Name: Retailing Management 10th Edition By Michael Levy -Test Bank
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Complete Test Bank With Answers

Sample Questions Posted Below

Retailing Management, 10e (Levy)

Chapter 5 Retail Market Strategy

1) A retail format describes the nature of the retailer’s operations that it will use to satisfy the

needs of its target market.

Answer: TRUE

Explanation: A retail format describes the nature of the retailer’s operations—its retail mix (type

of merchandise and services offered, pricing policy, advertising and promotion programs, store

design and visual merchandising, typical locations, and customer services)—that it will use to

satisfy the needs of its target market.

Difficulty: 1 Easy

Topic: What is a Retail Strategy?

Learning Objective: 05-01 Define retail strategy.

Bloom’s: Remember

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

2) After selecting a target market and a retail mix, the final element in a retail strategy is the

identification of prospective wholesalers.

Answer: FALSE

Explanation: After selecting a target market and a retail mix, the final element in a retail strategy

is the retailer’s approach to building a sustainable competitive advantage.

Difficulty: 1 Easy

Topic: What is a Retail Strategy?

Learning Objective: 05-02 Illustrate how retailers build a sustainable competitive advantage.

Bloom’s: Remember

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

3) Building strong relationships with wholesalers is one of the three approaches for developing a

sustainable competitive advantage.

Answer: FALSE

Explanation: Three approaches for developing a sustainable competitive advantage are (1)

building strong relationships with customers, (2) building strong relationships with suppliers, and

(3) achieving efficient internal operations.

Difficulty: 1 Easy

Topic: How Retailers Build a Sustainable Competitive Advantage

Learning Objective: 05-02 Illustrate how retailers build a sustainable competitive advantage.

Bloom’s: Remember

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

No reproduction or distribution without the prior written consent of McGraw-Hill Education.4) Customer relationship management programs collect data about customer shopping behavior

to enable retailers to build and maintain customer loyalty.

Answer: TRUE

Explanation: Customer relationship management programs collect data about customer shopping

behavior to enable retailers to build and maintain customer loyalty.

Difficulty: 1 Easy

Topic: Customer Relationship Management Process

Learning Objective: 05-02 Illustrate how retailers build a sustainable competitive advantage.

Bloom’s: Remember

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

5) Market expansion approaches include opening more stores in the target market and/or keeping

existing stores open for longer hours.

Answer: FALSE

Explanation: Market penetration approaches include opening more stores in the target market

and/or keeping existing stores open for longer hours.

Difficulty: 2 Medium

Topic: Strategic Growth Opportunities for Retailers

Learning Objective: 05-03 Classify the different strategic growth opportunities retailers pursue.

Bloom’s: Remember

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

6) A retail format development growth opportunity is an opportunity in which a retailer develops

a new retail format for the same target market.

Answer: TRUE

Explanation: A retail format development growth opportunity is an opportunity in which a

retailer develops a new retail format—a format with a different retail mix—for the same target

market.

Difficulty: 2 Medium

Topic: Strategic Growth Opportunities for Retailers

Learning Objective: 05-03 Classify the different strategic growth opportunities retailers pursue.

Bloom’s: Remember

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

No reproduction or distribution without the prior written consent of McGraw-Hill Education.7) Horizontal integration describes diversification by retailers into wholesaling or manufacturing.

Answer: FALSE

Explanation: Vertical integration describes diversification by retailers into wholesaling or

manufacturing.

Difficulty: 2 Medium

Topic: Strategic Growth Opportunities for Retailers

Learning Objective: 05-03 Classify the different strategic growth opportunities retailers pursue.

Bloom’s: Remember

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

8) Direct investment occurs when a retail firm invests in and owns a retail operation in its home

country.

Answer: FALSE

Explanation: Direct investment occurs when a retail firm invests in and owns a retail operation

in a foreign country.

Difficulty: 1 Easy

Topic: Global Growth Opportunities

Learning Objective: 05-04 Identify issues that arise as domestic retailers become global

retailers.

Bloom’s: Remember

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

9) The first step in the strategic retail planning process is to define the business mission.

Answer: TRUE

Explanation: The first step in the strategic retail planning process is to define the business

mission.

Difficulty: 2 Medium

Topic: Retail Strategic Planning and Operations

Learning Objective: 05-05 Know the steps retailers go through to develop a strategic plan.

Bloom’s: Remember

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

10) Scale economies are cost advantages due to a retailer’s size.

Answer: TRUE

Explanation: Scale economies are cost advantages due to a retailer’s size.

Difficulty: 2 Medium

Topic: Retail Strategic Planning and Operations

Learning Objective: 05-05 Know the steps retailers go through to develop a strategic plan.

Bloom’s: Remember

AACSB: Reflective Thinking

No reproduction or distribution without the prior written consent of McGraw-Hill Education.Accessibility: Keyboard Navigation

11) A retail strategy is a statement that identifies all the following except

A) the target market.

B) the format that the retailer plans to use.

C) the employee compensation plan.

D) the bases upon which the retailer plans to build a sustainable competitive advantage.

E) the retail mix.

Answer: C

Explanation: A retail strategy is a statement identifying (1) the retailer’s target market, (2) the

format and resources the retailer plans to use to satisfy the target market’s needs, and (3) the

bases on which the retailer plans to build a sustainable competitive advantage.

Difficulty: 1 Easy

Topic: What is a Retail Strategy?

Learning Objective: 05-01 Define retail strategy.

Bloom’s: Remember

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

12) The ________ is the market segment(s) toward which the retailer plans to focus its resources

and retail mix.

A) target market

B) retail market

C) virtual market

D) labor market

E) global market

Answer: A

Explanation: The target market is the market segment(s) toward which the retailer plans to focus

its resources and retail mix.

Difficulty: 2 Medium

Topic: What is a Retail Strategy?

Learning Objective: 05-01 Define retail strategy.

Bloom’s: Remember

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

No reproduction or distribution without the prior written consent of McGraw-Hill Education.13) A cafe focuses primarily on customers who are aged between 18 and 35 and earning about

$20,000 to $40,000 annually. This segmentation of customers is known as its

A) retail market.

B) target market.

C) virtual market.

D) global market.

E) labor market.

Answer: B

Explanation: The target market is the market segment(s) toward which the retailer plans to focus

its resources and retail mix.

Difficulty: 2 Medium

Topic: What is a Retail Strategy?

Learning Objective: 05-01 Define retail strategy.

Bloom’s: Apply

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

14) Hot Topic LLC appeals to tweens and teens through their Gothic frocks, fad movie gear,

piercing paraphernalia, and popular T-shirts and posters. The staff at Hot Topic wears the

merchandise. Also, they are active in helping their young customers choose from the hip

merchandise. The teens and tweens can be considered the

A) target market.

B) marketing mix.

C) marketing objective.

D) retail format.

E) retail mix.

Answer: A

Explanation: The target market is the market segment towards(s) which the retailer plans to

focus its resources and retail mix.

Difficulty: 2 Medium

Topic: What is a Retail Strategy?

Learning Objective: 05-01 Define retail strategy.

Bloom’s: Apply

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

No reproduction or distribution without the prior written consent of McGraw-Hill Education.15) A(n) ________ describes the nature of the retailer’s operations that it will use to satisfy the

needs of its target market.

A) situation analysis

B) organizational chart

C) competitor analysis

D) market research report

E) retail format

Answer: E

Explanation: A retail format describes the nature of the retailer’s operations that it will use to

satisfy the needs of its target market.

Difficulty: 3 Hard

Topic: What is a Retail Strategy?

Learning Objective: 05-01 Define retail strategy.

Bloom’s: Remember

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

16) Which of the following is a component of retail mix?

A) Product design

B) Market intelligence

C) Human resource practice

D) Pricing policy

E) Employee performance data

Answer: D

Explanation: The retail mix consists of the type of merchandise and services offered, pricing

policy, advertising and promotion programs, store design and visual merchandising, typical

locations, and customer services.

Difficulty: 1 Easy

Topic: What is a Retail Strategy?

Learning Objective: 05-01 Define retail strategy.

Bloom’s: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

No reproduction or distribution without the prior written consent of McGraw-Hill Education.17) Store design is a component of the

A) pricing mix.

B) product mix.

C) wholesale mix.

D) organizational mix.

E) retail mix.

Answer: E

Explanation: The retail mix consists of the type of merchandise and services offered, pricing

policy, advertising and promotion programs, store design and visual merchandising, typical

locations, and customer services.

Difficulty: 2 Medium

Topic: What is a Retail Strategy?

Learning Objective: 05-01 Define retail strategy.

Bloom’s: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

18) Which of the following statements is true of a sustainable competitive advantage?

A) It is not easily copied by the competitors.

B) It cannot be maintained over a long period of time.

C) It can only be maintained over a short period of time.

D) It can be easily copied by the competitors.

E) It can be achieved by reducing the price of the product.

Answer: A

Explanation: A sustainable competitive advantage is an advantage the retailer maintains over its

competition that is not easily copied by competitors and thus can last over a long period of time.

Difficulty: 3 Hard

Topic: How Retailers Build a Sustainable Competitive Advantage

Learning Objective: 05-01 Define retail strategy.

Bloom’s: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

No reproduction or distribution without the prior written consent of McGraw-Hill Education.19) A toy store has acquired an edge over its competition that cannot be easily copied by its

competitors. Which of the following has the store achieved?

A) Customer brand affiliation

B) Sustainable competitive advantage

C) Customer loyalty

D) Service excellence

E) Brand recall

Answer: B

Explanation: A sustainable competitive advantage is an advantage the retailer maintains over its

competition that is not easily copied by competitors and thus can last over a long period of time.

Difficulty: 1 Easy

Topic: How Retailers Build a Sustainable Competitive Advantage

Learning Objective: 05-01 Define retail strategy.

