Business Structures and Globalization

Study Notes

Franchises are a business structure where a franchisor (business) allows a franchisee (another operator) to trade under their name.
Franchisees benefit from lower risk, startup support, and predictable costs.
Franchisors benefit from quicker growth and shared risk with franchisees.
Disadvantages for franchisees may include profit sharing and a lack of independence, which can be expensive.
Disadvantages for franchisors may include potential profit sharing with franchisee and higher costs for supporting franchisee.

Globalization is the integration of world economies, allowing free trade in goods and services.
Globalization benefits people by allowing them to live and work anywhere in the world.
Businesses benefit from globalization through increased market access and lower costs due to access to a wider pool of labor.

Venture capital specialists provide funds to small and medium-sized businesses, particularly technology companies with high growth potential.
They often invest after initial start-up to support business expansion.

Market segmentation is dividing a whole market into groups with shared characteristics.
Companies segment markets to identify the needs of specific consumer groups.
Examples of segmentation include geographic (location), demographic (factors like age, gender, income), and psychographic (lifestyle).
Segmentation helps businesses tailor products or services to meet different customer needs.

E-commerce, or E-tailing, uses electronic systems to sell goods and services.
Business-to-consumer (B2C) involves businesses selling to consumers.
Consumers order online and receive their goods or services at their homes.
Business-to-business (B2B) involves businesses selling to other businesses online.
Benefits of online business include lower startup costs, wider variety of products from multiple vendors, operating 24/7, and access to a worldwide market.
Promotion strategies for B2C businesses in E-commerce include both Above-the-line promotion (using mainstream media), and Below-the-line promotion (e.g., sales promotions and other marketing not involving traditional media).