Hello guys!
Hope, you all are not bored with my business related blog, because this blog is also related to business. The topic of the blog is Home trade. Well in this blog, i'm going to mention the definition of trade, its types and advantages, disadvantages of home trade. Let's start with the trade.
TRADE:
"Trade is an activity of buying and selling of goods for money or other goods".
Exchange of commodities between individuals or groups either directly through barter system or indirectly through any medium such as money is called trade. Trade include all the transaction that could be buying and selling throughout the city, country or even worldwide are included in it. In other words, trade is the whole procedure of distributing the goods produced by different person ore industries to their ultimate consumers. It is, therefore said the trade is the process that can remove the hindrance in the exchange of commodities.
Trade also include three important person, off course without them trade is nothing. These are trader himself, then manufacturer and then consumer. Trader is a person, who buys goods from producers or other traders and sells these goods to consumers or other merchants. He serve like a bridge or develop a link between producer and consumer of goods.
A manufacturer is a person or group of persons, who are engaged in production of goods is called manufacturer. They also know as industrialists. They make arrangement to convert raw material into finished or semi finished goods. They earn profit by selling their product trough wholesalers and retailers in local and foreign markets. Well, as for consumer they are the persons who purchase a particular commodity to consume is known as consumer. His aim is to satisfy his desires and not a resale for making profit. It is notable that all trade activities are performed to deliver the produced goods to consumers.
Now, onto types of trade. they are two types of trade
· Home trade
· Foreign trade
Home trade:
In home trade, exchange of goods or purchase or sale is conducted within the boundaries of a particular country. Seller and buyer relate to the same country. It is also known as domestic trade. All the retailers, wholesalers, organization or anyone supplying consumers with commodities within the boundaries of a country, this process is known as home trade.
Foreign Trade:
Trade or exchange of goods and services between two or more independent countries for their mutual advantages is described as foreign trade. It include import and export of commodities between the producer and consumer of different countries. Foreign or international trade is an integral part of economy and plays a vital role in economic growth and social welfare of a country.
Now, onto advantages and disadvantages of trade.
Advantages of Home trade:
Well, i'm going to mention a few of advantages of home trade.
Creates More Demand:
With goods available to everyone, the demand of the goods increase. It could be said as, a good product commercializes itself. Home trade creates the demand of locally produced goods which lead to increase in production.
Employment opportunities:
With the expansion in home trade, the problem of unemployment can be solved. Because the people involved in this trade get the employment as owners and there is always a limit to what a man can do alone.
Free Movement of goods:
There is no restriction on the movement of goods within the country, so the goods can be sent freely anywhere in the country, so the goods can be sent freely anywhere in the country which make home trade easy.
Local currency:
In home trade, domestics currency is used for the receipt and payment. Hence, there is no problem of dealing with foreign exchange, as the transaction of commodities is done for their own currency.
Easy transportation:
Since goods are transferred from one place to another within the boundaries of a particular country, so local transport can easily availed for this purpose.
Availability of goods:
With the help of domestic trade, various commodities can be made availability in different areas of country. Due to this the people do not face any problem to get their required goods and a lot of time is saved.
Price stability:
With the help of domestic trade, shortage of goods can be removed by transferring them form the area having surplus. With the smooth flow supply of goods prices remain stable and equal throughout the country.
Equal facilities and restriction:
All the facilities provided and restriction imposed by the government are the same for each trader in domestic trade. No one can have favourable advantage or undue disadvantage.
Medical facilities:
Due to home trade the supply or availability of medicines is easy to make and maintain. For example the easy availability of medicine on clinics, health clubs, medical stores and even on small shops is possible with the help of home trade.
Low cost of production:
In the presence of home trade, producer can purchase raw material and other factors of production at low prices from that area where these are availabilities at cheaper rates. Having cheap raw materials and other means of production, the goods can be produced at lower cost to compete in the market.
Industrial development:
The growth of home trade provides better opportunities for industrial development. Industries are facilitated by consumption of their products, providing raw materials, machinery.
Agricultural development:
In agricultural countries, domestic trade play a vital role in agricultural development. Agricultural development. Agricultural development is based on the availability of latest technology, seeds, fertilizers and pesticides. All these requirements are easily availability in the whole country due to home trade.
Disadvantages of home trade:
Although there is a variety of advantages or merits of home trade but it also has certain following demerits.
Drugs:
Sometimes, with the help of domestic trade, drugs are spread throughout the country, which are dangerous and harmful for human health. All the drugs dealer engaged in domestic trade.
Weapons:
Expansion of home trade, sometimes facilitates the availability of dangerous weapons, Which is against the peace and national integrity.
Black marketing:
The traders may get involved in black marketing which means to have unnecessary shortage of consumer goods with a view to exploit consumers by increasing the prices of such commodities. This activity is un-Islamic and against the public interest.
Monopoly:
If individual has monopoly on production or distribution of particular commodities then it can become a source of exploitation for consumers because the producers or traders charge maximum prices.
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