1st Year Principles of Commerce Notes Ch# 14

Export

Discuss the Procedure of Export

The procedure of export trade is as follows:


1. RECEIVING THE ORDER

The first stage in the export trade is the receipt of an order from a foreign merchant. the order directs the exporter to forward certain goods. The order should give the necessary instructions, such as marks, number, mode of forwarding, insurance, quantity, quality, size etc and also the prices which the importer is ready to pay for the commodities.


2. EXPORT LICENSE

It is required to be taken by the exporter from the Chief Controller of exports and imports. Export license is a permission from the government for the export of certain goods. The export license helps the government in regulating and controlling the exports of a country.


3. WRITING TO THE IMPORTER FOR THE LETTER OF CREDIT

Before the exporter arranges for the shipment of goods, he asks the importer to open L/C in his favour with the bank. L/C is a security given by the issuing banker that the exporter will be paid for the goods exported by him. It authorizes the exporter to draw bills of exchange on the banker for receiving payment and the bank permits their honour.


4. ASSEMBLING THE GOODS

When L/C has been opened, the exporter will proceed to collect the goods. He will send the order to his warehouse for the goods for packing. If the goods are not in stock, he will purchase them from the local markets. The goods must be according to the order and all conditions should be duty followed.


5.PACKING AND MARKING THE GOODS

Packing is an important part of the export procedure and should receive due attention. Any instruction given by the importer bust be strictly observed. The measurements should be marked on the outside. In some cases gross weights are also indicated on the package.


6. APPOINTMENT OF A FORWARDING AGENT

The services of a forwarding agent can be taken for forwarding the goods. The forwarding agents are paid a certain commission and they undertake all the custom formalities on behalf of the exporter.


7. OBTAINING SHIPPING ORDERS

Shipping order is received from a shipping company by an application. In the application, the full particulars of commodities with the port of destination are given. The shipping company, carry the goods to the port of destination at a certain shipping order.


8. CUSTOM FORMALITIES

In export trade the following custom formalities are undertaken:

A) SHIPPING BILL

The shipping bill is a form containing the detailed description of goods such as marks, numbers, quantity, quality, country of destination and the name of the ship. It is available from the custom office and is filled up by the agent for paying the export duty. This form enables the custom officials to calculate the amount of duty.


B) DOCK DUES FORM

It is available from the lending and shipping office. It is filled up by the exporter or his agent by the payment because back authorities render some services regarding the export of the commodity.


9. LOADING THE GOODS AND GETTING MATE RECEIPT

After paying custom duty and dock charges, the exporter makes arrangement for loading them on the ship. The packages as they are received on the ship are counted and their packing is carefully examined. The captain at the ship then issues the receipt for the goods received and this receipt is called a mate receipt. A mate receipt is said to be claim, when it contains low, adverse remarks, regarding the goods. It is said to be dirty when it contains certain remarks regarding their defective packing.


10. BILL OF LADING

The exporter, after receiving the mate receipt presents it to the shipping company and obtains in exchange a document called Bill of Lading. The Bill of Lading can be transferred freely and it performs three functions:

1. It is an official receipt of the goods, placed on board the ship.

2. It is a contract to carry goods to the port of destination.

3. Its holder is entitled to take delivery of goods by presenting it on the port of destination.


11. MARINE INSURANCE POLICY

Certain goods are required to be insured before they are dispatched to a foreign country. Goods are insured with a marine insurance company and the policy is sent by the exporter to the importer.


12. CERTIFICATE OF ORIGIN

This is the certificate which shows the origin of the commodities being exported. That shows the origin of the country in which they were manufactured. Due to special trade agreements between certain countries goods sent from one country to another generally receives preferential treatment in respect of the import duties. Certificate of origin is obtained by the exporter for being sent to the importer, so that he must be able to get advantage of preference in import duty.


13. PREPARATION OF INVOICE

The exporter having shipped and having gone through all the formalities is now in a position to prepare the invoices. the invoice contains a detailed description of the goods shipped and the charges incurred.


14. RECEIVING PAYMENTS

The exporter generally receives payments by drawing a bill of exchange upon the bank where the importer has opened a letter of credit. He also attaches with it the necessary documents such as Invoice, Bill of Lading, Marine Insurance Policy, Certificate of Origin etc. When all these documents are sent with the Bill of Exchange, it is called documentary of Bill Exchange.

