TOPIC ONE: INTRODUCTION TO COMMERCE
Definition of Commerce
Commerce can be defined as any of the following:
1.According to S. A Butt -Commerce is the sum total of all the activities beginning from the place
of production and ending at the retailer’s shop’A study of commerce would therefore involve:
 A study of trade, the principal activity in distribution of goods,
 A study of auxiliary services that make trade possible
 A study of how best the above two could be organized so as to satisfy the needs of a
consumer in the most efficient manner.
2.Commerce is the system by which raw materials are distributed to industry and the finished
products to consumers.
3.Commerce is the sum total of those processes which are engaged in the removal of hindrances of
persons, place and time in the exchange of commodities (Saleemi)
4.Commerce is the sum total of all the activities beginning from the place of production and
ending at the retailers shop.
5.Commerce is a social science which is associated with trade and aids to trade.
6.Commerce includes all those branches that deal with the removal of obstacles / barriers to
satisfaction of human wants.
7.It is a study of the distribution of goods and services and the prices at which they are exchanged
with the aim of achieving the most efficient distribution to maximize the satisfaction of human
needs and wants.
8.According to N. A. Saleemi, commerce is a social science, which is associated with trade and aids
to trade.
9.According to G.R. Rwabutoga ( a Textbook of commerce), Commerce is concerned with trade
and other human activities embracing transport, finance, insurance, banking, advertising,
communications, market research and any other activity that helps people to exchange goods and
services.
Importance/significance of Commerce
Commerce serves as the basic function of ensuring satisfaction of human wants/needs.
Different people produce different goods, some are not available in the same geographical location
hence people in different parts of a country for instance to meet their needs, they have to enter into
a form of exchange. This allows them to trade what they have in exchange with what they need but
do not have or produce. Commerce ensures that this is achieved.
Commerce is part of a wider subject called Economics, which is concerned with studying how
mankind tries to satisfy unlimited wants using scarce resources. Man tries to satisfy his wants as
efficiently as possible. As the resources are limited and the wants are unlimited, man has to choose
which of his wants to satisfy first. Scarcity and choice are, therefore, key words in the study of
economics.
Commerce is concerned with trade and other human activities (called trade facilitators) embracing
transport, finance, insurance, banking, advertising, communications, marketing research and any
other human activity which helps people to exchange goods and services. Commerce also involves
the study of the distribution of goods and services and the prices at which goods and services are
exchanged. Its aim is to achieve the most efficient distribution of goods and services so as to
maximize the satisfaction of human needs and wants.
Human wants
Human wants cover any human desire. Any human desire is known as wants, needs. These include
food, better quality food more clothes, large houses, new model cars, TV sets and other things that
make life better.
All wants of human beings cannot be satisfied because resources are limited or scarce.
Economic activities are aimed at the satisfaction of human wants as human effects are converted
into rewards such as salaries and wages which help to meet the wants.
Characteristics of human wants:
a) Habitual: They are habitual meaning that they can be habit forming. A person who smokes
or drinks may wish to give it up, but find himself unable to do so. Such wants include desire
for cigarettes or beer. A person may find himself unable to function normally without them.
b) Insatiable: They are insatiable meaning they are so numerous they cannot be satisfied, such
things as land where we can’t have all the land for ourselves since our resources are scarce.
c) Competitive: They are competitive meaning that most wants can be satisfied by a number of
sources e.g. thirst can be satisfied by water, tea etc. This means you have to make a choice.
Growth of Commerce
Commerce plays a fundamental role in satisfaction of human wants. Before commerce, the
producer used to consume all his products. This meant we had to produce a little of everything in
order to meet our own needs. With the introduction of commerce came the exchange of goods
and services known as the barter trade. This was before money was introduced.
The growth of commerce introduced specialization which includes geographical and
occupational specialization. In geographical specialization, different regions of the world or a
country produce the types of goods they are best suited for.
The following factors have contributed to the growth of commerce:
1. Development of money and banking system led to greater production and exchange
activities as there was security of money for businessmen.
2. Improvement in the transport sector in terms of infrastructure and communication system.
3. Specialization or division of labour as people deal with what they could do best, effectively
and efficiently in terms of knowledge, climate and resources.
4. The diverse needs of human wants coupled with inability to produce everything for personal
needs.
5. The diversification of natural resources in different parts of the world in terms of
availability encouraged foreign trade.
Structure and Scope of Commerce
The structure of commerce means those limits under which different problems can be discussed.
The structure/scope of commerce comprises all commercial occupations. The main purpose of
commercial activity is to facilitate the trading or exchange of goods.