Nature of Commerce
Commerce is considered to be a part of business. It is that activity of business which is concerned with the exchange of goods and services. Some persons feel that commerce and business are synonymous. The following characteristics will help in understanding the nature of commerce:
I. Economic Activities:
Economic activities are taken up with a motive to earn profits. Commerce deals with those activities which are undertaken for profit. So only economic activities are included in commerce. It is the motive which is important and not the activity. Some activity may both be economic and non-economic. A trader buys goods to sell them again and earn profit while a consumer buys goods for consumption.
II. Exchange of goods and services:
Commerce involves an exchange of goods and services for profit. The goods may be produced or procured from other sources. The purchase of goods should be to re-sell them. It means that goods should be purchased for trading purposes.
III. Earning Motive:
The motive for undertaking trading activities is to earn profit. Profit is an incentive or reward for undertaking commercial activities. Any activity which does not have the incentive of profit will not be a part of commerce. If a trader gives some goods as charity then it will not be a part of commerce because profit motive is missing. But if the same trader sells goods to customers, it will form a part of commerce because profit motive is present. So earning motive must be present in activities or transactions.
IV. Creation of Utility:
Commerce creates place and time utility in goods. The goods may not be consumed at the place of production. These may be needed at different places. The goods are taken to those places where they are in need. Transportation facilities help in creating place utility in goods. The goods are also needed at different periods of time. It may not be possible to produce goods whenever they are demanded. The producers go on producing goods as per their capacity.
V. Regularity of Transactions:
The transactions should be regular. No isolated transaction will be a part of commerce. The sale of old furniture for replacing it by new is not a part of commerce. At the same time the sale of furniture by a furniture trader is commerce since the transactions are regular.
Scope of Commerce
Commerce has a wide scope. it deals with not only the activities related to transfer of goods and services but also with the development and promotion of trade and its allied activities. The activities relating to various branches of commerce will have to be properly understood. The study of trade will include internal and external (foreign) trade, wholesale and retail trade, mercantile agents associate with trade, etc. The foreign trade will be concerned with import and export trade and the procedures to be followed in such trade.
There are a number of hindrances in undertaking trade. These may relate to transportation of goods, raising of finances, storing of goods for future consumption etc. These hindrances necessitate the study of various modes of transport, banking activates, warehousing and insurance facilities. All these facilities will help in the development of commerce. Both internal and external trade need the use of cheques, bills of exchange, promissory notes, hundis, etc. The knowledge of drawing negotiable instruments is essential in financing of trade.
The customers will have to be made aware of the availability of goods and services in the market. The advertisement and salesmanship will help in promoting the products. Advertisement are playing an important role in the growth of trade. So these medias have become an indispensable part of commerce.
The communication services play a vital role in the promotion of business activities. The producers and traders need information about the terms and conditions of buying and selling, movement of goods in transit and information regarding payments. Whole of this information is sent through communication devices of post office, telephone, telex, etc. A number of time saving office devices like computers have also become a part of commerce. In a growing industrial world, marketing has become an important area. The activities like buying, assembling, grading, branding, packaging also need proper emphasis in commerce.
Every enterprise needs a suitable form of ownership organisation for its proper working. A choice has to be made out of the sole-proprietorship, partnership. Joint Hindu family firm, joint stock company and co-operative societies. Some under-takings are set up as public enterprises and public utilities. Commerce involves a study of various forms of organisation and their suitability in different situations.