This document provides an overview of commerce and its subdivisions. It defines business and distinguishes it from trade. Industry and commerce are identified as the two main classifications of business activities. Industry relates to production and manufacturing, while commerce involves the exchange and distribution of goods. Commerce has two main components - trade and aids to trade. Trade includes wholesale and retail trade, while aids to trade facilitate the exchange of goods and include transportation, warehousing, banking, insurance, packaging, and advertising.

1. Drug Store and Business Management
D Pharm 2nd year
Part-I
COMMERCE
Diksha Choudhary(Assistant Prof.)
M Pharmacy (Pharmaceutical Chemistry)
Abhilashi University , Mandi

2. Topic
1. Introduction
 Trade, Industry and Commerce
 Functions and subdivisions of commerce

3. Business
 Remains busy in the economic activities
 To get financial gain and not that person who remains busy in non-economic
activities
 Involves regular production and/or exchange of goods and services
 Main purpose of earning profits
 Through the satisfaction of human wants

4. Scope of business
 Not be confused with trade
 „Trade‟ simply denotes purchase and sale of goods
 „Business‟ includes all activities from production to distribution of goods and
services
 It embraces industry, trade and other activities like
 Banking, transport, insurance and warehousing
 Facilitate production and distribution of goods and services

5. Classification of business activities
 Classified into two groups
A. Industry
B. Commerce

6. Cont……
A. Industry
 Activities which relates to growing, extraction, production, conversion,
processing or fabrication of goods
 Industry produce different kinds of products for different purpose which may
be classified as follows:

7. Cont……
Classification of industries

8. Cont…..
 Primary industry:
 Include all the products or raw materials obtained from
 Agriculture, forests, mines, animal husbandry and fisheries etc
 Examples: wheat, rice, cotton, sugarcane, cereals, wood, metal ores, milk, fish, raw
silk etc
● Secondary industry:
 Produced by one industry
 But cannot be consumed as such unless it is passed through another industry
 to undergo further manufacturing processes to obtain a finished product
 Example: capsule shells are manufactured in one kind of industry but filling is
done in another kind of industry
 Iron, cotton, pulp

9. Cont…..
1. Extractive industries:
 Extract or draw out products from natural sources such as earth, sea or air
 Products generally used by manufacturing and construction industries
 For producing finished goods
 examples: farming, mining, fishing
2. Genetic industries:
 Means heredity
 Engaged in breeding plants and animals
 Their use in further reproduction
 Example: cattle, breeding, farming

10. Cont…
3. Manufacturing industry:
 Engaged in producing goods through the creation of utility
 Engaged in conversion or transformation of raw materials or semi-finished
products into finished products
 Goods supplied by the extractive industries are used as a raw material for
manufacturing industry
 Example: textile, jute, sugar, cement
 Further sub-divided as follows:
a) Analytical industries
b) Synthetic industries
c) Processing industries
d) Assembling industries

11. Cont……
a) Analytical industries:
 Analysis of one kind of basic material and after separating a number of products
are obtained from the same material
 Example: crude oil is extracted from beneath the earth and is processed and
separated into petrol, kerosene, gasoline, lubricating oil, etc.
b) Synthetic industries:
 Two or more materials are mixed together in the manufacturing operations to
obtain some new products
 Example: soap, cement, paints, fertilizers and cosmetics
c) Processing industries:
 Raw materials are processed through a series of manufacturing operations making
use of analytical and synthetic methods.
 Example: textiles, sugar and steel

12. Cont….
d) Assembling industries:
 Finished products can be produced only after various components have been
made
 Brought together for final assembly
 Example: automobiles, watches, televisions, bicycles, railway wagons, etc.
4. Construction industries:
 Making or construction of buildings, bridges, dams, roads, canals, etc.
 Use the products of manufacturing industries such as iron and steel, cement,
lime, mortar, etc.
 Products are not sold in the sense of being taken to the markets.
 Constructed and fabricated at fixed sites

13. Commerce
 An organized system for the exchange of commodities
 Distribution of finished products
 Evelyn Thomas “Commercial occupation deal with the buying and selling of
goods, the exchange of commodities and the distribution of the finished
products.”
 James Stephenson “Commerce embraces all those processes which help to break
the barrier between products and consumers.”
 Engaged in the removal of hindrances of person (trade), place (transport and
insurance) and time (warehousing)
 In the exchange (banking) of commodities.

