MODUL PERKULIAHAN

Mata Kuliah English For Business

Module 1:
Business, Commerce, and
Trade
Mahasiswa mampu memahami berbagai terminologi bisnis dan perdagangan
internasional serta menerapkannya dalam kalimat atau dialog berbahasa Inggris.

program tatap muka

fakultas kode mk disusun oleh
studi
ilmu budaya program cdp
studi
inggris s1
bahasa
01
Abstract Kompetensi
Bab ini mengeksplorasi Mahasiswa memiliki kemampuan
kemampuan dan keterampilan memahami dan berlatih menerapkan
berkomunikasi mahasiswa terminologi bisnis dan perdagangan
dalam dunia bisnis dan internasional dalam kalimat
perdagangan internasional. berbahasa Inggris.

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MODULE 1

1 Business, Commerce, and Trade

Business, Commerce, and Trade

A. Difference Between Business, Commerce, and Trade

Commerce and trade are two distinct terms involved in business activities. Trade is a subpart of
commerce and carries narrow scope in comparison to commerce.

In simple terms, trade refers to buying and selling of goods between customers and sellers in return
for money. Whereas, commerce in addition to buying and selling of goods also includes all those
activities needed for completing exchange of goods between producers to ultimate consumers. It
includes various services which aid trade such as transportation, insurance, warehouses,
advertising, banking and many more.

Trading activities bring association between seller and buyers. Commerce links together the
producer of goods and end consumers by facilitating the exchange. Trade is a social activity as it
aims at satisfying the needs of buyers and sellers.

But commerce focuses on earning profits for several parties involved in its services and thereby is
an economic activity. Dissimilarities between the trade and commerce can be well-understood
more clearly from comparison chart given below.

Difference Between Business, Commerce, and Trade

(Commercemates.com, 2022)

Basis of
Business Commerce Trade
Difference

Commerce refers to all Trade refers to

Business refers to all
activities which exchange of products
those activities which are
Meaning facilitates the exchange or services among
done with the aim of
of goods from producer buyers and sellers in
earning profits.
to end consumer. return for money.

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 Basis of
Business Commerce Trade
Difference

Wider. It includes both
Scope trade and commerce
within its activities.
Narrower as is
Wider than trade, as it
concerned with only
comprises of activities
buying and selling of
which supports trade.
goods.

Between owner and Between producer and Between buyer and

Connectivity
clients. consumer. seller.

Huge amount of capital is More amount of

Capital needed Requires less capital.
needed. capital needed.

Side Supply side of the Both demand and

Only demand side.
represented product. supply side.

Riskier than trade and

Risk level Riskier than trade. Low risk
commerce.

Transactions
Regular Regular Isolated
frequency

More employment
Large number of
opportunities as large
Employment opportunities due to
number of people are Very few.
Opportunities presence of many
required for performing
activities.
different tasks.

B. International Commerce and Global Trade

International commerce is the practice of buying and selling goods and services between nations.
With international commerce, sovereign states leverage competitive advantages of their home
countries to buy and sell elsewhere. A competitive advantage could be an extra-long coastline,
like Chile has; proximity to certain natural resources, like lumber (Canada) or fish (Portugal); or a
highly educated, technically trained workforce (South Korea, Sweden, Israel).

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With all of these different countries participating in the international commercial system, each with
its own set of sovereign laws, it is important that global regulatory agencies exist to create some
legal cohesion. The two main organizations overseeing international commerce are the
International Chamber of Commerce (ICC) and World Trade Organization (WTO). The WTO
does have a hand in regulating international commerce, despite there being a difference between
commerce and trade.

There is a technical distinction between international commerce and global trade. Trade refers to
the basic economic activity of buying, selling, and/or exchanging goods and services between two
or more parties in a marketplace. Commerce encompasses all activities that promote the exchange
of goods and services—from the point of manufacture to the moment a customer purchases a
product in a store.

Questions

1. Using your own words, what is the difference between business, commerce, and trade?
2. Find definition and meaning of the following business terms:
a. Customer
b. Seller
c. Goods
d. Service
e. Profit
f. Capital
g. Banking
h. Freight
i. Advertising
j. Marketing
k. Warehousing
l. Insurance

C. Reading
Getting started
Discuss the questions below with your group and then do the exercise which follows them.
1. What are the different types of trade discussed so far?

