Franchising as a Market Entry Strategy - Assignment

Research
Project
(The effectiveness of franchising as an
entry strategy and its impact on the
profitability of business. )

Table of Contents
TOPIC:- ...........................................................................................................................................1
INTRODUCTION...........................................................................................................................1
Overview of Research ...................................................................................................................1
Literature Review ............................................................................................................................3
Research Methodology ...................................................................................................................6
..........................................................................................................................................................9
Data Analysis and Interpretation .................................................................................................10
Discussion .....................................................................................................................................22
Recommendation and self Reflection ...........................................................................................23
CONCLUSION..............................................................................................................................25
REFRENCES.................................................................................................................................26
Appendix 1 ....................................................................................................................................28
Appendix 2 ....................................................................................................................................30
Research Proposal Form............................................................................................................30
Research Ethics .........................................................................................................................35

TOPIC:-
Costa analysing the effectiveness of franchising as an entry strategy and its impact on the
profitability of business. A study on Costa Coffee Romania.
INTRODUCTION
Globalisation is refers to the process through which businesses and other organisations
create their international influence by started performing their operations at global level. It also
help in integrating the economy as well as culture among two nations that contribute toward
improvising the organisational practices and mark its global presence (Holbeche, 2015). Costa
Coffee is the chosen organisation for this particular project; it is the largest coffee shop in the
globe and has its business operations at global level. The overall investigation is based on the
franchise of Costa Coffee in Romania, thus it is an effective expansion of the firm. The company
is using franchising as an entry strategy which has a huge impact over the profitability of
business, thus it is the most suitable way to expand business in proper manner.
Overview of Research
Franchising is considered as an essential aspect which is based on marketing concept that
can be adopted by a business as a strategy for business expansion. In this a franchisor licenses is
implemented which is known how procedures, intellectual property, use of its business model,
brand, and rights to sell its branded products and services to a franchisee. This also refers as an
effective aspect of globalisation thus it creates value for the firm in entry into new market by the
help of franchising, Thus its is an effective and most reliable strategy which can be implemented
by the businesses as their core strategy of business expansion. However it has a huge impact over
the profitability of firm. Costa Coffee operates as an international brand which has its global
operations and the company has operated its operations all over the world by applying the
strategy of franchising, thus it is the most suitable way for the business to attain growth and
profitability within a new market.
Globalisation concept is very wide which help an organisation in running its business at
large scale by targetting customers over several geographical area (Hammedi and et. al., 2015).
Apart from this internationalisation of business also support people to buy good or services from
several companies that help in improving the living standard of people.
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Costa Coffee is an international brand which is headquartered in London which started as
a wholesaler of roasted coffee which they supply to specialist of coffee shop and caterers. Now it
expended its business world wide by setting up approx 1280 outlets overseas within around 31
countries. It has now consider to be world's second largest coffee house chain and largest in UK
(Costa Coffee, 2019). This brand name and popularity of Costa Coffee supported it in expanding
its reach in developing country like Romania. With the emergence of brand in this country Costa
coffee become able to enhance its customer base because coffee is in the culture of Romania and
after this offering of high quality coffee it become able to enhance is profitability base. In
addition to this despite of being a developing country, Romania is one of the tourism attraction
place which in turn also supported in increasing its profitability and growth in this country
(Randrianasolo, 2017). It also help in enhancing its brand recognition in new country and among
tourist who visit that place and have the coffee Costa.
Research Aim:
“To investigate the role of emerging global brand in improvising organisational reach at
international level : A case on Costa Coffee franchise in Romania”
Research Objective:
 To analyse the concept of global brand emergence.
 To determine several issues that Costa coffee face while its brand emergence in Romania.
 To evaluate the impact of brand emergence over improvisation of Costa coffee reach.
 To identify the challenges could be faced by Costa Coffee.
Research Questions:
 Explain about the concept of Global brand emergence?
