Deck 4: Retail Institutions by Ownership

Question 1

A major disadvantage of independent retailing is the _____.

A)limitation in bargaining power
B)latitude in selecting customer markets
C)high investment requirements
D)inflexibility in developing strategy

Answer 1

A

Question 2

The high ease of entry into retailing _____.

A)generates a great deal of competition for new and existing retailers
B)means that investment per worker in retailing is generally higher than for most manufacturers
C)contributes to low new-retailer failure rates
D)is due to complex licensing provisions for many retailers

Answer 2

A

Question 3

A major competitive advantage of independent retailers is _____.

A)a good fit with other owned units
B)flexibility in devising retail strategy
C)quantity discounts in purchasing
D)specialization of retail functions

Answer 3

B

Question 4

The type of retailer with the largest percent of total retail franchise sales is _____.

A)gasoline service stations
B)hotels and motels
C)restaurants
D)auto and truck dealers

Question 5

A dealer agrees to sell a supplier's products and to operate under that supplier's name in _____.

A)a chain
B)a leased department
C)product/trademark franchising
D)independent channel ownership

Question 6

Independent retailers are characterized by _____.

A)a partnership form of organization
B)a franchise form of distribution
C)vertical integration
D)ownership of only one retail unit

Question 7

Franchisors can exclude franchisees from or limit their involvement in the strategic planning process through _____.

A)franchisor training
B)franchisor troubleshooting
C)limiting purchases to the franchisor or approved vendors
D)quantity purchases

Question 8

An example of a product/trademark franchise is a _____ franchise.

A)McDonald's fast-food
B)Wendy's fast-food
C)Super 8 hotel
D)Chevrolet auto dealership

Question 9

An example of a chain retailer performing a wholesaling function is _____.

A)gaining exclusive rights to sell certain items
B)introducing private brands,such as Sears' Kenmore
C)using point-of-sale equipment to determine inventory levels
D)buying directly from suppliers

Question 10

A benefit of franchising to a franchisor is _____.

A)the ability to develop a national presence with less franchisor investment than ownership
B)lack of uniformity
C)total channel control
D)intrafranchise competition

Question 11

In most situations,leased departments have been used by existing retailers to _____.

A)deepen their merchandise assortment to customers
B)generate cash flow due to centralized checkouts
C)improve the store's overall image
D)broaden their merchandise or service offerings into product categories on the fringe of their business

Question 12

Days Inn,Midas Muffler,and McDonald's are examples of which type of retail franchising structural arrangement?

A)service sponsor-retailer
B)voluntary wholesaler-retailer
C)manufacturer-retailer
D)cooperative wholesaler-retailer

Question 13

What percent of overall retail store sales are accounted for by independent retailers?

A)10
B)25
C)50
D)75

Question 14

An independent can limit the overdependence on the owner problem by _____.

A)life insurance
B)incorporating
C)centralized decision making
D)decentralized decision making

Question 15

Fair practice laws are designed to prevent a franchisor from _____.

A)enforcing a tying agreement
B)terminating,canceling,or failing to renew a franchise without sufficient cause
C)incorrectly reporting franchise profits and investments
D)selling additional franchises in a protected territory

Question 16

A disadvantage of centralized purchasing to a chain retailer is _____.

A)overdependence on the boss
B)lack of quantity discounts
C)absence of bargaining power
D)the difficulty in adapting to local needs

Question 17

Auto dealer and gasoline station franchises represent what type of structural arrangement?

A)voluntary wholesaler-retailer
B)service sponsor-retailer
C)cooperative wholesaler-retailer
D)manufacturer-retailer

Question 18

The use of prototype stores,standardized product lines,and cooperative advertising characterizes _____.

A)retail cooperatives
B)business format franchising
C)product/trademark franchising
D)vertical marketing systems

Question 19

Retailing is best characterized by which of the following?

A)independent ownership dominating sales
B)franchise organizations dominating sales
C)ease of entry into the marketplace
D)vertical marketing systems being fully integrated

Question 20

While chains account for about 30 percent of all retail establishments,they account for what percent of total retail sales?

A)30
B)50
C)75
D)90

Question 21

A manufacturer with low company resources that seeks intensive distribution should utilize which vertical marketing system?

A)a retail cooperative
B)partially integrated marketing system
C)independent vertical marketing system
D)fully integrated marketing system

Question 22

A major benefit to all parties of established channel roles is the _____.

A)development of long-term relationships among channel members
B)use of intensive distribution to foster consumer convenience
C)reduction in retail selling price due to private brands
D)development of a uniform image

Question 23

Avon and Sherwin-Williams utilize _____.

A)an independent vertical marketing system
B)a partially integrated vertical marketing system
C)a fully integrated vertical marketing system
D)franchising

Question 24

A manufacturer can exert channel control through _____.

A)pre-ticketing items
B)private branding
C)cooperative advertising
D)market research

Question 25

The overall process whereby one member of a channel can impose its will on other independent channel members is referred to as _____.

A)channel control
B)vertical integration
C)franchising
D)private branding

Question 26

Which vertical marketing system is involved when one channel member performs all production and distribution functions?

