Acting on the basis of good information reduces a retailer's chances of making wrong decisions. Without proper information, a firm's risk of poor performance is higher because it may act on the basis of too little knowledge or on knowledge gained nonsystematically. The extent of research activity should, to a large degree, be determined by the level of risk involved in a decision. For instance,

Question

there is considerable risk for a department store considering a new branch store location. There is much less risk if a retailer is deciding whether a store should carry a new line of sweaters. In the branch store situation, thousands of dollars for research and many months of study may be proper. In the case of the new sweaters, limited research may be sufficient.

a. If a retailer has good information, the decisions made are usually good decisions.
b. A retailer has a greater risk in deciding whether to expand locations than in deciding on new items to carry.
c. Many retailers unwisely spend thousands of dollars for research and study before making a major decision.
d. Retailers' decisions should be based on good information and the amount of each should be determined by the decision to be made.

Answer 1

d