Franchise Operations
Posted in Uncategorized with tags franchise on February 19, 2010 by xodikiqiagzMr. Rosensweig spent just 10 months leading Guitar Hero, the top gaming franchise, during a difficult year for the entire industry.
Mr. Rosensweig is taking over a fast-growing company. I wrote about Chegg.com, the leading player in the fledgling online textbook market, last summer. Since then, the company has raised an additional $112 million in debt, credit and equity financing, bringing its total to nearly $150 million. It counts marquee Silicon Valley firms like Kleiner Perkins Caufield & Byers among its investors.
“Textbook rental is a great concept,” Mr. Rosensweig said in an interview. “It is just a great business model.”
Mr. Rosensweig declined to discuss Chegg’s sales, but that the company grew about sevenfold in the last year. He said it did as much business in January 2010 as in all of 2009.
Chegg has rented more than two million books to students on 6,400 campuses. Mr. Rosensweig said that Chegg would use much of the money it has raised to buy books, not to finance its operations. “The faster we grow, the more capital we need to acquire books,” he said.
But Chegg.com has also had some hiccups. Its former chief executive, Jim Safka, who had joined after a stint as chief executive of Ask.com, left in September after just four months on the job. He handed the reins on an interim basis to Osman Rashid, the co-founder and chairman.
“We are thrilled that Dan is joining us as our president and C.E.O.,” Mr. Rashid said in a statement. “We know he is the right person to lead Chegg.com through the next phase of its growth.”
Activision said that David Haddad, the chief operating officer of Guitar Hero, would assume operational responsibility for the unit.
Baron Davis and Li-Ning take the first step in what they think will be a long journey.
by Chris O’Leary/olearychris
Baron Davis and Jay Li stood outside of the Li-Ning store Monday night in Portland with a light rain falling on them. Li, the general manager of the US-side of the Chinese company’s operations, apologized to Davis.
“I said, ‘Baron, sorry, I promised you when I first met you that we were going to launch your stuff in a year. Sorry it took two years to get here.’ He said, ‘No no no. Patience is a Chinese virtue,’” Li recalls.
Li’s story speaks volumes for the collaboration between Davis and a shoe company that’s taking steps to shed its new kid on the block image. Monday marked the grand opening of the Li-Ning USA store at 910 Hoyt Street in Portland. Davis signed 50 vinyl BD action figures for the event, with the store giving them to the first 50 customers through their doors.
Davis’ signature sneaker, the BD Doom, complete with a cartoonish Beardman logo on the tongue, has generated its share of Internet buzz since the Clippers guard started wearing them this season. Now that they’re available at their first US retail outlet and online (with Champs Sports scheduled to begin carrying them on the West coast in time for back to school in August) Li and his team are hoping they’re on the path to establishing some legitimacy in the sneaker world.
“The biggest issue with basketball is that it requires a ton of marketing,” Li says. “On the other hand, basketball and the way the game is defined is about individualism.
“It’s about counter-mainstream, it’s about the counter-culture. In many ways it’s a juxtaposition of the mainstream: these (sneaker companies) are big guys making big dollars.
“Then on the other hand you can have a small brand that comes into the big basketball (market) and do very well. We like to think that with a figure like Baron Davis we have a good chance.”
The key to turning that good chance into success, Li says, is the virtue that he’s sold B-Diddy on: patience.
“One thing I always preach is that we’re a Chinese company and one of the Chinese virtues is patience.
“We have to be here (Portland) to be relevant, we have to be in the game of basketball to be relevant and with a figure like Baron, we have a legitimate shot at being a player. Are we going to be a player that is going to be a multi-billion dollar franchise immediately? I don’t think so.
“We can still be relevant. We can still be an important name in the game of basketball, but we have a lot of patience.”
Setting up shop in what Li calls “the epicenter of footwear” is crucial, he says. He points to the hiring of former Converse/Nike designer Eric Miller, who led the job on creating the BD Doom as an example of the Portland emphasis paying off (read more on Eric Miller here ).
“Eric Miller was hired right here in this office,” Li says. “He brings credence to the whole patience process. You can see that it’s authentic, it’s not fake.
“We’re not just bringing a shoe and slapping the Beardman logo on it. We (Li-Ning and the design team) met with Baron two-and-a-half-years ago. “The sneakerheads are going to believe us. They’re not going to say that this is just a fake. This is an authentic shoe.”
