Interest: Having some economic or pecuniary interest in the subject matter of the insurance policy or contract, is known as Insurable Interest. The Principle of Insurable Interest states that the insured must have an insurable interest in the subject matter of the insurance. A person or an insured is said to have an insurable interest in the subject if any destruction of the subject adversely affects the insured. The insured of the insurance contract must either own the whole or part of the subject, or he/she must be adversely affected by any injury to the subject. For example, an individual has an insurable interest in his/her parents instead of any stranger.

Insurable Interest plays a different role in different types of insurance:

• Under Life Insurance, the presence of insurable interest at the time of contract is necessary. For example, a person took a Life Insurance Policy of her husband. After a few months, the couple got divorced and the husband died because of Heart Attack. In this case, the wife will get compensation from the insurance company because, at the time of insurance, the husband (insurable interest) was present.
• In the case of insurance of property, the insurable interest of the insured must be present at the time of signing the insurance contract. However, it does not mean that the insured must own the property at the time of entering into the insurance contract.
• In the case of fire insurance also, the insurable interest must be present at the time of entering into the insurance as well as at the time of loss of that subject. For example, Sahil took a Fire Insurance Policy for his Art Studio. If his Art Studio faces loss because of fire, he can claim compensation for the same. However, if he sells his Art Studio before the break-out of the fire, then Sahil cannot claim compensation for the loss by fire.
• The same is the case with Marine Insurance. The insurable interest of the subject must be present at the time of loss.

4. Principle of Indemnity: Indemnity means ‘Security against Loss’. The Principle of Indemnity aims at putting the insured (in the event of loss), in the exact same position he has immediately before the occurrence of that event. In other words, the insured of the insurance contract can recover the loss suffered by him/her, up to the limit of the amount covered by the insurance policy. The compensation payable to the insured for the loss suffered by him/her is measured in terms of money. Also, the insured is not allowed to make any profit out of the misfortune or unwanted event. All life and marine insurance contracts are contracts of indemnity; however, the life insurance contract is not a contract of indemnity because one cannot measure the loss arising on the death of the insured in terms of money.

For example, if Kashish has insured his house against fire for ₹8,00,000 and he suffers a loss of ₹5,00,000, then the insurance company will pay him only ₹5,00,000 and not the amount of policy; i.e., ₹8,00,000.

5. Principle of Subrogation: According to the Principle of Subrogation, after providing compensation to the insured for the subject matter, the insurer gets every right against the third party. This principle is applied to all the insurance contracts that are the ‘Contracts of Indemnity’.

For example, Sukant took insurance for his sports car for ₹10,00,000, which got stolen after a while. Now the insurer will compensate the loss suffered by Sukant according to the policy. However, if Sukant recovers his sports car later, then the insurance company (insurer) will have full rights on that car. It is because the insured already got the compensation for the loss and is not allowed to make any profit by any means. 

Question 5: Explain warehousing and its functions.

Answer: When goods are held in stock to make them available as and when required, it is known as Warehousing. It helps businesses to overcome the problems of storage and makes goods available when needed and thus, helping in maintaining prices at a reasonable level. It is a planned place for storing commodities in a secure and efficient manner until they are needed for consumption. It is important for keeping pricing consistent and commodities available at the proper time. Warehouses (also known as distribution centres) are utilised by distributors, manufacturers, importers, exporters, enterprises, and wholesalers due to the diverse roles of warehousing.

The functions of Warehousing are as follows:

1. Consolidation: The warehouse gathers and consolidates materials/goods from several manufacturing units before dispatching them to a specific client on a single transportation shipment. 

2. Break the Bulk: The warehouse divides the large number of products received from the manufacturing units into smaller quantities. These smaller quantities are subsequently transported to clients’ locations based on their requirements.

