BUSINESS ACQUISITION, FRANCHISING AND OUTSOURCING(2)

8/7/2019 BUSINESS ACQUISITION, FRANCHISING AND OUTSOURCING(2)

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Introduction

Entrepreneurship is described in terms ofstarting a new venture and not buying anexisting one.

Today buying into business through franchise

contracts has become very common

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Franchising is the fastest growing segmentof American commerce.

It has two roles for entrepreneurs.

In India, as service economy growsopportunities for franchising are going to be

plenty.


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Consideration for making

an acquisition

The e tre re e r ex erie ce.

N t re f t he si ess. L c ti .

Pers l si ess risks.

ter rise c st.

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Acquiring an established

business

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Advantagesof acquiring

an

establishedbusiness

Advantagesof acquiring

an

establishedbusiness

Reduces therisk of startinga new venture

Reduces therisk of startinga new venture

Benefit ofestablishedsuppliers,

bankconnections,

capableemployees.

Benefit ofestablishedsuppliers,

bankconnections,

capableemployees.

The data onsale, cash

flows can beascertained.

The data onsale, cash

flows can beascertained.


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Disadvantagesof acquiring an

establishedbusiness

Disadvantagesof acquiring an

establishedbusiness

Hidden

liabilities

Hidden

liabilities

Decliningmarket

Decliningmarket

Unprofitablebusiness

Unprofitablebusiness


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Franchising

Meaning of franchise is right to vote. Thecitizenship and authorization to sell thecompany's products.

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Franchising is one form of marketingchannel.

Its is extended version of licensing.

The franchisee is normally appointed

to save the resources or to benefit fromfranchise expertise in the field.


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Advantages to the

Franchisers

Cover more territories.

Marketing support

Key to rapid growth. Company enjoys regular income

Helps in establishing brand

Creates entry barriers forcompetitors.

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Franchisees act as category killers.

ow investment on the part of franchisors.

Easier to influence, manage and control each

franchisee.

Franchisee works more as a consultant.

Franchiser doesnt have knowhow of local

conditions.

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Franchisee Franchiser Relation

Avoid conflicts between them. They should not involve in any activity that

goes against each others interest.

Both should strive to keep the relations inorder.

There must be mutual understanding.

Agreements should not create any ambiguity

Consider each other as business partners.

Should share the cost.

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Franchising in India with

examples I.T. kids:

Business concept: Education

through computersumbers planned: 300 in a year

Company investment: Rs. 37 cores

Franchisee investment: Rs. 12-15lakhs

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Caf coffee day-

Business concept: Coffee cafes

umbers planned: 100 by 2001

Company investment: Rs. 5 crores

Franchisee investment: AboutRs.40 lakhs

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Information technology (IT)

IT is the industry which helps in spreading theknowledge through use of computers and other

supporting equipments.

In IT Industry on demand side are the

economic sectors and applications of IT. On

supply side are computer hardware, software.

IT Sector is one of the fastest growing

segments of Indian industry.

The growth of IT sector has led to tremendous

payoffs in terms of wealth creation and high

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Essence and future of IT

Information is regarded as the 4thfactor ofproduction with advancement in IT along with

land labour and capital.

IT industry has pervaded a wide range ofindustries viz. Manufacturing, Education.

IT industry has tremendous potential to

generate foreign exchange earnings and

quality employment

Major part of the IT industry is in private

sector and it accounts for 76%of its

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Outsourcing

Outsourcing means obtaining goodsor services by contract from outsidesource.

In IT sector, outsourcing hasacquired an internationaldimension.

Outsourcing is not all call centers

and medical transcription. India's reservoir of English

language as well as academicsubject skill ensured an advantagein outsourcing.

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ENTREPRENEURIAL

OPPORTUNITIES IN SERVICE

INDUSTRY.

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Definition and Meaning of

Services. According to American marketing

association, Services are the activities,benefits or satisfactions which are offered

for sale or are provided in connectionwith the sale of goods

According to Sir William Bieveridge,

Services refer to social efforts whichinclude government to fight giants evils,wants , diseases, ignorance, squalor andillness in the society.

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Myths about Service Industries

1stMyth:A service economy produces services at the expenseof others sectors.

2ndMyth:

Service production is primarily labour intensive. 3rdMyth:

eople satisfy their product needs before the needsfor services.

4th Myth:Services businesses are cottage industries and

service jobs are low paying.

5th Myth:

In service sector services are only offered by the20


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Types of Services

Financial Services

Shipping and Distribution

rofessional and Technical Other intermediate Services

Customer Services ( final markets to

private citizens)

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Characteristics of services

Intangibility

erishability

Inseparability Heterogeneity

Ownership

Simultaneity

Quality measurement

ature of demand

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Classification of services

Nature of the Service Act

Type ofRelationship that the serviceorganisation has with its customers

Scope for customization and judgment inservice delivery

Nature of Demand and Supply for the service

Method of service delivery.23


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Growing importance of services

Professionally qualified technicians and

communication services.

Educational institutes, banking services,

personal care services, electricity services,

Tourism industry and hospitality services

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Difference between

Physical Goods Tangible

Homogeneous

Production &

Distributionseparated fromconsumption

A thing

Core valueproduced in factory

No participation bycustomers

Kept in stock

Transfer ofownership

Services Intangible

Heterogeneous

Production,

Distribution &consumption aresimultaneous

An activity

Core valueproduced in buyerseller activity

Participation bycustomers

Cannot be stocked

No transfer ofownership

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Service marketing in developed

country Significant contribution

Innovative.

Adoption of development strategies .

Incorporate marketing principles.

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Significance of service

Marketing Least possible dependence on

technology

Raising the standard of living

Generation and expansion of job

opportunities

Optimum utilization of untapped

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Examples of innovation

Railways

Hospitals

Information technology

Air travels

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Business opportunities in service

sector Event management

IT enabled services

Courier Services

Telecommunication

Insurance sector

Travel and tourism services29


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BUSINESS ACQUISITION, FRANCHISING AND OUTSOURCING(2)