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Commerce flashcards

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Topic 1: Commerce and production

Define commerce: The distribution of goods and services to consumers: trade plus the aids to trade (banking, transport, insurance, warehousing, communication and advertising) that make distribution possible.
How does home trade divide?: Into wholesale trade (selling in bulk from producer to retailer) and retail trade (selling in small quantities to the final consumer).
Imports vs exports: Imports: goods and services bought from other countries. Exports: goods and services sold to other countries.
What is utility, and what are form, place and time utility?: Utility: the ability of a good or service to satisfy a want. Form: changing a product to make it more useful (timber into furniture). Place: moving it to where it is wanted. Time: making it available when wanted.
Why does scarcity force people to make choices?: Resources are limited but wants are unlimited, so choosing one thing means giving up the next best alternative, its opportunity cost.
Classify: fishing, house-building, banking, app development: Fishing: primary. House-building: secondary (construction). Banking: tertiary (commercial service). App development: quaternary (digital technology).
Why does commerce belong in the tertiary sector?: Primary output is in the wrong form, and secondary output is in the wrong place and often at the wrong time. Tertiary commercial services close these gaps by distributing goods.
Give one advantage and one disadvantage of specialisation for a worker: Advantage: higher output and greater skill at the task. Disadvantage: repetitive, demotivating work and a narrow set of skills.
Why does a country specialise?: To use its natural or acquired advantages, such as climate, resources or skilled labour, efficiently and export the surplus. The risk is over-dependence on trade and on imports.
Why does specialisation make commerce necessary?: Specialisation → interdependence → exchange: a specialist produces far more of one thing than it needs and too little of everything else, so it must trade.
Cotton farmer → mill → wholesaler → retailer: which utility does each stage add?: Farmer: primary production. Mill weaving cloth: form utility. Wholesaler storing stock: time utility. Transport to retailers: place utility. The retailer completes the chain to the consumer.

Topic 2: Commercial operations

Private sector vs public sector: Private sector: owned by individuals or shareholders, usually aiming for profit. Public sector: owned and run by the government, usually aiming to provide a service.
What is unlimited liability, and which owners have it?: The owners are personally responsible for all the business’s debts, so their own possessions can be taken. Sole traders and partners in an ordinary partnership have it.
Why might a sole trader become a private limited company?: To gain limited liability and raise more capital by selling shares privately, at the cost of registration and sharing control.
Why does a public limited company find it easier to raise capital?: It can sell shares to the general public, usually on a stock exchange. In return it must publish its accounts and may face takeover.
Why do public corporations exist?: To provide essential services that might be under-supplied by private firms, or to keep strategic industries under government control.
Give three features of a multinational company: Headquarters in one country, operations in one or more other countries, and large scale with access to big markets and capital.
Which location factors matter most for an e-commerce business?: Wi-fi and connectivity, warehousing, access to technology specialists, and logistics for delivery.
Define outsourcing: Using another business to carry out work, such as production or distribution, instead of doing it in-house.
Which two areas have driven the growth of outsourcing?: Contract manufacturing (another firm produces the goods) and contract logistics (another firm stores and distributes them).
Give two benefits of outsourcing for a business: Lower costs and access to specialist skills, which free money and managers’ time for the core business.
Give two drawbacks of outsourcing for a business: Less control over quality and delivery times, and the risk that a supplier’s poor practice damages the business’s reputation.
Name types of retailer: Itinerant retailers, vending machines, independent retailers, street markets, speciality shops, online retailers, multiple chain stores, supermarkets, hypermarkets and department stores.
Supermarket vs hypermarket vs department store: Supermarket: large self-service store, mainly food and household goods. Hypermarket: very large store, often out of town, selling a very wide range. Department store: many departments under one roof, each selling a different type of good.
Give three reasons small-scale retailers survive: Personal service, flexible opening hours and additional services, such as delivery or informal credit for regular customers.
Name retail selling techniques: Branding and own brands, logos and packaging, self-service, after-sales service, barcoding, direct mail, loyalty programmes, informal credit and cash on delivery.
How has e-commerce affected traditional retailing?: Positives: selling 24/7, more customers, more revenue, targeted marketing, lower store costs. Negatives: delivery, training and warehousing costs, and website maintenance.
What is EPoS?: Electronic point of sale: tills that scan barcodes, record each sale and update stock records automatically.
What is breaking bulk?: A wholesaler buying large quantities from manufacturers and selling them in smaller quantities to retailers, so retailers need not tie up capital in big orders.
Why is the wholesaler important to the manufacturer?: The manufacturer sells in bulk to a few buyers, saves on storage, passes on the risk of unsold goods, and receives information about what consumers want.
Why is the wholesaler important to the retailer?: The retailer can buy small quantities of many goods from one place, may receive credit and delivery, and gets advice on new products.
Why do supermarkets often bypass wholesalers?: They are large enough to buy in bulk straight from manufacturers and run their own warehouses, so they keep the wholesaler’s profit margin themselves.
What is a cash-and-carry wholesaler?: A self-service warehouse where retailers choose goods, pay cash at once and transport the goods themselves, in return for lower prices.
Which document does a seller send in reply to an enquiry?: A quotation, giving prices, terms of payment and delivery details.
Which document shows the amount a buyer must pay for goods supplied?: The invoice.
Which document travels with the goods and is signed on arrival?: The delivery note, which the buyer signs to confirm that the goods were received.
Goods arrive damaged and are returned. Which document reduces what the buyer owes?: A credit note.
What is a statement of account?: A summary of the transactions between buyer and seller over a period, such as a month, showing the balance still owed.
Which documents are used when exporting goods?: A certificate of origin, a bill of lading for sea freight or an air waybill for air freight, and often a documentary credit (letter of credit) to guarantee payment.
Name modern methods of business communication: Email, websites, social media, web-based chat including chatbots, video conferencing, mobile messaging, and posters or other printed methods.
Which factors should guide the choice of communication method?: Urgency, cost, security, distance, availability of networks and the importance of the message.
Why might a business use a chatbot on its website?: It answers common customer questions instantly at any time, at low cost, though it may not handle complex or unusual queries.
Which communication method suits a confidential contract that must arrive tomorrow?: A secure method that gives proof of delivery, such as an encrypted email with an electronic signature or a courier, because security and urgency both matter.

