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Class 11 Business Studies - Chapter Business, Trade and Commerce NCERT Solutions | Describe the activities relating to comm

Welcome to the NCERT Solutions for Class 11th Business Studies - Chapter Business, Trade and Commerce. This page offers a step-by-step solution to the specific question from Exercise 2, Question 5: describe the activities relating to commerce....
Question 5

Describe the activities relating to commerce.

Answer

Activities relating to trade are summarized below :

  1. Transport and communication: Production of goods generally takes place in particular locations. For instance, tea is mainly produced is Assam; cotton in Gujarat and Maharashtra; jute in West Bengal and Orissa and so on. But these goods are required for consumption in different parts of the country. The obstacle of place is removed by transport- road, rail or coastal shipping. Transport facilitates movement of raw material to the place of production and the finished products from factories to the place of consumption. Along with the transport facility, there is also need for communication facilities so that producers, traders and consumers may exchange information with one another. Thus, postal services and telephone facilities may also be regarded as auxiliaries to business activities.

  2. Banking and Finance: Business activities cannot be undertaken unless funds are available for acquiring assets and meeting the day-to-day expenses. Necessary funds can be obtained by businessmen from bank. Thus, banking helps business activities to overcome the problem of finance. Commercial banks generally lend money by providing overdraft and cash credit facilities, loans and advances. Banks also undertake collection of cheques, remittance of funds to different place, and discounting of bills on behalf of traders.

  3. Insurance: Business involves various types of risks. Factory building, machinery, furniture etc. must be protected against fire, theft and other risks. Materials and goods held in stock or in transit are subject to the risk of loss or damage. Employees are also required to be protected against the risks of accident and occupational hazards. Insurance provides protection in all cases. On payment of a nominal premium, the amount of loss or damage and compensation for injury, if any, be recovered from the insurance company.

  4. Warehousing: Usually, goods are not sold or consumed immediately after production. They are held in stock to be available as and when required. Special arrangement must be made for storage of goods to prevent loss or damage. Warehousing helps business firms to overcome the problem of storage and facilities the availability of goods when needed.

  5. Advertising: Advertising is one of the most important methods of promoting the sale of products, particularly, the consumer’s goods like electric goods, automobiles, soaps etc. Most of these goods are manufactured and supplied in the market by numerous firms- big or small. It is practically impossible for producer and trader to contact each and every customer. Thus, for sales promotions, information must reach the potential buyers about the goods available it favours price etc. advertising helps in providing information about available goods and including customers to buy particular item.

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