After Listening to All of the Challenges and Issues, Rhea

question 33

Multiple Choice

After listening to all of the challenges and issues, Rhea said she wanted to propose a more sweeping change. "Mark has already suggested doing some of the retailer's job for them. I say go even further-let's just do away with all of the intermediaries. We can perform all of their functions ourselves," she said. She went on to explain that, "Since we won't have to deal with intermediaries, my suggestion is bound to simplify the distribution process and cut costs dramatically." What do you think of Rhea's suggestion?

• A) It is truly radical because it calls for the elimination of the entire supply chain.
• B) It is an example of an administered and contractual distribution system.
• C) It should be viewed with some skepticism, because it ignores the fact that intermediaries usually create enough value to justify their inclusion in the distribution process.
• D) It is not really very radical, since most manufacturing firms in recent years have used this approach to bring about dramatic reductions in their costs of distribution.

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Definitions:

Cash Acquisition

The purchase of a target company using cash as the form of payment rather than stocks or other methods of payment.

After-Merger Earnings

The net income of a company following the completion of a merger, reflecting the financial performance after the consolidation of assets and operations.

Shares Outstanding

Shares outstanding refer to the total number of shares of stock that are currently owned by investors, including both public and institutional ownership.

Market Price

The prevailing rate for transactions involving assets or services in an economic marketplace.