Functions Of Commerce | Meaning, Scope, Characteristics

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Hello, welcome to this class on the topic Functions Of Commerce.

Table Of Contents

At the end of this article, students should be able to:

  1. Define commerce.
  2. Explain the scope of commerce
  3. Outline the characteristics of commerce.
  4. List the functions of commerce
  5. Revision Questions.

MEANING OF COMMERCE

Definition: Commerce can simply be defined as all the activities involved in the distribution and exchange of goods and services. In order was, commerce is a branch of production which is concerned with the distribution, exchange of goods and services and all the activities which assist or facilitate trade, e.g, banking, insurance, transportation, communication and tourism. It is the process of buying, selling and distributing goods and services.

SCOPE OF COMMERCE

The scope of commerce may be seen as the embracing the totality of all activities which ensures the distribution and exchange of goods and services for the satisfaction of the people. In all ramifications, commerce embraces trade and the ancillaries or aids to trade.

It can therefore be said that the different activities engaged in by the people in Commercial occupation include:

  • Trading
  • Warehousing
  • Insurance
  • Transportation
  • Banking
  • Advertising
  • Tourism
  • Communication

CHARACTERISTICS OF COMMERCE

The following are the characteristics of commerce:

  1. Economic activity: Commerce is an economic activity. A trader buys and sell goods to earn profit and wealth. It is expressed in monetary terms.
  2. Profits: Another characteristics of Commerce is profit, the motive of Commerce is to earn profit. Gifts of goods to friends and relatives is not commerce. Profit derives the engine of commerce.
  3. Marketing: This characteristics of Commerce involves the exchange, distribution and promotion of products. It is done on irregular basis. Marketing is done to create goods and satisfy customers.
  4. Components of business: Commerce is a component of business. This characteristics of Commerce deals with goods produce by Industries. Industries produce and Commerce disposes the goods.
  5. Utility: Commerce create place and time utilities to satisfy consumers needs. It transports goods from place to create place utility. It stores products for future uses which create time utility.

FUNCTIONS OF COMMERCE

Below, we are going to be looking at the functions of Commerce.

  1. Mass production of goods and services: Commerce facilitate mass production and thus people all over the world can enjoy goods and services produced both within outside their countries.
  2. Raising of Capital: Another functions of Commerce is that, it facilitates the Raising of capital for individual needs and investment through the services of banks and other financial institutions.
  3. Employment opportunities: It offers employment opportunities to a large number of people such as traders, bankers and insurance brokers.
  4. Transport: Transport is another functions of Commerce, it assist in moving people, raw materials and finished goods from production points to consumption points through transport.
  5. Warehousing functions: It facilitate the storage of goods until they are needed, thus bridging the gap between demand and supply in the market.
  6. Unity among Nations: It fosters unity among Nations thus, Nations become interdependent as they engage in trading activities.
  7. Improvement in standard of Living: The availability of variety of goods and services leads to improvement in standard of living and quality of life of people.
  8. Risk bearing: The availability of insurance companies encourages entrepreneurs to venture into various business activities.
  9. Exchange of goods and services: Exchange of goods and services is one of the most important functions of Commerce, eat facilitate the exchange of goods and services. Commerce facilitate the exchange of goods and services true transportation (road, Rail, sea, air) and telecommunication services.
  10. Creation of public awareness: It makes the public aware of the availability of goods and services through advertising.
  11. Linkage of buyers to Sellers: Commerce through communication links buyers and sellers together to do business without physical contacts.
  12. Creation of wealth for Nations: Commerce helps to create wealth for Nations, as duties are charged on goods and services either exported or imported.

Revision Questions.

  1. Define commerce.
  2. What are the scope of commerce?
  3. State the characteristics of commerce.
  4. State 10 functions of commerce.
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