Deck 2: Retail Strategic Planning and Operations Management

Question 1

Financial performance objectives can be broken into two categories:

A) marketing objectives and operating objectives.
B) profitability objectives and productivity objectives.
C) administrative objectives and financial strategy objectives.
D) human performance objectives and information objectives.
E) seasonal objectives and general operating objectives.

Answer 1

B

Question 2

Which of the following is NOT an aspect of a good mission statement?

A) Broad and general in nature
B) Provide direction
C) Motivational
D) Changes with every new fad
E) It is a plan of action for the firm to follow

Answer 2

D

Question 3

When a retailer sets goals and objectives based on a comparison of its actions against its competitors,it is establishing:

A) financial performance objectives.
B) market performance objectives.
C) personal objectives.
D) competitive pricing objectives.
E) societal objectives.

Answer 3

B

Question 4

Cameron Brody wants 15 percent of an average dollar invested in the assets of his bookstore to be returned in profit.Cameron is setting a(n)_____ financial objective.

A) gross margin return on sales
B) return on inventory
C) return on net worth
D) operating profit margin
E) return on assets

Question 5

Financial performance goals and objectives does which of the following:

A) Helps the firm's employees to fulfill dome of their own personal needs.
B) Compares a firm's actions to its competition.
C) Helps society to fulfill some of its needs.
D) Analyzes the firm's ability to provide a profit level adequate to continue and grow in business.
E) Helps stabilize the global financial market.

Question 6

If a retailer has set its primary objective as gaining 5 percent of market share,it is focusing on a _____ objective.

A) productivity performance
B) consumer choice
C) merchandise productivity
D) market performance
E) competition-oriented

Question 7

If net profit margin is 2.0 percent,the rate of asset turnover is 6.0x,and the financial leverage is 2.1,what is the return on assets?

A) 0.333 percent
B) 8.0 percent
C) 12.0 percent
D) 25.2 percent
E) 33.0 percent

Question 8

A retail firm that is setting goals based on the analysis of its ability to provide a profit level adequate to continue in business is setting _____ objectives.

A) liquidity
B) financial performance
C) profit performance
D) market performance
E) operating performance

Question 9

Consider this mission statement: "Dad's Tasty Dogs will utilize the friendly,proven expertise of its employees and the finest ingredients to provide customers with great tasting hot dogs at a fair price." What element of a good mission statement is missing?

A) How the retailer uses or intends to use its resources
B) A market share goal
C) How it expects to relate to the ever-changing environment
D) The kinds of value it intends to provide in order to serve the needs and wants of the customer
E) A SWOT analysis

Question 10

Which of the following elements is NOT a part of the strategic profit model (SPM)?

A) Net profit margin
B) Stockouts
C) Asset turnover
D) Financial leverage
E) Return on assets

Question 11

Which of the following would be an example of a market performance objective for Record World?

A) Open or acquire five to ten stores over the next year.
B) Increase this year's net profit margin by 3 percent over last year.
C) Improve public relations with customers by holding two major in-store events per six-month season.
D) Increase labor productivity by 12 percent over the next six months.
E) Increase return on assets from 12 percent to 15 percent over the next 12 months.

Question 12

The Card Shoppe had a gross margin last year of $2,000,000 and a net profit of $300,000,while net sales were $2,500,000.What was The Card Shoppe's net profit margin for last year?

A) 12.0 percent
B) 15.0 percent
C) 20.0 percent
D) 68.0 percent
E) 80.0 percent

Question 13

Sales volume and market share are the most popular measures of:

A) financial productivity.
B) market performance.
C) merchandise productivity.
D) consumer choice.
E) human resource allocation.

Question 14

Strategic planning:

A) requires a short-term commitment of resources by the retailer.
B) is concerned with maximizing the efficiency of the retailer's use of resources and with how the retailer converts these resources into sales and profits.
C) involves managing the buying and handling of merchandise, pricing, advertising and promotion, customer services and selling, and facilities.
D) is concerned with how the retailer responds to the environment in an effort to establish a short-term course of action.
E) involves adapting the resources of the firm to the opportunities and threats of an ever-changing retail environment.

Question 15

If a retailer has a return on assets of 15 percent and a net profit margin of 3 percent,then its rate of asset turnover is:

A) .20 times.
B) 5.0 times.
C) 15.0 times.
D) 30.0 times.
E) 60.0 times.

