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COM3: COMMERCE

This unit introduces you to commerce as a course and has the basic definitions used in it.

 

COMMERCE

Commerce is principally concerned with the distribution and exchange of goods and services or those activities in one way or another that help in the movement of goods from the producer to the consumer.

Commerce is the study of how man organises the exchange and distribution of goods and services beginning from the place of production and ending at retail shop.

OR

Commerce is the study of how man organises the distribution and exchange of commodities so as to satisfy his needs in the most efficient manner.

OR

Commerce is the study concerned with trade and aids to trade. It consists of activities which aid the passage of goods from the primary producer to the final consumer.

It can also be defined as trade and aids to trade. There are three activities;

  • Production

This involves the process of making goods and provision of services to satisfy human wants.

Or: increase of the utility of the commodity {creating usefulness of a commodity or a service, or utility is also the ability of something to satisfy the human wants}.

  • Consumption

This is the using up of a commodity (good or service) as we try to satisfy the human want or needs.

  • Exchange and distribution

In a simple society exchange may be a direct one. It is called barter trade. We may also have a general medium of exchange. Distribution is the movement of goods from manufacturer to the consumer (consumption area).

In the world of commerce, there are many activities of exchange and distribution which take place within or after the initial production and before their consumption therefore all activities that happen after production but before consumption constitute commerce.

commerce

TRADE

This is a branch of commerce concerned with the buying and selling of goods with the aim of making profit whether the trade actually makes profit or not. Trade can be classified thus;

  • Home trade[internal trade]
  • Foreign trade [ international trade]

 

  • Home trade[internal trade.]

This is the type of trade that involves buying and selling of goods within or between the boundaries of a country. Goods and services are usually traded/distributed in a chain. The following steps will be involved in the distribution of goods and services from the producer of the consumer as seen below;

Manufacturer [producer]                     Wholesaler                  Retailer                        Consumer

  • Manufacturer [producer]

A producer sells items or goods to either a wholesaler or to a large scale retailer. However some producers may operate their own retail outlets where they sell to the final consumers, soft drinks are sold to the final consumer by the producer.

  • Wholesaler

A wholesaler may sell items to the retailer or to the final consumer depending on the quantities needed. By nature of a wholesaler, he buys items in large quantities from a producer and sells to the retailer or final consumer in small quantities.

  • Retailer

Retailers buy their items from wholesalers in different quantities. We may have large scale retailers eg supermarkets, multiple shops, departmental stores, hire purchase stores. We may also have small scale retailers eg tied shops, roadside retailer, mobile shops, hawker, peddler, fixed shops.

  • Consumer

The retailer sells items to the final consumer in small quantities at any given time.

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 REASONS FOR STUDYING COMMERCE OR IMPORTANCE OF COMMERCE

  1. To know the role played by the government in protecting the consumers.
  2. To enable the students to know how goods are made available for satisfaction of human needs.
  3. To know the various sources of government revenue.
  4. To encourage students to develop neatness and orderliness in their work, paying attention to detail in every day work.
  5. To help students acquire the basic commercial language and knowledge for the purpose of employment and further studies.
  6. To enable the students appreciate the impact of commercial activities and operations on the society in which they live.
  7. To equip students with the basic knowledge of commercial language commonly used in East Africa.
  8. To provide the students with the knowledge that will enable them to understand the business environment.
  9. To know why prices of certain products fall and rise (fluctuate).
  10. To be aware of the services like insurance, banking, transport ant their roles in business.
  11. To acquire the basic skills necessary for running the business.
  12. To acquire a foundation for further studies and training.
  13. To know how trade is carried out within Uganda and with other countries.

HOW SOCIETY BENEFITS FROM PRACTICING COMMERCE.

  • Commerce creates utility that is the ability of a commodity to satisfy human needs.
  • Through commerce a variety of goods and services are made available for satisfying human needs.
  • Commerce enables consumers to carry out exchange amongst themselves hence encouraging specialisation.
  • Through commerce consumers are linked to the producers.
  • Commerce enables manufactures to inform consumers about availability of goods and services on the market for purchase.
  • Commerce enables business community and the public to get compensation for loses incurred from various insured risks.
  • Commerce enables manufactures to know the consumers opinions of their goods and services regarding price, quality, quantity, tastes etc.
  • Commerce enables the businessmen to acquire credits inform of loans and over drafts from financial institutions and safe custody for their money.
  • By bringing a variety of goods to the final consumers from different places and customers, commerce improves the standard of living of the people in the countries.

A VIDEO ABOUT COMMERCE

 

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