63) Reilly’s Law of Retail Gravitation ________.
A) uses the analogy of gravity to estimate the attractiveness of a particular business to potential
customers
B) predicts the declining fate of brick-and-mortar retail to online shopping
C) is based on downward trending of established locations
D) uses the analogy of contagious diseases and attracting customers
64) Shopping malls typically average ________ parking spaces per 1,000 square feet of shopping
while a typical central business district offers ________ space(s) per 1,000 square feet of
shopping space.
A) 20; 1
B) 3; 6
C) 5; 3.5
D) 3; 8
65) Carmen is starting a childcare center. One location closed after a murder on the property and
is near a neighborhood where there are many single parents. What city site selection factor might
give Carmen problems with her childcare center?
A) Transportation
B) Police and fire protection
C) The reputation of the location
D) Compatibility with the community
66) Mary’s successful clothing store was located on the back edge of the parking lot of a large
mall. She did not have to pay mall rents since she was not part of the mall, but drew many
customers who parked at the mall and then noticed her store. The mall developers built a movie
theater on the part of the parking lot directly in front of Mary’s store, basically hiding her from
most mall customers. After about six months, Mary’s business dropped off so much she had to
move. What retailer site selection criterion forced Mary to move?
A) Proximity of competitors
B) Visibility
C) Adequate parking
D) Room for expansion
67) Factors such as ________ should be sought out in the selection of retail and service business
locations.
A) the lowest possible rent/lease options, transportation network, adequate parking, physical and
psychological barriers
B) modest customer traffic, transportation network, lack of parking, physical and psychological
barriers
C) customer traffic, transportation network, adequate parking, physical and psychological
barriers
D) customer traffic, isolation from other stores, adequate parking, physical and psychological
barriers
68) Few decisions are as important for retailers as the choice of a location.
69) One element of the location decision common to all businesses is the need to locate where
customers want to do business.
70) Criteria for a “good location” are universal and apply to all types of small businesses.
71) Generally, the larger a retail store and the greater its selection, the broader its trade area size.
72) A company’s trade area can be influenced by intangible factors, such as physical and political
barriers.
73) Clever business owners choose their location with an eye on the surrounding mix of
businesses.
74) Retail compatibility describes the benefits a company receives by locating near other
businesses selling complementary products and services.
75) The Index of Retail Saturation (IRS) is a measure of the potential sales per square foot of
store space for a given product in a specific trading area.
76) To calculate the IRS, a retailer needs to know the number of customers in the area, the retail
expenditures for her/his product, and the total square feet of space allocated to selling her/his
kind of product in the trading area.
77) To calculate the IRS, a retailer needs to know the number of customers, the number of
competitors, and the total square feet of space allocated to selling her/his kind of product in the
trading area.
78) Reilly’s Law of Retail Gravity uses the analogy of gravity to estimate the attractiveness of a
particular business to potential customers.
79) The average community net income is the key factor in Reilly’s Law of Retail Gravitation to
determine the point of customer indifference.
80) Increased traffic flow can be beneficial to similar businesses located in close proximity to
one another (e.g., auto dealers, clothing retailers, and antique shops).
81) One of the key factors in choosing a location for a convenience store is finding a location
with high traffic volume and easy accessibility.
82) On average, the typical central business district has more parking spaces per square foot of
shopping space than the typical shopping mall.
83) Choosing a location in which many other businesses have failed can create a negative image,
even for a “new” business.
84) List and explain the main location criteria for retail and service businesses.
85) The central business district (CBD) ________.
A) is the traditional center of town
B) in many cities experienced decay in years past as customers began shopping more frequently
at malls and shopping centers, but are now going through revitalization programs
C) attracts customers from the entire trading area of the city
D) All of the above
86) Which of the following is an advantage of locating in a central business district?
A) Low rent
B) Easy and abundant parking
C) The ability to attract customers from the entire trading area
D) Moderate to low levels of competition
87) Which of the following is/are disadvantage(s) of locating in a central business district?
A) Intense competition
B) High rental rates
C) Traffic congestion and inadequate parking facilities
D) All of the above
88) The typical ________ is relatively small (contains from 3 to 12 stores) and serves a
population that lives within a 10-minute drive.
A) neighborhood shopping center
B) community shopping center
C) regional shopping mall
D) central business district
89) A ________ contains from 12 to 50 stores and serves a population of 40,000 to 150,000
people.
