II. Very Short Answer Questions

Question 1.
Who is a franchisee?
Answer:
The individual who acquires the right to operate the business or use the trademark of the seller is known as tire franchisee.

Question 2.
State two disadvantages of franchising?
Answer:
Franchising fees: The initial franchising fee and the subsequent renewal fee can be very high in case of successful businesses. From the franchisee’s point of view, this may be a deterrent. Fixed royalty payment: The franchisee has to make payment of royalty to the franchiser on a regular basis. This considerably reduces the income of the franchisee.

Question 3.
Who is a factor?
Answer:
The factor is an agent who buys the accounts receivables (Debtors and Bills Receivables) of a firm and provides finance to a firm to meet its working capital requirements.

Question 8.
Define Logistics.
Answer:
Logistics can be viewed as a logical extension of transportation and related areas to achieve an efficient and effective goods distribution system.

Question 9.
What is the need for Logistics?
Answer:
Logistics Management is defined as ‘Design and operation of the physical, managerial, and informational systems needed to allow goods to overcome time and space (from the producer to the consumer)’.

Question 10.
Write about the importance of Logistics.
Answer:
Organisations taking proactive managerial attention in coordinating the actors in logistics leads to reduced logistics costs and improved customer service.

Question 11.

What are the types of Logistics Applications?
Answer:

  1. Decision – wise
  2. Actor – wise
  3. Inbound logistics
  4. Outbound logistics.

III. Short Answer Questions

Question 1.
What are the types of franchising?
Answer:

  1. Product /trade name franchising : In this type, the franchisee exclusively deals with a manufacture’s product, example Kidzee, French Loaf outlets.
  2. Business format franchising : When a franchisor awards rights covering all business aspects as a complete business package to the franchisee it is called as business format franchising, example McDonald’s, Pizza Hut.

Question 2.
List the steps in factoring process.
Answer:

  1. The firm enters into a factoring arrangement with a factor, which is generally a financial institution, for invoice purchasing.
  2. Whenever goods are sold on credit basis, an invoice is raised and a copy of the same is sent to the factor.
  3. The debt amount due to the firm is transferred to the factor through assignment and the same is intimated to the customer.

Question 3.
Describe the benefits of Logistics.
Answer:
Generally a good transportation, storage, handling and information infrastructure helps in efficient logistics management. All firms are viewed as a collection of primary and secondary activities,

Question 4.
Explain the points of differences between Logistics and Supply Chain Management.
Answer:
Logistics:
Logistics Management deals with the efficient management of a static gap between demand and supply.

Supply Chain Management:
Supply Chain Management tries to identify the dynamic nature of the value creation itself such as responsiveness, quality and design. Hence, it aims for an effective management response over the longer run.

IV. Long Answer Questions

Question 1.
Enumerate the characteristics of franchising.
Answer:

  1. Franchise relationship is based on an agreement which lays down terms and conditions of this relationship.
  2. The term of franchise may be for 5 years or more. The franchise agreement may be renewed with the mutual consent of the parties.
  3. The franchisee gives an undertaking not to carry any other competing business during the term of the franchise; and the franchiser gives an undertaking not to terminate the franchise agreement before its expiry except under situations which may justify the termination of the franchise agreement.
  4. The franchisee agrees to pay specified royalty to the franchiser, as per terms of the franchise agreement.
  5. Franchise means selling the same product and maintaining a similar type of shop decor (i.e. style of interior decoration) for which franchiser provides assistance to franchisee in organising, merchandising and management.


Question 2.
Elucidate the features of factoring.
Answer:

  1. Maintenance of book – debts : A factor takes the responsibility of maintaining the accounts of debtors of a business institution.
  2. Credit coverage : The factor accepts the risk burden of loss of bad debts leaving the seller to concentrate on his core business
  3. Cash advances : Around eighty percent of the total amount of accounts receivables is paid, as advance cash to the client.
  4. Collection service : Issuing reminders, receiving part payments, collection of cheques from part of the factoring service.
  5. Advice to clients : From the past history of debtors, the factor is able to provide advises regarding the credit worthiness of customers, perception of customers about the products of the client, etc.