Business Strategies and Franchise Model Quiz

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Questions and Answers

What is the primary role of a franchisor in a franchise agreement?

To control the pricing of the franchisee's products

To provide financial loans to franchisees

To license elements of its business system to franchisees (correct)

To hire all employees for the franchisee's business

Which of the following describes a franchisee in a franchise business model?

A company that regulates franchise contracts

A stakeholder that assesses company performance

An individual who invests in the franchisor's expansion

A business owner who has the rights to use the franchisor's brand and business model (correct)

What is a major advantage of purchasing a franchise?

Ability to change supply chains independently

Established business system and brand recognition (correct)

Guaranteed financial support from the franchisor

Complete freedom to operate without any guidelines

Which of the following is NOT a step in the stakeholder management process?

Stakeholder elimination Signup and view all the answers

How do the focuses of stakeholders differ from those of shareholders?

Stakeholders consider overall company performance and community impact, unlike shareholders Signup and view all the answers

What are the five components essential for a business to maintain a competitive advantage?

Value, rarity, imitable, robustness, non-substitutable Signup and view all the answers

How do small businesses and start-ups typically differ from large companies in terms of opportunity recognition?

They are more agile in identifying and exploiting new opportunities. Signup and view all the answers

What distinguishes innovation from invention?

Innovation involves applying new methods in a market context, while invention is about new creations. Signup and view all the answers

What is an example of creative destruction in the context of business?

The establishment of online shopping leading to the decline of brick-and-mortar stores. Signup and view all the answers

Why did Blockbuster ultimately fail in the face of competition from Netflix?

Blockbuster underestimated the relevance of online streaming trends. Signup and view all the answers

What is the primary goal of business-level strategies?

To achieve competitive advantage by offering unique value to customers Signup and view all the answers

Which of the following best describes corporate-level strategies?

They deal with the overall direction of the organization across various businesses Signup and view all the answers

What is the primary focus of industry/sector benchmarking?

Comparing performance against other organisations within the same industry Signup and view all the answers

What is a limitation of best-in-class benchmarking?

It does not address why performance differences exist Signup and view all the answers

What does the 'organizing' element in strategy into action refer to?

Aligning structure and resources with the strategy Signup and view all the answers

What is one of the key drivers for achieving cost leadership?

Economies of scale Signup and view all the answers

In SWOT analysis, which components relate to the internal environment of an organization?

Strengths and Weaknesses Signup and view all the answers

Which of the following statements is true regarding strategic decisions?

They often require consideration of stakeholder values and expectations Signup and view all the answers

What is an essential aspect of managing change within an organization?

Ensuring employees embrace changes Signup and view all the answers

How do SWOT and TOWS analyses differ fundamentally?

SWOT identifies Weaknesses then Opportunities, TOWS does the opposite Signup and view all the answers

What characteristic is essential for a differentiation strategy?

Providing unique product features Signup and view all the answers

What can lead to a company being 'stuck in the middle' according to Michael Porter?

Adopting both cost leadership and differentiation strategies Signup and view all the answers

Which approach is most appropriate for addressing conflicting stakeholder interests?

Seeking alignment between the organization’s mission and stakeholder values Signup and view all the answers

What key aspect should be ignored when conducting a SWOT analysis?

Broad and general industry trends Signup and view all the answers

Which of the following best defines a focus/niche strategy?

Tailoring products to meet the specific needs of a narrow market segment Signup and view all the answers

What does the TOWS matrix facilitate in strategic planning?

Generating options addressing both internal and external factors Signup and view all the answers

What method refers to how an organization plans to grow over time?

Development directions and methods Signup and view all the answers

What are the two types of focus strategies mentioned?

Cost focus and differentiation focus Signup and view all the answers

How should strategic management decisions be characterized?

Complex and made under uncertainty Signup and view all the answers

Which statement effectively distinguishes SWOT from best-in-class benchmarking?

SWOT analyzes both internal and external factors comprehensively Signup and view all the answers

Which of the following is an element evaluated in the TOWS matrix?

