Introduction to Commerce PDF

Basic Human Needs Luxury Products  What is 'Commerce'  Commerce is the exchange of goods and services on a large scale. Any transaction that uses the money to purchase goods or services is a part of the Commerce.  Commerce is the exchange of goods and services between businesses....

Basic Human Needs Luxury Products  What is 'Commerce'  Commerce is the exchange of goods and services on a large scale. Any transaction that uses the money to purchase goods or services is a part of the Commerce.  Commerce is the exchange of goods and services between businesses.  Commerce is the trade of goods, services, or other things of value between companies or organizations.  In a broad sense, governments try to manage trade to make their people happier and healthier by creating jobs and making useful goods and services. Understanding commerce Since the beginning of trade, people have been trading goods and services. From the start of bartering to creating money to building trade routes, people have tried to trade goods and services and build distribution systems around this. Most of the time, corporations buy and sell goods and services on a large scale when they do business today. A consumer's sale or purchase of a single item is called a transaction. All the sales and purchases of that item in an economy are called Commerce. Most trade happens between countries, and most goods are traded from one country to another. It's important to know that "commerce" and "business" are different. Commerce is only about how things are bought and sold. It has nothing to do with how or what a company makes. Distribution has many parts, such as logistical, political, regulatory, legal, social, and economical.  IMPORTANCE OF COMMERCE 1. Commerce tries to satisfy increasing human wants  Human wants are never-ending.  They can be classified as 'Basic wants' and 'Secondary wants’.  Commerce has made distribution and movement of goods possible from one part of the world to the other.  Today we can buy anything produced anywhere in the world.  This has, in turn, enabled man to satisfy his innumerable wants and thereby promoting social welfare. https://kalyan-city.blogspot.com/2011/03/what-is-commerce-meaning-and-importance.html 2. Commerce helps to increase our standard of living  Standard of living refers to the quality of life enjoyed by the members of society.  When man consumes more products his standard of living improves.  To consume a variety of goods he must be able to secure them first.  Commerce helps us to get what we want at the right time, right place and at the right price and thus helps in improving our standard of living. 3. Commerce links producers and consumers  Production is meant for ultimate consumption.  Commerce makes possible to link producers and consumers through retailers and wholesalers and also through the aids to trade.  Consumers get information about different goods through advertisements and salesmanship.  The manufacturers are regularly informed about the likes and dislikes of consumers through marketing research.  Thus commerce creates contact between the centers of production and consumption and links them. 4. Commerce generates employment opportunities  The growth of commerce, industry, and trade bring about the growth of agencies of the trade such as banking, transport, warehousing, advertising, etc.  These agencies need people to look after their functioning.  Increase in production results in increasing demand, which further results in boosting employment opportunities.  Thus the development of commerce generates more and more employment opportunities for millions of people in a country. 5. Commerce increases national income and wealth When production increases, the national income also increases. In a developed country, manufacturing industries and commerce together account for nearly 80% of total national income. It also helps to earn foreign exchange by way of exports and duties levied on imports. Thus, commerce increases the national income and wealth of a nation. 6. Commerce helps in expansion of aids to trade With the growth in trade and commerce, there is a growing need for expansion and modernization of aids to trade. Aids to trade such as banking, communication, advertising and publicity, transport, insurance, etc., are expanded and modernized for the smooth conduct of commerce. 7. Commerce helps in growth of industrial development  Commerce looks after the smooth distribution of goods and services made available by the industry.  Without commerce, the industry will find it difficult to keep the pace of production.  It helps to increase demand for goods on one hand and on the other hand, it helps industries by getting them the necessary raw materials and other services.  Hence, commerce helps in attaining better division of labor and industrial progress. 8. Commerce encourages international trade  Through commerce, we can secure a fair and equitable distribution of goods throughout the world.  With the help of transport and communication development, countries can exchange their surplus commodities and earn foreign exchange, which is very useful for importing machinery and sophisticated technology.  