Functions of commerce | ezair commercia live

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Functions of Commerce

Commerce includes all those activities which help in the smooth exchange of goods and services from producers to consumers. These activities remove various obstacles involved in trade.

The functions of commerce are broadly divided into two main categories:

Trade

Aids to Trade

1. Trade

Trade means buying and selling of goods and services for profit. It connects producers with consumers.

Types of Trade:
(a) Internal Trade

Trade conducted within the boundaries of a country.

Wholesale Trade: Buying goods in large quantities from producers and selling them to retailers.

Retail Trade: Selling goods in small quantities directly to consumers.

(b) External Trade

Trade conducted between two or more countries.

Import Trade: Buying goods from foreign countries.

Export Trade: Selling goods to foreign countries.

Entrepôt Trade: Importing goods for re-export to another country.

2. Aids to Trade

Aids to trade are activities that support trade by removing different obstacles such as place, time, risk, finance, and information.

(a) Transport

Transport helps in carrying goods from the place of production to the place of consumption.

Removes place barrier

Includes roadways, railways, airways, and waterways

(b) Warehousing

Warehousing involves storing goods until they are needed.

Removes time barrier

Ensures regular supply of goods

Prevents price fluctuations

(c) Insurance

Insurance provides protection against risks such as fire, theft, accident, and marine risks.

Removes risk barrier

Provides financial security to businessmen

Encourages trade

(d) Banking and Finance

Banking provides necessary funds for trade and commerce.

Helps in raising capital

Provides loans, overdrafts, and credit facilities

Facilitates payments through cheques and online transfers

(e) Advertising

Advertising informs consumers about products and services.

Removes information barrier

Creates demand

Helps consumers make informed choices

(f) Communication

Communication helps in the exchange of information between buyers and sellers.

Includes post, telephone, internet, and email

Helps in placing orders and payments

Supports internal and external trade

Conclusion

Commerce plays a vital role in the economy by facilitating trade and overcoming obstacles. Without the functions of commerce, trade cannot operate smoothly.
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