Franchising as a new and unique mode of operation, has a great market penetration, is more secure than the traditional operation, rapid market expansion strategies and the most important 21st century business model. However, due to the existence of cross-licensing business risk, making a number of international franchise business in the early development of the target market for more expansion by another model - Regular Chain. And familiarity with the target market, will increase the use of franchise mode to achieve the purpose of scale expansion. But whether Direct or franchise, franchise businesses are only two kinds of means to expand the international market,
Construction of target companies in the promotion of franchise system played a unique role in each: the former to raise funds through short-term to promote the rapid expansion of business scale, the latter by increasing the business license system, the actual control over the licensing system to ensure development in accordance with the preset orbit. Franchise and business development strategy as the gradual adjustment of the two alternate ways, complement each other and jointly promote the goal of enterprise development.
This of course there are some limitations, such as comparing the pros and cons between the two operating modes, the more attention to risk prevention franchise on the vulnerable, but did not notice in the selection of suitable franchisee of the situation, Chartered Direct business model compared to the chain model can reduce the operational risks. In this regard, foreign theorists have made certain of this. Martin in his 1988 paper, "Franchising and Risk Management" in the attempt to analyze the risk aversion of such enterprises to adopt franchising business model of motivation. In his article, pointed out that although there is the risk of cross-border franchising,
But if the good of the operation and management mechanism, choose the right franchise franchisee, you can effectively avoid these risks, while Direct chain, but due to limitations of its own adverse business management; in this case We found that franchising is also a product of risk aversion - to avoid Regular Chain mode, all branches of management inaction.
According to regression analysis, we note that enterprises in the use of Direct expand markets, increase the franchise system will control the same way with certain franchises, and with the expansion of enterprise scale, or bought back by the new Direct shop in the entire franchise system, the proportion will increase, while the proportion of franchise stores will gradually decline, but will not completely disappear. Expansion also is in this phase enterprise, franchise because of its short-term absorption of capital, successful business management advantages, will become the main target of international franchise giant market expansion mode.
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