Test Bank For Retailing 8Th Edition Dunne Lusch Carver 1133953808 9781133953807 Full Chapter PDF
Test Bank For Retailing 8Th Edition Dunne Lusch Carver 1133953808 9781133953807 Full Chapter PDF
Test Bank For Retailing 8Th Edition Dunne Lusch Carver 1133953808 9781133953807 Full Chapter PDF
9781133953807
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MULTIPLE CHOICE
2. Strategic planning:
a. requires a short-term commitment of resources by the retailer.
b. is concerned with maximizing the efficiency of the retailer’s use of resources and
with how the retailer converts these resources into sales and profits.
c. involves managing the buying and handling of merchandise, pricing, advertising
and promotion, customer services and selling, and facilities.
d. is concerned with how the retailer responds to the environment in an effort to establish
a short-term course of action.
e. involves adapting the resources of the firm to the opportunities and threats of
an ever-changing retail environment.
ANS: E PTS: 1 REF: p. 51 OBJ: LO 2-1
STA: MBA: Strategic & systems skills LOC: MBA: Strategic & systems skills
KEY: Bloom's: Knowledge
4. The beginning of a retailer's strategic planning process is the formulation of the retailer's:
a. goals and objectives.
b. opportunity analysis audit.
c. alpha statement.
d. mission statement.
e. strategy statement.
ANS: D PTS: 1 REF: p. 52 OBJ: LO 2-1
STA: MBA: Strategic & systems skills LOC: MBA: Strategic & systems skills
KEY: Bloom's: Knowledge
6. Consider this mission statement: “Dad’s Tasty Dogs will utilize the friendly, proven expertise of its
employees and the finest ingredients to provide customers with great tasting hot dogs at a fair price.”
What element of a good mission statement is missing?
a. How the retailer uses or intends to use its resources
b. A market share goal
c. How it expects to relate to the ever-changing environment
d. The kinds of value it intends to provide in order to serve the needs and wants of
the customer
e. A SWOT analysis
ANS: C PTS: 1 REF: p. 52 OBJ: LO 2-1
STA: MBA: Strategic & systems skills LOC: MBA: Strategic & systems skills
KEY: Bloom's: Application
8. When a retailer sets goals and objectives based on a comparison of its actions against its
competitors, it is establishing:
a. financial performance objectives.
b. market performance objectives.
c. personal objectives.
d. competitive pricing objectives.
e. societal objectives.
ANS: B PTS: 1 REF: p. 53 OBJ: LO 2-1
STA: MBA: Strategic & systems skills LOC: MBA: Strategic & systems skills
KEY: Bloom's: Knowledge
9. A retail firm that is setting goals based on the analysis of its ability to provide a profit level adequate
to continue in business is setting objectives.
a. liquidity
b. financial performance
c. profit performance
d. market performance
e. operating performance
ANS: B PTS: 1 REF: p. 53 OBJ: LO 2-1
STA: MBA: Strategic & systems skills LOC: MBA: Strategic & systems skills
KEY: Bloom's: Knowledge
10. The four basic types of objectives that a retailer can formulate are:
a. financial, gross margin return on sales, return on assets, and return on net worth.
b. equity, benefactor, consumer choice, and employment.
c. sales volume, market share, productivity, and profitability.
d. societal, market performance, personal, and financial performance.
e. marketing performance, profitability, productivity, and societal.
ANS: D PTS: 1 REF: p. 53 OBJ: LO 2-1
STA: MBA: Strategic & systems skills LOC: MBA: Strategic & systems skills
KEY: Bloom's: Knowledge
11. Financial performance goals and objectives does which of the following:
a. Helps the firm’s employees to fulfill dome of their own personal needs.
b. Compares a firm’s actions to its competition.
c. Helps society to fulfill some of its needs.
d. Analyzes the firm’s ability to provide a profit level adequate to continue and grow
in business.
e. Helps stabilize the global financial market.