14. Components/subdivisions of commerce
1. Trade
2. Aids to trade
1. Trade:
 Buying and selling of goods
 Purchase goods to be sold to other trades or consumers at a profit
 Intermediaries between producers and consumers
 Buys those goods which are in demand
 Likely to find response in the market
 Hold them in the store and sell at appropriate time
 Able to get good margin of profit

15. Classification of trade
A. Internal trade
B. International trade
A. Internal trade:
 Also known as home trade
 Buying and selling done within the boundaries of the country which may be
a) Local trade (goods are purchased and sold at particular place)
b) State trade ( goods are traded only in a particular state)
c) Interstate trade (goods are bought and sold from one state to another state)
 Payments involved in trading are made in nation‟s own currency directly or
through the banking system

16. Cont…….
 Internal trade may be further sub-classified as follow:
i. Wholesale trade
ii. Retail trade
i. Wholesale trade:
 Buy the goods in large quantities
 Directly from the manufacturers
 Sell them in smaller quantities to retailers
 Direct contact with the consumers
 Link between manufacturers and retailers
ii. Retail trade:
 Goods are distributed in small quantities
 Final stage in distribution of goods
 Involves direct selling to the ultimate consumers
 Who deal in retail sale of goods are known as retailers
 Conducted through shops, department stores, multiple shops, co-operative stores, super
bazars, vendors etc.
 Direct link between manufacturer and/or wholesaler and consumer

17. Cont……
B. International trade:
 Foreign trade and external trade
 Goods or services are exchanged between two or more then two countries
 Making payments in the currency of the country concerned called foreign
exchange
 Movement of goods is done through international system of transport
 Vital role in the economic development

18. Cont…..
 Classification of foreign trade:
i. Import trade
ii. Export trade
iii. Entrepot trade
i. Import trade:
 Brings goods from foreign countries to his own country
 Example: India brings goods from Japan, USA, or any other country
ii. Export trade:
 Goods of one country are sold to other countries
 Exchange: India sells goods like drugs, cloth, readymade garments, tea, coffee, etc.
iii. Entrepot trade:
 Re-export trade
 Import of foreign goods of one country with the idea of exporting the same to other
countries and making profit in the process
 Example: India imports goods from Singapore, Japan and China
 Sells the same to any other country with a margin of profit

19. Cont…..
2. Aids to trade
i. Transport
ii. Warehousing
iii. Banking
iv. Insurance
v. Packing
vi. Advertising and publicity

20. Cont……
i. Transport:
 removes obstacle of place
 Carrying goods and persons from one place to another
 Increasing the mobility of goods, workers and capital
 Help in stabilizing the prices
 Modes of transport available which include road, rail, air, water, pipeline
transport etc
 Railways are most effective means of mvement of goods because:
a. Cheaper for bulky goods for long distance
b. Goods are more safe
c. Government controlled so the freights are less

21. Cont……..
ii. Warehousing (storage)
 removes the hindrance of time
 Place where goods are stored
 Proper conditions and to ensure continuous and unrestricted supply of goods
 Keeping, holding and preserving used at a later stage
 Process is done at a large scale and in a specialized manner
Need and importance of storage:
 Goods are not immediately sold so unsold goods will stored
 to ensure uninterrupted production
 Advantage of bulk buying
 Anticipation of demand
 For wholesalers as well as retailer for regular supply

22. Cont….
iii. Banking:
 Removing the hindrance of finance
 Life blood of any business
 Without finance it is not possible to run market activity
 Need for the purchase of machinery, raw materials, carrying production
operations, meeting transportation, storage and insurance expenses
 Raised from own sources, commercial bank, shares, debentures, financial
institution, trade creditors etc.
 Facilities of overdraft, cash credits, discounting of the bills of exchange

23. Cont…..
iv. Insurance:
 Removes the hindrance of risks
 Examples: fire, accidents, theft, storm, floods, earthquake, price reduction,
changes in demand and supply conditions, non-recovery of credit sales, etc.
 Risks due to natural calamities like pests, rain, hailstorm, lightning, fire,
floods, drought etc.
 Losses due to dishonesty, strikes, lockouts
 pilferage can be minimized by developing cordial relations and understanding
between employers and employees

24. Cont…..
v. Packaging:
 Removes the risk of spoilage
 Retain their therapeutic effectiveness from the time of their packaging
 Art and science
 Preparing the articles for transport, storage, display and use

25. Cont…..
vi. Advertising and publicity:
 Removes the hindrance of knowledge or information gap
 About the availability and uses of goods between trades and consumers
 Create demand and to increase the sales
 Methods are: T.V., radio, newspapers, magazines, wall posters, pamphlets, free
samples, trade fairs, exhibitions, balloons and window display, etc.