Professional Documents
Culture Documents
1) A firm that sells physical inputs and products to other businesses is best described as a(n)
________.
A) contractor
B) wholesaler
C) merchant
D) marketer
E) retailer
Answer: B
Difficulty: Easy
Objective: LO1
3) According to the author, what has been a significant factor in the large number of
consolidations in the wholesale distributor industry?
A) globalization of retailers
B) shifting channel power
C) federal regulations
D) investments in IT
E) end user demands
Answer: D
Difficulty: Moderate
Objective: LO5
AACSB: Information technology
6) Which of the following activities would LEAST likely be handled by a master distributor?
A) delivering products to other distributors
B) consolidating orders from manufacturers
C) providing marketing and advertising support
D) monitoring employee recruitment and training
E) helping manufacturers expand into new channels
Answer: D
Difficulty: Moderate
Objective: LO2
7) A wholesaling operation that is owned and run by a manufacturer and that performs selling
and marketing functions is best known as a(n) ________.
A) retailer
B) service broker
C) master distributor
D) supply chain manager
E) manufacturers’ sales branch
Answer: E
Difficulty: Easy
Objective: LO2
10) A wholesaler adds value by performing all of the following channel functions EXCEPT
________.
A) promoting products to prospects
B) granting credit to suppliers
C) manufacturing new products
D) processing orders and payments
E) negotiating transactions
Answer: C
Difficulty: Moderate
Objective: LO2
12) According to the text, what was the primary reason for the consolidation of pharmaceutical
wholesalers?
A) closure of small pharmacies
B) automation of picking tasks
C) research into new medications
D) deregulation by the government
E) investments by global organizations
Answer: B
Difficulty: Moderate
Objective: LO2
13) An independent firm located in the exporter’s country that performs channel functions for
multiple manufacturers in noncompeting product categories is most likely a(n) ________.
A) licensed exporter
B) export franchisor
C) wholesale agency
D) master-distributor
E) export trading company
Answer: E
Difficulty: Easy
Objective: LO2
15) Pittsfield Fabric, a U.S. manufacturer, is considering the idea of selling fabrics to European
consumers. Which type of intermediary would most likely assist Pittsfield with this plan?
16) What is the primary reason that the onion industry has failed to be successful in Niger?
A) high amount of local sourcing
B) poor reputation of wholesalers
C) formation of wholesaler co-ops
D) involvement of retailer-sponsored alliances
E) deregulation of food industry by the government
Answer: B
Difficulty: Moderate
Objective: LO2
AACSB: Diverse and multicultural work environment
22) Which of the following is most likely a true statement about Ace Hardware?
A) Ace dealers pay membership fees and receive stock to ensure a profitable system.
B) The primary competition for independent Ace stores is other dealer cooperatives.
C) Ace eliminated its private-label merchandise because of poor retail sales.
D) Ace focuses on independent dealers rather than operating its own stores.
E) Independent Ace stores are homogeneous, which simplifies distribution.
Answer: A
Difficulty: Difficult
24) What is the primary benefit of Ace managing the wholesale side of the business?
A) providing better customer service
B) offering a heterogeneous inventory
C) ensuring that dealers are successful
D) keeping procurement costs down
E) customizing store offerings
Answer: D
Difficulty: Moderate
Objective: LO4
26) Land O’Lakes, Sunkist, and Ocean Spray are examples of ________.
A) wholesalers
B) consumer groups
C) farm cooperatives
D) master distributors
E) independent franchisors
Answer: C
27) Which statement best explains the success of consumer co-ops in the French food sector?
A) Grocery chains in France have historically supported direct selling and local food sourcing.
B) French consumers want intermediaries to conduct more safety inspections of food and wine.
C) Many French shoppers demand regional, organic foods and oppose conventional farming.
D) French shoppers appreciate the lower prices of food purchased directly from farmers.
E) Many French consumers support the government and its food standardization tactics.
Answer: C
Difficulty: Difficult
Objective: LO4
AACSB: Diverse and multicultural work environments
28) What is the LEAST likely reason that some French farmers have stopped direct selling and
started using intermediaries again?
A) being expected to provide credit to buyers
B) having to promote products to build clientele
C) needing to locate where customers want to buy
D) matching crops to product assortment demands
E) complying with significant certification procedures
Answer: E
Difficulty: Moderate
Objective: LO4
AACSB: Diverse and multicultural work environments
29) What is a key reason for the fast pace of wholesaler consolidation in the U.S.?
A) improvements in information technology
B) shifts in channel power and sources
C) increased use of master distributors
D) growth of consumer co-ops
E) opportunities to globalize
Answer: A
Difficulty: Moderate
Objective: LO5
AACSB: Information technology
30) Which term refers to a large, full-line, versatile wholesaler that is able to serve many
environments well?