 Describe about several issues that Costa Coffee have while its brand emergence in
Romania?
 What is the impact of brand emergence over improvisation of Costa coffee reach?
 What Challenges could be faced by Cost?
Rationale:-
Main aim behind selecting this topic is to determine several issues that has been faced by
Costa Coffee during its expansion in Romania with the help of franchise so that by
representation of this research investigator will be able to represent number of issues that an
organisation face during its global expansion. In addition to this it also help in determining the
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impact that brand emergence have over the market performance of Costa Coffee. This research
involve a broad concept that help both researcher as well as reader to enhance their knowledge
about particular area of concern i.e. globalisation and its influence over business reach as well as
practices (Temporal, 2011). This research also have its own academical significance as it can
also be used for educational or academical purpose that support in enhancing the knowledge of
students as they would be able to determine the role of globalisation in enhancing organisational
reach by taking real life example of Costa Coffee.
Literature Review
Literature review is defined as the process of critical evaluation of information that has
been collected from several articles in order to develop an understanding regarding particular
topic of concern from the information provided by other researcher. This help in creating a base
for the research that can be further used to explore the things in order to combine both previously
searched as well as fresh data for providing more authenticated information.
Concept of global brand emergence
According to Müller-Mahn, 2012, global brands are the one that get recognition
throughout the world through expanding its business activities by adopting appropriate
marketing strategy to support brand and its development everywhere. The advantage of it is that
the firm can gain economies of scale by accessing resources at affordable cost. A strong brand
identity will build through its awareness, inspire affection and allegiance with consumer. Many
company derive global branding , in this the company enters new country and expand its
operations which is also known as brand emergence. Expansion decision are made generally
country by country or on product – division basis. There is importance of branding both from
consumer as well as manufacture side. From consumer side they got to know about the quality of
product, know about maker of the product and from manufacture side they know about value of
asset, premium price and the financial return. Global brand emergence required a company to
consider factors like consulting, marketing and planning in order to prepare an effective plan
related with global expansion. This is because a company have to face several issues while its
brand emergence within the new country in terms of competition, cultural differences, customer
taste & preferences and legal issues. Hence in order to get success at new market place and
overcoming such risks it is very essential for an organisation to consider these factors in order to
develop effective strategy that leads to maximum success out of all efforts.
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As per the view point of Te Velde, 2016, Brands emergence is basically affected by
competition, regulations, distribution issues and manufacturing cost while requiring constant
advancement. Global business has become yardstick for almost all brand. Further rapid growth
of e-commerce has increased its demand as a result of which companies are trying to expand
their operations at global level by getting access through e-commerce promotional activities.
This in turn them in developing brand recognition at new place before entering into market that
help in reducing the risk of failure. As companies usually face several challenge while they enter
in new market which can be reduced with the help of creating brand recognition before entering
in market. These efforts are usually made by companies with the help digital technologies in
order to make there brand relevant and also deliver efficiency and shareholders return. So that
they can get ease in practising brand emergence even when the competition is higher. This in
turn also support company in positioning its business at new place much effectively.
Several issues faced by Costa coffee while its brand emergence in Romania
As per the view point of Antonio Iftimescu, 2017, Coffee is in the culture of Romania
and there are number of specialist which work toward setting up their business as a coffee shop
or restaurant. In addition to this there are number of suppliers within Romania which supplies the
material required for preparation of coffee. This is reason behind the expansion of Costa Coffee
in Romania as there is greater scope within this country. But apart from this there are certain
challenges that Coast Coffee has faced through its journey of brand emergence in Romania.
These are explained below:
 Taste preference of customer:- The major issues faced by Costa Coffee is that people in
Romania prefer to have more strong coffee but on the other side they also want a coffee
which is rich in sugar. But access of sugar usually drown out the other flavours that make
it more harder to get acceptance and appreciation from targeted customers. This create
several problem in front of company as it find difficulties in attracting and maintaining
customer at initial stage.