3. Stock Piling: The seasonal storing of commodities for specific businesses is the next role of warehousing. Warehouses hold goods or raw materials that are not immediately needed for sale or manufacture. They are made available to businesses based on demand from customers. Agricultural items harvested at specific times for consumption throughout the year are also kept and released in lots.

4. Value-added Services: Value-added services such as in-transit mixing, packaging and labelling, etc., are provided by warehouses. Such services contribute to the optimization of supply chain management, production of increased value, and the effective delivery of items to customers. Bundling, customising, re-branding, re-packaging, processing, etc., are examples. When prospective buyers check the goods, they may need to be opened, packed, and labelled again. Grading and dividing commodities into smaller quantities is also done by warehouses.

5. Price Stabilisation: Warehousing stabilises prices by adjusting the supply of goods in response to the demand. Prices are, therefore, regulated when supply is high, while demand is low, and vice versa.

They help in the regulation of price fluctuations by:

• Stockpiling products when market supply exceeds market demand.
• Releasing goods when demand increases.

Long Answer Questions

Question 1: What are services? Explain their distinct characteristics.

Answer: Service is an intangible activity that also aims at satisfying the needs and wants of a consumer. Services are intangible in nature; i.e., they are non-physical objects that cannot be seen, felt, or touched, but can be experienced by the consumer. The ownership of services cannot be transferred from one person to another. Services cannot be produced as they are performed as and when required by the customer. For example, eating dinner at a restaurant, Urbanclap services at home, etc. The three different types of services are business services, social services, and personal services. Business services are further classified as Banking, Insurance, Warehousing, Transportation, and Communication.

Various characteristics of services are as follows:

1. Intangibility: Services are intangible in nature. It means that the services provided to a consumer cannot be touched, seen, or felt; instead, they can be experienced only. As individuals cannot taste, feel, or touch a service, they cannot determine its quality before consumption; hence, it gives rise to the purchase. Therefore, it is essential for the service providers to continuously work on their services to provide desired results to the customers. For example, a doctor should provide a favourable experience to a patient.

2. Inconsistency: As there is no tangible product in the services, they are inconsistent in nature and have to be exclusively performed by the service provider every time. Besides, different customers have different expectations, wants, and demands. Therefore, the service providers should alter their offer to meet the customers’ requirements as closely as possible. For example, beauty parlour services, etc.

3. Inseparability: The production and consumption of services are inseparable as they co-occur. For example, if we manufacture a Television today, we can sell it at a later date. However, we cannot do the same with services, as they have to be consumed as and when they are produced. Even though the service providers can design a substitute for their services as per the requirements, customer interaction is an essential part of services.

4. Inventory: As discussed earlier, services do not mean any tangible component; therefore, we cannot store them for future use. In simple terms, services are perishable in nature, and one cannot store the service itself but can store some associated goods to the service for future use. For example, one can purchase an airplane ticket and store it but can experience the journey only when the airlines provide it to the customer.

5. Involvement: A customer is involved in the production of the service. In simple terms, as the customer is the recipient of the service, their participation at the time of service delivery is a must. However, the service providers can make necessary changes in the services as per the need of the customer. For example, Urban Clap cannot provide massage services if the customer is not present or does not participate.

Question 2: Explain the functions of commercial banks with an example of each.

Answer: Commercial banks are considered to be an important component of the banking system. These are the banks that perform banking services with the aim of earning profits. Commercial banks are generally famous because they provide funds for a different span of time: short-term & medium-term. Also, commercial banks are very active in accepting deposits. Usually, the rate of interest charged on the loans is more than the interest offered on the deposits. The disparity between both interest rates then becomes the primary source of income or profits for the banks. Common examples of commercial banks are the State Bank of India (SBI), Bank of Baroda, Punjab National Bank (PNB), Central Bank of India, Canara Bank, Bank of India, etc.