Of course, it’s all gonna come down to the sneakerheads. The enthusiasts who lined up outside of Li-Ning to get their hands on the first available pairs came into the store out of loyalty to BD, curiosity on the shoe itself, or a little of both.
“This is my first time here and first purchase from this brand,” says Peter Lo, a 29-year-old who’s originally from Hong Kong. He says Li-Ning first got his attention at the 2008 Olympics. The company’s longevity in basketball is up in the air, at this point, he tells me.
“When I talk to my friends here they don’t know anything about this brand,” he says. “I guess they are trying to get more recognized here. I know this brand, I watch basketball and I know they are sponsoring the Spanish basketball teams. Other people might not realize that. Maybe they have more work to do to have people recognize the brand more.”
BD’s feeling the shoe and it’s piqued the curiosity of just about everyone who’s seen it. He tells the story of when LeBron James caught his first glimpse of the shoe when the Clippers were playing the Cavs.
“We were playing Cleveland and LeBron looked at me and said, ‘Yo BD, why do your shoes look better than everyone else’s?’” The story gets a great response out of everyone at the grand opening event.
“That was a compliment there and every time I’m on the court, guys are like, ‘What are those, what are those?’ I’ve signed like over 50 pairs of shoes and I’ve never ever signed shoes for anybody.”
On the surface, the Li-Ning/Davis pairing seems like an odd one. While the brand is upwards of a billion-dollar machine in China, where it sells footwear and gear for badminton, table tennis, gymnastics and soccer, it had been completely off the radar until they landed Shaquille O’Neal for an Asia-only endorsement. With Toronto’s Jose Calderon the only other Li-Ning NBA player in its roster, Davis’ leap from Reebok took many people by surprise in 2008.
Li says that Davis liked what he saw in the brand from the second he met with them.
“When I first met Baron, we met in Portland. We weren’t even in this office yet. We were in a hole in the wall, he came to the office and he walked in, looked and said, ‘Wow, this is the Google of footwear.’”
Despite having spent his career wearing two longtime established hoops brands in Nike and Reebok, Davis says he appreciated the input that Li-Ning would let him have with their flagship basketball shoe. Quality of the product was never a concern for the 30-year-old.
“I wasn’t too much worried because when I met with them, all I asked of Li Ning was to have a little bit of participation with the shoe,” he says.
“Just the marketing of the brand in the US. They’ve been so receptive as far as giving me an opportunity to do that. I think that for the team, they went out and got some of the best people in the industry to come on board. It’s made it a smooth and easy transition. Something that like I said, going forward, the best is yet to come from the brand.”
With one cool-looking sneaker in the books already, the future looks bright for Davis and Li-Ning. It’s a simple enough equation: Take BD’s creativity and enthusiasm for web promotions, which are through the roof. Add to that a company who seems to be ready to take their time in establishing themselves as a reliable and fun option in the basketball sneaker market, who is entirely open to working with their main athlete to maximize his and their strengths. It’s kind of like a Jerry Maguire situation, except Rod Tidwell’s already a star and the agent has the backing of a near billion-dollar foreign branch.
Li is confident that in time, it’ll happen.
“Someday, when people think of Li-Ning, they’ll think of a global brand that happens to be Chinese,” he says. “We’ll get there.”
The business environment strategy and the organizational architecture are important to consider. We want to employ an organizational structure to increase a firm's value. One option worth considering is franchising which can be attractive for a number of reasons. Generally, the business environment is already established as far as the market is concerned. You know your competitors, customers, and suppliers, so it is easier to add another outlet based on the current franchise model. As there are many successful models in existence the easiest path is to follow one that works. This is much easier than someone starting from scratch.
Concerning strategy, companies can rapidly and efficiently expand as many of the details have already been dealt with by the franchisee. This learning can save time and money. At the same time, new franchise owners takes on the reputation of the franchiser. Name brand recognition is already in place which can help sales from day one. The lessons learned can help the new franchise owner from the outset. Also, the parent company will receive a percentage of the sales and/or royalties from the new store without having to be directly involved with the day to day operations. Finally, the organizational architecture is also implemented to the new store. In addition there is a transfer of knowledge through training in things like customer service which must be consistent across the whole organization. These lessons on how to operate effectively using already proven methods are very valuable to the new owner.
