Divisions Of Commerce (Business Studies)

Table Of Contents

1. Commerce(Trade And Aids To Trade)
2.Trade Types

Commerce Is Divided Into: 1. Trade and 2. Aids To Trade. 1. Trade is divided into Home Trade and Foreign Trade. Home trade is divided into Wholesale and Retail, While Foreign Trade is divided into Import and Export. 2. Aids To Trade is divided into Transport, Banking, Wholesaling, Insurance, Advertisement.

Trade Types

Trade is classified into two major areas which are home trade and foreign trade.

1. Home Trade:

This is the buying and selling of goods and services within a country. Trade transactions do not go beyond the country borders. It involves only the people that live in that country, use that country’s local currency notes and have no trade restrictions. In other words, goods move freely from one town/place or another. It uses local languages. It is dominated mainly on small scale traders.
Home trade is divided into two branches namely wholesale and retail trade.

a. Wholesale Trade: This is the bulk processing of goods from the producer or manufacturer by big trader known as wholesalers or distributors who then break goods into smaller units or quantities to traders known as retailers. Wholesalers are closer to the markets they supply than the source they got the products from. A wholesaler is the middleman between the producer and the retailer. He is the second man in the business chain.
Producer-Wholesaler-Retailer-Consumers.

b. Retail Trade: This is the act of buying of goods in large quantity either from a wholesaler or directly from the producer and selling the goods in small units to the final consumers. It involves stocking and displaying goods at places, at the reach of the consumers. For instance the retailer buys sweets in cartons or dozen from the wholesaler, he breaks and display them in packets or in units of small quantities, in a road side shop or market and sells them to the final consumers. Product involves in home trade are: Biscuits, Sweets, Detergents, Beverages, Milks, Beer, Soap, Noodles, Creams, Bread, Motor cars, Electronics, etc.

READ ALSO: Trade: Meaning, Importance, Forms & Aids Of Trade

2. Foreign Trade:

This is a trade between one country and other countries of the world. Hence trade activities move beyond a country’s borders. It involves people of different countries and languages, use of foreign currency notes and trade on both local and foreign goods. For instance, Nigeria buys goods like cars, machines, jewelry, aeroplane’s, electronic and many other things from other countries. On the other hand, Nigeria sells goods like cocoa, groundnut, coal, palm produce, crude oil, cotton hides and skin, and many other thing she is endowed with or which she can produce more cheaply and efficiently to other countries. Foreign trade is also known as international or external trade. It entails importation. Exportation and entrepoted goods and services.

a. Import Trade: This is the bringing in of goods and services into a country from another country in a legitimate(lawful) way. That is, by paying import duties and other custom fees. We talk of imported shoes, imported car, imported dress, imported electronics and so on. Import trade involves not only visible items but also invisible items like services rendered to a country by another country and paid for by barter or money. Example, technical and military advice, educational services.

b. Export Trade: This is the selling of a country’s home made goods and services to another country. It consists of transaction in goods and services. Countries encourage exports so as to earn foreign exchange and to generate money to pay for imports. Goods exported from Nigeria include crude oil, coal, agricultural products like palm produce, groundnut, cocoa. Services exported from Nigeria include electricity, educational or manpower services.

c. Entrepot Trade: This involves importing goods from one country and re-exporting the same goods to another country for sale. For instance, goods made in japan could be imported into Nigeria from korea or American and exported to another country in the neighbourhood, like Cameroon.

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