CHAPTER ONE
INTRODUCTION TO COMMERCE
Commerce is the exchange of goods and services, especially on a large scale. It includes legal, economic,
political, social, cultural and technological systems that operate in a country or in international trade.
Also commerce is the collection of all such activities which deal with the buying and selling of goods,
the exchange of commodities or distribution of the finished goods.
In the economic sense, "commerce" refers to the conduct of trade among economic agents. Commerce
generally affects the well-being and welfare of citizens and residents, as it is known] to directly impact the
money which people have and their job opportunities as well. The term "commerce" may also refer to the
buying and selling of commodities globally or across borders - between governments and between
business firms.
The terms "trade" and "commerce" carrying different meanings:
Trade, on the one hand, may mean the selling and buying of commodities for money or anything of
value
Commerce covers a much broader field and includes trade, along with the services which facilitate
such buying and selling of goods. These services may include insurance, warehousing, transporting
and advertising.
Nevertheless, one can speak of "trade in goods and services".
Functions of commerce
The main function of commerce is to remove the following hindrances or obstacles in the exchange of
commodities;
a. Human obstacles; this occurs when the seller is unable to handover goods to a buyer, however this
obstacle is removed through trade
b. Obstacle of time; this is the difference in duration when goods are supplied to the market and when
they are actually bought. This obstacle is removed through storage of goods in warehousing
c. Obstacle of place; this takes the form of distance covered from where goods are produced to where
they are sold. This obstacle is removed through transport.
d. Financial obstacle; this occurs through lack of money to buy goods, and can be removed by financial
institutions
e. Obstacle of risk; these are the dangers likely to occur during the transportation and storage of goods
such theft, fire, accident and breakage. This is removed by insuring goods through insurance company
Importance of commerce
The importance of commerce is established by three basic facts of human life;
i. Unequal distribution of natural resources and human skills; commerce tries to neutralize
geographical disadvantages by bringing about exchange of goods between different regions
ii. Difference in standards of life; various commercial activities help narrow the gap between the
rich and poor
iii. Mutual interdependence; no person can produce all the goods they require, therefore the needs of
man are satisfied by efforts of others through money as a medium of exchange. Commerce caters
for the convenience of man and is rightly described as the index of human progress.
Growth of commerce
The following factors have played important role in the growth of commerce
a. The diversification of natural resources encouraged the exchange of goods different countries and
areas
b. The difference in human wants and needs also induced the exchange of goods
c. Specialization and division of labor became another main cause of trade or exchange of goods
COMMERCE COURSE NOTES CHAPTER 1 – INTRODUCTION TO COMMERCE PREPARED BY MR. ANTONY AMBIA Page 1
, d. Improvement in the transport and communication system that encouraged production and exchange
activities
e. Development of money and banking system also encouraged the growth and spread of commerce
Advantages of commerce
Ensures availability of goods in different regions
Reduce costs of production and distribution of goods through economies of scale
Provides profitable outlets for surplus product
Source of direct and indirect employment
Expansion of business through borrowing capital from financial institutions
Provide means of stabilizing commodity prices throughout a country
Optimum use of resources to produce goods that are consumable
Improved relations locally and internationally
Structure of commerce
COMMERCE COURSE NOTES CHAPTER 1 – INTRODUCTION TO COMMERCE PREPARED BY MR. ANTONY AMBIA Page 2
INTRODUCTION TO COMMERCE
Commerce is the exchange of goods and services, especially on a large scale. It includes legal, economic,
political, social, cultural and technological systems that operate in a country or in international trade.
Also commerce is the collection of all such activities which deal with the buying and selling of goods,
the exchange of commodities or distribution of the finished goods.
In the economic sense, "commerce" refers to the conduct of trade among economic agents. Commerce
generally affects the well-being and welfare of citizens and residents, as it is known] to directly impact the
money which people have and their job opportunities as well. The term "commerce" may also refer to the
buying and selling of commodities globally or across borders - between governments and between
business firms.
The terms "trade" and "commerce" carrying different meanings:
Trade, on the one hand, may mean the selling and buying of commodities for money or anything of
value
Commerce covers a much broader field and includes trade, along with the services which facilitate
such buying and selling of goods. These services may include insurance, warehousing, transporting
and advertising.
Nevertheless, one can speak of "trade in goods and services".
Functions of commerce
The main function of commerce is to remove the following hindrances or obstacles in the exchange of
commodities;
a. Human obstacles; this occurs when the seller is unable to handover goods to a buyer, however this
obstacle is removed through trade
b. Obstacle of time; this is the difference in duration when goods are supplied to the market and when
they are actually bought. This obstacle is removed through storage of goods in warehousing
c. Obstacle of place; this takes the form of distance covered from where goods are produced to where
they are sold. This obstacle is removed through transport.
d. Financial obstacle; this occurs through lack of money to buy goods, and can be removed by financial
institutions
e. Obstacle of risk; these are the dangers likely to occur during the transportation and storage of goods
such theft, fire, accident and breakage. This is removed by insuring goods through insurance company
Importance of commerce
The importance of commerce is established by three basic facts of human life;
i. Unequal distribution of natural resources and human skills; commerce tries to neutralize
geographical disadvantages by bringing about exchange of goods between different regions
ii. Difference in standards of life; various commercial activities help narrow the gap between the
rich and poor
iii. Mutual interdependence; no person can produce all the goods they require, therefore the needs of
man are satisfied by efforts of others through money as a medium of exchange. Commerce caters
for the convenience of man and is rightly described as the index of human progress.
Growth of commerce
The following factors have played important role in the growth of commerce
a. The diversification of natural resources encouraged the exchange of goods different countries and
areas
b. The difference in human wants and needs also induced the exchange of goods
c. Specialization and division of labor became another main cause of trade or exchange of goods
COMMERCE COURSE NOTES CHAPTER 1 – INTRODUCTION TO COMMERCE PREPARED BY MR. ANTONY AMBIA Page 1
, d. Improvement in the transport and communication system that encouraged production and exchange
activities
e. Development of money and banking system also encouraged the growth and spread of commerce
Advantages of commerce
Ensures availability of goods in different regions
Reduce costs of production and distribution of goods through economies of scale
Provides profitable outlets for surplus product
Source of direct and indirect employment
Expansion of business through borrowing capital from financial institutions
Provide means of stabilizing commodity prices throughout a country
Optimum use of resources to produce goods that are consumable
Improved relations locally and internationally
Structure of commerce
COMMERCE COURSE NOTES CHAPTER 1 – INTRODUCTION TO COMMERCE PREPARED BY MR. ANTONY AMBIA Page 2
