Franchising As A Corporate Strategy For Increasing Organizational Profitability

Project and Seminar Material for Business Administration and Management BAM

Franchising As A Corporate Strategy For Increasing Organizational Profitability


Abstract


This study is aimed at investigating franchising as a corporate strategy for increasing organizational profitability. The study focused on British American Tobacco (Nig) Ltd Zaria (BAT). The study used primary data collected with the use of questionnaire distributed to 50 managers of BAT, Zaria. The data was analysed using frequency percentages and weighted mean to answer the research questions. The findings of the study agreed with some previous research findings that the processes of strategic management generally include environmental scanning, formulation and implementation of strategies, and evaluation and control; but disagreed with some who posited that franchising have been fully embraced in Nigeria. The study finds that some corporate organizations are yet to fully come to terms with the processes of franchising. It found that some will formulate strategies but will not work according to its precepts. Finally, it is discovered that formulating the strategies without following the other processes is like not having any strategy at all. Therefore, the study concluded that franchising have not been fully adopted by corporate organizations in Nigeria, and that to enhance franchising; the full processes as identified by the model must be followed. And this will activate its positive impact on the firms’ competitive advantage as well as profitability.


Chapter One


Introduction

1.1 Background of the Study

Franchising is based on a marketing strategy that can be adopted by an organization as a strategy for business expansion. When employed, a franchisor licenses its knowledge, procedures, intellectual property, use of its business model, brand and rights to sell its brand products and services to a franchisee.

For successful franchise management, you must develop profitability strategies specific to your business. Also, learn how to improve cash flow, financial control, banking and profitability through effective training and development with Profit Mastery.

A main objective for all business owners is to improve the profitability and performance of their business unit. Earning more profits, improving cash flow management, developing a comprehensive understanding of financial control and financial management to achieve your goals are important and necessary business activities, and they all start with smart money management.

Marketing is a common phenomenon, but it is quite complex and in fact an elusive subject matter. Marketing means different things to different people just as it affect everyone and is highly controversial. The activities of Marketing are so diverse that its sometimes difficult to say exactly what the term means. But however, the general consensus on marketing is that it is the performance of business activities which involves identifying, anticipating customs wants and satisfy them.

The economic health of any nation depends largely on the healthy marketing system, especially where a huge mass production system and its attendant mass distributions are involved.

The importance and relevance of marketing business, whether in private or public organization cannot be overemphasized. It is against this background that many scholars and practitioners alike began to research extensively on Marketing as a business of exchange transactions.

Strategy is define as “a unified comprehensive, and integrated plan relating the strategic advantages of the firm to the challenges of the environment” (W.F. Gluck 1980). From the definition above, one can infer that strategy is a behaviour whose purpose is to achieve success for organizational goals in a competitive environment, chiefly rivals, market competitors, suppliers, customers, employees and even governmental unit.

The focus of this research work is on the franchising strategy employed by British American Tobacco Zaria and the prosperity for its growth. Marketing itself is a response to society needs. As society changes, so does marketing; as a society becomes complex so do the needs of its people.

Therefore, desired marketing strategies are required to cope with the dynamism of the society and their needs. For example, a marketer mush have a good knowledge of the behavioural sciences that deals with relationship among people which involves sociology, psychology and cultural anthropology. The way people responds as individuals and groups changes over time. More importantly the product under this research study is highly controversial world wide. In the civilized world, political and ethical actions sets legal boundaries for business like the marketing of tabacco products. All over the world, old laws are changed concerning the production, marketing and consumption of Cigarette, new laws are added and new interpretation are given to the existing laws.

However, decisions about what is acceptable behaviour form the ethical environment. Very often, a law is passed because a collective group thinking leads to the conclusion that a certain business practice is not ethical. For example several laws/decrees have either been passed or promulgated to ban or control Cigarette smoking all over the world.

British American Tobacco (BAT) took over Nigerian Tobacco Company Zaria in the year 2000 B.A.T, ironically was the Parent Company if N.T.C Zaria up till the time the former took over N.T.C. unfortunately NTC’s operations including Marketing had been at its best epileptic for the past one decade now; due probably to some factors that could be traced to poor quality of Nigerian made products, poor and inadequate marketing strategies and practices and alarming scale of smuggler’s activities including high costs of production.

