summary session 25-26

                                                                                                                                                                Gabriela Hartanto

                                                                                                                                                                LC 02/ 2301851471

Summary session 25-26

Franchising

                History

Another important innovation in franchising was the development of conversion franchising. Conversion franchising is the process of turning independent businesses into franchisees under the umbrella of the franchisor's brand name. The major oil companies were the pioneers in this activity when they began to offer independent repair stations the right to use their trademarks in the 1920s.

                Franchising

Franchising is an arrangement where franchisor (one party) grants or licenses some rights and authorities to franchisee (another party). Franchising is a well-known marketing strategy for business expansion.A contractual agreement takes place between Franchisor and Franchisee. Franchisor authorizes franchisee to sell their products, goods, services and give rights to use their trademark and brand name. And these franchisee acts like a dealer.In return, the franchisee pays a one-time fee or commission to franchisor and some share of revenue. Some advantages to franchisees are they do not have to spend money on training employees, they get to learn about business techniques.

                Functioning of Franchising

Under a franchise, the two parties generally enter into a Franchise Agreement. This agreement allows the franchise to use the franchisor’s brand name and sell its products or services. In return, the franchisee pays a fee to the franchisor.The franchisee may sell these products and services by operating as a branch of the parent company. It may even use franchising rights by selling these products under its own business venture.The franchisor may grant franchising rights to one or several individuals or firms. Consequently, if just one person gets these rights, he becomes the exclusive seller of the franchisor’s products in a specific market or geographical limit.In return, the franchisor supplies its products, services, technological know-how, brand name and trade secrets to the franchise. It even provides training and assistance in some cases.

Features of Franchising

Firstly, under a franchising agreement, the franchisor grants permission to the franchise to use its intellectual properties like patents and trademarks.Secondly, the franchise in return pays a fee (i.e. royalty) to the franchisor and may even have to share a part of his profits. On the contrary, the franchisor provides its goods, services, and assistance to the franchise.Finally, both parties in a franchise sign a franchising agreement. This agreement is basically a contract that states terms and conditions applicable with respect to the franchise.

Advantages and Disadvantages of Franchising

Advantages to Franchisors

·         Firstly, franchising is a great way to expand a business without incurring additional costs on expansion. This is because all expenses of selling are borne by the franchise.

·         This further also helps in building a brand name, increasing goodwill and reaching more customers.

Advantages to Franchisees

·         A franchise can use franchising to start a business on a pre-established brand name of the franchisor. As a result, the franchise can predict his success and reduce risks of failure.

·         Furthermore, the franchise also does not need to spend money on training and assistance because the franchisor provides this.

·         Another advantage is that sometimes a franchisee may get exclusive rights to sell the franchisor’s products within an area.

·         Franchisees will get to know business techniques and trade secrets of brands.

Disadvantages for Franchisors

·         The most basic disadvantage is that the franchise does not possess direct control over the sale of its products. As a result, its own goodwill can suffer if the franchisor does not maintain quality standards.

·         Furthermore, the franchisee may even leak the franchisor’s secrets to rivals. Franchising also involves ongoing costs of providing maintenance, assistance, and training on the franchisor.

Disadvantages for Franchisees

·         First of all, no franchise has complete control over his business. He always has to adhere to policies and conditions of the franchisor.

·         Another disadvantage is that he always has to pay some royalty to the franchisor on a routine basis. In some cases, he may even have to share his profits with the franchisor.

#Creativepreneurship

#Binus@Bandung

summary session 24

                                                                                                                                                        Gabriela Hartanto

                                                                                                                                                        LC02/2301851471

Summary session 24

Strategies For Firm Growth

                Internal and external growth strategies

-          Internal Growth strategies : Involve efforts taken within the firm itself, such as :

§  new product development  ->  Involves the creation and sale of new products (or services) as a means of increasing firm revenues.

§  other product related strategies  

§  international expansion -> International new ventures are businesses that, from their inception, seek to derive significant competitive advantage by using their resources to sell products or services in multiple countries.

-          External growth strategies : Rely on establishing relationships with third parties, such as  :

§  Mergers & acquisitions -> An acquisition is the outright purchase of one firm by another .A merger is the pooling of interests to combine two or more firms into one.

§  Strategic alliances & joint ventures -> A strategic alliance is a partnership between two or more firms developed to achieve a specific goal.Strategic alliances tend to be informal and do not involve the creation of a new entity.Participating in strategic alliances can boost a firm’s rate of product innovation and foreign sales.