Options derived from internal weaknesses and external threats Signup and view all the answers

Which of the following is NOT a key factor for successful focus strategies?

High barriers to entry for competitors Signup and view all the answers

What aspect does differentiation take into account to justify a premium price?

Customer relationships and unique attributes Signup and view all the answers

Which statement is true regarding hybrid strategies?

They can effectively combine pricing and cost structure advantages. Signup and view all the answers

What is the primary purpose of an organisation structure?

To enable the division of responsibilities and decision-making authority Signup and view all the answers

What does an organisation chart illustrate?

The grouping of employees and lines of communication Signup and view all the answers

What characterizes an agile organisation?

A focus on quickly adapting to customer needs Signup and view all the answers

What is work specialization often referred to as?

Division of labour Signup and view all the answers

What disadvantage is associated with a narrow span of management?

Increased complexity of vertical communication Signup and view all the answers

What does centralisation in an organisation refer to?

Concentration of decision-making authority at the top Signup and view all the answers

What is the span of control?

The number of subordinates a manager can efficiently direct Signup and view all the answers

What is a characteristic of a line-and-staff organisation?

Functional groups provide specialized advice while maintaining a clear command chain Signup and view all the answers

Study Notes

Lecture 1 - Introduction to Business Models

Business: profit-seeking organizations providing goods/services.
They all must satisfy customer needs to make a profit.
Value chain: each company/step involved in finalizing a product.
Revenue: the money a company brings in from selling goods and services.
Business model: concise description of how a business intends to generate revenue.
Profits = Revenue - Costs
Competitive advantage: aspects of a product/company that makes it appealing to the target customer.
Two types of businesses:
- Capital intensive: companies that create value by performing activities to deliver a costumer benefit (e.g. Netflix).
- Labor intensive: more present in developed countries (e.g printing).
Some businesses provide goods/services and therefore fall into both categories (e.g. Apple).
Healthy connection in businesses = between risk and reward.
Moral hazard = link between risk and reward is broken = everyone suffers the consequences if outcome is negative.
Non-profit organisations provide goods and services without a profit motive.

Major functional areas in a business enterprise

Research and development (R&D) with information technology (IT).
Manufacturing, production, or operations.
Marketing
Finance and accounting
Human resources
Business services

Economy and Economics

Economy: the total sum of all economic activities in a region.
Economics: the study of how a society uses its scarce resources for producing/distributing goods and services.
Microeconomics: study of how consumers, businesses and industries influence demand and supply.
Macroeconomics: study of wider economic issues, like government policy affecting resources allocation.
Factors of production: Knowledge, human resources, natural resources, capital and entrepreneurship.
Economic impact of scarcity: resources are limited, therefore every decision has an opportunity cost.

Lecture 2 - Entrepreneurship and Start-ups

Entrepreneurs: capture problems and turn them into opportunities. Leads to new products, services or businesses..
Entrepreneurship research field: a process predictive output, mindset of an entrepreneur.
Key elements: Opportunity recognition, evaluation, identification, goals/plans and execution
Market feedback leads to adaptation
Entrepreneurial cycle
Effectual logic: process-driven focus, starting from what resources available, instead of desired outcomes.

The Effectual Cycle

Who I am
What I know
Whom I know
Actual means
Courses of action
Interactions/contingency planning
Effectual stakeholder commitments
New goals

Lecture 3 - Industry Analysis: Structure, 5-Forces, and Competitive Environment

Business Environment: consists of layers from very general to very specific external factors affecting an organisation, opportunities and threats.
Macro-environment consists of broad factors (political, economic, socio-cultural, technological, environmental, and legal).
Industry is a group of firms producing essentially the same products or services.
Sector: a broad industry group (e.g. healthcare)
Market: customers for specific products or services.

Lecture 4 - Resources and Capabilities

Organization system transforms inputs to outputs, with resources creating/preserving competitive advantage.
Tangible resources: Physical, financial, human, intellectual capital.
Intangible resources: Knowledge, reputation.
Capabilities/competencies are the ways resources are used/deployed, showcasing strengths.
Competitive advantage is achieved through valuable, rare, and inimitable competencies.
This leads to sustainable success if resources/competencies aren't easily substituted.

