Types of Commerce

APRIL 24,2020


Good morning boys! I hope you all have understood the types of industries. so, we are on the second part of business activities which is Commerce and its types.

COMMERCE IS DIVIDED INTO TWO TYPES:
1. TRADE
2. AUXILIARIES OR AIDS TO TRADE.

First of all, you will write about them and then watch a video related to these topics to understand the topic better.

LEARNING OUTCOMES FOR TODAY- AT THE END OF THIS TOPIC, STUDENTS WILL BE ABLE TO:
a) Explain the types of trade.
b) Discuss the auxiliaries to trade.
c) Relate the aide to trade with the function of commerce.

Q.13 What are the types of Commerce? (1)
Ans- 1. Trade 2. Auxiliaries to trade

Q .14 What is Trade? What are the types of trade?( 5)
Ans- Trade means sale or exchange of goods either by producers themselves or by businessmen engaged in trading activities with an aim to earn profit. It facilitates large scale production of goods. There are two types of trade:
1. Internal/ Domestic Trade-
a) If the buying and selling of goods takes place within the geographical boundaries of a country, it is referred to as Domestic Trade.
b) It is divided in two parts-
i) Wholesale Trade- It involves buying and selling in bulk quantities. The wholesalers buy large quantities of stock from manufacturers and sell to retailers in small quantities.
ii) Retail Trade involves buying and selling in small quantities. Retailers sell to consumers for final consumption. Retailer acts as a direct link between manufacturer, wholesaler and consumer.
2. External/Foreign Trade
a) If buying and selling of goods takes place outside the geographical boundaries of a country, it is known as Foreign Trade. It is of three types-
i) Export Trade- It is the foreign trade where goods are sold to another country.
ii) Import Trade- It is the foreign trade where goods are purchased from another country.
iii) Entrepot Trade- If goods imported from a country and then sold to another country, it is called as Entrepot Trade. Example- Medical devices imported from Korea were further sold to Bangladesh.

Q .15 What are auxiliaries to trade? Explain them.(6)
Ans- Auxiliaries to trade are the services which assist all trade and industry activities. They are part of commerce and help in the smooth flow of trade, making the buying and selling easier by removing the various hindrances  They are explained as follows-
1) Transportation- a) It removes the hindrance of place.
b) It facilitates supply of raw material to producers and distributes finished goods from producers to consumers through road , rail , air or ship
2. Communication-
a) It plays a great role in progress of business activities. Effective and timely communication between the producers and consumers result into successful trade.Information can be exchanged through postal services, internet, telephone.
3.Banking and Finance-
a) Banking provides financial assistance to the suppliers ,producers and consumers and that removes the hindrance of Finance.
b) Banks not only provide the services of deposit and withdrawal of money but also assist produces and traders by providing overdraft, cash credit limit, loans, etc to run business activities without any financial limitations.
4.Insurance - a) Insurance removes the hindrance of risk.
b) It facilitates business organisation to minimise risk of losing income or damages due to goods lost in transit,  theft, fire, natural calamities, etc.
5  Warehousing - a) Warehousing provides the facility to store the unsold goods and faciltates the continuous supply of goods at reasonable prices.
b) It removes the hindrance of time and also prevents goods from loss or damage.
6. Advertisement - a) It removes the hindrance of information. It is one of the most important means of promoting a product .
b) It acts as a link between the producers and consumers and it brings awareness among the consumers or potential buyers about the goods and services available in the market and persuades them to buy the products.