Bloom’s: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

20) A ________ is a group of consumers with similar needs and a group of retailers that satisfy

those needs using a similar retail channels and format.

A) retail market segment

B) virtual market segment

C) wholesale market segment

D) target market segment

E) global market segment

Answer: A

Explanation: A retail market segment is a group of consumers with similar needs and a group of

retailers that satisfy those needs using similar retail channels and format.

Difficulty: 1 Easy

Topic: How Retailers Build a Sustainable Competitive Advantage

Learning Objective: 05-02 Illustrate how retailers build a sustainable competitive advantage.

Bloom’s: Remember

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

No reproduction or distribution without the prior written consent of McGraw-Hill Education.21) After selecting a target market and a retail mix, the final element in a retail strategy is the

retailer’s approach to

A) build a sustainable competitive advantage.

B) identify all potential wholesalers.

C) identify all possible channels of communication.

D) identify possible channels of distribution.

E) manage the logistics of the product.

Answer: A

Explanation: After selecting a target market and a retail mix, the final element in a retail strategy

is the retailer’s approach to building a sustainable competitive advantage.

Difficulty: 2 Medium

Topic: How Retailers Build a Sustainable Competitive Advantage

Learning Objective: 05-02 Illustrate how retailers build a sustainable competitive advantage.

Bloom’s: Remember

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

22) Why should a retailer be concerned with building a sustainable competitive advantage?

A) It could increase organizational turnover.

B) It would decrease organizational commitment.

C) It could decrease organizational productivity.

D) It could result in short-term profitability.

E) It could result in long-term profitability.

Answer: E

Explanation: Establishing a sustainable competitive advantage means that the retailer, in effect,

builds a wall around its battle position—that is, around its present and potential customers and its

competition. When the wall is high, it will be hard for external competitors (i.e., retailers

operating in other markets or entrepreneurs) to scale the wall and enter the market to compete for

the retailer’s target customers.

Difficulty: 1 Easy

Topic: How Retailers Build a Sustainable Competitive Advantage

Learning Objective: 05-02 Illustrate how retailers build a sustainable competitive advantage.

Bloom’s: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

No reproduction or distribution without the prior written consent of McGraw-Hill Education.23) Forester, a jewelry store, has developed a sustainable competitive advantage. Which of the

following characteristics of Forester is most likely to be the reason for this advantage?

A) Repeat purchases from a vendor due to limited alternatives

B) Knowledgeable and helpful salespeople

C) Automated warehouses

D) More merchandise

E) Higher advertising budgets

Answer: B

Explanation: Training knowledgeable and helpful salespeople is a sustainable competitive

advantage that is hard to replicate.

Difficulty: 3 Hard

Topic: How Retailers Build a Sustainable Competitive Advantage

Learning Objective: 05-02 Illustrate how retailers build a sustainable competitive advantage.

Bloom’s: Apply

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

24) Which of the following characteristics is most likely to be the least sustainable competitive

advantage?

A) Convenient locations

B) Ability to get scarce merchandise

C) Shared systems with vendors

D) More sales promotions

E) Coordination of procurement efforts

Answer: D

Explanation: Having more sales promotions is the least sustainable competitive advantage

compared to the other options.

Difficulty: 3 Hard

Topic: How Retailers Build a Sustainable Competitive Advantage

Learning Objective: 05-02 Illustrate how retailers build a sustainable competitive advantage.

Bloom’s: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

No reproduction or distribution without the prior written consent of McGraw-Hill Education.25) Which of the following characteristics is most likely to be the more sustainable competitive

advantage?

A) Extended hours of operation

B) Bigger warehouses

C) Ability to get scarce merchandise

D) More employees

E) Greater assortment of merchandise

Answer: C

Explanation: The ability to get scarce merchandise is the most sustainable competitive

advantage compared to the other options.

Difficulty: 1 Easy

Topic: How Retailers Build a Sustainable Competitive Advantage

Learning Objective: 05-02 Illustrate how retailers build a sustainable competitive advantage.

Bloom’s: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

26) Which of the following characteristics of a footwear store would most likely be its least

sustainable competitive advantage?

A) Shared systems with vendors

B) Convenient store location

C) Knowledgeable employee force

D) Helpful sales force

E) Lower price

Answer: E

Explanation: Lowering prices can easily be replicated, and hence, it is not a sustainable

competitive advantage.

Difficulty: 2 Medium

Topic: How Retailers Build a Sustainable Competitive Advantage

Learning Objective: 05-02 Illustrate how retailers build a sustainable competitive advantage.

Bloom’s: Apply

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

No reproduction or distribution without the prior written consent of McGraw-Hill Education.27) John plans to start a grocery store in his locality. Which of the following is most likely to

give him the least sustainable competitive advantage in the market?

A) Convenient locations

B) More employees

C) Exclusive merchandise

D) Coordination of procurement efforts

E) Helpful sales force

Answer: B

Explanation: Recruiting more employees can easily be replicated, and hence, it is not a

sustainable competitive advantage.

Difficulty: 3 Hard

Topic: How Retailers Build a Sustainable Competitive Advantage

Learning Objective: 05-02 Illustrate how retailers build a sustainable competitive advantage.

Bloom’s: Apply

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

28) Sally’s LLC, a local supermarket, has all of the following characteristics. Which of the

following characteristics of Sally’s is most likely to be a more sustainable competitive

advantage?

A) Extended hours of operation

B) More employees

C) Shared systems with vendors

D) More merchandise

E) More sales promotions

Answer: C

Explanation: A shared system with vendors is a sustainable competitive advantage that is hard to

replicate.

Difficulty: 3 Hard

Topic: How Retailers Build a Sustainable Competitive Advantage

Learning Objective: 05-02 Illustrate how retailers build a sustainable competitive advantage.

Bloom’s: Apply

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

No reproduction or distribution without the prior written consent of McGraw-Hill Education.29) Establishing a sustainable competitive advantage is the key to ________ performance.

A) short-term market

B) short-term financial

C) short-term employee

D) long-term employee

E) long-term financial

Answer: E

Explanation: Establishing a sustainable competitive advantage is the key to long-term financial

performance.

Difficulty: 1 Easy

Topic: How Retailers Build a Sustainable Competitive Advantage

Learning Objective: 05-02 Illustrate how retailers build a sustainable competitive advantage.

Bloom’s: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

30) Although Rosa visits several retailers when shopping for suits, she always buys suits at Bow

and Arrow Inc. Which of the following approaches best demonstrates her affinity for Bow and

Arrow Inc.?

A) Customer loyalty

B) Product pricing

C) Location

D) Unique merchandise assortment

E) Good vendor relations

Answer: A

Explanation: Customer loyalty is evident when customers are committed to buying merchandise

and services from a particular retailer.

Difficulty: 2 Medium

Topic: How Retailers Build a Sustainable Competitive Advantage

Learning Objective: 05-02 Illustrate how retailers build a sustainable competitive advantage.

Bloom’s: Apply

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

No reproduction or distribution without the prior written consent of McGraw-Hill Education.31) Tara gets her oil changed only at Tires Plus Inc. This commitment to Tires Plus Inc.

illustrates

A) ethical business practices.

B) store awareness.

C) good customer service.

D) customer loyalty.

E) price competitiveness.

Answer: D

Explanation: Customer loyalty is evident when customers are committed to buying merchandise

and services from a particular retailer.

Difficulty: 1 Easy

Topic: How Retailers Build a Sustainable Competitive Advantage

Learning Objective: 05-02 Illustrate how retailers build a sustainable competitive advantage.

Bloom’s: Apply

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

32) My Favorite Quilt Shop offers members of their Fabric Lovers Club merchandise worth $20

for every $200 they purchase plus additional discounts on classes and new fabric lines. The

Fabric Lovers Club is a good way to develop

A) internal excellence.

B) store awareness.

C) good customer service.

D) customer loyalty.

E) ethical business practices.

Answer: D

Explanation: Customer loyalty is evident when customers are committed to buying merchandise

and services from a particular retailer.

Difficulty: 1 Easy

Topic: How Retailers Build a Sustainable Competitive Advantage

Learning Objective: 05-02 Illustrate how retailers build a sustainable competitive advantage.

Bloom’s: Apply

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

No reproduction or distribution without the prior written consent of McGraw-Hill Education.33) Myra wanted to purchase a vase as a wedding gift. Pier 1 Imports offers a better assortment

and slightly lower prices, but she immediately went to her local gift shop instead of Pier 1

Imports. This is an example of

A) a SWOT analysis.

B) strategic control.

C) direct competition.

D) retail perception.

E) customer loyalty.

Answer: E

Explanation: Customer loyalty means that customers are committed to buying merchandise and

services from a particular retailer. Loyalty means that customers will be reluctant to switch and

patronize a competitive retailer.

Difficulty: 1 Easy

Topic: How Retailers Build a Sustainable Competitive Advantage

Learning Objective: 05-02 Illustrate how retailers build a sustainable competitive advantage.

Bloom’s: Apply

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

34) Retailers can foster customer loyalty by

A) having a generalized organizational mission statement.

B) providing good customer service.

C) having no distinct brand image.

D) trying to attain qualitative objectives rather than quantitative ones.

E) using a mass advertising strategy.

Answer: B

Explanation: Approaches for developing customer loyalty include building a strong brand

image, creating a unique positioning in the target market, offering unique merchandise,

providing excellent customer service, implementing a customer relationship management

program, and building a retail community.

Difficulty: 2 Medium

Topic: How Retailers Build a Sustainable Competitive Advantage

Learning Objective: 05-02 Illustrate how retailers build a sustainable competitive advantage.

Bloom’s: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

No reproduction or distribution without the prior written consent of McGraw-Hill Education.35) Wendy’s has established itself in the fast food market as one of the top five restaurants in the

city. Customers frequent Wendy’s because of the impeccable quality of food associated with it.

