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Accessing Resources for Growth from External Sources

Accessing Resources for Growth from External Sources. Franchising.

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Accessing Resources for Growth from External Sources

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  1. Accessing Resources for Growth from External Sources

  2. Franchising “An arrangement whereby the manufacturer or sole distributor of a trademarked product or service gives exclusive rights of local distribution to independent retailers in return for their payment of royalties and conformance of standardized operating procedures.”

  3. Franchising • Franchisee Benefits • Product Acceptance • Managerial Expertise • Capital Requirements • Money saving features • Knowledge of the Market • Operating & Structural Controls • Standardized suppliers

  4. Franchising • Franchisor Benefits • Expansion risk • Cost Advantage • Disadvantages • Franchisee v. Franchisor • Failure or Selling • Franchisor disadvantages

  5. Franchising • Types • Dealership • Cars • Name, image, method of doing business • Subway, McDonald’s • Services • Trends • Good health • Time saving or convenience • Environmental consciousness • Second Baby Boom

  6. Investing in a Franchise • Entrepreneurial Commitment • Factors • Proven v. unproven • Financial stability • Potential market • Profit potential • Collect Information • FTC’s Franchise Rule • Compare costs • Contact

  7. Joint Ventures • Definition • Types • Private-sector companies • Cooperative research • Industry-university agreements • Two problems • International joint ventures • Factors of Success • How to best manage entity re: ensuing relationships • Degree of symmetry • Expectation of results • Timing must be right

  8. Acquisitions • Considerations • Advantages • Established business • Location • Established market structure • Cost • Existing employees • More opportunity to be creative

  9. Acquisitions • Disadvantages • Marginal success record • Overconfidence in ability • Key employee loss • Overevaluated • Synergy • Structuring the Deal • Direct Purchase • Bootstrap Purchase • Locating Acquisition Candidates

  10. Mergers • Department of Justice • How does it take place? • Requirements • Determining value

  11. Leveraged Buyouts • Definition • Why buy? • Financing • Debt-to-equity ratio • Steps before buying • Is asking price reasonable? • Assess firm’s debt capacity • Develop appropriate financial package

  12. Overcoming Constraints by Negotiating • Two tasks • Distribution task • Divide up the pie • Integration task • Make the pie larger

  13. Negotiating • What will you do if no agreement is reached? • Reservation Price • What will the other party do if no agreement is reached? • Bargaining zone

  14. Negotiating • What are underlying issues for you? How important is each issue? • Trade-offs • What are underlying issues for other party? How important is each issue? • Understanding=Increased integration

  15. Negotiating Strategy • Build Trust and Share Information • Best outcome • Can it hurt the negotiations? • Ask Lots of Questions • Probe for preferences • Make Multiple Offer Simultaneously • Show what’s important based on choices • Used to Create Trade-offs that Result in Mutually Beneficial Outcomes

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