Effective International Marketing in Globally Franchising Firms.
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. While this can be done through a number of strategies, franchising is a growing means of achieving international presence.
DECIDING TO FRANCHISE INTERNATIONALLY
With the increase in international franchising and its impact on marketing, a number of studies have been conducted on various related aspects. One first consideration in literature is what leads to the decision to go international, and how this stimulates marketing within the firm. It is first helpful to consider the relationship between parent companies and their subsidiaries, whether franchises, partnerships, or company-owned outlets. Structurally, large multinationals such as McDonald’s and Benetton are “better viewed as inter-organisational networks than monolithic hierarchies,” because each subsidiary can take actions that affect the company as a whole (Birkinshaw 2000, 2). Corporate structure is determined by interplay between parent and subsidiary, with both responding to and driving needed changes in the business environment (Birkinshaw 2000, 4). Sometimes it will be the subsidiary that pursues markets, making a “proactive and deliberate pursuit of a new business opportunity” in order to “expand its scope of responsibility” (Birkinshaw 2000, 2).
Eroglu (1992) studied determinants in firms’ decisions to franchise internationally. He found two sets of “perceptual variables – perceived risks and perceived benefits – ” determine a company’s decision (19). When the perceived benefits outweighed the perceived risks, the company would proceed with expansion. Cost/benefit analysis in one common method for measuring benefits versus risk, but again, is filtered through the perceptual
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. While this can be done through a number of strategies, franchising is a growing means of achieving international presence.
DECIDING TO FRANCHISE INTERNATIONALLY
With the increase in international franchising and its impact on marketing, a number of studies have been conducted on various related aspects. One first consideration in literature is what leads to the decision to go international, and how this stimulates marketing within the firm. It is first helpful to consider the relationship between parent companies and their subsidiaries, whether franchises, partnerships, or company-owned outlets. Structurally, large multinationals such as McDonald’s and Benetton are “better viewed as inter-organisational networks than monolithic hierarchies,” because each subsidiary can take actions that affect the company as a whole (Birkinshaw 2000, 2). Corporate structure is determined by interplay between parent and subsidiary, with both responding to and driving needed changes in the business environment (Birkinshaw 2000, 4). Sometimes it will be the subsidiary that pursues markets, making a “proactive and deliberate pursuit of a new business opportunity” in order to “expand its scope of responsibility” (Birkinshaw 2000, 2).
Eroglu (1992) studied determinants in firms’ decisions to franchise internationally. He found two sets of “perceptual variables – perceived risks and perceived benefits – ” determine a company’s decision (19). When the perceived benefits outweighed the perceived risks, the company would proceed with expansion. Cost/benefit analysis in one common method for measuring benefits versus risk, but again, is filtered through the perceptual
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