Which of the following is most likely to be the reason for Wendy’s sustainable competitive

advantage?

A) Unique merchandise

B) Brand image

C) Customer service

D) Location

E) Price

Answer: B

Explanation: Customers frequent Wendy’s because of the impeccable quality of food associated

with its name. Hence, the brand image is the sustainable competitive advantage.

Difficulty: 1 Easy

Topic: How Retailers Build a Sustainable Competitive Advantage

Learning Objective: 05-02 Illustrate how retailers build a sustainable competitive advantage.

Bloom’s: Apply

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

36) Positioning is the process of

A) acquiring a lease for a retail store in a region.

B) creating and supporting a clear and distinct retailer image.

C) finding a retail location site.

D) negotiating the percentage-of-sales payment to the mall owners.

E) performing a situation audit.

Answer: B

Explanation: A retailer’s brand image reflects its positioning strategy. Positioning is the design

and implementation of a retail mix to create an image of the retailer in the customer’s mind

relative to its competitors.

Difficulty: 3 Hard

Topic: How Retailers Build a Sustainable Competitive Advantage

Learning Objective: 05-02 Illustrate how retailers build a sustainable competitive advantage.

Bloom’s: Remember

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

No reproduction or distribution without the prior written consent of McGraw-Hill Education.37) ________ is the design and implementation of a retail mix in order to create an image of the

retailer within the customer’s mind relative to its competitors.

A) Retail perception

B) Positioning

C) Imaging

D) Detailing

E) Competitive feedback

Answer: B

Explanation: Positioning is the design and implementation of a retail mix in order to create an

image of the retailer within the customer’s mind relative to its competitors.

Difficulty: 2 Medium

Topic: How Retailers Build a Sustainable Competitive Advantage

Learning Objective: 05-02 Illustrate how retailers build a sustainable competitive advantage.

Bloom’s: Remember

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

38) Customers who shop at Books-A-Million find that it has a large selection of books, in

addition to a helpful and friendly staff. Furthermore, they can enjoy a peaceful place to read

while sipping a cappuccino at its in-store Joe Muggs Café. This intimate perception of the store

indicates its ________ strategy.

A) perceptual retailing

B) imaging

C) positioning

D) visual merchandising

E) retail feedback

Answer: C

Explanation: Positioning refers to the image that the customer has of the store relative to its

competitors.

Difficulty: 1 Easy

Topic: How Retailers Build a Sustainable Competitive Advantage

Learning Objective: 05-02 Illustrate how retailers build a sustainable competitive advantage.

Bloom’s: Apply

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

No reproduction or distribution without the prior written consent of McGraw-Hill Education.39) ________ are developed such that the distance between two retailers’ positions on the map

indicates how similar those stores appear, according to consumers.

A) Perceptual maps

B) Geographical maps

C) Brand perceptions

D) Product perceptions

E) Demographic maps

Answer: A

Explanation: Perceptual maps are developed such that the distance between two retailers’

positions on the map indicates how similar the stores appear, according to consumers. A

perceptual map is frequently used to represent the customer’s image and preferences for retailers.

Difficulty: 2 Medium

Topic: How Retailers Build a Sustainable Competitive Advantage

Learning Objective: 05-02 Illustrate how retailers build a sustainable competitive advantage.

Bloom’s: Remember

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

40) In perceptual maps, retailers that are closer to an ideal point are evaluated

A) less favorably by the consumers.

B) more favorably by the producers.

C) more favorably by the suppliers.

D) less favorably by the suppliers.

E) more favorably by the consumers.

Answer: E

Explanation: In perceptual maps, retailers that are closer to an ideal point are evaluated more

favorably by the consumers in the segment than are retailers located farther away.

Difficulty: 1 Easy

Topic: How Retailers Build a Sustainable Competitive Advantage

Learning Objective: 05-02 Illustrate how retailers build a sustainable competitive advantage.

Bloom’s: Remember

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

No reproduction or distribution without the prior written consent of McGraw-Hill Education.41) Which of the following is most likely to be a disadvantage for a retailer in developing

customer loyalty through offering popular national brands?

A) The costs associated with offering popular national brands are very high.

B) There is often a huge reduction in the profit margin for the retailer.

C) Other competitors can purchase and sell the same popular products.

D) Training employees to operate the new product or service involves time and effort.

E) It leads to brand cannibalization.

Answer: C

Explanation: It is difficult for a retailer to develop customer loyalty through its merchandise

offerings, because most competitors can purchase and sell the same popular national brands.

Difficulty: 3 Hard

Topic: How Retailers Build a Sustainable Competitive Advantage

Learning Objective: 05-02 Illustrate how retailers build a sustainable competitive advantage.

Bloom’s: Remember

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

42) Competitive retailers can sell the same popular-national brands. Which of the following

should retailers do to secure a competitive advantage?

A) Prevent its customers from comparison shopping.

B) Limit its store traffic to qualified buyers.

C) Increase its sales expenses.

D) Increase its merchandising flexibility.

E) Develop private-label brands.

Answer: E

Explanation: It is difficult for a retailer to develop customer loyalty through its merchandise

offerings, because most competitors can purchase and sell the same popular national brands.

Many retailers thus develop private-label brands (also called store brands or own brands) that are

marketed by and available only from that retailer to keep customers loyal.

Difficulty: 1 Easy

Topic: How Retailers Build a Sustainable Competitive Advantage

Learning Objective: 05-02 Illustrate how retailers build a sustainable competitive advantage.

Bloom’s: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

No reproduction or distribution without the prior written consent of McGraw-Hill Education.43) La Rouge, a fabric store, is one of the most famous in the country. Customers flock to the

store from all across the nation for its exclusive collection of store brands. Which of the

following is most likely to be the sustainable competitive advantage of La Rouge?

A) Unique merchandise

B) Ethical business practices

C) Customer service

D) Location

E) Price

Answer: A

Explanation: Customers frequent La Rouge for its unique merchandise. Private-label brands

(store brands or own brands) are products developed and marketed by a retailer and available

only from that retailer.

Difficulty: 2 Medium

Topic: How Retailers Build a Sustainable Competitive Advantage

Learning Objective: 05-02 Illustrate how retailers build a sustainable competitive advantage.

Bloom’s: Apply

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

44) Which of the following is true of private-label brands?

A) Products developed and marketed by a retailer and available with other retailers

B) Products developed by a retailer but marketed and available with a third party

C) Products developed and available with a retailer but marketed by a third party

D) Products developed by a third party but marketed and available with a retailer

E) Products developed and marketed by a retailer and available only from that retailer

Answer: E

Explanation: Private-label brands are products developed and marketed by a retailer and

available only from that retailer.

Difficulty: 1 Easy

Topic: How Retailers Build a Sustainable Competitive Advantage

Learning Objective: 05-02 Illustrate how retailers build a sustainable competitive advantage.

Bloom’s: Remember

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

No reproduction or distribution without the prior written consent of McGraw-Hill Education.45) Private-label brands are also called

A) personal brands.

B) store brands.

C) faith brands.

D) umbrella brands.

E) individual brands.

Answer: B

Explanation: Private-label brands are also called store brands or own brands.

Difficulty: 1 Easy

Topic: How Retailers Build a Sustainable Competitive Advantage

Learning Objective: 05-02 Illustrate how retailers build a sustainable competitive advantage.

Bloom’s: Remember

AACSB: Reflective Thinking

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46) Kola is a chain of supermarkets across the country. Kola’s sales staff treat their customers

very well, which in turn creates great customer satisfaction. Which of the following is most

likely to be the sustainable competitive advantage of Kola?

A) Unique merchandise

B) Ethical business practices

C) Customer service

D) Location

E) Price

Answer: C

Explanation: Retailers also can develop customer loyalty by offering excellent customer service.

Difficulty: 1 Easy

Topic: How Retailers Build a Sustainable Competitive Advantage

Learning Objective: 05-02 Illustrate how retailers build a sustainable competitive advantage.

Bloom’s: Apply

AACSB: Reflective Thinking

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No reproduction or distribution without the prior written consent of McGraw-Hill Education.47) Which of the following is an opportunity for retailers to develop a sustainable competitive

advantage?

A) Reduced prices

B) Deeper assortment

C) Longer hours of operation

D) Good customer service

E) Coupons

Answer: D

Explanation: The best option for building a long-term advantage is good customer service, as the

other choices are easily replicated by competitors.

Difficulty: 1 Easy

Topic: How Retailers Build a Sustainable Competitive Advantage

Learning Objective: 05-02 Illustrate how retailers build a sustainable competitive advantage.

Bloom’s: Remember

AACSB: Reflective Thinking

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48) Customer relationship management programs are also known as

A) transitional programs.

B) sustaining programs.

C) twelve-step programs.

D) incentive programs.

E) loyalty programs.

Answer: E

Explanation: Customer relationship management programs are also known as loyalty or

frequent-shopper programs.

Difficulty: 1 Easy

Topic: Customer Relationship Management Process

Learning Objective: 05-02 Illustrate how retailers build a sustainable competitive advantage.

Bloom’s: Remember

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

No reproduction or distribution without the prior written consent of McGraw-Hill Education.49) Which of the following is a suggested method for improving the efficiency of internal

operations?

A) Unique merchandise

B) Customer service

C) Human resource management

D) Brand image

E) Building a retail community using social media

Answer: C

Explanation: Efficiency of internal operations can be improved by human resource management

and distribution and information systems.

Difficulty: 2 Medium

Topic: How Retailers Build a Sustainable Competitive Advantage

Learning Objective: 05-02 Illustrate how retailers build a sustainable competitive advantage.

Bloom’s: Remember

AACSB: Reflective Thinking

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50) Developing programs to motivate and coordinate employee efforts, providing incentives,

fostering a positive organizational culture, and managing diversity are functions of the

A) human resource management.