1st Year Principles of Commerce Notes Ch# 13

Marketing

DEFINITION OF MARKETING

The term market and marketing are often very really used in ordinary since but it has different meaning in commerce. marketing includes business activities involved in the flow of goods and service from production to consumption.

Mr. C.C Knight says: “ Marketing embraces all those efforts made in the discovery of consumers actual and potential requirement for the commodities and service and the steps taken fro securing their adequate distributing”

According to Prof. Hall “ the word marketing describes number of association activities which move towards a common objectives: the determination of consumer demand for sale and distribution of goods and services”

In simple words all those business activities which effect the transfer of ownership of goods and services and provide for there physical distribution come within the scope of marketing. Marketing activities may be divided into two main groups;

1.those which effect the transfer of title of the goods 2. those which are involved in the physical distribution of goods from one place to another.

Market creates time, place and possession utility. It is for their creation that study is becoming more and more important every day.


NATURE AND SCOPE

Marketing is a very comprehensive term and include all efforts to

1. discover the present and potential requirement of consumer.

2. the evolution of the product which would satisfy those requirements.

3. all the effective methods of production distribution

4. all the efforts to improve and modify the products.

FUNCTION OF MARKET

Marketing function can be defined as fundamental activities or services carried out in the marketing process. These functions are performed by manufactures, marketers, wholesalers etc. However the functions are as follow.


BUYING:

Buying is an important marketing function for everyone connected with the distribution and consumptions of good. Generally the wholesaler buy from the manufactures, the retailers from the wholesalers and consumer from the retailers. The performance of this function involves the activities relating to determination of needs, selection of proper source of supply, date of shipment etc. the function also considers the quality of goods with prospects of high profit.


Selling:

The second important function is to arrange for the sale of goods. Selling involves a a wide Varity of task. These include the discovery of customers, introducing them with the available goods and encouraging them to purchase them to purchase goods. Selling add possession utility to commodities. Sometimes selling is a specialized function as in case of brokers auctioneers and other sales agent who don’t handle the goods at all but merely serves as a connection link between buyer and sellers.


Advertising:

The age of competition compels the seller to be alert in the creation of demands for their goods through auxiliaries like advertisement and salesmanship. The main objective is to draw attention of a large number of people to the products and to convince them of the excellence of the product. As a result the number of consumers increases. Without publicity the goods may not be noticed and marketing may come to stand still.


Transportation:

It creates place utility. In order to have goods must be transported from one place to another. To a very great extent the marketing system is built up upon economical and effective transportation. For the distribution of goods over a wide area, effective transportation must be available. and it should be adequate to meet the normal demands. Therefore, the efficiency of marketing depends upon quick and cheap means of transportation. With the increase in the distance between the producer and consumer the importance of transportation has further been increased.


Storage and warehouses:

Storage of good is an another important function of marketing. In many lines of business goods are produced considerably in advance of their consumption. Storing creates the utility. Because marketers often maintain extensive inventories, the consumers desire to buy is satisfied without waiting.


Standardization and grading:

It determines the form and classifies goods according to their quality. The producer standardize his goods according to the requirement of the market. It saves the time of consumers in selecting the goods. Consumer relay upon manufacturers that their goods are of uniform quality and of standard measure and size.

By grading we mean that actual sorting out the commodities according to established specification relating to size , quality , color , weight etc. Graded products facilitate buying and selling and the elements of risk is also reduced .


Financing:

It consist of the supply and management of money of money and credit. A considerable amount of time elapse between the production and the sale of good, during that period finance is required at every step. The whole marketing mechanism is based upon financing. The retailers demand credit from the wholesalers , the wholesalers from the producers and the producers from the banks and finance companies.


Risk taking:

The mere act of owning goods carries with it the burden of assuming certain risks in connection with them. Some of the risks involved relate to physical deterioration theft, damage , waste, change in demand or supply or price. It is possible to minimize some of these risk through shifting them to insurance company.


Packing:

Protecting goods from breakage, spoilage and leakage while they are being transported or stored is another important function of marketing process. Considerable efforts and research has been carried out in this fields as packing represents a vital and expensive activity.