Because franchise owners retain a large share of the unit's profits, they have incentive to increase sales and value. Further decentralized decision making at the franchise level allows for the use of local knowledge. Franchises allow for individuals with the relevant specific knowledge to employ that knowledge and resources most efficiently and effectively. Corporate culture is normally used to define how a company organizes its work, authority structure, rewards, and control mechanisms, along with its various customs and rituals. Managers must ensure that the culture assists in operating efficiently. Culture is difficult to establish and maintain but it is an important part of a successful company. Organizational architecture attempts to define the key components that relate to company culture and educates employees on actions that can be taken to develop an efficient and effective architecture or culture. One example might be in human resources.
The market also provides a way for evaluating and rewarding the franchise. Simply put, owners recoup the wealth of their actions. It is in the interest of each franchise owner to conduct his/her business in the most efficient and productive manner to generate the most profits and ultimately personal gain.
Mr. Rosensweig spent just 10 months leading Guitar Hero, the top gaming franchise, during a difficult year for the entire industry.
Mr. Rosensweig is taking over a fast-growing company. I wrote about Chegg.com, the leading player in the fledgling online textbook market, last summer. Since then, the company has raised an additional $112 million in debt, credit and equity financing, bringing its total to nearly $150 million. It counts marquee Silicon Valley firms like Kleiner Perkins Caufield & Byers among its investors.
“Textbook rental is a great concept,” Mr. Rosensweig said in an interview. “It is just a great business model.”
Mr. Rosensweig declined to discuss Chegg’s sales, but that the company grew about sevenfold in the last year. He said it did as much business in January 2010 as in all of 2009.
Chegg has rented more than two million books to students on 6,400 campuses. Mr. Rosensweig said that Chegg would use much of the money it has raised to buy books, not to finance its operations. “The faster we grow, the more capital we need to acquire books,” he said.
But Chegg.com has also had some hiccups. Its former chief executive, Jim Safka, who had joined after a stint as chief executive of Ask.com, left in September after just four months on the job. He handed the reins on an interim basis to Osman Rashid, the co-founder and chairman.
“We are thrilled that Dan is joining us as our president and C.E.O.,” Mr. Rashid said in a statement. “We know he is the right person to lead Chegg.com through the next phase of its growth.”
Activision said that David Haddad, the chief operating officer of Guitar Hero, would assume operational responsibility for the unit.
Baron Davis and Li-Ning take the first step in what they think will be a long journey.
by Chris O’Leary/olearychris
Baron Davis and Jay Li stood outside of the Li-Ning store Monday night in Portland with a light rain falling on them. Li, the general manager of the US-side of the Chinese company’s operations, apologized to Davis.
“I said, ‘Baron, sorry, I promised you when I first met you that we were going to launch your stuff in a year. Sorry it took two years to get here.’ He said, ‘No no no. Patience is a Chinese virtue,’” Li recalls.
Li’s story speaks volumes for the collaboration between Davis and a shoe company that’s taking steps to shed its new kid on the block image. Monday marked the grand opening of the Li-Ning USA store at 910 Hoyt Street in Portland. Davis signed 50 vinyl BD action figures for the event, with the store giving them to the first 50 customers through their doors.
Davis’ signature sneaker, the BD Doom, complete with a cartoonish Beardman logo on the tongue, has generated its share of Internet buzz since the Clippers guard started wearing them this season. Now that they’re available at their first US retail outlet and online (with Champs Sports scheduled to begin carrying them on the West coast in time for back to school in August) Li and his team are hoping they’re on the path to establishing some legitimacy in the sneaker world.
“The biggest issue with basketball is that it requires a ton of marketing,” Li says. “On the other hand, basketball and the way the game is defined is about individualism.
“It’s about counter-mainstream, it’s about the counter-culture. In many ways it’s a juxtaposition of the mainstream: these (sneaker companies) are big guys making big dollars.
“Then on the other hand you can have a small brand that comes into the big basketball (market) and do very well. We like to think that with a figure like Baron Davis we have a good chance.”
The key to turning that good chance into success, Li says, is the virtue that he’s sold B-Diddy on: patience.