Lecture 5 - Developing Competitive Advantages

Strategy as direction/scope of an organization over the long term. This is achieved by configuring resources/competencies to fulfill stakeholder's expectations.
Strategic position: the external context surrounding the organization, including PESTLE analysis (political, economic, social, technological, legal, and environmental conditions + expectations/interests of stakeholders).
Strategic choices concerns how a business competes in a particular market sector.
Strategy in action: the process of aligning the organization's structure with strategy.

Lecture 6 - Strategic Decisions

How businesses grow through a range of strategies, such as mergers, acquisitions, partnerships and organic growth.
Bowman’s Strategy Clock shows pricing strategies from low-cost to high-value options.
Three-horizon model analyses how business volume grows over time.
Corporate level strategy: decisions concerning the scope of organization activities.
Business level strategy: how an organisation competes within business segment.
Operational strategy: how various operational parts implement overall strategy.

Lecture 7- Strategic Management

Organising: refers to aligning resources and capabilities.
Outsourcing is important when activities can be performed better by another company externally.
Forward integration: taking over activities that involve the delivery of a product to the customers.
Vertical integration: moving into activities of suppliers or customers.
Backward integration: taking over activities that involve sourcing inputs or raw materials.
Value-adding activities: help envisioning, serving as a service or resources, facilitating synergies and intervening/coaching to help employees to do their job effectively.

Lecture 8 - Marketing

Marketing is a process of creating value for customers, and building relationship in order to capture value back.
Marketing mix (Four P's): Product, Price, Place, and Promotion. This is a set of tactical marketing tools to achieve a defined strategic marketing objective.
Value-based pricing: based on customer perception of value
Cost-based pricing: based on calculated production/marketing costs.

Lecture 9 - Organizational Design, Structure, and Dynamics

Management is planning, organizing, leading and controlling to reach organizational objectives.
Management roles include interpersonal, informational and decision-making roles.
Organizing: process of arranging resources to carry out organizational plans.
Management pyramid is an organizational structure divided into top, middle and first-line management.
Departmentalisation: grouping employees based on functional area, like divisions based on product/customer, a matrix structure which combines functional and divisional patterns.
Network structure: uses external companies/firms to perform tasks via digital connectivity
Organizational Culture is the set of shared values/norms guiding behaviour within an organization.
Culture is difficult to change due to resistance to change, habit, security and economic factors.

Lecture 10 - Innovation

Invention is the creation of something new.
Innovation is the commercialized, new way of doing things.
Radical innovation changes how products/services are used/made.
Incremental innovation involves improvements to existing offerings.
Product innovation is related to the product (e.g., new features)
Process innovation is related to how a product is made/delivered.
Some industries are better at one type of innovation than others.
Open vs. Closed Innovation
Open innovation: exchange of ideas/knowledge with external partners to develop new products/services
Closed innovation: keeps new ideas inside the company.

Lecture 11 - Pace of Diffusion

Diffusion takes place in stages to adopt a new technology/process.
These stages are innovators, early adopters, early majority, late majority and laggards.
The rate/pace of diffusion is based on external factors like customer needs, how easy to adopt, cost/benefit calculations and various relationships with other people/networks.
S-curve shows how a new idea/product/service spread over time.
Tipping point = critical mass of users at a specific point in time.

###Lecture 12 - Core Capabilities and Strategy

Core competencies are central and vital to business activities. They are central and important.
Span of management: the number of people a manager can effectively oversee.
Organizational structure: a framework for dividing responsibilities, accountability, and making decisions.
Network structures use external companies for tasks; are flexible.
Unstructured organizations don't have formal structures; flexibility.

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Description

Test your understanding of business strategies, franchise models, and competitive advantages with this quiz. Topics include franchisor roles, stakeholder management, and the distinction between innovation and invention. Perfect for business students looking to enhance their knowledge.