Branding:

It is applicable to all identifying marks by which a manufacturer or wholesaler identifies his products. The brand enable the purchaser to know what he is buying.


Recording:

A considerable amount of recording is recording in order to know who made the purchase, the amount of investors. Therefore it is an important function.


Sampling:

In order to show goods to distant customers the producer has to adopt the prospect of sampling of the goods. It denoted the selection of apart of commodity from a bulk in such a way that it would be representative enough to render a correct idea about the commodity ti recipient of the sample.


Having Market Information:

It is important function and it is extremely helpful to both the consumer and the manufacturer. As markets for various articles are widening the importance of research and information in increasing. Producers are made aware of coming trends because marketers inform them of changes in consumers want supply and demand and the new market development, position of the computtors etc.


Salesmanship:

The chief objective of this stage of marketing process is to bring a potential buyer into contact with the seller. Thus this is also an important marketing function.

1st Year Principles of Commerce Notes Ch# 12

Retail Trade

INTRODUCTION 

It fulfills the requirements of the final consumer by placing the goods at his disposal for final consumption. it is the link between the wholesaler and final consumers. The retailers provide an opportunity of choices to final consumers amongst the variety of product kept by the retailer. He can also buy the goods in small quantities nearest to his door in accordance with his requirements
FUNCTION OF RETAILERS 

1. the retailers supply goods at the very door of consumers. The consumer need not to go far to purchase the good because retailers are situated at very little distance. He may bring the goods with himself or he may leave them with the retailers to be delivered at his place as soon as possible.
2. the greatest advantage of retailer is the stored goods and sell them in small quantities when the consumer requires. He thus relieves the consumers from the necessity of storing goods which may of them cannot do for the lack of resources.
3. he tries to study the taste of the consumers and keeps the goods likely be in demand. He again keep wholesale merchants in touch with changing fashion and tastes and thus enables those goods to be produced which are really in demand.
4. he keeps the large variety of goods manufactured by different manufacturer with a view to enable his consumer good choice and selection.
5. if the customer is dissatisfied by the good the retailers quite willingly makes good the complain.
6. he adopts diverse methods for reaching the customers. His beautiful display and scientific advertisement are very educative.


SMALL SCALE RETAILING

1. HOUSE TO HOUSE RETAILERS:
They are those who wander house to house selling their goods. Hawker and peddlers go into street, and different parts of the city in an effect to sell their goods. These person requires little capital and need no shop.

2. PART-TIME RETAILERS:
They are not regular retailers. They only sell goods from door to door in their spare time. they sometimes deal only in the seasonal goods and as soon as the season is over they stop selling the goods.

3. ORDINARY SHOPKEEPERS:
A large volume of retail trade is conducted by ordinary shopkeepers. They may be divided into small and big according to their scale of operations. Small shopkeepers require little capital and are established in lanes , unimportant streets. Big shopkeepers commands considerable capital and make shop in the most frequent areas in the heart of the city. Shop may be general or specialized. A general shop is the one where numerous varieties of goods of every day use are sold. A specialized shop on the other hand, is specialized in the sale of certain articles only for example fountain pens, jewelers shop.
LARGE SCALE RETAILING 

Now days, as the production of goods is done on large scale , the flow of good in the market is huge and varied. The distribution is also to be done on large scale. The flow of good in market is huge and varied. The distribution is also on large scale so as to reap the higher profits avoiding competition from small organization. When retailers purchase goods on large scale they save much as they can get many advantages from the wholesalers and manufacturers. Beside they can accumulate variety of commodities and thus attract the buyers. The large scale retailers are discussed as follows;
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1. DEPARTMENTAL STORES
Such stores requires investment of huge capital and involves considerable risk. The special features of this store is that they try to sell almost every considerable commodity of commerce, almost from an apple to an airplane. The store is divided into number of departments , suitated into the same roof, each department specializing in commodities of the nature. That is why it is known as the departmental store. it is thus an combination of large number of specialized shops, under unitary control. An attempt is thus made to supply to the customer all that he requires from this very place so that he may not require to visit any other shop.

