Every new franchise is rooted in a number of complex business decisions and ideas. This paper reviews the major peculiarities of the UPS store franchise as well as verifies its underlying principles against the existing economic issues. This brand presents much interest in current business reviews since it exemplifies a successful startup and helps to perceive the foundation of the modern economy.
The UPS Store is a global corporation that provides various postal services. Specifically, the franchise specializes in printing, mailbox services as well as packaging and shipping. It was initially launched as an effective alternative to the American mail service and gained much popularity throughout the USA ( The UPS Store par. 1).
The postal store possesses a huge financial potential, for the number of its units increases every year. Moreover, the UPS store is a successful provider of financing support programs. Thus, it offers a number of franchise loans to the new owners, which helps the beginners to feel secure in their future undertakings ( The UPS Store: Franchise Cost & Fees par. 3). The financing serves as a prerequisite of successful franchising. According to Keup, franchising is a method of market expansion utilized by a successful business entity wanting to expand its distribution of services or products through retail entities owned by independent operators using the trademarks or service marks, marketing techniques, and controls of the expanding business entity in return for the payment of fees and royalties from the retail outlet (5). Thus, one can deduce that efficient franchising is a guarantee of the corporations prosperity.
The economy targets three questions that constitute its concept. These questions are aimed at the investigation of production sources, processes, and customer types. Therefore, they are usually regarded as what, how, and for whom questions. The first issue refers to goods and services. The answer to the second question depends upon such factors as land and labor productivity as well as opportunity costs. Finally, a client implication determines the way in which a product or a service complies with a communitys demands ( The Three Fundamental Questions Every Economy Has to Answer. What, How, and For Whom par. 1).
Applying the fundamental questions to the UPS franchise study, it may be outlined that the company offers mailing services by providing the customers with high-quality postal operations. Thus, the evaluation of the UPSs work shows that the franchises land and labor productivity rank extremely high, due to the corporations constant extensions. The store targets various business establishments that are interested in mail services as well as the individuals who use it.
The three basic factors of production predetermine the outcomes of a franchises work. According to Ekelund and Hebert, the three factors are land, labor, and capital (703). The first factor embraces the actual resources that are used for a specific production. Since the UPS store specializes in services, it uses human resources. Due to the stores motto, leadership helps the management to support the high standards of the services ( The UPS Store, Inc. Leadership Team par. 1). Thus, the motivated and hard-working employees may be regarded as both efficient land and labor factors that determine the stores success. The third factor refers to the financial and technological progress of the UPS. Due to the stores productivity rankings, it may be concluded that the corporation advances in both budget and innovation extension.
Due to the rational management politics of the corporation, it demonstrates a progressive grow. Consequently, the UPS store serves as a model of a prosperous business startup.
Works Cited
Ekelund, Robert, and Robert Hebert. A History of Economic Theory and Method, Long Grove, Illinois: Waveland Press, 2013. Press. Web.
Keup, Peter. Franchise Bible 7/E: How to Buy a Franchise or Franchise Your Own Business, Irvine, California: Entrepreneur Press, 2012. Press. Web.
Cox and Masson (2007, p.1054) define franchising as contractual business relationships involving the franchisor and the franchisee, which operate as legally independent business entities. Through such relationships, franchisees have the legal right to use the franchisors business name, products and services, blueprint, or specialised aspects in their trading process.
Cox and Masson (2007, p.1055) add that the franchisor offers the franchisee the necessary support systems necessary to establish the business. By 2010, the presence of franchises was evident in approximately 75% of all countries in the world (Truitt 2006).
Subsequently, franchises have significantly contributed to the economic growth of the global economy by stimulating the retail sector, creation of employment, and contribution to countrys Gross Domestic Product (GDP) (Stanworth, Stanworth, Watson, Purdy, & Heleas 2004).
Therefore, franchising is a proven business concept. Many investors are of the opinion that adopting the franchise format can improve the effectiveness with which an organisation maximises its profit as opposed to independent start-ups. The concept of franchising business has experienced significant challenges in different parts of the world.
For example, the number of franchises declined from 1100 to 1025 during the period ranging between 2008 and 2010 (Buchan 2013). Despite this aspect, a report by the Franchise Council of Australia indicates that the franchise format has played a remarkable role in the growth of small businesses in the country (Buchan 2013).
Problem statement
Despite the contribution of franchising in promoting businesses capability to achieve high profitability, this business format has come under intense criticism due to its standardisation concept. Previous franchising literature has cited the level of autonomy and independence associated with franchising as major concerns.
Tuunanen and Hyrsky (2001) argue that standardisation is one of the key components of franchising. This assertion means that business format franchising is based on the model of cloning, whereby a business deals with standardised products and services. Therefore, the products are sold under similar trademark or trade name.
Under the concept of standardisation, the franchisee is required to adhere to the operational parameters set by the franchisor (Hoy & Stanworth 2014). Some of the standards include trademark, suppliers of inputs, promotion methods, the nature of the product, and the trademarks to be adopted.
Consequently, according to Fock (2001, p.173), the franchisees are not given the opportunity to incorporate their own initiative in the operation of the franchise. For example, the franchisor cannot make decision on diverse operating procedures such as operating hours, pricing, hiring of employees, and business location.
Failure to comply with the contractual agreement is a major source of conflict between the franchisee and the franchisor. For example, the contract may require the franchisee to pay the franchisor based on sales revenue. This aspect might pose a challenge to the franchisees in their quest to maximise their profits, especially if the geographical area in which they operate is characterised by minimal growth.
Such geographical limitations may pressurize franchisee to diverge from the set operational standards. Cox and Masson (2007, p.1054) assert that geographical dispersion exposes the chain to varied local market conditions that require adaptation to maximise performance.
Adopting uniform operating procedures and standards such as franchising is an ineffective strategy in some geographical locations in businesses effort to maximise their sales revenue and net income.
Subsequently, franchising is experiencing a challenge arising from the franchisors demand to comply with the concept of standardisation and the franchisees need to adapt their business operations in accordance with the geographical market needs (Levy & Weitz 2007).
Rationale of the study
Franchising has gained significance in the global business environment. Subsequently, most entrepreneurs and practising managers are inclining towards integrating the concept of franchising in their strategic management processes. The prominence of the franchising business format has arisen from the recognition of its role in stimulating business growth.
However, entrepreneurs and business managers have an obligation to ensure that firms achieve their profit maximisation. This goal can only be achieved if the most effective business format is adopted. However, the concept of franchising has some gaps emanating from its overemphasis of the concept of standardisation as its cornerstone.
Research aims and objectives
The study aims at developing a comprehensive understanding on the importance of understanding the standardisation and adaptation concepts of franchising. In a bid to achieve this aim, the researcher will follow a number of objectives, which include
To assess how geographical factors affect the implementation of franchising business format.
To analyse the extent to which franchisors allow franchisees to adapt to the prevailing environmental conditions.
To evaluate the franchisees integrate the concept of adaptation in their effort to carry out the franchising system.
Research questions
A number of research questions based on the research objectives will guide the study. The research questions are outlined below.
What is the impact of geographical factors affecting the implementation of franchising business format?
To what degree do franchisors allow franchisees to adapt their businesses to the prevailing environmental conditions?
How does a franchisee integrate the concept of adaptation in their effort to establish the franchising system?
Significance of the study
This study will be of great significance to practising managers and academicians. For example, the study will provide business managers and entrepreneurs with insight on the challenges associated with the standardisation concept of franchising especially in business operating in diverse geographical areas.
Subsequently, business managers will be in a position to make a decision on whether to adopt standardisation or adaptation in their effort to achieve profit maximisation. Furthermore, the study will enable academicians to appreciate the gap associated with the concept of franchising in their review of the subject.
Research hypothesis
This study will aim at verifying the null hypothesis (H0) or refuting the alternate (H1) hypothesis, which include
Null hypothesis H0 Geographical pressures have a significant impact on franchisees decision to deviate from the standardisation concept of franchising and adapt to the prevailing environmental conditions.
Alternate hypothesis H1 Geographical pressures do not have an impact on franchisees decision to deviate from standardisation and adapting to the prevailing environmental conditions.
Literature review
Franchising
Entrepreneurs must make a decision on the legal structure that they will adopt in the course of establishing their business. Truitt (2006) argues that the format selected has significant tax, regulatory, legal, and business consequences. The choice of business format is determined by different factors such as capital requirements, liability risk involved, tax, and marketing requirements (Sorenson & Sorensen 2001).
Some business structures are characterised by high capital requirements, liability risk, and marketing requirements (Croonen & Brand 2012). The main types of business format in much legislation include partnerships, sole proprietorships, limited liability companies, and franchises. Buchan (2013, p.3) emphasises that franchising has become a significant part of the global commercial landscape.
Components of franchising formats
Dada (2013) asserts that the franchise business format is comprised of four main components, which include the nature of the product or service, format facilitators, system identifiers, and benefit communicators. Franchises specialise in offering customers unique products or service, which acts as its competitive niche.
On the other hand, benefit communicators refer to the intangible benefits associated with the product or service being offered. Examples of such benefits include high level of professionalism in the service delivery process and reliability.
Format facilitators refer to the procedures and policies that should be followed by the franchisee, while system identifiers refer to the visual elements that associate a firm or product to a particular chain, for example trademarks, uniforms and architectural features (Yudoko 2012).
Franchising; standardisation versus adaptation
Cox (2002) argues that standardisation is the foundation of franchising due to its contribution in the franchisees and franchisors efforts to achieve its cost minimisation objective. For example, standardisation minimises the cost incurred in monitoring the franchisee. Moreover, standardisation allows businesses to develop and maintain a unique brand image amongst its customers (Michael 2002).
Subsequently, an organisation nurtures a high degree of customer loyalty arising from trusting in the uniformity of the products quality across outlets in different locations. Therefore, standardisation in franchising enables entrepreneurs to sustain the unique customer experience.
Longenecker (2012) asserts that the franchisees efforts to deviate from the set standards by adapting their own operational procedures may lead to erosion of the benefits associated with franchising, for example due to a decline in product quality and loss of the brand image (Rundh 2003). Furthermore, critics argue that adaptation in franchising format may influence the franchisees ability to innovate adversely (Chary 2009).
This assertion arises from the view that the franchisee might not have sufficient knowledge to innovate the product or service offered in order to fit the geographical needs (Stanworth, Healeas & Purdy 2002). Cox and Masson (2007, p.1056) argue that adapting to local conditions reduces the potential for cross-fertilisation of ideas for identifying and implementing new offerings.
Despite the significance of standardisation, Megan (2010) argues that franchises operate in diverse geographical areas, which are characterised by different factors such as intensity of competition, customer tastes, and preferences. Therefore, the effectiveness of standardisation amongst franchisees operating in geographically diverse area is limited.
