Home Trade | High School Business Studies Form 1 Notes

i. Helps people to acquire what they cannot produce
ii. Avails a variety of goods and services thereby improving the peoples living standards
iii. Creates an outlet for goods thereby enabling the producers to dispose of their surplus produce
iv. Creates employment opportunities
v. Encourages specialization and division of labour
vi. Promotes peace, social relations and understanding the parties involved since they depend on one another
vii. Provides revenue to the business and the government in form of taxes and fees charged on the various trading activities
viii. Ensures steady supply of goods and services
ix. Exploitation of local resources as traders create goods and services using locally available resources
x. Encourages economic growth and development

i) Home trade - buying and selling of goods and services within the boundaries of a given country. It is further divided into retail trade and wholesale trade.

ii) International trade (foreign trade) - carried out beyond the boundaries of a country.This is trade carried out between individuals or government of different countries. International trade carried out between two countries is referred to as bilateral trade and international trade carried out among many countries (more than two countries) is referred to as multilateral trade.

International trade is classified into the following:
i) Export Trade - sale of goods and services by a country to another country or individuals in one country to another country or individuals in one country to individuals in another country.
ii) Import Trade - buying of goods and services by one country from another country or by individuals in one country from individuals in another country.

Retail Trade

- Retail trade involves the buying of goods and selling them to the final consumer
- Retailers are classified/categorized according to the amount of capital they need to start and operate their businesses and their sales volume
- Can be classified as Small Scale Retailers or Large Scale Retailers.

Small Scale Retailers

These are retailers whose capital requirement is low and their sales volume also low.

Large Scale Retailers

- Retailers that require large amounts of capital to start and maintain their businesses.

Functions of Retailers

To Consumers

i) Offers credit facilities
ii) After-sales services
iii) Provision of variety of goods
iv) Advising consumers on choice and use of products
v) Availing needed goods
vi) Breaking bulk by selling goods to consumers in convenient quantities
vii) Accumulating bulk
viii) Stabilizing prices by ensuring that goods are continuously available to consumers

To wholesalers

i) Retailers store goods and relieve the wholesalers the burden of storing goods and the storage costs
ii) They relieve the wholesalers the burden of transportation
iii) Retailers advice wholesalers on market trends(on consumers demand)and give valuable information
iv) They help in distribution of goods to the consumers
v) They help in breaking bulk on behalf of the wholesaler
vi) They finance wholesalers to continue with their operations through paying for the goods
vii) They relieve the wholesaler of some risks that arise from the storage of goods such as theft, fire and accidents.

To producers

i) Through wholesalers retailers provide very vital information to manufactures about market demand
ii) They advertise goods on behalf of producers
iii) They sell and market goods to consumers relieving manufactures the task and risk of retailing
iv) They store goods on behalf of the producers
v) They break bulk on behalf of producers to consumers
vi) They finance producers by buying and paying cash

Wholesale Trade

Wholesaling involves selling goods in large quantities to traders for resale.

- written record which gives evidence that a trade or a business transaction has taken place
- A business transaction is a deal between two or more people involving exchange of goods and services in terms of money.
. Cash Basis - goods are paid for before or on delivery or a short while after delivery.
. Credit Basis - payment is made after a specified period from the date of delivery of the goods or the provision of the services.

- Methods or ways the buyer may use to settle debts arising from a business transaction
They can be grouped into:
i) Cash
ii) Means of payment provided by the post office
iii) Means of payments provided by the commercial banks
iv) Means of payments which arise from private arrangements between sellers and buyers
v) Other means of payment.

- various agreements/conditions agreed upon between sellers and buyers regarding how debts arising from their transactions should be settled.
It can be classified into:
A) Cash payments - applies when a buyer is required to pay for goods or services immediately before or after delivery
B) Deferred payments(credit payments) - that goods or service are not paid for in full on delivery. They are instead paid in future in a lump sum or in several instalments.