Commerce
Commerce SSS1 First Term
WEEK 1
Commerce
Performance Objectives
A student should be able to:
- Highlight the meaning and function of Wholesaler to Manufacturer and Retailer
- Explain the scope of Commerce
- Outline the characteristics of commerce.
- List the functions of commerce
- Describe e-commerce
Content
Commerce can be defined as all the activities involved in the distribution and exchange of goods and services. It is a branch of production which is concerned with the distribution, exchange of goods and services and all activities that facilitates trade, e.g. banking, insurance etc.
Scope of Commerce
Commerce can be divided into trade and all activities that aid trade. It may also be seen as all activities that ensure the distribution and exchange of goods and services for the satisfaction of people.
Trade
Trade may be defined as the act of buying and selling of goods and services.
Types of Trade
Trade is the act of buying and selling, i.e exchange of goods and services. Trade is the most important aspect of commerce. The other branches of commerce are functioning for the purpose of trade. Trade is divided or classified into major two groups. These are home or domestic trade, and foreign trade.
Home trade
Home Trade is the act of buying and selling of goods and services within a particular country. For example, trading from Lagos to Benin or from Gombe to Aba, Ede to Uyo is domestic trade. It involves the use of the same currency, the same laws, and the same weight and measures. It is subdivided into retail trade and wholesale.
Retail Trade: it is concerned mainly with the buying of goods in small quantities from wholesalers and making it available in units to the final consumers.
Wholesale Trade: it is the buying of goods and services in bulk from the producers and selling them in large quantities to the retailers. They serve as the intermediary between the producers and retailer.
Foreign Trade
This refers to the act of buying and selling between two or more countries. Examples are trading activities between Nigeria and Ghana, between Nigeria and the United Kingdom, between Nigeria and United State of America. It can be bilateral or multilateral in nature. It is also known as international trade. It is sub-divided into import, export and entrepot trades.
Import trade: This refers to buying of goods and services from other countries into one’s own country
Export trade: This refers to the sale of goods and services to other countries from one’s country. They are paid for in foreign currency.
Entrepot: It is the process of importing goods and services for re-exporting to other countries.
Aids to Trade
Aids to trade are commercial activities which facilitate trade i.e., they make trade possible. Aids to trade are banking, insurance, transportation, advertising, warehousing, communication and tourism.
Banking: This makes trading possible by making funds available. The bank is a financial institution which makes fund available to assist people in their daily purchases and capital for embarking on industrial activities.
Transportation: It is the movement of goods and people from one place to another either by road, sea, rail, pipe or air.
Advertising: It is the process of creating awareness in the minds of the public about the existence of a product. It could take many forms: press, catalogues, free samples, trade fair, exhibition, window display, television, radio, etc.
Warehousing: It is a process which ensures that goods produced are Stored until they are needed. Warehousing is an important aspect of commerce is aimed at seeing that there is a regular and steady supply of goods.
Communication: Communication is the means of sending and receiving information from one place to another. Suppliers and customers can be easily linked together through communication services such as telephone, telex and internet/e-mail.
Insurance: Insurance is a security made against loss. It is the protection against loss or liabilities suffered in the day-to-day business operation. In return for premiums, individuals and corporate organizations are compensated for losses arising from fire, flood, accident, etc. Insurance is an essential element in local and international trade. The traders who suffer losses are restored to their former Position or status through compensation.
7. Tourism: Tourism aids trade by providing tourists with trading opportunities at tourist centres. Many people from different countries can converge in a country because of its tourist attraction. This will definitely increase trading activities.
CHARACTERISTICS OF COMMERCE
Commerce has the following characteristics. These are:
1. Economic activity: Commerce is an economic activity. A trader buys and sells goods to earn profit and wealth. lt is expressed in monetary terms.
2. Profit: The motive of commerce is to earn a profit. Gifts of goods to friends and relatives is not commerce
3. Marketing: Commerce involves marketing. It involves the exchange, distribution and promotion of products. It is done on to Create goods and satisfies customers.
4. Components of business: Commerce is a component of the business. It deals with goods produced by industries. Industries produce and commerce disposes of the goods.
5. Utility: Commerce creates a place and time utilities to satisfy consumers’ needs. It transports goods from place to create place utility. It stores products for future uses which create time utility.
FUNCTIONS OF COMMERCE
1. Mass Production of Goods and Services: Commerce facilitates mass production and thus people all over the world can enjoy goods and services produced both within and outside their countries.
2. Raising of Capital: It facilitates the raising of capital for individual needs and investment through the services of banks and other financial institutions.
3. Employment Opportunities: It offers employment opportunities to a large number of people such as traders, bankers and insurance brokers.
4. Transport: It assists in moving people, raw materials and finished goods from production points to Consumption points through transport.
5. Warehousing Functions: it facilitates the storage of goods until they are needed, thus bridging the gap between demand and supply in the market.
6. Unity among Nations: It fosters unity among nations thus, nations become interdependent as they engage in trading activities.
7. Improvement in Standard of Living: The availability of a variety of goods and services leads to improvement in standard of living and quality of life of people.
8. Exchange of Goods and Services: Commerce facilitates the exchange of goods and services through transportation (road, rail, sea, air) and telecommunication services.
ELECTRONIC COMMERCE (e-COMMERCE)
Meaning:
Electronic commerce is commonly known as e-commerce is a type of industry where the buying, selling and distribution of goods or services conducted over electronic systems such as the internet and other computer networks.
FUNCTIONS OF E-COMMERCE
E-commerce has the following functions
1. Better prices: In e-commerce, customers get better prices. Consumers often get better prices in an online store than they can get in retail stores.
2. Customer's Conveniences: Ordering products online has the advantage over traditional in-store shopping in that it is much more convenient; consumers do not have to leave the comfort of their own homes.
3. Wider recognition: E-commerce opens the market to customers nationally and internationally.
4. Favourable competition: It also enables smaller companies to compete with larger companies.
5. Lower overhead cost: In e-commerce, the cost of doing business Is greatly labour force.
6. Eliminate the use of cash: the use of cash in e-commerce is completely
eliminated as all payment are done online.