UNIVERSITY OF FINANCE — MARKETING COMMERCIAL DEPARTMENT
TRƯỜNG ĐẠI HỌC
TAI CHINH - MARKETING
GROUP ASSIGNMENT GROUP 2
INTERNATIONAL BUSINESS NEGOTIATION
Lecturer: Assoc Prof PhD Tran Nguyen Ngoc Anh Thu
Trang 2UNIVERSITY OF FINANCE — MARKETING COMMERCIAL DEPARTMENT
TRƯỜNG ĐẠI HỌC TAI CHINH - MARKETING
GROUP ASSIGNMENT GROUP 2
INTERNATIONAL BUSINESS NEGOTIATION
Lecturer: Assoc Prof PhD Tran Nguyen Ngoc Anh Thu Group members: Hoang Nguyen Thuy Trang — Leader — 2121012019 Nguyen Hong Ngan — 2121011727 Nguyen Thi Mai Phuong — 2121013708 Phan Huu Thanh — 2121004364 Nguyen Thi Xuan Mai -— 212100657 Giap Bao Viet - 2121013851
AARYY
Trang 3DUTY ROSTER
Full Name Student ID Task Level of
Completion
Hoang Nguyĩn Thuy Trang
— Leader 2121012019
- Composing content - Presenting - Synthesizing content - Editing content - Dividing tasks
100%
Nguyễn Thị Mai Phương 2121013708 - Composing content - Negotiating
- Editing content 100%
Nguyễn Hồng Ngđn 2121011727 - Composing content - Presenting
- Editing content 100%
Nguyễn Thị Xuđn Mai 2121000657 - PowerPoint
- Presenting 100%
Phan Hữu Thănh 2121004364
- Composing content - Presenting
- Editing the synthesis file - Editing content
100% Giâp Bảo Việt 2121013851 - Composing content
- Negotiating - Editing content
- Presenting 100%
Trang 4TABLE OF CONTENTS 1.2 Some kind of popular franchise 1m Vietnam - - 22c 2 2211122 113221232 II N00 080x200 2 na 1.3.1 Single Unit Franchise ĂAøTeemerit - 2 2 1221222111 111511511111 2x key 1.3.2 Multi-Unit Franchise ĂÔøTeemen[ - - c2 2221222112211 12 125512 1x re 1.3.3 Area Developmenf ĂøTceme€ri[ - - c1 12211112115 1112115125111 111kg 1.3.4 Master Franchise ÂøTeemeii[ - - c2 2221121122111 1111211112111 1551 11112111 IV in -3uaiaaddđdđiidiadiadađđddŸ4 1.4.1 The power of the existing brand - c2 2222221212112 1211115111215 11 ke I 5ï »›n< li ố - 1.4.4 Lower Fallure R4f nn ng HH TH HH kh kg 1.4.5 BuyIng DOWT Q2 v12 n n2 ng 51x51 15111 1x k ng khe se 1.4.6 Effictent 8n V4.7 Profits e I9 I0 v 0 /l,Iaầa 1.5.2 v dựo 2n 1.5.3 P v sắuuoiaaỸIỲỶ IS Si noi on .e -
In in
Trang 5PP Noi Ta 6 PP 5u 6 PB 6 2.1.6 Remarkable business aCfIVIEICS St n HH H121 Hăn rệ, 6
Pm Ni hố ac.Ê 7
Trang 6CHAPTER 1: INFORMATION ABOUT THE FRANCHISE
1.1 Definition:
Franchising is based on a marketing concept which can be adopted by an organization as a strategy for business expansion Where implemented, a franchisor licenses some or all of its know-how, procedures, intellectual property, use of its business model, brand, and nights to sell its branded products and services to a franchisee In return, the franchisee pays certain fees and agrees to comply with certain obligations, typically set out in a franchise agreement
1.2 Some kind of popular franchise in Vietnam - Food
- Educational and training - Health and beauty - Sports
- Fashion - Pharmacy - Bookstore
1.3 Types of Franchise Agreement 1.3.1 Single Unit Franchise Agreement
Trang 71.3.2 Multi-Unit Franchise Agreement
In this agreement, the franchisor will give nghts to the franchisee to open various franchises and operate them and the area is also not defined in this agreement so there is no restriction on selection of area
This will give more rights to the franchisee as compared to single unit franchise agreement, so that you can negotiate better terms and conditions with the franchisor, such as lower fees, longer contracts, and more exclusive territories
1.3.3 Area Development Agreement
In this agreement, the franchisor will give nghts to the franchisee to open various franchises and operate them but there is restriction regarding the area as it is defined and also the time frame for which the agreement is valid, which leads the franchisee to open up several units and operate them within that defined area The advantage for the developer is that they will be the only one to develop a franchise m a certain area during the time needed to open each of the franchise units, making that franchise more attractive to potential customers
1.3.4 Master Franchise Agreement
In this agreement, the main franchisee that is master franchisee will give other franchisee the right to open a franchise in the specified territory which is decided by the franchisor and the main franchisee within what area the person is allowed to give permission to open a franchisee The person to whom the master franchisee will give the right to open the franchisee is known as sub franchisee and for that person the master franchisee will become franchisor
1.4 Advantages
1.4.1 The power of the existing brand
