Deck 3: Strategic Planning in Retailing

Question 1

An overall framework of action that guides a retailer is its ________.

A) mission statement
B) corporate philosophy
C) retail tactics
D) retail strategy

Answer 1

D

Question 2

Ownership may be separated from management in which retail ownership form?

A) sole proprietorship
B) partnership
C) government stores
D) corporation

Answer 2

D

Question 3

A major advantage of buying an established business versus starting a new business is ________.

A) flexibility in location
B) the generation of ongoing sales and profits
C) beginning with an unknown name and image
D) having to establish supplier relationships

Answer 3

B

Question 4

Which ownership and management alternative is fully controlled by the owner,operationally flexible,and subject to single taxation by the government?

A) franchising
B) sole proprietorship
C) corporation
D) partnership

Question 5

A major advantage of a firm's developing a retail plan is that it ________.

A) focuses on short-run tactics
B) anticipates and may avoid a crisis
C) balances sales forecasts with inventory requirements
D) shows likely competitor reactions

Question 6

In which management format does planning tend to be more formal and systematic?

A) centralized structure
B) corporate
C) professional manager system
D) owner-manager system

Question 7

Benefits,profits,risks,and costs are shared in which retail ownership and management alternative?

A) franchising
B) sole proprietorship
C) corporation
D) partnership

Question 8

Which form of ownership is a legal entity apart from its individual officers or stockholders?

A) independent ownership
B) sole proprietorship
C) corporation
D) partnership

Question 9

A retailer's commitment to a type of business and to a distinctive role in the marketplace is its ________.

A) overall retail strategy
B) organizational mission
C) long-term plan
D) competitive advantage

Question 10

Each of the steps in a retail strategy is ________.

A) interdependent with other steps
B) independent of each other
C) organized on the basis of strategy and tactics
D) organized by company, geographic region, and store units

Question 11

The candid evaluation of the opportunities and potential problems facing a prospective or existing retailer is referred to as ________.

A) situation analysis
B) implementation and analysis
C) philosophy of business
D) strategy determination

Question 12

Which statement concerning the partnership form of ownership is not correct?

A) Partnerships are subject to double taxation.
B) Partnerships are simpler to form than a corporation.
C) A partnership binds all partners to actions made by any individual partner acting on behalf of the company.
D) Responsibility and expertise may be divided among partners.

Question 13

Planning authority is limited to top management or ownership in a(n)________.

A) professional manager system
B) owner-manager system
C) centralized system
D) decentralized system

Question 14

A retail ownership form which combines independent ownership and managerial support is ________.

A) a corporation
B) a partnership
C) franchising
D) a sole proprietorship

Question 15

In planning his or her family's financial needs during the unprofitable stage of a newly started business,a retailer should utilize ________.

A) a home-equity mortgage loan
B) a personal drawing account
C) withdrawal of monies from personal savings' accounts
D) loans made with life insurance policies as collateral

Question 16

Managers in individual departments have major input into decision making in a(n)________.

A) centralized structure
B) decentralized structure
C) franchise system
D) owner-manager system

Question 17

In which ownership and management alternative is the owner personally liable with regard to legal claims from suppliers,creditors,and others?

A) franchising
B) sole proprietorship
C) corporation
D) partnership

Question 18

Which retail ownership form has the greatest capacity for long-term existence?

A) sole proprietorship
B) partnership
C) corporation
D) franchise

Question 19

A major disadvantage of buying an established business versus starting a new business is ________.

A) less flexibility in enacting a strategy tailored to the new owner
B) having a time lag until the business is ready to open
C) developing an inventory of goods
D) the existence of financing from the seller

Question 20

Rigid operations' standards and a limitation on the product lines sold characterize ________.

A) the owner-manager system
B) partnerships
C) franchising
D) chain ownership

Question 21

An advantage of starting a new business (versus buying an existing business or becoming a franchisee)is the ________.

