Introduction to Commerce and the Scope of Business
Commerce is the branch of business that moves goods and services from producers to final users. The O-Level paper tests whether you can separate industry (the making of goods) from commerce (their distribution), name the branches of trade, and explain each aid to trade with a Cameroonian example.
Industry versus commerce
Industry is concerned with production: extractive (mining, quarrying, farming), manufacturing (ALUCAM smelting aluminium at Edéa), construction (roads, houses) and genetic (breeding, fishing, forestry). Commerce begins only once the good exists, and covers trade plus the aids to trade.
Branches of trade
- Home (domestic) trade - goods bought and sold inside Cameroon: wholesale (CICAM selling cloth in bulk to a Douala trader) and retail (a kiosk in Bonabéri selling sachets of water).
- Foreign (international) trade - import (bringing in machinery), export (shipping cocoa to Europe) and entrepot (importing goods solely to re-export them, e.g. sugar resold to Chad).
Aids to trade
Banking (payment and credit), insurance (risk transfer), transport (movement), warehousing (storage until demand arises), communication (orders, market information), advertising (creating demand), and grading and packaging (protecting and standardising goods). Each aid exists because it removes one obstruction between producer and consumer.
Worked example
A cooperative in Kumba harvests cocoa, dries and bags it, sells it to a Douala exporter, who insures the consignment, trucks it to the Port of Douala and is paid through Afriland First Bank.
- Harvesting = industry (extractive/agricultural).
- Drying, bagging and grading = an aid to trade.
- Sale to the exporter = home trade at wholesale level.
- Insurance, transport and banking = aids to trade, not trade itself.
- The exporter's onward sale abroad = export trade.
Traps that cost marks
- Saying commerce includes production; commerce only distributes.
- Treating transport, banking or insurance as trade - they are aids to trade.
- Calling entrepot the re-export of locally made goods; entrepot goods are imported and re-exported unchanged.
- Giving a definition with no named commodity, firm or country.