International Development of Franchise Brands ...International Development of Franchise Brands...
Transcript of International Development of Franchise Brands ...International Development of Franchise Brands...
Dr. Gerald Lang BEM Bordeaux Management School/ KEDGE Business School Ecole Polytechnique Paris
International Development of Franchise Brands Workshop
Inte
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Inte
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Inte
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Inte
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International Development of Franchise Brands Workshop Themes
2. Doing appropriate market research
3. How to adapt the product and service offer to local needs?
4. Going digital to promote your brand
5. Local Partners – How to find them and work with them
1. Going International A Major Challenge for a Brand
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International Development of Franchise Brands
2. Doing appropriate market research
3. How to adapt the product and service offer to local needs?
4. Going digital to promote your brand
5. Local Partners – How to find them and work with them
1. Going International A Major Challenge for a Brand
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Brands Going International
Reasons
Saturation of home markets
Opening of new Markets
Homogenization of consumer’s needs
Increasing competition
Recession or other Economic Factors
Strict Regulation on Store Development
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Global Retailing Market Entry Strategies
Culturally close
Culturally distant
Easy
to e
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D
ifficult to enter
Adapted from Keegan, W./Green, M.: Global Marketing, 9th edition, 2008
External Growth Chain Acquisition
Organic Growth
Franchising Joint Venture
FRANCHISING FRANCHISING
FRANCHISING FRANCHISING
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Prerequisites of Internationalization
Have a strong and proven franchise concept in home country
Identify advantage relative to local competition What’s new, what’s better than local actors?
Decide Where? When? How? With whom?
Secure Supply Chain Competence Design - Production - Delivery
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Retailer’s Internationalization: Success stories
Joint Venture in South Korea since 1999 Today No. 2 with “HomePlus” behind local “E-Mart”
Successful acquisition of Asda in UK Successful acquisition in Brazil operating different brands
Opening in Dubai Mall
Successful development in China, Eastern Europe…
But: retreat from Japan, Corea, Chile, Turkey…
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Retailer’s Internationalization: Pitfalls
Wal-Mart acquired Wertkauf Supercenters in Germany Behavior and Product Mix not adapted
Decathlon opened three suburban stores in Germany Buying behavior for sports articles concentrates on city centre
Auchan & Carrefour invested much in US market Payment terms in US didn’t allow cash-flow to finance investments
The Body Shop entered successfully the US in 1992 Captured by Bath&Body Works, who dominate the category created by The Body Shop
Galeries Lafayette opened store on NYC 5th avenue Product Mix, Merchandising and Positioning not adapted
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Retailer’s Internationalization: Pitfalls
Mismatch Format - Country
Highly developed countries difficult to enter
Management mistakes
Difficult Positioning
How to make internationalization a succes?
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International Development: 4 phases
PRE-ENTRY PHASE • Market Study • Country
Choice • Concept • Entry mode • Partner
ENTRY PHASE • Choice of
timing • Cost of market
entry • Research of
first location • Launch and
correction • Make benefits
with first location
• Anticipate pitfalls and failure
GROWTH PHASE • Internal
organization of headquarters
• Local teams and staffing
• SCM and logistics optimization
• Supplier management
• Market survey • Multi-channel
development
REPOSITIONING • Anticipation of
concept maturity
• Local leaders “counter-attack”
• Back-office optimization (create cost leadership)
• Multi-format strategy, growth in mature market
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International Development of Franchise Brands
2. Doing appropriate market research
3. How to adapt the product and service offer to local needs?
4. Going digital to promote your brand
5. Local Partners – How to find them and work with them
1. Going International A Major Challenge for a Brand
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Choice of Country
Client characteristics
Distribution system
Competition
General Environment
Socio-economics, purchasing habits: Where to buy which product ?
Maturity of retail formats, wholesaler importance, shopping center coverage…
Competitor’s products, retail formats private label…
Economic and social context, taxes, political stability, legal environment and regulation
Geographical & Cultural Distance
Supply Chain and operations impact, Consumption habits, language
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3 levels of foreign markets studies
Macro-environment
Demographics, Economics, Institutions, Politics, Culture, Technology, Nature
Micro-environment
Market characteristics, Potential and existing customer behavior, Competition, Sales channels
Company related studies Existing competitive Advantages, Image and Positioning, Product policy, Price Policy, Distribution Policy, Communication Policy, Merchandising
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Assessment of consumer behavior in foreign markets
How do they buy?
