Theory question 103
Wholesale TradeCommerce 2 (essay)
(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.
Show the model answer
(a) The channel of distribution is the route by which goods pass from the producer to the final consumer.
(b) Any four, as arrow diagrams: Producer → Wholesaler → Retailer → Consumer; Producer → Retailer → Consumer; Producer → Consumer; Producer → Agent → Wholesaler → Retailer → Consumer; Producer → Wholesaler → Consumer.
(c) Any five, explained: same currency – no foreign exchange problems; same language and culture; fewer documents and simpler procedures; shorter distances, quicker delivery and lower transport costs; no customs duties/restrictions; less risk; easier to know customers and settle disputes under the same law.
Draw each channel with arrows from producer to consumer.