Tuesday, 23 November 2010
Write an individual essay, developing the arguments both for and against franchising as a mode of foreign market entry, outlining also any elements of risk arising for franchisor and franchisee and how they may be minimized.
Dr.Paliwoda Stanley, Dr. Jafari Ali Akbar
To understand the effects of globalization and the challenges it presents is assisted through the use of modern communication technologies and also the ability to expand into newly opening local markets and exposing them to new methods of production and marketing (FranExcel, 2001). However new challenges often occur, such as the use of managerial insight and intelligence, to examine a variety of different systems that
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The final result will be more satisfaction for the customers and increased sales. The main strategic benefit for the franchisor is that franchising allows for a more even spread of risks by increasing the amount of subsidiaries and this, of course, is enabled through the investment of franchisees. This means a more manageable risk level, by allowing for a rapid increase in the expansion of networks and by providing more opportunities to fluctuate with market requirements, which results in less pressure from competitors. The franchisee’s particular area of interest lies in taking part in initiatives for the expansion and proper operation of the enterprise as a whole. This sometimes can result in new alternative ideas, and also will allow the franchisor to franchises that are not complying to the specific operating guidelines and issues caused by other franchisees involved. This is of great benefit to the franchisor’s themselves as it aids them in ensuring the effective operation of the company. Finally, the administrative benefits include the fact that with a smaller central organization, the business can put into effect, specialized recruitment procedures for the area, resulting in a more efficient and productive labour force reflecting on a far more cost effective business. On the other hand, the disadvantages are also easily identifiable, and the franchisor must be aware of this possibility. First of all, when