A) established customer following
B) management assistance and training
C) time lag before opening
D) nonpayment for goodwill

Question 22

Which characteristic is shared by both sole proprietorships and partnerships?

A) depersonalization
B) management succession
C) single taxation
D) complexity and costs in setting up

Question 23

The growth of specialty stores and boutiques illustrates the popularity of ________.

A) bifurcated retailing
B) niche retailing
C) mass merchandising
D) dual channels of distribution

Question 24

A retailer with sales of $10 million and operating expenses of $2 million has an efficiency rating of ________.

A) 25 percent
B) 40 percent
C) 80 percent
D) 400 percent

Question 25

Objectives that seek to satisfy stockholders,customers,suppliers,employees,and government are called ________.

A) social marketing
B) satisfaction of publics' objectives
C) macromarketing
D) consumerism-based

Question 26

A retailer sells its goods and services to a broad spectrum of consumers in ________.

A) market segmentation
B) mass marketing
C) target marketing
D) multiple segmentation

Question 27

Which of the following is not a controllable variable?

A) store location
B) pricing
C) merchandise management
D) technology

Question 28

A retailer aims efforts at two or more distinct consumer groups,with different retailing approaches for each group,in ________.

A) market segmentation
B) concentrated marketing
C) mass marketing
D) differentiated marketing

Question 29

Market share sales' objectives are generally ________.

A) pursued by only larger retailers or retail chains
B) pursued by small, local independent retail businesses
C) based on existing store sales, not new store sales
D) used to determine store awareness

Question 30

Sales objectives are generally in the form of ________.

A) return on investment, efficiency, and level
B) satisfaction of stockholders and customers
C) maintenance of status quo
D) growth, stability, and/or market share

Question 31

Those aspects of business that a retailer can directly affect (such as store hours and location)are referred to as ________.

A) controllable variables
B) uncontrollable variables
C) strategy
D) tactics

Question 32

Sales revenues and employee turnover represent forms of ________.

A) retail audits
B) tactics
C) feedback
D) adaptation

Question 33

A retailer can determine how consumers and others perceive its company through use of ________.

A) control analysis
B) situation analysis
C) target market assessment
D) positioning

Question 34

Which retail ownership and management alternative is most likely to have limited capital and expertise?

A) open corporation
B) closed corporation
C) sole proprietorship
D) partnership

Question 35

A firm's target market best represents the ________.

A) consumer group sought by a retailer
B) image that a retailer desires to project
C) product quality that a retailer sells
D) number of retail stores a retailer has in any one area

Question 36

An off-price retailer stocks first-quality,in-season,name-brand apparel,accessories,and footwear for the entire family with savings at 20 percent to 60 percent from regular department and specialty store prices.This constitutes its ________.

A) goods/service category
B) organizational mission
C) target market
D) competitive advantage

Question 37

Decision making relating to a retailer's daily and short-term operations involve ________.

A) tactics
B) target market determination
C) competitive advantage determination
D) strategies

Question 38

Return on investment objectives are generally used by retailers that ________.

A) have large capital expenditures
B) are vertically integrated
C) are labor intensive
D) have high efficiency

Question 39

The distinct competencies of a retailer relative to competitors is referred to as its ________.

A) competitive advantages
B) cost advantages
C) economies of scale
D) focused strategy

Question 40

A discount camera retailer specializes in Web-based sales of popular models of major brands of digital cameras.The retailer seeks to beat prices by traditional camera dealers.This illustrates the retailer's ________.

A) competitive advantage
B) organizational mission
C) satisfaction of publics
D) store positioning

Question 41

A retailer attempting to improve its efficiency from 40 to 50 percent reduced its operating expense budget from $600,000 to $500,000.However,its new efficiency remained at 40 percent.What happened?

A) Sales decreased from $1,000,000 to $800,000.
B) Sales decreased from $1,000,000 to $833,333.
C) Sales decreased from $1,000,000 to $900,000.
D) Sales increased from $1,000,000 to $1,200,000.