Trang 8Franchises are already well-known businesses with established customer bases built in So when you open a franchise with this recognizable branding, people will automatically know what your business is, what you provide, and what they can expect 1.4.2 Experience A franchise does not face the problem of a newbie with no actual experience as he benefits from the experience of the actual owner and other franchise outlets As this is a tried and tested venture the experience of others counts Important benefits of franchising include available marketing strategies, documented procedures, and advanced training options
1.4.3 Business assistance
Depending on the terms of the franchise agreement and the structure of the business, the franchisee might receive essentially a turnkey business operation They may be provided with the brand, the equipment, supplies, and the advertising plan essentially everything they need to operate the business
Franchises provide the knowledge and wisdom of the franchisor This knowledge can be essential to running a successful business and makes it much easier than starting a business from scratch
1.4.4 Lower Failure Rate
In general, franchises have a lower failure rate than solo businesses When a franchisee buys into a franchise, they’re joming a successful brand, as well as a network that will offer them support and advice, making it less likely they'll go out of business
Trang 91.4.5 Buying power
Another benefit of franchising is the sheer size of the network If you’re operating a standalone business and need to order products or supplies to make your products, you re paying more money per item because your order is relatively small
However, a network of franchises has the opportunity to purchase goods at a deep discount by buying in bulk The parent company can use the size of the network to negotiate deals that every franchisee benefits from A lower cost of goods lowers the overall operation costs of the franchise
1.4.6 Efficient growth
Opening the first unit of a business is costly and time consuming Opening a second unit can be almost as difficult When that burden is shared with another business owner, it makes the process more efficient and takes the onus off the initial business owner
When trying to grow your small business, starting a franchise can make opening multiple locations a much simpler process
1.4.7 Profits
In general, franchises see higher profits than independently established businesses Most franchises have recognizable brands that bring customers in droves This popularity results in higher profits Even franchises that require a high initial investment for the franchise fee see high return on investment
1.5 Disadvantages 1.5.1 Limited creativity
Trang 10parent company gives training in this regard and every new franchise has to follow them diligently
1.5.2 Lack of privacy
A new franchise is totally dependent on its parent company for the directions as well as the operating system It has to provide all the financial information to the franchisor who collects it to improve audit-quality payments This information is shared by all the franchise outlets to benchmark individual performance with the rest of the outlets => lack of privacy and the franchise owner is unable to do anything about it 1.5.3 Decreased profits In franchising, you have to pay initial fees and royalty fees and later you have to share a part of your profit with the parent company => Decreased profits 1.5.4 Shared information In a franchise model, all the information is actively shared by all the related outlets =>There is a risk of leak and competitors can gain access and come to know about it 1.5.5 Less control If you are a franchisor and open a new franchise, you will delegate your responsibility to others and lose control over the new operation You have an indirect and partial hold on the running of the business
1.5.6 Damaged reputation
Ifthe franchisee does not comply with the regulations that the franchisor stipulates regarding quality => The brand’s image and reputation will suffer due to the fault of a single franchise
1.5.7 Geographical location
Trang 12CHAPTER 2: INFORMATION ABOUT THE COMPANY
2.1 Description of McDonald's Corporation (Company in the U.S)
McDonald's Corporation is an American multinational fast food chain run by brothers Richard and Maurice ("Mick & Mack") McDonald However, Ray Kroc was the one who helped McDonald's develop and become the world's leading brand in the field of fast food
2.1.1 Company type Public Company 2.1.2 Industry
Fast food restaurants 2.1.3 Headquarters
- Headquarters: Chicago, Illinois, U.S - Area of operation: Worldwide (199 countries) 2.1.4 Founded
