Trade Associations – SS2 Commerce Lesson Note (Second Term)

A trade association is an association of traders or producers engaged in the same line of trade. Its major aim is to protect and safeguard the interest of its members and their businesses. An example is M.O.A.L.S (Motorcycle Operators Association of Lagos State).

Behavioural objectives

By the end of the lesson, students should be able to:

1. Define a trade association, a chamber of commerce and a manufacturers association.
2. State the features of a trade association.
3. List the functions of trade associations, chambers of commerce and manufacturers associations.
4. State the disadvantages of trade associations.

What are the features of a trade association?

1. Membership is voluntary.
2. They are regionally based.
3. Its main aim is to protect or safeguard the interest of members.
4. It is financed from the subscriptions paid by members.

What are the functions of trade associations?

1. They assist needy members financially and morally.
2. They ensure uniformity in the mode of operation of their trade.
3. They provide information (i.e. trade, technical and credit information) for members.
4. They settle disputes among members.
5. They educate members about the latest developments affecting their trade.
6. They fix minimum prices for their goods or services.
7. They promote research work for the benefit of all members.
8. They ensure the maintenance of high standards in the quality of goods or services.
9. They regulate the activities of members and maintain professional ethics.
10. They safeguard and advance the common interest of members.
11. They serve as trade referees, especially on home trade.
12. They liaise with the government on policies affecting their trade and their members, e.g. by acting as pressure groups.

What are the disadvantages of trade associations?

1. They sometimes restrict entry into their trade.
2. They reduce the supply of goods to create artificial scarcity, thereby hiking prices.
3. They can hold the community to ransom, thereby causing crises (e.g. transporters).

What is a chamber of commerce?

A chamber of commerce is a voluntary association of businessmen, tradesmen and entrepreneurs from different commercial fields or various lines of business in a town, city or country. They come together to promote trade, commerce, industry, agriculture and mining in a particular town, city, area or country. An example is the Lagos Chamber of Commerce, Industry, Mines and Agriculture (LCCIMA).

A chamber of commerce is open to all trades. It embraces all industrial and commercial activities, such as manufacturing, trade, transport and banking.

Functions of a chamber of commerce

1. They organise trade fairs and exhibitions.
2. They promote both home trade and foreign trade.
3. They cooperate with other chambers of commerce.
4. They collect and disseminate information to all members and the general public.
5. They settle disputes among members.
6. They advise the government on matters of trade.
7. They issue certificates of origin.
8. They act as pressure groups.
9. They act as watchdogs in the administration of government laws.
10. They educate members through seminars, conferences etc.

What is a manufacturers association?

A manufacturers association is an association of producers that come together for the mutual economic and trade benefits of members.

Aims and functions of a manufacturers association

1. They promote trade, both local and foreign.
2. They act as a pressure group.
3. They attract foreign investors.
4. They ensure the production of standard goods.
5. They promote the export of manufactured goods.

Evaluation

1. Define a trade association and give one example.
2. State four features of a trade association.
3. What is a chamber of commerce?
4. List four functions of a chamber of commerce.
5. State three disadvantages of trade associations.

Assignment

1. State five functions of a trade association.
2. List three aims of a manufacturers association.