Accessing Resources for Growth from External Sources
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Transcript Accessing Resources for Growth from External Sources
Entrepreneurship 8th edition
Author:
Robert D Hisrich,
Micheal P. Peters
Dean a Shepherd
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Chapter 14
Entrepreneur
Accessing Resources for
Growth from External Sources
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Using external parties to help
grow a business
Franchising
Joint
ventures
Acquisition
Mergers
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Shah Rukh
Roll no: 22
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Franchising
An arrangement whereby a franchisor gives
exclusive rights of local distribution to a
franchise in return for payments of royalties
and conformance to standardize operating
procedures
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Advantages of franchising to the franchisee:Product
Acceptance:
Management Expertise
Capital Requirements
Knowledge of the market
Operating the structural controls
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Advantages of franchising to the franchiser:Expansion
Cost
Risk
advantages
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Disadvantages of franchising :Inability
of franchisor to provide services,
advertising etc.
The
franchise may face a problem when
franchisor bought out by another company
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Types of Franchises :There
are 3 types….
Dealership
Offers
name, image and methods of doing
business
Offer services
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Investing in a Franchise :There are factors that must be assessed by the
entrepreneur when he/she want to invest,
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continue :Proven
vs Unproven Franchise.
Financial stability of a franchise.
Potential market for the new franchise.
Profit potential for a new franchise.
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Muhammad Aatif Aneeq
Roll no: 15
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Joint Ventures
Two or more companies
forming a new company.
It is a separate entity that
involves a partnership between
two or more active
participants.
Strategic alliances
Universities, Non profit
organization, businesses and
the public.
General Motors & Toyota
General Electric & Westinghouse.
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Types of Joint Ventures
Private-sector companies
Cooperative research
Triangle Park in North Carolina..
Industry-university agreements
Boeing, Mitsubishi, Fuji, Kawasaki.
Two problems
International joint ventures
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Factors of Success
How to best manage entity
Ensuing relationships
Degree of symmetry b/w partners
Expectation of results
Timing must be right
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Acquisitions
Purchasing all or part of a
company.
Advantages
Established business
Location
Established market structure
Cost
Existing employees
More opportunity to be
creative
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Acquisitions
Disadvantages
Marginal success record
Overconfidence in ability
Key employee loss
Over evaluated
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Synergy
“The whole is greater than the sum of its
parts”
Lack = acquisition failure
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Muhammad Wasif Laeeq
Roll no: 1
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Mergers
Department of Justice
How does it take place?
Requirements
Determining value
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Leveraged Buyouts
Definition
Why buy?
Financing
Debt-to-equity ratio
Steps before buying
Is asking price reasonable?
Assess firm’s debt capacity
Develop appropriate financial package
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Overcoming Constraints by
Negotiating
Two tasks
Distribution task
Divide up the pie
Integration task
Make the pie larger
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Negotiating
What will you do if no agreement is
reached?
Reservation Price
What will the other party do if no
agreement is reached?
Bargaining zone
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Negotiating
What are underlying issues for you? How
important is each issue?
Trade-offs
What are underlying issues for other
party? How important is each issue?
Understanding=Increased integration
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Negotiating Strategy
Build Trust and Share Information
Ask Lots of Questions
Probe for preferences
Make Multiple Offer Simultaneously
Best outcome
Can it hurt the negotiations?
Show what’s important based on choices
Used to Create Trade-offs that Result in Mutually
Beneficial Outcomes
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