Michael (2000) argues that franchisees have substantial knowledge of their local geographical market compared to the franchisor. Consequently, the likelihood of succeeding in their innovation effort is high (Michael 2003).
Despite their commitment to standardisation, franchisors depend on the market knowledge and information gathered by franchisees in undertaking product or system innovation (Ryans, Grittith & While 2003). However, the need to maintain a strong brand image restricts franchisees from adapting their operations to the local market situation (Pizanti & Lerner 2003).
From the above review, a significant gap needs to be addressed on whether franchisors should give franchisees the opportunity to deviate from the set operational standards and procedures and adapting their operations to the prevailing market situations. Through adaptation, there is a high probability of franchising business formats gaining better significance compared to the prevailing situation.
Methodology
Research design
The purpose of this study is to explore the decision of franchisees to incorporate the standardisation versus the adaptation strategies in their operation. The study will adopt qualitative research design. The decision to adopt this research design is informed by the exploratory nature of the study.
Moreover, qualitative research design will provide the researcher with an opportunity to gather substantial amount of data to aid in making extensive and conclusive research findings. Maxwell (2005) further asserts that qualitative research design is a multi-method research strategy, which is interpretive in nature. Subsequently, the study will be of great significance to the target audience.
Data collection
The researcher will source data from secondary sources. The researcher will review previous studies and literature on standardisation and adaptation amongst franchises. Some of the main secondary sources of data that the researcher will consider include reports peer-reviewed journals and other literature. Numerous studies on franchising have been conducted previously.
Therefore, the use of secondary sources will provide the researcher with an opportunity to gather substantial data. However, the researcher will ensure that the secondary data selected is from credible sources. This move will improve the reliability of the data collected.
Data analysis and presentation
The data gathered will be analysed using Microsoft Excel, which will enable the researcher to condense the voluminous data collected. Creswell (2003) asserts that qualitative research design enables a researcher to gather diverse data. Evaluating the data collected can overwhelm the researcher if it is not condensed effectively.
By using Microsoft Excel, the researcher will be in a position to condense the data successfully by incorporating tables, graphs, range, and graphs. Subsequently, the researcher will assess different aspects associated with the subject under investigation.
Furthermore, using Microsoft Excel will provide the researcher with an opportunity to present the data effectively using graphs. Subsequently, the target audience will be in a position to understand the research findings easily.
Reference List
Buchan, J 2013, Franchisees as consumers; benchmarks, perspectives and consequences, Springer, New York.
Chary, S 2009, Production and operations management, Tata McGraw, New Delhi.
Cox, J 2002, Geographical dimensions of business format franchising, University of Southampton, Southampton.
Cox, J & Masson, C 2007, Standardisation versus adaptation; geographical pressures to deviate from franchise formats, The Service Industries Journal, vol. 27 no. 8, pp. 1053-1072.
Creswell, J 2003, Research design: qualitative, quantitative and mixed method Approaches, Sage Publications, New York.
Croonen, E & Brand, M 2012, Antecedents of franchisee responses to franchisor initiated strategic change, International Small Business Journal, vol. 69 no. 172, pp.114-126.
Dada, O 2013, Entrepreneurial organisation and the franchise system; Organisational antecedents and performance outcomes, European Journal of Marketing, vol. 47 no. 5, pp. 790-812.
Fock, H 2001, Retail outlet location decision-maker: franchisor or franchisee, Marketing Intelligence and Planning, vol. 19 no. 3, pp. 171-178.
Hoy, F & Stanworth, J 2014, Franchising; an international perspective, Routledge, New York.
Levy, M & Weitz, B 2007, Retailing management, McGraw-Hill, New York. Longenecker, J 2012, Small business management; launching and growing entrepreneurial ventures, Cengage Learning, Mason.
Maxwell, J 2005, Qualitative research design: an interactive approach, Sage Publication, New Jersey.
Megan, T 2010, A framework for implementing retail franchises internationally, Marketing Intelligence & Planning, vol. 28 no. 6, pp. 689-705.
Michael, S 2000, Investments to create bargaining power: the case of franchising, Strategic Management Journal, vol.21, pp. 497-514.
Michael, S 2002, Can a franchise chain coordinate, Journal of Business Venturing, vol. 17, pp. 325-341.
Michael, S 2003, First mover advantage through franchising, Journal of Business Venturing, vol.18, pp. 61-80.
Pizanti, I & Lerner, M 2003, Examining control and autonomy in the franchisor franchisee relationship, International Small Business Journal, vol. 21 no. 2, pp.131- 38.
Rundh, B 2003, Rethinking the international marketing strategy; new dimensions in a competitive market, Marketing Intelligence & Planning, vol. 21 no. 4, pp. 249-257.
Ryans, J, Grittith, D & While, D 2003, Standardisation versus adaptation of International marketing strategy; necessary conditions for advancements, International Marketing Review, vol. 20 no. 6, pp. 588-603.
Sorenson, O & Sorensen, J 2001, Finding the right mix: franchising, organisational learning and chain performance, Strategic Management Journal, vol. 22 no.16, pp. 713-724.
Stanworth, J, Healeas, S & Purdy, D 2002, Intellectual capital acquisition and knowledge management new perspectives on franchising as a small business growth strategy, ISBA National Small Firms Policy and Research Conference Proceedings, vol. 2 no.5, pp. 1507-1534.
Stanworth, J, Stanworth, C, Watson, A, Purdy, D & Heleas, S 2004, Franchising as a small business growth strategy: a resource-based view of organisational development, International Small Business Journal, vol. 22 no.3, pp. 539-559.
Truitt, W 2006, The corporation, Greenwood Press, Westport.
Tuunanen, M & Hyrsky, K 2001, Entrepreneurial paradoxes in business format franchising: an empirical survey of Finnish franchisees, International Small Business Journal, vol. 19 no. 4, pp. 47-62.
Yudoko, G 2012, Sustainable operations strategy; a conceptual framework, ICTOM, Bandung.
The article Franchise firm entry time influence on long term survival by Juste et al. (2008) presents a rather interesting outlook on franchise firm survival by focusing not on the market forces of supply and demand or even on methods of sustained development through management innovation, diversification and subsequent product development but rather it focuses on the concept of early entry as being a highly influential factor in the long term survival of a franchise firm.
This is a particularly interesting position to take especially when considering the fact that nearly 90% of all early entry businesses into new markets or new businesses with innovative approaches to address a particular need within a specific niche market fail within the first 5 years.
Taking this into consideration, the Juste et al. (2008) article should prove to be rather enlightening in terms of the innovative approach it has taken in discussing franchise firm survival especially when considering the breadth of research that apparently went into its creation.
Reasons for Choosing the Article
The main reason this particular article was chosen was due to its focus on the long term survival of franchises through early entry into a particular market. It presented the reasons as to why late entry into a market by a rival franchise often has a far lesser chance of survival as compared to a franchise that has already been well established within the local community.
On the other hand, another reason why I chose this particular article was due to the fact that upon reading it I discovered that the authors neglected to examine the extent of influence that a powerful brand could have on consumers.
While the article was able to connect early entry into a market with long term survival there were few factual points which reference the strategies that franchises utilized in order to survive in the long term.
This I believed was one of the inherent weaknesses of the article since based on my perspective brand promotion over a number years can have a power influence on consumers which leads to continued patronage and the survival of a franchise despite the entry of rivals into market.
As such I endeavored to research various cases involving well established corporations and sought to examine instances where improper/proper methods of innovation and change were utilized in order for them to continue surviving within their chosen market segments.
Aim of the Author
In the case of Juste et al. (2008) study it can be seen that the aim of the author was to show how franchises in Spain established in the early 1950s 1980s and reach up till the present have been able to survive for so long due to their early entry into the market. This was done by comparing the survival rate of franchises at later dates and how they were unable to usurp the position of franchises that were established much earlier.
It is based on this that it can be assumed that the overall goal of the author was to prove that when it come to investing into a particular franchise or entering into a particular market it is best to do so as a market pioneer especially in cases where franchises are established in new international locations.
Position of the Author
The position of the authors in the case of this article is one where it is apparently recommended to invest into well established and well known franchises within a new market and in cases where new markets are found to become a pioneer into that particular market in order to take advantage of the first entry position.
Structure and Organization of Paper
For this particular paper a brief synopsis will be provided which points out exactly what Juste et al. (2008) set out to accomplish after which comes the evaluation of the strengths and weaknesses of their study.
In that section various articles will be compared to that of Juste et al. (2008) along with various case examples in order to test the veracity of their arguments. Lastly, the paper will conclude with recommendations regarding what could have been done in order to improve the Juste et al. (2008) article in order to fix the apparent weaknesses found by this examination.
Synopsis
The initial argument that Juste et al. (2008) presents is that entry time influences the type of strategic decisions a firm can employ as well as its long term survival.
In order to prove this point the Juste et al. (2008) study set out to examine the Spanish franchising industry from the latter half of the 1950s till 2004 in order to examine the extent from which long term survival could be determined from early entry into the Spanish market. They did so by examining catering (food restaurants) and fashion outlets as their primary subjects for examination.
It was their hypothesis that the earlier the entry of a particular franchise into the Spanish market the more likely it was to establish itself and result in long term survivability. On the other end of the spectrum the study also assumed that in cases where late entry was seen there would be a lesser degree of market survivability due to the presence of already well established brands (Juste et al. 112 115).
It was through this method of examination that Juste et al. (2008) looked to prove its assumption of long term survivability of first mover franchises within particular markets.
Evaluation of Strengths and Weakness
When evaluating the strengths or weakness of a particular article it is important to examine the factual points brought up by other articles in the same category in order to determine the effectiveness of the arguments being presented in the article that is being examined.
In the article of Ordish (2006) it can be seen that early and late entrants into a particular market had varying operational and management strategies which Ordish (2006) explains is a direct result of having to contend with different market situations (Ordish, 30).
Ordish (2006) goes on to state that in the case of early pioneers into a particular market there are rarely any other competitors and as such this enables them to establish a customer oriented rather than a competitor oriented strategy (Ordish, 30).
What must be understood is that there are three components to market orientation that dictate how a company acts within a competitive environment, these are: customer orientation, competitor orientation, and inter-functional coordination.
In the case of customer orientation a company spends what resources it has in gathering data on the needs and behaviors of various consumers, the same can be said for competitor orientation however it focuses on competitors instead (Smeets and Yingqi, 949 961)
It must also be noted that either method has a distinct weakness. Focusing too much on consumer orientation can actually blind a company to changes in the market or may actually stifle innovation since the company focuses too much on consumer satisfaction rather than changing based on trends (Smeets and Yingqi, 949 961).
