A Retail Store Sells a Popular Cosmetic Called Devine and the Store

question 77

Essay

A retail store sells a popular cosmetic called Devine and the store manager was given $300,000 by the corporate office to improve store performance any way she thinks best.The "base case" information is a price of $30 per bottle, a contribution margin of 0.50, a customer defection rate of 20%, and a repurchase frequency of 3 times a year.If these improvement funds could be used to either (a) increase the contribution margin to 0.60 or (b) reduce the customer defection rate to 12% or (c) increase the repurchase frequency to 4 times per year, what is the best way to spend these improvement funds? (Assume all other variables remain at the base case level for each of the three improvement options.) VLC = P*CM*RF*BLC
a.What is the value of a loyal customer (VLC) for improvement option (a)?
b.What is the best way to use the $300,000 in improvement funds?

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Definitions:

Leadership Style

Leadership style is the manner and approach of providing direction, implementing plans, and motivating people; it can vary from autocratic to democratic or laissez-faire.

Fiedler's Contingency Model

A leadership theory proposing that a leader's effectiveness is contingent upon the match between the leader's style of interacting with subordinates and the degree of control and influence over the situation.

Leader's Style

The manner and approach of providing direction, implementing plans, and motivating people.

Servant Leaders

Are leaders who prioritize the needs of others before their own, focusing on the growth and well-being of their communities and the people they serve.