Module 5

Question 1

Why make market development plan

Answer 1

1) To achieve economies of scale
2) Key competency is your product service
3) Your product is nearing the end of its life

Question 2

Product Development

Answer 2

1) Product modification
2) Product expansion
3) Product extensional
4) Completely new product

Question 3

Reasons for diversification

Answer 3

1) To gain rapid market dominance
2) Economies of scale and synergy
3) To reduce risk and privately own business

Question 4

Advantages and disadvantages of the franchisor

Answer 4

Advantages
-Way of expanding business quickly
-Financing cost shared with franchisees
-Franchises usually are highly motivated since
their livelihood depends on success

Disadvantages

• British franchise Association rule take time and money to comply with
• Loss of some control to franchisees
• Franchisees can influence the business
• May be obligated to franchise the legal agreement

Question 5

Advantages and disadvantages of franchisees

Answer 5

Advantages

• less risk of failure
• Easier to finance their own start-up
• Quicker to start up
• Training and support from franchisor
• National branding should help sales

Disadvantages

• Not really your own idea
• Lack of real independence
• Franchisor makes the rules
• Can be expensive to buy into
• Royalties can be high
• Goodwill will build up dependent upon continuing franchising agreement maybe problems if you wish to sell
• Franchisor can damage brand

Question 6

Growth options

Answer 6

1)Product service development
2)Diversification
3Market penetration
4 Market development

Question 7

Strategy implications

Answer 7

1) problem child
- Develop opportunities
2) star
- Invest for growth
3) Cash cow
- Manage for earnings
4) dog
- Generate cash