Trade and Distribution Methods

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Questions and Answers

What is the definition of trade according to the text?

Trade is the exchange of ownership of goods and services on a particular consideration between a buyer and a seller.

Name the two main categories of trade, based on the text.

The two main categories are home trade and foreign trade.

What are the two types of home trade mentioned?

The two types of home trade are retail trade and wholesale trade.

What are the two types of foreign trade outlined in the text?

The two types of foreign trade are import trade and export trade. Signup and view all the answers

Describe a distribution method that involves an intermediary.

A manufacturer can distribute their goods using a wholesaler, who then sells goods to a retailer, who finally sells to a consumer. Signup and view all the answers

What type of Bill of Lading is issued when goods loaded onto a ship are broken or damaged?

impure Bill of Lading Signup and view all the answers

What is generally the role of intermediaries in the distribution process?

Intermediaries help distribute products from the manufacturer to the consumer. Signup and view all the answers

What is the purpose of a Sanitary or Health Certificate for certain agro products in international trade?

To confirm the product's suitability for consumption. Signup and view all the answers

What kind of certificate is issued by a warehouse authority to an importer to confirm that goods have been stored in their facility?

Warehouse Certificate Signup and view all the answers

What is the main difference between a wholesaler and a retailer?

Wholesalers sell goods for resale, while retailers sell goods to the end consumer. Signup and view all the answers

Describe the key characteristic that makes a Warehouse Certificate a valuable document in trade?

It is transferable. Signup and view all the answers

What is the role of an agent in the distribution process?

An agent acts on behalf of a head, undertaking responsibilities and earning a commission for their services. Signup and view all the answers

What is the purpose of a Bank Order in the context of foreign trade payments?

To instruct a bank to pay a specified amount to a recipient. Signup and view all the answers

Name a commonly used method for settling payments in foreign trade that uses the internet?

Credit Cards Signup and view all the answers

What is the primary advantage of using an internet prepaid card?

Temporary use for a specific purpose. Signup and view all the answers

What is required to access online banking services for making payments?

A username and a password. Signup and view all the answers

What is a key characteristic of non-store retailing?

Consumers purchase goods without visiting a retail outlet. Signup and view all the answers

Name two methods of non-store retailing?

Online retailing and direct marketing. Signup and view all the answers

Give an example of direct marketing?

Direct mail or catalogs. Signup and view all the answers

What is the main purpose of a wholesale trade?

The sale of goods to purchasers who buy with the intention of reselling. Signup and view all the answers

What is a key characteristic of wholesale trade?

Purchasing of goods with the purpose of resale. Signup and view all the answers

Besides the internet, list one other method of non-store retailing?

Telephone, fax, or catalogs. Signup and view all the answers

What is the role of a wholesaler in the distribution of products?

They sell goods for the purpose of resale. Signup and view all the answers

What type of business combines retail outlets with the supply of services?

Laugfs fuel stations and supermarkets, or Commercial mini banks and cargills supermarkets. Signup and view all the answers

What is the primary reason why some countries are the sole producers of certain goods, according to the text?

Unequal distribution of natural resources Signup and view all the answers

Explain the concept of relative cost advantage in the context of foreign trade.

A country should manufacture a product if they can do so at a lower cost than importing it. Similarly, they should import it if that is cheaper. Signup and view all the answers

What is the role of patents and copyrights in foreign trade, as described in this context?

Patents and copyrights create legal monopolies, limiting production of certain goods to specific countries. Signup and view all the answers

How do countries expand their market using sales promotion?

By using sales promotion strategies, countries can gain a worldwide market for their products. Signup and view all the answers

What are two factors mentioned that are often minimized to encourage trade?

Tariff and non-tariff trade barriers Signup and view all the answers

What is import trade?

Import trade is buying goods and services from other countries. Signup and view all the answers

Briefly define 'export trade'.

Selling goods or services manufactured in a country to other countries is known as export trade. Signup and view all the answers

How does the text define 'foreign trade'?

The trade that is carried out by one country with another country/countries. Signup and view all the answers

What is the term for a trade agreement between two countries?

Bi-lateral agreement Signup and view all the answers

Name three of the original member countries of the G8.

United States, United Kingdom, France, West Germany, Italy, or Japan Signup and view all the answers

What is the primary purpose of the South Asian Free Trade Agreement (SAFTA)?

To spread trade co-operation within the SAARC zone and create a free trade zone within South Asia. Signup and view all the answers

When did the North American Free Trade Agreement (NAFTA) officially commence?

January 1, 1994 Signup and view all the answers

What condition must goods meet to be tariff-free under NAFTA?

