Interrelationship Between Industry Commerce and Trade

There is a close interrelationship between the different branches of business described above. One cannot function without the support of others. Commerce helps industry before and after production through the purchase of materials and the sale of finished products. Productions of goods and services is meaningless unless they are distributed among the consumers. Trade, involving buying and selling of  goods, maintains a smooth flow of commerce and thereby supports industry. At the same time, industry provides the goods and services for distribution and thereby gives rise to commerce. As industry develops, trade and commerce also grow.

Industry, commerce and trade are closely related to each other. For example, industry provides goods and services which are distributed through commerce. No commercial activity is possible in the absence of industry and production. At the same time industry and production cannot survive unless the goods and services are distributed among consumer through commerce. Therefore, industry and commerce are interdependent. Industry provides the base for commerce and commerce serves s the backbone of industry.

Trade involves buying and selling of goods. It is the nucleus of commerce because all business activities revolve around or exchange. Trade provides the solid foundation upon which the superstructure of commerce has been raised. It provides necessary support to industry and maintains a smooth flow of commerce. This interrelationship is shown in Fig. 4.2.

Fig. 4.2 Interrelationship between Branches of Business.