What influences
their behavior?
Customers
Who is important
?
Where do they buy?
When do they buy?
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International Development of Franchise Brands
3. How to adapt the product and service offer to local needs?
2. Doing appropriate market research
4. Going digital to promote your brand
5. Local Partners – How to find them and work with them
1. Going International A Major Challenge for a Brand
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Not every concept is exportable…
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International Development: 2 Main Strategic Options
Standardization Strategy
Differentiation Strategy
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Internationalization Strategies
Non-Food
Standardized Distribution Strategy (homogenization of customers’ expectations)
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Internationalization Strategies
Food
Differentiation according to socio-cultural differences necessary
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Product and Brand Policy
International Product & Brand Strategy
Definition of the Concept
Definition of Product Range & Characteristics
Brand Management
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International Product & Brand Strategy Concept may be standardized, but product range adapted !
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Physical Product Characteristics
Standardization vs. Differentiation
Constraints
Environment
Local Competition
Measures, sizes, technical norms, sanitary and legal rules…
Climat, Lifestyle, infrastructure, technology
Traditions, local consumption habits
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International Development of Franchise Brands
4. Going digital to promote your brand
2. Doing appropriate market research
3. How to adapt the product and service offer to local needs?
5. Local Partners – How to find them and work with them
1. Going International A Major Challenge for a Brand
BIF
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Going digital to facilitate foreign market entry
F T I S O C O N N
• Create brand awareness • Generate online orders from
foreign countries • Test the market • Use social media • Recruit potential
(Master-) Franchisees • …
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Use of social media Customers in all countries share their opinion on
social networks!
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Use of social media Strong social media use in MENA region
Countries Facebook Users Increase in 6 Month
Population Facebook Population Penetration
USA 157,401,460.00 3.65%
309.05 million 50.74%
Turkey 30,963,100.00 4.38% 72.75 million 39.80% Egypt 9,393,700.00 16.95% 81.12 million 11.67% Saudi Arabia 4,532,300.00 11.17% 27.44 million 17.61% UAE 2,770,060.00 16.99% 7.55 million 55.67% Jordan 1,987,000.00 16.08% 6.04 million 31.01% Lebanon 1,367,220.00 12.65% 4.22 million 33.14% Iraq 1,303,500.00 44.55% 32.03 million 4.39% Kuwait 880,720.00 5.95% 2.7 million 31.58%
Palestine 712,140.00 17.85%
4.15 million 28.32%
Cyprus 553,900.00 13.81% 1.10 million 50.23% Oman 362,320.00 26.18% 2.78 million 12.21% Qatar 323,280.00 37.98% 1.75 million 38.44% Yemen 318,320.00 -1.47% 24.05 million 1.35% Bahrain 316,340.00 9.86% 1.26 million 42.86% Iran N/A* - 73.97 million - Syria N/A* - 20.44 million - Source: Alexa, 2012 except for population which is extracted from world bank data 2012 **Iran and Syria were excluded due to an official censorship of Facebook
Total ME Users 55,783,900.00 ME Average Increase in 6 month: 16.5%
363.35 million (Excluding USA)
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Use of internet to sell / promote on different markets
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International Development of Franchise Brands
5. Local Partners – How to find them and work with them
2. Doing appropriate market research
3. How to adapt the product and service offer to local needs?
4. Going digital to promote your brand
1. Going International A Major Challenge for a Brand
BIF
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Market Entry Strategies
Exporting
Contractual Agreements
Strategic Alliances
Internet
Distributor
Greater control
and greater
risk
Direct Foreign Investment
Licensing
Franchising
Strategic Alliances
Joint Ventures
Minority Participation
Acquisition of Local Company
Creation of Local Company
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Evaluation of foreign partners
Overall qualifications / selection criteria
Financial and company
strengths
Product knowledge
Marketing skills
Commitment
Distribution experience
Adapted from Hollensen, Global Marketing 4e, © Pearson Education 2008
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Finding and working with (Master) Franchisees
Becomes a franchisor
in the country
How to share cost and risk
of a pilot ?
When to pay royalties & entry fees?
Requires training and assistance
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Finding Partners
Feeling matters as well !
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