Question 42

A retailer seeking to purchase an existing retail business needs to verify the seller's statement of income.The prospective buyer should ________.

A) ask the seller for audited income tax statements on the business
B) accept the seller's "word"
C) sample sales during a representative two-week time period
D) judge sales on the basis of average industry benchmarks for usage, price, and additional services purchased

Question 43

Which objective is the most difficult to quantify?

A) sales
B) profit
C) satisfaction of publics
D) market share

Question 44

An advantage of buying an existing business versus starting a new business is ________.

A) no cost for goodwill
B) no time lag before opening
C) favorable lease terms
D) flexibility in developing and changing a retail strategy

Question 45

A major advantage of franchising from the perspective of the franchisor is ________.

A) franchisor management assistance and troubleshooting
B) lower operating costs due to shared purchases and advertising
C) rigid operations standards may limit franchisees from taking advantage of trends
D) the ability to develop a nationwide distribution system with minimum capital investment

Question 46

The most important limitation to consider in purchasing an existing business is ________.

A) a $40,000 payment for goodwill for a successful retail store that was established 10 years ago
B) a storefront that was renovated 10 years ago
C) the reason why the existing retailer is seeking to sell the business
D) a short-term lease on rented property

Question 47

Profitability objectives are most likely to be used when a retailer ________.

A) has a strong regional market presence
B) has high debt service
C) is privately held
D) is publicly held

Question 48

A major retailer studied the image of two of its units,a discount specialty store chain and an upscale specialty store chain,using a store positioning map technique.Each chain's images were clustered in separate quadrants.Which statement best explains this phenomenon?

A) Each chain has a distinct image.
B) Both chains appeal to the mass market.
C) Both chains appeal to the same target market.
D) Both chains are perceived as being upscale.

Question 49

A retailer has a sales efficiency rating of 20 percent.This means that ________.

A) 20 percent of every sales dollar is comprised of operating costs
B) 20 percent of every sales dollar contributes to nonoperating costs and profits
C) 80 percent of every sales dollar contributes to nonoperating costs and profits
D) its operating expense ratio has improved by 20 percent over the previous year

Question 50

Which of the following retail formats has a narrow width and high depth?

A) variety store
B) specialty store
C) supermarket
D) vending machine

Question 51

Intensive owner participation in a business is most likely to occur when ________.

A) a firm has strong financial controls
B) store hours are long
C) a business cannot be easily automated or mechanized
D) a retailer is well capitalized

Question 52

A uniform image is important for chain units and ________.

A) corporate-owned units
B) independently owned units
C) franchises
D) partnership-owned units

Question 53

Which management format best assures that individual retail store units have an overall retail strategy (store hours,merchandise selection,and price levels)that are most acceptable to community residents?

A) centralized structure
B) decentralized structure
C) professional manager system
D) owner-manager system

Question 54

Which of the following retail formats has a broad width and narrow depth?

A) vending machine
B) department store
C) supermarket
D) variety store

Question 55

A retailer with sales of $1 million wants to increase its efficiency rating from 40 percent to 60 percent.To what must it reduce operating expenses?

A) $200,000
B) $400,000
C) $500,000
D) $600,000

Question 56

The satisfaction-of-publics objective is most important for a retailer that is ________.

A) organized and managed as a sole proprietorship
B) organized and managed as a partnership
C) socially conscious
D) foreign-owned

Question 57

An advantage to a retailer's having a high depth is ________.

A) the appeal to consumers seeking a broad selection within a merchandise category
B) less likelihood of being out of stock
C) high inventory turnover
D) the appeal to one-stop shopping for a variety of goods and services

Question 58

Which management format best assures a low-cost provider retail strategy on the basis of quantity discounts,buyer negotiating ability,and the ability to easily switch merchandise among store units?

A) centralized structure
B) decentralized structure
C) professional manager system
D) owner-manager system

Question 59

Which management alternative is a sole proprietorship most likely to use?

