partners and its uses...

1. Corporate Venturing, Networking
and Franchising
Subject Name
Entrepreneurship
Code
BBA 1243
Credit Hours
3
*****Effort of Group “E”*****
Hariom Poddar
Ekata Niraula
Ranjeet Chaudhary
Manish Surait

2. Table of content
i. Partner selection criteria
ii. Process of reciprocity
iii. The franchising alternatives
iv. Theoretical foundations

3. Partner selection criteria
Choosing a partner for a joint venture, for an
alliance, or even for one of the shorter-term
relationships just discussed is crucial for the
entrepreneur.
A poor choice can doom not only the joint venture
but the entire enterprise.

4. Contd…
There are Three Partners criteria that must have to
meet:
 The potential partner must have a strong
commitment to the joint venture.
 The top managements of the firms must be
compatible.
 The people involved must have had previous
positive experience in the trenches.

5. Why partners are important?
 Partnership is an attractive option when the potential
partner has complementary skills with little duplication
and when the relationship creates a mutual dependence
that makes cooperation in everyone’s self-interest.
 Good communications, similar cultures and values,
compatible operating policies, and compatible goals all
make potential partners attractive.
 A partner with a strong reputation is valuable because it
can enhance the other firm’s legitimacy.

6. Process of reciprocity
• How do entrepreneurs position themselves and
their firms to enter into these alliances, networks,
and cooperative partnerships?
• Why do people allow entrepreneurs to do this?
???...
A situation in which two people , countries, etc provide the same help or
advantage of each other.

7. Contd…
From the business viewpoint, the primary reason is
that the entrepreneurial firm has something to offer
the partner:
A skill,
A process,
A technology,
A system for administration, access to a customer, or
a desirable location.

8. Contd…
But it is the entrepreneur who, on a personal level,
initiates the contact and maintains the relationships
that may turn into contracts and formal arrangements.
People allow entrepreneurs to approach them with
these cooperative and collective strategies for four
reasons:
Friendship
Liking
Gratitude: The feeling of being grateful & wanting to express your thanks .
Obligation: The state of being forced to do something because it is your duty or
because of a law.

9. Contd…
1. Friendship: The entrepreneur has developed a nurturing and
caring relationship with the people at the target
organization.
2. Liking: There is pleasure and comfort in reciprocity and in
finding someone with a mutual affinity.
3. Gratitude: The entrepreneur has put a member of the target’s
firm in his or her debt through a personal or professional
favor, and the discharge of that debt (reciprocity) is the
mechanism for the cooperation.
4.Obligation: The target firm must repay some formal
obligation to the entrepreneur.

10. The franchising alternatives
Franchising is a marketing system by which the
owner of a service, trademarked product, or business
format grants exclusive rights to an individual for
local distribution and/or sale of the service or
product.
In turn, the owner receives payment of a franchise
fee, royalties, and the promise of conformance to
quality standards.

11. Contd…
 Another way for a corporation to venture,
expand its boundaries and the reach of its
activities is through franchising.
 The franchisor is the seller of the franchise.
 The franchisee is the buyer of the product and
service and serve it.

12. Example
For example, both McDonald’s and Yum Brands
(KFC) are in intense competition to expand their
franchises in China & they trying to expand their
sales all over the world.

13. Why Franchising…?
• Franchising is one of the fastest-growing forms of
business and now represents a major share of all fast-
food restaurants, auto parts dealers, and quick-print
copy shops.
• Another group of franchise opportunities are
automobile dealerships, major league sports teams,
national and international real estate brokers, child-
care centers, and accounting and tax services.
• It increases market share, sales, profit and it create a
goodwill which is most fruitful for the company’s
product sand services.

14. Some highlights report of Franchising
1) There were over 2,500 franchising systems (companies that sell
franchises) in the United States. Seventeen of eighteen categories grew
in 2005.
2) The largest categories of existing systems are fast food (20 percent, 500
systems) and retailing and services (both growing at 11 percent).
3) The smallest category of existing systems is travel, and travel is the
only category that decreased in 2005.
4) Retail food is the fastest growing category with 67 percent growth in
the period from 2003 through 2005.
5) One-third of all franchise systems have 100+ units and nearly half
have 50 units; 25 percent of all franchise systems have 10 units or less.
6) Franchise sales topped $1.5 trillion dollars.
7) Franchise systems employ over 18 million Americans.

15. Theoretical foundations
1. Franchising is a method of implementing the growth strategy of the
franchisor’s venture.
2. The successful franchisor possesses resources that are rare,
valuable, imperfectly imitable, and non substitutable.
3. Usually these resources are a business concept, an operating
system, a brand name, and an actual or potential national
reputation.
4. Franchising enables the franchisor to multiply the rents collected
on the four-attribute resource through the franchise agreement.
5. Each franchisee becomes an outlet for the value added by the
special resource configuration.
6. The basic assumption is that value has been created and captured
through careful operation, testing, and documentation of a
commercially viable idea.

16. Contd…
7. Franchising enables the franchisor’s venture to grow
using the franchisee’s money, knowledge of the specific
locale, and human resources.
8. It also allows the franchisor to enjoy increasing
economies of scale in purchasing, building development
and improvements, and advertising and promotions.
9. Finally, it enables the firm to enjoy two traditional
strategic advantages at once: local control of costs
through close supervision of the franchisee, and effective
national or international product and service
differentiation through the marketing efforts of the
franchisor.

17. ***Thank You***
Any query…?