They must be manufactured within the USA, Canada, or Mexico. Signup and view all the answers

What was the original name of the Asia-Pacific Trade Agreement (APTA)?

Bangkok Agreement Signup and view all the answers

Name two member countries of the Asia-Pacific Trade Agreement (APTA).

Bangladesh, China, India, Laos, Mongolia, Sri Lanka, or South Korea Signup and view all the answers

In what year was the SAFTA agreement signed at the SAARC summit?

2004 Signup and view all the answers

What is the key distinction between e-trade and e-commerce?

E-trade specifically refers to the online buying and selling of goods and services, while e-commerce encompasses this plus supportive services like communication and transportation. Signup and view all the answers

How does an e-business differ from e-commerce, according to the text?

An e-business uses the internet for all business affairs, including marketing and administration in addition to trade; while e-commerce focuses on the trade aspects. Signup and view all the answers

Considering the import activity, what would be the initial step after deciding which product to purchase from a foreign country?

The initial step would be to find a supplier in the relevant country who produces the product. Signup and view all the answers

After finding the foreign supplier, what is the next step in an import transaction?

The next step would be planning and organizing the purchase transaction, including the terms of sale and delivery. Signup and view all the answers

Besides the actual purchase, what other types of affairs should be organized in an import transaction?

You also need to organize affairs related to purchasing and selling, such as pricing and delivery schedules. Signup and view all the answers

In an international e-trade settlement what is a benefit of using electronic methods for payment?

Electronic settlements are typically faster and more efficient than traditional methods, also may offer better tracking of payments. Signup and view all the answers

In the context of a business using computer networks for internal functions, describe the roles of information technology?

Information technology is used for both exchanging information and receiving feedback that is needed for the business. Signup and view all the answers

What is a significant relationship between e-commerce and e-business?

E-commerce is a part of e-business. E-business has a wider scope than e-commerce. Signup and view all the answers

Study Notes

Trade

Trade involves exchanging ownership of goods and services, based on agreement between buyer and seller.
Home trade occurs within a country's borders.
Foreign trade involves trade between countries.
Types of home trade include whole-sale and retail.
Types of foreign trade include import and export.

Methods of Distributing Consumer Goods

Goods can be distributed directly from manufacturer to consumer or through intermediaries, like retailers and wholesalers.
Intermediaries are parties that facilitate distribution.
Examples of distribution include manufacturer → consumer, manufacturer → retailer → consumer, manufacturer → wholesaler → retailer → consumer, and manufacturer → agent → wholesaler → retailer → consumer.

Agents

Agents act on behalf of a principal (head).
Agents earn commission for their services.
Different types exist based on service:
- Commission agent: Purchases or sells on their own discretion.
- Broker: Facilitates transactions between buyer and seller.
- Del credere agent: Sells goods on credit and collects debts.
- Factor agent: Sales agent who handles collection of debts.
- Auctioneer: Sells goods to the highest bidder.

Advantages of Intermediaries

Accumulate diverse goods from various manufacturers, making them available to consumers.
Introduce new products and services to the market.
Provide access to market information for consumers.
Streamline the process of exchange.

Disadvantages of Intermediaries

Possibility of unnecessary shortages and increased prices.

Retail Trade

Retail trade involves selling goods directly to end consumers.
Retailers serve producers, wholesalers, and consumers.
Trends in retail trade include spreading of supermarkets, expanding opening hours, and combining retail outlets with services.
Key services provided by retailers to producers, wholesalers, and consumers are described.

Wholesale Trade

Wholesale trade involves selling goods in bulk to retailers or other businesses.
Wholesalers play a crucial role in the distribution process.
Key functions of wholesalers include purchasing in bulk, storing goods, providing trade discounts, conducting sales promotions, doing market research, and providing transport services.
Services rendered to producers and retailers are explained.

Foreign Trade

Foreign trade involves buying and selling goods/services across countries.
Types of foreign trade are import trade, export trade, and entrepot trade.
Factors underlying the importance of foreign trade, such as imbalances in resources and cost advantages, are described.
Barriers to foreign trade, such as tariffs and non-tariff barriers, are explained.

Electronic Commerce

Electronic trade, or e-trade, is trade mediated by electronic devices, including the internet.
E-commerce is a part of broader electronic trade.

Documentation Used in Export/Import Trade

Import/export licences
Quotations
Indent
Bill of Lading (B/L)
Invoices etc.

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Description

This quiz covers the fundamentals of trade, including home and foreign trade, as well as the roles of intermediaries in distributing consumer goods. Learn about the different types of trade, distribution methods, and the functions of agents in transactions. Test your knowledge on these key economic concepts.