MANAGEMENT PROBLEM SOLVING Directions: Managers must make decisions in all areas
ID: 352705 • Letter: M
Question
MANAGEMENT PROBLEM SOLVING Directions: Managers must make decisions in all areas of business operation. With a partner, read the scenarios below. Then, work together to prepare a report containing recommendations to help the business owner with the decision making process Scenario 1 Katrina owns a specialized cosmetic and skin care store that is affiliated with a national brand of cosmetics. She has always offered hair care and accessory items to her customers in addition to the cosmetic products. Recently she received a letter from the corporate office of the cosmetics chain informing her that she could not continue operating as a "Platinum Level" store if she continued to sell the hair care and accessory items. The letter explained that the sale of items other than those manufactured by the cosmetic and skin care company is a violation of the "Platinum Level" guidelines. As the owner of a Platinum Level" store, Katrina has access to new product lines before other stores and is given a supply of one "Platinum Level" gift item each season to give to her customers as a sales incentive Katrina is not sure whether the value of being a "Platinum Level" store is worth the revenue that she would lose by not offering the hair care and accessory items for sale. How would you advise Katrina to make this decision? Scenario 2 Katrina is currently examining her location options for her business. Right now her store is located in a medium-sized metropolitan area. She rents space located in a strip mall across the street from a shopping mall that has a Macy's, Dillard's, and JCPenney's. Walmart recently expanded as a supercenter store and relocated three miles away from Katrina's store. The old Walmart location which was also near Katrina's store, is empty, and there are no immediate plans for any other business to move into the space. There is a new strip mall being planned just across the street from the new Walmart location with available space. The builder has offered Katrina a reduced price along with custom modifications at no cost if she will lease a space in the center. A coffee shop has leased space on the corner of the planned strip mall. Other businesses that have leased space include a nail salon, a shop that specializes in gift baskets and food specialty items, and a clothing boutique. What advice would you give Katrina to help her decide on the best location for her business? 3Explanation / Answer
Scenario I
Katrina should compare the revenue she earns by selling the hair care and accessory items with the revenue she earns by having a ‘platinum level store’ brand. She should start by dividing her customers into categories who visit the store because of platinum level status and which are indifferent. She can either have feedback from the customers which will consume a bit more time. For immediate approximate revenue value, she can check how much of new product line she has sold recently when other non-platinum stores didn’t have access to these products. Revenue from these customers who bought new product lines will give an approximate value of the revenue which is dependent on the platinum level store status. If this revenue is way less than what she earns by selling hair care and accessory, she should not continue with the platinum level store branding.
Scenario II
Katrina should see if the strip mall she is currently located has no other competitor. She should also see if with Walmart moving away would there is less customer footfall in the strip mall area. Or customers in Walmart were the ones who also used to shop around the strip mall area. In case the store customers were mostly those who used to shop in Walmart and surrounding areas, she should move away to the new place where currently there are no competitors, but only businesses that compliment her store.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.