The scope and range of commerce can be determined from the fact that it includes production, marketing, banking, finance, transporting, warehousing, insurance, and information. These factors or elements of commerce are discussed in the lines to follow.
Business function starts with the planning for production which is conversion of materials from one form to another. It requires the purchase of raw materials, machinery, and equipment, and hiring different classes of labors. Production, which is a commercial activity, has four factors without which it cannot take place. They are land , labor, capital and entrepreneurship.
Better production depends upon proper and timely planning, effective quality control, subtle selection of manpower, minimization of cost , continuous research , right and quality materials , modern plant , machinery and equipment , knowledge of customer taste and market trends , and best possible combination of ingredients .
Banking / Finance
Banking and finance are part and parcel of commerce. By performing this service , commerce is able to finance the needs of the business firms. Through banking producers and middlemen get the needed funds. Bank help Businessmen in foreign trade by issuing drafts, LCs and discounting bills of exchange. Banking caters to the financial needs of business .
Most of the loans are provided by the banking system. Specialized banking exists in the areas of industry , savings , agriculture, commerce, exchange , etc. commercial banks help businessmen in advancing loans, issuing letters of credit , discounting bills of exchange, transferring of money , and other agency and utility services. They offer facilities to open current and saving accounts. Industrial banks provide long term loans to enable industries to purchase plant , machinery , and equipment . on the other hand , agriculture banks provide funds to purchase seeds , fertilizers , tractors and warehousing facilities .
Finance is the lifeblood of business. Every commercial activity requires capital and loans. Funds can be obtained through the following sources :
2. Loans , or Bonds
3. Retained earning
Transportation is so an important activity that no business can be performed without it . Transporting starts immediately after production. It refers to moving goods from the point of production to the point of consumption. It helps the producer dispose of their goods to the far and needy markets. It creates place utility. Quick and modern means have made it possible to send goods in any part of the globe in a very short period.
Today trillions of dollars goods go across the world annually the credit goes to transportation.
There are many means of transportation that includes three routes land, air, and Sea. Most commonly used mean is marine transport which is the lowest in cost and used for shipping heavy or voluminous goods. Most of the world trade takes by sea.
The other mean is air transport which is quick but costly.
The third mean is road transport which is vital for inland trade. Landlocked countries are compelled to undertake foreign trade by land. It is done through network of roads, motorways, highways, carriage ways, and tracks.