Chapter 23 - Chain of Production☀️ Flashcards
What is a wholesaler?
A business that buys in bulk from the manufacturer and sells in smaller quantities to the retailer e.g. Musgrave’s Cash & Carry.
What is a franchise?
A franchise exists when the owners of a business give permission to another person to set up a branch of their business in another location in return for a fee e.g. McDonalds, Starbucks.
Who are involved in the extractive industry?
Businesses that take or extract raw materials from:
Land; forestry
Sea; fishing
Air; wind power
Who are involved in the construction and manufacturing industries?
Construction: Businesses involved in the building of houses, roads etc.
Manufacturing: Firms that make finished products for the consumer.
Who are involved in the service industry?
Firms that provide a service rather then a product to the consumer e.g. Banking, transport.
What are the types of production?
- Primary Production - All products produced by firms in the extractive industry.
- Secondary Production - All products produced by the construction and manufacturing industry.
- Tertiary - All services provided by the service industry.
What should you consider when choosing a channel of distribution?
- The type of good; are they perishable
- The speed
- The distance
What are the chains/ channels of distribution?
- Manufacturer -> Consumer (items bought from factory e.g. Waterford Glass factory shop)
- Manufacturer -> Retailer -> Consumer (furniture shop buys from furniture factory & sells to consumer)
- Manufacturer -> Wholesaler -> Retailer -> Consumer (local shop buys from a wholesaler)
What would a wholesaler be omitted from a channel of distribution?
- If it is important to get product to a consumer quickly
2. Retailer wishes to buy in bulk form the manufacturer.
Why would a wholesaler and retailer be omitted from a channel of distribution?
- The product needs to be customised for the individual consumer e.g. Custom Furniture
- Advancement in technology may allow the consumer to buy directly from the manufacturer. This is usually cheaper e.g. Buy a computer from Dell over the internet.
What are the functions of a wholesaler?
- Sells goods in smaller quantities to the retailer ‘Breaking Bulk’.
- Sells a wide range of goods from different manufacturers.
Define Independent Retailer.
Sole traders who operate small shops often family owned e.g. Newsagents
Define Multiple Store.
Number of branches that sell one type of product e.g. HMV
Define Chain Store.
Number of branches that sell a range of goods e.g. Dunnes
Define Supermarket.
Large self service retailer with a number of branches that sells many types of food and drink products e.g. SuperValu
Define Voluntary Retail Group.
Group of retailers who agree to buy their stock from one particular wholesaler only. Due to bulk buying, prices are cheaper to compete with supermarkets. They benefit from group advertising e.g. Spar & Mace
Define Department Store.
Each store is divided into departments specialising in a particular type of product e.g. Brown Thomas
Define Discount Store.
They usually sell a large quantity of one type of product at a low price e.g. Power City.
Define Mail Order Firm.
Retailers that sell through the post e.g. Littlewoods
Define Shopping Centre.
Big buildings in which there are a lot of small, medium and large stores selling a wide variety of goods e.g. Dundrum Town Centre.
Define Automatic Selling.
Vending machines.
Define Direct Selling.
Products/services provided directly to consumers by the manufacturer of the goods or provider of the service e.g. Ordering a custom-made kitchen
What are the functions of a retailer?
- Sells goods in smaller quantities to the consumer ‘Breaking Bulk’
- Sells a wide range of goods from different manufacturers
- May provide a delivery service
- May offer online sales to their customers
What are the advantages of franchising?
- Little risk attached to starting a business this way because the business is already successful in other locations.
- The name of the business is already well known, as it is easy to promote the business.
What are the disadvantages of franchising?
- New owner must pay money to the original owner each year which reduces profits
- Sometimes new owner cannot make any major decisions without getting permission from the original owner
What is the chain/channel of production?
The method used to get goods and services form the producer to the consumer.