Functions of Commercial Banks:

1. Acceptance of Deposits: Accepting Deposits is one of the most essential functions of commercial banks. Commercial banks accept deposits in different forms based on the need of different sections of society. The three main kinds of deposits are:

• Current Account Deposits or Demand Deposits: The deposits which are repayable by the banks whenever demanded are known as Current Account Deposits. In general, these deposits are maintained by businessmen. They can withdraw the money by a cheque without any restriction. No interest is paid by the banks on these accounts. Instead, they impose service charges to run these accounts.
• Fixed Deposits or Time Deposits: The deposits in which people deposit money with the bank for a fixed time period. There is no cheque facility for these types of deposits and carry a high-interest rate.
• Saving Deposits: The deposits which have combined features of current account deposits and fixed deposits are known as saving deposits. The depositors have a cheque facility to withdraw money from their account; however, there is some restriction on the number and amount of withdrawals. The rate of interest on these deposits is less than that of the rate of interest on fixed deposits.

2. Advancing of Loans: A bank cannot keep the deposits received idle; therefore, after keeping some amount as cash reserves, the balance amount is given to the needy borrowers as loans and advances by charging some interest on them. This interest is the main source of income for the banks. The different types of loans and advances made by commercial banks are as follows:

• Cash Credit: It is the loan given by the banks to the borrowers against their current assets such as shares, bonds, stocks, etc.
• Demand Loans: These are loans that can be recalled on demand at any time by the banks.
• Short-term Loans: Short-term loans are given as personal loans against some collateral security. 

3. Overdraft Facility: The facility in which a customer can overdraw his current account’s amount up to an agreed limit is known as an overdraft facility. In general, respectable and reliable customers get his facility for a short period. However, they have to pay interest to the bank on the overdrawn amount.

4. Discounting Bills of Exchange: The facility in which the bills of exchange’s holder can get his bill discounted with the bank before its maturity date is known as discounting bills of exchange. The commercial bank pays the amount to the bills of exchange holder after deducting some commission. Later on the maturity date, the party which had accepted the bill has to pay back the bank.

5. Agency Functions: Various agency functions are also provided by commercial banks to the customers, for which they charge some commission from their clients. The agency functions consist of:

• Transfer of Funds: Commercial banks provide their customers with the facility of economical and easy remittance of funds from place to place. It is done with the help of various instruments such as mail transfers, demand drafts, etc.
• Collection and Payment of Various Items: Commercial banks also provide customers with services like collecting bills, interest, cheques, rents, and other periodical receipts on their behalf and also make payments like taxes, insurance premiums, etc. on their behalf according to their standing instructions.
• Purchase and Sale of Foreign Exchange: Some commercial banks have the authority of dealing in foreign exchange. They can buy and sell foreign exchange on behalf of their clients and also helps in the promotion of international trade.

6. General Utility Functions: Commercial banks also render some general utility services such as:

• Locker Facility: Commercial banks provide their customers with facility of safety vaults or lockers to keep their valuable articles safely.
• Traveller’s Cheques: Commercial banks also issue traveller’s cheques for avoiding the risk of taking cash during the journey.
• Collection of Statistics: Commercial banks also collect statistics related to trade, commerce, and industry and publish them. Based on these statistics, they provide advice to customers on financial matters.

Question 3: Write a detailed note on various facilities offered by Indian Postal Department.

Answer: The Indian Postal and Telegraph Department provides a variety of postal services throughout India. The country has been subdivided into 22 postal circles in order to provide these services. These sectors oversee the operations of the numerous head post offices, sub-post offices, and branch post offices.

The numerous services offered by the postal department are essentially classified as such, based on regional and divisional level arrangements :

1. Financial Facilities: Postal services provide financing services to people as it has vast coverage. These services are provided by the post office through savings schemes, such as the Public Provident Fund (PPF), Kisan Vikas Patra, and National Saving Certificates, in addition to the standard retail banking functions of monthly income schemes, recurring deposits, savings accounts, time deposits, and money order facility.