B) district management.

C) general store manager.

D) chief executive officer.

E) marketing manager.

Answer: A

Explanation: Retailers build their human resource assets by developing programs to motivate

and coordinate employee efforts, provide appropriate incentives, foster a strong and positive

organizational culture and environment, and manage diversity.

Difficulty: 1 Easy

Topic: How Retailers Build a Sustainable Competitive Advantage

Learning Objective: 05-02 Illustrate how retailers build a sustainable competitive advantage.

Bloom’s: Remember

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

No reproduction or distribution without the prior written consent of McGraw-Hill Education.51) Which of the following is an advantage of the use of sophisticated distribution and

information systems?

A) It creates a positive image of the brand in the minds of the consumers.

B) It offers an opportunity for the retailer to reduce operating costs.

C) It helps an organization to attain cultural diversity within its workforce.

D) It helps an organization to monitor the productivity of its entire workforce.

E) It helps an organization to monitor the movements of its employees.

Answer: B

Explanation: The use of sophisticated distribution and information systems offers an opportunity

for retailers to reduce operating costs—the costs associated with running the business—and

make sure that the right merchandise is available at the right time and place.

Difficulty: 1 Easy

Topic: How Retailers Build a Sustainable Competitive Advantage

Learning Objective: 05-02 Illustrate how retailers build a sustainable competitive advantage.

Bloom’s: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

52) Sam loves shopping. She frequently goes window shopping in the city. During times of need,

she visits the nearest supermarket even though she loathes going there. Which of the following is

most likely to be the reason why Sam shops in the supermarket?

A) Unique merchandise

B) Brand image

C) Customer service

D) Location

E) Price

Answer: D

Explanation: Location is the most important factor determining which store a consumer

patronizes. For example, most people shop at the supermarket closest to where they live.

Difficulty: 1 Easy

Topic: How Retailers Build a Sustainable Competitive Advantage

Learning Objective: 05-02 Illustrate how retailers build a sustainable competitive advantage.

Bloom’s: Apply

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

No reproduction or distribution without the prior written consent of McGraw-Hill Education.53) The best way for a retailer to develop a sustainable competitive advantage is to

A) concentrate on finding the best location.

B) concentrate on having the lowest prices in town.

C) develop a good distribution system.

D) rely on multiple approaches.

E) maintain good vendor relations.

Answer: D

Explanation: A retailer should have multiple sources of competitive advantages to be

competitive in today’s marketplace.

Difficulty: 1 Easy

Topic: How Retailers Build a Sustainable Competitive Advantage

Learning Objective: 05-02 Illustrate how retailers build a sustainable competitive advantage.

Bloom’s: Remember

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

54) A ________ is a growth opportunity directed toward existing customers using the retailer’s

present retailing format.

A) market expansion growth opportunity

B) market penetration growth opportunity

C) retail format development growth opportunity

D) wholesale format development growth opportunity

E) diversification growth opportunity

Answer: B

Explanation: A market penetration growth opportunity is a growth opportunity directed toward

existing customers using the retailer’s present retailing format.

Difficulty: 2 Medium

Topic: Strategic Growth Opportunities for Retailers

Learning Objective: 05-03 Classify the different strategic growth opportunities retailers pursue.

Bloom’s: Remember

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

No reproduction or distribution without the prior written consent of McGraw-Hill Education.55) Walgreens has had rapid growth in their store openings. Many times, they have stores within

just a few blocks of each other. This is an example of Walgreens practicing

A) retail format development.

B) diversification growth.

C) market penetration.

D) market expansion.

E) market divestment.

Answer: C

Explanation: With market penetration, retailers use their existing retail format and devise

approaches to get current customers to visit the retailer more often or to buy more. Market

penetration approaches include opening more stores in the target market and/or keeping existing

stores open for longer hours.

Difficulty: 2 Medium

Topic: Strategic Growth Opportunities for Retailers

Learning Objective: 05-03 Classify the different strategic growth opportunities retailers pursue.

Bloom’s: Apply

AACSB: Reflective Thinking

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56) A bagel shop that decides to open up an hour earlier every morning is taking advantage of a

________ opportunity.

A) market penetration

B) diversification

C) retail format development

D) market depletion

E) market divestment

Answer: A

Explanation: With market penetration, retailers use their existing retail format and devise

approaches to get current customers to visit the retailer more often or to buy more. Market

penetration approaches include opening more stores in the target market and/or keeping existing

stores open for longer hours.

Difficulty: 2 Medium

Topic: Strategic Growth Opportunities for Retailers

Learning Objective: 05-03 Classify the different strategic growth opportunities retailers pursue.

Bloom’s: Apply

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

No reproduction or distribution without the prior written consent of McGraw-Hill Education.57) Bine Lane is a fabric store that sells only cotton clothing. After a situation analysis, the

marketing team of Bine Lane wants its current customers to visit and purchase from the store

more frequently. Which of the following growth strategies should Bine Lane follow to achieve

its objective?

A) Wholesale format development growth opportunity

B) Market expansion growth opportunity

C) Retail format development growth opportunity

D) Diversification growth opportunity

E) Market penetration growth opportunity

Answer: E

Explanation: A market penetration growth opportunity is a growth opportunity directed toward

existing customers using the retailer’s present retailing format. Such opportunities involve either

attracting new consumers from the retailer’s current target market who don’t patronize the retailer

currently or devising approaches that get current customers to visit the retailer more often and/or

buy more merchandise on each visit.

Difficulty: 2 Medium

Topic: Strategic Growth Opportunities for Retailers

Learning Objective: 05-03 Classify the different strategic growth opportunities retailers pursue.

Bloom’s: Apply

AACSB: Reflective Thinking

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58) Which of the following is an example of a market penetration growth opportunity?

A) Opening new stores in new geographical markets

B) Changing the brand name to appeal to newer market segments

C) Keeping existing stores open for longer hours

D) Opening new stores to cater to a different demographic segment

E) Changing the brand name in new geographical markets

Answer: C

Explanation: Market penetration approaches include opening more stores in the target market

and/or keeping existing stores open for longer hours.

Difficulty: 2 Medium

Topic: Strategic Growth Opportunities for Retailers

Learning Objective: 05-03 Classify the different strategic growth opportunities retailers pursue.

Bloom’s: Remember

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

No reproduction or distribution without the prior written consent of McGraw-Hill Education.59) Cross-selling is most commonly practiced with the

A) wholesale format development growth opportunity.

B) market expansion growth opportunity.

C) retail format development growth opportunity.

D) diversification growth opportunity.

E) market penetration growth opportunity.

Answer: E

Explanation: Cross-selling is most commonly practiced with the market penetration growth

opportunity.

Difficulty: 2 Medium

Topic: Strategic Growth Opportunities for Retailers

Learning Objective: 05-03 Classify the different strategic growth opportunities retailers pursue.

Bloom’s: Remember

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

60) A ________ involves using the retailer’s existing retail format in new market segments.

A) market expansion growth opportunity

B) market penetration growth opportunity

C) diversification growth opportunity

D) wholesale format development growth opportunity

E) retail format growth opportunity

Answer: A

Explanation: A market expansion growth opportunity involves using the retailer’s existing retail

format in new market segments.

Difficulty: 2 Medium

Topic: Strategic Growth Opportunities for Retailers

Learning Objective: 05-03 Classify the different strategic growth opportunities retailers pursue.

Bloom’s: Remember

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

No reproduction or distribution without the prior written consent of McGraw-Hill Education.61) Alvo’s, a producer of candy, has decided to expand its operations geographically. Which of

the following strategies should Alvo’s use to achieve its objective?

A) Retail format growth opportunity

B) Market penetration growth opportunity

C) Diversification growth opportunity

D) Market expansion growth opportunity

E) Wholesale format development growth opportunity

Answer: D

Explanation: A market expansion growth opportunity involves using the retailer’s existing retail

format in new market segments.

Difficulty: 2 Medium

Topic: Strategic Growth Opportunities for Retailers

Learning Objective: 05-03 Classify the different strategic growth opportunities retailers pursue.

Bloom’s: Apply

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

62) When Home Movies Inc. opened stores in other countries, it increased the company’s

international market share. Home Movies took advantage of a ________ opportunity.

A) diversification

B) market expansion

C) market divestment

D) retail format development

E) market penetration

Answer: B

Explanation: Market expansion involves using the retailer’s existing retail format in new market

segments.

Difficulty: 2 Medium

Topic: Strategic Growth Opportunities for Retailers

Learning Objective: 05-03 Classify the different strategic growth opportunities retailers pursue.

Bloom’s: Apply

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

No reproduction or distribution without the prior written consent of McGraw-Hill Education.63) Which of the following is an example of a market expansion growth opportunity?

A) Displaying merchandise to increase impulse purchases

B) Opening new stores in new geographic markets

C) Opening more stores in the same market

D) Keeping existing stores open for long hours

E) Engaging in cross-selling

Answer: B

Explanation: A market expansion growth opportunity involves using the retailer’s existing retail

format in new market segments.

Difficulty: 2 Medium

Topic: Strategic Growth Opportunities for Retailers

Learning Objective: 05-03 Classify the different strategic growth opportunities retailers pursue.

Bloom’s: Remember

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

64) A ________ is an opportunity in which a retailer develops a new retail mix for the same

target market.

A) retail format development growth opportunity

B) market penetration growth opportunity

C) diversification growth opportunity

D) market expansion growth opportunity

E) wholesale format development growth opportunity

Answer: A

Explanation: A retail format development growth opportunity is an opportunity in which a

retailer develops a new retail format—a format with a different retail mix—for the same target

market.

Difficulty: 2 Medium

Topic: Strategic Growth Opportunities for Retailers

Learning Objective: 05-03 Classify the different strategic growth opportunities retailers pursue.

