Entrepreneurship 8th edition
Author:
Robert D Hisrich,
Micheal P. Peters
Dean a Shepherd
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Chapter 14
Entrepreneur
Accessing Resources for
Growth from External Sources
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Using external parties to help
grow a business
Franchising
Joint
ventures
Acquisition
Mergers
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Shah Rukh
Roll no: 22
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Franchising
An arrangement whereby a franchisor gives
exclusive rights of local distribution to a
franchise in return for payments of royalties
and conformance to standardize operating
procedures
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Continue….
Advantages of franchising to the franchisee:Product
Acceptance:
Management Expertise
Capital Requirements
Knowledge of the market
Operating the structural controls
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Continue….
Advantages of franchising to the franchiser:Expansion
Cost
Risk
advantages
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Continue….
Disadvantages of franchising :Inability
of franchisor to provide services,
advertising etc.
The
franchise may face a problem when
franchisor bought out by another company
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Continue….
Types of Franchises :There
are 3 types….
Dealership
Offers
name, image and methods of doing
business
Offer services
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Continue….
Investing in a Franchise :There are factors that must be assessed by the
entrepreneur when he/she want to invest,
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Continue….
continue :Proven
vs Unproven Franchise.
Financial stability of a franchise.
Potential market for the new franchise.
Profit potential for a new franchise.
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Muhammad Aatif Aneeq
Roll no: 15
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Joint Ventures

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Two or more companies
forming a new company.
It is a separate entity that
involves a partnership between
two or more active
participants.
Strategic alliances
Universities, Non profit
organization, businesses and
the public.


General Motors & Toyota
General Electric & Westinghouse.
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Types of Joint Ventures

Private-sector companies

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Cooperative research

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Triangle Park in North Carolina..
Industry-university agreements

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Boeing, Mitsubishi, Fuji, Kawasaki.
Two problems
International joint ventures
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Factors of Success

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How to best manage entity
Ensuing relationships
Degree of symmetry b/w partners
Expectation of results
Timing must be right
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Acquisitions


Purchasing all or part of a
company.
Advantages

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

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Established business
Location
Established market structure
Cost
Existing employees
More opportunity to be
creative
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Acquisitions

Disadvantages

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Marginal success record
Overconfidence in ability
Key employee loss
Over evaluated
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Synergy

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“The whole is greater than the sum of its
parts”
Lack = acquisition failure
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Muhammad Wasif Laeeq
Roll no: 1
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Mergers


Department of Justice
How does it take place?


Requirements
Determining value
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Leveraged Buyouts

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Definition
Why buy?
Financing

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Debt-to-equity ratio
Steps before buying

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Is asking price reasonable?
Assess firm’s debt capacity
Develop appropriate financial package
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Overcoming Constraints by
Negotiating

Two tasks

Distribution task

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Divide up the pie
Integration task

Make the pie larger
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Negotiating

What will you do if no agreement is
reached?


Reservation Price
What will the other party do if no
agreement is reached?

Bargaining zone
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Negotiating

What are underlying issues for you? How
important is each issue?


Trade-offs
What are underlying issues for other
party? How important is each issue?

Understanding=Increased integration
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Negotiating Strategy

Build Trust and Share Information

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Ask Lots of Questions

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Probe for preferences
Make Multiple Offer Simultaneously

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Best outcome
Can it hurt the negotiations?
Show what’s important based on choices
Used to Create Trade-offs that Result in Mutually
Beneficial Outcomes
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