Question

While reviewing his monthly accounts, Sundaram realized that he was barely breaking even, primarily due to the substantial rent he was paying to the residents' association. He realized that while his sales were stagnated, the rental costs were contractually scheduled to increase every three years. He was determined to do something to increase his profits.
Which of the following will be the MOST sustainable way to increase Sundaram’s profits?

• A. He should offer to procure items unavailable at his shop from the town on residents’ demand.
• B. He should meet with the residents’ association to negotiate a lower rent.
• C. He should introduce “cheap Wednesdays” where he will sell groceries at 40% discount.
• D. He should advertise about his shop through a leaflet in the gated community.
• E. He should remove all the discounts he was offering and sell at the maximum retail price.
• A. The residents’ association should impose a fine on Sundaram since he was not contracted to sell vegetables.
• B. The residents’ association should ask Sundaram to give a specific quantity of vegetables to the maintenance staff for free.
• C. The residents’ association should discount the rent for the vegetable vendor to increase competition and ask him to continue.
• D. The residents’ association should request for bids from various shop owners to open another grocery store in the vacant place.
• J. The residents’ association should ask Sundaram to use the erstwhile space for selling vegetables and pay rent for the same.
• A. Sundaram should not bother since the nearest town is 30 kilometers away.
• B. Sundaram should employ a few helpers who will do home delivery of his products within 10 minutes across the three gated communities.
• C. Sundaram should demand that his rent be reduced to one-third since Rush’em has free access to these societies.
• D. Sundaram should start giving discounts on every product he sells.
• O. Sundaram should explore starting his own delivery startup Finish’em, dedicated to the suburb, competing with Rush’em.

Answer 1

The Correct Option is B

To determine the most sustainable way for Sundaram to increase his profits from his store in the gated community, we must analyze each option provided and consider the context given:

1. Procure items unavailable at his shop from the town on residents' demand:
   This option may increase customer satisfaction, but it does not directly address the fundamental issue of high rent costs, which are the main reason for low profits. It also requires additional logistics and might increase operational costs.
2. Negotiate a lower rent with the residents' association:
   This is the correct option. Since the high rent significantly impacts Sundaram's ability to generate profit, negotiating a lower rent would directly reduce his fixed expenses and improve his profit margins without changing the operational dynamics or sales volume of his store.
3. Introduce "cheap Wednesdays" with a 40% discount:
   While offering steep discounts could increase sales temporarily, it could also reduce overall profit margins further. Also, it does not solve the underlying rent issue; instead, it risks eroding profit margins even more.
4. Advertise through a leaflet in the gated community:
   Advertising may slightly increase awareness but is unlikely to significantly impact store traffic or sales, given the competition from larger retail chains already offering discounts. This option does not tackle the high rent expense.
5. Remove all discounts and sell at maximum retail price:
   Removing discounts could alienate customers who rely on these deals, leading them to shop more at larger retail chains in town, thereby decreasing sales volume further. This option does not address the primary rent issue either.

Considering all factors, negotiating a lower rent with the residents' association is a strategic move. It directly addresses the substantial fixed cost hindering profitability and could provide immediate financial relief, allowing Sundaram to explore further strategies for improving sales and customer loyalty.

Answer 2

Step 1: Understand the problem.
Sundaram is facing stagnant sales and increasing rent, which is threatening the viability of his store.
Step 2: Assess the options.
Meeting with the residents' association to negotiate a lower rent is the most sustainable solution as it addresses his major expense. Other options, such as discounts or advertising, might lead to short-term improvements but are not sustainable in the long term.
Final Answer: \[ \boxed{\text{(B) He should meet with the residents’ association to negotiate a lower rent.}} \]

Answer 3

To address the concerns of the residents' association caused by Sundaram selling vegetables, we must analyze how each option impacts the residents, Sundaram, and the preferences previously enjoyed by the maintenance staff. 

