2 Mrs Ney owns a mobile shop selling bread and cakes in her neighbourhood. She is experiencing competition from other retailers.

(a) State one feature of a mobile shop. [1]

(b) (i) Suggest two types of competition that Mrs Ney is likely to have. [2]

(ii) Why is Mrs Ney likely to have competition from other retailers? [3]

(c) Mrs Ney buys from wholesalers. Describe two services that wholesalers would provide for Mrs Ney. [4]

(d) Mrs Ney is considering selling her bread and cakes online. Explain two reasons why she may decide not to sell her bread and cakes online. [4]

(e) Discuss whether or not Mrs Ney would benefit from buying a franchise from a franchise company. Give reasons for your opinion. [6]

 

QUESTION

Mrs. Ney owns a mobile shop selling bread and cakes in her neighborhood. She is experiencing competition from other retailers

a.      State one feature of a mobile shop

·        Traders move from town to town selling their goods

·        Traders have vehicles that they have converted into a shop from which customers can buy goods.

b.       I)  Suggest two types of competition that Mrs. Ney is likely to have

·        Replacement competition. Where other retailers sells substitutes of bread and cakes, serving the same customers at the same time.

·        Direct competition. Where retailers sell breads and cakes with the same end game.

ii) Why is Mrs. Ney likely to have competition from other retailers?

·        Because there is free entry. Where many retailers have freedom of entry to the market.

·        Because of serving same customers with retailers.

·        Because of inadequate creativity on how to handle customers.

c).Mrs. Ney buys from wholesalers. Describe two services that wholesalers would provide for Mrs. Ney.

·        They will avail goods at places convenient to Mrs. Ney. Wholesalers will make sure that goods are available to a place that Mrs. Ney can get them with ease at the right time.

·        They will break bulk for the benefit of Mrs. Ney. Wholesaler will reduce commodities into smaller quantities which will be very convenient for Mrs. Ney's customers.

·        They will engage in product promotion on behalf of Mrs. Ney .Therefore Mrs. Ney will be selling product that customers are well aware of.

·        They will offer advisory services to Mrs. Ney regarding market trend. This will Mrs. Ney to avoid certain risk that might be associated with the market trend.

d). Mrs. Ney is considering selling her bread and cakes online. Explain two reasons why she may decide not to sell her bread and cakes online.

·        She will not be interact with customers physically to convince them to buy the product.

·        Selling online is expensive since she will have to pay for the online platform which will be expensive to her.

·        Because of potentially lower profit margin. Selling online will make customers to access the same product as Mrs. Ney's at a cheaper price online hence reducing her sales.

·        Because of the negative reviews she will receive from people. People are more likely to complain than they are to compliment a business and this can damage the reputation of her business.

e) Discuss whether or not Mrs. Ney would benefit from buying a franchise from a franchise company. Give reasons for your opinion.

Franchise is a type of license that grants a franchisee access to a franchisor's proprietary business knowledge, processes and trademarks, thus allowing the franchisee to sell a product or service under the franchisor's business name.

Mrs. Ney will benefit from buying a franchise from a company because from the following reasons;

·        She will be able to predict her success and reduce risk of failure since she is doing a business on a pre-establish name of the franchisor

·        She will get to know business technique and trade secrets of brands which will help her improve on her business.

·        She will not spend more money on training and assistance since the franchisor will provide for her.

·        She will benefit from continuing revenue stream. She will benefit from continuing royalties that are based on gross sales.

·        She will benefit from economies of scale. If she manages the franchise properly, the multiunit associated with franchising result in increased volume of purchases.

·        She will benefit from brand development. Franchising will serve to supplement and expand the value of her brand.