A) professional manager system
B) centralized structure
C) decentralized structure
D) owner-manager system

Question 60

A store positioning map of clothing retailers uses fashion (with high fashion at the top and low fashion at the bottom)and value (with high-value price at the right and low-value price at the left)as its key dimensions.In what quadrant would you expect to find a full-service,fashion-based specialty store?

A) top right
B) top left
C) bottom right
D) bottom left

Question 61

The cost of a business above its tangible asset value is considered goodwill.

Question 62

A long-term lease for an excellent retail location at a below market rental is an example of a retailer's ________.

A) competitive advantage
B) goodwill
C) store positioning
D) uncontrollable variables

Question 63

In retailing,market share is usually an objective for only small retailers or independents.

Question 64

Which target market strategy is most complex in terms of planning and implementation?

A) mass marketing
B) concentrated marketing
C) differentiated marketing
D) market niche

Question 65

Which of the following is an example of a controllable variable to an independent stationery and greeting card store?

A) high seasonality, especially during the first two weeks of school, and holiday periods
B) consumer acceptance of the store's new free delivery policy
C) stocking a broad selection of computer-based supplies for neighborhood residents that have computers and printers
D) competition from a new supermarket that stocks greeting cards and stationery

Question 66

A mass market strategy should be used by a retailer when ________.

A) important differences exist among consumers in terms of their needs
B) consumer needs in terms of goods and services are homogeneous
C) consumer needs in terms of goods and services are so diverse that they cannot be accurately characterized
D) many small niche markets exist

Question 67

Which retail strategy component is the most difficult to change?

A) promotion
B) pricing
C) merchandise management
D) store location

Question 68

An example of a tactical promotional decision is ________.

A) the development and implementation of a long-term image
B) the decision to use standardized promotions for all retail units
C) the decision that 75 percent of all promotional expenditures will be image-related
D) changing the advertising media mix on the basis of unfavorable publicity from a specific newspaper

Question 69

A person running a retail business works only when the business is open.

Question 70

Buying an existing business allows a retailer to fully tailor a retail strategy to the owner's desires and strengths.

Question 71

With a professional manager system,planning tends to be less formal and more intuitive than with an owner-manager system.

Question 72

Situation analysis seeks to answer two general questions: What is the retailer's current status? In which direction should it be heading?

Question 73

A retailer's time demand requirements can be reduced through use of a partnership organization,self-service formats,and automation/industrialization.

Question 74

In computing a retailer's financial requirements,personal savings,manufacturer and wholesaler credit,bank credit plans,bank loans,and commercial finance companies should be listed as a source of funds.

Question 75

An example of an uncontrollable variable to a franchisee is ________.

A) employee compensation above the minimum wage
B) zoning restrictions that limit the number of parking spaces
C) hiring of a store manager
D) retail prices of coffee

Question 76

An appliance repair firm wishes to determine the degree of customer satisfaction with its repair services.A survey is sent to each customer to determine whether their appliance was repaired properly,whether the workman arrived at the promised time,and whether the repair charge was within the original estimate.Other questions dealt with the conduct of the repairperson in terms of dress and customer relations skills.This survey is an example of which stage of the retail strategy?

A) feedback
B) adaptation
C) tactics
D) positioning

Question 77

Retail franchisees generally have a large degree of latitude in the operation of their businesses.

Question 78

A major potential disadvantage associated with the use of a differentiated marketing versus a mass marketing approach is that ________.

A) a major market segment may be saturated with retail offerings
B) an unchosen segment may have more opportunities
C) differences in each segment may be small relative to the costs of reaching each segment
D) competition is increased in each segment

Question 79

Which retail strategy controllable variable deals with asset management,budgeting,and resource allocation?

A) operations management
B) human resource management
C) merchandise management
D) pricing

Question 80

Retailers investing large capital expenditures in land,buildings,and equipment often have sales objectives as a company goal.