Question

Q4. Define auxiliaries to trade .Discuss various auxiliaries to trade and their importance tocommerce.​

Answer 1

Answer:

AUXILIARIES TO TRADE:

~Activities which are meant for assisting trade are known as "auxiliaries to trade".

~These activities are referred to as services because these are in the nature of facilitating the activities related to trade & industry.

VARIOUS AUXILIARIES TO TRADE:

o Transportation and Communication:

~Production of goods generally takes place in particular locations but these goods are required for consumption in different parts of the country.

~The obstacle of place is removed by transport through road, rail or coastal shipping.

~Transport facilitates movement of raw material, to the place of production and the finished products from factories to the place of consumption.

~Along with transport facility, there is also a need for communication facilities so that producers, traders and consumers may exchange information with one another.

~Thus, postal services and telephone facilities may also be regarded as auxiliaries to business activities.

o Banking and Finance:

~Business activities cannot be undertaken unless funds are available for acquiring assets, purchasing raw materials and meeting other expenses. ~Necessary funds can be obtained by businessmen from a bank.

~Thus, banking helps business activities to overcome the problem of finance.

~Commercial banks, generally lend money by providing overdraft and cash credit facilities, loans and advances.

~Commercial banks also help promoters of companies to raise capital from the public.

o Insurance:

~Business involves various types of risks. Factory building, machinery, furniture, etc., must be protected against fire, theft and other risks.

~Material and goods help in stock or in transit are subject to the risk of loss or damage.

~Employees are also required to be protected against the risks of accident and occupational hazards.

~Insurance provides protection in all such cases.

o Warehousing:

~Usually, goods are not sold or consumed immediately after production. ~They are held in stock to make them available as and when required. ~Special arrangement must be made for the storage of goods to prevent loss or damage.

~Warehousing helps business firms to overcome the problem of storage and facilitates the availability of goods when needed.

o Advertising:

~Advertising is one of the most important methods of promoting the sale of

products, particularly, consumer goods, like electronic and automobile goods,

soaps, detergents, etc.

~Advertising helps in providing information about available goods and services and inducing customers to buy particular items.

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