Nature, Purpose and scope of Business — OCM STD 11 Commerce — Question
Gujarat BoardEnglish MediumSTD 11 CommerceOCMNature, Purpose and scope of Business5 Marks
Question
What is commerce? Explain its characteristics.
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Answer
Introduction :
Children of India enjoy Japanese toys and video games, while on the other hand number of people of the world enjoy spices – tea, coffee of India.
All this has been possible due to ‘trade ‘ activities.
Without trading activities modern prosperous human life or even its dream is impossible.
Contribution of trade is sizable and remarkable in economic development of the nation.
What is commerce?
Ordinary person identifies ;trade’ as commerce. Activity these two are different.
The term ‘commerce ‘ is wide - spread.
Against product there is exchange of money means trade and all services supporting trade services such as banking, insurance, warehouse, transport, Communication, commission agents inclusive.
As per general opinion, “ beside trade, services supporting trade is included in Commerce”.
As per broad idea,, besides exchange Of products against money, all activities related to trade are included in the term ‘ commerce ‘.
It can be very clearly said from the above definitions that commerce = trade + Supporting services
Through Commerce, time and place utility of product are created.
Characteristics of Commerce :
Main characteristics of commerce are as below :
Exchange of product or services :
The term ‘commerce ‘ first of all includes the term ‘trade ‘.
Trade means exchange of product or services against money.
If this activity of barter is being done forever then it is called ‘trade’.
Ancillary / supporting services :
The term ‘commerce ‘ includes trade and its supporting services e.g. banking, insurance, warehouse, transportation, communication, agency etc.
Continuity of services :
Development of trade activities depends on its supporting continuous services like banking, insurance, transportation, godown etc.
Economic Activity :
Activity of commerce is an economic activity.
Bank recovers interest, rent is paid for warehousing servicers, premium is paid to insurance company.
Fare is paid for transportation services, Commission or brokerage is paid to agents.
Thus all activities in commerce are performed with expectation of financial reward.
Activity to satisfy demand :
Trade and its supporting (ancillary ) services are included in commerce.
Through commerce, demands of customers are satisfied.
With the support of various services.
Traders and customers satisfy their various needs.
Commerce is an activity to satisfy demands.
Fair price :
If services supporting trade are available at just fair price then only through commerce customers can get product at fair price.
Services of bank, insurance, warehouse, transportation etc. should be accessible at fair price.
Creation of Time Utility :
Warehouse is included in the activity of commerce woolen cloth, umbrella, rain – coat, crackers, kites are manufactured round the year.
They are kept in the warehouse and sold during the season. Thus, due to godown and warehouse time – utility is created in product.
Increase in place utility :
Forest wood, green coconuts grown on sea – shores, sand lying on river bank, etc. can be transported to the place of utility in cities due to transportation.
Barriers of place are removed due to the transportation and product is moved to specific place and it is a creation of place utility.
Conclusion :
Activity of commerce includes variety of services related to trade.
This services sector is expanding and developing.
In modern times after sales services are provided, which includes repairing and maintenance of the product etc.
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