Case Study Description of Assessing the Franchise Option
By 2005, franchise systems will account for an estimated one-half of U.S. retail sales. But prospective franchisors need to consider carefully whether to expand a business by franchising or by opening company-owned outlets. The advantages of franchising include allowing the firm to overcome resource constraints of limited capital and thin the ranks of experienced managers. Franchising also provides a means of trading off certain functions; franchisees are more efficient in performing functions whose average cost curve turns up relatively quickly. It obviates the need for monitoring (and its attendant costs) because franchisees have invested their own capital and are motivated to work hard for profitability. It offers substantial efficiencies in promotion and advertising by leveraging the value of a trademark and brand image. And, of course, it helps in managing one's risks, because franchisors can eventually convert profitable franchise locations into company-owned operations (although this strategy raises certain ethical concerns). A beginning firm, however, needs to outline its business goals over an extended period and analyze how it can use franchising to fulfill those goals. Factors that bear upon the relative desirability of the franchise option include labor- vs. capital-intensity, demand variability, the importance of repeat customers, and the role of changing technology. A firm might well find that a "mixed system" (a mix of franchised and company-owned stores) optimizes its cost-benefit balance.
Swot Analysis of "Assessing the Franchise Option" written by Surinder Tikoo includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Franchising Franchise facing as an external strategic factors. Some of the topics covered in Assessing the Franchise Option case study are - Strategic Management Strategies, Growth strategy, Marketing and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the Assessing the Franchise Option casestudy better are - – digital marketing is dominated by two big players Facebook and Google, there is backlash against globalization, central banks are concerned over increasing inflation, supply chains are disrupted by pandemic , increasing transportation and logistics costs, competitive advantages are harder to sustain because of technology dispersion, customer relationship management is fast transforming because of increasing concerns over data privacy,
wage bills are increasing, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of Assessing the Franchise Option
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Assessing the Franchise Option case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Franchising Franchise, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Franchising Franchise operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Assessing the Franchise Option can be done for the following purposes –
1. Strategic planning using facts provided in Assessing the Franchise Option case study
2. Improving business portfolio management of Franchising Franchise
3. Assessing feasibility of the new initiative in Innovation & Entrepreneurship field.
4. Making a Innovation & Entrepreneurship topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Franchising Franchise
Strengths Assessing the Franchise Option | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Franchising Franchise in Assessing the Franchise Option Harvard Business Review case study are -
Ability to recruit top talent
– Franchising Franchise is one of the leading recruiters in the industry. Managers in the Assessing the Franchise Option are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Effective Research and Development (R&D)
– Franchising Franchise has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Assessing the Franchise Option - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
High switching costs
– The high switching costs that Franchising Franchise has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Analytics focus
– Franchising Franchise is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Surinder Tikoo can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Diverse revenue streams
– Franchising Franchise is present in almost all the verticals within the industry. This has provided firm in Assessing the Franchise Option case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Learning organization
- Franchising Franchise is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Franchising Franchise is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Assessing the Franchise Option Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Strong track record of project management
– Franchising Franchise is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Innovation driven organization
– Franchising Franchise is one of the most innovative firm in sector. Manager in Assessing the Franchise Option Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Organizational Resilience of Franchising Franchise
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Franchising Franchise does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Highly skilled collaborators
– Franchising Franchise has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Assessing the Franchise Option HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High brand equity
– Franchising Franchise has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Franchising Franchise to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Training and development
– Franchising Franchise has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Assessing the Franchise Option Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Weaknesses Assessing the Franchise Option | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Assessing the Franchise Option are -
Interest costs
– Compare to the competition, Franchising Franchise has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Assessing the Franchise Option HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Franchising Franchise has relatively successful track record of launching new products.
Workers concerns about automation
– As automation is fast increasing in the segment, Franchising Franchise needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Franchising Franchise supply chain. Even after few cautionary changes mentioned in the HBR case study - Assessing the Franchise Option, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Franchising Franchise vulnerable to further global disruptions in South East Asia.
