trade and commerce megha

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  • 8/12/2019 Trade and Commerce Megha


  • 8/12/2019 Trade and Commerce Megha



    Impact onsociety


    Characteristicsof commercialactivities



    Issues andproblems


    and potential

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    The buying and selling of goods and services is called trade.

    The term trade can also be used to indicate the people ororganisations that do business in the same kind of product,for example the car trade, the book trade, etc.

    There are two types of trade namely; home (local) trade andInternational or foreign trade.

    Commerce is a more general term: it is used to describetrade and all the other business activities and services whichmake trade possible, e.g. banking, insurance, transport and


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    Without trade and commerce , people all overthe world enable to fufill their needs.

    Every basic need of an individual depends on


    The economy of a country or state alsodepends on its trade and commerce.

    imports have a positive impact on productivitybecause they increase competition and thuslead to an improved allocation of resourcesand better management practices.

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  • 8/12/2019 Trade and Commerce Megha


    A manufacturer takes thematerials extracted or

    produced by a producer(raw materials) andtransforms them into semi-

    finished or finishedproducts.

    A wholesaler buys inlarge quantities frommanufacturers and

    sells them in smallerquantities to retailers.

    A retailer sells goodsin small quantities to

    individual consumers.Examples of retailers

    are shop,supermarkets,

    department stores ordiscount stores.

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  • 8/12/2019 Trade and Commerce Megha


    Commercial areasin a city can take up about 5% of a citys land. It is used forcommercialactivities.

    These activities include the buying and selling of goods and services in retailbusinesses, wholesale buying and selling, financial establishments, and wide variety ofservices that are broadly classified as "business".

    Even though these commercial activities use only a small amount of land, they are extremelyimportant to a communityseconomy.

    They provide jobs and bring money into the community.

    Different places are famous for different commercial activities.

    For example: Ludhiana is famous all over the India for textile industry and it is imported todifferent places in India.

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    It includes services required for any

    trade or commerce. for example:








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    1. Transportation:

    Transportation refers to the conveyance of goods and

    passengers from one place to another. Goods are produced at one place and consumed at another


    For example, tea is produced mainly in Assam and West Bengalbut is consumed all over the world.

    Transport helps to increase the size and scale of business.

    Thus, transport has become the lifeline of modern industry andtrade.

    Now-a-days goods are produced in anticipation of demand. It is,therefore, necessary to store and preserve the goods until they are sold.

    Many products such as wheat, sugar, rice, etc. are produced in aparticular season but they are needed throughout the year.

    It helps to stabilise prices through equal distribution of surpluses overdifferent time periods.

    2. Warehousing:

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    3. Insurance Business involves several types of risk e.g., risks arising from price

    fluctuation dishonesty of employees, bad debts, exchange ratefluctuations, loss of goods in transit and storage, fire, floods, etc.

    Insurance removes the hindrance of risk.

    A large number of people who are subject to a particular riskcontribute to common fund, out of which compensation is paid tothose few who actually suffer the loss.

    It helps businessmen to develop sense of security and freedom

    from anxiety.

    There is usually a time gap between production or purchase andsale of goods. It takes time to collect money after sale of goods

    on credit. During this period, businessmen need finance to carry on their

    business activities.

    Production and distribution of goods and services on alarge scale requires a huge amount of money at low ratesof interest.

    Banks provide funds in various forms e.g. loans, overdraft,cash credit, discounting of bills, etc.

    4. Bankingand finance:

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    Advertising and publicity inform the consumers about the availabilityof various products and services.

    Advertising educates consumers about the use of products andprovides them greater satisfaction.

    The main purpose of advertising is to create and sustain demand.

    There are various forms of advertising and publicity such as thepress, outdoor, displays, radio, television, letters to customers, fairs,exhibitions, cinema, etc

    Proper packing of goods is essential for efficient trade. Packing attractsconsumers to buy goods.

    Proper packing prevents damage to goods in the process of transport andwarehousing.

    Modern means of communication like telephone, telex, and postal serviceshave become essential for the expansion of trade and industry.

    6. Other aids:

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    Industryis the production of a good or service within an economy.

    Manufacturing industry became a key sector of production and labour.

    Many developed countries and many developing/semi-developed countries

    depend significantly on industry.

    It is directly linked to trade and commerce,because in industry,different

    types of products are made which by means can be import and export.

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    1. Distance:

    There is a great time lag between placement of order and receipt ofgoods.

    Distance creates higher costs of transportation and greater risks.

    Different languages are spoken and written in differentplaces.

    Price lists and catalogues are prepared in differentlanguages.

    A trader wishing to buy or sell goods at different places mustknow the different language or employ somebody whoknows that language.

    2. Different languages:

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    3. Difficulty in transportation andcommunication:

    Dispatch and receipt of goods takes a longer time andinvolves considerable expenses.

    During the war and natural calamities, transportation ofgoods becomes even more difficult. Similarly, the costs of

    sending or receiving information are very high.

    4. Risk in transit:

    Foreign trade involves much greater risk than home trade.Goods have to be transported over long distances

    . Many of these risks can be covered through marineinsurance but increases the cost of goods.

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    5. Import and export restrictions:

    Every country charges customs duties on imports to protect its

    home industries.

    Similarly, tariff rates are put on exports of raw materials.

    Importers and exporters have to face tariff restrictions.

    6. Problems in payments:

    Every country has its own currency and the rate at which one

    currency can be exchanged for another (called exchange rate)

    keeps on fluctuating change in exchange rate create additional risk. Due to wide time gap between dispatch of goods and receipt of

    payment, there is greater risk of bad debts.

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    7. Investment for longer period:

    There is longer time gap between supply of goods and receipt of

    payment. Therefore, the exporter's capital remains locked up over a

    longer period.

    8. Intense competition:

    Heavy expenditure on advertising and sales promotion may be


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    Electricity appears to be the main constraint to trade expansion.

    Electricity is not provided in sufficient quantities to satisfy theneeds of companies and individuals.

    Electricity shortages slow down the development of economic

    activities, private sector, and international trade.

    transportation problems constrain more trade performancethrough the availability of infrastructure than through its quality.

    Infrastructure problems are a significant constraint to trade.

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  • 8/12/2019 Trade and Commerce Megha


    Proper land should be allotted to different

    commercial activities while planning a city or


    Infrastructure should be proper.

    The taxes should be less on transportation

    because it increases the cost of the object.

    All the services like electricity , water should beprovided properly so that there should be no

    problem at the time of manufacturing of goods.

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