Franchising and licensing: Two powerful ways to grow your business in any econom

Question

Franchising and licensing: Two powerful ways to grow your business in any economy (4th ed.)

Chapter 20 – Joint Ventures and Strategic Alliances

With strategic alliances, there are explicit and implicit risks that must be considered before signing the agreement – these are especially important when engaging with a company in a foreign land.

Consider Asian, Thailand. What might be a risk to a company in the U.S. doing business there and what might the risks be for a company from Thailand doing business in the U.S.

Think of a specific business or industry to discuss.

Explanation / Answer

While performing business internationally, an organization will have to propose some strategic alliances which are also associated with some implicit and explicit risks. Consider the fast food organization in US wants to do its business in Thailand through franchising. Some of the potential risks associated with this fast food business in Thailand for an US fast food organization are mentioned here.

While operating in Thailand through franchising, the franchisors may not follow the standards of the organizations. This is primarily due to the culture and attitude of the people in Thailand. The preferences and taste of the buyers in the Thailand market may be different from that of the US. The political stability of this nation is not stable which can hinder the business operation of the franchise.

While considering the organization from the same fast food industry operating in Thailand wants to extend its business in US the risks may be the cost of production.

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