Q. 5

Describe the activities relating to commerce.

Answer :

The activities relating to commerce are as follows-

i) Transport and Communication: Production of goods generally takes place in particular locations and these goods are required for consumption in different parts of the country. Transport facilitates the 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.


(ii) 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. Banks also undertake the collection of cheques, remittance of funds to different places, and discounting of bills on behalf of traders.


(iii) Insurance: Business involves various types of risks. Factory building, machinery, furniture, etc., must be protected against fire, theft and other risks. Material and goods help in stock or 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 protects in all such cases.


(iv) Warehousing: Goods are not sold or consumed immediately after production. They are held in stock to make them available as and when required. A special arrangement must be made for the 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


(v) Advertising: Advertising is one of the most important methods of promoting the sale of products, particularly, consumer goods, like electronics and automobile goods, soaps, detergents, etc. Most of these goods are manufactured and supplied in the market by numerous firms. It is impossible for producers and traders to contact every customer for which promoting sales, information about the goods and services are required to reach potential buyers. Advertising helps in providing information about available goods and services and inducing customers to buy particular items.


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