THE SCOPE OF COMMERCE.

THE SCOPE AND NATURE OF COMMERCE

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THE SCOPE AND NATURE OF COMMERCE

INTRODUCTION

DFN:  

i.   Commerce is the subject deals with the study of exchange and distribution of goods and services to meet the consumers demand.

ii. Commerce is social science which is associated with trade and aid to trade.

iii.      It is all activities that enables goods and services  to SQCN from the production to the final consumers

Terms used in definitions

Exchange:   means a change of ownership and distribution means make available of goods and services

Goods:  is anything made which are in form to be used by people. It should be tangible thing

Services: is a un tangible thing that being offered to people

THE NATURE OF COMMERCE:

The commerce originated from the study of different stages that commerce passes through.

It passes through:-

-          Primitive stage to the modern stage.  At the early stage people produced goods and commodities for their own satisfaction on use. Later they found having surplus that otherwise would be destroyed

-          They started to exchange those surplus commodities with other commodities from other people with what they produced. This exchange involves goods to goods.(BARTER TRADE)

BARTER TRADE

Is the exchange of goods with other goods. During this stage of commerce there was no medium of exchange.  This exchange (barter trade) has several limitations which are :-

i.         Double coincidence of wants It was difficult to find people who needs  ones product and have a commodity the same needed for  exchange.

ii.       Divisibility: it was difficult to divide the commodity according to the need of the customers.

iii.      It was difficult to measure the value of the commodity as there was no standard of measure. The measure of value was according the ones needs.

iv.     Portability: some of the commodities were to be carried the whole, the exchange of maize and cassava all commodities have to be carried to the market.

v.       Problem of unit of exchange: how much goods are available to attain the needs.

-       Due to these difficulties in this stage people came into other stage known as commodity exchange.

COMMODITY EXCHANGE.

Is the exchange of goods by the use of selected commodity or goods which have chosen by the society to be used as a medium of exchange.

The selected commodity will be used in exchange with other goods or services.

-          The selected commodity to be used as the medium of exchange has to be accepted by the society.

-          Such commodity should be durable so that it can serve the purpose for the long time. Also the commodity selected was of value. Thus commodities like gold, copper, silver, and diamond were used as commodities for exchange.

-          In the latest stage of commerce exchange is facilitated by the introduction of money into circulation as a medium of exchange to overcome the problems of commodity exchange.

We can conclude that the following five factors have played important role in growth of commerce.

1.       The diversification of natural resources encouraged the exchange of goods between different area or countries

2.       The difference of human wants also induced  the exchange of goods

3.       Specialization or division of labour becomes another main cause of trade or exchange of goods

4.       Improvement of transport and communication system was also a great help in the expansion of commercial activities.

5.       Development of money and banking system was another reason for  great production and exchange activities.

THE SCOPE OF COMMERCE:

In modern economy and civilized societies the scope of commerce includes all those activities which have become essential to facilitate buying and selling goods. For example Transport is needed for the movement of goods from the Centre of production to the center of consumption. Similarly, insurances, banking, warehousing etc. seek to facilitate buying and selling of goods is now an important part of commerce. The documents of trade like the bill of exchange, draft etc which help in trade are now part of study of commerce.

The scope of commerce is also about what does commerce entail?. This means the structure of commerce which means those limits under which different problems can be discussed in commerce, the branches of commerce which comprises the commercial occupations

The main purpose of these is to facilitate exchange of goods and services.

The branches of commerce can be summarized by the commerce flow chart as shown in figure 1.1

1.       TRADE

It is concerning with all the process of buying and selling of goods and provision of services with the exchange.

 

Trade is divided into home trade which involves the process of buying and selling goods and services within the boundaries. It is divided into wholesale trade and retail trade

The other category of trade is foreign or international trade which involves the process of buying and selling goods and services across the boundaries of national boundaries, it is also known as export and import.

2.       AIDS TO TRADE/ AUXILIARY SERVICES.

Aids to trade are all human activities that help or facilitate people to exchange goods and provision of services. They involves

i.         BANKING: It is the financial institution which assist trade by serf guarding traders money, provide efficient safe and convenient means of payments. Banks to provide credit facility to traders.

ii.       WAREHOUSING:  This is a system which intends for the storage of goods so that they are available when and where required. It also protects the goods from being stolen, going bad due to extreme weather conditions and from other hazard.

iii.      INSURANCE:   Is the pooling of risk. All business activities are exposed to a number of risks. Goods may be stolen, catch fire, be damaged in an accident, sink in the sea ect. Insurance firms help traders by minimizing such risk.

iv.     TRANSPORT:   This refers to the movement of goods and passengers from one place to another. The forms of transport involves land(road and railways), water and air. Transport assists trade by distributing raw materials to manufacturer, semi-finished goods to finishing firms and the finished goods to the consumers and users.

v.       COMMUNICATION:  this is the act of any natural or artificial means of conveying information. This consists of those people engaged in the spread of commercial  information between producers and consumers by means of the press, wireless, radio, television etc

vi.     ADVERTISING:    It give information on particular goods by aiming of convincing traders to buy or sell a particular goods or services.

