Harvard Case - Maliks: Franchising the Brand
"Maliks: Franchising the Brand" Harvard business case study is written by Sana EL Hajj. It deals with the challenges in the field of General Management. The case study is 15 page(s) long and it was first published on : Oct 13, 2020
At Fern Fort University, we recommend Malik's pursue a strategic franchising model that balances brand expansion with maintaining quality and cultural alignment. This strategy involves a phased approach to international expansion, focusing on emerging markets with strong growth potential and a cultural affinity for Malik's products. This will require a robust franchisee selection process, comprehensive training and support programs, and a strong emphasis on corporate social responsibility to ensure long-term success.
2. Background
Malik's is a successful family-owned bakery chain in Pakistan, known for its high-quality, traditional baked goods. The company faces a crossroads: expand internationally to capitalize on growing demand or remain a local brand. The family is hesitant to relinquish control, but recognizes the potential of franchising to achieve business growth while maintaining brand integrity.
The key protagonists are:
- Malik family: The owners of Malik's, divided on the best path forward.
- Asif Malik: The youngest son, eager to explore international expansion through franchising.
- Umar Malik: The eldest son, cautious about losing control and maintaining quality standards.
3. Analysis of the Case Study
Strategic Framework:
- Porter's Five Forces: Analysis reveals a fragmented market with high potential for growth, particularly in emerging markets. The threat of new entrants is moderate, while bargaining power of suppliers is low due to the availability of ingredients. The bargaining power of buyers is moderate, and the threat of substitutes is low due to the unique and traditional nature of Malik's products.
- SWOT Analysis:
- Strengths: Strong brand reputation, loyal customer base, experienced management, strong family values.
- Weaknesses: Limited international experience, potential for quality control issues with franchising, reliance on family management.
- Opportunities: Expanding into emerging markets, leveraging technology for online ordering and delivery, diversifying product offerings.
- Threats: Competition from multinational bakery chains, maintaining quality standards across franchises, managing cultural differences.
Financial Considerations:
- Franchising model: Offers potential for rapid expansion with minimal capital investment.
- Franchise fee: Provides a consistent revenue stream for Malik's.
- Royalty fees: Ensure ongoing revenue generation and brand control.
- Risk assessment: Requires careful evaluation of potential franchisees and markets to minimize financial risk.
Marketing & Operations:
- Brand management: Maintaining brand consistency across franchises is crucial.
- Product development: Adapting products to local tastes and preferences is essential.
- Supply chain management: Establishing a reliable and efficient supply chain is critical for consistent quality.
- Technology and analytics: Utilizing data-driven insights to optimize operations and marketing efforts.
4. Recommendations
Phase 1: Pilot Franchising in Selected Emerging Markets:
- Market Research: Conduct thorough market research in target countries (e.g., Middle East, South Asia) to identify potential franchisee candidates and assess market demand.
- Franchisee Selection: Develop a rigorous selection process that prioritizes experience, financial stability, and alignment with Malik's values.
- Training and Support: Establish a comprehensive training program for franchisees, covering operations, quality control, customer service, and brand standards.
- Pilot Program: Launch a pilot program with a limited number of franchises in carefully chosen markets to test the model and refine processes.
Phase 2: Strategic Expansion and Growth:
- International Expansion: Based on the pilot program's success, expand into additional markets with a focus on emerging economies with strong growth potential and cultural affinity for Malik's products.
- Technology Integration: Implement technology solutions for online ordering, delivery, and inventory management to enhance efficiency and customer experience.
- Product Innovation: Introduce new products tailored to local tastes while maintaining core brand identity.
- Corporate Social Responsibility: Implement CSR initiatives to build brand loyalty and foster positive community relations in each market.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core Competencies: The recommendations leverage Malik's core competencies in baking, brand reputation, and family values.
- External Customers: The recommendations focus on meeting the needs of international customers while maintaining brand quality.
- Competitors: The recommendations aim to differentiate Malik's from multinational competitors by emphasizing its unique heritage and cultural appeal.
- Attractiveness: The franchising model offers a high ROI potential with relatively low capital investment.
- Assumptions: The recommendations assume that Malik's can find qualified franchisees, adapt to local market conditions, and maintain brand consistency across franchises.
6. Conclusion
Malik's has a strong foundation for international expansion through franchising. By carefully selecting franchisees, providing comprehensive support, and adapting to local markets, the company can achieve significant growth while preserving its brand integrity and family values.
7. Discussion
Alternative Options:
- Joint Ventures: Partnering with local businesses to enter new markets.
- Direct Expansion: Opening company-owned stores in new markets.
Risks & Key Assumptions:
- Franchisee Quality: Ensuring the selection of qualified and committed franchisees.
- Cultural Adaptation: Successfully adapting products and marketing to local preferences.
- Quality Control: Maintaining consistent quality across franchises.
- Brand Consistency: Preserving the brand identity and reputation across different markets.
8. Next Steps
- Market Research: Conduct thorough market research in target countries within the next 6 months.
- Franchisee Selection Process: Develop a detailed franchisee selection process within the next 3 months.
- Pilot Program Launch: Launch the pilot program in 2-3 selected markets within the next 12 months.
- Training and Support Program: Develop a comprehensive training and support program for franchisees within the next 6 months.
By following these recommendations and implementing a strategic franchising approach, Malik's can achieve sustainable growth while maintaining its brand heritage and family values.
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Case Description
Maliks, a major stationery retailer and provider of photocopy and printing services, had operated in Beirut, Lebanon, for over 25 years. The company's founder was considering the most suitable strategy for his goal of 100 branches by 2020. He was assessing the advantages and disadvantages of adopting the franchising business model as an expansion strategy and wondered what operational problems he would encounter. The Maliks management team was also assessing the viability of using the franchise model to expand beyond the greater Beirut area to achieve substantial growth. The company enjoyed strong brand-name recognition, but there were still many questions about the company's next steps, including whether the franchise business model was the most suitable strategy for Maliks. Did the company have the necessary resources and skilled management team to adequately monitor and support prospective franchisees? How would prospective franchisees be selected? What marketing and operational costs was the company likely to incur as a franchisor? Most importantly, did the Maliks management team have the required skills to effectively manage the franchise model?
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