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CH-4: TOPIC – ENTERPRISE GROWTH STRATEGIES


                                                    CODE : 241604010111

               NOTES:
                   1.   GROWTH AND DEVELOPMENT OF AN ENTERPRISE :
                   •   Growth is necessary for the survival of the enterprise.
                   •   To ensure the efficiency
                   •   Profitable functioning of the organization
                   •   To achieve the diversification/expansion/modernization objectives
                   •   To ensure entrepreneurial and managerial ability and efficiency
                   2.   INTERNAL EXPANSION :
                   •   Increase in the present production capacity
                   •   Replacing old machines with new machines
                   •   Entering new areas of production or marketing or both
                   •   Financed through undistributed profits and reserves
                   •   Broadly it is related to increase in business activities and widening the capital structure
                   3.   EXTERNAL EXPANSION/BUSINESS COMBINATION:
                   •   When two or more business enterprises come together with a common objective of expanding their business.
                   •   FRANCHISING
                   •   MERGERS & ACQUISITION
                   •   External expansion is financed through long-term sources of finance
                   •   Expansion of capital base
                   •   Elimination of unnecessary competition
                   •   Synergy
                   4.   FRANCHISING :
                               It 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.
                              A franchise is a type of license that a party (franchisee) acquires to allow them to have access to a business's (franchisor)
                              proprietary knowledge, processes, and trademarks in order to allow the party to sell a product or provide a service under
                              the business's name.
                    FRANCHISOR : A franchisor sells the right to open stores and sell products or services using its brand, expertise, and intellectual
                              property. It is the original or existing business that sells the right to use its name and idea. The small business
                              owner who purchases these rights is called a franchisee and the branch business, itself, is called a franchise.

                       FRANCHISEE : A franchisee is a person or company that is granted a license to do business under the franchisor's
                       trademark, trade name, and business model, by the franchisor. The franchisee purchases a franchise from the
                       franchisor.
                       FRANCHISE AGREEMENT : A franchise agreement is a legally binding document that outlines a franchisor's terms and
                       conditions for a franchisee. Every franchise is governed by these terms, which are generally outlined in a written
                       agreement between both parties. The franchise agreement is signed at the time an individual makes the decision to enter
                       the franchise system.

                       CONTENTS OF FRANCHISE AGREEMENT :
                       Contract explanation
                       Operations manual
                       Proprietary statements
                       Ongoing-site maintenance
                       Franchisor-Franchisee Relationship
                       Duration of the Agreement
                       Franchise Fee
                       Business Operations
                       Training and Support
                       Site Selection and Development
                       Use of Intellectual Property
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