Write any four differences between trade and commerce
Answers
Answer:
Major differences between industry, commerce and trade are as follows:
Basis Industry Trade Commerce
Meaning
It involves manufacturing activities such as extraction, construction and production of goods. It involves transfer or exchange of products distributed by commerce.
It involves distribution of products produced by industries.
Capital Requirement
Requires huge amount of capital to establish industry. Requires less capital than industry and commerce.
Requires less amount of capital than industry but larger amount than trade to operate its activities.
Level Of Risk
Riskier than commerce and trade. Relatively less riskier than industry and commerce.
Less riskier than industry but involves high risk than trade.
Side
Supply side of the product. Both side (demand and supply) of the product. Demand side of the product.
Creation Of Utility
It creates form utility. It creates processing utility.
It creates time utility and place utility.
Place Of Operation It is operated in workshop or factory.
It is operated in the market.
It is operated from production center to distribution center.
Following are the major differences between trade and commerce:
1. Trade is selling and buying of goods and services between two or more parties in consideration of cash and cash equivalents.Commerce includes the exchange of goods and services along with activities viz. banking, insurance, advertising, transportation, warehousing, etc. to complement the exchange.
2. Trade is a narrow term that merely includes the selling and buying whereas commerce is a wider term that includes exchange as well as the several revenues generating activities that complete the exchange.
3. Trade is generally done to satisfy the need of both the seller and the buyer which is more of a social perspective. Whereas the commerce is more economical in nature because of the involvement of several parties whose primary aim is to generate the revenue.
4. Trade is generally a single time transaction between the parties that may or may not reoccur. Whereas in commerce the transactions are regular and occur again and again.
5. The trade involves two parties the seller and the buyer who facilitates the exchange without employing anyone in between. Whereas in commerce exchange is done with the support of several departments thereby giving them employment opportunities.
6. Trade provides a link between the seller and the buyer, the direct parties involved in the exchange. Whereas the commerce provides a link between manufacturer and the ultimate customer, who are not direct parties, with the help of several aides of distribution.
7. Trade represents both the side of demand and supply where both the parties know what is demanded and what is to be supplied. Whereas in commerce only the demand side is known i.e. what is demanded in the market and then making that available through various channels of distribution.
8. Trade requires more capital because the stock has to be kept ready that is entitled to the sale and also the cash has to be kept ready for the immediate payment. Whereas in commerce the capital required is less because there are different parties involved who have to manage their resources individually without imposing a burden on one.
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