Bloom’s: Remember

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

No reproduction or distribution without the prior written consent of McGraw-Hill Education.65) Ashton, a chain of supermarkets, intends to change its pricing policy and promotional mix

but intends on catering to the same market segment. Which of the following growth strategies

will best suit Ashton LLC?

A) Market penetration growth opportunity

B) Market expansion growth opportunity

C) Retail format growth opportunity

D) Diversification growth opportunity

E) Wholesale format growth opportunity

Answer: C

Explanation: A retail format growth opportunity is an opportunity in which a retailer develops a

new retail format—a format with a different retail mix—for the same target market.

Difficulty: 2 Medium

Topic: Strategic Growth Opportunities for Retailers

Learning Objective: 05-03 Classify the different strategic growth opportunities retailers pursue.

Bloom’s: Apply

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

66) When Nordstrom department stores launched a website to sell its merchandise to its present

customers; it took advantage of a ________ opportunity.

A) diversification

B) market format investment

C) market expansion

D) market penetration

E) retail format development

Answer: E

Explanation: Retail format development is when the retailer develops a new retail format for the

same target market; the online retailing was the new format.

Difficulty: 2 Medium

Topic: Strategic Growth Opportunities for Retailers

Learning Objective: 05-03 Classify the different strategic growth opportunities retailers pursue.

Bloom’s: Apply

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

No reproduction or distribution without the prior written consent of McGraw-Hill Education.67) A ________ is one in which a retailer introduces a new retail format directed toward a

market segment that’s not currently served by the retailer.

A) retail format growth opportunity

B) market penetration growth opportunity

C) diversification growth opportunity

D) market expansion growth opportunity

E) wholesale format development growth opportunity

Answer: C

Explanation: A diversification growth opportunity is one in which a retailer introduces a new

retail format directed toward a market segment that’s not currently served by the retailer.

Difficulty: 2 Medium

Topic: Strategic Growth Opportunities for Retailers

Learning Objective: 05-03 Classify the different strategic growth opportunities retailers pursue.

Bloom’s: Remember

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

68) Krueger Burgers, a chain of restaurants, intends to change its pricing policy and promotional

mix to cater to a new market segment. Which of the following growth strategies will best suit

Krueger Burgers?

A) Market penetration growth opportunity

B) Market expansion growth opportunity

C) Retail format growth opportunity

D) Diversification growth opportunity

E) Wholesale format growth opportunity

Answer: D

Explanation: A diversification growth opportunity is one in which a retailer introduces a new

retail format directed toward a market segment that’s not currently served by the retailer.

Difficulty: 2 Medium

Topic: Strategic Growth Opportunities for Retailers

Learning Objective: 05-03 Classify the different strategic growth opportunities retailers pursue.

Bloom’s: Apply

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

No reproduction or distribution without the prior written consent of McGraw-Hill Education.69) In a related diversification growth opportunity,

A) the retailer’s present target market and retail format share nothing in common with the new

opportunity.

B) the retailer’s future target market and retail format share nothing in common with a missed

opportunity.

C) the retailer’s past target market and retail format share nothing in common with a missed

opportunity.

D) the retailer’s future target market and retail format share something in common with a missed

opportunity.

E) the retailer’s present target market and retail format share something in common with the new

opportunity.

Answer: E

Explanation: In a related diversification growth opportunity, the retailer’s present target market

and retail format share something in common with the new opportunity.

Difficulty: 2 Medium

Topic: Strategic Growth Opportunities for Retailers

Learning Objective: 05-03 Classify the different strategic growth opportunities retailers pursue.

Bloom’s: Understand

AACSB: Reflective Thinking

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70) Which of the following is an example of related diversification?

A) Purchasing from different vendors

B) Operating in similar locations

C) Targeting another market segment

D) Using a newer medium for advertising

E) Developing a management information system

Answer: B

Explanation: In a related diversification growth opportunity, the retailer’s present target market

and retail format share something in common with the new opportunity. This commonality might

entail purchasing from the same vendors, operating in similar locations, using the same

distribution or management information system, or advertising in the same newspapers to similar

target markets.

Difficulty: 2 Medium

Topic: Strategic Growth Opportunities for Retailers

Learning Objective: 05-03 Classify the different strategic growth opportunities retailers pursue.

Bloom’s: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

No reproduction or distribution without the prior written consent of McGraw-Hill Education.71) An unrelated diversification growth opportunity

A) has a lot in common between the retailer’s present business and the new growth opportunity.

B) is less risky compared to a related growth opportunity.

C) is less effective compared to a related growth opportunity.

D) is less expensive compared to related growth opportunity.

E) has little commonality between the retailer’s present business and the new growth opportunity.

Answer: E

Explanation: An unrelated diversification growth opportunity has little commonality between

the retailer’s present business and the new growth opportunity.

Difficulty: 2 Medium

Topic: Strategic Growth Opportunities for Retailers

Learning Objective: 05-03 Classify the different strategic growth opportunities retailers pursue.

Bloom’s: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

72) Which of the following is an example of unrelated diversification?

A) Operating in similar locations

B) Creating a new management information system

C) Using the same distribution

D) Advertising in the same newspapers

E) Purchasing from the same vendors

Answer: B

Explanation: An unrelated diversification growth opportunity has little commonality between

the retailer’s present business and the new growth opportunity.

Difficulty: 2 Medium

Topic: Strategic Growth Opportunities for Retailers

Learning Objective: 05-03 Classify the different strategic growth opportunities retailers pursue.

Bloom’s: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

No reproduction or distribution without the prior written consent of McGraw-Hill Education.73) Which of the following statements is true of vertical integration?

A) It is the diversification by retailers into manufacturing.

B) It is the diversification by wholesalers into retailing.

C) It is the diversification by manufacturers into marketing.

D) It is the diversification by supply chain management into marketing.

E) It is the diversification by marketing into manufacturing.

Answer: A

Explanation: Vertical integration describes diversification by retailers into wholesaling or

manufacturing.

Difficulty: 2 Medium

Topic: Strategic Growth Opportunities for Retailers

Learning Objective: 05-03 Classify the different strategic growth opportunities retailers pursue.

Bloom’s: Remember

AACSB: Reflective Thinking

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74) Jose runs a gallery that specializes in neon art with an emphasis on vacation icons like

flamingos, dolphins, and palm trees. Since demand was high and supplies were low, he decided

to buy an old warehouse and then hire craftspeople to work there in order to produce the art. He

would provide them with all of the supplies they needed, and he would be their only customer.

Jose engaged in

A) horizontal integration.

B) market expansion.

C) co-operative buying.

D) market penetration.

E) vertical integration.

Answer: E

Explanation: Vertical integration means that the retailer has invested in manufacturing

merchandise that the retailer will sell.

Difficulty: 2 Medium

Topic: Strategic Growth Opportunities for Retailers

Learning Objective: 05-03 Classify the different strategic growth opportunities retailers pursue.

Bloom’s: Apply

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

No reproduction or distribution without the prior written consent of McGraw-Hill Education.75) Designing private-label merchandise is a(n) ________ because it builds on the retailer’s

knowledge of its customers.

A) unrelated diversification growth opportunity

B) market expansion growth opportunity

C) related diversification growth opportunity

D) market penetration growth opportunity

E) retail format development growth opportunity

Answer: C

Explanation: Designing private-label merchandise is a related diversification growth opportunity

because it builds on the retailer’s knowledge of its customers.

Difficulty: 2 Medium

Topic: Strategic Growth Opportunities for Retailers

Learning Objective: 05-03 Classify the different strategic growth opportunities retailers pursue.

Bloom’s: Remember

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

76) Which of the following retail growth strategies has the greatest chance for succeeding?

A) Related diversification growth opportunity

B) Market penetration growth opportunity

C) Market expansion growth opportunity

D) Retail format development growth opportunity

E) Unrelated diversification growth opportunity

Answer: B

Explanation: Typically, retailers have the greatest competitive advantage and most success when

they engage in opportunities that are similar to their present retail operations and markets. Thus,

market penetration growth opportunities have the greatest chances of succeeding because they

build on the retailer’s present bases of advantage and don’t involve entering new, unfamiliar

markets or operating new, unfamiliar retail formats.

Difficulty: 2 Medium

Topic: Strategic Growth Opportunities for Retailers

Learning Objective: 05-03 Classify the different strategic growth opportunities retailers pursue.

Bloom’s: Remember

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

No reproduction or distribution without the prior written consent of McGraw-Hill Education.77) Retailers have the least opportunity to exploit a competitive advantage when they pursue

A) retail format growth opportunities.

B) market penetration growth opportunities.

C) diversification growth opportunities.

D) market expansion growth opportunities.

E) wholesale format development growth opportunities.

Answer: C

Explanation: Retailers have the least opportunity to exploit a competitive advantage when they

pursue diversification opportunities.

Difficulty: 2 Medium

Topic: Strategic Growth Opportunities for Retailers

Learning Objective: 05-03 Classify the different strategic growth opportunities retailers pursue.

Bloom’s: Understand

AACSB: Reflective Thinking

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78) The emerging international markets that receive the most attention from global retailers are

collectively referred to as the ________ nations.

A) Asian Tigers

B) Next Eleven

C) MIKT

D) CIVETS

E) BRIC

Answer: E

Explanation: The emerging international markets that receive the most attention from global

retailers are Brazil, Russia, India, and China, collectively referred to as the BRIC nations

Difficulty: 1 Easy

Topic: Global Growth Opportunities

Learning Objective: 05-04 Identify issues that arise as domestic retailers become global

retailers.

Bloom’s: Remember

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

No reproduction or distribution without the prior written consent of McGraw-Hill Education.79) Which of the following statements is true of the challenges faced by organized retailing in

India?

A) The cost of setting up facilities is significantly high.

B) The ever-increasing operating costs.

C) Government impedes foreign investment in retailing.

