6/ Your text uses the examples of Licensing and Franchising as the basis for cre
ID: 1169751 • Letter: 6
Question
6/ Your text uses the examples of Licensing and Franchising as the basis for creation of a business model. You should be able to look at these two examples and see how a “Business Model” would be worked out to formulate a specific business design.
7/ Outsourcing –business models may be built around this practice. What is it? Why would you want to use such a business model to conduct business?
8/ Models Based on Networks – is the last example discussed in the PEM text. Why is this design hot? [What does your text say?] How would the BMC framework apply?
Explanation / Answer
Solution :
6) Licensing: Licensing permits a company in the target country to use the property of the licensor. Such property usually is intangible, such as trademarks, patents, and production techniques. The licensee pays a fee in exchange for the rights to use the intangible property and for technical assistance. Licensing has the potential to provide a very large ROI since this model of foreign entry also does require additional investments.
Franchising is a way of doing business . It is a method of marketing and distributing products or services . Franchising involves atleast two kinds of people . The first is the franchisor , who owns the company and lends his or her trademark or trade name and business system to the second person . This second person , the franchisee , usually pays a one time fee for the right to do the business under the franchisor's name and system . The franchisee also pays a royalty , or percentage of sales , to the franchisor . The contract or agreement between the franchisor and franchisee is called a franchise .
Franchising is attractive because it offers opportunity to people with various levels of funding and experience . Young entreprenuers are attracted to franchising because it gives them a chance to be independent and still work within an established system .
7) Outsourcing can be defined as a process in which an organization enters into a contract with another organization to operate and manage one or more of its business processes . Outsourcer refers to a company that contracts with another company to provide services that might otherwise be provided by its in-house employees. There are many advantages of outsourcing and one prominent reason being saves money . Other reasons could be if a company wishes to focus on its main business and while having some of its processes handled by outside experts then the company can opt for outsourcing . Outsourcing can also ensure business continuity in the event of crisis or disaster in a particular location .
8) A Network based business model is a model including two or several stakeholders creating a joint value proposition based on the stakeholders key activities and resources . This is done as a open business model or business network business model where local or even global network partners gain significant competitive advantage and growth through creating network based business models . Companies choose this kind of business model when collective knowledge ; in some instances called intellectual capital or knowledge resources is to be mobolized to create far more value than a single company can do alone .
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