Low market penetration in new markets
– Outside its home market of Franchising Franchise, firm in the HBR case study Assessing the Franchise Option needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
No frontier risks strategy
– After analyzing the HBR case study Assessing the Franchise Option, it seems that company is thinking about the frontier risks that can impact Innovation & Entrepreneurship strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Assessing the Franchise Option, is just above the industry average. Franchising Franchise needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Aligning sales with marketing
– It come across in the case study Assessing the Franchise Option that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Assessing the Franchise Option can leverage the sales team experience to cultivate customer relationships as Franchising Franchise is planning to shift buying processes online.
Lack of clear differentiation of Franchising Franchise products
– To increase the profitability and margins on the products, Franchising Franchise needs to provide more differentiated products than what it is currently offering in the marketplace.
Increasing silos among functional specialists
– The organizational structure of Franchising Franchise is dominated by functional specialists. It is not different from other players in the Innovation & Entrepreneurship segment. Franchising Franchise needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Franchising Franchise to focus more on services rather than just following the product oriented approach.
Need for greater diversity
– Franchising Franchise has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Opportunities Assessing the Franchise Option | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Assessing the Franchise Option are -
Building a culture of innovation
– managers at Franchising Franchise can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Innovation & Entrepreneurship segment.
Better consumer reach
– The expansion of the 5G network will help Franchising Franchise to increase its market reach. Franchising Franchise will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Franchising Franchise can use these opportunities to build new business models that can help the communities that Franchising Franchise operates in. Secondly it can use opportunities from government spending in Innovation & Entrepreneurship sector.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Innovation & Entrepreneurship industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Franchising Franchise can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Franchising Franchise can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Creating value in data economy
– The success of analytics program of Franchising Franchise has opened avenues for new revenue streams for the organization in the industry. This can help Franchising Franchise to build a more holistic ecosystem as suggested in the Assessing the Franchise Option case study. Franchising Franchise can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Using analytics as competitive advantage
– Franchising Franchise has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Assessing the Franchise Option - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Franchising Franchise to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Franchising Franchise is facing challenges because of the dominance of functional experts in the organization. Assessing the Franchise Option case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Innovation & Entrepreneurship industry, but it has also influenced the consumer preferences. Franchising Franchise can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Buying journey improvements
– Franchising Franchise can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Assessing the Franchise Option suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Manufacturing automation
– Franchising Franchise can use the latest technology developments to improve its manufacturing and designing process in Innovation & Entrepreneurship segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Leveraging digital technologies
– Franchising Franchise can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Franchising Franchise can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Assessing the Franchise Option, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Developing new processes and practices
– Franchising Franchise can develop new processes and procedures in Innovation & Entrepreneurship industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Threats Assessing the Franchise Option External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Assessing the Franchise Option are -
High dependence on third party suppliers
– Franchising Franchise high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Franchising Franchise business can come under increasing regulations regarding data privacy, data security, etc.
Stagnating economy with rate increase
– Franchising Franchise can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Regulatory challenges
– Franchising Franchise needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Innovation & Entrepreneurship industry regulations.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Assessing the Franchise Option, Franchising Franchise may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Innovation & Entrepreneurship .
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Franchising Franchise can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Assessing the Franchise Option .
Technology acceleration in Forth Industrial Revolution
– Franchising Franchise has witnessed rapid integration of technology during Covid-19 in the Innovation & Entrepreneurship industry. As one of the leading players in the industry, Franchising Franchise needs to keep up with the evolution of technology in the Innovation & Entrepreneurship sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Franchising Franchise in the Innovation & Entrepreneurship industry. The Innovation & Entrepreneurship industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Franchising Franchise with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Franchising Franchise.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Franchising Franchise in the Innovation & Entrepreneurship sector and impact the bottomline of the organization.
Easy access to finance
– Easy access to finance in Innovation & Entrepreneurship field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Franchising Franchise can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Weighted SWOT Analysis of Assessing the Franchise Option Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Assessing the Franchise Option needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Assessing the Franchise Option is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Assessing the Franchise Option is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Assessing the Franchise Option is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Franchising Franchise needs to make to build a sustainable competitive advantage.