D) The supply chain is underdeveloped and inefficient.

E) Managerial talent is becoming more difficult to find and retain.

Answer: C

Explanation: Previously, government regulations greatly restricted foreign investments in

retailing; today, though some of the restrictions have been relaxed, foreign retailers still must

comply with a myriad of regulations before opening stores and shipping merchandise.

Difficulty: 1 Easy

Topic: Global Growth Opportunities

Learning Objective: 05-04 Identify issues that arise as domestic retailers become global

retailers.

Bloom’s: Remember

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

80) Which of the following statements is true of the challenges faced by organized retailing in

China?

A) Government impedes foreign investment in retailing.

B) Stringent regulations on profit margins discourage capitalism.

C) An unstable political scenario increases the risk associated with direct investments.

D) Managerial talent is becoming more difficult to find and retain.

E) Retailers cannot rely on domestic products as their quality is low.

Answer: D

Explanation: Doing business in China is challenging. Operating costs are increasing, managerial

talent is becoming more difficult to find and retain, and an underdeveloped and inefficient supply

chain predominates.

Difficulty: 2 Medium

Topic: Global Growth Opportunities

Learning Objective: 05-04 Identify issues that arise as domestic retailers become global

retailers.

Bloom’s: Remember

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

No reproduction or distribution without the prior written consent of McGraw-Hill Education.81) Which of the following statements is true of the challenges faced by organized retailing in

Russia?

A) Retailers cannot rely on domestic products as their quality is low.

B) Government impedes foreign investment in retailing.

C) Managerial talent is becoming more difficult to find and retain.

D) Stringent regulations on profit margins discourage capitalism.

E) An unstable political scenario increases the risk associated with direct investments.

Answer: A

Explanation: Retailers often cannot rely on domestic products because the quality of products

made in Russia tends to be poor.

Difficulty: 1 Easy

Topic: Global Growth Opportunities

Learning Objective: 05-04 Identify issues that arise as domestic retailers become global

retailers.

Bloom’s: Remember

AACSB: Reflective Thinking

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82) Mindy’s, a fashion brand, has a significant cost benefit that facilitates success in international

markets in which price plays an important role in consumer decision making. Which of the

following is most likely a reason for Mindy’s success in international markets?

A) A global culture

B) Adaptability

C) Human resources

D) Financial resources

E) Globally sustainable competitive advantage

Answer: E

Explanation: This is an example of a globally sustainable competitive advantage. Entry into

nondomestic markets is most successful when the expansion opportunity builds on the retailer’s

core bases of competitive advantage.

Difficulty: 1 Easy

Topic: Global Growth Opportunities

Learning Objective: 05-04 Identify issues that arise as domestic retailers become global

retailers.

Bloom’s: Apply

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

No reproduction or distribution without the prior written consent of McGraw-Hill Education.83) Papa Bean, a global chain of pizzerias, has operations in more than 80 countries around the

world. Its menu varies considerably in different countries, assimilating minute details from the

local culture to add to its truly global flavor. Which of the following is most likely a reason for

the success of Papa Bean in international markets?

A) A global culture

B) Adaptability

C) Human resources

D) Financial resources

E) Rigidity

Answer: B

Explanation: Successful global retailers recognize cultural differences and adapt their core

strategy to the needs of local markets. This is an example of adaptability.

Difficulty: 1 Easy

Topic: Global Growth Opportunities

Learning Objective: 05-04 Identify issues that arise as domestic retailers become global

retailers.

Bloom’s: Apply

AACSB: Reflective Thinking

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84) Fresh Foods, a chain of international supermarkets, has operations in 20 countries around the

world. Fresh Foods always encourages the rapid development of local management and retains

few expatriates in its overseas operations. Fresh Foods’ management ranks are truly international.

Which of the following is most likely a reason for the success of Fresh Foods in international

markets?

A) A global culture

B) Adaptability

C) Capital assets

D) Financial resources

E) Rigidity

Answer: A

Explanation: To be global, retailers must think globally. This is an example of success through a

global culture.

Difficulty: 2 Medium

Topic: Global Growth Opportunities

Learning Objective: 05-04 Identify issues that arise as domestic retailers become global

retailers.

Bloom’s: Apply

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

No reproduction or distribution without the prior written consent of McGraw-Hill Education.85) Lezos, a chain of international restaurants, has operations in more than 50 countries around

the world. The company has a practice of investing in projects long enough for them to become

successful. Which of the following is most likely a reason for the success of Lezos in

international markets?

A) A global culture

B) Adaptability

C) Human resources

D) Financial resources

E) Rigidity

Answer: D

Explanation: Successful global retailers have the ability to keep investing in projects long

enough to become successful. This is an example of success because of the availability of

financial resources.

Difficulty: 2 Medium

Topic: Global Growth Opportunities

Learning Objective: 05-04 Identify issues that arise as domestic retailers become global

retailers.

Bloom’s: Apply

AACSB: Reflective Thinking

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86) ________ occurs when a retail firm invests in and owns a retail operation in a foreign

country.

A) Inventory investment

B) Portfolio investment

C) Direct investment

D) Philatelic investment

E) Alternative investment

Answer: C

Explanation: Direct investment occurs when a retail firm invests in and owns a retail operation

in a foreign country.

Difficulty: 1 Easy

Topic: Global Growth Opportunities

Learning Objective: 05-04 Identify issues that arise as domestic retailers become global

retailers.

Bloom’s: Remember

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

No reproduction or distribution without the prior written consent of McGraw-Hill Education.87) Toss, a chain of sports equipment retailers, plans to invest in a retail operation in a foreign

country. Which of the following categories of investments does this belong to?

A) Philatelic investment

B) Alternative investment

C) Inventory investment

D) Portfolio investment

E) Direct investment

Answer: E

Explanation: Direct investment occurs when a retail firm invests in and owns a retail operation

in a foreign country.

Difficulty: 3 Hard

Topic: Global Growth Opportunities

Learning Objective: 05-04 Identify issues that arise as domestic retailers become global

retailers.

Bloom’s: Apply

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

88) Which of the following statements is a key advantage of direct investments?

A) The retailer has complete control of the operations.

B) The retailer is exempted from trade taxes.

C) The retailer is at freedom to choose which nation’s law they adhere to.

D) The retailer is exempted from local trade laws.

E) A loss is borne equally by all involved parties.

Answer: A

Explanation: A key advantage of direct investment is that the retailer has complete control of the

operations.

Difficulty: 1 Easy

Topic: Global Growth Opportunities

Learning Objective: 05-04 Identify issues that arise as domestic retailers become global

retailers.

Bloom’s: Remember

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

No reproduction or distribution without the prior written consent of McGraw-Hill Education.89) A(n) ________ is formed when the entering retailer pools its resources with a local retailer to

form a new company in which ownership, control, and profits are shared.

A) merger

B) joint venture

C) acquisition

D) strategic alliance

E) takeover

Answer: B

Explanation: A joint venture is formed when the entering retailer pools its resources with a local

retailer to form a new company in which ownership, control, and profits are shared.

Difficulty: 1 Easy

Topic: Global Growth Opportunities

Learning Objective: 05-04 Identify issues that arise as domestic retailers become global

retailers.

Bloom’s: Remember

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

90) Flee, a chain of electronic stores, plans to grow geographically. It has tied up with local

retailers in international markets to form a new company in which ownership, control, and profits

are shared between all involved parties. Which of the following entry strategies is being followed

by Flee?

A) Acquisition

B) Merger

C) Takeover

D) Joint venture

E) Strategic alliance

Answer: D

Explanation: A joint venture is formed when the entering retailer pools its resources with a local

retailer to form a new company in which ownership, control, and profits are shared.

Difficulty: 1 Easy

Topic: Global Growth Opportunities

Learning Objective: 05-04 Identify issues that arise as domestic retailers become global

retailers.

Bloom’s: Apply

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

No reproduction or distribution without the prior written consent of McGraw-Hill Education.91) Which of the following statements is an advantage of a joint venture?

A) The entering retailer is exempted from trade taxes.

B) Trade laws favor the entering retailer.

C) The entering retailer takes all the profits.

D) The entering retailer has complete control of the operations.

E) The local partner provides an understanding of the market.

Answer: E

Explanation: A joint-venture entry strategy reduces the entrant’s risks. In addition to sharing the

financial burden, the local partner provides an understanding of the market and has access to

local resources, such as vendors and real estate.

Difficulty: 1 Easy

Topic: Global Growth Opportunities

Learning Objective: 05-04 Identify issues that arise as domestic retailers become global

retailers.

Bloom’s: Remember

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

92) Which of the following statements is a disadvantage of a joint venture?

A) The entering retailer must bear all the loss.

B) Only the local retailer is exempted from trade laws.

C) Government places restrictions on the repatriation of profits.

D) Only the local retailer is exempted from trade tax.

E) The local retailer is at freedom to choose which laws they adhere to.

Answer: C

Explanation: Problems with a joint venture entry approach can arise if the partners disagree or

the government places restrictions on the repatriation of profits.

Difficulty: 1 Easy

Topic: Global Growth Opportunities

Learning Objective: 05-04 Identify issues that arise as domestic retailers become global

retailers.

Bloom’s: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

No reproduction or distribution without the prior written consent of McGraw-Hill Education.93) A(n) ________ is a collaborative relationship between independent firms.

A) strategic alliance

B) joint venture

C) acquisition

D) merger

E) takeover

Answer: A

Explanation: A strategic alliance is a collaborative relationship between independent firms.

Difficulty: 1 Easy

Topic: Global Growth Opportunities

Learning Objective: 05-04 Identify issues that arise as domestic retailers become global

retailers.

Bloom’s: Remember

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

94) MarMa, a retailer of auto accessories, plans to grow geographically. It has tied up with

independent international firms to facilitate its local logistical activities. Which of the following

entry strategies is being followed by MarMa?