1. Option 1: Imposing a Fine on Sundaram
   • This approach is punitive and does not directly address the root concerns of the association regarding loss of rent and vegetable distribution to maintenance staff.
   • Fining Sundaram does not incentivize any action that would restore the previous benefits enjoyed.
2. Option 2: Sundaram Giving Vegetables to Maintenance Staff for Free
   • While this addresses the maintenance staff's benefit, it does not solve the issue of lost rental income from the previous vendor.
   • It also places an undue financial burden on Sundaram, who is already providing a service to residents.
3. Option 3: Discounting Rent for the Previous Vendor
   • This could encourage the vendor to return, increasing competition for Sundaram.
   • However, this does not ensure profitability for the disruption to Sundaram’s business and the relationship with the residents.
   • Additionally, the idea still leaves unresolved issues about guaranteed benefits to staff.
4. Option 4: Requesting Bids for Another Grocery Store
   • This is a lengthy process and may not immediately address the concerns the association has.
   • It complicates matters by introducing another long-term lease without solving the existing issues efficiently.
5. Option 5: Sundaram Using the Ertwhile Space for Vegetables and Paying Rent
   • This solution directly solves the loss of rental income problem.
   • By using the space, Sundaram can also establish larger offerings or better prices that mirror the previous vendor's benefits to the maintenance staff.
   • This option represents a compromise that maintains revenue while potentially retaining benefits to the staff.

Therefore, the best solution to address the concerns of the residents’ association is to ask Sundaram to use the erstwhile space for selling vegetables and pay rent for the same. This addresses both the financial aspect and improves the utility and service offerings within the gated community.

Answer 4

Step 1: Understand the issue.
Sundaram’s selling of vegetables is affecting the vendor’s business and the maintenance staff’s benefits. The residents’ association has to address these concerns.
Step 2: Evaluate the options.
Option (E) is the most reasonable approach since it allows Sundaram to continue with his business in a controlled manner, and he can be made to pay rent for using the space.
Final Answer: \[ \boxed{\text{(E) The residents’ association should ask Sundaram to use the erstwhile space for selling vegetables and pay rent for the same.}} \]

Answer 5

To address the problem of declining business due to the competition from Rush'em, Sundaram needs to consider strategies that enhance his service and meet the evolving needs of his customer base. Let's analyze the provided options step by step:

1. Option 1: Sundaram should not bother since the nearest town is 30 kilometers away.
   • This approach is passive and does not solve the issue of Rush'em's increasing presence. Ignoring the competition will likely lead to further decline in his business.
2. Option 2: Sundaram should employ a few helpers who will do home delivery of his products within 10 minutes across the three gated communities.
   • This option is proactive. By offering quick home delivery service, Sundaram can directly compete with Rush'em's convenience factor for suburban delivery. This would likely help him retain customers who value fast service.
3. Option 3: Sundaram should demand that his rent be reduced to one-third since Rush'em has free access to these societies.
   • While reducing operating costs is a good idea, demanding a reduction in rent may not be feasible or approved by the residents' association. It also doesn't address the immediate problem of competition.
4. Option 4: Sundaram should start giving discounts on every product he sells.
   • Offering discounts might temporarily attract customers, but it could also reduce profit margins significantly. Sundaram already offers a 15% discount and competing with large chains on price alone is not sustainable.
5. Option 5: Sundaram should explore starting his own delivery startup Finish’em, dedicated to the suburb, competing with Rush’em.
   • While starting a new venture focused on delivery is an innovative solution, it requires significant investment and operational changes. It may be too ambitious and risky as an immediate solution.

Conclusion: The correct and best option is for Sundaram to employ a few helpers who will perform home deliveries within 10 minutes across the three gated communities. This leverages his existing business infrastructure while enhancing service delivery to compete effectively with Rush'em's convenience model. Implementing this service improvement can help Sundaram retain his existing customer base and possibly attract some new clients seeking quicker delivery times.

Answer 6

Step 1: Understand the problem.
Sundaram is facing competition from a new startup, Rush’em, which has a quick delivery promise that Sundaram is struggling to match. The key factor is delivery speed within the community.
Step 2: Evaluate the options.
- Option (A) does not work because Sundaram cannot ignore competition simply based on distance. - Option (B) is the best because employing helpers for faster delivery directly addresses the challenge Sundaram faces with Rush’em’s delivery time, which is key in retaining his customers. - Option (C) does not address the core issue, as rent reduction won’t help with the delivery competition. - Option (D) could hurt Sundaram’s business in the long run, as discounts cannot sustain business if the core product offering is inferior. - Option (E) would create a new business in competition with Rush’em but doesn’t solve the immediate problem of delivery speed.
Final Answer: \[ \boxed{\text{(B) Sundaram should employ a few helpers who will do home delivery of his products within 10 minutes across the three gated communities.}} \]