Nigeria Tobacco Company tailed out of Business not because people have stopped smoking but simply because they saw themselves as tobacco company and not Marketing Company that require sound marketing strategies including bench marketing. It is against the foregoing background and facts that makes a research of this kind more interesting and worthwhile. This research work is particularly informed by the researcher’s inquisitive mind regarding the high expectations upon the new company (BAT) which has to operate with the conditions attached and under a double standard policies and legislations of the Federal Government. Including very unstable economic environment. Therefore it is the considered opinion of the researcher that this study would go a long way in contributing in a number of ways to improvement of BAT marketing strategies and more importantly to knowledge as a whole.


1.2 Statement of Research Problem

The main problem that this research study is set to address and find solution for is the lack of protection over the local industries which has always negated franchising strategies that may be adopted. This lack of protection is evident in the way and manner the smugglers smuggles into Nigeria Foreign products like Cigarette unchecked and with impunity, and again the numerous and indiscriminate advertisement on our daily media (both print and electronic media).

Another disturbing problem is the conflicting and confusing legislations on the manufacturers of tobacco products and the consumers as well. The advertising strategies employed by BAT have always been subjected to criticism from the public. The same advert that encourage people to smoke, that smoking is a way of life again end up warning that “Cigarette Smoking is Dangerous to your Health”.


1.3 Objective of the Study

The main objective of this research study is to examine the Franchising as a corporate strategy for increasing organizational profitability employed by BAT.

The following are the specific objectives of the study:

  1. To examine the current marketing strategies used in BAT to increase organizational profitability.
  2. To introduce franchising as a marketing strategy to increase organizational profitability in BAT.
  3. To find out how the company hope to tackle the Government and Public ‘double standard’ concerning the need for a tobacco company in Nigeria using franchising.

1.4 Research Questions / Hypothesis

What is the current marketing strategies used in BAT to increase organizational profitability?

  1. How can franchising increase organizational profitability in BAT.
  2. How does do company hope to tackle the Government and Public ‘double standard’ concerning the need for a tobacco company in Nigeria using franchising?

1.5 Significance of the Study

The study is quite significant because of the Nigeria’s high drive for industrialization and the crave for foreign investors to invade Nigerian Business environment.

The researcher study is significant more so as it intend to investigate the paradox surrounding the tobacco business. That is, the country like Nigeria that is aware of the health hazard in smoking will not let go the revenue that such industry could offer, and employment offered as well.


1.6 Scope of the Study

This research study pay particular attention to the marketing strategies employed by British American Tobacco (Nig) Ltd Zaria, and the prospect for their future growth.

Bearing in mind the nature of the topic for study and the circumstances surrounding the birth of BAT, the researcher has decided to briefly mention the Nigeria tobacco company LTD Zaria (the company that BAT took over from). The study therefore is limited to the period of 3 years; that is from the year 2000 to 2002.

Furthermore, the highlights of the study are limited to the strategic planning of marketing functions of BAT, the company’s promotional and pricing strategies, advertising strategies, products policies and development and including the packaging and labeling and physical distribution channels adopted.

The research study also attempt to examine critically what prospects BAT has on the face of turbulent economy like Nigerian’s and the government’s position about smoking that hardly can see any marketing strategies to a success.


1.7 Limitations of a Success

Any research study cannot be completely successful without at least some short-comings; but however, the magnitude of such shortcomings and intensity may differed depending on what the research intends to achieve.

First and foremost, the researcher encounters problems in the areas of data collection. Most of the information required to bring out a perfect study were considered classified documents by the British American Tobacco Company; and as such we hardly could gain access to them. Notwithstanding, the above constraint, the researcher has tried as much as possible not to compromise the quality of this research study/work.


1.8 Organization of the Study

The study is divided into five chapters. Chapter one deals with the study’s introduction and gives a background to the study. Chapter two reviews related and relevant literature. The chapter three gives the research methodology while the chapter four gives the study’s analysis and interpretation of data. The study concludes with chapter five which deals on the summary, conclusion and recommendation.