A) Takeover

B) Joint venture

C) Acquisition

D) Merger

E) Strategic alliance

Answer: E

Explanation: A strategic alliance is a collaborative relationship between independent firms. A

retailer might enter an international market through direct investment but use independent firms

to facilitate its local logistical and warehousing activities.

Difficulty: 1 Easy

Topic: Global Growth Opportunities

Learning Objective: 05-04 Identify issues that arise as domestic retailers become global

retailers.

Bloom’s: Apply

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

No reproduction or distribution without the prior written consent of McGraw-Hill Education.95) Which of the following statements is true of franchising?

A) It offers the highest risk and requires the least investment but also has the highest potential

return on investment.

B) It offers the lowest risk and requires the least investment but also has the lowest potential

return on investment.

C) It offers the lowest risk and requires the most investment but also has the highest potential

return on investment.

D) It offers the highest risk and requires the most investment but also has the highest potential

return on investment.

E) It offers the highest risk and requires the most investment but also has the lowest potential

return on investment.

Answer: B

Explanation: Franchising offers the lowest risk and requires the least investment but also has the

lowest potential return on investment.

Difficulty: 1 Easy

Topic: Global Growth Opportunities

Learning Objective: 05-04 Identify issues that arise as domestic retailers become global

retailers.

Bloom’s: Remember

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

96) Which of the following statements is a disadvantage of franchising?

A) The retailer bears all the loss.

B) Heavy taxes are levied on the retailer.

C) Local laws favor the franchise.

D) The potential profit is reduced.

E) This is the most expensive method of entering a new market.

Answer: D

Explanation: Franchising offers the lowest risk and requires the least investment but also has the

lowest potential return on investment. The retailer has limited control over the retail operations

in the foreign country, its potential profit is reduced, and the risk of assisting in the creation of a

local domestic competitor increases.

Difficulty: 1 Easy

Topic: Global Growth Opportunities

Learning Objective: 05-04 Identify issues that arise as domestic retailers become global

retailers.

Bloom’s: Remember

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

No reproduction or distribution without the prior written consent of McGraw-Hill Education.97) Which of the following steps is typically the first step in the strategic retail planning process?

A) Develop a retail mix to implement strategy.

B) Evaluate performance and make adjustments.

C) Define the business mission.

D) Evaluate strategic alternatives.

E) Identify strategic opportunities.

Answer: C

Explanation: Defining the business mission is typically the first step in the strategic planning

process.

Difficulty: 2 Medium

Topic: Retail Strategic Planning and Operations

Learning Objective: 05-05 Know the steps retailers go through to develop a strategic plan.

Bloom’s: Remember

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

98) Dave is a part of the strategic retail planning process in his organization. He has defined the

business mission. Which of the following steps is most likely Dave’s next stage in the strategic

planning process?

A) Conduct a SWOT analysis.

B) Evaluate performance and make adjustments.

C) Develop a retail mix to implement strategy.

D) Establish specific objectives and allocate resources.

E) Evaluate strategic alternatives.

Answer: A

Explanation: After developing a mission statement and setting objectives, the next step in the

strategic planning process is to conduct a SWOT analysis. A SWOT analysis involves an

analysis of the retailer’s internal environment (strengths and weaknesses) and external

environment (opportunities and threats).

Difficulty: 2 Medium

Topic: Retail Strategic Planning and Operations

Learning Objective: 05-05 Know the steps retailers go through to develop a strategic plan.

Bloom’s: Apply

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

No reproduction or distribution without the prior written consent of McGraw-Hill Education.99) Which of the following factors is classified as a market factor?

A) Economic conditions

B) New technology

C) Barriers to entry

D) Competitive rivalry

E) Seasonality

Answer: E

Explanation: Market size, market growth, cyclicality of sales, and seasonality are classified as

market factors.

Difficulty: 2 Medium

Topic: Retail Strategic Planning and Operations

Learning Objective: 05-05 Know the steps retailers go through to develop a strategic plan.

Bloom’s: Remember

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

100) Which of the following factors is classified as a competitive factor?

A) Social changes

B) Bargaining power of vendors

C) New technology

D) Economic conditions

E) Market growth

Answer: B

Explanation: Barriers to entry, bargaining power of vendors, and competitive rivalry are

classified as competitive factors.

Difficulty: 2 Medium

Topic: Retail Strategic Planning and Operations

Learning Objective: 05-05 Know the steps retailers go through to develop a strategic plan.

Bloom’s: Remember

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

No reproduction or distribution without the prior written consent of McGraw-Hill Education.101) Which of the following is true of scale economies?

A) Scale economies are volume advantages due to a retailer’s cost.

B) Scale economies are volume advantages due to a retailer’s size.

C) Scale economies are cost advantages due to a retailer’s size.

D) Scale economies are size advantages due to a retailer’s cost.

E) Scale economies are size advantages due to a retailer’s volume.

Answer: C

Explanation: Scale economies are cost advantages due to a retailer’s size.

Difficulty: 2 Medium

Topic: Retail Strategic Planning and Operations

Learning Objective: 05-05 Know the steps retailers go through to develop a strategic plan.

Bloom’s: Remember

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

102) Which of the following factors is classified as environmental dynamics?

A) Market size

B) Seasonality

C) Barriers to entry

D) Social changes

E) Competitive rivalry

Answer: D

Explanation: Technological changes, economic/consumer/social changes, and regulatory

changes are classified as environmental dynamics.

Difficulty: 2 Medium

Topic: Retail Strategic Planning and Operations

Learning Objective: 05-05 Know the steps retailers go through to develop a strategic plan.

Bloom’s: Remember

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

No reproduction or distribution without the prior written consent of McGraw-Hill Education.103) Which of the following is a condition that may lead to competitive rivalry?

A) Large number of competitors of the same size

B) Presence of perceived differences between competing retailers

C) Fast growth

D) Low fixed costs

E) Lack of competition

Answer: A

Explanation: Conditions that may lead to intense rivalry include (1) a large number of

competitors that are all about the same size, (2) slow growth, (3) high fixed costs, and (4) a lack

of perceived differences between competing retailers.

Difficulty: 2 Medium

Topic: Retail Strategic Planning and Operations

Learning Objective: 05-05 Know the steps retailers go through to develop a strategic plan.

Bloom’s: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

104) Josh is responsible for the strategic retail planning process in his organization. He has

defined the business mission and conducted a SWOT analysis. Which of the following steps is

most likely his next stage in the strategic retail planning process?

A) Evaluate strategic opportunities.

B) Establish specific objectives and allocate resources.

C) Identify strategic opportunities.

D) Develop a retail mix to implement strategy.

E) Evaluate performance and make adjustments.

Answer: C

Explanation: Identifying strategic opportunities is typically the next step after conducting a

SWOT analysis in the strategic retail planning process.

Difficulty: 2 Medium

Topic: Retail Strategic Planning and Operations

Learning Objective: 05-05 Know the steps retailers go through to develop a strategic plan.

Bloom’s: Apply

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

No reproduction or distribution without the prior written consent of McGraw-Hill Education.105) Luke is responsible for the strategic retail planning process in his organization. He is

currently identifying the strategic opportunities. Which of the following steps is most likely to

have been Luke’s previous step before identifying the strategic opportunities?

A) Evaluating performance

B) Developing a retail mix

C) Establishing specific objectives

D) Evaluating strategic opportunities

E) Conducting a SWOT analysis

Answer: E

Explanation: Identifying strategic opportunities is typically the stage after conducting a SWOT

analysis in the strategic retail planning process.

Difficulty: 2 Medium

Topic: Retail Strategic Planning and Operations

Learning Objective: 05-05 Know the steps retailers go through to develop a strategic plan.

Bloom’s: Apply

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

106) Zara is responsible for the strategic retail planning process in her organization. She has

identified the strategic opportunities. Which of the following steps is most likely Zara’s next

stage in the strategic retail planning process?

A) Define the business mission.

B) Evaluate strategic opportunities.

C) Evaluate performance.

D) Develop a retail mix.

E) Establish specific objectives.

Answer: B

Explanation: Evaluating strategic opportunities is typically the stage after identifying strategic

opportunities in the strategic retail planning process.

Difficulty: 2 Medium

Topic: Retail Strategic Planning and Operations

Learning Objective: 05-05 Know the steps retailers go through to develop a strategic plan.

Bloom’s: Apply

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

No reproduction or distribution without the prior written consent of McGraw-Hill Education.107) Which of the following steps is typically the next step after evaluating strategic

opportunities in the strategic retail planning process?

A) Establishing specific objectives

B) Developing a retail mix

C) Evaluating performance

D) Defining the business mission

E) Conducting a SWOT analysis

Answer: A

Explanation: After evaluating strategic alternatives, specific objectives are established in the

typical strategic retail planning process.

Difficulty: 2 Medium

Topic: Retail Strategic Planning and Operations

Learning Objective: 05-05 Know the steps retailers go through to develop a strategic plan.

Bloom’s: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

108) Which of the following steps is typically the previous step before evaluating the strategic

opportunities in the strategic retail planning process?

A) Defining the business mission

B) Establishing specific objectives

C) Identifying strategic opportunities

D) Developing a retail mix

E) Evaluating performance

Answer: C

Explanation: Identifying strategic opportunities is typically the previous stage before evaluating

strategic opportunities in the strategic retail planning process.

Difficulty: 2 Medium

Topic: Retail Strategic Planning and Operations

Learning Objective: 05-05 Know the steps retailers go through to develop a strategic plan.

Bloom’s: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

No reproduction or distribution without the prior written consent of McGraw-Hill Education.109) Which of the following steps is typically the next step after establishing specific objectives

and allocating resources in the strategic retail planning process?