2. Who are the different people involved in this trade?

3. What role would they play in the process?

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Vocabulary
Look at the terms below. Using what you have learnt about definitions, can you write one for each
term? Write the definitions for the following terms in your own words. Then check your answers
as you read the text. Do not use the text to find the definitions.
Term Definition
1 Export trading company
______________________________________________
______________________________________________

2 Export management
company
______________________________________________

3 Distributor ______________________________________________
______________________________________________

4 Retailer ______________________________________________

______________________________________________
5 Import export agent ______________________________________________
______________________________________________

6 Sales representative ______________________________________________

EXPORT TRADER

Trade has existed ever since Man recognized the need to look for and obtain resources to
fulfill his needs. From early man trading skins and salt with neighbouring tribes to Marco Polo
bringing silks, spices and technology from the Far East to the Western world, to modern
conglomerates trading millions of dollars on the stock exchange, trade has been an essential part
of our lives. Countries engage in trade for many reasons. These include product availability,
competitive prices and product image. But for the goods to reach the customer, they must go
through the import/export process and pass through the hands of different players along the way.

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The word import comes from the Medieval Latin importare which means to bring in which, in
essence, is done when goods are brought in from a foreign country, while export is the process by
which goods are shipped from one country to another. There are two main methods of export:
direct and indirect exporting. In direct exporting, the manufacturer, assembler or processor of an
exported good is in charge of the entire marketing and distribution of the product and sells directly
to companies, known as direct merchants, in the foreign market. The direct merchant then sells
these goods on their domestic market. These merchants usually offer complementary services
such as maintenance, spare parts and technical support to their customers.

However, a cheaper and less risky export route is through indirect export where the manufacturer
hires a local agent to find and deliver its goods to buyers abroad. An example of indirect exporting
is through an Export management company (EMC) which handles trade for a domestic company
which wants to sell its product abroad. The EMC hires the dealers, distributors and representatives,
manages the advertising, marketing and promoting of the product, oversees marking and
packaging, and arranges the shipping. An Export management company can specialize in one type
of product, foreign market or both and is usually paid by commission, salary or a retainer plus
commission.

Another type of indirect trading agent is the Export trading company (ETC) which looks for
potential buyers by identifying the needs of the foreign market and then supplying domestic
sources willing to fill this need. It can either take title to the goods or work on a commission basis.
An Import/Export company, on the other hand, purchases goods directly from a domestic or
international client and then packs, ships and resells these goods.

There are also a number of intermediary players. For example, an import export agent is one
who rarely invests capital in inventory or deals in the merchandise, products or services directly.
Instead, this agent acts as an intermediary between manufacturers and distributors in one country
and buyers in another, finding the appropriate market for the goods, making a solid connection
and solidifying a business relationship between both parties. They are paid a commission which
is usually 10% of the transaction. Manufacturers may also decide to have their own representative
who is an expert in their particular industry and can give technical support. This specialization
may differentiate them from the sales representative who simply promotes the product and then
passes the sale to the seller. A distributor buys the imported product and then sells it to another

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for further distribution to the buying public. Finally, there is the retailer who then sells the
merchandise to the customer.

There are many different kinds of agents involved in the import and export trade and the best type

would depend on the needs, and capabilities of the manufacturer who wishes to place his product

on an international market. From export management companies to individual sales

representatives, there is a group of qualified individuals able to help in this process.

Checking your understanding of the text

Form three groups. Each group has to do the following:
1. Write six (6) questions based on the text. Remember to check the grammatical structure of
your question.
2. Give your questions to members of the 2nd group for them to answer.
3. Give the answers to members of the 3rd group for them to be corrected.
4. Discuss the answers with the entire class.

References
1. Cruz, Didier J.C. “Introduction to International Trade”. accessed August 11, 2022
https://www.academia.edu/29941691/ENGLISH_FOR_INTERNATIONAL_TRADE_1_
Material_researched_and_adapted_by_Introduction_to_International_trade
2. Shopify. April 8, 2022. “International Commerce”. Accessed August 8, 2022.
https://www.shopify.com/blog/international-commerce
3. Commercemates.com “Difference Between Business, Commerce, and Trade”. Accessed
August 8, 2022. https://commercemates.com/difference-between-business-commerce-
trade/
4. http://www.entrepreneur.com/startingabusiness/businessideas/startupkits/article41846.ht
ml

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