Exam 1 Study Guide Essay

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Exam 1 Review Sheet
Mtg. 393 Spring 2013
For all chapters you should know the basic concepts, their definitions, examples, and applications. Videos and anything discussed in class in addition to what is in the book is fair game.
Chapter 1
1. Know the definition of retailing.
A set of business activities that adds value to the products/services sold to consumers for personal use.
2. What is a distribution channel, what is a supply chain network, what is logistics?
Distribution channel: Supply chain: a set of firms that makes and delivers goods and services to the final consumer
Logistics: Detailed coordination of tasks that involve many people
3. Know the retailer’s role in the supply chain.
Retails are the final business within a supply chain. They link manufacturers to consumers
Know vertical integration, backward integration, and forward integration. Know examples.
Vertical integration – firm performs more than one set of activites that are on different points on a production path (ex: retailers investing in wholesaling
Backward Integration – retailer performs some distribution and manufacturing activities (ex: JCPenny selling Arizona Jeans, private label)
Forward Integration – manufacturers undertake retailing activities (ex: Ralph Lauren, Liz Claiborne operating their own stores)
Why is it advantageous for retailers to be vertically integrated?
More control over the value chain, competitive advantages, cost control, differentiation
4. Know how retailers create value and each of the 4 functions.
Breaking bulk (can be sold in quantities customers want) provide assortment (can buy other products at the same time), hold inventory (buy it at a convenient location, where you want it), and offering services (see it before you buy it, credit, layaway, help from employees etc)
5. Know the social and economic significance of retailing.
Retail sales account for over $4.1 trillion in annual sales, employs over 24 million people, and is one of the largest contributor to job growth
6. Know the top 3 largest retailers. What type of retailers dominates worldwide?
Walmart, Carrefour, Tesco. Retailers offering food and other fast-moving consumer goods dominate worldwide.
7. Know the U.S. distribution system, how it compares to the rest of the world and the major reasons why.
Has greatest retail density, greatest concentration of large retail firms, largest store sizes, large enough to operate their own warehouses, eliminating the need for wholesaling (other countries rely heavily on wholesalers), large store/firm combination results in great efficiency in the distribution system, few restrictions on locations, store size, and ownership (unlike other countries)
8. What is social responsibility? What is the role of retailers in this activity?
The voluntary actions taken by a company to address the ethical , social, and environmental impacts of its business operations, and also concerns of stakeholders Examples: Fair-trade, donating to charity
9. Know the difference between intratype and intertype competition. Why is this important for a retailer?
Intratype – competition between firms of the same types of businesses (Macys vs. Dillards)
Intertype –competition between firms that are different types of businesses (Macys. vs Walmart)
**Important because retailers must identify their competition
10. What is scrambled merchandising? What impact does it have on competition?
Scrambled merchandising is when retailers offer products that aren’t typically associated with their store (like drug stores selling clothing). This increases competition between these stores and retailers that sell those products.
11. What should a retail strategy identify?
Target market, significant demographic and life-style trends, the product and service mix, a long-term comparative advantage
12. Know the current retail issues as discussed in class.
13. Why do manufacturer’s need to