A) progressive firm
31) A manufacturer that invests in fragmentation when faced with wholesale consolidation is
most likely ________.
A) focusing on forward vertical integration
B) creating partnerships with large distributors
C) increasing its attractiveness to channel members
D) forming alliances with small wholesaler-distributors
E) developing additional channel power through outsourcing
Answer: D
Difficulty: Moderate
Objective: LO5
32) According to the text, why will most wholesalers never be truly global?
A) Increasing trade barriers discourage wholesalers from globalizing.
B) Cross-border shipping costs for wholesalers are expected to rise.
C) Wholesaling involves meeting the varied needs of local markets.
D) Global wholesaling channels are too standardized to be profitable.
E) Wholesaler consolidation prevents manufacturers from outsourcing.
Answer: C
Difficulty: Difficult
Objective: LO2
35) What was the most likely reason for the failure of B2B online exchanges?
A) Buyers were unable to purchase similar products from one site.
B) Exchanges overlooked the value provided by wholesalers.
C) Wholesaler consolidation eliminated most e-distributors.
D) Exchanges added an unnecessary and costly intermediary.
E) Grey market pricing was unexpected by the exchanges.
Answer: B
Difficulty: Difficult
Objective: LO6
AACSB: Information technology
36) Buyers attracted to online reverse auctions most likely want to ________.
A) analyze a product’s lifetime cost of ownership
B) form relationships with major wholesalers
C) evaluate overall procurement costs
D) focus on low product prices
E) eliminate buying risks
Answer: D
Difficulty: Moderate
Objective: LO6
AACSB: Information technology
37) Watson Wholesalers typically charges customers slightly higher product prices with the
explanation that the services the firm provides are free. Which term best describes the strategy of
Watson Wholesalers?
A) activity-based costing
B) value-added pricing
C) fragmentation
41) Wholesalers are business establishments that sell products primarily to end-users but also to
other businesses.
Answer: FALSE
Difficulty: Easy
Objective: LO1
42) Agents, brokers, and commission agents buy or sell products, earn commissions or fees, and
take ownership of the products they represent.
Answer: FALSE
Difficulty: Easy
Objective: LO7
43) Collaborative filtering software enables wholesalers to use customer information to identify
and suggest appropriate products for prospects.
Answer: TRUE
Difficulty: Easy
Objective: LO3
AACSB: Information technology
44) Cooperatives are increasingly popular among small and medium-sized Japanese wholesalers
that want to gain economies of scale and compete more effectively with large wholesalers.
Answer: TRUE
Difficulty: Easy
Objective: LO4
AACSB: Diverse and multicultural work environment
45) Independent electronic exchanges rely on specialized software that allows bidders to submit
progressively declining bids to win a customer’s business.
Answer: FALSE
Difficulty: Easy
Objective: LO6
AACSB: Information technology
46) What have been the causes and effects of consolidation in the wholesale sector?
Answer: The wholesale sector has been subject to a massive, decades-long wave of
consolidation. Consolidation strengthens wholesaler-distributors even as it reduces their
number—and some inefficiencies in the industry. Consolidation was largely sparked by IT. That
is, actors performing the distribution function experience intense pressures to invest in IT. The
49) What have been the positive and negative effects of e-commerce on wholesalers? How might
online reverse auctions impact wholesalers?
Answer: E-commerce has changed but will not likely replace wholesalers. Wholesalers thrive by
gaining customer knowledge and combining it with their knowledge of producers to solve the
problems of both ends. The Internet creates new problems (e.g., heightened risk of defective
goods, fraudulent “merchants,” credit card theft, release of private information). It also creates
50) How do wholesaler voluntary groups differ from cooperative groups? What are the benefits
of cooperative groups?
Answer: In both wholesaler voluntary groups and cooperative groups, members agree to do a
certain amount of business with the consortium and follow some of its procedures. In a
cooperative group, the members must buy shares in the co-op, such that they are owners as well
as members. And as owners, they receive shares of the profits generated by their co-op (as stock
dividends) and end-of-year rebates on their purchases. Thus, the goals of the co-op and the
interests of its members align closely. Unlike wholesaler voluntary groups, retailer co-ops thus
have a more formalized structure, run by dedicated professional managers whose jobs have fairly
elaborate role descriptions. They also are better able to influence the marketing efforts of their
owner/members, who must adhere to the co-op’s advertising, signage, and brands if they hope to
stay. In short, their marketing coordination is stronger.
Difficulty: Difficult
Objective: LO4
AACSB: Analytical thinking
‘With a regulating dam at a point on the river below its exit, the Albert Lake
could well be used to store up water during the rainy season, which would be
discharged into the river during the months of low supply. In this way a double
purpose would be served: the volume of the river in flood would be diminished,
and in summer would be largely increased. The lake has an enormous catchment
area, and it seems probable that its levels could be, without serious difficulty,
raised to the required height.’
THE SUDD