Focusing too much on competitor orientation on the other hand results in too much time and capital being placed on competitive activities which results in companies at times neglecting their consumer bases and focusing too much on getting ahead of the competition (Relationship and innovation orientation in a business-to-business context, 59).
On the other hand both methods also have their own respective strengths such as the customer orientation strategy being more effective in uncertain markets whereas competitor oriented strategies become effective in fast growing markets (Smeets and Yingqi, 949 961).
Taking this into consideration, Costa (2011) explains that in cases where a company is the first mover in a particular market this gives it a considerable advantage by the mere fact that it can focus on a customer oriented strategy without having to worry about subsequent problems related to inter-market competition within the immediate future (Costa, 22).
This allows the company to develop itself as a viable brand and develop a well established reputation within its chosen market through a strategy that focuses more on developing proper relations with consumers. Costa (2011) goes on to state that the power of a well established brand should never be underestimated since it can enable a company to persevere in the face of severe competition via the strength of its brand alone (Costa, 22).
This particular statement by Costa (201) is in direct relation to what Juste et al. (2008) defines as pioneering advantages in the case of franchise firm entry times. From the perspective of Juste et al. (2008) pioneers benefit from brand loyalty, higher switching costs and pre-emption of scarce resources such as locations, brand reputation or customer preferences (Juste et al., 108).
One of the inherent weaknesses of the Juste et al. (2008) article was the fact that it neglected to elaborate on the possibility of new competitors armed with either more potent resources or capabilities from entering into the market and overtaking a first mover franchises market share. One particular case example where this is evident is the fall of Blockbuster and the subsequent rise of Netflix within the past 10 years.
What is notable in this particular case is that Blockbuster originally had a dominant position in the U.S. market. It had 3,000 stores and controlled 95% of the video rental market however it is interesting to note that its business model didnt change much over time.
The chain was a first mover in entering into a sales structure that focused on providing consumers with as wide a selection of movie choices as possible and this proved to be a particularly wise business decision.
Combined with thorough brand awareness the chain was able to dominate the U.S. market and showed all the advantages indicated by Juste et al. (2008) as belonging to a pioneer in a particular market segment. By the late 1990s though it is obvious that Blockbuster was so competitor centered in maintaining its dominant position that it neglected to examine changes within its consumer base.
In fact it was at this point that online e-commerce systems which enabled consumers to make purchases online started to proliferate which enabled new companies to enter into previously hard to enter markets due to the flexibility and low cost nature of online sales and consumer marketing (Movies At Home, 33).
When Netflix began its online video rental service in the latter half of the 1990s this gave consumers a faster and more convenient method of video rental which subsequently eroded away at Blockbusters market position till by 2005 to 2009 when Netflix released its online video streaming service this could be considered the final nail in the coffin so to speak resulting in the dominance of Netflix and the complete erosion of Blockbusters previously dominant position (Movies At Home, 33).
Based on this case example it can be seen that entry time into a market by a franchise cannot be stated as a prelude towards long term survival without a certain degree of contention.
Juste et al. (2008) fails to elaborate more on this particular aspect and merely glosses over it by mentioning it on just a single line. This I believe is an inherent weakness in the article since it fails to take into account subsequent changes in markets via innovations and new market paradigms that are relevant in todays way of doing business.
For example, first mover firms such as GE (General Electric) and IBM which have been around for more than several decades have moved along with market trends and innovations in order to continue to stay relevant in the present day. While it may be true that the paper focuses more on franchises rather than firms this lesson is still applicable.
First mover franchises need to stay relevant within their prospective markets by changing along with new consumer tastes (Relationship And Innovation Orientation In A Business-To-Business Context, 59).
This was seen by some of the new dietary innovations enacted by restaurants such as Wendys, Burger King and Olive Garden in order to keep pace with a consumer market that is slowly but surely turning towards healthier options in their food choices.
This push towards franchise innovation is lacking within the Juste et al. (2008) article and as such is a lapse in what needs to be present in any long term survival strategy. A single line does not do the concept justice since it is an integral aspect for any franchise.
On the other hand the article does present viable arguments in relation to the first mover principle which should not be immediately discounted. One of the first factors indicated by the article is that in cases of international expansion firms that enter early could achieve better locations within a market before it becomes overly saturated and more franchise chains look for more suitable locations.
One case example where this is evident is that of the Kenny Rogers franchise and its expansion into the Philippine market. It is rather interesting to note that within the U.S. the Kenny Rogers franchise never truly took off due to market saturation of similar restaurant franchises having the same product offering (Franchisee considers selling its Roasters restaurants, 3).
Due to dismal sales in its home market the franchise took the rather risky route of expanding abroad into new markets where such a degree of market saturation wasnt evident (Franchisee considers selling its Roasters restaurants, 3).
One of the primary locations the chain expanded into during the latter half of the 1990s was the Philippines due to its English speaking population and the fact that archipelago had embraced various aspects of U.S. culture.
The result was phenomenal, due to the restaurant chain being one of the first to offer American style dishes and combo meals this enabled the company to expand into various ideal locations before other franchises of a similar type arrived within the country.
To this day the franchise has continued to survive within the Philippines despite stiff competition since it has continued to retain many of its original locations that it had expanded to. This particular example confirms the results indicated in the Juste et al. (2008) and shows that the study does in fact have credence to the facts it presents.
Conclusion and Recommendations
Overall the article showed a great deal of promise in showcasing how entry times into particular markets greatly influenced the long term survivability of particular franchises.
In fact it was quite effective in doing so by presenting data from the 1950s onwards showing how franchises that entered into Spain in the latter half of the 1950s to the 1980s were able to survive and thrive well into 2004 while others that hand entered later into the market were at greater risk of closure.
What I did notice though was the fact that the study was missing distinct details related to brand awareness and how particular brands can become incorporated into local cultures to such an extent that they become indivisible aspects of it.
What must be understood is that as franchises continue to grow within particular population centers their advertising initiatives combined with continuous consumer consumption of products actually integrates the brand name of that product into the local culture.
This results in better product awareness which translates into distinct consumer patronage for particular brands. Such an aspect has been documented by numerous studies yet it is strangely absent in this one. It must also be noted that a companys strategies do change over time depending on changes within the market.
For example, as mentioned earlier customer orientation strategies are more effective in uncertain markets whereas competitor oriented strategies become effective in fast growing markets, the inherent problem with this is that markets tend to change over time as seen in the case of Netflix.
As such when markets change this necessitates changes in orientations as well with companies at times shifting towards either customer oriented or competitor oriented strategies. This was similarly glossed over by the article which should have mentioned it due to the fact that anticipating changes in markets and adapting to them is an integral factor in any franchises long term strategy.
It is based on this that it is recommend by this article critique that any future article that deals with the relation between entry time and long term survival should also include sections relating to the power of brand awareness and how this connects to the process of being pioneers into a particular market.
By having this particular aspect included into the study readers will be able to understand how branding plays and integral role in helping to ensure long term survivability. With the study as it is now in the present some readers may in fact assume that being an early pioneer into a particular market is all that is necessary to succeed.
This particular assumption would be fallacious and would cause many individuals to neglect the necessity of proper brand development and promotion. As such in order for people not to get the wrong idea in the future it will be necessary to include aspects related to the interconnectivity between brand development and early pioneering in order to present readers with a full picture of how the process actually works.
Works Cited
Costa, MaryLou. First-Movers In Market For A Change Of Address. Marketing Week (01419285) 34.42 (2011): 22. MasterFILE Premier. Web.
Franchisee considers selling its Roasters restaurants. Wall Street Journal Eastern Edition 29 Dec. 1995: 3. MasterFILE Premier. Web.
Juste, VictoriaFirst, Laura Palacios, and Yolanda Redondo. Franchise firm entry time influence on long-term survival. International Journal of Retail & Distribution Management. 37.2 (2008): n. page. Print.
Movies At Home. Consumer Reports 74.3 (2009): 33. MasterFILE Premier. Web.
Ordish, Rebecca. Testing The Franchising Waters In China. China Business Review 33.6 (2006): 30. MasterFILE Premier. Web.
Relationship And Innovation Orientation In A Business-To-Business Context. South African Journal Of Business Management 41.4 (2010): 59. MasterFILE Premier. Web.
Smeets, Roger, and Wei Yingqi. Productivity Effects Of United States Multinational Enterprises: The Roles Of Market Orientation And Regional Integration. Regional Studies 44.8 (2010): 949-963. International Security & Counter Terrorism Reference Center. Web.
Zermatt area has many magnificent hotels that are family owned and does not have enough space for accommodation of long staying tourists. The proposed residential apartments within Zermatt are likely to boost the number of tourists visiting these exotic sites.
The Peak by Four Seasons apartments will offer accommodation to visitors of the hotels in Zermatt. This project will ensure that targeted clients will enjoy the best services within the location of their preferred hotels within Zermatt since the residential units will be constructed within the Zermatt location.
Facilities
The residential resort has facilities such as free Digital TV Apple TV, B&O Television Sets in all living rooms and bedrooms, Blue Ray and DVD disc Library, private cinema room, high speed villain in all apartments and lobby, apple computers in the apartments and laptop PCsare available upon request, library and open fireplace, ski room and heated lockers, internal elevators, ski in and out facilities, breathtaking views on the Matterhorn and the surrounding peaks from all balconies, fireplaces, geothermal heatingand direct access via private tunnel and elevators.
Besides, the recreational services include an indoor and outdoor pool usable 24/7, wellness area with sauna, flower steam bath, caldarium, large rainfall showers, sundeck, massage and beauty treatment available upon reservation, and large state-of-the-art fitness center.
Franchised Services
The Peak by Four Seasons residential units will franchise the beverage services to hotels such as Mont Cervin Palace, Riffelalp Resort, and the Omnia hotel.
Included in the Peak by Four Seasons franchise investment are:
Beverage services
Culinary equipment/Furniture
Personal effects such as towels, dishes, and toiletry
Marketing the Peak by Four Seasons by these hotels
Housekeeping and Inventory Systems
The Peak by Four Seasons provides basic services in housekeeping for all its clients despite the size or the cost of these residential units. These services are of quality and in line with the health regulatory standards in Zermatt (Harrison & St. John 2010; Janus 2008). The in house housekeeping inventory system controls all these services (Williams 2007).
Reservation Systems
The Peak by Four Seasons uses the Computer Reservation System (CRS) program to store information its intangible and tangible assets. Besides, the system is critical in eliminating the physical gap that might exist between the franchises and customers (Schneider, Chung & Yusko1993; UNWTO 2009; Weitzner & Darroch 2010). To put in place this system, we intend to incorporate KeepMeBooked, and Olxbooker for international and local clients.
