SCOPE OF COMMERCE

TRADE
The literary meaning of trade is exchange of goods. It may be defined as the exchange of
commodities between individual or groups either through barter system or through any medium
such as [Link] includes all the selling and buying activities of the [Link] actual practice
trade is procedure of distributing the goods produced by different persons or industries to their
ultimate [Link] is therefore said, the trade removes the personal hindrance in exchange
of commodities.
“Trade is an activity of buying and selling of goods for money or other good.”
Trade can be classified into two components: Home trade and foreign trade.
A. Home Trade
In home trade, exchange of goods or trade is conducted within the boundaries of a particular
country. Seller and buyer belong to the same country. It is also known as domestic, local or
internal trade.
B. Foreign trade
Foreign trade is trade or exchange of goods and services between two or more independent
countries for their mutual [Link] includes import and export of commodities among
producer and consumer countries.

AUXILIARIES TO TRADE
It is framework of attaining certain objectives .The objectives of commerce are to provide series
of services or activities, which can facilitate the exchange of goods until they are reached on the
ultimate and proper consumer. Thus, the consumer can satisfy their wants and producers can sell
their goods to get profit in organizing the activities in commerce organizing the activities we go
through many elements know as auxiliaries of trade.

1) Banking:
There is usually a time gap between production/purchase and sale of goods. During this period
businessmen need funds to carry on their business. Banks and other financial institutions
provide required credit in various forms. Moreover banks facilitate business activity by
providing safe and quick means for the remittance of money. Banks remove the hindrance of
raising finance and credit on one’s own.
2) Transportation
Transport refers to the conveyance of goods and passengers from one place to another. It
facilitates trade by transferring and distributing goods. It overcomes the barrier of distance and
creates place utility. Transport widens the market and helps to equalize and stabilize prices at
different [Link] results in the equitable distribution of goods among far flung areas. Quick
and economical means of transport such as railways, roadways, airways and shipping have
widened the scope of trade by including international transactions.
3) Means Of Communication
Means of communication provide or convey commercial information to individual, firms and
companies. They consist of people, institutions and processes engaged in spreading the
necessary business engaged in spreading the necessary business information between
producers and consumers. Radio and Television are general communications services but
telephones, fax, email, internet are also important means of communication. N modern era
success of a business depends on the latest, concise and accurate information.
4) Insurance
Business involves several types of risks. Insurance removes the hindrance of risk. With the help
of insurance, a business can protect himself from several types of risks. Insurance is based on
the “pooling of risks”. A large number of people who are subject to a particular risk contribute
to a common fund, out of which compensation is paid to those few who actually suffer the loss.
There are various types of insurance e.g. Fire, marine insurance, workmen’s compensation
insurance and life insurance.
5) Publicity/Advertising
Publicity/Advertising inform the consumers about the available of various product and
services. They remove the hindrance of knowledge. The main purpose of advertising is to
create and sustain demand. In absence of advertising, consumers may remain ignorant of
the availability of goods and services and businessmen may not be able to sell their
products. There are various forms of advertising and publicity such as press, outdoor
displays, radios, televisions, exhibitions and cinemas.
6) Warehousing
Nowadays goods and produced in anticipation of [Link] is, therefore necessary to store
the goods until they are [Link] is therefore, necessary to store the goods until they are sold.
Many products such as wheat, sugar, rice etc. are produced in a year. Proper storage
arrangements must be made in order to make the goods available throughout the year.
Besides, it is necessary to store commodities such as woolen garments and umbrella to
meet the desired seasonal demand. Warehousing removes the hindrance of time and
thereby creates time [Link] helps to stabilize prices. Warehousing are of three types,
namely, private, public and bonded.
 7) Middlemen
Middlemen perform the role of bridge between producer (seller) and consumer
(purchaser).Middlemen may be trader, agent or some other status like transporter or
salesman etc. Some middlemen are specialized in bringing buyers and sellers together for a
transaction and they play a active and prominent role in the negotiations leading to
purchase and sale. Middlemen receive their reward in form of commissions.
8) Packing
Packing means putting goods in wrappers, containers etc. Packing helps to protect the
goods from damage during transport and warehousing. It also makes the goods attractive.
Packing helps in the conveyance and handling of goods. It removes hindrance of risk by
keeping goods safe and free from spoilage. Trade and transport of good have become easier
and safer due to improvements in the art and methods of packaging.

DIFFERENCE AMONG COMMERCE, TRADE AND INDUSTRY

COMMERCE: Commerce includes all those activities, which are helpful in transferring goods
from the place of production to the ultimate consumer.
TRADE: Trade is an activity of buying and selling of goods for money or other goods.
INDUSTRY: industry is that part of business which is connected with the production of goods
and services.

COMMERCE:
 Nature
It is sum/total of those activities which are directly or indirectly related to the exchange of
goods.
 Classification
It is branch of business
 Scope
Its scope is narrower than the [Link] includes internal and external trade and auxiliaries
of trade only.
  Exchange
It is connected with the exchange of goods
 Function
Its major function lies in transferring goods to consumers
BUSINESS
 Nature
Business includes all those activities through which profit is earned.
 Classification
It is wider term and includes commerce and industry
 Scope
It has wider scope as it includes all kinds of trade, auxiliaries to the trade production, extraction
and farming also.
 Exchange
It is connected with the exchange as well as production of goods.
INDUSTRY
 Classification
Industry is also branch of business
 Scope
Scope of industry includes production or preparation, extraction of goods, farming, agriculture
and forestry.
 Function
It is major function of production
 Relationship
Without the help of commerce industrial goods cannot be distributed, so both help each other.
 COMMERCE TRADE INDUSTRY
 Nature It is related to exchange of It is related to
It is related to goods manufacturing of goods
distribution of goods.

