Commerce

Disadvantages of foreign trade

len Alfred Ajibola - Wed, 18th December, 2019 @ 11:13 AM

Topics in Commerce

Principle of Marketing: People as a marketing mix and their importance Principle of Marketing: Positioning as a marketing mix Principle of Marketing: Packaging as a marketing mix Elements of promotion in marketing mix Principle of Marketing: Promotion as a marketing mix Principle of Marketing: Place as a marketing mix Principle of Marketing: Price as a marketing mix Principles of Marketing: The seven principles of marketing mix Factors necessary for division of labour Disadvantages of division of labour Advantages of division of labour Concept of Outbound Marketing Inbound Marketing explained Types of production in commerce Commerce: Definitions and Scopes of Commerce Differences between balance of trade and balance of payments Balance of payment deficit and balance of payment surplus Disadvantages of foreign trade Divisions of foreign trade Advantages of foreign trade


Academic Questions in Commerce

Please check out our Test Your Knowledge page to see all Questions and Answers

Whatever is being marketed must always provide value to its potential consumers.

  • A. True

  • B. False

Which of the following is not a branch of marketing?

  • A. Merchandising

  • B. Promotions

  • C. Forex

  • D. Search Media Optimization

  • E. Social Media Optimization

  • F. Copywriting

Which of the following is not a characteristics of commerce?

  • A. The only aim of commerce is to make profit

  • B. It is a discontinuous process after profit had been made

  • C. It is accompanied with challenges and uncertainties

  • D. It is 100% business and economic activity

  • E. Transaction processes are always involved in commerce

  • F. It connects the process of production and marketing

Which of the following is not a function of commerce?

  • A. Unnecessary in times of emergencies like earthquakes and wars

  • B. Facilitates mass production of goods

  • C. Influences transportation network within and outside a state

  • D. Attempts to satisfy human needs and wants

  • E. Improves the standard of living

  • F. Acts as an online business link between buyers and sellers

One of the following is a form of division of labour.

  • A. Agonistic division of labour
  • B. Antagonistic division of labour
  • C. Mutualistic division of Labour
  • D. Advanced division of labour
  • E. Solitary division of labour
  • F. Occupational division of labour

A place where people buy homogenous goods in large quantities is called _____.

  • A. Wholesaler's Market

  • B. Goods Market

  • C. Products Market

  • D. General Market

  • E. Commodity Market

  • F. Forex Market

Any activity aimed at getting people interested in a company's product or service is termed _____.

  • A. Commerce

  • B. Economics

  • C. Financial Accounting

  • D. Marketing

  • E. Production

  • F. Distribution

Which of the followings isn't a characteristics of commerce?

  • A. Commerce is solely aimed at making profit

  • B. Commerce is 100% business

  • C. Commerce is a discontinuous process because it eventually satisfies human needs

  • D. Commerce is accompanied by uncertainties

  • E. Transaction processes are always done in commerce

  • F. Commerce connects the processes of production and marketing

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Disadvantages of foreign trade:

Despite the many advantages that foreign trade (or international trade) has shown, it still has some of its setbacks.

Please read on the advantages of foreign trade here.

Below are the disadvantages of foreign trade:


1. Suppression of infant industries

An infant industry is defined as a new industry (in its developmental stage); and is likely to experience difficulties especially against established competitors abroad.

When goods, products and services are imported from abroad, infant industries will become suppressed and may eventually fold up.

You can read on production here.

Meanwhile, always understand that infant industries are crucial for the development of a nation.

 

2. Importation of substandard and harmful goods

Many people have died because of the drugs they had taken. This occurs in societies because the importers of such substandard drugs care only about making money, thus importing them into the country.

Please read on the disadvantages of money here.

In some developing countries, importers may bring in substandard car accessories like break pads and tyres, ultimately leading to the death of innocent citizens.

 

3. Potential suffering from the misuse of natural resources

An excessive export of natural resources to other countries will result to a gradual reduction of the natural resources until it becomes exhausted.

For instance, Nigeria is a major exporter of petroleum.

The current volume of petroleum in Nigeria is much lesser compared to what was present during its discovery. This is a result of constant exportation of petroleum.

The money generated from exportation should be judiciously utilized by exporting countries in order to sail through the rainy days.

Please read on balance of trade and balance of payments here.

 

4. Economic instability

Too much importation of goods from other countries will negatively affect the economy of the importing countries. As a result, their currencies have little or no value.

Please read the concept of demand here.

 

5. Unemployment

Unemployment will persist in nations that constantly import goods and services. This is true because these countries typically lack enough industries as a result of constant importation of basic products. As a result unemployment rate is increased.

You can read the introduction to foreign trade here.

 

6. Hinders national growth and development

Those who make huge amount of money from importation may deliberately work against national growth by supressing the necessary facilities like constant power supply and good road network.

The above facilities are necessary if a country sincerely plan to attract more investors into their land.

Please read on the advantages of land mode of transportation here.

