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Accessing Resources For Growth From External Sources

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Presentation on theme: "Accessing Resources For Growth From External Sources"— Presentation transcript:

1

2 Accessing Resources For Growth From External Sources
15 Chapter Accessing Resources For Growth From External Sources

3 External Parties For Business Growth
Franchising Joint Ventures Acquisition Merger

4 Fastest Growing Franchises (2003)
Company Since Type # Stores Curves 1995 Women’s Only Fitness 3,778 Subway 1974 Submarine Sandwich 14,800 7-Eleven 1964 24-Hr. Convenience 3,761 Taco Bell Mexican Fast Food 5,417 Jani-King Commercial Cleaning 7,843 Source: Entrepreneur, 2003

5 Franchise System Franchise Agreement Franchisor Franchisee

6 Franchising & Franchisee
Advantages Reduced Risk Product Acceptance Mgmt. Expertise Buying Power Market Knowledge Financial Advice Controls Disadvantage High Start-up Costs Franchisor Unable To Perform Franchisor Failure Or Sale

7 Franchising & Franchisor
Advantages Quick Expansion & Little Capital Large Operation Yet Few HQ Employees Economies Of Scale Large Advertising Budget Disadvantages Difficult To Find Quality Franchisees Single Franchisee Failure Reflects On Entire System Expansion Creates Loss Of Control

8 Franchise Capital Requirements
Franchise/Royalty Fee Construction Costs Equipment Purchase

9 Franchisor Provides Facility Layout Control Stock & Inventory
Buying Power Advertising/Sales Promotion- Local & National

10 Franchise Types Dealership Name & Image & Method Services

11 Franchising Opportunities
Health Time Saving & Convenience Environmental Consciousness Second Baby Boom

12 Franchising Risks Unproven vs. Proven Franchise
Financial Stability Of Franchise Potential Market Profit Potential

13 Branded Product/Service
Franchise Contract Franchisor, Inc. Branded Product/Service Performance Monitoring $$$$$ Franchisee

14 Franchisor Assigns Territory Provides Training/Support
Provides Financial Aid/Advice Offers Merchandise/ Supplies at Competitive Price Provides Training/Support Business Expansion Using O.P.M.

15 Franchisee Pays Up-Front Costs Makes Monthly Payment to Franchisor
Runs Business by Franchisor’s Rules/Procedures Buys Materials from Franchisor/ Approved Supplier

16 Joint Ventures Types Success Industry-University International
Assessment & Management Symmetry Realistic Expectations Timing

17 Acquisitions Advantages Disadvantages Established Business Location
Established Marketing Structure Cost Existing Employees Opportunity For Creativity Disadvantages Marginal Success Record Overconfidence Key Employee Loss Over Valued

18 Acquisition Process Valuation- Synergy Deal Structure
Locating Candidates- Broker

19 Merger Motivation Leveraged Buyout Survival Protection Diversification
Gain Leveraged Buyout Reasonable Price Debt Capacity Appropriate Financial Package

20 Resource Negotiation Tasks Reservation Price- Bargaining Zone
Distribution Integration Reservation Price- Bargaining Zone Assessments No Agreement- Buyer & Seller? Issues- Importance?

21 Negotiation Strategies
Build Trust/Share Information Ask Questions Multiple Offers Mutually Beneficial Trade-Offs


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