University Business Development Report: Agency Theory and Franchising

This report delves into the intricate relationship between agency theory and franchising, examining crucial business concepts. It begins by differentiating between joint ventures and alliances, followed by an explanation of the contrast between acquisitions and Greenfield entries. The report then explores market exit strategies, analyzing the factors involved in making such decisions. Furthermore, it discusses the concept of competitive advantage and its potential sources within a business context. The content covers strategic management, market dynamics, and the application of agency theory in franchising, providing a comprehensive overview of these essential business topics. The report also references various academic sources to support its arguments and provide a deeper understanding of the subject matter.

Relationship between agency
theory and franchising

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
Explain the difference between joint ventures and alliances.......................................................1
Explain the difference between acquisition and Greenfield entry...............................................1
Discuss the theories of market exit strategies. What are some of the factors involved in the exit
strategy decision?.........................................................................................................................2
Discuss what is meant by competitive advantage and what are likely sources for this
advantage?...................................................................................................................................2
CONCLUSION................................................................................................................................3
REFERENCES................................................................................................................................4

INTRODUCTION
In the franchise and agency theory has wide relationship through development of business
considered in positive consideration. In this way, strategic management develop demand and
leadership make decisions that what essentially done by the company (Kacker, Emerson and
Coughlan, 2016). In this aspect, present report covers differences between joint venture and
alliances. Furthermore, it includes theories of market exit strategies. At last, it focuses on the
competitive advantages and sources that are required in it.
MAIN BODY
Explain the difference between joint ventures and alliances.
In the joint venture, businesses started and invest as new which jointly and owned as the
parent companies. Beside this, in the alliance legal agreement consider between two and more
than two companies that share access of their technologies, etc. It is not create own and new
company (Marie Doherty, Chen and Alexander, 2014).
Further, in the joint venture business access assets and knowledge to combine their best
features and altering as the parent company. However, in alliances, quick gain of new areas of
expertise considered with new technology markets which consist usually two options such as buy
smaller company from a strategic alliance.
Explain the difference between acquisition and Greenfield entry.
In respect to determine the difference between acquisition and Greenfield entry, following
differences considered in the business:
 Acquiring is the method that considered short term cash with guarantee future stability.
While, in the Greenfield investment it is starts with bare ground and build from there
(Argyres and Bercovitz, 2015).
 In the acquiring, there is existing company can gain more to establish market. On the
other hand, in the Greenfield commitment considers when market is solid.
 In addition to this, in the Acquiring skilled workforce develops at disposal. Beside this, in
the Greenfield investment there is greater control of all the aspects in the business.
 Further, in Acquiring there is one less competitor to deal with the market. On the other
hand, people can work to make control over the brand (Kacker, Emerson and Coughlan,
2016).
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 In the acquisition, negotiation usually occurs at the top level to target the company and
handle licensing and compliance. However, in Greenfield competition will be difficult to
overcome.
Discuss the theories of market exit strategies. What are some of the factors involved in the exit
strategy decision?
In respect to implement the exit, there are several kinds of strategies implemented in the
business environment. They are as follows:
 Family succession: Many small businesses can implement this strategy that assists to
passing the business from family member. In this way, legacy considered as the attractive
option. It is also allow make opportunity for increasing profits and revenue.
 Liquidation and Walkaway: In this aspect, business owner decide to simple quits and
close the business doors. It happens around more than hundred times in the businesses
(Madanoglu and Castrogiovanni, 2017).
In respect to implement the exit strategies, there are several factors involved in it such as
goodwill, badwill, etc. All these elements helps to considered successful exit strategy in the
business for their success plan and attain desired results.
Discuss what is meant by competitive advantage and what are likely sources for this advantage?
In respect to attain competitive advantages, it is essential to allow the organisation to
implement attributes in the organisation that increases its effectiveness. It includes access
competitors which includes natural resources such as high grade and low cost power source.
Furthermore, there are highly skilled labour included that also considered in the geographic
location with high entry barriers (Marie Doherty, Chen and Alexander, 2014). In addition to this,
competitive advantages also gain through highly skilled labour and high entry barriers
consideration in the business. New technology access assists to make it creative in the business
environment.
In respect to attain competitive advantages, there are several sources in which people are
first because behind innovation it is the most valuable consideration that involved in the
company. Furthermore, organisational culture and structure also source to attain competitive
advantages in the business. It includes habits, behaviour, mission, etc. of the enterprise that are
most important symbol of the enterprise (Argyres, Bercovitz and Zanarone, 2016). In this aspect,
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process and practices also involved in the superior method that produce results to enjoy
competitive advantages.
CONCLUSION
From the above report, it can be summarised that in the franchise and partnership there is
large differences are occurs. In this aspect, it is essential to focus on the creative perspective
which makes different objectives in systematic manner. Therefore, report articulated about the
several important perspective which discussed in the positive manner.
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REFERENCES
Books and Journals
Argyres, N. and Bercovitz, J., 2015. Franchisee associations as sources of bargaining power?
Some evidence. Journal of Economics & Management Strategy, 24(4), pp.811-832.
Argyres, N., Bercovitz, J. and Zanarone, G., 2016. The Role of Relational Contracts in Inter-
Firm Relationships: Theory and Evidence on Multiunit Franchising.
Kacker, M., Emerson, J. and Coughlan, A.T., 2016. How firm strategies impact size of partner‐
based retail networks: Evidence from franchising. Journal of Small Business
Management, 54(2), pp.506-531.
Madanoglu, M. and Castrogiovanni, G.J., 2017. Franchising proportion and network
failure. Small Business Economics, pp.1-19.
Marie Doherty, A., Chen, X. and Alexander, N., 2014. The franchise relationship in China:
agency and institutional theory perspectives. European Journal of Marketing, 48(9/10),
pp.1664-1689.
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