WAEC Commerce 2012 Theory — Question 3

Model answer

(a) Channels of distribution: this can be defined as various link in which the producer/seller is linked to the buyers. (b) Examples of channels of distribution: (i) Producer ⇒ wholesaler ⇒ retailer ⇒ consumer. (ii) Producer ⇒ wholesaler ⇒ consumer. (iii) Producer ⇒ retailer ⇒ consumer. (iv) Producer ⇒ consumer. (c) Advantages of home trade over foreign trade: (i) There is no currency barrier in home trade, which is one of the major headaches in foreign trade. (ii) Home trade involves relatively shorter distance. (iii) In most cases, there is no restriction on local trade as compared with foreign trade which is usually accompanied with different regulations. (iv) Home trade tends to be cheaper than foreign trade because there is no transportation cost. (v) Lesser risk in home trade as against foreign trade.