Banking and Finance

What is Trade?

Buying and selling of goods and services with the aim of earning profits is known as Trade. It is one of the most essential parts of commerce. It enables to make the goods available to the consumers or users. These days goods are manufactured on a large scale and it is very difficult for the producers to reach the consumers by themselves. Middlemen serve as a link between the producers and consumers by making the goods available to them. In the absence of trade, both producers and consumers will have to search for each other, and it would not be possible to carry on business on a large scale. Trade can be carried out on small scale, like in the case of Hawkers and small shops, or large scale, like Departmental stores....

What are Auxiliaries to Trade?

Activities which are made for assisting trade are known as auxiliaries to trade. These activities or services facilitate the purchase and sale of goods and services. These are generally referred to as services because their nature is to facilitate the activities related to industry and trade. These include banking, transport, warehousing, warehousing and insurance. These not only support trade but also industry, and hence entire business activity. These activities help in the removal of various hindrances which arise in the exchange of goods and services....

Various Auxiliaries to Trade

1. Transport and Communication...

1. Transport and Communication

It involves all the activities which are concerned with the movement of goods from one place to another. As we know that production takes place at various places and these goods are required at other places for consumption.  For example, jute is produced in West Bengal, but it is consumed in various other places. The hindrance of place is removed by means of transportation, like road, rail, etc. Transport helps in the movement of raw material to the place of production and finished products from the factories to the place of consumption....

2. Banking and Finance

It involves activities which are related with providing finance for various business activities. Business activities cannot start without having adequate funds. Funds are needed acquiring machinery, raw materials, meeting expenses, etc. Banking solves the problem of finance. It helps to overcome the hindrance of finance. Various facilities are provided by the bank, like overdraft, cash credit, and various types of loans and advances. Banks also undertake collection of cheques, issue of bank drafts, discounting of bills, etc. Banks also help exporters in collecting money from importers, in case of foreign trade. They also help in raising capital from public....

3. Insurance

It involves all the activities which are concerned with protection from various kinds of risks. Business involves many kinds of risks. and insurance helps to protect the businesses from such risks. Insurance removes the hindrance of risks by protecting against various risks. Factory, building and other assets must be protected against fire, theft, burglary, etc. Employees should also be protected against the risk of accidents and occupational hazards. Insurance protects against all these risks. Businesses have to pay a nominal amount known as a premium, and in return, the amount of loss or compensation can be recovered....

4. Warehousing

It is concerned with storing goods in order to facilitate their supply to the market at the right time. There is always a time gap between production and consumption of goods as goods are not produced immediately after they are produced. This time gap is because of irregular demand or irregular supply. Warehousing helps in the storage of goods and providing goods at the right time, and thus, removes the hindrance of time. Warehousing ensures stable prices in the market, as goods are supplied continuously when needed. To maintain a smooth flow of goods throughout the year and protect goods from various damages, like moisture, insects, thefts, etc., they are stored in warehouses and storages....

5. Advertising

It involves all those activities which are concerned with providing information about products and services. It is one of the most important ways of promoting the sale of products and services, especially in the case of consumer goods. It is not possible for the manufacturers, producers and traders to meet each and every consumer and inform them about the product. Thus, advertising informs the consumers about the product and various other useful information, like features, price, uses, quality, etc., related to the product. Thus, it removes the hindrance of information....