An Empirical Literature Review of Organizational Design and Control Across Multiple Markets: the Case of Franchising in the Convenience Store Industry
Organization Design and Development (MGT- 561)
An Empirical Literature Review of Organizational Design and Control across Multiple Markets: The Case of Franchising in the Convenience Store Industry
Michael T. Cook
Phone: 518-961-6511
Sage Graduate School
Topic: An Empirical Literature Review of Organizational Design and Control across Multiple Markets: The Case of Franchising in the Convenience Store Industry
Introduction
Companies get into expansion mode by having a number of business units for many reasons: to leverage from available competencies, to promote company’s brand and get economies of scale. Mostly companies serving multiple markets are franchise organizations. Benefits of serving multiple markets kept aside; there are significant challenges of control across different market types that come in the way of attending to and serving diverse customer base. Case in point, a hotel franchise can achieve economies of scale by opening at new locations, as a departmental store repeats its business model by operating stores in markets that attends to different customers.
Organizational Design and Control across Multiple Markets
Crucial control dilemmas surface in such companies because of the vast network creating information deviations among the units answerable to customers and the head office. Such situations demand expertise of the local management more than the headquarters comparatively. Companies try to resolve the issues faced in controlling multiple markets through their organizational design and control choices.
There are market type dispersions due to changing customer demand; it is not related to geographical dispersion necessarily. It is a possibility that there are strongly different types of customers in any two units of a company although they are not far from each other geographically. For example, convenience stores of the diverse population in Chicago attend to patrons of totally different culture although distance from one
An Empirical Literature Review of Organizational Design and Control across Multiple Markets: The Case of Franchising in the Convenience Store Industry
Michael T. Cook
Phone: 518-961-6511
Sage Graduate School
Topic: An Empirical Literature Review of Organizational Design and Control across Multiple Markets: The Case of Franchising in the Convenience Store Industry
Introduction
Companies get into expansion mode by having a number of business units for many reasons: to leverage from available competencies, to promote company’s brand and get economies of scale. Mostly companies serving multiple markets are franchise organizations. Benefits of serving multiple markets kept aside; there are significant challenges of control across different market types that come in the way of attending to and serving diverse customer base. Case in point, a hotel franchise can achieve economies of scale by opening at new locations, as a departmental store repeats its business model by operating stores in markets that attends to different customers.
Organizational Design and Control across Multiple Markets
Crucial control dilemmas surface in such companies because of the vast network creating information deviations among the units answerable to customers and the head office. Such situations demand expertise of the local management more than the headquarters comparatively. Companies try to resolve the issues faced in controlling multiple markets through their organizational design and control choices.
There are market type dispersions due to changing customer demand; it is not related to geographical dispersion necessarily. It is a possibility that there are strongly different types of customers in any two units of a company although they are not far from each other geographically. For example, convenience stores of the diverse population in Chicago attend to patrons of totally different culture although distance from one
Bibliography: Campbell, Dennis, Datar, Srikant M., Tatiana, Sandino. (2008). Organizational design and control across multiple markets: the case of franchising in the convenience store industry. Retrieved from http://www.hbs.edu/research/pdf/08-091.pdf Hendrikse, G.W.J. & Jiang, T. (2007, August). An incomplete contracting model of governance structure variety in franchising. ERIM. Rotterdam School of Management (RSM). Retrieved from http://publishing.eur.nl/ir/repub/asset/10462/ERS-2007-049-ORG.pdf Kranz, Sebastian & Lewin-Solomons. (2008). Decision structures in franchise systems of the plural form.” Retrieved from ftp://web.bgse.uni- onn.de/pub/RePEc/bon/bonedp/bgse8_2008.pdf