ANS: D PTS: 1 REF: p. 53 OBJ: LO 2-1
STA: MBA: Strategic & systems skills LOC: MBA: Strategic & systems skills
KEY: Bloom's: Comprehension
12. Sales volume and market share are the most popular measures of:
a. financial productivity.
b. market performance.
c. merchandise productivity.
d. consumer choice.
e. human resource allocation.
ANS: B PTS: 1 REF: p. 53-554 OBJ: LO 2-1
STA: MBA: Strategic & systems skills LOC: MBA: Strategic & systems skills
KEY: Bloom's: Application
13. Which of the following would be an example of a market performance objective for Record World?
a. Open or acquire five to ten stores over the next year.
b. Increase this year's net profit margin by 3 percent over last year.
c. Improve public relations with customers by holding two major in-store events
per six-month season.
d. Increase labor productivity by 12 percent over the next six months.
e. Increase return on assets from 12 percent to 15 percent over the next 12 months.
ANS: A PTS: 1 REF: p. 54 OBJ: LO 2-1
STA: MBA: Strategic & systems skills LOC: MBA: Strategic & systems skills
KEY: Bloom's: Analysis
14. If a retailer has set its primary objective as gaining 5 percent of market share, it is focusing on a
objective.
a. productivity performance
b. consumer choice
c. merchandise productivity
d. market performance
e. competition-oriented
ANS: D PTS: 1 REF: p. 53-54 OBJ: LO 2-1
STA: MBA: Strategic & systems skills LOC: MBA: Strategic & systems skills
KEY: Bloom's: Application
16. Which of the following elements is NOT a part of the strategic profit model (SPM)?
a. Net profit margin
b. Stockouts
c. Asset turnover
d. Financial leverage
e. Return on assets
ANS: B PTS: 1 REF: p. 55 OBJ: LO 2-1
STA: MBA: Strategic & systems skills LOC: MBA: Strategic & systems skills
KEY: Bloom's: Comprehension
17. The Card Shoppe had a gross margin last year of $2,000,000 and a net profit of $300,000, while
net sales were $2,500,000. What was The Card Shoppe's net profit margin for last year?
a. 12.0 percent
b. 15.0 percent
c. 20.0 percent
d. 68.0 percent
e. 80.0 percent
ANS: A PTS: 1 REF: p. 55 OBJ: LO 2-1
STA: MBA: Strategic & systems skills LOC: MBA: Strategic & systems skills
KEY: Bloom's: Application
18. If a retailer has a return on assets of 15 percent and a net profit margin of 3 percent, then its rate
of asset turnover is:
a. .20 times.
b. 5.0 times.
c. 15.0 times.
d. 30.0 times.
e. 60.0 times.
ANS: B PTS: 1 REF: p. 55 OBJ: LO 2-1
STA: MBA: Strategic & systems skills LOC: MBA: Strategic & systems skills
KEY: Bloom's: Application
19. Cameron Brody wants 15 percent of an average dollar invested in the assets of his bookstore to
be returned in profit. Cameron is setting a(n) financial objective.
a. gross margin return on sales
b. return on inventory
c. return on net worth
d. operating profit margin
e. return on assets
ANS: E PTS: 1 REF: p. 56 OBJ: LO 2-1
STA: MBA: Strategic & systems skills LOC: MBA: Strategic & systems skills
KEY: Bloom's: Application
20. If net profit margin is 2.0 percent, the rate of asset turnover is 6.0x, and the financial leverage is
2.1, what is the return on assets?
a. 0.333 percent
b. 8.0 percent
c. 12.0 percent
d. 25.2 percent
e. 33.0 percent
ANS: C PTS: 1 REF: p. 56 OBJ: LO 2-1
STA: MBA: Strategic & systems skills LOC: MBA: Strategic & systems skills
KEY: Bloom's: Application
22. A retailer has a net profit of $1,000,000, total assets of $12,000,000, a 2.5 asset turnover ratio, and
a net worth of $5,000,000. What is its financial leverage ratio?
a. .083 times
b. .500 times
c. 2.00 times
d. 2.40 times
e. 4.80 times
ANS: D PTS: 1 REF: p. 56 OBJ: LO 2-1
STA: MBA: Strategic & systems skills LOC: MBA: Strategic & systems skills
KEY: Bloom's: Application
23. A retailer has total assets of $6,000,000 and a net worth of $3,000,000. What is the retailer's
financial leverage ratio?
a. .5 times
b. 2.0 times
c. 50 percent d.
