Lesson Note

Subject: Commerce

Topic: Meaning, Scope and Importance of Commerce

Lesson Summary/Discussion

Commerce can simply be defined as all the activities involved in the distribution and exchange of goods and services. In other words, commerce is a branch of production which is concerned with the distribution, exchange of goods and services and all activities which assist or facilitate trade, e.g. banking, insurance, transportation,
communication, tourism etc. It is the process of buying, selling and distributing goods and services.
The process of living involves three major activities which are production, consumption and exchange. The central focus of commerce is exchange. In a commercial sense, exchange would concentrate on the transfer of goods and services from their producers to the customers.
Commerce is therefore concerned with trade and activities which assist trade. These include the distribution of raw materials to manufacturers and finished products from the factory to the consumers. Commerce involves time, place and utilities. Commerce developed as a result of specialisation.

The scope of commerce may be seen as embracing the totality of all activities which ensure the distribution and exchange of goods and services for the satisfaction of the people. In all ramifications, commerce embraces trade and the ancillaries or aids to trade.

The scope of commerce can easily be
illustrated by a diagram. It can therefore be said that the different
activities engaged in by people in commercial Occupation include:

  • Trading
  • Transporting
  • Warehousing
  • Banking
  • Insurance
  • Advertising
  • Communication
  • Tourism


  1. Mass Production of goods and Services: Commerce facilitates mass production and thus people all over the world can enjoy goods and services produced both within and outside their countries.
  2. Raising of Capital: It facilitates the raising of capital for individual needs and investment through the services of banks and other financial institutions.
  3. Employment Opportunities: It offers employment opportunities to a large number of people such as traders, bankers, insurance brokers, etc.
  4. Transport: It assists in moving people, raw materials and finished goods from production points to consumption points through transport.
  5. Warehousing Functions: It facilitates the storage of goods until they are needed, thus bridging the gap between demand and supply in the market.
  6. Unity Among Nations: It fosters unityy among nations thus, nations become interdependent as they engage in trading activities.
  7. Improvement in Standard of Living: The availability of variety of goods and services leads to improvement in standard of living and quality of life of people.
  8. Risk bearing: The availability of insurance companies encourages entre-preneurs to venture into various business activities.
  9. Exchange of Goods and Services: It facilitates the exchange of goods and services. Commerce facilitates the exchange of goods and services through transportation (road, rail, sea, air) and telecommunication services.
  10. Creation of Public Awareness: It makes the public aware of the availability of goods and services through advertising.
  11. Linkage of Buyers to Sellers: Commerce through communication links buyers and sellers together to do business without physical contacts.
  12. Creation of Wealth for Nations: Commerce helps to create wealth for nations, as duties are charged on goods and services either exported or imported.

Lesson Evaluation/Test

  1. Define commerce.
  2. Mention the scope of commerce.
  3. List and explain the importance of commerce.