COMMERCE- MEANING AND CLASSIFICATION
MEANING-
-COMMERCE IS CONCERNED WITH TRADING OF GOODS AND SERVICES AND ALL THE ACTIVITIES WHICH MAKES TRADE POSSIBLE.
- IT IS A LINK BETWEEN PRODUCER AND CONSUMER
WHY COMMERCE..??
-To ensure free- flow of goods and services.
- To remove hindrances which comes in the process of exchange.
WHAT ARE HINDRANCES..??
The hindrances may be in respect of persons, place, time, risk, finance, information.
- The hindrance of persons is removed by trade, thereby making goods available to consumers from the producer.
- Transport removes the hindrance of place by moving goods from the place of production to the marketplace for sale.
- Storage and warehousing activities remove the hindrance of time by facilitating holding of stocks of goods and raw materials to be sold whenever required.
- Insurance protects from the risk against goods like fire, theft, damage.
- Capital required to undertake the business activities is provided by the banks and financial institutions.
- Advertising makes it possible for producers and traders to inform consumers about their products and services.
Hence, Commerce is said to be all those activities which remove the above mentioned hindrances in the process of trading.
COMMERCE INCLUDES TWO ACTIVITES-
1. TRADE
2.AUXILIARIES TO TADE
1. TRADE-
-It refers to sale, transfer or exchange of goods.
-It helps in making the goods produced available to the consumers.
-The goods are transferred from the manufacturer to the consumer through various channels of distribution.
-It creates place utility (makes it accessible to customers) and trader acts as a link between producers and consumers.
-It is classified as-
INTERNAL TRADE
EXTERNAL TRADE
Fevicol passes through various distribution channels to be sold in a market. The activity involved in making the fevicol available from the factory to the final consumer is known as trade.
EXAMPLE OF SERVICES-
1. goibibo.com - It has multi channels of distribution to make the service available to consumers. They do trading of their services through-
NETWORK OFFICES
WEBSITE
MOBILEAPPS
PARTNERSHIP WITH GOOGLE FOR FLIGHT AND HOTEL SEARCH
2. ICICI PRUDENTIAL LIFE INSURANCE - It also has multi channels of distribution to sell their services.
BANK BRANCHES
INDIVIDUAL AGENTS
CORPORATE AGENTS
WEBSITE
EMPLOYEES
OFFICES
-INTERNAL TRADE
Also known as ‘DOMESTIC OR HOME TRADE’.
It is concerned with buying and selling of goods and services within domestic/geographical boundaries of the country.
It is classified as:
- WHOLESALE TRADE – Buying and selling of goods and services in bulk quantities.
-RETAIL TRADE – Buying and selling goods and services in small quantities for final consumption.
-EXTERNAL TRADE
ALSO KNOWN AS ‘FOREIGN TRADE’.
IT CONSISTS OF EXCHANGE OF GOODS AND SERVICES BETWEEN PERSONS AND ORGANIZATIONS OPERATING IN TWO OR MORE COUNTRIES.
IT IS CLASSIFIED AS-
-IMPORT
-EXPORT
-ENTREPOT
IMPORT - If the goods are purchased from another country, It is termed as Import.
ENTREPOT - When goods are imported for export to other countries, it is known as Entrepot trade.
AUXILIARIES TO TRADE -
ALL THOSE ACTIVITIES WHICH HELPS IN THE TRADING OF GOODS AND SERVICES ARE AUXILIARIES TO TRADE.
THEY SUPPORT BOTH INDUSTRY AND TRADE, HENCE THE ENTIRE BUSINESS ACTIVITY.
REMOVES HINDRANCES THAT ARISE IN THE PRODUCTION AND DISTRIBUTION OF GOODS.
AUXILIARIES TO TRADE ARE –
-TRANSPORTATION AND COMMUNICATION
-BANKING AND FINANCE
-INSURANCE
-WAREHOUSING
-ADVERTISING
TRANSPORTATION AND COMMUNICATION
-MOVEMENT OF RAW MATERIALS AND GOODS IS POSSIBLE THROUGH TRANSPORTATION.
-IT REMOVES THE OBSTACLE OF PLACE THROUGH ROAD, RAIL, AIR OR COASTAL SHIPPING.
-COMMUNICATION FACILITIES HELPS PRODUCERS, TRADERS, AND CONSUMERS TO EXCHANGE INFORMATION WITH ONE ANOTHER. IT IS DONE THROUGH POSTAL SERVICES, TELEPHONE, SOCIAL MEDIA
BANKING AND FINANCE
-MONEY IS CONSIDERED AS BLOOD FOR ANY BUSINESS. WITHOUT IT, IT IS IMPOSSIBLE TO RUN ANY BUSINESS.
-NECESSARY FUNDS FOR GENERATING CAPITAL, ACQUIRING ASSETS, PURCHASING RAW MATERIALS, AND MEETING OTHER EXPENSES IS PROCURED FROM BANKS AND FINANCIAL INSTITUTIONS.
-COMMERCIAL BANKS PERFORM FUNCTIONS FOR BUSINESSMEN SUCH AS-
PROVIDING OVERDRAFT FACILITIES
CASH CREDIT FACILITIES
COLLECTION OF CHEQUES
REMITTANCE OF FUNDS
DISCOUNTING OF BILLS
HELP EXPORTERS IN COLLECTING MONEY FROM IMPORTERS (CURRENCY CONVERSION)
RAISING CAPITAL FROM PUBLIC – DMAT FACILITIES, FILING IPO’S
INSURANCE
-WHAT ARE THE THINGS THAT ARE ON RISK AND NEED TO BE PROTECTED-
ASSETS LIKE MACHINERY, FURNITURE, GOODS, BUILDINGS
MATERIAL AND GOODS IN TRANSIT OR IN STOCK.
EMPLOYEES AND LABOURS FROM ACCIDENT AND OCCUPATIONAL HAZARDS
-INSURANCE IS A CONTRACT THAT TRANSFERS THE RISK OF FINANCIAL LOSS FROM AN INDIVIDUAL OR BUSINESS TO AN INSURANCE COMPANY.
-A NOMINAL AMOUNT OF PREMIUM IS PAID TO THE INSURANCE COMPANY, THEY COLLECT SMALL AMOUNTS OF MONEY FROM CLIENTS AND POOL THAT MONEY TOGETHER TO PAY FOR LOSSES.
WAREHOUSING
-IT HELPS BUSINESS FIRMS TO OVERCOME THE PROBLEM OF STORAGE AND FACILITATES THE AVAILABILITY OG GOODS WHEN NEEDED.
-PRICES ARE MAINTAINED THROUGH THE CONTINOUS SUPPLY OF GOODS.
-IT ALSO PREVENT LOSS OR DAMAGE TO RAW MATERIALS AND GOODS BY PROVIDING PROPER STORAGE AND ENVIRONMENT .
ADVERTISING
-USED FOR PROMOTION OF GOODS AND SERVICES, MOSTLY CONSUMER GOODS LIKE AUTOMOBILE, ELECTRONICS, FMCG PRODUCTS, AND OTHER SERVICES.
-IT INFORMS THE CONSUMERS ABOUT PRODUCT FEATURES, USES, QUALITY AND PRICE.
-IT IS ALSO USE TO CONVINCE POTENTIAL BUYERS TO PURCHASE YOUR PRODUCT.
-IT CAN BE DONE THROUGH VARIOUS METHODS LIKE TV, SOCIAL MEDIA, PRINT MEDIA, RADIO, BILLBOARDS, MAGAZINES.
THANX
ISHA SAREEN
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