What is meant by auxiliaries trade?
Answers
Explanation:
ACTIVITIES which are meant for assisting trade are known as auxiliaries to trade. Generally referred to as service because these are in the nature of facilitating the activities relating to industry and trade, transport, banking, insurance, warehousing and advertising are regarded as auxiliaries to trade.
Explanation:
Auxiliaries to trade are those activities which facilities business. Transport, banking, insurance, warehousing, and advertising is regarded as auxiliaries to trade. Infect, these activities not only support trade but also industry and hence, the entire business activity.
The auxiliaries to business are discussed below:
1. Transport and Communication. Transportation carries goods form producers to traders and finally to consumers. It bridges the geographical distances. It makes for speed and efficiency in exchange. Transportation provides the wheels of commerce. It is because f transportation that a producer can sell his goods in different parts of the world. It crates ‘places utility’.
Alongwith transport, communication is also an important service. Communication helps in exchange of information between producers, consumers and traders. The communication services like postal service, telephone service, fax, internet, e-mail, etc., facilitate trade to a great extent.
2. Banking and Finance. Banks and financial institutions provide credit facility; loan etc. to provide finance for smooth flow of business activities. Banks help the businessmen to overcome the problem of funds. Alongwith provision of funds, the commercial bamks provide many others facilities such as collection and deposit of cherubs, issue of bank draft, discounting of bills of exchange, etc. Banks also provide the facility of overdraft, cash credit limit, arrangement and payment in foreign currency in case of foreign or external trade.
3. Warehousing. It refers o the holding of goods until they are finally consumers. Goods have to be stored at every stage in the process of exchange. Warehousing performs a useful function by matching supply with demand. It helps to make available the seasonally produced goods throughout the year. Warehousing creates ‘time utility’.
4. Insurance. There are a number of risks in any business activity. These can be covered with the help of insurance companies. Insurance companies undertake to make good the loss by receiving a small amount of premium in advance as consideration.
5. Advertising. In order to find customers, the producer has to inform the prospective customers about the utility and features of his product. This can be done with the help of advertising. Advertisement spreads awareness among the consumers regarding new goods and their uses. Advertisement directly promotes the sale of goods. It is a very good technique of promotion and improves the knowledge of customers. It helps the traders to sell their goods and the consumes to get goods of their choices.
6. Packaging. Packaging removes hindrance of risk of spoilage, etc. From the point of view of the dispatch of goods to the market, strong and foolproof system of packaging of goods is of great importance.