Topic 3: Globalisation of trade

Why do countries trade internationally?: No country can produce everything efficiently. Trade gives wider choice, cheaper imports from lower-cost producers, export markets, investment and jobs.
Give four difficulties of international trade: Language and distance, payment and exchange-rate risk, customs duties and documentation, and different laws, as well as the risk of non-payment.
Is tourism visible or invisible trade?: Invisible trade: it is a service, like banking, insurance and shipping. Visible trade is trade in goods.
What does the balance of payments include that the balance of trade does not?: Trade in services and financial flows such as investment. The balance of trade covers goods only.
Exports of goods $400m, imports of goods $350m: what is the balance of trade?: $400m − $350m = +$50m, a surplus.
Why might a government restrict imports?: To protect infant industries and jobs, to reduce a trade deficit, or to retaliate against another country’s restrictions.
How does a tariff affect consumers?: It is a tax on imports, so imported goods become more expensive and consumers pay higher prices or buy fewer imports.
What is a global supply chain?: The network of suppliers, manufacturers, agents, wholesalers and retailers in different countries that moves a product from raw materials to the final consumer.
Give three risks to a global supply chain: Natural disasters, political change such as new tariffs or embargoes, and financial risk such as currency changes. Ethical, environmental and technological risks also apply.

Topic 4: Logistics in commerce

What are the three functions of transport in the supply chain?: Time, place and quantity: transport delivers the right quantity of goods to the right place at the right time.
Road vs rail transport: Road (delivery vans, trucks, couriers): door-to-door and flexible, but limited loads and congestion. Rail (freight trains): cheap for heavy, bulky loads over long distances, but fixed routes and usually needs road at each end.
Sea vs air transport: Sea (ferry, tanker, container ship, cargo liner): cheapest for heavy, bulky goods internationally, but slow. Air (freight planes): fastest over long distances for perishable, urgent or valuable goods, but the most expensive.
What are the advantages and disadvantages of pipelines?: Advantages: continuous flow, low running and labour costs. Disadvantages: very high cost to build, carries only liquids and gases, and leaks can be hard to find.
Which six factors affect the choice of transport method?: Nature of goods, urgency, cost, security, distance and reliability of the transporter.
Which transport method suits fresh flowers sent abroad for a festival, and why?: Air freight, refrigerated: the flowers are perishable, urgent and valuable for their weight, so the high cost is justified.
What is containerisation?: Packing goods into standard-sized sealed containers that move between ships, trains and trucks without being unpacked, cutting handling, damage and theft.
What is transshipment?: Transferring containers from one ship or vehicle to another at a hub port on the way to their destination.
What are the five functions of warehousing in the supply chain?: Links with seasonal production, links with demand, protecting supply, price stability and logistics postponement.
Bonded vs cold storage warehouse: Bonded: holds imported goods until customs duty is paid. Cold storage: refrigerated or frozen storage for perishable goods such as food and medicines.
What is a regional distribution centre (RDC)?: A large warehouse owned by a retail chain; suppliers deliver full loads to it and it sends mixed loads to the chain’s shops in that region.
Name three uses of automation in warehousing and two benefits: Uses: robotics, automated sorting and voice picking. Benefits: any two of lower labour costs, less human error, improved picking accuracy, improved inventory control and improved customer service.

