Question
What do you understand by 'short selling' and 'squaring' off?

Answer

Short selling: It means first selling and then buying. It happens only in day trading or future trading.
Squaring off: This term is used to complete one transaction. It means that, if you buy, then you have to sell, and if you sell then you have to buy.

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Subhiksha
Subhiksha was founded in 1997 by R Subramanian, IIT-IIM graduate. It operated over 1600 outlets selling groceries, fruits, vegetables, medicines and mobile phones and positioned itself as value retail chain. It adopted strategy to cut price, focus on lower and upper middle class and opened shops near catchment area of customers. It started with one store in Chennai and within a short span the count reached to 1600 outlets (2008).
Why did Subhiksha super market fail?
  1. Rapid store expansion in various formats like groceries, medicines, mobiles, electronics, consumer durables and IT without sufficient fund in hand.
  2. Operated on very slim or zero margins resulting in higher cash outflows whereas inflows were almost nil.
  3. Not much attention to customers service resulted in bad quality service at store level.
  4. Downstream supply chain was not integrated resulting in lower fill rates and customer dissatisfaction.
  5. Expanded business through debt (7500 million debt).
  6. In October, 2008 the company did not have enough funds to manage its operations.
  7. Poor inventory management resulted in defective inventory, breakages, lower fill days and pile up inventory.
  1. What were the main reasons for 'Subhiksha's failure? Enumerate the ones given in the chapter.
Quote the lines from the passage which are indicative of the given reasons.
  1. Was 'location' one of the factors responsible for 'Subhiksha's failure?
  2. What additional factor, other than those discussed in the chapter, was responsible for Subhiksha's failure?