A study of commerce would therefore involve:

a.       A study of trade, the principal activity in distribution of goods

b.      A study of auxiliary services that make trade possible

c.       A study of how best the above could be organized so as to satisfy the needs of a consumer in the most efficient manner.

Due to the above facts, it is clear that commerce involves all activities beginning from the place of production and ending at the retailer’s shop   or with the user.

IMPORTANCE OF COMMERCE

The importance of commerce is established by three basic facts of human life.

These facts are:- 

1.     Un equal distribution of natural resources

The natural resources, human skills are not equally spread over the surface of the earth. Commerce helps to neutralize geographical disadvantages by bringing about exchange of goods between different regions. Rubber for instance available in Malaysia is made available to consumer all over the world.

2.     Difference of standard of life

The standard of life of the people is different in different countries. the various  commercial activities help in narrowing the gap between the rich and the poor.

3.     Mutual interdependence.

Human life is a patent example of mutual interdependence. No man  by himself can produce all his requirement of goods, clothing, shelter, medicines and other comforts.  The needs of man are satisfied by the effort of others through the use of money.

Therefore due to those facts above there are many reasons for studying commerce/importance of commerce/ why commerce these are:-

i.            Studying commerce helps ones to know one’s particularly occupation fit into the general scheme of business activities

ii.          Commercial knowledge provides the valuable introduction to later studies like accountancy, economies, finance, industrial management and administration, marketing etc

iii.         It helps gaining of broad knowledge to what is happening in the business enrolments

iv.        It facilitates the exchange of technology and stimulates production

v.          Commerce enabling the exchange of goods and services from the place which is plenty to the place there is shortage.

vi.        Commerce promotes trade by proving current information to producers, uses and final consumers.

vii.       Commerce encourages personal linking and international understanding.

viii.     Commerce promotes other commercial activities such as transport, banking, insurance etc.

ix.        It helps the producers and consumers of goods and services to acquire different marketing techniques.

COMMERCE AND ECONOMICS

1.       Commerce relates with other subjects like economics because they are all social subject

2.       Economics deals with the allocation of scarcity resources to satisfy the unlimited human wants.

3.       Economics is concerned with problems arising from the production and distribution of goods and services.

4.       Both subjects are interested in distribution of goods just as they are all interested in distribution of goods just as they are all interested in money and Banking.

Some differences between commerce and economics.

1.       Economics deals with the facts that all things are scarce relative to demand for them as economic resources required for them are factors for production which are limited in supply.

2.       Economics looks on that everything is limited in supply the problems of economics arises as how should the economics resources be shared out of plenty production which compete for them.

3.       Commerce takes economic facts as they are as it does not consider why firms in one industry are larger and why others are small.

4.       Commerce looks on why different parts of the country specialized in difference commodity.

5.       Commerce only considers that some firms of industry and that specialization of production exist and that restriction on imports has been imposed.

6.       Commerce is concerned with distribution of goods to the fact that whole sale and retail trade is carried only.

7.       Commerce is concerned with how goods are imported and marketed and exported

8.       Commerce is therefore considering with the how economics activities   are carried rather than economies which consider as why of economic activities.

DIFFERENCES BETWEEN TRADE AND COMMERCE

TRADE	COMMERCE
1.       It means buying and selling goods and services	1.       It includes not only trade but aid to trade like warehousing, insurance, banking and transport
2.       Trade is branch of commerce	2 .   commerce includes trade is a branch  business
3.       Trade creates possession utility	3..     commerce creates place, time as well as possession utility by removing hindrances of place, time, and risk in exchange.
4.       Trade may be local, regional, national or international  in its character	4..  commerce  helps in increasing the size and rate and diversifying the direction of trade

DIFFERENCES BETWEEN INDUSTRY AND COMMERCE.

INDUSTRY	COMMERCE
1.       Industry is concerned with production of goods	Commerce is concerned with distribution of goods through exchange
2.       It creates form utility through land labor and capital organization	It creates place, time and possession utility
3.       It includes different types of occupation  like agriculture, manufacturing,  mining etc.	It includes trade and aids to trade.

DIFFERENCE BETWEEN COMMERCE AND BUSINESS.

i.                     Business consists of all industries, commerce and services occupation  while commerce consists of only commercial occupation

ii.                   Business is any activity carried out  with an intension of making profit while standing of a risk less where by commerce is only activities related to trade and aid to trade.