ADVANTAGES 
The advantages of running a departmental stores are as follow;
1. The central side of departmental store gives it more advantages over a small scale retail store.
2. It provides efficient service to the customers like saving of time, car parking, telephone etc.
3. Such stores often create a demand for a commodity. A customer is sometimes induced to purchase other things also when finds them nicely placed in various section of store.
4. The price in departmental stores are less than in retailers shops because of the economy of large scale buying.
5. One department advertises for the other department.

DISADVANTAGES
1. The elaborated service provided by the store tends to increase overhead expenses.
2. The location of such stores ia sway from population residential areas. It is difficult for the large scale retailers enterprises ie departmental store to take away the share of profit of the small retailers because they are located in central parts of the city and the people living in the suburbs and the other parts may not be served.

2. MULTIPLE SHOP/ CHAIN STORE
Sometimes the manufacturer himself wants to eliminate all the intermediateries and reach consumers directly. This he does by opening multiple shops. Shops are opened in various parts of big cities and in all important cities in province or country. These shops are mean to sell only those goods in which the producer or manufacturer is interested. The range of commodities kept and sold is thus very narrow. The advantages accruing as a result of specialization are those of economy in buying together with speedy and larger turn over at lower price eg BATA shoe manufacturing company whose multiple shops are spread all over the big cities of Pakistan.

ADVANTAGES
The multiple shop system enjoys all the advantages which normally accrue to large scale enterprise namely , economies of buying in larger quantities, centralized and highly sufficient control and experts advertising of firm’s special lines. In addition to these there are the following advantages particular to multiple shops;
1. Shortages of stock at any branch may be made up by transfer from one branch to another.
2. A speedy turnover of stock is attain and be accentuated by studying sales figures to discover which of the goods are slow moving and then concentrating advertising effort on these items only.
3. As a result of speedy turnover, multiple shops are able to run their business at slightly lower cost than the other types.
4. As sales are made on cash basis , there are no bad debts and no expense of maintaining a large clerical staff.
5. The multiple stop benefits also from the fact that numerous branches can cater easily and efficiently for customers at comparatively short distance from their residence. The total number of its customers is larger than that of a single store or departmental store.
6. Each branch in itself is an advertisement for other branches and so long as the goods sold are of good quality in relation to the price, there is no limit to the number of branches that an efficient concern my control

LIMITATION
Multiple shops suffer two limitation. Firstly they have to meet heavy expenses. Much of the difference between their buying and selling prices is absorbed by high rents of big promises in busy streets, with rules proportionately higher and by provision for writing off the initial cost of new shop fronts and new equipment and by the maintenance of poorly paying branches in places where the trade is not enough. Secondly many managers and staff do not, without constant supervision, take the same interest in their duties as the proprietors would be.

3. MAIL ORDER BUSINESS

In mail order business goods are sold and delivered through the post and not across the counter. From buyers point of view, it may be describe as shopping by post. Payment is made by several methods, varying with the type of stores and customers standing. If the customer has an account, the goods are charged against it. If he is unknown the goods are supplied either on “ cash with order” basis or the goods are sent through the post office on cash on delivery basis. In later case the VPP( value payable post) system is utilized.
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ADVANTAGES
1. Expenses and expensive shop, fronts etc. Are eliminated.
2. The sales in direct touch with the buyers and therefore it is generally to know the demands of customers more easily.
3. Advertising may be more effectively carried out since the results may be checked up with fair accuracy.
4. The actual selling is reduced to routine the work being performed by low grade workers and hence cheaper labour.
The sales appeal may be designed by experts and is not dependent upon the capacity of individual salesman. The customer buys sitting at his home and therefore saves himself from botherations of different types.

DISADVANTAGES
1. The small retailer is still able to compete with mail order house in most lines and ho has “convincing appeal” in his varied shook.
2. All retail shops have the advantage of enabling customer to see and examine goods but mail order business may not provide the facility to their customer’s ordinal.
3. Heavy expenses on advertising increase the cost to the customer as compared with normal retailers.
4. Publicity through advertisement also include quality of goods; the wordings of advertisement often create confusion and also sometimes mislead the customer.
5. The sales appeal is stereotyped and may not be easily altered.
6. It is not easy to find causes of failure to affect sales nor is it easy to get the orders.