INSURANCE CONTRACT 01

1. COMMERCIAL KNOWLEDGE CPS,CBA,CA

2. AN INTRODUCTION OF COMMECIAL KNOWLEDGE.

3. WHAT’S COMMERCE??

4. MEANING OF COMMERCE • According to James Stephenson, "Commerce is an organized system for the exchange of goods between the members of the industrial world." In a broader sense," • Commerce is that part of business which is concerned with the exchange of goods and services and includes all those activities which directly or indirectly facilitate that exchange."

5. MEANINGCONT…. • Commerce is a branch of business. • It is concerned with the exchange of goods and services. It includes all those activities, which directly or indirectly facilitate that exchange.

6. PURPOSEOFCOMMERCE Commerce tries to satisfy increasing human wants • Human wants are never ending. They can be classified as 'Basic wants' and 'Secondary wants'. Commerce has made distribution and movement of goods possible from one part of the world to the other. Today we can buy anything produced anywhere in the world. This has in turn enabled man to satisfy his innumerable wants and thereby promoting social welfare

7. PURPOSECONT…. Commerce helps to increase our standard of living • Standard of living refers to quality of life enjoyed by the members of a society. When man consumes more products his standard of living improves. To consume a variety of goods he must be able to secure them first. Commerce helps us to get what we want at right time, right place and at right price and thus helps in improving our standard of living.

8. PURPOSE CONT…. Commerce links producers and consumers • Production is meant for ultimate consumption. Commerce makes possible to link producers and consumers through retailers and wholesalers and also through the aids to trade. Consumers get information about different goods through advertisements and salesmanship.

9. PURPOSE CONT…. Commerce links producers and consumers • Production is meant for ultimate consumption. Commerce makes possible to link producers and consumers through retailers and wholesalers and also through the aids to trade. Consumers get information about different goods through advertisements and salesmanship.

10. PURPOSE CONT…. Commerce generates employment opportunities • The growth of commerce, industry and trade bring about the growth of agencies of trade such as banking, transport, warehousing, advertising, etc. These agencies need people to look after their functioning.

11. PURPOSE CONT…. Commerce increases national income and wealth • When production increases, national income also increases. In a developed country, manufacturing industries and commerce together accounts for nearly 80% of total national income. It also helps to earn foreign exchange by way of exports and duties levied on imports. Thus, commerce increases the national income and wealth of a nation.

12. PURPOSE CONT…. Commerce increases national income and wealth • When production increases, national income also increases. In a developed country, manufacturing industries and commerce together accounts for nearly 80% of total national income. It also helps to earn foreign exchange by way of exports and duties levied on imports. Thus, commerce increases the national income and wealth of a nation.

13. PURPOSE CONT…. Commerce helps in growth of industries • Commerce looks after the smooth distribution of goods and services made available by the industry. Without commerce, industry will find it difficult to keep the pace of production. It helps to increase demand for goods on one hand and on the other hand it helps industries by getting them the necessary raw materials and other services.

14. PURPOSE CONT…. Commerce encourages international trade • Through commerce we can secure a fair and equitable distribution of goods throughout the world. With the help of transport and communication development, countries can exchange their surplus commodities and earn foreign exchange, which is very useful for importing machinery and sophisticated technology.

16. TYPES OF COMMERCE • There are two types of commerce namely; • i/ TRADE • ii/ AIDS TO TRADE

17. TRADE What is Trade? • Trade refers to buying and selling of goods and services for money or money's worth. It involves transfer or exchange of goods and services for money or money's worth. The manufacturers or producer produces the goods, then moves on to the wholesaler, then to retailer and finally to the ultimate consumer.

18. Different Types of Trade Two types of Trade • Home Trade • Foreign Trade

19. Home Trade/ Domestic Trade/ Internal Trade Is the type of trade which is conducted within the political and geographical boundaries of a country. It can be at local level, regional level or national level. Hence trade carried on among traders of Dar es Salaam, Tanzania, etc. is called home trade.

20. HOME TRADE CONT…. • Home trade can be further sub-divided into two groups; • Wholesale Trade • It involves buying in large quantities from producers or manufacturers and selling in lots to retailers for resale to consumers. The wholesaler is a link between manufacturer and retailer. A wholesaler occupies prominent position since manufacturers as well as retailers both are dependent upon him. Wholesaler act as an intermediary between producers and retailers.

21. HOME TRADE CONT…. • RetailTrade • It involves buying in smaller lots from the wholesalers and selling in very small quantities to the consumers for personal use. The retailer is the last link in the chain of distribution. He establishes a link between wholesalers and consumers. There are different types of retailers small as well as large.

22. FOREIGN TRADE/ EXTERNAL TRADE • External trade also called as Foreign trade. It refers to buying and selling between two or more countries. For instance, If Mr. X who is a trader from Dar es salaam Tanzania, sells his goods to Mr. Y another trader from New York in USA then this is an example of foreign trade.

23. FOREIGN TRADE CONT…. External trade can be further sub-divided into three groups, • Export Trade: When a trader from home country sells his goods to a trader located in another country, it is called export trade. For e.g. a trader from India sells his goods to a trader located in China.

24. FOREIGN TRADE CONT…. • Import Trade: When a trader in home country obtains or purchase goods from a trader located in another country, it is called import trade. For e.g. a trader from India purchase goods from a trader located in China.

