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Summer-2013
Master of
Business Administration- MBA Semester 1
ML0011–Buying
and Merchandising-4 Credits
(Book ID: B1762)
Assignment
(60 Marks)
Note: Answer
all questions (with 300 to 400 words each) must be written within 6-8 pages.
Each Question carries 10 marks 6 X 10=60
Q1. Explain the various principles of
an ideal merchandising giving suitable examples for each?
Ans. Merchandising
Merchandising
is a term used in marketing to denote all those sales- promotion activities
that aim to generate the customer’s interest in the product or service other
than conventional press and television advertising, direct mail or the use of
PR. The purpose of merchandising is to bring product and customer into the
closest possible proximity in order that the attributes of the merchandise may
become fully apparent and, in effect, sell them.
Q2. Enumerate the category management
strategies that are used by retailers to ensure a smooth category management
process.
Ans. Category management
Marketing
strategy in which a full line of products (instead of the individual products
or brands) is managed as a strategic business unit (SBU). It is based on the
concept that a marketing manager is better able to judge consumer buying
patterns and market trends by focusing on the entire product category.
Q3. Discuss the concept of
open-to-buy system. How do you calculate open-to-buy for the past and current
period?
Ans. Good inventory control is critical to
ensuring an adequate level of stock is on hand for the amount of sales being
generated. Having too much inventory (or the wrong type) during certain periods
can slow your cash flow and reduce profits with too many markdowns. On the
other hand, if you under buy and miss sales opportunities then you are not
making your potential profit. A retailer can be sure to stock the right amount
of the right products at the right time by using an Open-To-Buy (OTB) plan.
Q4. Enumerate some merits and
demerits of Formal Buying Organization, Informal Buying Organization,
Centralized Buying & Decentralized Buying along with diagrammatic
representation of functions and attributes of the buying department.
Ans. Both types of structures exist within
most companies. The advantages and disadvantages of each will only really
become apparent if there isn't a good balance between them.
Informal structures sometimes arise because the formal
structure does not meet the business requirements - also, where the two
conflict problems can arise. e.g. the leader of the informal organization may
not lead the formal organization.
Q5. Enumerate the first 5 steps in
Merchandise Buying and Handling Process.
Ans. The first step in the merchandise purchasing process
deals with determining the type of channel to be used for purchasing each line of
merchandise. The retailer can consider different sources of supply:
raw-resource producers, manufacturers, wholesalers and resident purchasing
offices.
The second step in the merchandise purchasing process
involves contacting the various sources of supply. Both the vendor and the
retailer can initiate the contact process.
Q6. ‘Selecting an appropriate vendor
is the key step in the success of an enterprise’.
Ans. 1. Analyze the Business
Requirements
The first
task that the vendor selection team needs accomplish is to define, in writing,
the product, material or service that you are searching for a vendor. Next
define the technical and business requirements. Also, define the vendor
requirements. Finally, publish your document to the areas relevant to this
vendor selection process and seek their input. Have the team analyze the
comments and create a final document. In summary:
Ø Assemble an Evaluation Team
Ø Define the Product, Material or
Service
Ø Define the Technical and Business
Requirements
Ø Define the Vendor Requirements
Ø Publish a Requirements Document for
Approval
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