(a) With the aid of a diagram, illustrate the scope of commerce. (b) Explain four commercial activities that facilitate buying and selling.

Answer Details

(a) The scope of commerce (illustrated with a diagram)

Commerce is that branch of business concerned with the buying and selling of goods and services together with all the services that assist in getting those goods from the producer to the final consumer. Its scope is divided into two main branches: Trade and the Aids to Trade. The chart below illustrates the full scope.

From the diagram, the scope of commerce covers:

• Trade - the actual buying and selling of goods. It is sub-divided into Home (internal) trade, made up of wholesale and retail trade carried on within a country, and Foreign (external) trade, made up of import, export and entrepôt (re-export) trade carried on between countries.
• Aids to Trade - the services that support and make trade possible, namely transportation, banking (finance), insurance, warehousing (storage), advertising and communication.

(b) Four commercial activities that facilitate buying and selling

1. Transportation: It facilitates the movement of goods and services from the point of production to the wholesalers, retailers and consumers where they are needed, so that goods are available for sale at the right place.
2. Insurance: It reduces and covers the risks associated with the production and distribution of goods, such as fire, theft and loss in transit, giving traders the confidence to buy and sell in larger quantities.
3. Advertising: It helps to create awareness about the existence, qualities and prices of goods and services, thereby persuading buyers and increasing the volume of sales.
4. Warehousing (storage): It provides safe storage of goods until they are needed, bridging the time gap between production and sale and making it possible for production to continue ahead of demand.