25. IMPORTANCE OF FOREIGN TRADE Division of labour and specialization • Foreign trade leads to division of labour and specialization at the world level. Some countries have abundant natural resources. They should export raw materials and import finished goods from countries which are advanced in skilled manpower.

26. IMPORTANCE CONT…. Optimum allocation and utilization of resources • Due to specialization, unproductive lines can be eliminated and wastage of resources avoided. In other words, resources are channelized for the production of only those goods which would give highest returns. Thus, there is rational allocation and utilization of resources at the international level due to foreign trade.

27. IMPORTANCE CONT…. Availability of multiple choices • Foreign trade helps in providing a better choice to the consumers. It helps in making available new varieties to consumers all over the world.

28. IMPORTANCE CONT…. Raises standard of living of the people • Imports can facilitate standard of living of the people. This is because people can have a choice of new and better varieties of goods and services. By consuming new and better varieties of goods, people can improve their standard of living.

29. IMPORTANCE CONT…. Generate employment opportunities • Foreign trade helps in generating employment opportunities, by increasing the mobility of labour and resources. It generates direct employment in import sector and indirect employment in other sector of the economy. Such as Industry, Service Sector (insurance, banking, transport, communication), etc.

30. IMPORTANCE CONT…. Facilitate economic development • Imports facilitate economic development of a nation. This is because with the import of capital goods and technology, a country can generate growth in all sectors of the economy, i.e. agriculture, industry and service sector.

31. AIDS TO TRADE IN COMMERCE • Trade or exchange of goods involves several difficulties, which are removed by auxiliaries known as aids to trade. • It refers to all those activities, which directly or indirectly facilitates smooth exchange of goods and services.

32. CONT…. • Aids to trade includes Transport, Communication, Warehousing, Banking, Insurance, Advertising, Salesmanship, Mercantile agents, Trade promotion organizations in a country and Global organizations for international trade. Auxiliaries ensure smooth flow of goods from producers to the consumers. Hence, without aids to trade; objectives, operation, and functionality of any trade are nearly impossible to achieve.

33. TRANSPORTATION • In the modern times there is a vast distance between centers of production and the centers of consumption. This difficulty is removed by an important aid to trade known as transport. Transport creates place utility. • There are three main types of transport modes namely; air (airway), water (river, sea, canals), and land (road, railway, pipeline).

34. TRANSPORTATION CONT… • Transportation refers to the movement of product from one location to another. It makes its way from the beginning of supply chain to the customer.

35. CURRENT TRANSPORTATION PROBLEMS • Financing • Congestion • infrastructure • Safety • Population • Increased truck weights

36. COMMUNICATION • Communication means transmitting or exchange of information from one person to another. It can be oral or in writing. It is necessary to communicate information from one to another to finalize and settle the terms of sales such as prices of goods, discount allowed, facility of credit, etc.

37. COMMUNICATION CONT… • Modern means of communication like telephone, telex, telegraph, email, teleconference, etc., plays an important role in establishing contact between businessmen, producers and consumers.

38. WAREHOUSING • There is a time gap between production and consumption. In other words, goods, which are produced at one time, are not consumed at the same time. Hence, it becomes necessary to make arrangements for storage or warehousing.

39. WAREHOUSING CONT… • Agricultural commodities like wheat and rice are seasonal in nature, but are consumed throughout the year, on the other hand, goods such as umbrellas and woolen clothes are produced throughout the year but are demanded only during particular seasons. Therefore, goods need to be stored in warehouses till they are demanded.

40. USES OF WAREHOUSING • It helps in storing goods. • Payment of customs duties in instalments. • Transfer of ownership of goods without actual delivery. • Benefit of selling goods at favorable prices. • Availability of perishable goods throughout the year. • warehousing prevents scarcity of goods

41. AIDS TO TRADE CONT…. • ADVERTISING • BANKING • PRODUCTION

42. PRODUCTION Production is simply the process of converting raw materials or other inputs such as ideas into finished goods or services

43. TYPES OF PRODUCTION Production is grouped into 2 major categories. They are: • Direct Production:  This involves production of goods and services on a small scale. It is usually done by an individual for the purposes of his/her family use or consumption. The goods produced are meant for the family use alone and not for sale.

44. Indirect Production: Goods and services are produced on a large scale. Indirect production is sub divided into: a. Primary Production. b. Secondary Production. c. Tertiary Production:

45. Indirect Production CONT… Primary Production: Primary production refers to the extraction of basic raw materials from their natural location as provided by nature. Examples of primary production are agriculture, fishing, forestry, mining, oil extraction etc

46. Indirect Production CONT… Secondary production • Involves the transformation or conversion of raw materials or semi-finished goods into final forms that are acceptable to the consumers. Examples are houses, cars, food, clothing, chemicals, etc. They are generally described as manufacturing and construction industries.

47. Indirect Production CONT… Tertiary Production: • Industries in the tertiary sector produce all those services which enable the finished goods to be put in the hands of consumers. In fact, these services are supplied to the firms in all types of industry and directly to consumers.

48. Factors of Production Production of a commodity or service requires the use of certain resources or factors of production. Since most of the resources necessary to carry on production are scarce relative to demand for them they are called economic resources. Resources, which we shall call factors of production

49. Factors of Production

50. Factors of Production CONT….