Advantages of Franchising


Franchising may combine the advantages of a small business managed by its owner and the resources, especially marketing impact, available only to large firms. The franchisee may be interested mainly in securing the privilege of selling a highly advertised product. Usually one of the most important advantages of a franchise to the franchisee is the right to use a trademark owned by the franchisor that is well known and/or highly advertised. In addition, many franchisors have developed a standardized and tested method of conducting the business, whether it is producing hamburgers, conducting an employment service, or replacing automobile mufflers, that will be adopted by the franchisee.

From the franchisee’s standpoint, especially if he or she has little or no experience in the business being franchised, the most important services of the franchisor are likely to be advertising , training in the business, and advice after the business is under way. Some franchisors also assist with financing. They may build and equip the place of business and lease it to the franchise—a so called turnkey operation.

One of the major advantages of franchising for the franchisor, however, is the possibility of rapid expansion by using the financial resources of the franchisees. Through franchising, the franchisor can gain considerable control over the distribution of its products or services without owning the retail outlets. By carefully controlling the number and location of outlets, the franchisor can reduce competition among them and perhaps encourage them not to carry competitive products. This may make the franchise organization’s competition against similar products (or services) more effective by encouraging bigger investments and more aggressive marketing by franchisees. Efforts may also be made to influence prices charged by the franchisee. Where the franchisee prepares a product, such as food, or offers a service, the franchisor usually maintains a high degree of control over operations to standardize quality.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Product Development Process


The product development process involves analysis of the marketplace, the buyer, the company’s capabilities, and the economic potential of new product ideas. This process may be both expensive and time consuming. To accelerate the process, many companies create multidisciplinary teams so that manufacturing and marketing plans can be developed in tandem while the product is being designed.

  1. Generation and Screening of Ideas: The first step is to come up with ideas that will satisfy unmet needs. A producer may get new product ideas from its own employees or from external consultants, it may simply adapt a competitor’s idea, or it may buy the rights to someone else’s invention. Customers are often the best source of new product ideas.
  2. Business Analysis: A product idea that survives the screening stage is subjected to a business analysis. At this point the question is: Can the company make enough money on the product to justify the investment? To answer this question, companies forecast the probable sales of the product, assuming various pricing strategies. In addition, they estimate the costs associated with various levels of production. Given these projections, the company calculates the potential cash flow and return on investment that will be achieved if the product is introduced.
  3. Prototype Development: The next step is generally to create and test a few samples, or prototypes, of the product, including its packaging. During this stage, the various elements of the marketing mix are put together. In addition, the company evaluates the feasibility of large-scale production and specifies the resources required to bring the product to market.
  4. Product Testing: During the product testing stage, a small group of consumers actually use the product, often in comparison tests with existing products. If the results are good, the next step is test marketing, introducing the product in selected areas of the country and monitoring consumer reactions. Test marketing makes the most sense in cases where the cost of marketing a product far exceeds the cost of developing it.
  5. Commercialization: The final stage of development is commercialization, the large-scale production and distribution of those products that have survived the testing process. This phase requires the coordination of many activities—manufacturing, packaging, distribution, pricing and promotion. A classic mistake is letting marketing get out of phase with production so that the consumer is primed to buy the product before the company can supply it in adequate quantity. A mistake of this sort can be costly, because competitors may be able to jump in quickly. Many companies roll out their new products generally, going from one geographic area to the next. This enables them to spread the costs of launching the product over a longer period and to refine their strategy as the rollout proceeds.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Productivity and People Management


Productivity—real output per working hour—is not rising quickly as it did previously. This does not necessarily mean that workers are becoming lazier. What it does mean is that in an uncertain economy, businesses are not investing enough in the machinery needed to help workers accomplish more. For example, the steel plants are so obsolete that Japan and Germany are taking over the international steel markets. Too, as the economy become more service-oriented, productivity tends to slow down. The reason is that services—such as family counseling—tend to be able to increase productivity only by reducing their quality.

