ENDTERM 1.5
Transcript of ENDTERM 1.5
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Entrepreneurship Options
C. FranchisingA start-Up entrepreneur may decide to go into business bysimply buying a locally operate lets say Jollibee or PizzaHut. This practice is known as franchising.
In the US alone, the sales in the franchising industry in1991 were $758 billion as compared to the $334billionpesos in 1980.Here in the Phils. Sales of franchises went up 100B in 2001 comparedto 82B in 2000.
This proves the popularity and acceptability of franchising businessamong Filipinos.
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Entrepreneurship Options
Franchise came from the Old french franchir, which meansfreedom, privilege or immunity from burden.
During the feudal ages in Europe, the local landlords
would grant rights to the subordinates to hold and
attend markets or fairs. The landlords then were thefirst franshisor and the subordinates were the first
franchisee.
One of the first franchise agreements was during the
nineteenth century when SINGER SEWING MACHINECOMPANY gtranted distribution franchises to their
dealers. Singer was the first one to issue franchise
contracts
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Entrepreneurship OptionsC. FRANCHISING
After the world war II there was the expansion of motels,drugstores, variety shops, and employment agemcieswhich exhibited franchising principle.
In the 1950s products and services started to franchise inthe US.
In 1955, Ray Croc franchise a fast-food chain, calledMcDonalds .
The franchising boom came in 1960s and 1970s wherefastfood restaurants started to franchise.
In the Phils. Mcdonalds and Jollibee were in the market in1970s.
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Entrepreneurship OptionsC. FRANCHISING CONCEPTS
Franchise- it is an agreement whereby an independentperson is given exclusive right to sell a specializedgood or service
Franchising is a marketing system based on anagreement wherein one party(franchisee orfranchisor) is given the right to handle businessas anindependent owner but is required to abide by theterms and conditions specified by the other party
(franchisor).For franchisors, franchising means selling the franchise, while for
the franchisee or franchiser, franchising understood to meanbuying a franchise.
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Entrepreneurship Options
C. FRANCHISING CONCEPTSFranchisor refers to any entity that owns the franchise name
and distinctive elements (such as patent, trademark, signs and
symbols) which grant the right to sell its products.
Franchisee or the franchise buyer it is the entit y that buysto operate the business using the name, product, trademark,
service mark, product and business format of the franchisor
under the terms and condtions of the franchise contract.
Franchising contract it refers to the legal documentinvolving two parties (franchisor and franchisee) specifying the
obligations, primarily of the franchisee and the conditions
under which the latter will coduct business.
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Entrepreneurship OptionsBENE
FITS OF FRANCH
ISING
Both the franchising and the franchisee can benefit from
franchising. For the franchising, this guarantees faster
expansion and greater market penetration for his
business. In effect, this can lower operating costs.For the franchisee, getting a franchise gives him better
brand recognition and less-costly share in local and
natinal promotion of the product. Furthermore, the
franchisee can avail of management training at lesscost. In some cases, the franchise can also enjoy
financial assistance from the franchiser.
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Entrepreneurship OptionsTYPES OF FRANCHISING
The Product and Trademark franchising involves anarrangement wherein the franchisee is given the rightto manufacture and/or distribute a widely recognizedbrand or product.
The franchisor has very little control over how thebusiness is operated but it demands that thefranchisee maintain the integrity of the products.
Examples of these are franchises in the softdrinkindustry, gasoline service stations and automobile andtruck dealerships.
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Entrepreneurship OptionsTYPES OF FRANCHISING
Three Types are:
1. Manufacturer-Retailer franchise in whichfranchisee buys from the manufacturer and directlysells it to the consumer.
2. Manufacturer-Wholesales franchise- themanufacturer sells to the franchisee partiallycompleted products.
3. Wholesaler-Retailer franchise- wholesaler is thefranchisor that grants the retailer the right to retailtheproduct but use the wholesalers name,trademark, logo or other identidfying marks.
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Entrepreneurship Options
ADVAN
TAGE
S OF FRANCH
ISING
1. Possibility of failure is lessened.
2. Increase in new market location through urbanization of local areas,
3. Customers tend to patronize a specific franchised service or product.
4. Customer loyalty and preference for a successful brand name.
5. Better management through training provided by the franchisor.
6. Technical and other assistance is easily accessed from the franchisor.
7. It is easier and faster to build good reputation and gain recognition.
8. A better assurance that the business will be profitable.
9. Obtain greater purchasing power.
10. High performance standards.
11. Advertising cost is less.
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Entrepreneurship Options
DISADVAN
TAGE
S OF FRANCH
ISING
1. High cost of franchise
2. Operation is controlled by the franchisor
3. Presence of fierce competition
4. Pressure continuously make the product acceptable to
the market.