Olxbooker System
Olxbooker software is essential in making a specific reservation especially for a long period of stay. The system handles payments made in advance and cash payments.In addition, this software provides an online module that downloads reservation requests from the website directly to reception with a thirty day trial. The complete package goes for 900 USD per month.
KeepMeBooked System
KeepMeBooked is moderately priced web-based software designed for business such asapartment residential. The software does the same function as the Olxbooker though it costs five dollars for each room within the residential unit. It also comes with free thirty day trial. However, its functions are limited to cash reception.
After comprehensive research, the Peak by Four Seasons adopted Olxbooker since it is more reliable and is affordable in the long run.
Investment in Technology
The Peak by Four Seasons being a global-born business, it is our priority to start gathering data to increase our knowledge management and capabilities. Technology integrated management will play an important role in the Peak by Four Seasons operations and strategies.
Technologies today are successful in improving customer value, internal business processes, internal growth and learning, sustaining a competitive advantage, and improving the long-term financial standing of a company (Kaynak 2003; Kew & Stedwick 2005).Thus, we intend to invest in the following technology.
Customer Value and CRM
The Peak by Four Seasons offers guests a range of technology, including wifi capabilities, automatic key cards, and a high-tech hassle free online reservation system. In order to minimize costs, the company will utilize the free system offered by Google Analytics program in offering CRM services.
Competitive Advantage
The capability of the Peak by Four Seasons to periodically collect data will ensure that it remains competitive in the market.
Internal Business process
Information sharing in the Peak by Four Seasons project is significant in improving efficiencies and effectiveness.Thus, sharing information within the departments of the Peak by Four Seasons is anticipatedto help the business to adapt to the Zermatts business environment.
Internal growth
Olxbooker system can create and manage standardization throughout the organization (Evans & Collier 2009).Thus, the Peak by Four Seasons seeks to introduce this system to manage critical information about clients and communicate with its departments. Since this computerized system is accurate in revenue collection, the Peak by Four Seasons will incur minimal losses in revenue collection.
Financial Aspect
Olxbooker will remain important in the billing, payroll, procurement, and HR departments of the Peak by Four Seasons project hence reducing the cost of operating the business.
Human Resources
The Peak by Four Seasons will function as a Limited Liability Company (LLC), but purges the need for corporate maintenance.
Labor Laws
According to the Zermatts legislations, employee and employer relations are managed by the following regulations (Peng 2009; Murphy 2010).
Legal limit of regular working hours: 8 hours per day or 44 hours per week unless there is a written agreement between the employer and employee
Vacation: Within twelve months of work, employees are entitled to a paid one month leave from work.
Overtime Pay: Employees in Zermatt are entitled to overtime pay of at least 50% of the hourly rate
Personnel
In order to maintain a community oriented establishment, all front-line personnel will be indigenous to the Zermatts culture. All employees will be carefully selected, with qualifications including experience in tourism and hospitality and keen understanding of the Zermatts culture (Armstrong 2006).
Due to the type of establishment, we find it necessary to employ accounting or human resource personnel in addition to a general manager who will encompass the knowledge and capabilities to manage the necessary functions (Beardwell & Claydon 2007; Corporate Watch UK 2003).
The teams of the residences are full time employees groomed following the four seasons philosophy. The team comprises of a residence manager and 6 concierges, a front office manager, two drivers, an executive housekeeper, twelve housekeepers, a chef de cuisine, a sous chef, three chefs theparty, and atechnician. The outsourced staff will include a ski instructor, baby-sitters, and massage service providers.
Job Descriptions
General Management-Work Activities:
Promoting and marketing
Planning and organizing accommodations
Setting targets for the business
Financial planning and recruitment of staff
General Management-Job Requirements:
University degree
Language skills: Fluent in English and the local language
University degree
Five years experience in senior management position
Proficient with the latest CRM and Reservation systems
Reception-Work Activities:
Registering and receiving guests
Control advance bookings
Collecting payments
Controlling advance bookings
Answer questions about facilities and amenities
Reception-Job Requirements:
Fluent in local language and English
Well organized and good at multitasking
Housekeeping/Maintenance-Work Activities:
Laundry and general cleaning
Disposing wastes and replacing household supplies
Housekeeping/Maintenance-Job Requirements:
Physical and medical fitness
Cleaning equipment usage knowledge
Salaries
The Peak by Four Seasonswill offer full-time employment opportunities. Employees in the Front-line will be paid 700UD per month consisting of 22 working days. Housekeeping and maintenance will receive 500UD per month.The chefs will be paid a salary of 1500UD per month. The drivers earn a salary of 700UD per month.
The technician will earn 900UD per month. However, the outsourced personnels salaries will be negotiable and will depend on the demands of the market(Blyton & Turnbull 2006; Burke & Cooper 2008).
Training Personnel and Data Keeping
Employees will be periodically trained on the modern services and systems in this business to remain competitive. Training programs will be tailored to fit the specific demands of the market.
Outsourcing
Outsourcing has benefits such as improved service for guests, reduced cost of labor, and minimized risk(Zhu, Hsu, & Lillie 2001). Outsourcing services for thePeak by Four Seasons is critical in filling the positions that may not attract local labor(Brink, Fruytier& Thunnissen 2012; Cole 2006; Knight & Cavusgil 2006). These positions include babysitters, ski instructor, and massage providers.
References
Armstrong, M. (2006). Strategic HRM: a guide to action. London: Kogan Page.
Beardwell, L., & Claydon, T. (2007). HRM: a contemporary perspective. London: FT/Prentice Hall.
Blyton, P., & Turnbull, P. (2006). TheDynamics of Employee Relations. California: Palgrave.
Brink, M., Fruytier, B., & Thunnissen, M. (2012). Talent management in academia: performance systems and HRM policies. Human Resource Management Journal, 22 (2), 201-223.
Burke, L., & Cooper, T. (2008). Building more effective organizations: HR management and performance in practice. California: Palgrave.
Cole, G. (2006). Personnel & HRM. London: Continuum.
Evans, J., & Collier, D. (2009). Om. Alabama: Cangage South-Western.
Harrison, J. & St. John, C. (2010).Foundations in strategic management. Ohio: South Western Cengage Learning.
Janus, P. (2008). Pro Performance Point Server 2007: Building Business Intelligence. Alabama: Press Intel.
Kaynak, H. (2003). The relationship between total quality management practices and their effects on firm performance. Journal of Operations Management, 21 (4), 405435.
Kew, J., & Stedwick, J. (2005). Business Environment: Managing in a Strategic Context. London: CIPD.
Knight, G. A., & Cavusgil, S. T. (2006). Innovation, Organizational Capabilities and the Born-Global Firm. (T. Gale, Ed.) Journal Of International Business Studies, 124 (18).
Murphy, J. (2010). Organization theory and design. Hampshire:Cengage Learning EMEA.
Peng, M. W. (2009). Global Strategic Management. Southwestern: Cengage Learning.
Schneider, B., Chung, B., &Yusko, K. (1993). Service Climate for Service Quality. Current directions in Psychological Science, 12 (2), 197-200.
UNWTO. (2009). Tourism an Economic and Social Phenomenon:World Tourism Organization. Web.
Weitzner, D., & Darroch, J. (2010). EBSCO. Journal of Business Ethics, 1 (3), 56-67.
Williams, C. (2007).Rethinking the future of business: directions and visions.New York: Palgrave.
Zhu, Z., Hsu, K., & Lillie, J. (2001). Outsourcing a strategic move: The process and ingredients for success. Management DecisionJournal, 4 (7), 45-55.
Franchising industry is very popular, as its rates of development are rather high. Though there numerous advantages of using franchising concept in the business, the potential franchisors should be aware of the existing risk of buying a franchise fraud and put much effort in investigating the ways to avoid dealing with franchise frauds.
Franchise systems developed between the 1860s and 1950s and today occupy a significant place in the mainstream of business in the USA and worldwide. In common sense, franchising is a lease of companys brand and business strategy. Usage of a franchise is regulated by agreement between franchiser (the one who offers a franchise) and franchisee (the one who buys a franchise).
The United States occupy leading position in employing franchising concept in practice. This model appears to be a secure model of running a business. It has shown good results even in the tough economic market.
One of the most common claims made by a franchisee in the situation when a franchise has failed to achieve success and bring profit is a franchise fraud (Bundy & Satterlee, 2007, p. 191). The franchisee states that he is a victim of the fraud and that the franchisor was aimed at gaining personal profit. In the same time, the franchiser can claim that franchisee signed the agreement of free will. Such cases can lead to the need of appealing to the Court.
The problems can be avoided if the people involved in business are aware of difficulties related to signing an agreement with an unreliable franchiser. Such mistakes can easily be avoided if the franchisee is well informed about the appropriate procedure needed to exclude the risk of buying a franchise fraud before signing a contract.
Franchise frauds appear when unfair companies sell intellectual property that does not belong to them and make a fortune by using other brands popularity. It happens when the company creates its merchandise mark by copying the popular brand (branded colors, package, names of products, etc.). Another type of franchise fraud appears when the unfair companies even do not register its merchandise mark.
They simply create a franchise project that is based on the brand of the successful company and sell it to inexperienced franchisees. Franchise fraud has no commercial value, as it offers only copying of superficial specifics of the brand. Only valuable franchises offer the successful business models based on great experience and presenting commercial classified information.
Franchise frauds mostly appear in the industries using chain stores concept. They include fast food, fashion clothes, and automotive industries. Fast-food restaurant industry presents a special area of risk, as food restaurants represent the largest segment of the total franchised businesses (Gandhi, 2014, p. 3).
They are the most popular objects of creating and selling franchise frauds (e.g. Mash Donalds). Another risky area consists of fashion clothes brands (e.g. ZaraZara). Sometimes, franchise fraud can even gain more popularity and profit than the original company.
Merchandise mark, logotype, production technologies, and unique models of business conducting are regarded as an intellectual property of the company. Copying of intellectual property is punished by law. Therefore, the owner of the original is free to appeal to the Court and ask for material compensation in the case of fraud exposure. Both sellers and buyers of the fraud are punished in such case. The potential franchisees should be aware of the responsibility they accept when buying a franchise fraud.
The timeliness of the exposure of franchise fraud is of vital importance. The franchisee should ensure the reliability of franchisor before signing the documents. In the 1970s, the frequent cases of selling franchise frauds led to mass protests of businesspersons against sales of fraudulent franchises. The word franchising even was regarded as an abusive one. The situation became normal only after passing appropriate laws.
This experience shows that law regulation of franchising is one of the most important keys to avoiding the prevalence of fraud franchise frauds and ensure their early exposure. There are three federal laws, which are aimed at ensuring keeping of rights of franchisees (Abel & Burke, 2003, p. 361).
