These can be marketing, sales, crisis management, financial or any other form of business objectives.
Key features of collaboration
1 . Synchronous collaboration. This major entails online networking and instant messaging.
2. Asynchronous collaboration that include sharing of business assets like premises and information.
Collaboration relies on openness and all level of Information sharing. It also Involves some bevel of focus and business accountability on the side of the management organization. Collaboration is a social powered strategy of management. Networking technology has been embraced to ensure highly social benefits and achievements.
Today, collaboration can be with prospect consumers, Industry mentors, suppliers and at times Industry competitors.
1. Faster and easier marketing platform.
2. Wider network of business.
This is to produce more products and input knowledge and perspectives from several suggestions. E. G. A small IT firm can suggest to a client about an event planning company that they are in collaboration with.
3. Effective production of goods and services and concrete delivery of customer perceived value.
4. Inspiration and support. Like minded organizations gain a valuable source of motivation, inspiration and support beyond referrals. They share challenges and brainstorm on solutions.
5. Symbiotic selling.
A cycle of business that shares customers and are involved in joint marketing expands the pool of customers compared to an independently managed business.
6. Reduced expenditure cost by sharing assets. Sharing business assets like office or machineries and equipments reduces cost of operations. E. G. A gas station and a car clearing agency can share same space for business operations.
7. Economies of scale. Joint production promotes reduced discount for the large number of customers. This is a method in involving two parties, the franchiser and franchisee.
The franchisee agrees to pay the franchiser a royalty or commission apart from a flat fee in exchange the use of a national or international brand name and where appropriate other help such as building plants and site selection as well as sometimes production methods, management ND accounting procedures.
Product acceptance Franchisee usually enters into a business that has an accepted brand name and therefore ready customer base. This implies that the franchisee does not have to spend resources trying to establish the credibility of the business. T. Management Expertise Management assistance is provided by the franchiser. Each new franchisee is often required to take a training program on all aspects of operating the franchise.
This training could include classes in accounting, personnel management, marketing and production. Iii. Capital requirement A new venture can be costly in terms of time and money. The franchise offers an opportunity to start a new venture with upfront support that could save the franchisee significant time and possibly less capital.
In some cases the franchiser will also finance the initial investment to start the franchise operation. The initial capital required to purchase the franchise generally reflects a fees for the franchise, construction cost and purchase of equipment. The pre-structured layout of the facility, control of stock, inventory and the potential buying power of the entire lb.
Knowledge of the market Most franchiser will be constantly be evaluating market conditions and determine the most effective strategies to be communicated to the franchisees.
Operating and structural control Maintaining of quality controls of the product and services, establishing effective managerial controls can be a problem when starting a new venture. Administrative controls usually involve financial decisions revolving to cost, inventory, cash flow and personal issues like criteria of hiring and firing, scheduling and training to ensure consistent service to the customer. These controls will usually be outlined in manual supplied to the franchisee by the franchiser.
VI.Management and training support A franchise gives a franchisee the right to valuable training and support from the franchiser. Support can come before the opening of a unit for example; site selection, design and construction, grand-opening) and continues throughout the life of the franchise (e. G. Management support, operating assistance, and training). Business support and training are often invaluable to beginners in a business and lack thereof is often the reason that a good number of independently-owned businesses fail. With a good franchise, one is not alone in business.
Some franchisers provide support through periodic newsletters and others do so through scheduled workshops or seminars. Vii. Increased Chance of Success. Is buying a business concept and methods with a proven track record of success. Studies suggest that franchise-owned businesses enjoy higher success rates than independent businesses. This could be explained by the fact that a prospective franchisee has the opportunity to research and buy into a successful business and can also avoid business ideas that have failed or are bound to fail. Viii. Brand Name Appeal.
