During their lifecycle, companies often plan to expand into a foreign market. One of the most difficult decisions they have to make beforehand, in order to do so suc-cessfully, is the choice of the mode of entry. There are many opportunities that have to be evaluated differently from case to case which can have a huge impact on the performance of the company within the new market. Franchising is a com-mon strategy for entering and growing in markets.
This seminar work is intended to evaluate franchising as a mode of entry. It will outline advantages and disadvantages and aims to give guidelines for companies, with regard to creating and managing a franchise system. Therefore McDonald’s will be highlighted in order to show how this can be possible. Moreover, this seminar work will make clear in which cases franchising is not the right mode when entering into a new market. Therefore the whole topic will be considered before a more detailed discussion of the fast food sector.
Table of Contents
- Introduction
- Subject
- Objectives
- Structure
- Franchising in general
- Concepts of franchising
- Reasons for introducing a franchising system
- Advantages
- Disadvantages
- Practical examination of franchising by McDonald's
- Conclusion
Objectives and Key Themes
This seminar paper aims to evaluate franchising as a mode of entry into foreign markets. It will analyze the advantages and disadvantages of franchising, providing guidelines for companies on establishing and managing a franchise system. The paper will also highlight McDonald's as an example of successful franchise expansion. Additionally, the paper will examine scenarios where franchising might not be the most suitable entry strategy.
- Evaluating franchising as a mode of entry into foreign markets
- Analyzing the advantages and disadvantages of franchising
- Providing guidelines for creating and managing a franchise system
- Using McDonald's as an example of successful franchise expansion
- Identifying scenarios where franchising might not be the appropriate entry strategy
Chapter Summaries
The second chapter will provide a comprehensive overview of franchising, exploring different forms of franchise systems. Chapter three will delve into the reasons why companies utilize franchise systems, outlining both advantages and disadvantages to enable an initial evaluation. Chapter four will examine the practical aspects of franchising by focusing on McDonald's as an example of successful expansion with franchising. Finally, the seminar paper will be summarized in chapter five, highlighting the key findings and providing a short prognosis for the future of McDonald's.
Keywords
The primary keywords and focus topics include franchising, mode of entry, foreign markets, advantages, disadvantages, franchise system, McDonald's, fast food sector, company expansion, and international business.
Frequently Asked Questions
Why is franchising a popular mode of entry for foreign markets?
Franchising allows for rapid expansion with lower capital investment from the franchisor, leveraging the local knowledge of franchisees.
What are the main advantages of a franchising system?
Key benefits include brand recognition, shared marketing costs, and motivated local owners who manage daily operations.
What are the disadvantages of franchising for a company?
Disadvantages include less control over quality standards, potential conflicts with franchisees, and sharing profits with external partners.
How did McDonald's successfully use franchising?
McDonald's used a standardized business model and strict operational guidelines to ensure consistency across thousands of global locations.
When is franchising not the right entry strategy?
It may not be suitable if the business model is too complex to standardize or if the company requires total control over its intellectual property and operations.
- Arbeit zitieren
- Charicea Kaspers (Autor:in), 2017, Franchising as a model of entry into foreign markets. An evaluation, München, GRIN Verlag, https://www.grin.com/document/442809
