Global Business: Franchising

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The response address the queries posted in 2150 words with references.

// There are many ways to initiate a business and 'franchise' is one of them. There are various things that have to be considered, while undertaking any sort of operating or opening a franchise. But before starting, it is essential that we must introduce the topic like, this://

// Above we gave a brief introduction of the topic. Moving ahead, now we are going to relate the importance of systems and components that shape the structure and influence the US and global business environment. //

Global Business: Franchising

Franchising

Franchising (from the French for honesty or freedom) is a method of doing business under which a "franchisor" sanctions proven methods of doing business to a "franchisee" in return for a fee and a percentage of sales or profits.

Company

The company I have chosen is involved in distribution and retailing of the garments in the US by obtaining a franchise in the country.

Economic environment and Market potential

The economy of the United States is very strong. Its GDP is the world's largest gross domestic product (GDP). It was $13.21 trillion in 2006. The US is a mixed economy where most of microeconomic decisions are taken by the corporations and other private firms while being regulated by the government. Also, there is a high level of productivity (GDP per capita, 45,594 in 2006 with U.S. Population striking a 300 million) in the US economy. The U.S. Economy has sustained a fairly high overall GDP growth rate, a low unemployment rate, and high levels of research and capital investment.

The market in the US for the garments would be of a rapidly changing nature. The people in this country are very much conscious of the changing fashion and the new trends. They prefer to wear the garments and clothes of the branded companies and some of them are very brand loyal and do not switch to a new brand.

The Organization structure of the company would follow a matrix structure of organization. The matrix structure is regarded as a hybrid form of functional structure and project structure. The organization would be headed by the CEO (Chief Executive Officer), followed by the different functional heads of the production, marketing, finance and the purchase department. They would be followed by the representatives of the respective projects. (Mathew, 2003)

// It is very important to take into consideration, the various conditions surrounding the contemporary global economy. Here, we are going to discuss how different factors like social, cultural, economic, legal and political differences among the nations affect international business. //

The contemporary global environment

With the rise of the technology, we have been able to characterize our environment as a global one. "The global economy" provided the ability to market products and services all over the world. It has also enabled the businesses to build up partnerships and alliances all over the world. Preceding the Globalization, the United States dominated the global economy. But, recently, the share of the U.S. in the global economy has reduced to around 25%. And it is expected that this trend would continue further seeing that the economies of several newly industrialized nations are growing at a faster rate.

Several advantages arise in the shift to a global economy. They consist of the possibility to enhance the benefits arising from economies of scale. The companies could benefit from the biggest and cheapest workforces, raw materials, and technology through a global economy because it breaks down the global barriers. For ...