Managing people and resources on all levels of organizations will continue to be a major managerial challenge. Future managers have to be more sensitive to people’s needs and more flexible in resolving problems. Early retirement and part-time work programs are likely to become common in the near future.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Statistics of Supply and Demand


Equilibrium is determined by the interaction of given supply and demand curves. But what about changes in supply and demand? Such changes can be interpreted as shifts of the supply, curve, of the demand curve, or both at once.

Perhaps as a result of altered preferences, buyers suddenly want to continue more of some good at each possible price. This is called an increase of demand. The basic technique in analyzing some economic change will be to ask: Is the change reflected in a shift of supply, or a shift of demand (or possibly, of both)? It will be immediately evident that an increase in demand alone leads to an increase in both equilibrium price and equilibrium quantity. An increase in supply leads to an increase in equilibrium quantity, but to a decrease in equilibrium price.

It is sometimes useful to distinguish between those sources of change originating “outside” and those originating “inside” the economic system. The “outside” sources of variation include” 1) Changes in tastes, 2) changes in technology, changes in resources, and 3) changes in resources, and 4) changes in the political-legal system. All these changes can be regarded, in some degree at least, as originating autonomously rather than in response to economic factors.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Ideal-Candidate Profile


You don’t have the time or the resources to evaluate every applicant who strolls in. to guide your work, you should develop a profile of your “ideal” candidate. You may never find your ideal, but you will establish a basic framework that outlines the person you are looking for.

Developing an ideal candidate profile is similar to viewing a lineup of suspects after you’ve witnessed a bank robbery. The individual you pick out may not be the actual bank robber, but chances are the real criminal is strongly similar. Often, a lineup helps police establish the silhouette or basic framework of the person being sought. The police is clear even if the details are not. Likewise, your ideal candidate profile will give you a sharper idea of what you are really looking for, so that you can increase your odds of finding him or her.

Use the following outline to develop of profile of your ideal candidate:

  1. Must have, or have done, or be able to do:
    • Experience: type and years
    • Industry: type, or specific companies, and years
    • Skills or talents
    • Education
  1. Should have, or have done, or be able to do:
    • Experience: type and years
    • Industry: type, or specific companies, and years
    • Education
  1. Would be nice to have, or have done, or be able to do:
    • Experience: type and years
    • Industry: type, or specific companies, and years
    • Skills or talents
    • Education

Be specific when you draft your outline. If you want someone with strong follow-up skills, say so. If you want an assertive person who can handle high stress, say so. To create a good match between job and candidate, you need to define the person as closely as you define the job.

Keep your company culture in mind, too. If your company is team-oriented and flexible, you want a candidate who is comfortable with teamwork—and not everyone is. If your department is highly structured, you want someone who works well in a structured situation. Describe the qualities that your company values so that you can find compatible candidates.

Just remember that defining the candidate is a lot like shopping for groceries: the more you toss into your shopping cart, the more you’ll pay. The cost of filling a job is influenced by two factors: how long it takes to find the candidate, and the supply of qualified candidates. The greater the number of must have items on your list, the longer it’s going to take to find that person. The greater the experience, skills, or education requirements, the smaller the supply of candidates and the larger the compensation package required to hire the person.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Customer Commitment


Great companies are extremely market-oriented and are incredible at creating value to their highly satisfied, loyal customers. Greatness in marketing and customer service is a function of attitude, not resources. Most companies do not do a very good job as marketers. Consider when you have been put on hold endlessly when calling for technical support, when you have been ignored or treated indifferently when visiting a retail site, or when you have been supplied inferior goods or services. While second-rate firms may survive in the short term, they will not last in the long run unless they change their philosophy and start creating superior value for their customers.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Supplier Partnership


An organization spends a substantial portion of every sales on the purchase of raw materials, components, and services. Therefore, supplier quality can substantially affect the overall cost of a product or service. One of the keys to obtaining high-quality products and services is for the customer to work with suppliers in a partnering atmosphere to achieve the same quality level as attained within the organization.

Customers and suppliers have the same goal—to satisfy the end user. The better the supplier’s quality, the better the supplier’s long-term position, because the customer will have better quality. Because both the customer and the supplier have limited resources, they must work together as partners to maximize their return on investment.

