What Is a Trading Company?

The Trading Company is one with organized economic activity that is dedicated to the sale and purchase of one or several products that, on the one hand, can be a raw material or, on the other, finished products. The commercial company fulfills a function, that of being an intermediary between those who manufacture the product, and those who consume it. This type of company, unlike others, does not carry out any kind of transformation as far as the raw material is concerned.

We must focus and pay attention to the fact that commercial companies do not have to be only of this type, because there are mixed commercial companies that could be commercial, as their name indicates, but also industrial and/or service companies. As a clear example to illustrate, we can say that a company that buys and sells electrical appliances is, therefore, a commercial company, although it is also providing repair and maintenance services for the products it sells to consumers, so that fact also defines it as a service company.

Commercial Companies Are Organizations Dedicated

To activities or operations for profit, that is, economic or commercial purposes to fill and satisfy the need for some service or good in the markets. Of course, there are many categories of companies, the one that we can highlight today is the trade, but what exactly is a commercial company? What does he do? How can it be recognized? These are concepts that we will see below so that everything is clear.

And as we point out before, a commercial company is in charge of buying raw material, on the one hand, materials that will later be processes to be convert into goods. It is also in charge of acquiring intermediate goods, which are not yet complete and need a bit of processing. We also have the finished goods, which are ready for sale and consumption. Capital goods, such as very heavy machinery equipment, vehicles, for example, to later be put up for sale to companies or the final consumer.

Types of Business Company Assets

Here we list more clearly the goods that commercial companies can acquire. They are the following:

• Bines finished and ready for sale and consumption.
• Intermediate goods are those that still have one or two processes left to be completed.
• Capital goods those that will later be sold to companies. Especially heavy machinery.
• Raw material. Those that still need to be transformed into a bine or what is the same, a product for consumption.

Characteristics Of A Trading Company

The greatest characteristic of a commercial company is that they do not make any change, evolution or transformation of the raw materials or the materials to buy, they do not resort to an energy source or apply work to the product, this is what differentiates them, for example from industrial companies that do transform the raw material to obtain the product. Therefore, the commercial company is simply an intermediary.

And what does it mean to be an intermediary company? Well, they are in charge of transfers, distributions, sales, etc. of the product or products in question. These commercial companies can be public or private, this fact is important, and are also many cases in which a commercial company is dedicate to both trading and industrial production.

Categories Of A Commercial Trading Company

Of course, within the commercial company, there are different types of it, now we will see them and explain what they differ from. They are the following:

• The retail commercial companies: as we can deduce, this kind of company operates on a small scale, only in a region that is relatively small and of course, the buyers or consumers are usually loyal by proximity, be it, for example, a neigh bookhood store, a small clothing store…
• The wholesale commercial companies: They are the companies that buy-in almost industrial quantities and then sell that product to the retail companies so that they put them up for sale.
• The commercial commission company: the are in charge of selling a certain product, always in exchange for a commission for said sales.

Functions Of Commercial Trading Company

As we have specified before. A commercial company is in charge of acting as an intermediary between companies and consumers. So seen from a marketing point of view. These commercial functions connect with the markets and do it in the following ways:

• Being aware of the need that exists in a give market, whether from consumers or from other companies depending on the product or products that are market.
• Starting the existing demand. Or what is the same. Creating and generating a specific for the product or products that Being sold.
• On the other hand, they can also meet the need of the demand by giving them what they ask for. To do this, of course, they must have the product or products that the relevant need demands, they must also have in their sights the existing competition, profitability and meet the objectives set in terms of sales.

To consider developing processes to help execute marketing-base business functions, you need to know the following:

• Carrying out a complete commercial study: This market study implies studies of the business environments that of course include the markets. The demands that may exist at that time. The segmentation of the markets and to carry out all of this. Surveys of all kinds, statistics, and anything like measurements to make it rigorous.
• Design of some strategies: Try to create the best possible plan so that the benefit is the greatest possible and therefore the sales as well. This is key and crucial for the company’s plan and marketing is based on some basic principles that are: the product or products, the price it costs, promotion and publicity and finally distribution.
• And of course, it is not enough to put it on sale and that’s it. All promotion and sales must be monitor to know what works and what does not.

Distinctions Between Commercial Companies

A plan of reforms is being develop that must be take into account and because of that. It should be note that the  inconsistencies in the background that grow and born. For the most part. that how society should be form confuse. of that change. Above all the management of it.

And aside from that, I think it is important to highlight, albeit roughly. The characteristic types that differ between them. Since each one must be know in order not to confuse them and understand the purpose of each one and. Of course. Their differences between them. they make unique.

Trading Companies

These companies, as we have seen before. Have a commercial origin, of productivity or other activities of that nature. They normally have the characteristic of being private companies. And their purpose is to provide the greatest possible benefit to their shareholders. Therefore they are for-profit.

Social Enterprises

And now we  talking about the social company. Which is the one whose functional structures are quite similar to those of the companies we call commercial private companies. Both in terms of their legal and management structures. The truth is that they distance themselves in the distribution of their profits. , which we could consider the company’s assets.

The need to establish these differences originates from the persevering campaign create by powerful. Businessmen to distract us from the issue since in this way these two categories can be consider as the same. But of course.

But. And there is always a but. The big problem and cause originate in its improper use of those resources that were accumulate, of course. Control by the government of that time to fix the negative capital that the nation had at that time. Or what is the same, to cover the holes create.

Also Read: What Is An Initial Exchange Offering (IEO)?