In the analyzed case study, Nina and Matt want to expand their chain of cupcake shops, Treasure Cup, opening new shops in multiple countries. The main aspects of global integration they need to consider to be successful are the degree to which their company’s products and methods can be used in other countries and how responsive they are to the needs of local customers. Nina and Matt believe that their cupcakes can satisfy customers from different parts of the world with a range of tastes and fillings. However, they have not analyzed the needs and preferences of their target populations, and they cannot be sure that the citizens of other countries will like their products.
Moreover, Nina and Matt should consider whether they will be able to adjust their business to local laws, regulations, and payment methods. Language is another issue that needs to be considered. Since Nina and Matt have no employees in other countries, they will need to find those people who speak English and can easily understand them. Differences in sales practices, economic and political demands – all these aspects need to be considered before launching Treasure Cup as a global company.
Nina and Matt should pursue franchising to help Treasure Cup succeed as an international brand. In this case, franchising will be the best choice because it is associated with fewer financial risks and grows gradually and steadily. According to Amadieu et al. (2014), the main benefits of franchising over company-owned stores are reduced monitoring costs, rapid expansion, and “positive effect on performance since it overcomes financial, informational and managerial limits to company growth” (p. 4). Moreover, company-owned stores have a single owner, a parent company, which will need to control every aspect of its business.
If Nina and Matt want to open new cupcake stores in other countries, they may find it difficult to control their local stores and the stores overseas. What is more, if they are single owners, they will need to use their own money to invest in new stores, and when something goes wrong, the losses will be huge for them. Franchising allows using others’ money to expand Treasure Cup business, preserving their brand name and saving costs. Even though the company’s profits will be smaller because it needs to share profits with the franchisees, risks and losses will be smaller too. Finally, franchisees will try to ensure that the stores run well because they will invest their own money in the business development. In case of a company-owned business, only the owners will be responsible for all risks and problems.
If I were Nina or Matt, I would consider several things before launching Treasure Cup as a global company. First, I would think if my business is ready to expand. If a cupcake business is successful in one country, it does not mean that it will be successful overseas. All risks and potential benefits, investments and challenges, and strategic plans should be well-thought-out. I would also assess my potential clients and think about whether I would be able to provide customer care and support in other countries. A financial buffer should also be created to ensure that I will have enough money to survive, if a global company fails. Finally, I would look for local partners and suppliers to ensure that my stores always have high-quality fresh raw materials.
Reference
Amadieu, P., Picot-Coupey, K., & Viviani, J.-L. (2014). Company-owned stores, franchised stores or/and stores-within-a-store: Can any organizational form yield better performance? Evidence from French fashion retailers. XXIII Conference Internationale de Management Strategique, Rennes.