A) neighborhood shopping center
B) community shopping center
C) regional shopping mall
D) central business district
90) The ________ serves a large trading area (10 to 15 miles or more), contains from 50 to 100
stores, and draws customers from a population that lives within a 20- to 40-minute driving time.
A) neighborhood shopping center
B) community shopping center
C) regional shopping mall
D) central business district
91) A ________ combines the drawing strength of a large regional mall with the convenience of
a neighborhood shopping center.
A) power center
B) community shopping center
C) central business district
D) strip mall
92) Which of the following is an important consideration for an entrepreneur evaluating a
shopping mall or center location?
A) In terms of customer demographics, is the mall or center a good fit for my products or
services? How much foot traffic and vehicle traffic does the mall or center generate?
B) Who are the other tenants? The anchor tenants? Is there a good fit for my products and
services?
C) What are the mall’s or center’s vacancy and turnover rates?
D) All of the above
93) A ________ center combines the drawing strength of a large regional mall with the
convenience of a neighborhood shopping center.
A) neighborhood
B) power
C) theme or festival
D) lifestyle
94) Typically located near affluent residential neighborhoods where their target customers live,
________ centers are designed to look less like shopping centers and malls and more like the
busy streets in the central business districts that once existed in towns and cites.
A) neighborhood
B) power
C) lifestyle
D) community shopping
95) A type of business that does well when located near competition is ________.
A) one that has a unique product line – dissimilar to that of its competitors
B) one that carries products for which customers comparison shop
C) one whose location is part of its trademark
D) None of the above
96) Because they are centrally located, central business district locations offer business owners
the ability to attract customers from the entire trading area of the city.
97) Many central business districts suffer from intense competition, high rental rates, traffic
congestion, and inadequate parking facilities.
98) The typical neighborhood shopping center contains from 3 to 12 stores and serves a
population that lives within a 10-minute drive.
99) A community shopping center contains from three to twelve stores and serves a population
that lives within a 10-minute drive.
100) A community center is an upscale shopping experience with specialty stores, dining and
entertainment in an outdoor setting.
101) A power center combines the drawing strength of a large regional mall with the
convenience of a neighborhood shopping center.
102) A regional shopping mall serves a large trading area (10 to 15 miles or more), contains from
50 to 100 stores, and draws customers from a population that lives within 20 to 40 minutes
driving time.
103) Clothing is one of the most popular items sold in regional shopping malls.
104) Shopping centers are always a wise location for a small business owner to choose.
105) The customer group that spends the most time in shopping malls is teenagers between the
ages of 14 and 17.
106) For some retailers, locating near competitors makes sense because similar businesses
located near one another can increase traffic flow to all.
107) Retailers should be careful not to locate near anyone in direct competition with them.
108) List and discuss the eight options where retail and service businesses can serve their
customers. What are their advantages and disadvantages?
Mini-Case 14-1: Hungarian Heaven
Mike Pontya has operated a neighborhood restaurant in Cleveland for over 30 years. Mike is
planning to move to Arizona because of his health, and has put the business up for sale. The
restaurant, which caters to the local trade, is well known in the Hungarian community of
Cleveland as having the best authentic Hungarian food in town, but it is not in a traditional
restaurant district. The restaurant has parking for 10 cars. Most customers park on the street. In
the past, this was not a problem as there was a great deal of walk-in business from the
neighborhood. Now, however, a new four-lane highway passes by the front door of the
restaurant. There is a stoplight on the corner the restaurant is on to improve access to the
highway for drivers emerging from the neighborhood. The flight to the suburbs has taken a
heavy toll on the neighborhood. However, the restaurant is still doing well financially.
Terry and Judy Kozma are brother and sister who share a love for cooking and a desire to be in
the restaurant business. All of their relatives have encouraged them to quit their jobs and buy the
restaurant. Terry and Judy were reared two blocks from the restaurant, and both worked part–
time for Mike Pontya while in college.
109) What site analysis criteria are relevant to Terry and Judy’s evaluation of the restaurant’s
location?
110) What are the advantages and disadvantages of the restaurant’s current location?
111) What is a business incubator? What can an incubator offer an entrepreneur just starting out?
112) Briefly explain the fundamental considerations in evaluating an existing building as a
location. Utilize the explanation of zoning laws, ergonomics and the Americans with Disabilities
Act in your explanation.
113) Identify and describe the goal/purpose of the three types of manufacturing layouts.
114) Select six of the features that are important to a lean, efficient manufacturing layout and
identify a potential benefit that they may offer the business.