§  Licensing -> The granting of permission by one company to another company to use a specific form of its intellectual property under clearly defined conditions.Virtually any intellectual property a company owns that is protected by a patent, trademark, or copyright can be licensed to a third party.

§  Franchising

Advantages & Disadvantages

-          Internal growth strategies : 

Ø  Advantages :

·         Incremental, even-paced growth.

·          Provides maximum control.

·          Preserves organizational culture.

·          Encourages internal entrepreneurship.

·          Allows firms to promote from within.

Ø  Disadvantages :

·         Slow form of growth.

·          Need to develop new resources.

·          Investment in a failed internal growth

·           strategy can be difficult to recoup.

·          Adds to industry capacity.

-          External growth strategies :

Ø  Advantages :

·         Reducing competition.

·          Access to proprietary products.

·          Gaining access to new products.

·          Gaining access to new markets.

·          Access to technical expertise.

·          Access to an established brand name.

·          Economies of scale.

·          Diversification of business risk.

Ø  Disadvantages :

·         Incompatibility of top management.

·          Clash of corporate cultures.

·          Operational problems.

·          Increased business complexity.

·          Loss of organizational flexibility.

·         Antitrust implications.

#Binus@Bandung

#Creativepreneurship

summary week 11

                                                                                                                                                        Gabriela Hartanto

                                                                                                                                                        LC02 / 2301851471

Summary gslc week 11

Preparing for and evaluating the challenge of growth

                Sustained growth is defined as growth in both revenues and profits over an extended perios of time.Successfully growing a business is a function of preparation,good management and an appreciation of the issues involved.The three primary things that a business can do to prepare for growth are :

·         Appreciating the nature of business growth

·         Staying committed to a core strategy

·         Planning for growth

The six most common reasons that firms grow in an effort to increase their profit ability and valuation are to :

1.       Capture economies of scale (which are generated when increasing production lowers the average cost of each unit produced)

2.       Capture economies of scope (similar to economies of scale,scope economies are advantages a firm generates through the range of its operations)

3.       Achieve market leadership (which happens when a firm holds the top or second position in its industry or the segment of an industry in which it competes)

4.       Maintain influence,power, and survivability (conditions through which a firm is able to affect the setting of an industry’s standards as well having the scale and scope that will allow it to make a mistake and continue operating )

5.       Accommodate the growth of key customers (which is the ability to serve an important customer’s expanding demand for the firm’s product or service)

6.       Maintain an ability to attract and retain talented employees (the most desirable employees want to work for a firm in which learning and growth opportunities will be readily available to them)

Firms are collections of productive resources that are organized in an administrative framework.As a firm goes about its routine activities, it recognizes opportunities to grow.The problem with this scenario is that firm’s are not always prepared or able to grow, because of limited “managerial capacity." A firm’s administrative framework consists of two kinds of services that are important to firm growth.Entrepreneurial services generate new market, product, and service ideas, while managerial services administer the routine functions of the firm and facilitate the profitable execution of new opportunities.New product and service ideas require substantial managerial services (or managerial capacity) to be successfully implemented.This is a complex problem because if a firm has insufficient managerial services to properly implement its new product and service ideas, it can’t grow. Continuation From Previous SlideThe reason a firm can’t quickly increase its managerial services (to take advantage of new product or service ideas) is that it is expensive to hire new employees, it takes time for new hires to be socialized into the culture of a firm, and it takes time for new employees to acquire firm-specific skills and establish trusting relationships with other members of the firm.When a firm’s managerial resources are insufficient to take advantage of its new product and service opportunities, the subsequent bottleneck is referred to as the managerial capacity problem. As a firm grows, it is faced with the dual challenges of adverse selection and moral hazard.Adverse selection means that as the number of employees a firm needs increases, it becomes increasingly difficult for the firm to find the right employees, place them in appropriate positions, and provide adequate supervision.Moral hazard means that as a firm grows and adds personnel, the new hires typically do not have the same ownership incentives as the original founders, so the new hires may not be as motivated as the founders to put in long hours and may even try to avoid hard work.

