(a) What is channel of distribution?
(b) With the aid of diagrams, show four examples of channel of distribution.
(c) Explain five advantages of home trade over foreign trade.
Explanation
(a) Channel of distribution is the path which is used to move a product from the manufacturer to the consumer or industrial user.
(c) Advantages of home trade over foreign trade:
(1) Exchange is in local currency.
(2) Home trade attracts more sellers as traders have more knowledge about home market than foreign market.
(3) The question of different measures and weight does not arise in home trade.
(4) Sellers and buyers are in closer proximity than in foreign trade. / Cost of transportation.
(5) Distance. Exchange is quicker between sellers and buyers in home trade than in foreign trade.
(6) Less documentations are needed in home trade.
(7) Common official language is used in home trade.
(8) Differences in culture are minimal as against foreign trade.
(9) Less risk is involved in home trade. Hence insurance for goods is optional.
(10) Government regulations and policies is the same in local trade but differs in foreign trade.