2. Mail Facilities: Mail services include parcel services, which are the transmission of items from one location to another; registration services, which offer security for the transmitted articles; and insurance services, which give insurance coverage for any hazards encountered during postal transmission.

3. Other Services: The postal service also provides the following additional services :

• Greeting Post: A beautiful range of greeting cards for every occasion.
• Media Post: An creative and cost-effective way for Indian corporations to promote their brands using postcards, envelopes, aerogrammes, telegrams, and letterboxes.
• Direct mail: Direct mail is used for direct marketing. It is done through addressed or left unanswered direct posts.
• Money Transfer facilities: International Money Transfer through collaboration with Western Union Financial Services in the United States allows money to be remitted to India from 185 countries.
• Passport services: A one-of-a-kind collaboration with the Ministry of External Affairs to facilitate passport applications.
• Speed Post: It has over 1000 destinations in India and connects to 97 major countries worldwide.
• E-bill Post: e-bill post is the department’s most recent service for collecting bill payments over the counter for BSNL, Bharti Airtel and other organisations.

Question 4: Describe various types of insurance and examine the nature of risks protected by each type of insurance.

Answer: Insurance is a legal contract (insurance policy) agreed upon between the two parties, namely the insurance firm (also known as the insurer) and the individual or group (known as insured). Both of these parties enter into a contract in which the insured pays the insurer a predetermined sum of money (known as a premium) with the promise that the company will compensate the insured in the occurrence of a financial loss (risk) due to the causes for which the insurer has agreed to provide coverage. Businesses require customised insurance plans that protect them against distinct sorts of hazards.

Different types of insurance and nature of risks protected by each of them are as follows:

1. Life Insurance: A life insurance policy is a legal agreement between an insurer and a policyholder. In exchange for the premiums paid by the policyholder throughout their lifetime, a life insurance policy promises that the insurer will pay an amount of money to specified beneficiaries when the insured dies. Life insurance is a policy or cover that helps the insured person to give some financial independence or assurance for his or her family members after death. 

Nature of Risks Protected: Life insurance provides protection to the family at the premature death of the insured.

2. Health Insurance: Health Insurance is a contract between an insurer and an individual or a group in which the insurer agrees to provide health insurance at an agreed-upon price, which is premium. Premium can be paid in instalments or in lump-sum depending upon the policy taken. Health insurance claims can be made either immediately in cash or through payment after treatment. 

Nature of Risks Protected: It provides protection against unseen health problems.

3. Fire Insurance: A contract whereby the insurer, in consideration of the premium paid, undertakes to compensate the insured for any loss that may result due to the occurrence of fire is known as Fire Insurance. The fire insurance policy is usually for one year and has to be renewed from time to time. The premium can be either paid in lump sums or instalments. The document which contains the terms and conditions of the contract is known as Fire Insurance Policy. The claim for loss by fire must fulfil two conditions:

• There must be actual loss.
• The fire must be accidental and non-intentional. This means that the property insured must be damaged or burnt by fire. It will not cover the damages under the word ‘fire’ if the property is damaged by heat or smoke without ignition and such loss will not be recoverable from the insurer. 

Nature of Risks Protected: Protection of goods against the risk of fire.

4. Marine Insurance: Marine insurance is a contract in which the insurer agrees to compensate the insured against maritime losses in the way and to the extent agreed upon. Maritime insurance protects against loss caused by marine hazards or perils of the sea. Marine risks include ship collisions with rocks, ship attacks by opponents, fire and capture by pirates, and the captains’ and crew’s activities. These risks result in ship and cargo damage, destruction, or disappearance, as well as non-payment of freight. So, marine insurance protects the ship’s hull, cargo, and freight. 
In a marine insurance contract, the insurer (also known as the underwriter) agrees to provide payment to the insured (often the owner of a ship or cargo) in the case of a complete or partial loss at sea. The insurer pays a certain amount in consideration for the guarantee and protection he receives. Protection against loss caused by marine or marine perils is provided by marine insurance. 

