Question 1

A sales opportunity grid evaluates new opportunities on the basis of such criteria as _____.

Accepted Answer

The sales opportunity grid evaluates new opportunities based on profitability, which is measured by net profit in specific time periods. The other criteria listed (sales per square foot, retail price, and sales revenues) do not necessarily indicate profitability and are not typically used as primary criteria in evaluating sales opportunities.

Question 2

A firm's comparing its performance to competitors based on the components of the strategic profit model illustrates _____.

Accepted Answer

Benchmarking is the process of comparing a firm's performance to that of its competitors in terms of key performance indicators. Comparing the components of the strategic profit model, which includes factors such as revenues, costs, and capital utilization, is a common method of benchmarking. SERVQUAL is a customer service quality assessment tool, opportunity cost analysis is a decision-making approach that involves evaluating the alternatives forgone by choosing one option over another, and gap analysis is a method of identifying differences between current and desired performance levels. None of these options accurately describe the scenario presented in the question.

Question 3

A retailer's actual GMROI was 25 percent,whereas its planned GMROI was 30 percent.The retailer should perform _____.

Accepted Answer

The retailer should perform gap analysis to identify the gap between the actual and planned GMROI. This analysis will help the retailer to identify the reasons for the gap and take corrective measures to improve the GMROI. Benchmarking is a helpful tool for identifying the best practices of other retailers but may not directly address the specific gap in GMROI. Retail performance indexing is a measure of performance against a set of key performance indicators but does not necessarily address the GMROI gap. Opportunity cost analysis is a tool for analyzing the financial impact of choosing one option over another and may not directly apply to the situation of a lower-than-planned GMROI.

Question 4

In developing performance measures for a retail operation,it is important to _____.

Accepted Answer

Using measures comparable to secondary source data allows for benchmarking and comparison with industry standards.

Question 5

In developing performance measures for a retailer,it is important to _____.

Accepted Answer

Performance measures should be consistent over time to allow trends to be ascertained.

Question 6

A home improvement chain plans for various contingencies such as higher interest rates reducing home sales and the effect of electricity disruption due to major storms.This analysis is _____.

Accepted Answer

The analysis described involves considering different possible scenarios and their potential impact on the business, which is characteristic of scenario analysis. Gap analysis involves assessing the difference between current performance and desired outcomes, benchmarking involves comparing performance with industry peers, and opportunity cost analysis involves making a choice between two options based on the potential benefits forfeited with the option not chosen.

Question 7

Which statement concerning the sales opportunity grid is not correct?

Accepted Answer

The statement that the sales opportunity grid assumes that all products have the same markup is not correct. The sales opportunity grid takes into account individual product costs and profitability, and does not assume that all products have the same markup.

Question 8

What type of auditor is most appropriate for a small,independent retailer?

Accepted Answer

An outside auditor is most appropriate for a small, independent retailer as they provide an unbiased and independent assessment of the company's financial statements and internal controls.

Question 9

A chain with 100 stores is currently opening between 7 and 10 stores per year.What performance measure most accurately reflects continuing sales productivity?

Accepted Answer

Sales per square foot in stores open one year or more is a better measurement because it takes into account the productivity of individual stores that have been open for at least a year, rather than just looking at overall sales or growth. This provides a more accurate reflection of continuing sales productivity.

Question 10

Very large retail organizations are best able to use which type of person to conduct an audit?

Accepted Answer

The answer of Very large retail organizations are best able...

Question 11

Which of SERVQUAL's attributes relates to whether the service was performed correctly the first time?

Accepted Answer

Reliability is the attribute that relates to whether the service was performed correctly the first time. This involves providing accurate and dependable service to customers.

Question 12

A retailer wants an audit to be as objective as possible.The retailer recognizes that there is significant rivalry and competition within the firm.The retailer should use a(n)_____ to conduct the audit.

Accepted Answer

An outside auditor is not affiliated with the company and has no personal interest in the outcome of the audit, making them the most objective choice. Company department managers, team auditors, and company specialists may have personal biases or conflicts of interest that can affect the result of the audit, especially in a highly competitive environment.

Question 13

Direct product profitability for a new product over a three-year period can be assessed through _____.

Accepted Answer

The answer of Direct product profitability for a new product...

Question 14

Which statement about the use and interpretation of secondary data to measure a retailer's performance is not correct?

Accepted Answer

A retailer should not necessarily base their performance standards solely on the best retailers across industries. They should consider the performance of the best retailers within their industry and adjust accordingly.

Question 15

The appearance of service technicians and of the service equipment is referred to as _____ in SERVQUAL.

Accepted Answer

The appearance of service technicians and service equipment is a measure of tangibles in SERVQUAL. Tangibles refer to the physical facilities, equipment, and appearance of personnel.

Question 16

Average sales per store,sales per square foot of selling space,and inventory turnover are examples of retail _____.

Accepted Answer

Average sales per store, sales per square foot of selling space, and inventory turnover are all performance measures used in retail. These measures help retailers assess their effectiveness and efficiency in generating sales and managing inventory. Option A, return on net worth performance ratios, is not applicable to retail, while option B, non-key business ratios, is too general and does not accurately describe these specific measures. Option C, inventory management ratios, is partially correct but does not encompass all of the measures listed.

Question 17

A firm benchmarking its customer satisfaction on the basis of secondary data should use _____.

Accepted Answer

The American Customer Satisfaction Index (ACSI) is a widely used benchmark to evaluate customer satisfaction levels of different companies and industries, based on secondary data sources. It provides a valid measure of customer satisfaction, based on a standardized methodology and extensive research. While reliability measures, gap analysis, and SERVQUAL are useful tools for assessing customer satisfaction, they primarily rely on primary data collection and may not be feasible or cost-effective for all firms. Using secondary data sources and a validated benchmark like ACSI can help firms benchmark their performance and identify areas for improvement.

Question 18

Which auditor provides a retailer with the highest level of objectivity?

Accepted Answer

An outside auditor is independent and not affiliated with the company or its management, providing the highest level of objectivity in their auditing and reporting. Company department managers and specialists may have internal biases or conflicts of interest, while disguised auditors are only effective in identifying specific issues rather than providing a comprehensive evaluation.

Question 19

A retailer would not conduct an audit unless it would involve the lowest incremental costs possible.The retailer should consider using a(n)_____.

Accepted Answer

A company department manager is likely to have the lowest incremental costs because they are already employed by the company and do not need to be paid additional fees.

Question 20

A horizontal audit is often conducted prior to a vertical audit,since the horizontal audit _____.

Accepted Answer

A horizontal audit focuses on a particular area or process within a company, often revealing weaknesses or areas that require further attention. This information can then be used to guide a more comprehensive vertical audit. The cost and level of expertise required for a horizontal audit may vary depending on the size and complexity of the organization, but it is generally considered an important first step in the audit process. The other options given (B, C, and D) do not accurately describe the purpose or benefits of a horizontal audit.

Quiz 20: Integrating and Controlling the Retail Strategy