The purpose of this dissertation is to focus on franchising and to examine, if franchising is a good strategy for a company operating throughout Europe. In order to find an answer to this question further sub-tasks have to be researched. It will identify the characteristics of the franchise system and its advantages and disadvantages. Furthermore, why franchising is a useful hybrid organisational form for organisations to entry, be in business and to expand without enormous financial resources. Moreover, criteria in terms of transaction costs and resource scarcity will be explained.
Once a company decides to go abroad and to target a certain European country, it has to develop and determine a strategy to enter the new market. There are several methods a company can use, for example indirect, exporting, direct exporting, licensing, franchising, joint ventures, direct investment and informal networks. Considering as a case study the corporate strategy of the Italian company Benetton, it will be analysed, if franchising is a successful mode to be used in business and to expand throughout Europe. Here is to be added that the analysis of the franchise system of Benetton will occur exclusively through the selection of the most important characteristics of a franchising strategy highlighted in chapter three. An extension of this selection would go beyond the scope of this project.
The dissertation consists of (including this introduction chapter one) six chapters. Chapter two encompasses the theoretical framework. Here, agency theory and transaction costs analysis will be explained. The agency theory will be used to explain the business relationship between franchisor and franchisee. Coase developed in 1937 the transaction costs analysis which was further developed by Williamson (Williamson and Masten 1999, p.181), however, this approach could explain the importance for organisations to find the suitable coordination structures, whether be it vertical integration, non-vertical integration, or a hybrid form that includes elements of both. Furthermore, the agency theory and the transaction costs analysis will be applied to franchising. Accordingly, franchising as a hybrid organisational form will be explained in detail.
In chapter three the trend of franchising in Europe will be analysed and the international franchise concept with its advantages and disadvantages will be explained. This involves the master franchising.
Inhaltsverzeichnis (Table of Contents)
- Introduction
- Agency theory and transaction costs theory
- Agency theory
- Information asymmetry
- Adverse selection
- Moral hazard
- Moral hazard with hidden action
- Moral hazard with hidden information
- Moral hazard in teams
- Agency theory and franchising
- Transaction costs theory
- Dimensions of transactions
- Hierarchy, market and hybrid forms
- Transaction costs and franchising
- International franchising
- Cooperative international strategy through the basis of contracts
- Advantages of international franchising
- Disadvantages and problems of international franchising
- Master franchising
- Franchising in Europe
- Case study - Benetton
- Analysis and evaluation
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This dissertation aims to explore franchising as a business strategy, focusing specifically on its effectiveness for companies operating throughout Europe. To achieve this, the research will examine the characteristics, advantages, and disadvantages of franchising, analyzing why it serves as a useful hybrid organizational form for companies seeking entry, growth, and expansion without substantial financial investment. This analysis will incorporate the theoretical frameworks of agency theory and transaction cost analysis.
- The characteristics of franchising as a hybrid organizational form
- The advantages and disadvantages of franchising, particularly in an international context
- The role of agency theory and transaction cost analysis in understanding franchising
- The application of franchising as a strategic tool for international expansion
- The effectiveness of franchising in the European market, specifically using the case study of Benetton
Zusammenfassung der Kapitel (Chapter Summaries)
- Introduction: Introduces the topic of franchising and its relevance to companies operating in Europe. It outlines the dissertation's structure, research objectives, and case study (Benetton).
- Agency theory and transaction costs theory: Explains the theoretical frameworks of agency theory and transaction costs analysis, highlighting their applications in understanding franchising. This chapter delves into concepts such as information asymmetry, adverse selection, and moral hazard.
- International franchising: This chapter explores the concept of international franchising, discussing its advantages, disadvantages, and variations such as master franchising. It also examines the trend of franchising within the European market.
- Case study - Benetton: Introduces the company profile of Benetton in the context of the clothing retail industry, outlining its business model and its use of franchising as a strategic tool.
- Analysis and evaluation: This chapter analyzes Benetton's use of franchising as a strategic tool for operating in different European countries. It evaluates the effectiveness of this strategy based on the theoretical frameworks presented in the dissertation.
Schlüsselwörter (Keywords)
This dissertation focuses on the key concepts of franchising, agency theory, transaction cost analysis, international business, and strategic management. It examines the application of franchising as a strategic tool for international expansion, particularly within the European market. The case study of Benetton serves as an example to analyze the effectiveness of franchising for companies operating across multiple European countries.
- Quote paper
- Christine Klock (Author), 2004, Franchising a good strategy for a company operating throughout Europe - Case study Benetton -, Munich, GRIN Verlag, https://www.grin.com/document/32010