Nature of Risks Protected: Protection of goods against the risk of loss in a sea voyage.

Question 5: Explain in detail the warehousing services.

Answer: When goods are held in stock to make them available as and when required, it is known as Warehousing. It helps businesses to overcome the problems of storage and makes goods available when needed and thus, helping in maintaining prices at a reasonable level. It is a planned place for storing commodities in a secure and efficient manner until they are needed for consumption. It is important for keeping pricing consistent and commodities available at the proper time. Warehouses (also known as distribution centres) are utilised by distributors, manufacturers, importers, exporters, enterprises, and wholesalers due to the diverse roles of warehousing.

Types of Warehouses

Following are the types of Warehouses:

1. Private Warehouses: Private warehouses are run, owned, or leased by a firm that handles its own goods, such as a retail chain shop or a multi-brand multi-product corporation. In general, an efficient warehouse is built around a material handling system to maximise product movement efficiency. The benefit of private warehousing includes control, flexibility, and other benefits, like improved dealer relations.

2. Public Warehouses: After paying a storage fee or charges, dealers, manufacturers, and members of the general public can utilise public warehouses to store their goods. The government supervises the operation of these warehouses by issuing licenses to private companies. The warehouse owner acts as the owner of the goods’ agent and is expected to take proper care of the commodities. These warehouses also provide additional services, such as rail and road transportation. It is very helpful for small manufacturers as they can’t afford to build their own warehouses. Other advantages include the opportunity to offer value-added services, like packing and labelling, etc.

3. Bonded Warehouses: Bonded warehouses are government-licensed warehouses that receive imported goods prior to payment of tax and customs duty. These are items imported from other nations. Importers are not authorised to transfer goods from the ports or airport until all customs duties have been paid.

4. Government Warehouses: Warehouses that are fully owned and managed by the government are known as Government warehouses. All these warehouses are managed by the government through public-sector organisations. Food Corporation of India, State Trading Corporation, and Central Warehousing Corporation are a few examples.

5. Cooperative Warehouses: Warehouses that are set up or established by some marketing or agricultural cooperative societies for cooperative members are known as Cooperative Warehouses.

Functions of Warehousing

The functions of Warehousing are as follows:

1. Consolidation: The warehouse gathers and consolidates materials/goods from several manufacturing units before dispatching them to a specific client on a single transportation shipment. 

2. Break the Bulk: The warehouse divides the large number of products received from the manufacturing units into smaller quantities. These smaller quantities are subsequently transported to clients’ locations based on their requirements.

3. Stock Piling: The seasonal storing of commodities for specific businesses is the next role of warehousing. Warehouses hold goods or raw materials that are not immediately needed for sale or manufacture. They are made available to businesses based on demand from customers. Agricultural items harvested at specific times for consumption throughout the year is also kept and released in lots.

4. Value-added Services: Value-added services such as in-transit mixing, packaging and labelling, etc., are provided by warehouses. Such services contribute to the optimization of supply chain management, the production of increased value, and the effective delivery of items to customers. Bundling, customising, re-branding, re-packaging, processing, etc., are examples. When prospective buyers check the goods, they may need to be opened, packed, and labelled again. Grading and dividing commodities into smaller quantities is also done by warehouses.

5. Price Stabilisation: Warehousing stabilises prices by adjusting the supply of goods in response to the demand. Prices are, therefore, regulated when supply is high, while demand is low, and vice versa.

They help in the regulation of price fluctuations by:

• Stockpiling products when market supply exceeds market demand.
• Releasing goods when demand increases.

6. Financing: Financing is yet another of a warehouse’s various functions. Warehouse finance is a sort of inventory financing in which a financial institution provides a loan to a manufacturer or business. Goods, inventories, or commodities are stored in a warehouse and utilised as collateral for the loan in this situation. In other words, warehouse owners advance money to the owners in exchange for the security of products, and then supply goods to customers on credit terms.