The Federal Trade Commissions Franchise Rule requires disclosure of information that is necessary to be known to make relevant decisions before signing a contract. However, there is a loophole in the law, which lets franchisors make undocumented oral claims, which are typically inadmissible to establish fraud, even if inaccurate (Abel & Burke, 2003, p. 362).
Several reforms of the rule have been proposed to make it more precise. As the law is not likely to expose the frauds and protect the franchisees, they should consider investigating the proposed franchisor and market, interviewing current franchisees, and consulting legal counselor prior to signing an agreement. Such precautions will help the franchisee to expose possible franchise frauds and prevent unpleasant consequences.
There are certain strategies that can help to prevent the risk of dealing with franchise frauds. The person eager to buy a franchise should directly contact the owner of the brand and avoid interacting with intermediaries. It is better to communicate with participants in the business market, whose contacts can be found on their official websites. It is also of vital importance to check the official registration documents of the selected merchandise mark.
The potential franchisee should require full information about the selected company, e.g. history, data about products and offers, the experience of other franchisees. The age of the company and the size of its current network are also essential aspects to be considered while investigating the chosen company. The consultation with a legal counselor can also reduce the risks of buying a franchise fraud.
There are some red flags for detecting franchise fraud. They include the franchisors reluctance to expose the relevant information about the company and other franchisees. Such behavior can be a sign of previous negative experience of other franchisees. Another alert is the companys young age.
If the company has less than three years experience and already launches the franchising program, it can be a proof of the fact that the brand was created only for selling. Even if such network has certain success, it is appropriate to consider the insufficient experience of the franchiser. It can result in future mistakes made by the inexperienced franchiser.
There are many unfair companies, which are aimed at selling franchise frauds and receiving profit. Businesspersons willing to become a part of franchising industry should pay special attention to the exclusion of the possibility of buying a franchise fraud before signing the agreement with a franchisor. Exploring red flags for detecting the franchise fraud and the controls for preventing it can contribute to the franchisees successful decision on choosing an appropriate franchisor.
References
Abel, E. M. II, & Burke, D. (2003). Franchising fraud: The continuing need to reform. American Business Law Journal, 40(2), 355-384.
Bundy, K., & Satterlee, K. (2007). You made me do it : Reliance in franchise fraud cases. Franchise Law Journal, 26(4), 191-198.
Gandhi, H. V. (2014). Franchising in the United States. Law and Business Review of the Americas, 20(1), 3-24.
Indivisibility is a margin position, which allows any production manufacture to function (Besanko & Braeutigam 2010). When a company requires an appliance that produces 500 items installs an apparatus that produces 2000 pieces, it leads to an overproduction, because such an appliance cannot be divided into small ones. The device can become productive only by raising the level of production to 2000 items. Indivisible input is an increase in production that cannot be divided in order to manufacture fewer items (Mukherjee, Mukherjee, & Ghose 2004). The UPS franchise organization, as the most companies, has several indivisible inputs. Here are examples of indivisible input of the UPS firm: an industrial machine has to be fully equipped in order to supply an organization with copies of output; the vehicles used in the firm are designed for massive transportations.
There are four essential typical features of a perfectly compatible company: a large number of small firms, identical products sold by all firms, perfect resource mobility or the freedom of entry into and exit out of the industry, and perfect knowledge of prices and technology (Perfect competition, 2005, para. 1). These four components combined indicate that a certain company that is considered to be perfectly competitive is not able to seize domination over the whole retail. A market that is perfectly competitive implies that the competition exists at the maximum achievable position. The economists of the neo-classic dispute over the possibility of a perfect competition to be able to create the most excellent effect on customers and society in general.
The excessive quantities of smaller companies that manufacture interchangeable output signify that an abundant quantity of flawless replacements can take a place of the production that is manufactured by any corporation. This makes the demand curve for a perfectly competitive firms output perfectly elastic. Freedom of entry into and exit out of the industry means that capital and other resources are perfectly mobile and that it is not possible to erect barriers to entry (Perfect Competition, 2005, para. 3). Impeccable awareness indicates that every company function on the same foundation; that consumers are aware of every attainable perfect alternative for a product and that companies indeed manufacture interchangeable items (Perfect Competition, 2015). The UPS franchise shares the trait of exact services provided by other companies, as there are different firms that render transport and logistics services. This confirms one of the basic traits of perfectly compatible company identical products sold by all firms (Perfect Competition, 2005, para. 1).
An economic profit is a difference between the revenue received from the sale of output and the opportunity cost of the inputs used (Economic Profit, 2014, para. 1). Unlike in a monopoly or an oligopoly, a perfectly competitive company is not able to derive a monetary benefit eventually; in other words, a company is not able to obtain pecuniary profit that covers more than the companys expenses.
Assuming that the UPS franchise firm is competitive, the profits would not inevitably disappear over time; more likely, the profit of the firm would gravitate towards normal profit (Profit, 2015). Due to frequent distorting of this hypothesis of a zero eventual profits, it has to be noted that in this context the concept of profits is manipulated differently. The approach of neo-classics delineates profits as a monetary balance, which remained after taking away all expenses (Economic Profit, 2014). On the other hand, proponents of classical economics interpret profits as a remaining amount of funds after reimbursing expenses that do not include interest and risk coverage; thusly not taking into consideration a number of opportunity costs. So, to conclude, if the UPS franchise firm becomes compatible, the remaining economic profits after subtracting every expense would be minimal, as, according to the classic economy, the economic profits only cover the expenses of the firm and would lean towards normal profit on the long run.
References
Besanko, D., & Braeutigam R. (2010). Microeconomics. New York, New York: John Wiley & Sons.
HMV or His Masters Voice as it is commonly known, is a British company engaged in the entertainment (music and movies) business. The company was started by Sir Edward Elgar in 1921 when the first HMV store was started at 363, Oxford Street, London (BBC News 2013).
The logo of the company, featuring Nipper the dog and a gramophone became very popular with the masses. The logo was actually acquired from a work of art of Francis Barraud (HMV par. 6). By the year 1986, HMV had 25 outlets throughout the United Kingdom.
Now the company thought of starting its operations out of the United Kingdom namely, Ireland and Canada. HMV is accredited for opening the biggest record outlet of that time the Oxford Circus shop. HMV also had the opportunity to host several celebrity appearances in its store each year the figure of such events is said to be 200 annually. ( HMV history: 90 years on, the music and DVD retailer goes into administration par. 9).
In January 2012 the company, in an attempt to recoup the financial losses, entered into an agreement with Universal Music. The same year, the company sold away Hammersmith (the venue) thereby bringing to an end HMVs live music business.
The company experienced further downtrends in its sales to an extent that there was a warning signal that the company might not be able to honor its agreements with the banks. BBC reported that HMVs sales for December 2010 were down 10.2% as compared to the sales in the same month the previous year (BBC 2011). Considering all such circumstances, the company (HMV) publicized its decision to opt for administration.
HMV store at 363 Oxford Street, London (picture taken on 11 July 1939)
Research Question
Should HMV venture into the yet untouched market of Saudi Arabia and start new franchises?
Theoretical Framework
The rationale for the study:
Since childhood, we all have been hearing about the music company called HMV. The first name on everyones mouth, whenever there is any reference of a music company, is undoubtedly HMV. We all truly hold very high esteem of the company. But the recent reports on the developments at the company front have startled one and all.
What happened to such a popular and strong company? Why is it being reported that the company is not performing well? In such circumstances, should the company think of venturing into new markets such as Saudi Arabia? All such questions suggested me to do this study.
Areas to be covered
My study will be based on the following:
The opportunities in Saudi Arabia.
The strengths of HMV might prove to be helpful if it plans to open franchises in Saudi Arabia.
Other music companies that are already established in the region and how they might have a negative impact on HMVs plans.
The drawbacks of the company that might hinder the franchising plans.
I will look at all these aspects to come to a conclusion whether it will be feasible for HMV to open franchises in Saudi Arabia or not.
Methodology
In order to collect information that will help me in this study, I plan to adopt the following sources of information:
I plan to get the required details or figures from trustworthy websites. Such information will help me to evaluate my results. Since the websites that I plan to refer will be trustworthy, I can rely on the information. But a disadvantage in referring to the internet is that sometimes, despite being careful, we come across websites that seem to be good but the information provided is not accurate. So in order to avoid such possible wrong information, I will desist from referring websites such as Wikipedia.com, about.com, etc.
I have details of the music companies that are presently having outlets in Saudi Arabia. I propose to talk to some employees in such outlets. This will provide me with the actual position of the market.
I also plan to conduct a survey that will include an audience from all walks of life. I will conduct the survey with at least one hundred people. I have made a questionnaire that includes all possible questions to get the required information. I even plan to interview customers who visit such outlets. I understand that it will be a tough job to persuade them for the interview but I am sure that with my kind of PR, I will be able to manage the situation.
I also plan to do some analysis such as the SWOT analysis and the PEST analysis. Such analyses will provide me with some answers that will help me evaluate the feasibility.
SWOT Analysis of HMV
SWOT analysis is a popular analysis done by organizations in order to know their Strengths, Weaknesses, Opportunities, and Threats in the global competitive market. In the following paragraphs, we shall do the SWOT analysis of HMV, with particular emphasis on the Saudi Arabian market.
Strengths:
HMV is a very popular brand name in the music industry and needs no introduction. Music lovers know that the company is well reputed and delivers quality products at reasonable prices. HMV already has an online existence, so customers can make their dealings via the internet.
If an HMV franchise is opened in Saudi Arabia, HMV can further benefit from its popularity. HMV sells DVDs, games, music CDs, etc., so there is no need for the customers to have any sort of direct arrangement with the company; the same can be had online or from the proposed franchise.
Weaknesses:
The major drawback with HMV is that it was unable to sell selected items, like for example any particular song or any particular TV episode. The customer has to buy the complete CD or DVD. Relating the weaknesses to Saudi Arabia, the country is an Islamic state and there are certain restrictions that people and businesses have to follow.
HMV will have to be very careful while advertising on the national TV channels or on billboards. Also, Saudi Arabia being an Arabic speaking country, HMV will have to develop or record more of Arabic language products.
There was a news article where it was reported that some employees of HMV hijacked the companys Twitter account and posted negative remarks ( Music retailer HMV sacked 190 staff, but left Twitter in their control par. 1). Such information may hamper the prospects of HMV in Saudi Arabia.
Opportunities:
Saudi Arabia is yet untouched country by HMV. But due to the popularity of the company and ease of access to world news, the citizens are aware of the name HMV. This is a plus point for HMV. By opening an outlet in Saudi Arabia, HMV can further enhance its image. When customers visit the outlet, they will definitely be enticed to purchase the products.
