Quiz 4: Retail Institutions by Ownership

Business

Retail institution: Retail institution is the structure or form of business operations of any organization. It consists of three classifications such as ownership, store based retail strategy mix, and non-store based retail strategy mix. Forms of ownership: The different forms of ownership are as follows: • Independent • Chain • Franchise • Leased department • Vertical marketing system • Consumer cooperative Independent ownership: • Independent owner is the one who owns the retail store completely. • He is the sole proprietor of the store where he is responsible for all business activities in the store. • The main advantage of independent ownership is that expenses could be controlled as per his budget. • Independent ownership store always has a friendly image in the society. Chain ownership: • These are the multiple retail outlets under common ownership. • In this type, all the stores will be under centralized management and main store will take all necessary decisions for other stores. • The advantages under this ownership are negotiating power, comprehensive function efficiencies, efficient management and long run planning. • The disadvantages under this ownership are inflexibility, condensed control and partial freedom to take decisions. Franchising: • Franchising is a pre-determined contract connecting franchisee and franchisor. • In this, franchisor gives permission to a franchise to operate the same business type in its location. • The major benefits of franchising are the business is an established brand and it is easy to get profits. Leased department: The leased department is a type of retail store rented or leased by an external party where the owner is responsible for the business activities in the store. Vertical marketing systems: • The vertical advertising systems occur during consecutive stages of manufacturing and allocation of the products. This type of stores is generally owned by manufacturer, retailer or wholesaler. • The major benefits in this store are it could have self-sufficiency, lower costs through elimination of intermediaries, direct contact with customers and good bargaining power. Consumer cooperative stores: These retail stores are possessed by group of consumers where people invest, receive stocks, appoint staff, and manage the operations.

Independent retailers: • Independent owner is the one who owns the retail store completely. • The owners are the sole proprietor of the store where he is responsible for the all-commercial activities happening in the store. • The main advantage of the independent ownership is expenses could be controlled as per his budget. • Independent ownership store always have friendly image in the society. Statement: "Independent retailers may exit soon from the retail institution." Justification: Independent retailers are growing day-by-day. The business handled by these independent retailers is restaurants, specialty stores, dry cleaners and others. These storeowners have major competitive advantages such as high flexibility, control over investment and expenses and efficient entrepreneurial tactics.

Independent ownership: • Independent owner is the one who owns the retail store completely • He is the sole proprietor of the store where he is responsible for the all business activities happened in the store • The main advantage of the independent ownership is expenses could be controlled as per his budget • Independent ownership store always have friendly image in the society Chain ownership: • These are the multiple retail outlets under common ownership • In this type, all the stores will be under centralized management and main store will take all necessary decision making for other stores • The advantages under this ownership are negotiating power, comprehensive function efficiencies, efficient management and long run planning • The disadvantages under this ownership are inflexibility, condensed control and partial freedom to take decisions Ease of entry and its lower impact on chain retail ownership and independent ownership: • Independent retail owners can start their business operations due to low investment, no licensing and other ongoing requirements • Multi chain retailers are highly capitalized and contended with various formats in the markets • Independent retailers could run the store individually without the help of other salesmen which reduces the maintenance cost whereas it is difficult for an individual to handle the chain of retail stores