Accessing Resources for Growth from External Sources
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Transcript Accessing Resources for Growth from External Sources
Accessing Resources for
Growth from External Sources
Franchising
“An arrangement whereby the manufacturer
or sole distributor of a trademarked
product or service gives exclusive rights of
local distribution to independent retailers
in return for their payment of royalties and
conformance of standardized operating
procedures.”
Franchising
Franchisee Benefits
Product Acceptance
Managerial Expertise
Capital Requirements
Money saving features
Knowledge of the Market
Operating & Structural Controls
Standardized suppliers
Franchising
Franchisor Benefits
Expansion risk
Cost Advantage
Disadvantages
Franchisee v. Franchisor
Failure or Selling
Franchisor disadvantages
Franchising
Types
Dealership
Name, image, method of doing business
Cars
Subway, McDonald’s
Services
Trends
Good health
Time saving or convenience
Environmental consciousness
Second Baby Boom
Investing in a Franchise
Entrepreneurial Commitment
Factors
Proven v. unproven
Financial stability
Potential market
Profit potential
Collect Information
FTC’s Franchise Rule
Compare costs
Contact
Joint Ventures
Definition
Types
Private-sector companies
Cooperative research
Industry-university agreements
Two problems
International joint ventures
Factors of Success
How to best manage entity re: ensuing relationships
Degree of symmetry
Expectation of results
Timing must be right
Acquisitions
Considerations
Advantages
Established business
Location
Established market structure
Cost
Existing employees
More opportunity to be creative
Acquisitions
Disadvantages
Synergy
Structuring the Deal
Marginal success record
Overconfidence in ability
Key employee loss
Overevaluated
Direct Purchase
Bootstrap Purchase
Locating Acquisition Candidates
Mergers
Department of Justice
How does it take place?
Requirements
Determining value
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
Overcoming Constraints by
Negotiating
Two tasks
Distribution task
Divide up the pie
Integration task
Make the pie larger
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
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
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