Business Journal Review - Book Report/Review Example

INTRODUCTION: The article selected has been written by Srinivasan, Sridhar, & Narayanan and it is published in the year The of the article is Effects Of Opening And Closing Stores On Chain Retailer Performance. In retail industry the opening and closing of retail stores is a regular process by retailers for improvement their financial performance. There are few considerations for evaluating the impact of opening and closing of store on the chain retailer’s performance. The concern of the underlying study is to find out the changing performance of chain retailers by opening and closing of stores. . The author has suggest that that the impact of market share, age of retailer, size of retailer and advertising intensity of the retailer on its value condenses the overall impact of value added to retail chain by opening and closing of stores.

Therefore, attempts to explore the following aspects:1- How the performance of chain retailers is affected by the opening and closing of stores?2- How the impact of closing and opening of retail stores on the firm performance is moderated by other characteristics of chain retailer? It is measured for exploring the impact received by the shareholder’s value from the distribution strategy of the firm. METHOD:The data is collected from the retail industry of US. for132 out of 1,447 listed retailers between 1998 to 2009.

The market value of the firm had been the dependable variable and market share, advertising intensity, size of retailer in terms of number of employees and the age of business in terms of the number of years of existence in the market are the independent variables. The parsimonies model of specification was used for studying the relationship.FINDINGS: The study has following findings:The market share of the firm increases with the opening of stores and decreases with the closing of stores. The relationship is vice versa with firm’s value.

Value is created by advertising efforts of opening of new retail stores in the target market only. It has been identified that the closing of unprofitable stores by the older chains enhance the firm’s value due to hierarchical issues. It requires focusing on retaining the existence in target markets.In both activities opening and closing of retail stores, the firm’s value gets decreased when the size of the firm increased. The bigger retailers are panelized high for consistently opening of stores.

The actions of huge retailers are strongly followed by the investors and the analysts of the industry. Therefore, any move by the retailer impacts very much on the investors. DISCUSSION:The impact of opening and closing of stores on the firm’s value has been determined in this research for exploring the impact of distribution strategy on shareholder’s value. Four factors were used to measure the impacts are market share, advertising intensity, and size of firm and age of firm. Most of the investors believe that the expansion of retail chain always increases the firm’s value but this research has proved the perception of most of the investors wrong with the findings of this research.

It has been proved that expansion doesn’t always increase the firm’s value. It varies from situation to situation. Therefore, it is important for the firm to understand level at which value of the firm would be maximized in response to impact from distribution strategy.WEAKNESSES OF RESEARCHThe research is concerned only with the US market conditions. The findings of this research lack applicability on areas other than US..The research is concerned only with the market trend of retail industry and can not be used in any other industry because different industries have different market conditions.

The findings are limited to the retail industry of US only.ReferenceSrinivasan, R., Sridhar, S., & Narayanan, S. (2013). Effects Of Opening And Closing Stores On Chain Retailer Performance. Journal of Retailing, 1-39.