Question 16

The beginning of a retailer's strategic planning process is the formulation of the retailer's:

A) goals and objectives.
B) opportunity analysis audit.
C) alpha statement.
D) mission statement.
E) strategy statement.

Question 17

For a mission statement to be effective,it should:

A) be less than 10 words; after all, the more concise the mission statement, the more focused the company.
B) provide a basic description of the fundamental nature, rationale, and direction of the firm.
C) be changed annually to reflect changes in the environment.
D) follow the strategy laid out annually by senior management.
E) be developed only after the retailer sets its goals and objectives.

Question 18

Which of the following is not a step in the strategic planning process:

A) develop action plans.
B) perform a SWOT analysis.
C) define specific goals and objectives.
D) a well defined mission statement.
E) strategy development

Question 19

_____ is the anticipation and organization of what needs to be done to reach an objective.

A) Analyzing
B) Forecasting
C) Planning
D) Strategic realignment
E) Tactical adaptation

Question 20

The four basic types of objectives that a retailer can formulate are:

A) financial, gross margin return on sales, return on assets, and return on net worth.
B) equity, benefactor, consumer choice, and employment.
C) sales volume, market share, productivity, and profitability.
D) societal, market performance, personal, and financial performance.
E) marketing performance, profitability, productivity, and societal.

Question 21

The manager of a department store chose to use a percentage of the year's profits to help fund the Salvation Army's Thanksgiving Dinner for the Homeless.In reference to this sponsorship,the manager appears to have set what kind of objective?

A) Benefactor objective
B) Self-gratification objective
C) Financial performance objective
D) Status and respect objective
E) Personal objective

Question 22

Chandler Markus is the store manager for a large discount drugstore.Chandler allows his department managers to arrange the fixtures and schedule their employees as they see fit.According to Chandler's actions,the drugstore has set what kind of objective?

A) Benefactor objective
B) Power and authority objective
C) Space productivity objective
D) Employee-centered objective
E) Employee empowerment

Question 23

When a retailer uses productivity objectives,it is referring to the productivity of which resources?

A) Market comparison, profitability, productivity
B) Net worth, financial leverage, and asset turnover
C) Sales, merchandise, and owner's equity
D) Space, labor, and merchandise
E) space, owner's equity, and merchandise

Question 24

Which of the following refers to a retailer's "traffic strategy"?

A) Having the right merchandise, using the right layout and display, and having the right sales force
B) Providing the appropriate level of service that the customers expect
C) Getting shoppers and converting them into customers at the lowest operating cost possible
D) Converting shoppers into customers by having them purchase merchandise
E) Getting shoppers into the store

Question 25

If a retailer has a net profit margin of 3 percent,asset turnover of 4.0x,and financial leverage of 2.0x,then its return on net worth is:

A) 6 percent.
B) 8 percent.
C) 12 percent.
D) 24 percent.
E) 48 percent.

Question 26

If a retailer with an ROA of 7.0 percent decides to increase its financial leverage ratio from 1.5 times to 2.0 times,which of the following results will occur?

A) The retailer's ROA will increase by 33 percent.
B) The retailer's RONW will decrease by 33 percent.
C) The retailer's RONW will go from 10.5 percent to 14.0 percent.
D) The retailer's RONW will increase by .5 percent.
E) The retailer's RONW will increase by 10.5 percent.

Question 27

The analysis that provides management with a critical view of the organization's position relative to its internal and external environment is known as:

A) SWOT analysis.
B) strategic window analysis.
C) leverage analysis.
D) retail audit.
E) opportunities awareness.

Question 28

Which of the following is NOT an example of a financial performance goal?

A) Increase return on assets from 8 percent to 9 percent.
B) Increase asset turnover from 2.5 to 2.8.
C) Increase market share by 20 percent.
D) Increase space productivity by 5 percent.
E) Reduce financial leverage from 2.1 to 2.0.

Question 29

A retailer has a net profit of $1,000,000,total assets of $12,000,000,a 2.5 asset turnover ratio,and a net worth of $5,000,000.What is its financial leverage ratio?

A) .083 times
B) .500 times
C) 2.00 times
D) 2.40 times
E) 4.80 times

Question 30

Specialty stores typically have a _____ than discounters.

A) lower asset turnover
B) lower profit margin
C) lower return on net worth
D) lower market share
E) lower return on net worth and lower market share

Question 31

If net profit margin is 5.0 percent,rate of asset turnover is 4.0x,and financial leverage is 2.0x,then return on net worth is:

A) 8.0 percent.
B) 10.0 percent.
C) 20.0 percent.
D) 40.0 percent.
E) 80.0 percent.