#creativepreneurship

#Binus@Bandung

summary session 20-21

                                                                                                                                             Gabriela Hartanto

                                                                                                                                             LC02/2301851471

Summary session 20-21

The Importance of Intellectual Property

            When a business is establishing its presence in the marketplace, protecting and managing its intellectual property is critical as it can mean the difference between success or failure. That is why it is important for businesses to understand the different forms of intellectual property because some involve a formal application and examination process before a right can be registered while others come into play without the need for a registration process. Below is a glossary explaining the various rights which businesses may find beneficial.

Confidential information

Obligations of confidence can arise under contract or under the general law. Duties under the general law may arise from a particular relationship (employer-employee) or where information has been received by a person who was aware, or should have been aware, that the information was confidential. Confidential information can be the most valuable asset of a business. The information can relate to any subject matter and be stored in any form. Examples include a new product design, a marketing strategy and software code.

Copyright

Copyright is the right to prevent copying (and certain other acts) in relation to works that qualify for protection. Copyright can subsist in literary, musical, artistic and dramatic works as well as original databases, sound recordings, films, broadcasts, cable programmes and typographical arrangements of published editions.

The duration of protection will vary depending on the work. For example, copyright in literary, musical, artistic and dramatic works, a film or an original database expires 70 years after the death of the author while in the case of sound recordings, broadcasts, cable programmes and typographical arrangements, the duration is 50 years.

Database right

The owner of the database right has the right to undertake or authorise others to extract or re-utilise all or a substantial part of the contents of a protected database. A database is protected where there has been a substantial investment in obtaining, verifying or presenting the contents of the database. This right is separate to copyright.

The duration of the database right is 15 years from the end of the calendar year in which the making of the database was completed or it was first re-utilised.

Designs

A design can be registered if it is new and has individual character. A design is “new” when nothing like it has been previously made available to the public and has “individual character” if the overall impression it produces on an informed user differs from that produced by a design which has previously been made available to the public.

A design can be registered (in Ireland or Europe) for a period of 5 years and then renewed, for periods of 5 years, to a maximum period of 25 years.

Patent

A patent gives the inventor the exclusive right, for a limited period, to prevent others from using his invention without permission. An invention is patentable if it is:

·         Novel

·         Capable of industrial application

·         Involves an inventive step

A full term patent is registered for 20 years. In Ireland, it is also possible to register a short term patent for 10 years. It is not possible though to hold both a full and short term patent for the same invention. Therefore, when both patents are granted, the short term patent will be deemed void.

Trade mark

A trade mark identifies goods or services as those produced or provided by a specific person or enterprise.

The period of protection is 10 years but a trade mark can be renewed indefinitely on payment of renewal fees.

Having a reasonable knowledge of intellectual property will help businesses to incorporate these assets into their planning and strategy.

#Binus@bandung

#Creativepreneurship

               

summary session 18-19

                                                                                                                                                Gabriela Hartanto

                                                                                                                                                2301851471/LC02

Summary entrepreneurship week 9

Unique Marketing Issues

                The first step in selecting a target market is to study the industry in which the firm intends to compete and determine the different potential target markets within that industry.This process is called market segmentation.The next step is to establish a unique position in that market-one that differentiates the entrepreneurial firm from its competitors.The term position mean emphasized that a firm’s position in the marketplace determines how it is situated relative to its competitors.From a marketing perspective,this translates into the image of the way a firm wants to beperceived bt iys customers.Importantly,position answers the question,”Why should someonein our target market buy our good or service instead of our competitor’s?” Also important to these three steps is the development of a product attribute map,which illusstrates a firm’s position in its industry relative to its major rivals.It is sitioning strategy and helps a firm develop its marketing plan.

                A firm’s marketing mix is the set of controllable,tactical marketing tools that it uses to produce the response it wants in its target market.Most marketers organize their marketing mix around the 4P’s : product,price,promotion and place (or distribution).In the context of the marketing mix,a product is a good or service the firm offers in the market it has chosen to serve.Technically,a product is something the firm sells that takes on a physical form,while a service is an activithy or a benefit the firm provides that does not take on a physical form.The most important attribute of the product a firm sells is its ability to create value for customers.Price is the amount of money customers are willing to pay to purchase a product.Typically,entrepreneurs use one of two methods to set the price of their product.With cost-based pricing,the list price for a product is determined by adding a markup percentage to the product’s cost.When using value-based pricing,the list price for a product by estimating what consumers are willing to pay for a product and then backing off a bit to provide a cushion.

