Mgt211 GDB No. 1 Fall 2011 solution
Thursday, November 03, 2011 Posted In MGT Edit ThisMr. Owais has just earned a diploma in Hotel Management. He has a plan to open a small fast food outlet but he is not sure whether to run it as an independent "sole proprietor" or franchisee of an existing known brand. He has come to know through some source that you are currently enrolled in MGT211-Introduction to Business course. Therefore, he is seeking advice from you that which one is the most suitable/appropriate option for him i.e. sole-proprietorship or franchising? You are also required to explain him with reasons that why you have advised him a particular option.
Note: To avoid negative marking complete your comment within 150 words.
last date 3 Nov 2011
Solution:
First of All i ask him About the Financial Sources
If he is having sufficient Financial Sources than I ll suggest to adopt Sole propritorship
Because Sole Propritorship Offers such Advantages than no other business Can offer:
1-it is easy to establish and easy to dissolve
2-Managment Flexibilty For owner
3- Owner is all in all for his Business
4-Owner has right to retain all profits after payment of personal taxes
5-Retention of all profits and responsibility of all losses give sole propritorship incentive to maximize efficiency in operations
But if he has limited financial resources than it ll be dificult for him to maintain the business because
Sole proprietorships do not pay franchise taxes, and earnings and losses are reported on your personal income tax return.
Unfortunately, this format offers no liability protection whatsoever,
in this case i ll suggest him that
good insurance coverage is vital to protect your personal assets from business-related claims
But in case he has no sufficient Financial Sources
it ll be better to adopt Franchisee Trend of Business because
1-primary benefit is risk minimization vusolutions
2-Franchisers sell a defined, proven business format or method of operation, offering a product or service that has sold successfully
3-Franchisees can often buy lower-cost goods and supplies
4- group purchasing power of all the franchises.
5-potential to grow as its business and name recognition grow.
6- management assistance, including accounting procedures, personnel and facility management.
7- The most difficult part of a new business is its start-up, franisers helps to new franchisees in gaine xperience
8-One of the biggest benefits to franchising is marketing.
But in my point of view this is totally opposite.
Explanation:
When you open a franchise of a renowned brand, you purchase the right to use the name, trade mark, methods and packing material etc. For this you have to pay a huge cost (as decided in the deal b/w two parties) in purchasing this right. So, the option of opening a franchise is costly.
-----------This discussion was about the line you write in your idea----------
Now,
Taking into consideration the question of GDB, there is no restriction of financing. It is just a matter of experience.vusolutions
In my point of view:
It is better for Mr. Owais to open a franchise of a renowned brand. Mr. Owais is new in this field, so, by opening a franchise he can get the following advantages:
1. Huge revenue because the product is already successful in market
2. Successful business process
3. Guidance from Franchiser in all business matters (This will be greatly beneficial for Mr. Owais in getting experience)
4. Low rate of failure
After getting the experience in franchise of a renowned fast food brand, he will get sufficient market experience and customer demand. So, after that he can start his own business (sole proprietorship). In this way chance to get failure will be minimized.
last date 3 Nov 2011
Solution:
First of All i ask him About the Financial Sources
If he is having sufficient Financial Sources than I ll suggest to adopt Sole propritorship
Because Sole Propritorship Offers such Advantages than no other business Can offer:
1-it is easy to establish and easy to dissolve
2-Managment Flexibilty For owner
3- Owner is all in all for his Business
4-Owner has right to retain all profits after payment of personal taxes
5-Retention of all profits and responsibility of all losses give sole propritorship incentive to maximize efficiency in operations
But if he has limited financial resources than it ll be dificult for him to maintain the business because
Sole proprietorships do not pay franchise taxes, and earnings and losses are reported on your personal income tax return.
Unfortunately, this format offers no liability protection whatsoever,
in this case i ll suggest him that
good insurance coverage is vital to protect your personal assets from business-related claims
But in case he has no sufficient Financial Sources
it ll be better to adopt Franchisee Trend of Business because
1-primary benefit is risk minimization vusolutions
2-Franchisers sell a defined, proven business format or method of operation, offering a product or service that has sold successfully
3-Franchisees can often buy lower-cost goods and supplies
4- group purchasing power of all the franchises.
5-potential to grow as its business and name recognition grow.
6- management assistance, including accounting procedures, personnel and facility management.
7- The most difficult part of a new business is its start-up, franisers helps to new franchisees in gaine xperience
8-One of the biggest benefits to franchising is marketing.
But in my point of view this is totally opposite.
Explanation:
When you open a franchise of a renowned brand, you purchase the right to use the name, trade mark, methods and packing material etc. For this you have to pay a huge cost (as decided in the deal b/w two parties) in purchasing this right. So, the option of opening a franchise is costly.
-----------This discussion was about the line you write in your idea----------
Now,
Taking into consideration the question of GDB, there is no restriction of financing. It is just a matter of experience.vusolutions
In my point of view:
It is better for Mr. Owais to open a franchise of a renowned brand. Mr. Owais is new in this field, so, by opening a franchise he can get the following advantages:
1. Huge revenue because the product is already successful in market
2. Successful business process
3. Guidance from Franchiser in all business matters (This will be greatly beneficial for Mr. Owais in getting experience)
4. Low rate of failure
After getting the experience in franchise of a renowned fast food brand, he will get sufficient market experience and customer demand. So, after that he can start his own business (sole proprietorship). In this way chance to get failure will be minimized.