5. Problem associated with expiration of the franchise.
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Entrepreneurship Options
C. A FRANCHISE PROVIDES:1. Business Name
2. Market Research
3. System ideals and Operating
manual4. Propriety marks
5. Experience
6. Good judgement of the
franchisor7. Training
8. Location assistance and
approval
9. Store lay out and construction
supervision
10. Exclusive area coverage
11. Procurement programs
12. Hiring assistance
13. Grand opening assistance
15. Marketing Strategies
16. Research andDevelopment
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Entrepreneurship Options
D. WHY ANENTREPRENEUR MAY BUY A FRANCHISE1. Earning depends on the effort
2. Opportunities for unlimited
income
3. Personal Satisfaction4. Tax benefits
5. Freedom to pursue the job
that you want
6. Assurance of continuousemployment
7. Eliminates the difficulties in
starting up
8. Ease inoperatinalizing the
business plan
9. Benefits of having an
established system
10. Benefits from quality
research and development
11. Quicker start-up
12. Probability of success is High
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Entrepreneurship Options
C. CONSIDERATIONS INCHOOSING A FRANCHISE1. Cost of Investment
1. Franchise Fee
2. Set-up operation
3. Operational expenses andpurchases
4. Royalties
5. Advertisements
2. Franchisees preference and
interest
3. Location of the franchise
4. Reputation of the franchise
orgranization
5. Franchise support and
assistance
6. Possibility of obtaining a
master franchise.
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Entrepreneurship OptionsINTERNATIONAL ENTREPRENEURSHIP
As entrepreneurs are affected by glozalisation. And a
number of forces have led to increased globalization.
Thus, all entrepreneurs no matter how much they
dont want to grow internationally, they have to tradein an economy that is affected by the trends of the
global economy.
Trading accross boarders requires some understanding
of:1. different cultures
2. different economies
3. different way of doing business
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Entrepreneurship OptionsThe Process of Internationalization
Step 1 The entrepreneur establishes a
domestic market
Step 2 The entrepreneur sells in an overseas
market through an agent
Step 3The entrepreneur establishes a
subsidiary operation in the overseas
market, dealing direct customers
Step 4 Production in the overseas market
through a subsidiary operation
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Entrepreneurship OptionsINTERNATIONAL ENTREPRENEURSHIP
As entrepreneurs are affected by glozalisation. And a
number of forces have led to increased globalization.
Thus, all entrepreneurs no matter how much they
dont want to grow internationally, they have to tradein an economy that is affected by the trends of the
global economy.
Trading accross boarders requires some understanding
of:1. different cultures
2. different economies
3. different way of doing business
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Business starts and proceeds with theprocess of thinking carefully, asking
every fundamental questions and giving
the clearest answers to them.
GENERATE IDEAS
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TO SEE AN
OPPORTUNITY
IS NO GREAT ART.THE ART LIES BEING
THE FIRST TO SEE IT
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How do we generate ideas?
External Scanning
Needs and Resource Analysis thru:
SWOT Analysis
Research, Interviews & surveys
Demand and Supply Analysis
Internal Scanning
Existing data or information Past business ideas and ventures
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CONSIDERATIONS IN IDENTIFYINGBUSINESS
OPPORTUNITIES
1. Capitalize on available resources
Raw Materials Local Specialized Skills
Technology
Industrial Information
Utilities Infrastructure
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2. Availability of market
3. Government Support
4. Financial Viability
5. Socio-economic impact in the community.
CONSIDERATIONS IN IDENTIFYINGBUSINESS
OPPORTUNITIES
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Determining product line and business
type
Questions:
Do you want to manufacture a product,
deliver a service, or go into trading? Would you like to be a subcontractor?
What specific fields are you interested in?
Can you apply your skills, hobbies or workexperience to this field?
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Types of Businesses
Trading/Vending Wholesaler
Retailer
Distributor
Franchising Food
Service
Health & Wellness
Manufacturing/ProcessingExporter
Domestic Producer
Sub-contractor
Service IndustriesHealth & Wellness
Transportation and
Communication
ICT
Agriculture /Aquaculture
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Idea Screening
Make an assessment on the choices of
business ideas based on:
Knowledge of the business
Experience in the field
Skills
Ease of Entry
Uniqueness