 Development It got development with It got developed in 18th

It got development in human civilization century
12th century

 Capital There is need of less capital There is need of heavy

There is need of less capital
capital

 Area It covers particular area It is setup at one place

It covers a big or large
area.

 Scope It is concerned with It is a part of business and

It is concerned with the exchange of goods or includes generation,
Trade and aids of Trade services extraction, construction and
manufacturing industries.
 Risk The risk involved is due to The risk involved is high due
The risk involved in it is less investment to heavy investment
low due to less
investment

 Resources It can depend upon human It depends upon natural

It depends upon human resources resources
resources

 Customers The consumers are the The trade and

The wholesalers and customers of traders manufacturers are its
retailers are its customers customers

 Dependence It depends upon finished It depends upon raw

It depends upon finished goods for selling things material for making goods
goods for selling things

It is third grade industry It is first and second grade

 Grade industry
 It is third grade industry

 Staff The organization is needed The skilled Labour and

The sales forces and to exchange goods engineers are required to
agents are needed to male products
sell.

 Machine There is reliance on men for There is reliance on

There is reliance on men buying and selling goods machines for producing
for selling goods goods

 Technology It depends upon preserving It depends upon modern

Commerce depends technology for goods technology for production
upon sale technology

 Element Trade is an element of Industry is an element of

Commerce is an element of commerce business
business
 STEP/ESSENTIALS FOR ESTABLISHING A NEW BUSINESS

While planning and constructing an idea for starting a new business, following factors should
be kept in mind. The successful running and establishment of business entirely depends upon
them.

WITH A VIEW TO DO A BUSINESS

 Nature of business

Before starting a new business, its nature is always decided. A business may be engaged in trading,
manufacturing or rendering services.

 Government Restrictions:

It must be taken into consideration before the establishment of business that the government imposes
no restriction to conduct this particular business. if license is necessary for starting business them the
trader must get the required license.

 Size of the business

It is important to decide the volume, scale or size of the business before its establishment. A business may
be of small medium or large medium. However, following factors help in this connection.

(i) Amount of capital

(ii) Quantity of production
(iii) Demand for the goods
(iv) Market scope
 Organizational Structures

The form of business organization may be sole proprietorship, partnership or Joint Stock Company. The
suitable organizational structure must be decided before starting the business.

 Selection of Place

Selection of site or place is another important factor. Success or failure of the business is mostly based on
location or site selected for it. Proper care must be taken of the following requirements while deciding
the site for business.

(i) Availability of the raw material

(ii) Outlet (market for the goods produced.
(iii) Availability of auxiliary services
(iv) Availability of experts and labourers
  Government incentives

Some areas are declared as tax free zones or interest free loan is provided for particular business. The
government policies regarding the import of raw material, machinery and export of goods produced must
be observed carefully while starting a new business.

WITH A VIEW TO RUN BUSINESS

 Management
It must be decided before the start of business that how the affairs or working of business
shall be managed. The policy of hiring employees and distributing work should be framed.
Moreover it is also decided that either owners will take part in management or not.

 Availability of capital
In present modern scientific era, success and prosperity of business depend on the quantity
of capital. Every business transaction or activity depends upon it for example purchase of
land, building, machinery, raw material and payment of wages. No business can be started
without or run without capital.

 Availability of Machines
Use of the latest machinery is the key to success for a business especially in though
[Link] the present age of competition, manual work and use of old machinery may
result in failure of the business. Proper planning is required to make the machines available
according to nature of the business.

 Availability of Raw Material

Availability of standard and cheap raw material is essential to produce goods of better quality
at lower cost. Sometimes to produce the goods of better quality at lower cost. Sometimes
raw material has to import for this purpose. Hence the planning should be made accordingly.

 Power resources
Power resources like water, oil, coal gas and electricity must be easily available according to
the needs and nature of business.

 Availability of laborers
The area where business is going to be established, availability of labourers on reasonable
wages is necessary to run a business efficiently and [Link] present industrial age, the
use of modern and automatic machines has increased to great extent. Therefore, both skilled
and unskilled worker are required to work on these machines.

 Availability of experts
Availability of technical experts according to the nature of business is essential for the
formation and profitable performance of business. Some departments of the business require
services of business and trained professionals and it becomes difficult to run business
successfully without them.

 Means of Transportation:
Fast and cheap means of transportation play a vital role in making the raw material available
and sending the finished goods to the markets. Means of transportation increases the
probability of success in business.

 Selection of distributors
The trader has to select distributors before the start of business for the distribution of
produced goods. The goods can be easily transferred to consumers through middlemen.

With a View of Result

 Future of business
The future of business must be accessed very precisely. The factor of technology is important
in this regard. New inventions, innovations are continuously coming up. Today technology
rejects yesterday’s. Consumer taste is also on the change. So businessmen should make the
careful analysis of business conditions, both local and abroad.

 Change of loss
In business, there is always an element of uncertainty or risk. Though, it is inevitable for a
business yet factors involving chances of loss should be kept in mind to avoid the chances of
loss in future.
 Chances of Expansion
All the aspects of business growth and expansion must be taken into consideration before
the establishment of business. So all these factors should be paid proper attention. With the
expansion in business, more capital, space and power resources may be required.