B Franchising License – A Growth Strategy For International Expansion
By : Bijoy Kumar Sahoo
This arrangement permits a company in the target country to use the property of the licensor. Such property usually is tangible, such as trademarks,patents and production techniques.The licensee pays a fees in exchange for the rights to use the intangible property and possibly, for technical assistance.
This strategy of the market development has seen the rapid expansion of many retail chains across the globe. McDonald’s owes a great deal of its success in the international and nation markets due to successful franchising. This strategy enables a retailer to build a strong identity in the market.
For franchising to be successful, it is necessary that the partnership be with people who share the organisations vision and understand the market equally well.System and procedure also need to be in place with the parent company,so that they can be successfully duplicated.
For instance brands like FCUK,Promod,Miss Sixty and GAS increase their presence in India,Many brands which have existed for a while,are thinking of revising their strategies to maintain their hols on the market.
And this is exactly what Marks and Spencer(M&S) is doing. Having entered the Indian market almost 10 years ago through its franchise partner Plat Retail,M&S enjoyed the first mover advantage.
But with planett retail now becoming the launch vehicle for direct competitors like Debenhams,Guess and Next,M&S is making a whole hearted attempt to stifle completion by announcing a JV in India,dropping its price by a steep 35 percent,launching larger format stores and bringing in M&S Food and M& kids Wear and Now a departmental store in associaltion with Reliance Retail Ltd.
According to an M&S spokesperson,a 35 percent price cut and an expansion in its store network will help the brand widening its customer base. The price change is envisaged to help customers experience M&S brands and products.Anyone who walks into an M&S store now,will feel the difference in pricing, which will be one of the most competitive in the market
• Bijay Kumar Sahoo is the Store Manager
Reliance Retail Ltd.