75 percent e.
100 percent
ANS: B PTS: 1 REF: p. 56 OBJ: LO 2-1
STA: MBA: Strategic & systems skills LOC: MBA: Strategic & systems skills
KEY: Bloom's: Application
24. If net profit margin is 5.0 percent, rate of asset turnover is 4.0x, and financial leverage is 2.0x,
then return on net worth is:
a. 8.0 percent.
b. 10.0 percent.
c. 20.0 percent.
d. 40.0 percent.
e. 80.0 percent.
ANS: D PTS: 1 REF: p. 56 OBJ: LO 2-1
STA: MBA: Strategic & systems skills LOC: MBA: Strategic & systems skills
KEY: Bloom's: Application
25. If a retailer has a net profit margin of 3 percent, asset turnover of 4.0x, and financial leverage of
2.0x, then its return on net worth is:
a. 6 percent.
b. 8 percent.
c. 12 percent.
d. 24 percent.
e. 48 percent.
ANS: D PTS: 1 REF: p. 56 OBJ: LO 2-1
STA: MBA: Strategic & systems skills LOC: MBA: Strategic & systems skills
KEY: Bloom's: Application
26. If a retailer has an ROA of 10 percent and a financial leverage of 4.0, then its RONW would be:
a. 0.4 percent.
b. 6 percent.
c. 14 percent.
d. 26 percent.
e. 40 percent.
ANS: E PTS: 1 REF: p. 56 OBJ: LO 2-1
STA: MBA: Strategic & systems skills LOC: MBA: Strategic & systems skills
KEY: Bloom's: Application
27. If a retailer with an ROA of 7.0 percent decides to increase its financial leverage ratio from 1.5
times to 2.0 times, which of the following results will occur?
a. The retailer's ROA will increase by 33 percent.
b. The retailer's RONW will decrease by 33 percent.
c. The retailer's RONW will go from 10.5 percent to 14.0 percent.
d. The retailer's RONW will increase by .5 percent.
e. The retailer's RONW will increase by 10.5 percent.
ANS: C PTS: 1 REF: p. 56 OBJ: LO 2-1
STA: MBA: Strategic & systems skills LOC: MBA: Strategic & systems skills
KEY: Bloom's: Application
29. When a retailer uses productivity objectives, it is referring to the productivity of which resources?
a. Market comparison, profitability, productivity
b. Net worth, financial leverage, and asset turnover
c. Sales, merchandise, and owner's equity
d. Space, labor, and merchandise
e. space, owner’s equity, and merchandise
ANS: D PTS: 1 REF: p. 57 OBJ: LO 2-1
STA: MBA: Strategic & systems skills LOC: MBA: Strategic & systems skills
KEY: Bloom's: Knowledge
31. A retail firm that is setting goals based on its desire to help society fulfill some of its needs
is developing objectives.
a. personal
b. self-respect
c. financial benefit
d. self-esteem
e. societal
ANS: E PTS: 1 REF: p. 58 OBJ: LO 2-1
STA: MBA: Strategic & systems skills LOC: MBA: Strategic & systems skills
KEY: Bloom's: Knowledge
32. You have recently been hired by a small retailer in your area. During a discussion with the owner,
you notice that the owner's primary objective for being in business is to provide the customer with a
real alternative. The owner is primarily using a objective to focus the business.
a. market performance
b. financial performance
c. societal
d. personal
e. self-esteem
ANS: C PTS: 1 REF: p. 59 OBJ: LO 2-1
STA: MBA: Strategic & systems skills LOC: MBA: Strategic & systems skills
KEY: Bloom's: Application
33. The manager of a department store chose to use a percentage of the year's profits to help fund the
Salvation Army's Thanksgiving Dinner for the Homeless. In reference to this sponsorship, the
manager appears to have set what kind of objective?
