Experience economy Essay Example | Topics and Well Written Essays - 3250 words

Experience economy - Essay Example Commerce includes all those activities, which are connected with trade and auxiliaries to trade such as transport, warehousing, insurance and banking and finance. Trade involves buying and selling of goods and its purpose is to bridge the gap between persons, i.e. the producers and the consumers can concentrate on their own occupations and at the same time buy goods to satisfy their consumption needs. The farmers can both enjoy each other's products with the help of traders. For example there are different types of cotton; jute, hides and skins are supplies to the producers of cotton textiles, gunny bags and shoes respectively. At the same time manufactured goods, which have been produced with the raw materials, are supplied to the consumers. Producers buy raw materials, machinery and equipment as well as stores and spare parts for machinery fro trading agencies and consumers buy practically all articles required for their daily use from traders. Goods are produced on a large scale in anticipation of demand. The markets for products are now spread over the length and breadth of the country and even extended to countries across the international borders. Hence direct sale of goods by the producers to the consumers is not possible. Without the help of traders and merchants engaged in trade it would be impossible for the system of large-scale production to continue. The trader involved in the actual operation of purchasing goods from producers and selling them to consumers. Traders and consumers are interdependent. Importance of trade Trade is of great significance for production as well as consumption of goods. It is through trade that goods produced at particular places are equitably distributed among users. With the help of trade goods are made available to consumers at the time of their need. It removes the hindrance of persons by bringing together producers and consumers who are widely scattered. Advantages of trade Advantages of trade are outlined below: It enables the producers to concentrate on their production activities; otherwise they would have to go in search of consumers for goods they produce. Trade makes goods available to consumers who can concentrate on their own occupations It results in specialization and large-scale production as the markets are now spread over wide territories. Sale of goods from one country and purchase of goods form other countries. It provides avenues of employment to various persons. It increases the standard of living of people as they can avail of goods of various kinds produces by different producers. Distinction between Home trade and foreign trade a. Home trade is concerned with trade between people of the same country while foreign trade is concerned with trade between people of two different countries. b. In home trade the buyer has to pay for the goods in home currency while in foreign trade buyer ha to make payment in foreign currency. c. Payment in home trade is simpler and less time consuming while in foreign trade, payment is not a simple process and hence is more time consuming. d. Home trade is not subject to restrictions, which exist in case of foreign trade such as tariffs, quotas, etc. e. Transport costs are relatively much less in home trade than in foreign trade. Development in different sectors like Information Technology, Steel industry, etc., has resulted a sharp rise in the usage of harmful substances.