11. Methods of development

Question 1

What are the benefits of franchising?

Answer 1

• Rapid expansion
• Less management time on admin, HR and premises
• Local knowledge
• Franchisee receives financial reward of success

Question 2

What is the Lynch expansion matrix?

Answer 2

Used to summarise the combinations of expansion techniques that have been adopted by a business

Question 3

Which model would you use to summarise international expansion?

Answer 3

Lynch expansion matrix

Question 4

What are the axes of the lynch expansion matrix

Answer 4

Internal/ external development
Home country/abroad

Question 5

How could a business internally develop in an abroad country

Answer 5

Exporting
Overseas manufacturing

Question 6

How could a business externally develop in home country?

Answer 6

Joint venture
Merger
Acquisition

Question 7

What are Porters generic strategies for a successful acqusition?

Answer 7

The better off test - acquisition must generate extra benefits
The cost of entry test - is there a cheaper way of entering market

Question 8

What are the disadvantages of franchising and licensing?

Answer 8

Shares profit
Successful franchisees may set up on their own
Quality control