International Business Final
What is a Franchise?
A Franchise is an arrangement where one party (the franchiser) grants another party (the franchisee) the right to use its trademark or trade-name as well as certain business systems and processes, to produce and market a good or service according to certain specifications.
Movement of Goods
Domestic trade: easier to move goods without much restrictions. Maybe need to pay sales tax,etc International Trade: Restricted due to complicated custom procedures and trade barriers like tariff, quotas or embargo
Broader markets
Domestic trade: limited market due to limits in population, etc International trade: Broader markets
Usage of different currencies
Domestic trade: same type of currency used International trade: different countries used different currencies
Language and Cultural Barriers
Domestic trade: speak same language and practice same culture International trade: Communication challenges due to language and cultural barriers
Disadvantages of buying a franchise
Buying a franchise means entering into a formal agreement with your franchisor. Franchise agreements dictate how you run the business, so there may be little room for creativity. There are usually restrictions on where you operate, the products you sell and the suppliers you use. Bad performances by other franchisees may affect your franchise's reputation. Buying a franchise means ongoing sharing of profit with the franchisor. Franchisors do not have to renew an agreement at the end of the franchise term.
Mobility in Factor Of Production
Domestic Trade: Free to move around factors of production like land, labor, capital and labor capital and entrepreneurship from one state to another within the same country International Trade: Quite restricted
Why should a company consider the possibility of going international?
First Mover Advantage Potential for Growth More Customers Discourage Local competitors Increase sales Improve profits Short term and long terms security Increase innovation Economies of sales Education Competitive strike Government incentives
Advantages of buying a franchise
Franchises offer the independence of small business ownership supported by the benefits of a big business network. You don't necessarily need business experience to run a franchise. Franchisors usually provide the training you need to operate their business model. Franchises have a higher rate of success than start-up businesses. You may find it easier to secure finance for a franchise. It may cost less to buy a franchise than start your own business of the same type. Franchises often have an established reputation and image, proven management and work practices, access to national advertising and ongoing support.
What are some of the main differences between Domestic and International trade?
Mobility in Factor of Production Movement of Goods Usage of different currencies Broader markets Language and Cultural Barriers