Question 32

A retailer has total assets of $6,000,000 and a net worth of $3,000,000.What is the retailer's financial leverage ratio?

A) .5 times
B) 2.0 times
C) 50 percent
D) 75 percent
E) 100 percent

Question 33

If a retailer is assessing the remodeling needs of its stores,as well as evaluating the effect that the lack of a formal training program is having on the management of its establishments,the retailer is reviewing the firm's:

A) strengths.
B) weaknesses.
C) opportunities.
D) threats.
E) operations.

Question 34

If a retailer has an ROA of 10 percent and a financial leverage of 4.0,then its RONW would be:

A) 0.4 percent.
B) 6 percent.
C) 14 percent.
D) 26 percent.
E) 40 percent.

Question 35

Closure strategy is:

A) often referred to as a "retailer's cost management" strategy.
B) just getting shoppers into the store.
C) getting shoppers in the store and converting them into customers at the lowest operating cost possible.
D) often referred to as a retailer's traffic strategy.
E) having the right merchandise, using the right layout and display, and having the right sales force.

Question 36

A retail firm that is setting goals based on its desire to help society fulfill some of its needs is developing _____ objectives.

A) personal
B) self-respect
C) financial benefit
D) self-esteem
E) societal

Question 37

Merchandise productivity:

A) is net sales divided by the total square feet of retail floor space.
B) states how many dollars in sales the retailer wants to generate for each square foot of store space.
C) is net sales divided by the number of full-time-equivalent employees.
D) reflects how many dollars in sales the retailer desires to generate for each full-time-equivalent employee.
E) is net sales divided by the average dollar investment in inventory.

Question 38

When a retailer is attempting to determine its major advantage(s)over competitors,it is analyzing its:

A) strengths.
B) weaknesses.
C) opportunities.
D) threats.
E) operations.

Question 39

A "retailer's cost management" strategy refers to:

A) getting shoppers into the store.
B) having the right merchandise, using the right layout and display, and having the right sales force.
C) the small size of the retailers' stores which gives these advantages in negotiating leases in an industry with a surplus of stores, thus reducing their operating costs.
D) having a low marginal cost, where the cost of selling one more unit does not significantly impact total costs, thus making them want to maximize revenue.
E) getting shoppers and converting them into customers at the lowest operating cost possible that is consistent with the level of service that customers expect.

Question 40

You have recently been hired by a small retailer in your area.During a discussion with the owner,you notice that the owner's primary objective for being in business is to provide the customer with a real alternative.The owner is primarily using a _____ objective to focus the business.

A) market performance
B) financial performance
C) societal
D) personal
E) self-esteem

Question 41

Which of the following is an incorrect statement regarding strategic planning?

A) A short-term commitment of resources is required by strategic planning.
B) The strategic planning process is started by assessing the external environment.
C) Effective strategic planning can aid a retailer in contending with competitors.
D) Strategic planning takes into consideration how a retailer responds to the environment.
E) Ineffective strategic planning can lead to a decrease in a retailer's level of profitability.

Question 42

_____ signify what the retailer wants to accomplish,while _____ indicate how the retailer will attempt to achieve them.

A) Objectives; mission statements
B) Mission statements; plans
C) Strategies; plans
D) Objectives; strategies
E) Action plans; strategies

Question 43

A firm's specific goals and objectives should not be identified within its mission statement.

Question 44

Most smaller retailers have more control over this important factor for successes than larger retailers:

A) promotional strategy.
B) location.
C) personnel.
D) service levels.
E) credit policies.

Question 45

As a general rule,retailers should strive for an asset turnover of:

A) 1.0 to 1.5 times.
B) 1.5 to 2.0 times.
C) 2.0 to 2.5 times.
D) 2.5 to 3.0 times.
E) 3.0 to 3.5 times.

Question 46

As a general rule,retailers should strive for a financial leverage of:

A) 1.0 to 2.0 times.
B) 2.0 to 3.0 times.
C) 3.0 to 4.0 times.
D) 4.0 to 5.0 times.
E) 5.0 to 6.0 times.

Question 47

A fully-developed retail marketing strategy specifies the:

A) level of financial performance sought and mix of financial statement components.
B) specific target market sought, location, the specific retail mix to be used, and the retailer's value proposition.
C) consumer and channel member behavior.
D) prices of goods to be sold.
E) retail mix to be used, specific target market sought, and budget available.