A)fully integrated vertical marketing system
B)partially integrated vertical marketing system
C)independent vertical marketing system
D)franchising

Question 27

The use of franchising and the designation of suggested retail selling prices are channel control strategies of _____.

A)consumer cooperatives
B)wholesalers
C)retailers
D)manufacturers

Question 28

An advantage of a leased department form of organization to a leasee is _____.

A)an enlarged market due to providing one-stop customer shopping
B)management assistance
C)protection from FTC regulations
D)financial support provided by the leasor

Question 29

Which of the following has the greatest flexibility in developing and implementing a retail strategy?

A)independent retailer
B)franchisee
C)chain store manager
D)leased department operator

Question 30

A benefit to the use of a fully integrated vertical marketing system is _____.

A)higher investment requirements
B)greater profitability due to franchising
C)greater control over production and marketing
D)increased sales due to less market penetration

Question 31

The growth of consumer cooperatives has been limited due to _____.

A)fair practice legislation
B)required consumer/member initiative and drive
C)competitive actions by full-service retailers
D)wholesaler use of full-time forcing

Question 32

A disadvantage of a leased department to the leased department operator is the _____.

A)restriction on goods/services carried
B)high promotional expense
C)poor cash flow due to centralized checkouts
D)creation of a one-stop shopping environment

Question 33

Uniformity of retail image is not a problem for _____.

A)independent retailers
B)chains
C)franchises
D)leased department lessees

Question 34

Retailers can possess channel control through _____.

A)franchising
B)fair trade legislation
C)private brands
D)tying contracts

Question 35

The need to develop and monitor a common image for all units is important for which retail institutions?

A)independents and cooperatives
B)chains and franchises
C)chains and service sponsors
D)independents and service sponsors

Question 36

The most common form of vertical marketing system is _____.

A)independent vertical marketing system
B)partially integrated marketing system
C)fully integrated marketing system
D)a retail cooperative

Question 37

Decision making is usually centralized and the levels of management personnel are minimized in which retail institution?

A)department store
B)chain
C)variety store
D)independent

Question 38

Which statement concerning the ease of entry into retailing is correct?

A)Ease of entry generates a high degree of competition.
B)Investment per worker in retailing is significantly greater than that of manufacturing establishments.
C)Ease of entry is reflected in high market shares for leading firms.
D)Ease of entry into retailing contributes to the need for effective stockholder relations.

Question 39

Which of the following has developed because existing retail institutions are inadequately fulfilling market needs?

A)consumer cooperatives
B)independent channel ownership
C)leased departments
D)total vertical integration

Question 40

Which vertical marketing system allows a firm to appeal to different customers through different wholesale and retail distribution forms?

A)dual vertical marketing system
B)independent vertical marketing system
C)partially integrated vertical marketing system
D)fully integrated vertical marketing system

Question 41

Agreements drawn up that require franchisees to abide by stringent regulations set by the franchisor are legal if necessary to _____.

A)develop and maintain a uniform chain-like image
B)force franchisees to purchase goods and services from approved vendors
C)constrain franchisee decision making
D)provide franchisors with additional revenues

Question 42

Which statement about leased departments is not correct?

A)The proprietor of a leased department is responsible for all aspects of its operations.
B)The leasor provides management assistance,training,and troubleshooting for the leasee.
C)The leasor imposes various stipulations on the leasee to ensure consistency and coordination.
D)Leased departments tend to operate on the fringe of a department store's product lines.

Question 43

Which of the following is not a benefit to a department or discount store using leased departments instead of company-operated units?

A)a one-stop shopping environment
B)low investment requirements
C)high control of operations
D)payment based on sales,not profits

Question 44

Which of the following is not a structural arrangement involving retail franchisees?

A)manufacturer-retailer
B)vertical marketing system
C)service sponsor-retailer
D)wholesaler-retailer

Question 45

A major potential problem associated with franchising for the franchisor is that _____.

A)money is obtained when goods are delivered,rather than when they are sold
B)franchisees as owners have less incentive to work hard than employees
C)it is difficult to set up and enforce franchise qualifications
D)poorly performing franchises can undermine both consumer and investor confidence

Question 46

Franchisors generally receive revenues from franchisees from all of the following except _____.

A)initial franchise fee
B)quality control fee
C)percent of gross sales royalty fee
D)sale of goods and services to franchisee

Question 47

Which of these is not an advantage of franchising to the franchisee?

A)the training provided
B)strict contract provisions
C)exclusive selling rights
D)cooperative marketing programs

Question 48

The job titles of buyer,vice-president of operations,and merchandise vice-president are more likely to be found in what type of retail institution?

A)independent
B)chain
C)leased department
D)franchise

Question 49

In contrast to product/trademark franchising,in business format franchising,_____.

A)franchisees have greater flexibility in operations
B)franchisees can operate autonomously from their suppliers
C)there is an active relationship between the franchisor and franchisee
D)about 70 percent of all retail franchising occurs

Question 50

As a result of constrained decision making in franchising,_____.

A)oversaturation of outlets can occur
B)royalties are based on sales,not profits
C)the franchisor can limit franchisee input into planning
D)the franchisor uses short-duration leases

Question 51

FTC rulings,fair practice laws,and franchise-member organizations have the effect of _____.

