Reference no: EM131537334

Question: Fender Guitars Are Everywhere When you enter a music store searching for that perfect guitar, you expect to be able to choose from an extensive variety of guitars. You want a style and color that reflects your personality, an awesome sound, and a great price. Equally important, you want a brand name that is respected by musicians worldwide. Beginning with its legendary Telecaster®, Fender has produced renowned electric guitars for more than 50 years. The company now offers a wide variety of electric basses and amplifiers. Have you ever wondered how small music stores can afford to have such an extensive selection of guitars and amplifiers? The money required to maintain this level of inventory is beyond the financial resources of the typical music store. To solve this problem, Fender has established relationships with various floor-planning companies that provide reasonable financing to Fender dealers. The dealers can purchase product beyond their financial resources, and pay for the product as it is sold. The floor-plan methodology enables Fender's dealers to provide their customers with a full range of product from which to select. In addition, the inventory can be very easily replenished.

Critical Thinking

1. Manufacturers in other industries, including automobiles, motorcycles, and appliances, often floor-plan inventory for their distributors. What do these industries have in common with musical instruments?

2. How does the floor-plan method benefit customers who do not live in large metropolitan areas?