Introduction to Commerce.
Emergence of Commerce
It is generally accepted that no single person can live alone providing all his basic needs by and for himself. It is even impossible for a family to provide for all its needs without depending on other members of the society.
Thus, there is the need to buy goods and services that one cannot provide and which one needs for survival. This need is what brought about commerce.
Meaning of Commerce
Commerce is the study of buying and selling of goods and services (trade) and activities which facilitate trade, namely advertising, warehousing, banking, insurance and transportation (which are referred to as aids or auxiliaries to trade).
Functions of Commerce
Commerce makes its impact felt in individual as well as national lives as follows:
(i) It moulds the world into one economic unit.
(ii) It makes goods and services produced in one place available where they are needed.
(iii) It improves the standard of living of individuals and nations.
(iv) It creates employment for individuals e.g. bankers, traders etc.
(v) It helps to preserve goods until such goods are needed.
(vi) It makes funds available for business ventures and also helps in the safe-keeping of money
(vii) It makes the exchange of goods and services possible.
Scope of Commerce
Diagram Illustrating the Scope of Commerce
Commerce is divided into two main aspects. namely Trade and Aids (Auxiliaries) to Trade. Trade is the actual buying and selling of goods and services while aids to trade are those activities or functions that facilitates trade.
Trade is the buying and selling of goods and services, within a country or in a foreign market. Thus trade is divided into two viz: Home (Internal) trade and foreign (International) trade.
Home Trade: This refers to trade within a country. It is made up of wholesale and retail trades. It is also known as domestic or internal trade.
Wholesale Trade deals in bulk purchasing of raw materials and finished goods from producers and manufacturers and then selling in smaller quantities to the retailers or, in few cases, to the ultimate consumers.
Retail Trade deals with buying goods from wholesalers or manufacturers! producers and selling to the final consumers The consumer is always the last link in a chain of distribution.
Foreign Trade: This is trade between two or more countries. It is also known as external or international trade. It consists of import and export trade.
Import Trade: This is the bringing of goods and services produced in another country into one’s country.
Export Trade: This involves sending of goods and services produced in one country to another country for sale.
Aids to Trade
These are also known as auxiliaries to trade. They consist of activities which help trade to take place. These are warehousing, transportation, communication, advertising, insurance and banking.
Warehousing: This is the system of storing goods produced until they are needed, because demand for goods is not stable; Warehousing enables the manufacturers to produce ahead of demand and to meet the demand of their customers on time.
There are three types of warehouses, namely bonded ordinary and state warehouses.
Transportation and Communication: This involves the movement of goods and services and, sending of messages’ from one place to another. Means of transportation are land, sea and air while communication can be oral or written.
Advertising: This is a means by which manufacturers bring to the notice of consumers the existence of their products and services, and also persuade them to buy the goods.
Insurance: This involves the transfer of risks suffered, in the course of trading, to others. The insured is always restored to the position in which he was before the loss. This is achieved by everyone contributing to a pool of funds from which the unfortunate can be compensated.
Banking: This is the way by which money and other valuables are safely kept and made available on demand. Banks accept deposits from, and grant loans to their customers. Deposits yield interest while interests are charged on loans.
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