Definition of Trading/ definition of trade?
The term trade refers to the business through which goods and services are bought and sold, and trade is one of the branches of business, and trade may take place within a narrow scope within the local market, or outside the borders of the country, and one of the parties to trade may be people, companies, or countries, and specializes Trade is the process of distributing the goods produced, and the term trade includes systems that are applied locally and internationally, including legal, political, social, economic, cultural, and technological systems. different countries,
Trade is affected in terms of transporting goods from one place to another with some advantages that guarantee its continuity and expansion, such as geographical, technological, and economic advantages, and some peoples were distinguished from others by trade because of these advantages.
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The emergence of trade
Trade is closely related to civilization, as trade appeared with the civilization of humans and the expansion of needs and was not limited to food, drink, and housing.
Trade is one of the multiple means that people used to meet their different needs, as the country cannot provide all its needs from the local internal market, so It needs to exchange goods between it and other countries, and trade also arose due to other conditions and factors that govern the country and make it difficult for it to produce everything it needs, and these factors include the shortage of coal, the shortage of wood, the lack of raw materials, and the climate.
Trade depends on the labor and skills that are mastered, it is possible to have raw materials and the skill of manufacturers in a country, and a country may lack these two elements, while the skill of navigation is available to be a carrier of goods, and the country may combine all the elements, the shores of the Mediterranean were the center The main trade in the world.
Main Trade Elements
Any business process needs integrated main elements that make it a successful operation, which is as follows:
- Preparation: by doing a comprehensive study that includes knowing the success rate of trade in the market, and exploiting its chances of success. This study is based on observation, research, testing ideas related to trade, establishing a financial portfolio, and commercial planning.
- Performance: The application of the study that was prepared in the preparation phase on the ground, by starting a commercial activity, taking into account giving trade its appropriate volume in the market, forecasting potential risks and the ability to avoid them, and the ability to adapt to the market and its fluctuations.
- Review: Any study of financial transactions, whether individual or comprehensive trading at the market level, and this step is important to assess the situation, and correct ideas about the market based on the successes and mistakes that occurred previously.
- Reorganization: by applying the new ideas of trade that were reached through the review, and avoiding the mistakes that existed in the past; The new performance is better.
Internal trade The concept of internal trade expresses the commercial operations in which goods are traded between traders in the local market within a specific geographical area. Internal trade is divided into two types, which are as follows:
– Wholesale trade
The amount of goods traded in this type is large, as the wholesaler buys large quantities of goods from its manufacturers, and then sells them to retailers, who in turn sell them to consumers, where the wholesaler forms the link between producers and retailers.
- Wholesale trade: the amount of goods traded in this type is large, as the wholesaler buys large quantities of goods from its manufacturers, and then sells it to retailers, who in turn sell it to consumers, where the wholesaler forms the link between producers and retailers.
– Foreign trade
The concept of foreign trade expresses the commercial operations in which goods are traded between two different countries. Foreign trade is divided into three types, which are as follows:
- Export trade: This trade refers to the activity in which goods are sold from within a country to outside its borders.
- Import trade: This trade refers to the commercial activity in which goods are purchased from another country and brought to the home country.
- Transit trade: This trade refers to the commercial activity through which the goods are transported through an intermediary trader from the country of origin to another country; To be processed and then transported to the importing country.
E-commerce refers to commercial activities that take place over the Internet through the exchange of goods, buying, and selling, which is a digital version of shopping, as e-commerce provides everything consumers need, such as books, flight reservations, and various financial services.
Buyer’s shopping process; Where shopping is done at any time, it is also distinguished by the fact that it expands the circle of online shopping to include a greater number of stores and goods.
One of the undesirable things in e-commerce is that there is not enough customer service that helps the customer to obtain all the advantages of the product, and one of the things that the customer does not prefer is waiting for the goods to be shipped, and also the inability to inspect the item before buying it, and therefore the item may reach the customer on Contrary to his expectations.
E-commerce is divided into several types as follows:
- From companies to merchants (B2B): The process of selling goods in this type of e-commerce takes place from the company’s website to an intermediary person, often a wholesaler, who in turn sells these goods to consumers.
- From companies to consumers (B2C): Dealing in this type of e-commerce is direct between the company through its website and consumers without the presence of an intermediary party, by browsing the website, choosing his commodity, and ordering it directly through the company’s website.
- Consumer-to-consumer (C2C): In this type of e-commerce, buying and selling takes place between one consumer and another, through the publication of commodity information by one consumer on a website and its purchase by another consumer.
- From Consumer to Business (C2B): In this type of e-commerce, the consumer provides services to companies for an estimated amount of money based on the type of service.
- From companies to government (B2G): Dealing in this type of e-commerce is between companies and the government, where information is exchanged between companies and the government through government approved websites that give companies the ability to submit applications to the government.
- From Government to Companies (G2B): Dealing in this type of e-commerce is between the government and businessmen, but government-approved websites are dedicated to auctions, bids, and job applications.
- From Government to Citizen (G2C): The interaction in this type of e-commerce is between the government and the citizen; With the aim of saving citizens’ time to obtain government services through government websites.
The Importance of Trade
Trade is of great importance in different societies. Among the benefits of trade are the following:
- Trade fulfills the basic needs of people, by transporting goods from anywhere in the world to any other place.
