Retail Ownership & Buying a Business

Retail Ownership

• Corporations possess the greatest capacity for long-term existence among retail ownership forms.
• Ownership and management can be separate in a corporation.
• Franchising combines independent ownership with managerial support.
• Rigid operational standards and limited product lines are characteristic of franchising.
• Sole proprietorships are most likely to use an owner-manager system.

Buying a Business

• A significant advantage of buying an established business is the ongoing sales and profits it generates.
• A major disadvantage of buying an established business is potential inflexibility in enacting a new strategy.
• A crucial limitation to consider when purchasing an existing business is a short-term lease on rented property.
• To verify income, a retailer should request audited income tax statements from the seller.
• An advantage of buying an existing business is no time lag before opening.
• A key advantage of starting a new business is nonpayment for goodwill.

Management and Planning

• Planning is more formal and systematic in a professional manager system.
• Planning authority is limited to top management in a centralized system.
• A centralized structure best assures a low-cost provider retail strategy.
• Managers in individual departments having major decision-making input is typical of a decentralized structure.
• Decentralized structure assures that retail strategy is acceptable to community residents.

Objectives and Strategies

• Sales objectives generally focus on growth, stability, and/or market share.
• Market share sales objectives are typically pursued by larger retailers or retail chains.
• Retailers with large capital expenditures commonly use return on investment objectives.
• A retailer with $10 million in sales and $2 million in expenses has an 80% efficiency rating.
• Objectives aimed at satisfying various stakeholders are known as satisfaction of public objectives.
• A retailer can assess consumer perception of their company through use of positioning.
• The growth of specialty stores and boutiques showcases the popularity of niche retailing.
• A firm's target market represents the consumer group a retailer seeks to attract.
• Mass marketing involves selling goods and services to a broad consumer spectrum.
• Differentiated marketing tailors retail approaches to two or more distinct consumer groups.
• Competitive advantages refer to a retailer's distinct competencies relative to competitors.
• Aspects of a business that a retailer can directly control are called controllable variables.
• Technology is not a controllable variable within a retail business.
• Tactics are decisions related to a retailer's daily and short-term operations.

Additional Concepts

• During an unprofitable startup stage, a retailer should use a personal drawing account to plan for family financial needs.
• Sales revenues and employee turnover are forms of feedback.
• A discount camera retailer's focus on beating traditional prices illustrates its organizational mission.
• An off-price retailer offering name-brand goods at 20-60% off constitutes its organizational mission.
• Limited capital and expertise are most likely in a sole proprietorship.
• Sole proprietorships and partnerships share the characteristic of management succession.
• Intensive owner participation is most likely to occur when a business cannot be easily automated or mechanized.
• Profitability objectives are most likely to be used when a retailer has high debt service.
• A uniform image is important for franchises.
• A major advantage of franchising for the franchisor is developing a nationwide distribution system with minimum capital investment.