Understanding the Market — Entrepreneurship STD 11 Commerce — Question

Commerce is basically and primarily concerned with the distribution of goods. Commerce provides the means for the by distribution of goods to the consumers and bridges the gap between the producers and the consumers.

According to James Stephenson, “Commerce embraces all those processes which help to break the barriers between producers and consumers. It is the sum total of all those activities, which are engaged in the removal of hindrance of persons (trade), place (transport and insurance) and time (warehousing) in the exchange (banking) of commodities".
Thus, the purpose of commerce is to ensure the supply of goods and services at the right place, in the proper quantities, at right time and in right condition as and when they are needed.
Commerce can be classified into two broad ranges of activities:
It is referred to the nucleus around which other aids or auxiliaries revolve. The producers cannot come into direct contact with all the consumers as they are often situated geographically far from each other. trader acquires the goods from the producers and sells them to the consumers. Hence, trade is basically buying goods from the manufacturer and selling them to the consumers. It facilitates the smooth and timely transmission of goods and removes hindrance of persons.
Trade can be further classified as:

1. Internal or Home Trade: When buying and selling of goods take place within the boundaries of a country, i.e. inside a nation, then it is referred to as home trade or internal trade. The distinct features of this trade are that buyers and sellers belong to the same country, mode of payment is in the same legal tender approved for the country and the trade is done locally, regionally or inter-state wise, abiding by the same land laws.

• Wholesale trade.
• Retail trade.

2. External or Foreign Trade: This refers to buying and selling of goods between two or more countries/nations.

This trade can be further classified as:

• Import trade: It implies purchase of goods from foreign countries. e.g. India imports petrol from Iran.
• Export trade: It implies sale of goods to foreign countries. e.g. India exports tea to the UK.
• Entrepot trade: It implies purchasing or importing goods from one country to be sold or exported to some other country. e.g. importing electronic goods from China and then exporting them to Sri Lanka.

3. Auxiliaries to Trade: This means those services which smoothen the flow of exchange between the trader and the consumer by removing hindrances of place, contact, time, risk, finance and information.

The various auxiliaries to trade and the hindrances they remove are depicted through the following chart:

S. No.	Hindrances	Removed by
1.	Of place	Transportation
2.	Of contact	Communication
3.	Of time	Warehousing
4.	Of risk	Insurance
5.	Of finance	Banking
6.	Of information	Advertising