Worldwide competition[ edit ] One of the product categories in which global competition has been easy to track in U. The increasing intensity of competition in global markets is a challenge facing companies at all stages of development in international markets. As markets open up, and become more integrated, the pace of change accelerates, technology shrinks distances between markets and reduces the scale advantages of large firms, new sources of competition emerge, and competitive pressures mount at all levels of the organization.
Where American families carve their turkey, Japanese families proudly showcase a giant bucket of Kentucky Fried Chicken. Lines stretch around blocks in Tokyo, and across the country, Colonel Sanders clones greet guests of the international franchises with a smile and a Santa suit.
The tradition began as part of a brilliant marketing campaign in KFC was happy to step in. There are plenty of obstacles on the road to global franchise success.
Choosing the Right Franchise Structure Many international franchises fail because they dive right into a market without the proper research or local insight. Locals and investors express interest, they see an untapped market, or recent profits excite them to expand.
EFFECTIVE INTERNATIONAL MARKETING IN GLOBALLY FRANCHISING FIRMS. Overview The decision to take a company outside the the company’s origin involves careful analysis of risk and benefit factors, consideration and selection of potential markets, planned market entry, and development of market penetration over time. International marketing is the export, franchising, joint venture or full direct entry of an organization's product or services into another country. This can be achieved by exporting a company's product into another location, entry through a joint venture with another firm in the target country, or foreign direct investment into the target. Franchising in the global market. Holiday Inn and Budget Rent A Car have established truly international networks building off the platform of their franchising know-how and techniques developed in their home markets. and perhaps an obligation to pay a small percentage to the franchisor for the global marketing of the brand. .
In their rush grow, they neglect this important planning step: Choose the best structure by evaluating things like local resources, laws, and distribution network options. Since these factors vary from market to market, successful franchises will often follow different franchise structures in different areas.
In direct franchising, franchisors enter contracts with franchisees on an individual basis. This approach cuts out the middle-man, which can allow both franchisees and franchisors to keep a larger share of profits.
This structure also gives franchisors a greater level of control over each location. However, foreign franchisees may need to secure vendor contracts and other resources on their own, putting an additional burden on the franchisee while threatening brand consistency in the process.
For these reasons, direct franchising has decreased in popularity for businesses expanding internationally. Area Development This structure also offers a contract to a single franchisee, but that contract allows the franchisee to develop multiple locations within a designated territory.
Area development has an advantage over direct franchising because it cuts down on training and management needs. Master Franchising This structure essentially places a middle man between the domestic company and its international franchisees. The master franchisee often has the responsibility of developing, training, and largely managing these locations.
This structure also saves franchisors from having to micromanage operations across the globe and in multiple markets. It also leverages the local knowledge and experience of the master franchisee. For these reasons, this structure is one of the most popular for international franchises.
However, it does have some drawbacks—namely that the master franchisee will require a substantial salary. Joint Venture Franchisors can decide to share ownership of locations within direct or area franchising structures. When they do, they refer to the arrangement as a joint venture.
In this structure, franchisor and franchisee share responsibilities and profits more equally. Then analyze how things like relationships, laws, and resources will differ in your new markets. Time spent choosing the optimal international franchising structure is time well spent!
The only completely consistent people are dead. To aim for consistency is to fight an uphill battle against the very laws of nature. Imagine how much harder that battle becomes when your armies are scattered across the globe.McDonald's is a global franchisor.
A franchising contract allows the franchisee to operate a business—a retail product or service firm or a B2B provider—using the name and business format developed and supported by the franchisor.
While this can be done through a number of strategies, franchising is a growing means of achieving international presence. In particular, McDonald’s and The United Colors of Benetton represent two distinct yet successful examples of effective international marketing in globally franchising firms.
International marketing is the export, franchising, joint venture or full direct entry of an organization's product or services into another country. This can be achieved by exporting a company's product into another location, entry through a joint venture with another firm in the target country, or foreign direct investment into the target.
When you take a global marketing approach, your brand can bask in the glow of a global reach. The Advantages & Disadvantages of International Franchises. What Is Global Standardization in. The International Franchise Association is your main source of franchise information and resources to research, grow, or join your favorite franchise business opportunity.
We bring franchises together from all over the world to learn from one another and grow franchising as a whole.
In particular, international franchising usually requires adaptation of marketing products to the local cultures.
In the case of Benetton’s social awareness campaigns, marketing product was intended to be used globally, although some areas and retailers found some of the photos disturbing or inappropriate (Barela , ).