a. Benefactor objective
b. Self-gratification objective
c. Financial performance objective
d. Status and respect objective
e. Personal objective
ANS: A PTS: 1 REF: p. 59 OBJ: LO 2-1
STA: MBA: Strategic & systems skills LOC: MBA: Strategic & systems skills
KEY: Bloom's: Application
34. Chandler Markus is the store manager for a large discount drugstore. Chandler allows his department
managers to arrange the fixtures and schedule their employees as they see fit. According to
Chandler's actions, the drugstore has set what kind of objective?
a. Benefactor objective
b. Power and authority objective
c. Space productivity objective
d. Employee-centered objective
e. Employee empowerment
ANS: B PTS: 1 REF: p. 62 OBJ: LO 2-1
STA: MBA: Strategic & systems skills LOC: MBA: Strategic & systems skills
KEY: Bloom's: Application
38. The analysis that provides management with a critical view of the organization's position relative to
its internal and external environment is known as:
a. SWOT analysis.
b. strategic window analysis.
c. leverage analysis.
d. retail audit.
e. opportunities awareness.
ANS: A PTS: 1 REF: p. 68 OBJ: LO 2-1
STA: MBA: Strategic & systems skills LOC: MBA: Strategic & systems skills
KEY: Bloom's: Knowledge
39. When a retailer is attempting to determine its major advantage(s) over competitors, it is analyzing its:
a. strengths.
b. weaknesses.
c. opportunities.
d. threats.
e. operations.
ANS: A PTS: 1 REF: p. 68 OBJ: LO 2-1
STA: MBA: Strategic & systems skills LOC: MBA: Strategic & systems skills
KEY: Bloom's: Application
40. If a retailer is assessing the remodeling needs of its stores, as well as evaluating the effect that the
lack of a formal training program is having on the management of its establishments, the retailer is
reviewing the firm's:
a. strengths.
b. weaknesses.
c. opportunities.
d. threats.
e. operations.
ANS: B PTS: 1 REF: p. 68 OBJ: LO 2-1
STA: MBA: Strategic & systems skills LOC: MBA: Strategic & systems skills
KEY: Bloom's: Application
41. If a retailer is attempting to determine which of the closely related areas of business
are underdeveloped in its market, it is assessing its:
a. strengths.
b. weaknesses.
c. opportunities.
d. threats.
e. operations.
ANS: C PTS: 1 REF: p. 68-69 OBJ: LO 2-1
STA: MBA: Strategic & systems skills LOC: MBA: Strategic & systems skills
KEY: Bloom's: Application
42. If a retail firm is attempting to determine the potential negative effects of a new competitor
entering the market, it is assessing its:
a. strengths.
b. weaknesses.
c. opportunities.
d. threats.
e. operations.
ANS: D PTS: 1 REF: p. 69 OBJ: LO 2-1
STA: MBA: Strategic & systems skills LOC: MBA: Strategic & systems skills
KEY: Bloom's: Application
43. signify what the retailer wants to accomplish, while indicate how the retailer will
attempt to achieve them.
a. Objectives; mission statements
b. Mission statements; plans
c. Strategies; plans
d. Objectives; strategies
e. Action plans; strategies
ANS: D PTS: 1 REF: p. 69 OBJ: LO 2-1
STA: MBA: Strategic & systems skills LOC: MBA: Strategic & systems skills
KEY: Bloom's: Knowledge
46. The retailer’s is a clear statement of the tangible and intangible results a customer receives
from using the retailer’s products or services.
a. mission statement
b. customer interaction tracker
c. value proposition
d. customer type indicator
e. vision statement
ANS: C PTS: 1 REF: p. 74 OBJ: LO 2-1
STA: MBA: Strategic & systems skills LOC: MBA: Strategic & systems skills
KEY: Bloom's: Knowledge
48. Most smaller retailers have more control over this important factor for successes than larger retailers:
a. promotional strategy.
b. location.
c. personnel.
d. service levels.
e. credit policies.