                A firm’s sales process depicts the steps it goes through to identify leads and close sales.The seven-step sales process includes the following steps :

·         Step 1 : Prospect for (or gather) sales leads

·         Step 2 : Make the initial contact

·         Step 3 : Qualify the lead

·         Step 4 : Make the sales presentation

·         Step 5 : Meet objections and concerns

·         Step 6 : Close the sale

·         Step 7 : Follow up

#Binus@Bandung

#Creativepreneurship

summary session 16-17

Summary session 16-17

Getting Financing or Funding

                Commonly,entrepreneurs discover that trying to operate their business without borrowed funds or invested capital is difficult.Because of this,entrepreneurs need to understand the different approaches available to them to gain access to the amount of capital needed to successfully support their ventures in the pursuit of organizatonal success.For three reasons cash flow challenges capital investment needs, and the reality of lengthy product development cycles most new firms need to raise money at some point during the early part of their life.Firm growth can generate cash flow problems,typically because of the lag between the need to spend capital to generate additional revenue and the time required to earn positive returns from those investment.

                Personal funds,friends and family,and bootstrapping are the three sources of personal financing available to entrepreneurs.It is very common for entrepreneurs to use their own funds to invest in their ventures while simultaneously provinding their “sweet equity” or hard work to keep the firm going.

                The three steps involved in properly preparing to raise debt or equity financing are as follows : Determine precisely how much money is needed,determine the type of financing or funding that is most appropriate and develop a strategy for angaging potential investors or bankers.Cash flow statements are helpful to efforts to detrmine the amount of capital a firm requires at a point in time.

                Business angels,venture capital,and aninitial public offering (IPO) are the three most important sources of equity funding available to entrepreneurs.Business angels are individuals who invest their personal capital directly in start-up ventures.These investors tend to be highnet-worth individuals who generally invest between $10.000 and $500.000 in a single company.Venture capital is money that is invested by venture capital firms in start-up and small businesses with exceptional growth potential.

                The sources of debt available to entrepreneurs include commercial banks,SBA guaranteed loans and other sources such as vendor credit,factoring,peer-to-peer lending and crowdfunding,histrocially,commercial banks have been reluctant to loan funds to entrepreneurial ventures,largely because they are risk averse and because lending  to smaller firms is less profitable for them compared to lend to large,established organizations.

                Leasing and SBIR and STTR grant programs,along with othher types of grant programs,are examples of creative opportunities entrepreneurs can pursue to obtain financial resources.A lease is a written agreement in which the owner of a piece of property allows an individual or business to use the property for a specified period of time in exchange for payments.The major advantage of leasing is that it enables a company to acquire the use of assets with very little or no down payment.The SBIR and STTR grant programs are important sources of grant-stage funding for technology-based ventures.

#Binus@Bandung

#creativepreneurship

Gabriela Hartanto (LC02/2301851471)

Summary week 8 session 15

Summary session 15

Building a New-Venture Team

                A new-venture team is the group of people who move a new venture from an idea to a fully functioning firm.Company founders,key employees,the board of directors,the board of advisers,lenders and investors,and other professionals are the primary elements involved with forming a new-venture team.A heterogeneous founding team has members with diverse abilities and experiences.A homogeneous founding team has members who are very similar to one other.The personal attributes that affect a founder’s chances of launching a successful new firm include level of education,prior entrepreneurial experience relevant industry experience,and the ability to network.Networking is building and maintaining relationships with people who are similar or whose friendship could bring advantages of the firm.

                A skills profile is a chart that depicts the most important skills that are needed in a new venture and where skills gaps exist.Finding good employees and effective new-venture team members is challenging.Founders may draw from their personal networks to find the needed talent or may ask existing employees for referrals.

                A board of directors is a panel of individuals who is elected by a corporation’s shareholders to oversee the management of the firm.It is typically made up of both inside and outside directores.An inside director is a person who is also an officer of the firm.An outside director is someone who is not employed by the firm.When a high-quality individual agrees to serve on a company’s board of directors,the individual is in essence expressing an opinion that the company has potential (why else would the individual agree to serve?).This phenomenon is referred to as signaling.

                The primary reason that new ventures turn to consultants for help and advice is that white large firms can afford to employ experts in many areas,new firms typically can’t.Consultants can be paid or can be part of a nonprofit or goverment agency and provide their service for free or for a rediced rate.       

#Binus@Bandung

#creativepreneurship

Gabriela Hartanto

2301851471 (LC02)