Business Responses, Questionnaire Example

1. Large-scale retailers usually choose licensing rather than franchising when expanding in foreign countries. Why would specialty stores be less likely to choose licensing and more likely to choose franchising?

Specialty stores choose the franchising method since they mostly operate through chain stores with a parent company. Unlike licensing, franchising is expensive, but it allows the parent company to exert full control on the business and provide assistance in both marketing and management.

2. Discuss the relationship between risk management and franchising when developing a retail business internationally.

Franchising is a form of risk management while retailing internationally. When expanding business through franchising methods, the retailer gets access to already established business systems at a low risk. The low risk obtained comes as an organizations commercial advantage.

3. How would strategic alliances influence the competitive edge of smaller businesses?

A strategic alliance is an association linking two or more parties with the aim of pursuing agreed or critical business goals. These alliances enable business to gain competitive advantage as they can access partner’s resources such as technology, market, staff, and capital among others.

4. Discuss how cultural differences may influence whether a retailer may enter a foreign market using a franchising or licensing agreement.

Cultural difference is an essential aspect to consider while entering a foreign country. For example, certain actions, products or business methods may be unacceptable in certain regions. In such regions, retailers should use licensing method as franchising would involve the introduction of new laws. Franchising method would be the most appropriate to use if retail investors want to penetrate a country with little cultural difference from the home country.

5. Name some advantages and disadvantages of franchising your store in foreign markets.

Advantages include expansion through a proven idea, use of a recognized brand names and trademarks, support from franchisor, gaining exclusive rights in a territory and already established relationship. Disadvantages include high cost levels, high levels of restrictions, profits get shared, and other franchisor could give a poor reputation to the brand.

6. Name some advantages and disadvantages of licensing your brand in foreign markets

Advantages of licensing include cheaper establishment costs, powerful licensees provide instant market access and deter competitors, license enables products to be supplied locally where manufacturing opportunity lacks and extensive market presence gets created in products early life. Disadvantages are the company must find the right partner, licensor is required to provide technical assistance and training and licensors lose control of their licensed products.