There have been a number of forces that have changed supplier reltions. Prior to the 1980s, procurement divisions were typically based on price, thereby awarding contracts to the lowest bidder. As a result, quality and timely delivery were sacrificed. It is stopped because price has no basis without quality. In addition, single suppliers for each item help develop a long-term relationship of loyalty and trust. These actions will lead to improved products and services.

Another factor changing supplier relations was the introduction of the just-in-time (JIT) concept. It calls for raw materials and components to reach the production operation in small quantities when they are needed and not before. The benefit of JIT is that inventory-related costs are kept to a minimum. Procurement lots are small and delivery is frequent. As a result, the supplier will have many more process setups, thus becoming a JIT organization itself. The supplier must drastically reduce setup time or its costs will increase. Because there is little or no inventory, the quality of incoming materials must be very good or the production line will be shut down. To be successful, JIT requires exceptional quality and reduced setup times.

The practice of continuous process improvement has also caused many suppliers to develop partnerships with their customers.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Line of Sight

Customer Retention Program


To develop an effective customer retention (CR) program, organization can follow this five-step process:

  1. Determine your current CR rate. It is surprising how few companies know the percentage of customers that leave (the defection rate) or the percentage of customers that they are able to retain annually (the retention rate). There are many ways to measure customer retention. Choosing an appropriate measure provides a starting point for assessing a firm’s success in keeping customers.
  2. Analyze the defection problem. This is a three-pronged attack. First, we must identify disloyal customers. Second we need to understand why they left. There are six types of defectors. Customers go elsewhere because of lower price, superior products, better service, alternative technologies, market changes (they move or go bankrupt), and “political” considerations; (switching motives) can also provide insight here. Third, strategies must be developed to overcome the non-loyal purchasing behavior.
  3. Establish a new CR objective. Let’s assume that your company is currently retaining 75% of its customers. A realistic goal may be to improve client retention annually by at least 5%, to 80%, and to keep 90% of your clients within 5 years. Customer-retention objectives should be based on organizational cabalities (strengths, weaknesses, resources, etc.), customer and competitive analyses, and benchmarking with the industry or sector, comparable firms, and high performing units in your company.
  4. Invest in targeted CR plan to enhance customer loyalty. The cost (potential lifetime value) of a single lost customer can be substantial. This is magnified exponentially when we realize the overall annual cost of lost business.
  5. Evaluate the success of the CR program. As an iterative process, the final phase in designing a solid customer retention plan is to ensure that it is working. Careful scrutiny is required to assess the program’s impact on keeping existing customers. Upgrading current customer relationships may be a secondary business objective. At this point, we gather new information to learn to what extent our CR rate improved. We may need to revisit our benchmarks and further probe isolated causes of defection. CR strategies and tactics will be closely analyzed to determine which methods worked best and those that had little or no impact on keeping customers.

 My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Line of Sight

Just about Joint Ventures


Joint ventures (JV) are the waves of the future. There is hardly a Fortune 500 company, active overseas, that does not have at least one JV.

JV represents a higher risk alternative because it requires various levels of direct investment.  A JV involves sharing risks to accomplish mutual enterprise. JVs, incidentally, are the next most common form of entry once a firm moves beyond the exporting stage to a more regular overseas involvement.

JVs provide a mutually beneficial alternative to domestic and foreign businesses to join forces. For both parties, the ventures are a means to share both capital and risk and make use of each other’s technical strength.

JVs, however, are not an unmixed blessing. The major problem in managining joint ventures stems from one cause: there is more than one partner. With patience and flexibility on the part of both partners, JVs can be managed successfully. But one of the partners must play the key, dominant role to steer the business to success.

Widespread interest in JVs is related to:

  1. Seeking market opportunities.
  2. Dealing with rising economic nationalism.
  3. Preempting raw materials.
  4. Risk sharing.
  5. Developing an export base.
  6. Selling technology.

Even a JV with a well-qualified majority foreign partner may provide significant advantages, such as:

  1. Participation in income and growth.
  2. Low cash requirements.
  3. Preferred treatment for the venture.
  4. Easier access to a market and to market information.
  5. Less drain on a company’s managerial resources.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Line of Sight

Previous Older Entries