A)shifting some channel power back to franchisees
B)limiting franchisor "right-to-purchase" laws
C)promoting service-sponsor versus manufacturer franchises
D)further constraining decision making relative to franchisees

Question 52

Independents can compete with chain organizations (in terms of image,promotional effectiveness,and central organization assistance)through _____.

A)franchising
B)an off-price chain
C)a vertical marketing system
D)a leased department

Question 53

Centralized purchasing and decision making,as well as cost efficiencies,are characteristics of which form of retail institution?

A)independents
B)chains
C)retail cooperatives
D)vertical marketing systems

Question 54

An individual attempting to enter retailing who desires and requires considerable training and assistance should consider _____.

A)product/trademark franchising
B)business format franchising
C)independent retailing
D)a leased department operation

Question 55

Chains can receive new items as soon as they are introduced,get proper service and selling support from suppliers,and obtain the best prices.These advantages refer to _____.

A)economies of scale
B)a centralized organization
C)quantity discounts
D)bargaining power

Question 56

The job titles of channel member salesperson,vice-president of real-estate,vendor quality inspector,and channel member support person are most likely to be found in what type of retail institution?

A)independent
B)consumer cooperative
C)leased department
D)franchisor

Question 57

A problem common to franchisors and department or discount stores that utilize leased departments is the _____.

A)short duration of most leases
B)potential negative effect on the firm's overall image
C)inflexibility with regard to store hours and operating style
D)legality of contract provisions relating to use of approved vendors

Question 58

A business format franchise most closely resembles which vertical marketing system alternative?

A)independent vertical marketing system
B)partially integrated vertical marketing system
C)fully integrated vertical marketing system
D)dual vertical marketing system

Question 59

A unique disadvantage for independent retailers is a lack of _____.

A)competitive advantages
B)independence
C)control over strategy
D)management succession

Question 60

A major competitive advantage of chains in contrast to independents is _____.

A)freedom from antitrust legislation.
B)freedom from unionization.
C)independence of actions.
D)efficiencies due to doing wholesaling functions.

Question 61

A retail firm can be correctly placed in only one institutional classification.

Question 62

Channel control is lowest for manufacturers/service sponsors in _____.

A)a fully integrated vertical system
B)an independent vertical marketing system
C)product/trademark franchising
D)business format franchising

Question 63

Manufacturers/service sponsors can exert channel control through _____.

A)brand loyalty
B)store loyalty
C)private branding
D)fair practice legislation

Question 64

In an independent vertical marketing system,_____.

A)successive stages of production and distribution are jointly owned
B)manufacturers seek out wholesalers,who seek out retailers to stock and sell products
C)two channel members can perform all production and marketing functions
D)marketing operations are franchised

Question 65

The majority of franchising sales are made by franchisor-owned units.

Question 66

Two broad types of franchising arrangements are product/trademark franchising and business format franchising.

Question 67

Channel control is greatest for manufacturers/service sponsors in _____.

A)a fully integrated marketing system
B)business format franchising
C)product/trademark franchising
D)an independent marketing system

Question 68

Independent retailer organizations are generally characterized by centralized decision making and by minimal layers of management personnel.

Question 69

A large retailer,such as Wal-Mart,can gain channel control over suppliers through _____.

A)bargaining power
B)fair trading
C)franchising
D)full-line forcing

Question 70

Business format franchisees operate in a relatively autonomous manner from their franchisors.

Question 71

The vast majority of all retail institutions are chain operated.

Question 72

In general,retailing is characterized by the relative ease of entry when compared with manufacturing activities.

Question 73

An important problem for small,family-run independent retail businesses is overdependence on the owner.

Question 74

A retailer can generate channel control through each of the following strategies except _____.

A)bargaining power due to many purchases from a manufacturer
B)private brands
C)the threat of switching vendors
D)franchising

Question 75

Many leases in leased departments can be terminated on very short notice (as little as 60 days)by the leasor.This gives the leasor _____.

A)decreased bargaining power
B)increased bargaining power
C)protection under fair practice laws
D)additional revenue

Question 76

A retailer generates channel control by attaining brand loyalty for its goods and converting it to store loyalty.This retailer is utilizing _____.

A)private brands
B)franchising
C)bargaining power in negotiations
D)a fully integrated vertical marketing system

Question 77

A firm using a differentiated marketing strategy should utilize a(n)_____.

A)independent vertical marketing system
B)partially integrated vertical marketing system
C)fully integrated vertical marketing system
D)dual vertical marketing system

Question 78

While chains comprise about 30 percent of all retail institutions,they account for about 75 percent of retail sales.

Question 79

In a typical franchise arrangement,a franchisee pays an initial fee and a monthly percentage of gross sales in exchange for the exclusive rights to sell goods and services in a specified geographic area.

Question 80

Retailers use private labeling to generate channel control because _____.

A)retailers can switch vendors with no impact on their customer loyalty
B)a large proportion of a manufacturer's output is sold to one retailer
C)retailers can more easily obtain bank financing
D)greater channel communication is fostered