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In: Economics

Q1. franchising and Independent operator are the most common forms of retail operating models in almost...

Q1. franchising and Independent operator are the most common forms of retail operating models in almost all countries in the world. Discuss the pros and cons about it and state the reasons why. in details

Q2. Pavilion is situated at the major tourists and CBD area of KL. Assuming you are the sales manager of a high end products outlet in Pavilion, and intend to boost up your sales after the reopening post the Recovery Movement Control Order (RMCO). What will you do in terms of growing your business in terms of store based sales . in details

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Answer)

Part 1. Following are the pros and cons of franchising and independent operator

  • Pros of franchising and independent operators
  1. Expansion without investment-Business gets expanded without you having to put much of an actual investment .
  2. Capital infusion-Royalty is like recieving a rent every month,it is a great source of capital injection every month or quarter for your business.
  3. Access to your growth partners-A lot of high capability individuals require an oppoortunity to get franchise and they will give you ideas and returns which wouldn't have been possible if you wouldn't have been possible had it not been for franchise.
  4. In terms of independent operators you are getting people who are a lot more self driven than a lot of salaried employees owing to their capital at stake,so in terms of effotts you are guarenteed a 100% effort.
  5. Networking-Consider yourself a CEO,you are looking for a new COO or operations-strategy head,would you take another CEO, chances are you eould be thrilled as CEO with such proposition,same is being offered in a way by these models
  • Cons of franchising
  1. Diluting your brand value-If there is quality issues at franchise,you would suffer too and cannot escape bad reputation in that case.
  2. Less control -You cannot run the things the way you can run with your own outlets and that can leave you with less freedom with the direction of your brand.
  3. Loss of your top employees-Such models if successful can force your top employees to look for themselves the same way out.
  4. Probability of failure-We have talked about efforts of independent operators but what about their probability of success,they may not be able to generate even returns enough to break even owing to working as an independent operator.

Part 2. Following are the actions one can take to boost store based sales of high end products in such case

  1. Differentiation-One of the qualities of high end products is that their users are willing to pay extra and differentiation may give them that extra incentive to go for it,so stock your store with unique products.
  2. Ambience based selling-Fragrance marketing to sound marketing is a hit these days where different sounds or fragrances are used to stimulate shopping experience and give shoppers a relaxed environment where they go for luxury to further strengthen that feeling.
  3. Short term boost can be provided with a limited period discount on a minimum purchase value.

Answer is complete.Thank you!

Rahul Sunny answered 2 years ago
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