Threats:
The main threat that HMV has in Saudi Arabia is from Apples iTunes. Apples iTunes is already an accepted means of getting music for the Saudi people (Bhatia 2012). It is very easy as well to download music from iTunes.
Apples iTunes has the upper edge because customers can download music or videos sitting at home whereas, in order to purchase music or video CDs and/or DVDs from HMV, the customers will have to walk down to the store; this will incur some costs of traveling on the customers.
HMV will have to tread a rough path in overcoming this threat. Another threat for HMV in Saudi Arabia is that the laws governing each and everything are based on Shariah ( Sharia Law in Saudi Arabia par. 1). There is no other reasoning that is entertained. HMV will have to compromise to some extent if it wants to establish itself in Saudi Arabia.
The word PEST stands for the political, economic, social, and technological aspects that may have an impact on the performance of any organization. This kind of analysis is generally done by organizations in order to get information on the aforementioned aspects prevailing in a specific country or area where they want to launch their products.
The analysis can also be done to have the latest trends and current information about the aspects. This analysis helps the organizations to understand the market (current or future) and the external factors that may have an impact on their performance.
Political factors:
Saudi Arabia is an Islamic nation and has a king ruling the country. The laws are framed as per the Shariah guidelines and as such, there are certain restrictions pertaining to every action, including the businesses. The judgment or ruling of the Shariah court is final and has to be abided.
There is limited freedom of advertising products. Islamic culture has to be considered while designing advertisements. Even the kind of stuff that is being marketed has to be according to the Shariah principles. Considering all such aspects, HMV will be able to market only a limited variety of its products in the country.
Apart from this aspect, Saudi Arabia is a very safe country with rare instances of cheatings and frauds. So the businesses are safe in the country. Adding to the advantages is the fact that since the country is ruled by a king, there are no chances or very rare chances of any political imbalance.
Economic factors:
Saudi Arabia is an oil-rich country and the GDP of the country was US$576.82 billion in 2011 ( Saudi Arabia GDP par. 1). The growth in the GDP has been 0.1%, 4.6%, 6.8%, and 6% for the years 2009, 2010, 2011, and 2012 respectively ( Data on GDP and economic information par. 1). Considering the encouraging figures, it is a good sign for the future growth of businesses in the country. So HMV has a bright future in Saudi Arabia.
Social factors:
As mentioned earlier, Saudi Arabia is an Islamic country, and the citizens are bound to follow the Shariah laws. But due to the advancements in science and technology, the younger generation has been able to connect to the world of entertainment in a manner that would not have been possible without the internet. SO HMV can benefit from its online promotions to reach millions of hearts.
The current population of Saudi Arabia is 28.84 million ( Saudi Arabia population clock par. 1). Apart from this, Saudi Arabia is considered to be a hub of expatriate workers. These workers are from all over the world. Such an expatriate workforce of Saudi Arabia since they are well aware of the HMV brand will add to the advantages of HMV. Some of the music or videos that might be inappropriate face the risk of being banned by the government.
Technological factors:
Technology has changed the face of businesses all around the world. The music industry has also experienced great upgrades due to the incessant inventions being made. As far as HMV is concerned, it can adopt new technologies to prevent unauthorized copying of its music or videos. Saudi Arabia is a country where new inventions reach without delay.
Questionnaire and results of the survey
For this survey, I contacted over 100 people of all age groups. Following are the results of the survey in tabular form:
Following are the graphical representations of all the answers:
Analysis and discussion
After all the description that we have written above, it is now time for the analysis. The two analyses that we have done show that there no such hindrance for HMV to open a franchise in Saudi Arabia. There are minor issues that can be taken care of with proper planning.
The survey results also show that the people of Saudi Arabia are interested in having a retail store from where they can buy their favorite music and video CDs and DVDs. The main issue that seems a little complicated is the prevalence of Islamic law in the country.
People are more inclined towards Islamic culture. And obviously, they would prefer to listen to Arabic music and watch Arabic videos. If we consider the number of Arabic singers and performers, we will understand that there is no dearth of Arabic artists. So HMV can produce more CDs and DVDs featuring such artists. The superior quality of HMV will guarantee excellent results.
The concept of franchising is definitely not a new one and can be traced back to the early days of governmental licensing and even the method used by the clergy for the expansion of churches. Modern concepts of franchising emerged in the United States in diverse business areas as drive in restaurants, fast foods, soft drink vending etc. The boom and a slump soon followed in the US as well as the UK during the 1950s and 1960s. Franchising again popular in the later decades and is now considered to be a powerful and well accepted form of business. In the UK it was the Singer Sewing Machine Company that can be credited with the starting of the modern concept of business franchising. Its mass manufacturing production system allowed the company to sell the product at a very competitive price, but the company could not economically run a replacement part service as a central operation so it set up a service & maintenance franchisee. (History of Franchising, 2008). Today franchising is one of the most effective ways of wealth and risk sharing and has necessitated in foolproof techniques that can carry the business forward in a profitable way for both the franchisor and the franchisee. This technique is referred to the service delivery system (SDS) and forms the backbone of any franchising concept. This paper looks at the importance of the SDS and the evaluation of the effectiveness of a properly formulated SDS.
The Service Delivery System in franchising
One of the most important components of a franchise business is the service delivery system it operates. According to Francorp, a leading franchise consulting and development firm, the key is that you start with an exceptionally sound baseline service delivery system. (Frank Corp What Makes a Successful Franchise Company: Adaptability, 2008). There is more literature written about the importance of an SDS. According to the book Franchising, an SDS is the fundamental means by which the customer satisfaction in a franchising business is assured and also created a competitive advantage for the franchisees. Every franchise has a well defined SDS, however overt or transparent it may seem to an outside observer. (Spinelli, Rosenberg and Birley 2004, p.20). A well laid our service delivery system has the following advantages. It Encapsulates the intellectual knowledge of the franchise as a business asset. Written instructions which add value to a business process are leased to third parties to generate a profit. (Preparing the Franchise Package: Understanding the Business System. p.6).
Documental knowledge about the business system can help to reduce risk and also helps in formulating an effective training package. It helps to increase overall efficiency by facilitating the concept of repetitive action, which forms one the core fundamentals of franchising. Allocation of tasks and coordination within the business and with franchisee and franchisor is also made more effective. An SDS also helps in efficient running and bringing about uniformity of operations and tasks among all franchisees. It provides the detailed knowledge of doing the tasks and is basically what the franchisor buys in exchange for the franchise fee. The SDS is also the basic document which tells the franchisee what to do to meet the demands of the customer. (Service Delivery System).
Evaluation of an SDS
The importance of the SDS has been established and now the review of a sound system is being done here. This can be done on the basis of procedures followed in the evaluation of a general service delivery system and its quality. This will be done on the basis of a study conducted on the effectiveness of fast-food franchise outlets in the USA and Korea. The study included the following variables commonly referred to as SERVQUAL, which is a common yardstick to measure service quality. The variables are tangibleness, reliability, responsiveness, assurance, and empathy. An SDS should assure that tangible factors like physical facilities, equipment, personnel, and communication materials. (Chang, Lim and Kim, p.1230). Reliability of tasks and operations should be there to ensure quality. Responsiveness or the willingness of the staff to be of service to customers and to meet their requirements is another important factor. Employee should be made knowledgeable, courteous and should be able to impart a feeling of trust and confidence in customers. Also an element of empathy rather than sympathy should be taught to the employees in dealing with customers. The above mentioned study also adds that these factors were not adequate in fully evaluating the service delivery systems and added the following components to the study. They include sanitation (hygiene), location of the franchise, the parking facilities available, the quality of the service (in this case food), the environment in which the franchisee is situated and the image or perception of customers about the franchising company. All the elements if properly ensured can give a high evaluation rating to a service delivery system in any franchise business.
Bibliography
CHANG, Daesung., LIM, Seongbae., and KIM, Hwanyong. A Comparative Study on the Service Quality of Global Fast Food in USA and Korea: Evaluation of Service Quality. [online]. 1230.
Franchising is a marketing strategy that is usually used for business expansion in which one party (a franchisor) gives another party (a franchisee) rights and authorities regarding the sale of certain goods or products. The two parties enter into a contractual agreement for the sale of specific goods or services through the use of a trademark or brand name in exchange for royalties or other form of compensation. The franchisee pays to the franchisor a commission or a one-time fee for the trademark use, and a certain percentage of the revenues henceforth. In such a relationship, sustaining profitability through the growth of the chain is important. The franchisor benefits from a franchising fee and royalties while the franchisee benefits from the brands reputation and experience. The role of the franchisee is to manage the daily operations of the business in a manner that meets the standards of performance and operation set by the franchisee. A successful franchising agreement is one in which the two parties involve derive value and form a long-term business relationship. Two advantages of franchising as a growth strategy include capitalized expansion of brand as little money is invested and faster brand development as the franchisee provides the labor needed. Disadvantages include increased risk of conflicts due to differences in management models and the risk of a franchisors brand-reputation deterioration. Three key traits that franchisees should possess include transparency, self-leadership, and the ability to follow instructions.
Advantages and Disadvantages of Franchising
It is the responsibility of a franchisor to attract new partners to enhance the value of the business brand. Franchising has grown in popularity over the past decades because of factors that include saturation, increased competition, diminished profits in domestic markets, an increase in the number of industrialized countries in the global marketplace, and the liberalization of markets in foreign countries (Baena, 2018). Expansion and growth have three main benefits: it increases the visibility of a business, enhances survival, and signal the profitability of a network (Lucia-Palacios and Bordonaba-Juste, 2014). One of the ways that a franchisor can attract new investors is by signaling the system potential value. This is accomplished by first, learning about the franchisees perspective of the meaning of value and how to create it. Successful relationships are based on how well a franchisor manages the franchise system to satisfy their interests and those of the franchisees (Lucia-Palacios and Bordonaba-Juste, 2014). Trustworthiness, transparency, and security through sustained support are important for successful partnerships, which in turn benefit the franchisor in various ways. These include capitalized expansion and brand development.
Advantages
One of the major advantages of franchising from a franchisors perspective is capitalized expansion as franchisees provide local market knowledge, capital, and human resources. The expansion of a business for growth requires the investment of resources and capital that could be unavailable or difficult to raise (Gonzalez-Diaz and Solis-Rodriguez, 2012). In that regard, franchising serves this purpose by licensing a franchisee to expand the business through a contractual agreement (Ghantous and Das, 2018). This approach allows entrepreneurs to leverage their brand and business experience to gain access to a wider market and attain economies of scale (Ghantous and Das, 2018). The franchisor mainly provides both tangible and non-tangible assets to the franchisee for the successful management of the business unit. Important services include product supply, training, marketing plans, information, management experience (control and coordination), and brand awareness (Baena, 2018). Signaling is one of the ways through which franchisors can attract potential franchisees. According to signaling theory, business entities radiate certain signals that could be used by potential franchisees in the decision-making process (Baena, 2018). Franchisors usually possess critical information about their businesses profitability and viability. Therefore, they need to signal potential franchisees regarding the viability of their chains, as well as their potential for profit and robustness.
