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Lecture purchasing selection and procurement for the hospitality industry (8th edition) chapter 4 feinstein, stefanelli

Eighth Edition

Purchasing
Selection and Procurement for the Hospitality Industry

ANDREW HALE FEINSTEIN AND JOHN M. STEFANELLI

© 2011 John Wiley and Sons,
Inc.
All Rights Reserved


CHAPTER

4

Forces Affecting the
Distribution Systems

© 2011 John Wiley and Sons,
Inc.

All Rights Reserved


YOU SHOULD BE ABLE TO:
• Identify and differentiate the economic
and political forces that affect the
channel of distribution.
• Describe the role of ethics in the
channel of distribution.
• Explain the legal restrictions that affect
the channel of distribution.
• Provide examples of technological
advances that are impacting the ways
in which products are distributed.
© 2011 John Wiley and Sons,
Inc.
All Rights Reserved


FORCES AFFECTING THE
DISTRIBUTION CHANNEL
Economic Force

Political Force

Sources
(growers, manufatuures,
and processors)

Intermediaries
(middlemen)

Ethical Force
Retailers
(hospitality operators)

Legal Force

Technological
Force



Other Forces

Consumers


ECONOMIC FORCE
• Supply and demand
Basic commodities are typically acquired
through a bidding procedure
Co-op farmers
Established market prices
• Perceived value
Perceived quality + perceived services /
EP cost
© 2011 John Wiley and Sons,
Inc.
All Rights Reserved


ECONOMIC FORCE (CONT.)
• What is the difference between AP price
and EP cost?
• Monopolistic competition

© 2011 John Wiley and Sons,
Inc.
All Rights Reserved


POLITICAL FORCE
• Lobbyists –The NRA
• Primary sources have the most influence
• Typically used to influence produce
availability, prices, and channel member
behavior

© 2011 John Wiley and Sons,
Inc.
All Rights Reserved


ETHICAL FORCE
• Define ethical behavior
What is ethical?
• Codes of ethical behavior
• Examples

© 2011 John Wiley and Sons,
Inc.
All Rights Reserved


LEGAL FORCE
• Sherman Act (1890)
• Meat safety legislation
Sinclair Lewis’ The Jungle
Pure Food Act (1906)
Meat Inspection Act (1907)
USDA established in 1862
• Primarily focuses on meat, poultry,
and eggs
© 2011 John Wiley and Sons,
Inc.
All Rights Reserved


LEGAL FORCE (CONT.)
• Meat safety legislation
Poultry Products Inspection Act (1957)
Wholesome Meat Act (1967)
Wholesome Poultry Products Act (1968)
• The Federal Food, Drug, and Cosmetic Act
(1906)
FDA administers this law
Evaluates contaminate levels
© 2011 John Wiley and Sons,
Inc.
All Rights Reserved


LEGAL FORCE (CONT.)
• Seafood safety legislation
PUFI for a fee
FDA has authority to examine seafood in
interstate commerce.
• Federal Trade Commission (1914)
Amended by the Wheeler-Lea Act (1938)
Deals with advertising, deceptive
promotions, monopolies, and conduct in
the marketplace
© 2011 John Wiley and Sons,
Inc.
All Rights Reserved


LEGAL FORCE (CONT.)
• Clayton Act (1914)
Used to control antitrust violations
• Tying agreements
• Exclusive dealings

• Perishable Agricultural Commodities Act
(1930)
Control interstate commerce
Prohibits unfair practices in sale of produce
© 2011 John Wiley and Sons,
Inc.
All Rights Reserved


LEGAL FORCE (CONT.)
• Agricultural Adjustment Act (1933) &
Agricultural Marketing Agreement Act (1937)
Ensure steady flow of perishable products
• Robinson-Patman Act (1936)
Known as the “small business protection
act”
Promotional discounts favoritism through a
quantity limits provision
Predatory pricing
• Gas station example
© 2011 John Wiley and Sons,
Inc.
All Rights Reserved


LEGAL FORCE (CONT.)
• Hart Act (1966-1969)
Packaging pictorial aspects
Misleading descriptions and illustrations
Package label regulations
• The Internal Revenue Service (IRS)
• The Bureau of Alcohol, Tobacco, and
Firearms (BATF)

© 2011 John Wiley and Sons,
Inc.
All Rights Reserved


LEGAL FORCE (CONT.)









Franchise law
Contract law
Agency law
Title to goods
Consignment sales
Warranties and guarantees
Patents and copyrights
Rebates
© 2011 John Wiley and Sons,
Inc.
All Rights Reserved


TECHNOLOGY FORCE






Genetically engineered foods
Product preservation
Value-added foods
Transportation
Packaging

© 2011 John Wiley and Sons,
Inc.
All Rights Reserved



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