Question 48

If a retailer is attempting to determine which of the closely related areas of business are underdeveloped in its market,it is assessing its:

A) strengths.
B) weaknesses.
C) opportunities.
D) threats.
E) operations.

Question 49

Less than 60 percent of all retailers have a written mission statement.

Question 50

If a retail firm is attempting to determine the potential negative effects of a new competitor entering the market,it is assessing its:

A) strengths.
B) weaknesses.
C) opportunities.
D) threats.
E) operations.

Question 51

A good mission statement states how the retailer intends to use its resources,how it expects to relate to the ever-changing environment,and how it expresses the values it intends to offer the consumer.

Question 52

Just having a written mission statement is enough for success in today's environment; after all,with all the changes taking place it would be foolish to expect a retailer to always adhere to its original mission statement.

Question 53

The retailer's _____ is a clear statement of the tangible and intangible results a customer receives from using the retailer's products or services.

A) mission statement
B) customer interaction tracker
C) value proposition
D) customer type indicator
E) vision statement

Question 54

Success for all retailers,large and small,is generally a matter of good planning and the implementation of the plan.

Question 55

A retailer's retail mix consists of all of the following EXCEPT:

A) location.
B) price.
C) customer service and selling.
D) traffic strategy.
E) merchandise.

Question 56

Superior planning can enable retailers to offset some of the advantages their competition may have,such as a better location.

Question 57

The aim of operations management is to:

A) heighten customer service.
B) advance the merchandise mix.
C) maximize the performance of current operations.
D) develop more effective long-term plans.
E) increase a product's perceived value to the customer.

Question 58

It is necessary for retail firms to strive for high-profit performance results:

A) so that average operating results can be obtained even if planned results cannot be accomplished.
B) as a means of achieving the largest profit possible.
C) a retailer need not strive for high profit performance results.
D) so that new retailer entrepreneurs cannot enter the market.
E) so that the managers can be allocated larger year-end bonuses.

Question 59

As a general rule,retailers should strive for a net profit margin of:

A) .05 to 1.5 percent.
B) 1.5 to 2.5 percent.
C) 2.5 to 3.5 percent.
D) 3.5 to 4.5 percent.
E) 4.5 to 5.5 percent.

Question 60

Essentially,a retailer's mission statement describes the fundamental nature,rationale,and direction of the firm.

Question 61

Financial performance objectives analyze the retailer's ability to provide a profit level adequate to continue in business.

Question 62

Return on assets is net profit divided by owner's equity.

Question 63

Most retailers like to operate with a financial leverage ratio of 1.0 or greater so as to minimize debt.

Question 64

Personal objectives relate to how a retail owner wishes to help individuals employed by the firm fulfill some of their needs.

Question 65

If a retailer has a financial leverage rate of 2.3 and an asset turnover of 2,then its RONW is 4.6 percent.

Question 66

Market share is equal to the retailer's total sales divided by total market sales.

Question 67

Market performance objectives compare a retailer's actions against those of competitors.

Question 68

Self-gratification focuses on the needs and desires of the owners,managers,or employees of the firm and their pursuit of what they truly want out of life.

Question 69

When a retailer donates money to charity,this is considered a personal objective.

Question 70

Net profit margin shows how much profit a retailer makes on each dollar of sales.

Question 71

Net profit margin is calculated by dividing the retailer's net profits by markup in dollars.

Question 72

Paying taxes is the retailer's role in helping finance societal needs that the government deems appropriate,from welfare programs to national parks.

Question 73

If a retailer has a net profit margin of 2.0 percent and an asset turnover of 3.0,then its ROA will be 6.0 percent.

Question 74

Managers are usually evaluated on financial leverage since return on assets is beyond their control.

Question 75

Goal statements should specify "how" a retailer intends to achieve a specific level of performance,as well as the "time period" allowed for achievement of the results.

Question 76

An equity objective reflects the retailer's desire to treat the consumer and suppliers fairly and not endanger their living conditions.

Question 77

A retailer operating with a profit margin of 20 percent is making $20 on each $100 of sales.

Question 78

A retailer's goals and objectives should give precision and direction to the retailer's mission statement.

Question 79

All retail objectives,of whatever type,must be consistent with and reinforce the retailer's overall mission.

Question 80

The strategic profit model (SPM)assesses a retailer's performance and is based on the retailer's net profit margin,rate of asset turnover,financial leverage,and return on net worth.