A very common phenomena these days is for people to visit the physical stores and then go online to purchase the same item because it is usually available at a lower price. Thus, readers browse the local bookstores and often chat with the store owners and employees about the books but go home and buy online. Similar things happen in neighborhood hardware store. The store owners and employees are friendly and answer many questions and offer suggestions for the customers projects but oftentimes the customers leave the store to buy the item online or from a big box store such as Lowes or Home Depot. Another problem is faced by local landscaping companies. People often asks them to submit a design prior to beginning a work but after seeing the design, they decide to do it themselves.

Required: a) Are all these problems related? Why or why not? What are the similarities and differences?

b) What type of business practices are resulting in these problems. Clearly, such activities by the customers impose costs on the businesses they choose to visit. What are those costs and what are the cost drivers?

c) How would you advice these businesses so that such costs can be minimized or avoided?

d) Can you offer an example where businesses have developed a successful strategy to minimize such costs? Be specific to relate the specific practices to costs reduction