Objectives

At the wind of the study (lesson) students should be able to
i. To define Trade
ii. Identify the types of Trade
iii. Know the differences between the foreign trade and home trade.
iv. Know the similarities between foreign trade and home trade.

Introduction

Presentation:

Step 1

Definition of Trade:

Trade is defined as the process of buying and selling of goods and services on the market.

Step 2

Types of Trade

Trade is divided into two types namely;

Foreign Trade also known as International trade or external trade
Home trade also know as internal trade or domestic trade.

i. Foreign Trade:

This is the type of trade that involves the buying and selling (exchange) of goods and services between two or more countries.

ii. Home trade:

When selling and buying (exchange) of goods and services is done within a particular country this process is known as home trade or internal trade.

Step 3

Differences between foreign trade and home trade.

Foreign trade involves the exchange of goods and services across countries. While home trade involves the exchange of goods and services within the borders of a country.
Foreign trade requires interpretations of languages due to process that each country speaks a different language. While in home trade, a common language is used.
In foreign trade different currencies is use and this causes problem in an exchange rate to arise. While in home trade the same currency is use for the exchange of good and services.
In foreign trade, cable transfer and letters of credit are the most suitable means of payments. While in home trade cheques are the most favorable means of payment.
In foreign trade transports cost due to distance between buyers and sellers. While in home trade there is low transport cost due to the process that it is done within the country.
In foreign trade there is trade barriers like quotas and custom duties on both export and import of goods and services. While in home trade there is no such barriers.

Step 4

Similarities between foreign trade and home trade.

Both foreign trade and home trade involves the use of money as the medium of exchange.
Foreign trade and home trade has the same objective which is to make profit.
Foreign trade and home trade both involves the activities of middlemen.
Both trades involves the buying and selling of goods and services.
Both, home trade and foreign trade depend very much on aids to trade such as transport, insurance, finance, warehousing, etc.

Evaluation:

i. What is trade?
ii. Explain the types on trade.
iii. List the differences between home trade and foreign trade.
iv. What is another name for home trade and foreign trade.