 

7. Difficulty in times of war

Countries that depend on importation will suffer during the times of war. This is true because supplies to such countries will be cut off by enemies thus making them vulnerable.

 

8. Exploitation of some countries

Countries that export raw materials and import the finished products of their raw materials are considered losers in a foreign trade.

For instance, Nigeria is an exporter of petroleum (as at 2019) but ironically, she buys the products of petroleum like petrol and kerosene.

Please read on the divisions of foreign trade here.

The Nigerian government understood the burden this would cause on her people; and as a result, they constantly subsidize these products especially petrol.

If Nigeria as a nation had a refiney, the money spent on subsidies could have gone into capital projects. This will be more beneficial to the masses. However, Africa's largest refinery is currently being built in Lagos, Nigeria by Aliko Dangote.

 

9. Cause of war

Some of the wars that happened in the past are considered to be caused by countries trying to secure international markets for their products.

Also, understand that foreign trade can also foster hatred and cold war between countries.

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len

Alfred Ajibola is a Medical Biochemist, a passionate Academician with over 10 years of experience, a Versatile Writer, a Web Developer, a Cisco Certified Network Associate and a Cisco CyberOps Associate.


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Amazing facts in Commerce

With Amazon Smile, you can donate 0.5 percent of your purchases to a charity of your choosing

Check it out here

The brewery, Sankt Gallen in Japan, produces a beer called Un Kono Kuro from elephant's dung

North Korea and Cuba are the only countries in the world where you can't buy Coca-Cola

Amazon is an e-commerce website launched in 1995. It did not make any profit for its first seven years.

Amazon's first profit was in 2003. Its founder 'Jeff Bezos' is the richest man in the world as at 2018/2019


NOTABLE POINTS IN Commerce

Marketing is a broad field of study. Below are branches or divisions of marketing:

  • Advertising

  • Search Engine Optimization (SEO)

  • Merchandising

  • Branding

  • Promotions

  • Copywriting

  • Social Media Optimization (SMO)

  • Event planning

  • Customer Relationship Management (CRM)

  • Graphic Design

  • Internet Marketing

Marketing is defined as any activity or process aimed at getting people interested in a company’s product or service.

The processes utilized in marketing can take place via posters, public relations campaigns, handbills, social media, radio and television, buses, walls along the streets, the internet or just anywhere.

Below are some of the branches of marketing:

  • Advertising

  • Search Engine Optimization (SEO)

  • Merchandising

  • Branding

  • Promotions

  • Copywriting

  • Social Media Optimization (SMO)

  • Event planning

  • Customer Relationship Management (CRM)

  • Graphic Design

  • Internet Marketing

Please read more on marketing here

Commerce can be defined as the exchange of goods and services, usually for money and on a large scale that will require the transportation of such goods and services.

Commerce is crucial (important) to the life of any nation for the following reasons:

  1. Commerce facilitates the exchange of goods and services which everyone can enjoy, regardless their location or whether the goods is produced within or outside their country.
  2. Commerce creates an awareness of the existence of goods and services through advertising.
  3. Commerce offers employment to a very large number of people in a nation.
  4. Commerce promotes rapid transfer of both oral and written messages through communication.
  5. Commerce determines the standard of living in a nation. This is because the extent of commercial activities is crucial to wealth of a nation.
  6. Commerce makes for the protection against risk in day to day business operations.
  7. Through commerce, there is a steady supply of goods in a nation. This is because commerce ensures that goods produced are stored until needed.

Please read on the functions and characteristics of commerce here

A public company is not owned by an individual; rather it's usually owned by groups or a large number of people.

The shares of a public company are traded freely on the stock exchange.

Below are some features of a public company:

  1. A public company must receive it’s training certificate to commence business.
  2. The minimum membership is two while the maximum membership is limitless.
  3. A public company has a legal status. It can sue and be sued.
  4. A public company files and publishes its annual reports, including its accounts.
  5. The liability of its members is limited.
  6. The shares are easily transferrable through the stock market.
  7. A public company can issue debentures to be secured as its assets.

Please read on limited liability company, its advantages and disadvantages here

There are seven elements of the marketing mix. These are:

  1. Product: Anything thing that satisfies a consumer’s need is referred to as a product. Product may come in the form of manufactured goods, raw materials or services.
  2. Price: Price is defined as the exchange value of goods and services supplied. In simple terms, it serves as a mechanism of exchange.
  3. Promotion: It involves all the processes that concerns with how business organizations should inform their customers about its product. If done properly, the demand of product will be increased. Promotions can take the form of advertising, search engine optimization, social media marketing, trade fairs exhibition and so on.
  4. Place: The place as a marketing mix concerns variables such as location and transport facility where the distribution of goods and services take place.
  5. Packaging
  6. Positioning
  7. People

Think of marketing mix as the set of marketing tools that an industry or company uses to drive or accomplish its marketing objectives in the target market

Please read on the principles of marketing mix here