In retailing,the cost advantages of large retail chains (such as Wal-Mart in the US,Tesco in Britain,Metro in Germany,and Carrefour in France)is primarily the result of:
A)Scale economies in operating large individual retail units
B)Lower costs of bought-in products as a result of superior bargaining power
C)Higher capacity utilization in retailing and distribution
D)Using superior bargaining power to pay lower wage rates.

Question

Quizplus · Accepted Answer

Large retail chains have a significant advantage over smaller competitors due to their ability to negotiate better terms with suppliers as a result of their size and purchasing power. This allows them to secure lower prices for the products they sell, which in turn allows them to offer lower prices to consumers while still making a profit. Scale economies in operating large individual retail units and higher capacity utilization do play a role in reducing costs but are secondary to the bargaining power advantage. Lower wage rates are not a primary factor in the cost advantages of these retailers.

In Retailing,the Cost Advantages of Large Retail Chains (Such as Wal-Mart