Chapter Five


Conclusion and Recommendations

5.1 Conclusion

It could be said that franchising is yet to be fully adopted by British American Tobacco (Nig) Ltd Zaria and Nigeria in general. But that when the processes of is fully enhanced, it is capable of boosting the profitability of corporate organizations. When the franchising are fully implemented as formulated following the processes, it has a lot positive impact on the firms’ competitive advantage as well as profitability.


5.2 Recommendations

Base on the foregoing, the following recommendations are discernable:

  1. Corporate organizations should not just make management policies or strategies, but should also implement it with open mind. It is necessary to note that franchising should be open enough to adjustments that may arise in the process of implementation. This is the reason why the process should start with evaluation and dissemination of information to key players in the management process and end with evaluation and control of actions, and back to evaluation and dissemination of information as a cycle.
  2. Franchising should be incorporated into the curricula of entrepreneurial centers and business schools in Nigeria. This will encourage detailed knowledge on the principles of franchising for future managers of corporations in Nigeria.
  3. This study recommends further investigation on the factors that discourages full implementation of the processes of franchising by corporate organizations.

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Frequently Asked Questions


Are your franchisees gearing up for growth?

If your business is geared for growth, so too will your franchisees. Make sure you have the resources and systems in place to support multiple-unit operators. Make sure your brand’s business plan, marketing, systems, corporate management and culture are all set up to support franchisee growth.

How can I use my franchise management skills to expand my business?

As a successful franchise business owner you’ll be used to leading both staff and franchisees. You’re constantly re-evaluating processes, changing procedures and learning from others. You can use those franchise management skills to demonstrate your expertise within your network, and attract new prospects to expand it. Here’s 16 ways how: 1.

How do you attract franchisees to your brand?

Make sure your brand’s business plan, marketing, systems, corporate management and culture are all set up to support franchisee growth. 4. Connect people and encourage conversations for bigger investments. The best way for prospective franchisees to know whether your franchise management system will really work for them is to ask.

How to improve profitability of your company?

Ways To Improve Profitability of Your Company 1) Prepare a strategic plan with 1-year, 3-year, and 5-year goals 2) Determine up to five key success factors for your business 3) Implement and monitor a budget 4) Each year, abandon up to 10 percent of your business that is not aligned with your strategic plan

Why should you invest in a management franchise?

By investing in a management franchise, you can use the experience gained during your career to grow your own business Owning and running a franchise business is all about transferrable skills. And that’s perhaps best illustrated in the abundant and diverse range of businesses that operate in the ‘management franchise’ category.

How to become a successful franchisee?

One of the most important factors of operating a franchise is following a system and maintaining the brand identity. You must be willing to learn and follow the franchisor’s business plan to successfully duplicate the proven process. Driven leaders are focused on achieving goals and are constantly motivated to improve the franchise.

How do you attract franchisees to your brand?

Make sure your brand’s business plan, marketing, systems, corporate management and culture are all set up to support franchisee growth. 4. Connect people and encourage conversations for bigger investments. The best way for prospective franchisees to know whether your franchise management system will really work for them is to ask.

What skills do you need to be a franchise owner?

As a successful franchise business owner you’ll be used to leading both staff and franchisees. You’re constantly re-evaluating processes, changing procedures and learning from others. You can use those franchise management skills to demonstrate your expertise within your network, and attract new prospects to expand it.

How do you attract and retain franchisees?

To continue attracting and retaining that business, it’s important to stay true to the brand. If the franchise brand is known for great customer service, then local managers have to make sure that customer service is a priority for them. Personalize each franchise to the local area, but stay true to the brand it represents.

How do I build a brand for my franchise?

The franchise business model really lends itself to the rapid development of a recognised brand. This extended article shows you how to make use of it… 1. Identify what qualities, values, and experiences customers associate with your business Market research is often the place where successful franchise branding starts.

What is franchise branding and why is it so important?

Building your franchise branding strategy is one area where you don’t want to skimp on expense. This is going to be a vital part of your franchise proposal – and one that’s going to get even more important as you expand. The franchise business model really lends itself to the rapid development of a recognised brand.

What makes a successful franchise location?

Much of the traction and business a franchise location enjoys comes from the brand name that it carries. To continue attracting and retaining that business, it’s important to stay true to the brand. If the franchise brand is known for great customer service, then local managers have to make sure that customer service is a priority for them. 

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