Topic 5: Aids to trade that support commerce

What are the purposes of advertising?: To inform customers about products and prices, persuade them to choose a brand, remind them of existing products, and build a brand image.
Informative vs persuasive vs collective vs competitive advertising: Informative: gives facts. Persuasive: creates a desire to buy. Collective (generic): promotes a whole product type for an industry. Competitive: compares a brand with its rivals.
What is sales promotion? Give three methods: Short-term incentives to raise sales, such as free samples, coupons, special offers, competitions, loss leaders and free gifts.
Standing order vs direct debit: Standing order: a fixed amount paid on set dates, set up and changed by the payer. Direct debit: the receiver collects an amount that can vary, such as a utility bill.
What has been the impact of digital banking?: Closure of bank branches, more digital-only banks and less use of cash, a move towards a cashless society.
What are the five purposes of insurance in the syllabus?: Risk reduction, compensation, financial protection, business confidence and investment.
Name the seven types of insurance risk in the syllabus: Consequential loss, employer’s liability, fire, motor, premises, public liability and theft.
How does pooling of risk work?: Many policyholders pay premiums into a common fund; only a few suffer losses in a year, so the fund can compensate them.
Stock worth $80,000 is insured at $1.50 per $100. What is the premium?: 80,000 ÷ 100 × 1.50 = $1,200 a year.
Proposal form vs cover note vs policy: Proposal form: the application, giving full facts about the risk. Cover note: temporary proof of cover until the policy is issued. Policy: the full contract setting out what is covered.
What does an insurance broker do?: An independent adviser who compares insurers to find the most suitable cover at a good price for the client.
Name three short-term and three long-term sources of finance: Short-term: trade credit, debt factoring, overdraft, leasing, hire purchase, sale and leaseback, retained profit. Long-term: ordinary and preference shares, loans, debentures, venture capital, crowdfunding.
Mark-up % vs gross profit margin %: Mark-up = (average selling price − unit cost) ÷ unit cost × 100. Gross profit margin = gross profit ÷ revenue × 100.
Unit cost $40, selling price $50: what is the mark-up?: (50 − 40) ÷ 40 × 100 = 25%.
How do you calculate working capital and net profit?: Working capital = current assets − current liabilities. Net profit (profit for the year) = gross profit − expenses.

Topic 6: Sustainability and ethics

What is the purpose of sustainability in the supply chain?: Making commercial processes eco-friendly and environmentally responsible for future generations.
Name five of the nine actions to improve sustainability: Any five of: sustainable materials, sustainable logistics, reducing packaging, eco-friendly products, recycling and reducing waste, reducing returns and exchanges, digital resale marketplaces, free repair services, water stewardship.
How does reducing returns and exchanges improve sustainability?: Fewer returns mean fewer delivery journeys and less wasted stock, for example by giving accurate size guides and clear product photos.
What is a digital resale marketplace?: An online platform where customers resell used items, keeping products in use for longer.
What is water stewardship?: Reducing, reusing and treating the water used in production so that local water supplies are protected.
What does ethics mean in commerce?: Moral principles about what is right and wrong, guiding how a business behaves, often beyond what the law requires.
What is the role of fair trade in commerce?: Producers in lower-income countries receive a fair, stable price and decent conditions; consumers get an ethical choice and retailers gain reputation.
Which two ethical issues does the syllabus name?: Misleading advertising and harmful disposal of products.
Why do consumers need protection?: Sellers know more than buyers, goods may be unsafe, faulty or not as described, advertising can mislead, and individuals have less power than large businesses.
What should a buyer do to resolve a complaint?: Keep the receipt and evidence, complain to the seller first, escalate to the manager or head office, contact a consumer protection organisation, and take legal action as a last resort.
How should a seller respond to a complaint?: Listen and record it, offer a repair, replacement or refund, apologise or offer goodwill, investigate the cause and train staff.

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Written for Cambridge O Level Commerce (7100), syllabus 7100 (2026-2028).

Cards by Marlbridge Academic Team. This deck has not yet been reviewed as a whole by a subject teacher. Report an error.

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