 Competition:- Another issues faced by Costa Coffee in Romania is competition which
restrict company to expand its business in country. This is because there are number of
young rosters entrepreneurs who set up their business as a coffee shop or restaurant and
now they are famous over that area. As a result of which people prefer to visit those as
they offer coffee as per the taste which they prefer. This in turn take a lot of Costa
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Coffee's time to attract its potential customer to visit the stores and have taste their
offerings.
 Culture differences:- One of the major issue that usually found by Costa Coffee during
its brand emergence is Romania is the difference between the two culture. This also have
an huge influence over the operation as well as performance of comp[any at new place.
The reason behind this is that there is a huge difference between the business activities
performed within the Romania as taste and preference of customers are totally different.
This is because the people of Romania prefer strong coffee and more sugary at the same
time which affect the taste of coffee. But on the other side Costa Coffee focuses over
taste of its offering without going excess over sugar. Hence this was the major issue that
has been faced by company at new location.
Impact of brand emergence over improvisation of Costa coffee reach
According to the view point of Bliss, 2011, Brand emergence plays a crucial role with the
growth as well as success of an organisation. As it help in approaching larger number of
customers over several geographical area. Brand emergence also supported Costa coffee in
improving its global reach by providing it an opportunity regarding setting up its franchises over
several geographical area and approaching larger number of customers. This brand emergence in
Romania also helped Costa Coffee in increasing its reach as Romania is rich in culture of coffee
and after branding its outlet in country, company become able to expand its operations
throughout Europe. This become possible after getting acceptance in Romania as through which
company get enhancement in brand recognition. Hence it support Costa Coffee in expanding its
global reach through brand emergence.
As per the view point of Taylor and Derudder, 2015, the action of Costa Coffee toward
the global brand emergence helps it in improving its reach at global market up to a great extend.
This is because, Romania country is best known for its coffee which is rich in taste and of high
quality. As a result of which its expansion in Romania supported Costa coffee to adopt the
culture of country in term of its practices and procedure to prepare coffee. The achievement of
success at this market supported Costa Coffee not only in increasing customer base within the
country but it also support in enhancing brand image at global market. This positive brand image
also help Costa Coffee in marking its name at global market which in turn further help while
approaching customers or expanding its business in new country. As people prefer to take
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product or services from the brand which have higher recognition in marketplace and get positive
reviews from its experienced customers. Hence, its expansion within the Romania help in
creating a positive brand image which in turn help it in further approaching customers much
easily that leads to maximisation of Costa coffee reach at global market.
Challenges faced by Costa Coffee.
Apart from this there are several challenges faced by Costa coffee while doing franchise.
Explanation of these are as follows :-
 Costa Coffee face issue related to skilled employees because in Romania their are several
people whose education and skills don't matched with each other. Thus, it will be the
major issue which faced by respective organisation within franchise process. Along with this, company have to work on rules and regulation stick by the company.
Franchise taker cannot implement their own policies within working of company.
Franchising:
Franchising is the type of licensing which party acquire and it allow them to access
business's proprietary knowledge, trademark and processes. Taking franchise allow party to sell
goods and services under the name of business. For gaining franchise, franchisee have to pay
initial start-up as well as annual licensing fees to franchisor. There are some pros and corns of
franchise explanation of these are as follows :-
Pros Cons
Franchises offer individual small business
ownership which is supported through the
advantages of high business network.
Along with this, franchises have higher rate of
success in comparison of start-up business.
Perhaps one of the biggest advantages to
buying a franchise is the training and
ongoing support receive from the
franchisor. There will always be someone
to call when a question or problem arises.
Most franchisors require franchisees to pay
ongoing royalty and/or advertising fees.
Though you benefit from the support and
marketing efforts this affords, you will
always owe a percentage of your profits to
the franchisor.
Depending on the system, start-up costs for a
franchise can be steep. Many franchise
owners find it necessary to secure
financing in order to purchase their
business.
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