A good franchise carries the advantage of brand awareness and established customer base. Rather than spend valuable time searching for new customers, a franchisee that buys into a good franchise can devote more time running the business. With the franchise business model, a franchisee does not need to spend time and resources creating his or her own trademark or developing his or her own brand. This explains why a franchise from a company that enjoys huge global presence and significant market share may be worth more than a franchise from a small start-up company. ‘x. Marketing/Advertising Support:
The franchisee typically receives advertising/marketing support. Advertising support can be in the form of ready-made sales and marketing aids such as brochures and posters. Advertising support can also be in the form of promotional materials and hand-outs such as pens, magnets, and other materials that can be used for special promotions. A franchisee also benefits from shared marketing and x. Financial Assistance For many prospective entrepreneurs, financing is a problem. It is not easy to obtain a loan to start a business and government support to small business owners is still not adequate.
Sometimes, the franchising model can offer a way out. A franchise agreement can open up financing opportunities for the franchisee. There are two ways the franchise arrangement can help unlock needed resources. First, a few franchisers supply financing to their franchisees. Second, many franchisers are willing to provide referrals to prospective franchisees and this may influence the lending decisions of commercial lenders, a bank may be more willing to lend money to someone investing in a successful franchise.
BENEFITS TO THE FRANCHISER
1 .This business can be expanded quickly with little capital.
A franchiser can expand a business nationally and even internationally by authorizing and selling franchise in selected locations. Operating a franchised business requires fewer employees that non franchised one.
2. Cost advantage.
Franchiser can purchase supplies in large quantities and get economies of scale that would not have been possible otherwise. Many franchised businesses purchase part accessories packing and raw material in large quantities and then sell them to franchisees
Franchise fees, royalty ; levies in addition to the possibility of sourcing private label reduces to franchisees. This capital injection provides an improved cash flow, a higher return on investment and higher profits. Other financial benefits that the franchiser enjoys are reduced operating, distribution and advertising costs. Of course that also means more allocated funds for research and development. Additionally, there will always be economies of scale with regard to purchasing power.
The franchiser can have a smaller central organization when compared to developing and owning locations themselves. Franchising also means uniformity of procedures, which reflects on consistency, enhanced productivity levels and better quality. Effective quality control is another advantage of the franchise system. The franchisee is usually self-motivated since he has invested much time and money in the business, which means working hard to bring in better organizational and monetary results.
This also reflects more satisfied customers and improved sales effectiveness.
To the franchiser, franchising means the spreading of risks by multiplying the number of locations through other people’s investment. That means faster network expansion educed effect from competitors.A management contract is an arrangement under which operational control of an enterprise is vested by contract in a separate enterprise that performs the necessary managerial functions in return for a fee.
Management contracts involve not Just selling a method of doing things (as with franchising or licensing) but involve actually doing them. A management contract can involve a wide range of functions, such as technical operation of a production facility, management of personnel, accounting, marketing services, and training. Benefits Many hotels operate under management contract arrangements, as they can more easily obtain economies of scale, a global reservation systems, brand recognition etc.
If you own more than one business, you may benefit from hiring a contract company to handle the day-to-day details of your company, leaving you time to focus on the big picture. Responsibilities you can turn over to the management team include recruiting, hiring and training your staff. Terminations also can be turned over to the outsiders. Instead of relying on an in-house manager, you will be bringing on the expertise of management team that usually brings to the table experience in a number of areas, such as employee tax codes, marketing, and accounting.
You do give up some of your privacy and may enter into confidentiality disputes when you hand over management of your company to a third party. Agreements made with vendors necessarily become open to the managers for a number of uses, ranging from ordering to price negotiations and inventory control. Employee records, including pay, insurance, and personal information, become part of the management team’s responsibility. Your wan financial information also becomes accessible to the outsiders, leaving you potentially vulnerable to fraud, ethical breaches, and public exposure.
While managers may come and go, leaving you without a consistent team in place to run your operations, a management contract firm can change the players without affecting the continuity of your business model. The contract company may experience employee turnover, but it won’t affect your business as much because of the contract you have in place that specifies how your business is to be managed. The contractor must maintain a up by an experienced home office.
It can be difficult to foresee the number of conflicts that could occur with an outside contractor. For example, you may hire a management company to run your business it in turn takes on the management of one of your suppliers. Price changes, discounts, and forecasts could be compromised. Many contract management companies use a home office to handle back office duties, such as payroll and accounting. Conflicts could ensue if the company manages competitors or clients of your business. Make sure your contract provides a legal way out if you find such conflicts develop.