ANS: B PTS: 1 REF: p. 74-75 OBJ: LO 2-2
STA: MBA: Strategic & systems skills LOC: MBA: Strategic & systems skills
KEY: Bloom's: Knowledge
50. It is necessary for retail firms to strive for high-profit performance results:
a. so that average operating results can be obtained even if planned results cannot
be accomplished.
b. as a means of achieving the largest profit possible.
c. a retailer need not strive for high profit performance results.
d. so that new retailer entrepreneurs cannot enter the market.
e. so that the managers can be allocated larger year-end bonuses.
ANS: A PTS: 1 REF: p. 79 OBJ: LO 2-2
STA: MBA: Strategic & systems skills LOC: MBA: Strategic & systems skills
KEY: Bloom's: Analysis
51. As a general rule, retailers should strive for a net profit margin of:
a. .05 to 1.5 percent.
b. 1.5 to 2.5 percent.
c. 2.5 to 3.5 percent.
d. 3.5 to 4.5 percent.
e. 4.5 to 5.5 percent.
ANS: C PTS: 1 REF: p. 79 OBJ: LO 2-2
STA: MBA: Strategic & systems skills LOC: MBA: Strategic & systems skills
KEY: Bloom's: Knowledge
52. As a general rule, retailers should strive for an asset turnover of:
a. 1.0 to 1.5 times.
b. 1.5 to 2.0 times.
c. 2.0 to 2.5 times.
d. 2.5 to 3.0 times.
e. 3.0 to 3.5 times.
ANS: D PTS: 1 REF: p. 79 OBJ: LO 2-2
STA: MBA: Strategic & systems skills LOC: MBA: Strategic & systems skills
KEY: Bloom's: Knowledge
53. As a general rule, retailers should strive for a financial leverage of:
a. 1.0 to 2.0 times.
b. 2.0 to 3.0 times.
c. 3.0 to 4.0 times.
d. 4.0 to 5.0 times.
e. 5.0 to 6.0 times.
ANS: B PTS: 1 REF: p. 79 OBJ: LO 2-2
STA: MBA: Strategic & systems skills LOC: MBA: Strategic & systems skills
KEY: Bloom's: Knowledge
TRUE/FALSE
1. Superior planning can enable retailers to offset some of the advantages their competition may
have, such as a better location.
2. Success for all retailers, large and small, is generally a matter of good planning and
the implementation of the plan.
5. A good mission statement states how the retailer intends to use its resources, how it expects to relate
to the ever-changing environment, and how it expresses the values it intends to offer the consumer.
6. Just having a written mission statement is enough for success in today's environment; after all, with all
the changes taking place it would be foolish to expect a retailer to always adhere to its original
mission statement.
7. A firm's specific goals and objectives should not be identified within its mission statement.
8. A retailer's goals and objectives should give precision and direction to the retailer's mission statement.
9. Goal statements should specify "how" a retailer intends to achieve a specific level of performance,
as well as the "time period" allowed for achievement of the results.
10. Market performance objectives compare a retailer's actions against those of competitors.
11. Financial performance objectives analyze the retailer's ability to provide a profit level adequate
to continue in business.
13. The strategic profit model (SPM) assesses a retailer's performance and is based on the retailer's
net profit margin, rate of asset turnover, financial leverage, and return on net worth.
14. Net profit margin shows how much profit a retailer makes on each dollar of sales.
15. Net profit margin is calculated by dividing the retailer's net profits by markup in dollars.
16. A retailer operating with a profit margin of 20 percent is making $20 on each $100 of sales.
18. If a retailer has a net profit margin of 2.0 percent and an asset turnover of 3.0, then its ROA will be
6.0 percent.
19. Most retailers like to operate with a financial leverage ratio of 1.0 or greater so as to minimize debt.
20. If a retailer has a financial leverage rate of 2.3 and an asset turnover of 2, then its RONW is
4.6 percent.