It ensures the faster economic growth of the country. 9. Commerce benefits underdeveloped countries Underdeveloped countries can import skilled labor and technical know-how from developed countries. While advanced countries can import raw materials from underdeveloped countries. This helps in laying down the seeds of industrialization in the underdeveloped countries. 10. Commerce helps during emergencies During emergencies like floods, earthquakes, and wars, commerce helps in reaching the essential requirements like foodstuff, medicines and relief measures to the affected areas.  CHARACTERISTICS OF COMMERCE Commerce is a subset of business and not a synonym  Commerce provides the necessary link amidst the producers of goods and consumers of goods.  It is known for the exchange of goods and services for adequate consideration.  Commerce covers the services delivered by various organizations, to facilitate the free flow of goods and services.  It removes all the barriers, as to person, place, time, risk, knowledge, finance, etc. in the process of exchange.  Profit acts as an incentive for carrying out commercial activity.  It tends to create utility.  CLASSIFICATION OF COMMERCE Commerce can be classified into two categories: Trade:  As we all know that trade is the sale, transfer or exchange of goods and services, for mutual benefit.  The person engaged in the trade of goods is termed as a trader, who acts as the middleman between the producer and consumer of goods.  It is further subdivided into two categories: o Internal Trade o External Trade Internal Trade: When buying and selling of goods and services is undertaken within the geographical boundaries of the country, as well as the consideration is paid in the country’s legal currency or by way of banks and the transportation system of the country is used, for supplying the goods and services. Wholesale: In wholesale trade, the goods are bought in large quantities from the producers and the sold to a number of retailers. Retail: In retail trade, the retailer purchases goods from the wholesaler for the purpose of reselling them to the consumers in small lots, for a profit. External Trade: When the purchase and sale of goods and services take place between two countries, it is called as external trade. It can be classified into three categories: Import: When goods are purchased from a foreign country, it is called as an import. Export: When goods are sold to a foreign country, it is called export. Entrepot: Entrepot trade means re-export, i.e. goods imported from a foreign country, not for domestic consumption but for selling it further to another country. Auxiliaries to Trade: Auxiliaries to trade covers all those activities which help in the efficient flow of commercial activities. There are various hindrances in undertaking trade. Auxiliaries to trade help in eliminating those hindrances: Transportation: Transportation activities facilitate in the removal of the hindrance of place, as goods are produced in a specific location only, while they are demanded in varied locations. Hence, these goods need to be moved from their place of origin to the place of consumption. Warehousing:  Warehousing involves safe storage of the goods, which facilitates the removal of the hindrance of time.  There are a number of goods which are produced in specific seasons, for instance, cotton, juice, sugar etc.  However, they are needed throughout the year, on a daily basis for different purposes and then there are some goods which are needed season-wise such as woolen clothes, umbrellas, etc.  Hence, warehousing provides proper storage for such produce. Banking:  Banking helps in providing financial assistance to the enterprise, i.e. it removes the hindrance of finance.  We all know that goods are not purchased at the same time when they are produced, and so there is a time-gap between the production and consumption of goods. And during this period, the entrepreneurs require funds to finance production.  Therefore, banks help in raising funds. Advertising:  Until and unless firms advertise their goods and services in the market, customers may not be aware of the goods available.  Hence, advertising facilitates the removal of the hindrance of information / knowledge.  Advertisement is the best tool for making people aware of the goods and services, with just one message, that communicates its features and usefulness, through various channels, such as radio, television, internet, newspaper, etc. Insurance: We all know that there is always a risk involved in the transportation of goods and services from one place to another. With the insurance, the risk of theft or fire can be removed and the organization can be free from the fear of loss during transit. Communication: The goods and services provided by different organizations are required to be communicated among the buyers. In the same way, goods and services needed or desired by the buyers have to be conveyed to the sellers, by way of orders. In layman terms, commerce is not just about the exchange of goods and services, rather it includes all such activities which are essential to bringing goods and services from the point of origin to the point of consumption.