Franchisors benefit immensely from franchising because they get the opportunity for brand development, especially in international and emerging markets. According to research, franchising is a popular retail format in the United States; it comprises of approximately 3,000 franchise entities that are worth over US$2.1 trillion (Paswan et al., 2014). This strategy for business growth is gaining momentum in other parts of the world. For example, it accounts for 53%, 32%, 16%, 3%, and 1.6% of the retailing sectors in Australia, Germany, Brazil, China, and India respectively (Paswan et al., 2014). In Canada and the United Kingdom, there were about 78,000 and 44,200 franchise entities in 2015 respectively (Kang et al., 2018). Many franchises are located in emerging economies that are experiencing high rates of industrialization. Therefore, they offer brand owners an opportunity to expand their businesses into new economies that are growing rapidly (Kang et al., 2018). For example, Ray Kroc (McDonalds) and Dave Thomas (Wendys) transformed their brands from small to public corporations using the franchising model (Gillis et al., 2020). They receive an up-front fee and ongoing royalties in exchange for offering entrepreneurs the opportunity to build profitable enterprises around the world. Franchisees invest in their outlets and self-monitor to maximize the performance of their business units (Madanoglu et al., 2019). The result is rapid growth that is essential in the development of brands.
Disadvantages
One of the major disadvantages of franchising from the perspective of a franchisor is the risk of conflict due to differences in management models or the failure to attain the set standards of operation and performance. According to agency theory, franchising involves the signing of an agreement between the principal (franchisor) and the agent (franchisee), in which the former delegates certain responsibilities to the latter, owing to the lack of resources, time, or skill (Jang and Park, 2019). The theory recognizes the probability that both parties could have divergent interests that could be a source of conflict (Chien, 2014). In certain cases, the agent could fail to perform the delegated responsibilities in a satisfactory manner. Franchising is disadvantageous whenever the goals of the franchisor and those of the franchisee differ (Crosno and Tong, 2018). In such cases, it becomes difficult or expensive for the former to evaluate the performance of the latter (Madanoglu and Karadag, 2016). The franchisor can solve this problem by spending additional resources to observe and monitor the franchisee, which could introduce unnecessary business expenditures (Jang and Park, 2019). Agency theory defends franchising as a means of business expansion because the issue of conflicting goals can be mitigated by researching costs; this approach evaluates potential franchisees to find the most appropriate one (Dada and Onyas, 2021). Franchising necessitates the development of skills for the detection and mitigation of agency problems (Chien, 2014). The franchisee might develop opportunistic behavior, especially in geographically distant markets.
Another disadvantage of franchising is the increased risk of ruining the reputation of a franchisors brand. As mentioned earlier, franchising is important because it facilitates expansion, growth, and survival. However, it creates an incentive for franchisees to take advantage of the franchisors brand without the struggle of building one from scratch (Lucia-Palacios and Bordonaba-Juste, 2014). The costs of brand advertising are split between the two parties. However, the franchisor loses because the franchisee enjoys the benefits of servicing customers alone (Perrigot et al, 2015). In that regard, the latter benefits in cases where the quality of services or goods is below par, even though they share the costs of advertising with the partner (Gillis et al., 2020). An increase in the number of dissatisfied customers is one of how franchisors suffer from engaging in franchising (Bordonaba-Juste et al., 2011). This could originate from a lack of facility upgrades, understaffing, high prices, substandard employee training, concealing critical information, and refraining from conducting promotions and new product introductions (Gillis et al., 2020). This free-riding behavior has been shown to have negative effects on the franchisors brand reputation.
Three Qualities to Look for in Potential Franchisees
Attracting the right and the most qualified franchisee is the key factor that determines the success of a franchise. Research has shown that poor recruitment processes lead to failed franchises because of discrepancies in the goals and objectives of the franchisor and the franchisee. The proper alignment of the goals of both parties is necessary for the success of a franchise partnership (Hajdini and Windsperger, 2019). Franchisors should look for certain traits in franchisees because those qualities are strong indicators of business success. They include transparency, self-leadership, and the ability to follow instructions.
Transparency
Transparency is one of the most critical qualities that a franchisor should look in potential franchisees. This incorporates several business activities, including open communication, dissemination of earnings information, business plans, and organizational strategies. Optimal value in franchising is created when a franchisee applies the franchisors business format and model without making alterations (Watson et al., 2020). This provides consistent and high-quality customer experience that is critical to the growth of the brands reputation. In contemporary business environments, innovation is an essential success component. For instance, certain MacDonalds major products such as the Egg McMuffin and Big Mac were created by franchise owners (Watson et al., 2020). However, many franchisors limit their franchisees innovative activities to maintain network consistency within the franchise system. In that regard, many franchisees implement innovations secretly to seek autonomy to foster growth (Parsa, 1999). Investors who innovate secretly and conceal information regarding sales and marketing lack integrity, and therefore, they are risky to the brand reputation of a franchisor. A franchisee should be able to articulate their perceptions of value in an honest manner before agreeing. According to Grace and Weaven (2011), a franchisees perception of lack of value in a franchise results in misalignments that could result in non-compliance with the franchisors standards and diminished levels of satisfaction. In that regard, the franchisee should explain clearly their perception of value so that the franchisor can be able to determine whether they are a proper fit for their business model (Grace and Weaven, 2011). Perceived value is a key determinant in a franchisees willingness to adhere to set standards and strive toward the desired performance outcome.
Self-Leadership
According to Lee (2017), self-leadership is one of the most important trait that franchisees should possess. It is defined as the process and strategy through which self-direction and self-motivation are attained to complete tasks. It comprises behavior patterns and cognitive strategies that foster personal effectiveness and performance (Gillis et al., 2020). Self-leadership focuses on the capabilities of individuals to cognitively control their thought pattern and actions (Lee, 2017). Research has shown that the successful management of mental activities leads to increased individual and organizational performance. Common traits that are characteristics of individuals who possess self-leadership include self-goal setting, self-planning, self-rewarding, and self-observation (Lee, 2017). Self-goal setting involves the creation of specific goals that improve an individuals impetus for higher performance. Self-planning involves the articulation of the strategies and activities that are required for the accomplishment of goals (Gillis et al., 2020). Self-observation encompasses the activities that facilitate information collection for enhanced comprehension of the origin and effects of ones behavior. Self-rewarding refers to the act of giving oneself gifts to celebrate the achievement of specific goals. These traits are indicators that a franchisee has self-leadership, and therefore, is fit to manage a franchise. It is also important for franchisees to be conversant with knowledge-sharing mechanisms because that is one of their fundamental roles. Self-leadership allows them to identify gaps between the present and the projected business state, and as a result, create ways to apply self-motivation and self-direction to mitigate the discrepancy (Lee, 2017). Research has established a positive association between franchisees with a strong sense of self-leadership and the dissemination of knowledge within the system.
Ability to follow Instructions
The ability to follow instructions or compliance is an essential trait in a franchisee. It can be defined as the degree to which an investor adheres to the rules, policies, and requests of the franchisor. Following instructions originate from a commitment and motivation to stick to the rules as they are outlined in the contractual agreement (Paswan et al., 2014). Compliance is beneficial because it allows the franchisor to satisfy customer needs, fulfil their expectations, and attain a desired base level of performance (Lee, 2017). The success of a franchise is largely based on the capability of the franchisor to create and enforce policies, rules, and standards across the franchise network. The major challenge is to obtain compliance with the set guidelines among all franchisees. In that regard, one of the trait that franchisees should possess is the ability to follow instructions without causing conflict or initiating rebellion. The perception of self-interest or opportunistic motives on the side of the franchisor could cause conflicts, non-compliance, and behaviors that strive for autonomy (Lee, 2017). Therefore, franchisors should ensure that they standardize business operations and enforce rules and policies that cater to their interests and those of the franchisees. A study conducted by Lee (2017) revealed that knowledge sharing is one of the strategies that franchisors can implement to promote adherence to standards and rules. Brand positioning is achieved through adherence to certain values and attributes that are associated with a brand in the market (Yakimova et al., 2019). Compliance ensures that franchisees collaborate with the franchisors to strengthen and augment the brand positioning in a recommended manner.
According to Nyadzayo et al. (2016), one of the most critical components of a franchises success is brand building. In that regard, a franchisee should be willing to align their behavior, strategies, and identity with the franchise brand (Nyadzayo et al., 2016). Franchisors grow their brands by determining the values and norms that should be associated with it in the marketplace. This is achieved by establishing specific branding and marketing activities that are aimed at presenting a product or service to consumers in a specific way. Consistency in branding is achieved only if franchisees follow the guidelines that franchisors give them regarding the marketing and branding processes (Bordonaba-Juste et al., 2011). A franchise brand gives a franchise business a competitive advantage that facilitates its differentiation in the marketplace (Sun and Lee, 2019). Therefore, choosing the right partner can be the link between a successful and a failed franchise. In many instances, the locations involved in franchising are geographically dispersed, sometimes around the world (Sun and Lee, 2019). Therefore, partnering with a franchisee who can follow instructions lowers monitoring efforts and costs, and improves cohesion within the system.
Conclusion
Franchising is one of the most effective growth strategies that entrepreneurs apply in their businesses. This concept has gained more popularity in the past decades, primarily due to globalization and technological advancement. Franchising involves the signing of a contractual agreement between two parties, a franchisor and a franchisee. The franchisor is the owner of the business that is a recognized brand while the franchisor is the other party who gets the right to build an enterprise based on the products and services of the other party. A brand owner receives a one-time fee and royalties on the sale of the product or service henceforth, and the franchisee benefits from the brands reputation and experience. From the perspective of a franchisor, franchising has several befits. Two benefits include capitalized expansion and accelerated brand development. The arrangement has disadvantages too: conflicts due to differences in management models and the risk of ruining the brands reputation. To reap the full benefits of franchising, franchisors should look for certain traits in potential franchisees. These include transparency, self-leadership, and the ability to follow instructions (compliance). The proper alignment of the goals of both parties is necessary for the success of a franchise partnership. Therefore, franchisors should look for the aforementioned traits because they are strong indicators of business success. Self-leadership initiates self-motivation and self-direction while transparency ensures that franchisors reveal all the information that is critical to the success of the partnership. Compliance refers to adherence to the rules, policies, and requests of the franchisor.
