Assumption I
One of the key asset brought by the Franchiser to the table is knowledge. Which has been formalized into rules and routines.
Evidence- The assumption is supported by Cyert and March in this article by the author.
Challenge- I agree as mostly new entrepreneur opt for franchisee model as they are backed by the set of knowledge, rules and operating procedures. Moreover the have established brand name on which they capture the market. The franchisee does not need to establish any new business procedure but follow the procedure which is followed by the franchiser. This gives the franchisee a lot of time to think about how to make the business profitable as well as to look …show more content…
Evidence- It is backup through Ganco and Agarwal in this article.
Challenge- It is absolutely right that new entrants on the contrary may try new ways of business and new ideas and excel in innovation. They can use social networking media to bring new ideas into market. Innovation are the part of every business and it’s very necessary for every organization to be innovative because it provide better options in the market to survive and to be competitive. So I agree with this assumption.
Assumption- V
In such circumstances, we can bring in the instances of full service and limited service hotels. According to the level of operation, it has been found that it is more difficult to operate full service hotels. So for full service hotels, if it is operated by a franchisee it would be more beneficial and profitable. Franchisees are related to brands and a brand relation would give the full service hotel a performance …show more content…
Here dummy variable of 1 is used to relate to brand and 0 as independent hotel as the independent variable in the equation to capture whether hotel is franchised or independent.
Data of around 104 hotels from UK was collected. These hotels were from different locations like Urban, suburban, airport and small metropolitan. Hotels were started between 2006 and 2010. Samples from this data was used for analysis. This data was published by STR Global. This is an independent research organization which gives comprehensive data related to the hotel and hospitality industry.
Common industry metric of revenue per available room (RevPAR) has been used to measure the performance of the hotels. One of the dependent variables for each hotel was revenue per available room done month wise. In this there are two other important factors which are important constituents of Revenue per available room. They are average daily rate and occupancy of hotel. There are two critical control variables and they are market demand and market segments which are also discussed about in this article. Due to the mode of entry, the differences in performances