Asset Light Strategies Are the Only Way Ahead for International Hospitality Companies
Topic 6: “Asset light strategies are the only way ahead for international hospitality companies.”
In the topic asset light strategies refers to international hospitality companies owning less assets. Assets are “items of economic value owned by an individual or corporation, especially that which could be converted to cash” (www.investorwords.com). The various different strategies international hospitality companies use in order to ‘lighten’ their assets could be by franchising, management contracts and offshoring (also known as outsourcing). Each of these strategies will be explained in depth throughout the essay. The reason why businesses would want to have fewer assets is because they want to get out of having asset-heavy balance sheets. By the strategies mentioned above international hospitality companies can lighten their balance sheets substantially.
Franchising is probably used by most major international hospitality companies in our days. “A franchise is a right granted to an individual or group to market a company's goods or services within a certain territory or location” (www.franchises.about.com). There are hundreds of well known franchise businesses in today’s world, some of them are Mc. Donald’s, Starbucks, Subway and the Hilton etc. Franchising does not only serve its purpose in the hospitality sector but also in more than 120 different industries such as the “automotive, cleaning & maintenance, health & fitness, financial services, and pet-related franchises, just to name a few” (www.franchises.about.com).
The concept of franchising revolves upon a franchisor and a franchisee. The franchisor who is the owner of the business grants a licence to the franchisee to use their products and business idea in return for a percentage of gross monthly sales and a royalty fee. The franchisor will provide help and support to the franchisee which will be selling the franchisors product or services which will also be using the franchisors trademark. The
In the topic asset light strategies refers to international hospitality companies owning less assets. Assets are “items of economic value owned by an individual or corporation, especially that which could be converted to cash” (www.investorwords.com). The various different strategies international hospitality companies use in order to ‘lighten’ their assets could be by franchising, management contracts and offshoring (also known as outsourcing). Each of these strategies will be explained in depth throughout the essay. The reason why businesses would want to have fewer assets is because they want to get out of having asset-heavy balance sheets. By the strategies mentioned above international hospitality companies can lighten their balance sheets substantially.
Franchising is probably used by most major international hospitality companies in our days. “A franchise is a right granted to an individual or group to market a company's goods or services within a certain territory or location” (www.franchises.about.com). There are hundreds of well known franchise businesses in today’s world, some of them are Mc. Donald’s, Starbucks, Subway and the Hilton etc. Franchising does not only serve its purpose in the hospitality sector but also in more than 120 different industries such as the “automotive, cleaning & maintenance, health & fitness, financial services, and pet-related franchises, just to name a few” (www.franchises.about.com).
The concept of franchising revolves upon a franchisor and a franchisee. The franchisor who is the owner of the business grants a licence to the franchisee to use their products and business idea in return for a percentage of gross monthly sales and a royalty fee. The franchisor will provide help and support to the franchisee which will be selling the franchisors product or services which will also be using the franchisors trademark. The
Bibliography: Bhaskar, P. (2007) Offshoring: The Next Level of an "Asset Light" Strategy http://pt.hvs.com/article/3034/offshoring-the-next-level-of-an-asset-light-strategy/ (Accessed: 15 November 2009). Available at: http://ejournals.ebsco.com/Direct.asp?AccessToken=9III45D8SRXWJNOD1EC0H9NJOMOP8QMM4&Show=Object (Accessed: 15 November 2009).