CHARACTERISTICS AND IMPORTANCE OF COMMERCE

Commerce is a subset of business activities that include activities such as production, purchase, sale, and distribution of products and services.

It covers all activities that contribute to the exchange of goods and services, both directly and indirectly

Commerce has some important characteristics such as economic activity, profit-oriented, creating utility, etc.

Commerce also performs important functions such as removing distance barriers, provision of employment opportunities, satisfying consumer needs, etc

Characteristics of Commerce

1. Commerce is an economic activity: Commerce is an economic activity because it entails activities that are carried out for sufficient monetary consideration.

Simply said, Commerce is an economic activity because it involves activities such as production, exchange and distribution, all of which are done to earn profit 

2. Commerce is profit-driven: Commercial activities are not just done for the fun of it. Rather, they are done with the intent of earning profit.

Profit drives the engine of commerce by acting as an incentive for engaging in commercial activity

3. Commerce creates utility: One subset of commerce is production, which is essentially the creation of utility.

Production converts mere raw materials into a form capable of satisfying the needs of a consumer.

4.  Commerce includes services: Commerce encompasses not only tangibles such as goods but also intangibles such as services.

Bankers and drivers are involved in commercial activity, but, they do not provide goods.

Rather, they render services.

5. Commerce is a component of business activity: Commerce is a subset of business, relating to the distribution and disposal of goods and services.

It connects the producers of goods and services with the consumers of those goods and services.

6. Scope of commerce: The scope of commerce includes the buying and selling of goods and services (trade) and other activities that facilitate (aids to trade).

Simply put, the scope of commerce includes trade and aid to trade.

7. Commerce involves regular transactions: A one-time or isolated transaction is not considered commercial activity.

This is because commerce cannot fulfil all the needs of consumers in a single transaction.

Hence, goods and services must be transacted continuously to satisfy consumers' needs as well as for the growth of the business

Importance or functions of commerce

1. It provides employment opportunities to people: Commerce involves many activities such as marketing, production, and distribution, all of which necessitate the employment of people.

In reality, the growth and development of commerce usually increase the requirement of people

Hence, commerce creates employment opportunities for the masses

2. Commerce removes distance barrier: Commerce removes hindrances to places through transportation.

Through air transport, a person located in one country can purchase goods from a person in another country, knowing that his purchased goods will arrive in the quickest time possible.

3. Commerce satisfies consumer needs: Commercial activities are geared toward satisfying consumer needs. 

Commerce provides goods and services to consumers through production, distribution, and exchange.

4. It improves the standard of living: Commerce raises the standard of living of members of society.

Firstly, it provides raises employment opportunities so that they can earn important income.

Second, it makes good available to customers to better their lives.

5. Commerce contributes to economic growth: Economic growth is usually measured by an increase in national income (GDP). 

Gross domestic product is the market value of goods and services produced in a country. Because production is a commercial activity it is clear commerce contributes massively to economic growth.

6. It encourages international trade: Commerce encourages international trade, which is the exchange of goods and services between countries.

Transportation, which is a subset of commerce, allows two countries to trade by bridging the distance between them.

Communication makes international trade easier by allowing two countries to communicate their trade and payment arrangements.

The commercial activity of banking allows the remittance of money from one country to another, enabling a convenient means of payment between two nations.

From the foregoing, we can see that commerce facilitates international trade.

7. It brings producers and consumers together: Everything produced is meant for the consumption of final consumers.

Commerce identifies consumer needs through marketing and produces things that meet those needs through production.

That will be all for now. Here are similar posts that you can read. 

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