Chapter 23 - Chain of Production☀️

Question 1

What is a wholesaler?

Answer 1

A business that buys in bulk from the manufacturer and sells in smaller quantities to the retailer e.g. Musgrave’s Cash & Carry.

Question 2

What is a franchise?

Answer 2

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.

Question 3

Who are involved in the extractive industry?

Answer 3

Businesses that take or extract raw materials from:
Land; forestry
Sea; fishing
Air; wind power

Question 4

Who are involved in the construction and manufacturing industries?

Answer 4

Construction: Businesses involved in the building of houses, roads etc.
Manufacturing: Firms that make finished products for the consumer.

Question 5

Who are involved in the service industry?

Answer 5

Firms that provide a service rather then a product to the consumer e.g. Banking, transport.

Question 6

What are the types of production?

Answer 6

1. Primary Production - All products produced by firms in the extractive industry.
2. Secondary Production - All products produced by the construction and manufacturing industry.
3. Tertiary - All services provided by the service industry.

Question 7

What should you consider when choosing a channel of distribution?

Answer 7

1. The type of good; are they perishable
2. The speed
3. The distance

Question 8

What are the chains/ channels of distribution?

Answer 8

1. Manufacturer -> Consumer (items bought from factory e.g. Waterford Glass factory shop)
2. Manufacturer -> Retailer -> Consumer (furniture shop buys from furniture factory & sells to consumer)
3. Manufacturer -> Wholesaler -> Retailer -> Consumer (local shop buys from a wholesaler)

Question 9

What would a wholesaler be omitted from a channel of distribution?

Answer 9

1. If it is important to get product to a consumer quickly

2. Retailer wishes to buy in bulk form the manufacturer.

Question 10

Why would a wholesaler and retailer be omitted from a channel of distribution?

Answer 10

1. The product needs to be customised for the individual consumer e.g. Custom Furniture
2. 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.

Question 11

What are the functions of a wholesaler?

Answer 11

1. Sells goods in smaller quantities to the retailer ‘Breaking Bulk’.
2. Sells a wide range of goods from different manufacturers.

Question 12

Define Independent Retailer.

Answer 12

Sole traders who operate small shops often family owned e.g. Newsagents

Question 13

Define Multiple Store.

Answer 13

Number of branches that sell one type of product e.g. HMV

Question 14

Define Chain Store.

Answer 14

Number of branches that sell a range of goods e.g. Dunnes

Question 15

Define Supermarket.

Answer 15

Large self service retailer with a number of branches that sells many types of food and drink products e.g. SuperValu

Question 16

Define Voluntary Retail Group.

Answer 16

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

Question 17

Define Department Store.

Answer 17

Each store is divided into departments specialising in a particular type of product e.g. Brown Thomas

Question 18

Define Discount Store.

Answer 18

They usually sell a large quantity of one type of product at a low price e.g. Power City.

Question 19

Define Mail Order Firm.

Answer 19

Retailers that sell through the post e.g. Littlewoods

Question 20

Define Shopping Centre.

Answer 20

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.

Question 21

Define Automatic Selling.

Answer 21

Vending machines.

Question 22

Define Direct Selling.

Answer 22

Products/services provided directly to consumers by the manufacturer of the goods or provider of the service e.g. Ordering a custom-made kitchen

Question 23

What are the functions of a retailer?

Answer 23

1. Sells goods in smaller quantities to the consumer ‘Breaking Bulk’
2. Sells a wide range of goods from different manufacturers
3. May provide a delivery service
4. May offer online sales to their customers

Question 24

What are the advantages of franchising?

Answer 24

1. Little risk attached to starting a business this way because the business is already successful in other locations.
2. The name of the business is already well known, as it is easy to promote the business.

Question 25

What are the disadvantages of franchising?

Answer 25

1. New owner must pay money to the original owner each year which reduces profits
2. Sometimes new owner cannot make any major decisions without getting permission from the original owner

Question 26

What is the chain/channel of production?

Answer 26

The method used to get goods and services form the producer to the consumer.