A) Identifying strategic opportunities

B) Developing a retail mix to implement the strategy

C) Evaluating performance and making adjustments

D) Defining the business mission

E) Conducting a SWOT analysis

Answer: B

Explanation: Developing a retail mix to implement the strategy is typically the next step after

establishing specific objectives and allocating resources in the strategic retail planning process.

Difficulty: 2 Medium

Topic: Retail Strategic Planning and Operations

Learning Objective: 05-05 Know the steps retailers go through to develop a strategic plan.

Bloom’s: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

110) Which of the following steps is typically the previous step before establishing specific

objectives and allocating resources in the strategic retail planning process?

A) Identifying strategic opportunities

B) Developing a retail mix to implement strategy

C) Evaluating performance and making adjustments

D) Defining the business mission

E) Evaluating strategic opportunities

Answer: E

Explanation: Evaluating strategic opportunities is typically the previous step before establishing

specific objectives and allocating resources in the strategic retail planning process.

Difficulty: 2 Medium

Topic: Retail Strategic Planning and Operations

Learning Objective: 05-05 Know the steps retailers go through to develop a strategic plan.

Bloom’s: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

No reproduction or distribution without the prior written consent of McGraw-Hill Education.111) Which of the following steps is typically the next step after developing a retail mix to

implement the strategy in the strategic retail planning process?

A) Establishing specific objectives and allocating resources

B) Evaluating strategic opportunities

C) Identifying strategic opportunities

D) Evaluating performance and making adjustments

E) Defining the business mission

Answer: D

Explanation: Evaluating performance and making adjustments is typically the next step after

developing a retail mix to implement the strategy in the strategic retail planning process.

Difficulty: 2 Medium

Topic: Retail Strategic Planning and Operations

Learning Objective: 05-05 Know the steps retailers go through to develop a strategic plan.

Bloom’s: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

112) Which of the following steps is typically the previous step before developing a retail mix to

implement the strategy in the strategic retail planning process?

A) Establishing specific objectives and allocating resources

B) Evaluating strategic opportunities

C) Identifying strategic opportunities

D) Evaluating performance and making adjustments

E) Defining the business mission

Answer: A

Explanation: Establishing specific objectives and allocating resources is typically the previous

step before developing a retail mix to implement the strategy in the strategic retail planning

process.

Difficulty: 2 Medium

Topic: Retail Strategic Planning and Operations

Learning Objective: 05-05 Know the steps retailers go through to develop a strategic plan.

Bloom’s: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

No reproduction or distribution without the prior written consent of McGraw-Hill Education.113) Which of the following steps is typically the last step in the strategic retail planning

process?

A) Develop a retail mix to implement strategy.

B) Establish specific objectives and allocate resources.

C) Evaluate performance and make adjustments.

D) Identify strategic opportunities.

E) Define the business mission.

Answer: C

Explanation: Evaluating performance and making adjustments is typically the last step in the

strategic planning process.

Difficulty: 2 Medium

Topic: Retail Strategic Planning and Operations

Learning Objective: 05-05 Know the steps retailers go through to develop a strategic plan.

Bloom’s: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

114) Which of the following steps is most likely to be the previous step before evaluating

performance and making adjustments in the strategic retail planning process?

A) Define the business mission.

B) Develop a retail mix to implement strategy.

C) Identify strategic opportunities.

D) Conduct a SWOT analysis.

E) Evaluate strategic opportunities.

Answer: B

Explanation: Developing a retail mix to implement the strategy is the previous step before

evaluating performance and making adjustments in the strategic retail planning process.

Difficulty: 2 Medium

Topic: Retail Strategic Planning and Operations

Learning Objective: 05-05 Know the steps retailers go through to develop a strategic plan.

Bloom’s: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

No reproduction or distribution without the prior written consent of McGraw-Hill Education.115) Name five approaches for retailers to develop a sustainable competitive advantage.

Answer: The five approaches for retailers to develop a sustainable competitive advantage are

• Customer loyalty

• Location

• Human resource management

• Distribution and information systems

• Vendor relations

Difficulty: 1 Easy

Topic: How Retailers Build a Sustainable Competitive Advantage

Learning Objective: 05-02 Illustrate how retailers build a sustainable competitive advantage.

Bloom’s: Remember

AACSB: Reflective Thinking; Communication

Accessibility: Keyboard Navigation

116) Describe customer loyalty and the ways in which retailers can build customer loyalty.

Answer: Customer loyalty means that customers are committed to buying merchandise and

services from a particular retailer. A retailer can build customer loyalty by

• developing a strong brand for the store or store brands,

• developing clear and precise positioning strategies,

• offering unique merchandise,

• providing outstanding customer service,

• implementing customer relationship management programs (such as loyalty programs), and

• building a retail community.

Difficulty: 1 Easy

Topic: How Retailers Build a Sustainable Competitive Advantage

Learning Objective: 05-02 Illustrate how retailers build a sustainable competitive advantage.

Bloom’s: Remember

AACSB: Reflective Thinking; Communication

Accessibility: Keyboard Navigation

117) Define positioning.

Answer: Positioning is the design and implementation of a retail mix to create an image of the

retailer in the customer’s mind relative to its competitors.

Difficulty: 1 Easy

Topic: How Retailers Build a Sustainable Competitive Advantage

Learning Objective: 05-02 Illustrate how retailers build a sustainable competitive advantage.

Bloom’s: Remember

AACSB: Reflective Thinking; Communication

Accessibility: Keyboard Navigation

No reproduction or distribution without the prior written consent of McGraw-Hill Education.118) Why would a retailer desire to have private-label or store brands?

Answer: It is difficult for a retailer to develop customer loyalty through its merchandise

offerings because most competitors can purchase and sell the same popular national brands. But

many retailers build customer loyalty by developing private-label brands. These brands that are

found only at the retailer’s stores can build customer loyalty, resulting in a sustainable

competitive advantage.

Difficulty: 1 Easy

Topic: How Retailers Build a Sustainable Competitive Advantage

Learning Objective: 05-02 Illustrate how retailers build a sustainable competitive advantage.

Bloom’s: Remember

AACSB: Reflective Thinking; Communication

Accessibility: Keyboard Navigation

119) What are customer relationship management programs?

Answer: Customer relationship management (CRM) programs, also called loyalty or frequent

shopper programs, are activities that focus on identifying and building loyalty with a retailer’s

most valued customers. These programs typically involve offering customers rewards based on

the amount of services or merchandise they purchase. For example, airlines offer free tickets to

travelers who have flown a prescribed number of miles, and Subway gives customers a free

sandwich for each 10 they purchase.

Difficulty: 1 Easy

Topic: Customer Relationship Management Process

Learning Objective: 05-02 Illustrate how retailers build a sustainable competitive advantage.

Bloom’s: Remember

AACSB: Reflective Thinking; Communication

Accessibility: Keyboard Navigation

120) How can a retailer use the market penetration opportunity to foster growth?

Answer: Growth can be achieved by using the market penetration opportunity by attracting

customers in the retailer’s current target market who don’t patronize the retailer currently or

devising strategies that induce current customers to visit the retailer more often and/or buy more

merchandise on each visit.

Difficulty: 2 Medium

Topic: Strategic Growth Opportunities for Retailers

Learning Objective: 05-03 Classify the different strategic growth opportunities retailers pursue.

Bloom’s: Remember

AACSB: Reflective Thinking; Communication

Accessibility: Keyboard Navigation

No reproduction or distribution without the prior written consent of McGraw-Hill Education.121) Differentiate between related and unrelated diversification.

Answer: In a related diversification growth opportunity, the retailer’s present target market and

retail format share something in common with the new opportunity. This commonality might

entail purchasing from the same vendors, operating in similar locations, using the same

distribution or management information system, or advertising in the same newspapers to similar

target markets. In contrast, an unrelated diversification growth opportunity has little

commonality between the retailer’s present business and the new growth opportunity.

Difficulty: 2 Medium

Topic: Strategic Growth Opportunities for Retailers

Learning Objective: 05-03 Classify the different strategic growth opportunities retailers pursue.

Bloom’s: Remember

AACSB: Reflective Thinking; Communication

Accessibility: Keyboard Navigation

122) List the key opportunities for success in global retailing.

Answer: Four characteristics of retailers that have successfully exploited international growth

opportunities are

• a globally sustainable competitive advantage,

• adaptability,

• a global culture, and

• financial resources.

Difficulty: 1 Easy

Topic: Global Growth Opportunities

Learning Objective: 05-04 Identify issues that arise as domestic retailers become global

retailers.

Bloom’s: Remember

AACSB: Reflective Thinking; Communication

Accessibility: Keyboard Navigation

123) Describe franchising.

Answer: Franchising offers the lowest risk and requires the least investment but also has the

lowest potential return on investment. The retailer has limited control over the retail operations

in the foreign country, its potential profit is reduced, and the risk of assisting in the creation of a

local domestic competitor increases.

Difficulty: 1 Easy

Topic: Global Growth Opportunities

Learning Objective: 05-04 Identify issues that arise as domestic retailers become global

retailers.

Bloom’s: Remember

AACSB: Reflective Thinking; Communication

Accessibility: Keyboard Navigation

No reproduction or distribution without the prior written consent of McGraw-Hill Education.124) List the steps in the strategic retail planning process.

Answer: The following are the steps in the strategic retail planning process:

• define the business mission,

• conduct a SWOT analysis,

• identify strategic opportunities,

• evaluate strategic opportunities,

• establish specific objectives and allocate resources,

• develop a retail mix to implement the strategy, and

• evaluate performance and make adjustments.

Difficulty: 2 Medium

Topic: Retail Strategic Planning and Operations

Learning Objective: 05-05 Know the steps retailers go through to develop a strategic plan.

Bloom’s: Remember

AACSB: Reflective Thinking; Communication

Accessibility: Keyboard Navigation

No reproduction or distribution without the prior written consent of McGraw-Hill Education.

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