Introduction To Commerce

INtroduction to Commerce

MEANING OF COMMERCE  

Commerce simply refers to all the activities involved in the production, distribution and exchange of goods and services. Put in another way, commerce is a branch of production  which is concerned with the distribution ,exchange of goods and services and all the activities which facilitate or promote trade, e.g. banking, insurance, Transportation, communication, tourism etc. Commerce can also be referred to as the process of buying, selling, and distributing goods and services. Simply put, commerce is trade and aids to trade.

INtroduction to Commerce

Commerce is situated between producers (who make goods) and consumers (who buy goods).So, we can say that Commerce consists of the businesses that exist between the producers and consumers. The position of Commerce can be shown in a simple diagram.

Producers ——–> Commerce ———–>Consumer

SCOPE OF COMMERCE

The scope of commerce may be seen as embracing the totality of all the activities which ensure the distribution and exchange of goods and services for the satisfaction of the people. In all ramifications, commerce embraces trade and the auxiliaries or aids to trade.

The scope of commerce can therefore be referred to, as the different activities engaged in by people in commercial occupation. These activities include;

  • Trading
  • Transporting
  • Warehousing
  • Banking
  • Insurance
  • Advertising
  • Communication
  • Tourism

Commerce is sometimes referred to as tertiary production, because in a way it is a form of production. Even services have to be ‘produced’ because when goods leave the producers, they do not usually pass directly to the consumer, they have to be stored (warehousing) transported, insured, advertised and sold by traders. These and many other commercial activities that make up tertiary production assist in the change in ownership of goods from the producer to the consumer. Tertiary production is also sometimes called the service industry, but more often, it is referred to as commerce and direct services. Aids to trade include all the commercial activities that facilitate buying and selling.

FUNCTIONS OF COMMERCE

  • Mass production of goods and services: Commerce facilitates mass production thereby enabling people all over the world to enjoy goods and services produced both within and outside their countries
  • Raising of capital: It makes available the necessary fund for individual needs and investment through the services of banks and other financial institutions.
  • Employment opportunities: It offers employment opportunities to a large number of people such as traders, bankers, insurance brokers, etc.
  • Warehousing: Commerce facilitate the storage of goods until they are needed, thus bridging the gap between demand and supply in the market.
  • Exchange of goods and services: It facilitate the exchange of goods and services through transportation (road, rail, sea, air) and telecommunication.
  • Improvement in standard of living: The availability of variety of goods and services leads to improvement in the standard of living and the quality of life.
  • Linkage of buyers and sellers: Commerce through communication links buyers and sellers together to do business without physical contact.
  • Risk bearing: The availability of insurance companies encourages entrepreneur to venture into various business activities.
  • Transport: Commerce assist in moving people, raw material and finished goods from production points to consumption points through transport.
  • Unity among nations: It fosters unity among nations thus, nations become interdependent as they engage in trading activities.
  • Creation of wealth for nations: Commerce helps to create wealth for nations, as duties are charged on goods and service either imported or exported.
  • Creation of public awareness: It makes the public aware of the availability of goods and services through advertising.

CHARACTERISTICS OF COMMERCE

The main characteristic of Commerce includes;

  1. Economic activity: commerce is an economic activity because it is carried out to earn profit.
  2. Commerce involves the exchange of goods and services which is trade and aids to trade.
  3. Profit making: the primary objective of commerce is to earn profit. Therefore, profit drives the engine of commerce.
  4. Utility: Commerce crates time and place utility for goods to satisfy consumers’ needs. It transports goods from place to create place utility. It also stores products for future uses which create time utility.
  5. Components of business: Commerce is a component of business that deals with regular business transactions.
  6. The scope of Commerce centers on distribution and exchange to ensure equitable supply of goods and services.
  7. Commerce is concerned with the enhancement of man’s survival and the growth of a nation through various commercial activities.

You Might Also Like

Leave a Reply