Chapter 11

Question 1

What 7 major firm types can the retail industry be divided into?

Answer 1

1. General merchandise
2. Durable goods
3. Speciality stores
4. Food and beverage
5. Gasoline and fuel
6. MOTO
7. Online retail firms

Question 2

What is the reality of the future of line retail?

Answer 2

1. Online consumers are not primarly cost-driven they are brand-driven
2. Online market entry costs were underestimated as was the cost of acquiring new customers
3. Older traditional firms are taking over as the top online retail sites
4. Disintermediation did not occur (removal of middlemen)

Question 3

How can the ability of a firm to survive be analyzed?

Answer 3

1. Key industry strategic factors
2. Strategic factors that pertain specifically to the firm
3. Financial statements for the firm

Question 4

Give examples of key industry strategic factors

Answer 4

Barriers to entry, the power of suppliers, the power of customers

Question 5

Give examples of strategic factors that pertain specifically to the firm

Answer 5

Firm value chain, core competencies synergies, the firms current technology

Question 6

Give examples of key financial factors

Answer 6

Revenue, cost of salary, gross margin, balance sheet

Question 7

What are the 4 types of merchants and what are their challenges?

Answer 7

1. Virtual merchants - Web firms generating revenue from online sales. Challenge is to build a business, brand name and the steep learning curve (Amazon)
2. Omni-channel merchants (bricks and clicks) - network of physical stores as primary but also online capabilities. Challenge is cost of physical buildings, coordinating prices and developing credible e-commerce presence (Walmart)
3. Catalog merchants - national offline catalog operation as largest retail channel + online capabilities. Challenge is the high cost for printing and mailing and building credible e-commerce presence (Land’s End)
4. Manufacturer-direct merchants - sell directly to consumers without intervention of retailers. Challenge to switch from supply-push to demand-pull model (Dell)

Question 8

What is a supply-push model?

Answer 8

Products are made prior to orders being received based on estimated demand

Question 9

What is a demand-pull model?

Answer 9

Products are not build until an order is received

Question 10

What sector is the largest and most rapidly expanding part of the economy?

Answer 10

Service sector

Question 11

What major trends in the online travel service industry are there today?

Answer 11

The Internet has become the most common channel used by consumers to research travel options and book reservations for hotel rooms, flights, rentals

• Consolidation, the rise of meta-search engines, mobile devices and social media