(a) Illustrate any four channels of distribution of manufactured goods.
(b) Explain the statement the longer the channel, the higher the price.
(c) Give five reasons why small scale retail businesses may fail.
Explanation
(b) The statement that the longer the channel, the higher the selling price implies that the agent, wholesaler and retailer will want to cover the cost, hence put some profit margin on the price. This tends to increase the selling price of the goods.
(c) Reasons why small scale retail businesses may fail are:
(i) Failure of retail business to keep proper book of account may destroy the fortune of the business.
(ii) When too much credit is allowed, capital will be drastically affected.
(iii) The cost of advertisement is expensive, hence they can not afford it.
(iv) Lack of business acumen: Many retail businesses fail because of a lack of experience on the part of the owner.
(v) The retail businesses do not provide adequate insurance and the burden of risk rests on the owner.
(vi) It is difficult to separate business from ownership.
(vii) There is competition from bigger firms.
(viii) There is a lack of capital for expansion.
(ix) There is no specialised knowledge on goods dealt in.