- Trade helps to improve the standard of living of individuals, as it provides goods of various kinds and makes them within reach, as it provides them at the time, place, and price that suits the individual.
- Trade links the consumer and the producer, where the consumer is informed of the latest products and goods through advertisements on the goods, and the producer obtains the consumer’s reactions through opinion polls conducted on the process of marketing the goods.
- Trade helps reduce unemployment. The more trade develops, the more commercial companies need employees; This increases job opportunities.
- Trade contributes to increasing the national income of a country; Which makes it richer.
- Trade helps boost production.
- Trade develops the industrial sector.
- Trade contributes to the development and development of countries.
- Trade brings together people of different cultures and languages.
- Trade helps people move around in different places.
- Trade brings technology closer to people.
- Trade helps transform raw materials into a finished product that is ready for use.
- Trade helps small-capital owners start their businesses.
- Trade increases the well-being of societies by providing high-quality luxury goods.
- Trade encourages each country to distinguish its products that can be produced at the lowest cost, most effective and efficient.
- Trade encourages each country to limit the types of goods it produces, thus increasing its production capacity for these goods.
- Trade contributes to creating competition between markets; Which leads to a decrease in global prices of goods, and thus increases the purchasing power of the consumer.
- Trade eliminates the monopoly of local markets for goods; By finding competition with foreign companies.
- Trade improves the quality of goods and helps the emergence of advanced, innovative, and manufactured goods with the best technology.
There are many negatives to trade, especially international trade, and among these negatives are the following:
- International trade is affected by political conditions, especially if this trade is a trademark, or a business subject to the Trans-Pacific Partnership (TPP), where government decisions are constantly changing; Because of the successive change of governments.
- International trade is exposed to exchange rate fluctuations; Because of the focus on presenting products in new markets, which leads to the difficulty of predicting the market’s revenues, and thus the difficulty of making a correct budget, and this sometimes leads to huge losses in revenue, as the change in the value of foreign currency destabilizes the competitive position of the brand.
- Standards and standards differ from one culture to another, as international trade is affected by different cultures, especially if it is a brand. It is possible that the standards and controls for a particular culture conflict with something related to this brand, such as: the external appearance of the commodity and the way it is presented.
- Some companies and brands avoid paying at the beginning of trading through international trade, so they avoid the risks of not paying by credit, and thus international trade is exposed to credit risks, as credits affect the percentage of sales in the market, and these risks can be avoided through brand insurance or adoption.
- International trade is under constant threat of theft of one brand’s marketing information and concepts by another.
Trade is divided into several branches in the form of related activities. These activities are summarized as follows:
- Exchange of goods: Trade is a chain that starts from the producer and ends with the consumer, where the producer searches for people who are interested in the goods and want to buy them at an appropriate price, and because of the difficulty of direct communication between the producer and the final consumer sometimes; Wholesalers and retailers existed as intermediaries to complete the trade.
- Transportation: Transportation is the appropriate means to remove the impediment of place, as the distance between production centers and consumption centers is an obstacle to the arrival of goods from the producer to the consumer; Therefore, various means of transportation were found to remove this obstacle, to shorten distances, and these means: roads, railways, maritime transport, and airlines.
- Storage: Storage is the appropriate means to remove the time obstacle that arises between the time of production and the time of consumption, as some goods are produced in specific seasons to be consumed at any time of the year, such as sugar and wheat, and some goods are produced throughout the year to be consumed in seasons specific, such as woolen clothing, cooling supplies; Therefore, goods are stored in warehouses until they are ordered.
- Insurance: Insurance is the appropriate means to remove the obstacle of threat and risk, as goods are exposed to various forms of threat, such as theft, burning, and climatic conditions, and by ensuring goods through various insurance policies, this obstacle is eliminated.
- Banking services: Banking services are the appropriate means to remove the obstacle to financing and facilitate exchange, as the process of exchanging goods is subject to several factors, namely: the time factor, the time factor, and the price, where banks provide loan services (Loans) and overdrafts to eliminate Financing impediment, money is also transferred from one person to another using banking services, and banks play a vital role in making and receiving payments in international trade.
- Advertising and marketing: Advertising and marketing is the appropriate means to remove the barrier to knowledge, where ignorance of the existence of certain goods and the way they are used limits their exchange. Therefore, advertising campaigns are launched to introduce the products and their uses; This is to bring customers to the showrooms, thus enhancing the exchange process.
The most famous international trade organizations
There are a large number of international trade organizations that attract the smartest minds in the fields of trade and business, and these organizations include the following:
- World Trade Organization (WTO): The world’s leading trade organization in international trade, where international trade policies are negotiated.
- International Chamber of Commerce (ICC): The International Chamber of Commerce aims to encourage global business by inviting countries to improve the standard of living of their citizens in a peaceful environment.
- International Association of Communication Workers (IABC): This organization connects communication professionals, encourages career development, and sets communication standards around the world.
- International Business Organization (IBO): This organization provides services to the international community, where its services are concerned with matters related to commercial activities.
- Federation of International Trade Associations (FITA): Through this federation, information is exchanged between international business websites on the Internet, where this communication increases the ability of websites to conduct their trade within ethical and legal standards.
Definition of Trading?
Definition of Trading/ definition of trade?