Franchising
What is a Franchisor?
The firm selling a license
What is an MNC?
What is a Multinational Company
Expansion of a business by means of opening new branches, shops or factories is known as _____________. (also known as organic growth)
What is internal growth
A method of internal growth
Expansion, diversification and modernisation.
What is a Franchisee?
The entrepreneur buying a license?
What is Globalization?
What is the growing integration and interdependence of the world's economies.
reductions in a firm’s unit (average) costs of production that result from an increase in the scale of operations.
What are economies of scale
A method of external growth?
Mergers and Acquisitions, Joint Ventures, Strategic Alliances, Franchising
What is Franchising?
A form of Business ownership whereby a person or business buys a license to trade using another firm's name, logo, brands, and trademarks.
One threat globalization poses to a company?
Increased competition, More demanding customer expectations
When a company buys over 50% of the shares of another company and becomes the controlling owner – often referred to as “acquisition”
What is a takeover
Why do MNCs grow so fast?
Spread risks, Economies of scale, Cheaper production costs
Name one benefit of franchising for both the franchisee and the franchisor?
Franchisor:
Cheaper and faster internal growth, Enter new markets locally and internationally
Franchisee:
Relatively low risk, Greater likelihood of success due to local market insights
Two oppurtunities globalization can have on a business
Increased customer base, Economies of scale, Increased choice of location, External growth opportunities, Increased sources of finance
An agreement by shareholders and managers of two businesses to bring both firms together under a common board of directors with shareholders in both businesses owning shares in the newly merged business
What is a merger?
When two businesses in unrelated businesses integrate. This is a type of diversification to reduce corporate risks. For example, the Indian company Tata integrating Tata Steel, Tata Television, Tata Motors and Tata Hotels together.
What is a Conglomerate?
Name one Drawback of Franchising (for franchisor or franchisee)
Risk damage to brand name due to unsuccessful franchises, Constrained by franchisor rules and requirements, Can be very expensive to buy a license
What is World War I?
factors that cause average costs of production to rise when the scale of operation is increased.
What are diseconomies of scale?
State 2 internal and external economies of scale
Internal: Technical, Financial, Marketing, Risk-bearing. External: Consumers and Eployees