COMMERCE LECTURE 1
Good day all! Welcome to the introductory class to commerce. Commerce is a subject which covers all the processes after the manufacturing of a product, till the time it is in the hands of the primary consumer! Or in other words it is a process of exchange of goods and services.
Our first topic is production. Production relates to the activities which are necessary in order to satisfy the wants of mankind. These wants can broadly be divided into two categories:
- Goods: tangible things such as food, cars, clothes etc
- Services: intangibles such as entertainment, health care etc
The process of production is rather complex, but for clearer understanding, we can divide it into stages.
Primary production: relates to extractive industries, i.e. those concerned with obtaining the direct product of nature e.g. fishing, farming, mining etc.
Secondary production: relates to the industries which convert natural products into useful, finished good e.g. ship builder, construction site worker etc.
Tertiary production: relates to the distribution of the finished goods to end consumer e.g. wholesaler, banker, importer, retailer.
To study this process, let us take the example of wood. The clearing of wood in forest would be a primary activity. The transportation of the logs of timber to the workshop and conversion into furniture would be secondary production and finally, placing the furniture in a well reputed shop and advertising it on T.V would be tertiary production.
Did you notice something? Initially, the logs of wood had little financial value, but when they were sold as the end products their value had increased. This is true for every chain of production: the value increases with each stage.
Can you think of another example to illustrate the chain of production?
- Division of Labor:
Breaking down jobs into small tasks so that one person concentrates on one task only and does not make the whole product.
Listed below are a few advantages and disadvantages of division of labor:
|Well paid workers||Boring and repetitive|
|Suitable for workers who don’t want responsibility||Loss of skill and craftsmanship|
|Increases output as tasks done quickly||Less satisfied workers|
|Enables mechanization||Long working hours|
|Economies of scale are obtained||Poor working conditions|
|Over all lower costs of products||Limited range of tasks|
|Workers can concentrate on one aspect of production||Stoppage at one point in chain can affect the entire process|
|Allows for wide range of products to be produced||Lack of individuality|
|No shortage of products||Boredom amongst workers|
|Cheap||High cost of plants and machinery|