MGN101 (Lecture 9)- Business Organization and Management

Foundation of Indian Business (Franchising, Outsourcing and E-Commerce)

by
Dr Dinesh Kumar
 Franchising
• In a franchise operation, the owner of the original business, known as the franchisor, essentially sells the rights to use his brand to an entrepreneur
called a franchisee. In return, the franchisee agrees to follow the franchisor’s business model and to pay the franchisor royalties.

• Capital: The franchisor’s capital requirements will be lesser because the franchisees provide the capital to open each franchised channel.
• Better Management: The local management of each franchised unit will be highly motivated and very helpful. They care for the franchise
units as their own and that will frequently lead to higher sales and profit levels.
• Less Employees: The number of employees which a franchisor needs to operate a franchise network is much smaller than they would need
to run a network of company owned units.
• Speed of Expansion: The franchise network can grow as fast as the franchisor can develop its infrastructure to recruit, train and support its
franchisees.
• Reduced Attachment in Day-To-Day Operations: The franchisor will not be drawn in the day-to-day operations of each franchised outlet.
• Risks and Accountability: The franchisor will not risk its capital and will not have to sign lease agreements, employment agreements, etc.
• Increasing Brand Fairness: Leveraging off the assets of franchisees helps franchisors grow their market share and brand equity more
quickly and effectively.
• Publicity and Support: Franchisor will reach the target customer more effectively through co-operative advertising and promotion
initiatives.
• Consumer Faithfulness: Franchisors use the power of franchising as a system to build customer loyalty to catch the attention of more
customers and to keep them.
• Worldwide Growth: International expansion is easier and quicker, since the franchisee possesses the local market knowledge.

2
 Outsourcing
• In simple terms, outsourcing refers to the act of contracting a third party company to carry out certain functions of your business.
• Outsourcing can be done for the sake of reducing operating costs as outsourcing is more cost effective than hiring an in-house team.

3
 Offshoring
• Off-shoring is the relocation of a business process from one country to another typically an operational process, such as manufacturing, or
supporting processes, such as accounting.
• Typically this refers to company business, although state governments may also employ off-shoring.
• Off- shoring refers to a company getting their various services handled in a different country to make the most of the cost advantage.
• Off-shoring is usually done by finding a country where the exchange rate gives your business a distinct monetary benefit.

4
Outsourcing vs Offshoring

5
E-Commerce
• E-Commerce is defined as those
commercial transactions carried
out using the electronic means, in
which goods or services are
delivered either electronically or
in their tangible or intangible
form.

6
 Features of E-Commerce
• Real-time Shopping Experience
• Using Mobiles and Android Apps for Transaction
• Multi-channel
• Big Data
• Customization and Personalization
• Valuing Customer Engagements than Conversion Ratio
• Push Notification
• Social Networking Sites
• Mobile POS and Accessing Via Mobile
• Retailer Support to Omni-Channel Consumers

7
Benefits of E-Commerce
• It helps to reach global
• Cost effective

8
Disadvantages of E-Commerce
• E-commerce lacks the personal touch
• System and data integrity
• E-commerce delays goods

9
Bibliography
• Koontz, H., Weihrich, H., & Cannice, M. V. (2020). Essentials of Management-An International, Innovation and Leadership
Perspective|. McGraw-Hill Education.
• Gupta, C. B. (2010). Business Organisation and Management. Mayur Paperbacks.
• Singh, B. P., & Chhabra, T. N. (1991). Business Organisation and Management.

10
ThankYou
Dr Dinesh Kumar
+919720226833
dinesh.28611@lpu.co.in

11