15th May 1940, in California, U.S 2.1.5 Website
- medonalds.com - corporate.medonalds.com
2.1.6 Remarkable business activities
- In 1954, Ray Kroc discovered a small but very successful restaurant business of the brothers Dick and Mac McDonald Feeling interested in their very efficient operating system, he convinced the two McDonald brothers of his vision of building McDonald’s restaurants across the United
Trang 13In 1961, for $2.7 million, Kay Kroc successfully acquired McDonald’s with the ambition to turn the brand into an international fast food
After a short period of operation, more than 100 million hamburgers have been sold from the brand McDonald’s continues to grow And now present in international markets such as Germany, Belgium, Japan, and Vietnam 2.1.7 Business sectors McDonald's predominantly sells fast food (hamburgers, chicken, French fries, soft drinks, coffee, desserts, and breakfast, ) Products are offered as either "dine-in" (where the customer chooses to eat in the restaurant) or "take-out" (where the customer chooses to take the food off the restaurant)
2.2 Description of VFBS (Company in VietNam)
Vietnam Food and Beverages Service Co.,Ltd (VFBS) is member of Imex Pan Pacific Group (IPPG), operates in many fields, mainly franchising international brands VFBS professional franchise brands of fast food famous leading overseas such as Domino's Pizza, Burger King
2.2.1 Company type Public Company 2.2.2 Industry
Food and Beverage Services 2.2.3 Headquarters
Headquarters: 15 Le Thanh Ton Street, District 1, Ho Chi Minh City
2.2.4 Founded
Trang 142.2.5 Website
https:/Appgroup vn/ 2.2.6 Telephone
093 809 0108
2.2.7 Remarkable business activities of IPPG about F&B
2010: IPPG stretched its arms to the fast-food industry In 2010, they franchised Domino's Pizza and Burger King - the super imternationally famous fast-food chains that have started another page on the journey of operating a series of fast-food stores across all provinces in Vietnam 2012: Acquired experience and strengths in the F&B sector, in 2012, [PPG franchised 2 other famous international fast-food brands to Vietnam - Dunkin’ Donuts and Popeyes In the same year, IPPG Supply Chain was founded as they started focusing on developing a closed production - transportation - supply chain to ensure quality synchronization by international standards on fast-food chains
Trang 1510
CHAPTER 3: NEGOTIATION 3.1 Step 1: Pre-negotiation
3.1.1 VFBS's company 3.1.1.1 Objective
SMART 1: Plus an additional 10% compensation, totaling 110% of the initial fee Specific: Receive the compensation of the initial fee
Measurable: Plus an additional 10% compensation Achievable: Financial capacity of McDonald’s Corporation
Relevant: Fairness between both parties in benefits related to the initial fee Time-bound: 2024 -> 2034
Initial fee: VFBS's company supposes the term initial fee in contract causes disadvantages for them: “If the Restaurant is not ready for occupancy within one (1) year from the date of this Franchise, the Franchisee shall have the right to terminate this Franchise and obtain an immediate refund of the Initial Fee upon written request to McDonald's.”
So that they give a suggestion to add 10% initial fee in case (1) year from the date of this Franchise, Franchisee shall have the right to terminate this Franchise and obtain an immediate refund of the Initial Fee Pay + 10% upon written request to McDonald's
SMART 2: VFBS becomes the Master Franchisee of McDonald's in Vietnam Specific: Be the Master Franchisee of McDonald’s in Vietnam
Trang 16- Relevant: With the financial, economic and experience capabilities of VFBS VFBS plans to open 25 restaurants within the first five years, which could involve expanding to up to 50 restaurants over a decade
- Time-bound: 2024 -> 2034
= Brand exclusivity: VFBS hopes to be the Master franchisee of McDonald's in Vietnam so that they will be the only one to develop a franchise in a certain area during the time needed to open each of the franchise units, making that franchise more attractive to potential customers
3.1.1.2 Strategy
© Competitive Collaborative ® e Compromise Assertiveness Unassertive <> Assertive e Avoidant Accommodative ® Uncooperative <——————_ Cooperative Cooperation
Figure 3.1: Modes of conflict management
- Compromise -> Because in case if the Restaurant is not ready for occupancy within one (1) year from the date of this Franchise, it means McDonald's will have to pay an additional 10% of the initial cost to VFBS So McDonald's won't be 100% satisfied with the deal