organic/inorganic growth

What is a franchise?

An arrangement in which a company sells another business the right to sell its products or services in return for payment.

Who is a franchisor?

The company that sells the right to sell its products or services.

Who is a franchisee?

The business that purchases the right to sell the company's products or services.

List one advantage for the franchisor.

Lots of money obtained without having to spend on expanding.

List one disadvantage for the franchisor.

Control issues over products sold by franchisees.

List one advantage for the franchisee.

Using a tried and tested brand name increases the chance of success.

List one disadvantage for the franchisee.

Lower profit margins due to required purchases from the franchisor.

What is a co-operative?

A business owned and run by its members, who share profits and decision-making.

How do co-operatives contribute to the economy?

They contribute £38.2 billion a year to the UK economy.

What is a key characteristic of co-operatives?

Members elect those managing the business and help shape decisions.

What is a joint venture?

A business arrangement where two or more parties agree to pool their resources for a specific goal.

What is a strategic alliance?

An agreement between two or more parties to pursue a set of agreed-upon objectives while remaining independent organizations.

What are some factors to consider before franchising a business?

Initial costs, potential for profit, control issues, and knowledge of foreign markets.

What is the impact of franchising on stakeholders?

Franchising can provide business opportunities and economic benefits but may also lead to conflicts and loss of control.

What are some examples of co-operative organizations?

Banks, pharmacies, funeral parlors, grocery stores.

What is the significance of John Lewis as a co-operative?

It was transformed into a co-operative in 1949, making it owned by its employees.

What are the risks associated with franchising?

High initial costs, risk of poor franchisee selection, and potential loss of control.

What is the role of a franchisor in supporting franchisees?

Providing market research, training, and marketing support.

What are the potential conflicts in franchising?

Conflicts can arise from control issues, bad publicity, and legal disputes.

How do stakeholders benefit from business size?

Larger businesses can generate larger profits, impacting employees, customers, and the community.

What is one challenge of operating a franchise?

Franchisees may have less control compared to running their own independent business.

What is the importance of market research in franchising?

It helps the franchisor identify suitable locations and potential franchisees.

What is a disadvantage of being a franchisee?

Franchisees must pay continuing royalty payments to the franchisor.

What is a potential benefit of a strategic alliance?

Access to new markets and resources while maintaining independence.

How can co-operatives solve community issues?

They can be formed in response to local needs, such as taking over community spaces.

What might limit the success of a franchise?

Limited knowledge of local customs and business practices in foreign markets.

What is the role of members in a co-operative?

Members own the co-op and participate in decision-making processes.

What are the advantages of co-operatives?

Legal documentation is straightforward and inexpensive; high productivity due to common goals; limited liability for members; high quality of service as customers are members and profits are shared; all stakeholders benefit.

Why is high quality of service provided in co-operatives?

High quality of service is provided because customers, who are also members, have a vested interest in the success of the co-operative, leading to loyalty and support.

What are some disadvantages of co-operatives?

Capital can be limited; banks may be reluctant to offer loans; possible weak management; slower decision-making due to member involvement; no guarantee of better outcomes than ordinary businesses.

What are the benefits of joint ventures?

Access to knowledge and resources, new opportunities, shared exposure to risks, and sharing of unique skills.

What are some drawbacks of joint ventures?

Around 50% fail due to complexity; power imbalances can cause conflict; potential loss of Intellectual Property.

How does organic growth differ from mergers and acquisitions?

Organic growth refers to a business expanding its operations internally, while mergers and acquisitions involve combining with or purchasing other companies.

What is a merger?

A merger is when two businesses come together to become one on a permanent basis.

What is a takeover?

A takeover involves acquiring control over another company by buying its shares, while the target company continues to exist independently.

What is a hostile takeover?

A hostile takeover occurs when the acquiring company attempts to take control of a target company against the wishes of the target company's management.

What is a vertical merger?

A vertical merger occurs when two companies at different stages of production in the same industry combine.

What are the benefits of mergers?

Mergers can reduce risk, expand market presence, and provide access to new resources.

What is the significance of the Tata acquisition of Jaguar and Land Rover?

Tata acquired these brands to expand its presence in the passenger car market beyond India and to gain international competitiveness.

What was the purpose of Ferrero acquiring Thorntons?

Ferrero aimed to expand its business in the UK confectionery market by acquiring Thorntons.

Why did Ben and Jerry's sell to Unilever?

Ben and Jerry's sold to Unilever due to a lucrative offer, prioritizing shareholder interests over their desire to remain independent.

What is the role of joint ventures in securing resources?

Joint ventures can help businesses access resources that are only available in other countries, such as technology or financial support.

What are critical factors for maintaining global competitiveness?

Access to critical market data, local knowledge, and understanding of customer preferences are essential for competitiveness.

What is the difference between franchisors and franchisees?

Franchisors are the original business owners who grant licenses to franchisees, who operate under the franchisor's brand and system.

What are the learning intentions regarding co-operatives?

To explain the concept of co-operatives and evaluate their impact on stakeholders.

What are the next steps for understanding forecasting?

Reflect on learning intentions, review help sheets, and research the topic of forecasting in preparation for the next lesson.

What is a patent?

A patent is a government authority or license that confers the right to exclude others from making, using, or selling an invention for a set period.