“One thing I always preach is that we’re a Chinese company and one of the Chinese virtues is patience.
“We have to be here (Portland) to be relevant, we have to be in the game of basketball to be relevant and with a figure like Baron, we have a legitimate shot at being a player. Are we going to be a player that is going to be a multi-billion dollar franchise immediately? I don’t think so.
“We can still be relevant. We can still be an important name in the game of basketball, but we have a lot of patience.”
Setting up shop in what Li calls “the epicenter of footwear” is crucial, he says. He points to the hiring of former Converse/Nike designer Eric Miller, who led the job on creating the BD Doom as an example of the Portland emphasis paying off (read more on Eric Miller here ).
“Eric Miller was hired right here in this office,” Li says. “He brings credence to the whole patience process. You can see that it’s authentic, it’s not fake.
“We’re not just bringing a shoe and slapping the Beardman logo on it. We (Li-Ning and the design team) met with Baron two-and-a-half-years ago. “The sneakerheads are going to believe us. They’re not going to say that this is just a fake. This is an authentic shoe.”
Of course, it’s all gonna come down to the sneakerheads. The enthusiasts who lined up outside of Li-Ning to get their hands on the first available pairs came into the store out of loyalty to BD, curiosity on the shoe itself, or a little of both.
“This is my first time here and first purchase from this brand,” says Peter Lo, a 29-year-old who’s originally from Hong Kong. He says Li-Ning first got his attention at the 2008 Olympics. The company’s longevity in basketball is up in the air, at this point, he tells me.
“When I talk to my friends here they don’t know anything about this brand,” he says. “I guess they are trying to get more recognized here. I know this brand, I watch basketball and I know they are sponsoring the Spanish basketball teams. Other people might not realize that. Maybe they have more work to do to have people recognize the brand more.”
BD’s feeling the shoe and it’s piqued the curiosity of just about everyone who’s seen it. He tells the story of when LeBron James caught his first glimpse of the shoe when the Clippers were playing the Cavs.
“We were playing Cleveland and LeBron looked at me and said, ‘Yo BD, why do your shoes look better than everyone else’s?’” The story gets a great response out of everyone at the grand opening event.
“That was a compliment there and every time I’m on the court, guys are like, ‘What are those, what are those?’ I’ve signed like over 50 pairs of shoes and I’ve never ever signed shoes for anybody.”
On the surface, the Li-Ning/Davis pairing seems like an odd one. While the brand is upwards of a billion-dollar machine in China, where it sells footwear and gear for badminton, table tennis, gymnastics and soccer, it had been completely off the radar until they landed Shaquille O’Neal for an Asia-only endorsement. With Toronto’s Jose Calderon the only other Li-Ning NBA player in its roster, Davis’ leap from Reebok took many people by surprise in 2008.
Li says that Davis liked what he saw in the brand from the second he met with them.
“When I first met Baron, we met in Portland. We weren’t even in this office yet. We were in a hole in the wall, he came to the office and he walked in, looked and said, ‘Wow, this is the Google of footwear.’”
Despite having spent his career wearing two longtime established hoops brands in Nike and Reebok, Davis says he appreciated the input that Li-Ning would let him have with their flagship basketball shoe. Quality of the product was never a concern for the 30-year-old.
“I wasn’t too much worried because when I met with them, all I asked of Li Ning was to have a little bit of participation with the shoe,” he says.
“Just the marketing of the brand in the US. They’ve been so receptive as far as giving me an opportunity to do that. I think that for the team, they went out and got some of the best people in the industry to come on board. It’s made it a smooth and easy transition. Something that like I said, going forward, the best is yet to come from the brand.”
With one cool-looking sneaker in the books already, the future looks bright for Davis and Li-Ning. It’s a simple enough equation: Take BD’s creativity and enthusiasm for web promotions, which are through the roof. Add to that a company who seems to be ready to take their time in establishing themselves as a reliable and fun option in the basketball sneaker market, who is entirely open to working with their main athlete to maximize his and their strengths. It’s kind of like a Jerry Maguire situation, except Rod Tidwell’s already a star and the agent has the backing of a near billion-dollar foreign branch.
Li is confident that in time, it’ll happen.
“Someday, when people think of Li-Ning, they’ll think of a global brand that happens to be Chinese,” he says. “We’ll get there.”
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