References
Baena, V. (2018) International franchise presence and intensity level: profile of franchisors operating abroad. Management Research Review, 41(2), 202-224.
Bordonaba-Juste, V., Lucia-Palacios, L., & polo-Redondo, Y. (2011) An analysis of franchisor failure risk: Evidence from Spain. Journal of Business & Industrial Marketing, 26(6), 407-420.
Chien, S-Y. (2014) Franchisor resources, spousal resources, entrepreneurial orientation, and performance in a couple-owned franchise outlet. Management Decision, 52(5), 916-933.
Crosno, J.L. and Tong, P.Y. (2018) Just going through the motions? An empirical investigation of control, compliance, and performance in franchisor-franchisee relationships. Journal of Business Research, 92, 360-373.
Dada, O. and Onyas, W.I. (2021). Negotiating agency in mitigating franchise failure: a critical discourse analysis. Industrial Marketing Management, 98, 1-16.
Ghantous, N. and Das, S.S. (2018) International franchising and performance: a resource-based perspective. International Journal of Retail & Distribution Management, 46(8), 744-763.
Gillis, W.E., Combs, J.G. and Yin, X. (2020). Franchise management capabilities and franchisor performance under alternative franchise ownership strategies. Journal of Business Venturing, 35(1), 1-20.
Gonzalez-Diaz, M., & Solis-Rodriguez, V. (2012) Why do entrepreneurs use franchising as a financial tool? An agency explanation. Journal of Business Venturing, 27(1), 325-341.
Grace, D. and Weaven, S. (2011) An empirical analysis of franchise value-in-use, investment risk and relational satisfaction. Journal of Retailing, 87(3), 366-380.
Hajdini, I. and Windsperger, J. (2019) Contractual restraints and performance in franchise networks. Industrial Marketing Management, 82, 96-105.
Jang, S. and Park, K. (2019) A sustainable franchisor-franchisee relationship model: Toward the franchise win-win theory. International Journal of hospitality Management, 76, 13-24.
Kang, J., Asare, A. K., Brashera-Alejandro, T. and Li, P. (2018) Drivers of franchisor growth: a meta-analysis. Journal of business & Industrial Marketing, 33(20, 196-207.
Lee, K-J. (2017) knowledge sharing in franchise system: franchisee self-leadership, satisfaction, and compliance. International Journal of Contemporary Hospitality Management, 29912), 3101-3118.
Lucia-Palacios, L. and Bordonaba-Juste, V. (2014) Franchising and value signaling. Journal of Services Marketing, 28(20, 105-115.
Madanoglu, M. and Karadag, E. (2016) Corporate governance provisions and firm financial performance: the moderating effect of deviation from optimal franchising. International Journal of Contemporary Hospitality Management, 28(8), 1805-1822.
Madanoglu, M., Castrogiovanni, G.J. and Kizildag, M. (2019). Franchising and firm risk among restaurants. International Journal of Hospitality management, 83, 236-246.
Nyadzayo, M.W., Matanda, M.J. and Ewing, M.T. (2016) Franchisee-based brand equity: the role of brand relationship quality and brand citizenship behavior. Industrial Marketing Management, 52, 163-174.
Parsa, H.G. (1999). Interaction of strategy implementation and power perceptions in franchise systems: an empirical investigation. Journal of Business Research, 45, 173-185.
Paswan, A.K., DSouza, D. and Rajamma, R.K. (2014) Value co-creation through knowledge exchange in franchising. Journal of Services Marketing, 28(2), 116-125.
Perrigot, R., Hussain, D. and Windsperger, J. (2015) An investigation into independent small business owners perception of franchise relationships. International Journal of Retail & Distribution Management, 43(8), 693-711.
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New York Yankees is a name that is used to refer to the baseball professional players in the New York City. The club was founded in 1901 in Baltimore and later relocated to New York City in 1903. “They were previously referred to as the New York high Landers and later they were nicknamed the Yankees,” (Greenberger, p20). They have occupied the Yankee Stadium in New York since 1923 to last year. They have now moved to a new stadium which has also been named the Yankee Stadium. The group is a member of the Major League Baseball in America. They have actually been involved in many champions’ leagues in the history of American sports in regard to baseball. “From the period of the 1920’s, the Yankees started to make a remarkable record on their success in the baseball games,” (
Twins, p35). This followed the move to purchase high quality players from other teams which included the Red Sox and the Chicago white sox.
Red sox were the major team that was involved in trading its players through its owner Harry Frazee to clear some debts. One of the players who were greatly talented and gifted in the game was Babe Ruth. “His trade to the Yankees really affected the performance of the Red Sox since they did not win any games for the following eighty six years,” (Jim, p17). This one trade of the Red Sox became like a curse to the team as it tremendously turned out to be a supernatural reinforcement for the Yankees who were now very famous of their success. In 1921, The Yankees faced another great team, “the Giants” and their defeat saw their removal from the World Series. They however returned in 1922 but suffered yet another defeat from the Giants.
The rise of the Yankees
“The period of the 1920’s to 1930’s were great years for the Yankees with the honor owed to the two champions of the team Babe Ruth and Gehrig,”(Joe, p27). During this period the team hired a new manager by the name Miller Huggins and a general manager who was Ed Barrow. Barrow was also a former member of the Red Sox and he served the Yankees for a period of 25 years. His service was greatly credited for the success of the Yankees. The 1927 team of the Yankees was very successful making continuous wins remarkably in 1939, 1961 and 1998. This earned the Yankees another nickname as the murderers. Ruth’s total home runs amounted to 60 in 1927 which made history for the next thirty four years. “This period also saw Gehrig make his first big season by managing forty seven round trippers,” (Robinson, p9). In 1928, the Yankees faced the Philadelphia and the St Louis Cardinals in the World Series. In these series, Babe Ruth made 625 hits with three home runs. On the other hand Lou Gehrig made 545 hits and four round trippers. The Yankees then returned to the World Series after three years under a new manager Joe McCarthy where they won over the Chicago clubs with consecutive twelve wins. During this season Ruth became very famous of his called shot home run in the third series on the Wrigley Field.
Yankee stars of the 1920’s and 1930’s
Babe Ruth
Ruth was born in 1895 in a place called Baltimore in Maryland. He started his career as a baseball player at the age of 20. Initially he played for the minor leagues in Baltimore and later he joined the Boston Red Sox. Ruth was one of the greatest stars in the history of American baseball. His presence in the team as an outfield player led the Yankees to the headlines. “He made baseball to become a fun to many and for this reason he earned himself various nicknames such as Bambino, sultan of Swat among others,” (Jim, p23). He had great ability for the home runs and he left a record of success during the period. In 1923 when a new base ballpark was opened it was named the Yankee stadium but the funs preferred to call it, “The House That Ruth Built.” as a tribute to him. His presence in the team drew large crowds to the stadium just to see the Yankees play. He led the American league 11 times in the walks and six times in the runs where he worn eight times. He was also a pitcher of the Yankees five times and he was always successful in these games.
Lou Gehrig
Lou was born on June, 19, 1903. He is remembered as a great champion in the history of the American baseball especially for the contribution he made in the period between 1920 and 1930. He joined the Yankees in 1923 as a pinch hitter. He was a great hitter in the game and this game him the nickname “The iron Horse.” (Robinson, p15). He played various American Baseball Leagues all of which he made record of success. He still remains a great hero to many of the American baseball funs. In his career statistics as a baseball player, he managed to leave a record of.340 battling average, 493 home runs, 2,721 hits and 1,995 runs battled in. He played for the Yankees from the period of 1923 to 1939. He played in the World Series champion in 1927, 1928, 1932, 1936, 1937 and 1938. His career in baseball was cut short by his deteriorating health which later claimed his life.
Contribution of the Yankees to the American Culture
The popularity of sports in America was seen in the period of the 1920’s. During this time, America became very proud of its rising heroes in sports especially in baseball, football, golf among other sports. The period has been referred to as the Golden age of Sports since it saw the rise of extraordinary success in the American sports. The rise of heroes in baseball such as Ruth and Lou made a great difference in the teams they played for and this came to change the American sports culture. There were major technological and social changes in regard to sports. “One of the influences on sports culture was the changes in the textile and clothing that was used for sports,” (
Twins, p47). The teams that were involved in sports made different uniforms some which were used to symbolize important occasions. The garments or clothes that were used to make these uniforms were different and this displayed a lot of meaning to the society. The reflections that were displayed in the uniforms were used to indicate the ever evolving changes in baseball both to the teams and also to the funs. Uniforms were recognized as an important symbol for the recognition of the teams and the players by the funs especially in the field. This was a great step in the culture of sports since most funs came to fields just to watch the teams play. “The Yankees were especially very famous of their ever changing uniforms,” (Greenberger, p31). Fashion of the uniforms was especially important to them with some of them having attached emblems for easy recognition of the teams. Later they introduced Numbers and also names of the players to the uniforms. The society was quick to adopt this culture as most schools introduced the game. School teams were formed for the students and they also made their own uniforms. Uniforms in the American sports culture were a reflection of what was happening in the society.
The success of the Yankees during this period also led to the recognition of baseball as a professional career in American sports culture. Professionalism was introduced owing to the various changes in the rules of the game and also the involvement of the World Series championship. Most individuals in the society were now able to see sports as a lifetime career especially with the success of Ruth who earned a lot from the game. The success of the Yankees drew many crowds to the field and this made the owners and also the managers of the game to see the importance of support of the funs in winning the games. “Success of teams is now believed to depend on the number of funs coming to the team,” (Joe, p39). It also created a culture of purchasing excellent players from other teams. This was because the success of the Yankees was greatly owed to the purchase of Ruth from the Red Sox team. Today we see the culture still very common in sports where teams purchase players from other teams to enhance their performance.
Conclusion
The period of 1920 to 1930 was a great period for the Yankees. The two heroes Ruth and Gehrig were the greatest players during the period. Their remarkable wins and success in the game drew so many funs to baseball and this came to change the American baseball culture besides other sports. The golden age of sports saw America rise greatly in sports and the society and also communities became very alert about sports. During this period the culture of American sports was greatly changed especially in the social and political approach. “The importance of funs in the games became highlighted as most individuals helped to build the morale of sports,” (Twins, p55). It also helps to change the society’s mind and view sports as a lifetime career.
Work Cited
Greenberger. All-Star Game History. Baseball History. Rosen Publishing Group, 2007, p17-32.
Jim Reisler. Babe Ruth: Launching the Legend McGraw-Hill, 2004, p12-29.
Joe Torre. The Yankee Years. Prentice Hall, 2009, p22-41.
Robinson. Iron Horse: Lou Gehrig in His Time. Sage publications, 2004, p8-17.
Twins. New York Yankees Franchise Fitted Baseball. Routledge, 2001, p34-56.
