Internal/Organic

• Types of Internal/Organic Expansion

  • Outsourcing
  • Franchising
  • Opening new stores
  • E-commerce
• Outsourcing

  Contracting another business to carry out some of the business's activities
• E-commerce

  Business transactions carried out electronically on the Internet
• Advantages of Outsourcing

  • Reduces costs
  • Improves quality
  • Saves time
• Disadvantages of Outsourcing

  • Quality of products cannot be controlled
  • Time of production cannot be controlled
• Franchising

  Where a company expands by giving other firms the right to sell its products on return for a fee or a percentage of the profits
• Franchisee

  The firms selling the franchisors products
• Franchisor

  The product manufacturers
• Advantages of Franchising

  • Business can grow faster because it does not need to finance the opening of each store but benefits from the sales
• Disadvantages of Franchising

  • If the franchisee does something wrong the whole brand reputation will be affected
  • Franchisee takes a proportion of the revenue earned by the franchise (royalty fee)
  • Franchisee runs the business everyday resulting in control loss for franchisor
• Advantages of E-commerce

  • Access to wider market
  • Trading online compliments the existence of physical stores
• Disadvantages od E-commerce

  • Distribution can be costly
  • May become more popular than physical stores leaving them empty
  • Processing orders and returns is expensive
  • Customers expect fast service, loyalty can be lost if this is not the case