CBSE Class 9 Operative Activities in Business Notes

II.COMMERCE

Commerce includes all those activities which are necessary for facilitating the exchange of goods and services.

Commerce includes two types of activities, viz., (i) trade and (ii) auxiliaries to trade. (i) Buying and selling of goods is termed as trade.

(ii) But there are a lot of activities that are required to facilitate the purchase and sale of goods. These are called services or auxiliaries to trade and include transport, banking, insurance, communication, advertisement, packaging and warehousing.

Trade may be classified into two broad categories — internal and external.

Internal, domestic or home trade is concerned with the buying and selling of goods and services within the geographical boundaries of a country.

This may further be divided into wholesale and retail trade.

♦ When goods are purchased and sold in bulk, it is known as wholesale trade.

♦ When goods are purchased and sold in comparatively smaller quantities, for final consumption it is referred to as retail trade.

♦ External or foreign trade consists of the exchange of goods and services between persons or organisations operating in two or more countries.

♦ If goods are purchased from another country, it is called import trade.

♦ If they are sold to other countries, it is known as export trade.

♦ When goods are imported for export to other countries, it is known as entrepot trade

AIDS TO TRADE

(a) Transport and Communication: Transport facilitates movement of raw material to the place of production and the finished products from factories to the place of consumption. Along with the transport facility, there is also a need for communication facilities so that producers, traders and consumers may exchange information with one another. Thus, postal services and telephone facilities may also be regarded as auxiliaries to business activities.

(b) Banking and Finance: Business activities cannot be undertaken unless funds are available for acquiring assets, purchasing raw materials and meeting other expenses. Necessary funds can be obtained by businessmen from a bank. Thus, banking helps business activities to overcome the problem of finance. Commercial banks generally lend money by providing overdraft and cash credit facilities, loans and advances. Banks also undertake collection of cheques, remittance of funds to different places, and discounting of bills on behalf of traders.

(c) Insurance: Business involves various types of risks. Factory building, machinery, furniture etc. must be protected against fire, theft and other risks. Materials and goods held in stock or in transit are subject to the risk of loss or damage. Employees are also required to be protected against the risks of accident and occupational hazards. Insurance provides protection in all such cases. On payment of a nominal premium, the amount of loss or damage and compensation for injury, if any, can be recovered from the insurance company.

(d) Warehousing: Usually, goods are not sold or consumed immediately after production.

They are held in stock to make them available as and when required. Special arrangement must be made for storage of goods to prevent loss or damage. Warehousing helps business firms to overcome the problem of storage and facilitates the availability of goods when needed. Prices are thereby maintained at a reasonable level through continuous supply of goods.

(e) Advertising: Advertising is one of the most important methods of promoting the sale of products, particularly, consumers goods like electronic goods, automobiles, soaps, detergents etc. Thus, for promoting sales, information about the goods and services available, their features, price, etc., must reach potential buyers. Also there is a need to persuade potential buyers about the uses, quality, prices, competitive information about the goods and services etc. Advertising helps in providing information about available goods and services and inducing customers to buy particular items.

(f) E-Commerce - E-commerce is the activity of buying or selling of products on online services or over the internet.

(g) M-Commerce - M-commerce (stands for mobile commerce) is the buying and selling of goods and services through wireless handheld devices such as cellular telephone and personal digital assistants (PDAs).