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Assertion (A): Manufacturers use the product franchise to govern how a retailer distributes their products. Reason (R): Manufacturing franchise opportunity typically require that a business owner purchases and distributes the products for one specific company.
A textile manufacturing company named Fab Weave Ltd and a cotton producing company named Pure Cotton Ltd decided to merge together to maintain steady production and supply chain.
From the given Franchise in Column I and related meaning in Column II, identify the matching pair. Column I: 1 Franchisor, 2 Franchisee, 3 Franchise, 4 Royalty. Column II: A The individual or firm purchasing the rights, B Periodic payment made to the franchisor, C The owner who grants rights to another party, D Standard Operating Procedure.
Assertion (A): Horizontal expansion means adding new units at the diversified stage of production. Reason (R): A bakery starting a chain of similar bakeries in other towns is an example of horizontal expansion.
Rohan embarked on an entrepreneurial venture by establishing a gym called Fit Zone. He equipped the facility with a diverse range of machines and enlisted qualified trainers to assist customers in their workouts. Initially, he set a nominal hourly fee to make the gym accessible to individuals from economically disadvantaged backgrounds. The gym quickly gained popularity, prompting Rohan to operate in multiple shifts and hire additional trainers. He also expanded the facility by installing extra machines to accommodate a larger customer base. Identify the type of business expansion undertaken by Rohan.
From the given enterprise in Column I and related glossary in Column II, identify the matching pair. Column I: 1 Vodafone and Idea, 2 Walt Disney and American Broadcasting company, 3 Facebook and Instagram, 4 L&T and Mind Tree. Column II: A Conglomerate Merger, B Hostile Acquisition, C Friendly acquisition, D Horizontal Merger.
Assertion (A): Mergers generally take place in a consensual setting, where both companies agree to combine their businesses and form a new entity. Reason (R): In a merger, the boards of directors of both firms approve the combination, and at least 50% of the shareholders of each company must agree before the merger can occur.
Kraft Inc. almost took over Cadbury company by force. Identify the type of acquisition.
The acquisition of Jaguar Land Rover by Tata Motors in 2008 is a prime example of a __________________ in India. Both parties were able to negotiate the deal without conflict, and Tata Motors successfully integrated JLR into its global operations.
The franchisee faces serious problem and difficulties when the franchisor:
[Refer to image in original paper] Identify the image and choose the correct option:
First School Ltd. is an acclaimed infrastructure development company. It designs the buildings for educational institutions in a unique way to give the maximum benefits of nature to the different stakeholders in the institution. Generally, the buildings have been designed by them in such a way that during the day maximum sunlight is utilized and solar panels conserve solar energy for the rest of the day. This helps to conserve electricity and reduce the electricity bill. Identify the type of value added by First School Ltd.
In a Reverse acquisition a public company takes over a private company.
When two companies that may not compete with each other but exist in the same supply chain merge, it is known as:
Assertion (A): Backflip acquisition is a rare case of acquisition in which the purchasing company becomes a subsidiary of the purchased company. Reason (R): Both the companies approve of the acquisition but the entire process is done by force.
Nipro Electronics was the leading player in the electronics industry for the last fifteen years. A few years back, Mobe Electronics, a smaller company entered the market. Nipro Electronics started losing its market share to Mobe Electronics due to its innovative products. To maintain or develop a competitive edge, Nipro Electronics decided to acquire Mobe Electronics under friendly terms but that failed. Now it decided to buy majority shares of Mobe Electronics and hence initiated the acquisition. From the following, identify the type of acquisition which Nipro Electronics adopted after failing on friendly terms:
Assertion (A): Mergers and Acquisitions is a potential strategy for ensuring the accelerated growth of business. Reason (R): Growing through Mergers and Acquisitions usually turns out to be less expensive as compared with internal expansion, particularly when the replacement cost of asset is higher than the market value of the targeted assets.
Fizz and Lime is an established beverage company which started bottling Wheat Grass Juice, Bitter Gourd with Jamun and Amla with Aloevera. It is planning to expand externally without compromising the unique taste of these drinks. Belligio juices got exclusive rights to manufacture and sell Wheat Grass and Amla, Aloevera under the name Fizz and Lime. Belligio Juice had to use only the ingredients supplied by Fizz and Lime to produce, bottle and distribute the two drinks. Identify and explain the form of external expansion adopted by Fizz and Lime.
Elegant Paints Ltd. is engaged in the manufacturing of paints and varnishes with its production unit located in Pune, Maharashtra. Shine Coats Ltd. manufactures decorative home coatings and supplies its products across India as well as exports to countries in Asia and Europe. Shine Coats Ltd. purchases raw materials such as paints and varnishes from Elegant Paints Ltd. To achieve economies of large-scale production and strengthen their market position, the management of both companies decided to merge their businesses. Identify the type of merger entered into by Elegant Paints Ltd. and Shine Coats Ltd. Also explain the type of merger other than the one identified.
A merger took place between Titan Engineering Ltd., a company engaged in infrastructure construction and manufacturing of heavy machinery, and CoolTech Appliances Ltd., a multinational company specializing in home and kitchen electronic appliances. Identify and explain the type of merger between Titan Engineering Ltd. and CoolTech Appliances Ltd.
Kamal Ltd. are manufacturers of textiles, having their plant in Surat, a city of Gujarat. Vastra Ltd. are the manufacturers of readymade garments and sell their products throughout the country. They also export their products in America and European countries. Vastra Ltd. source their textiles from Kamal Ltd. The management of the two companies decided to merge to have economies of large-scale production. (a) Identify the type of merger entered into by Kamal Ltd. and Vastra Ltd. (b) Also, explain the type of merger other than the one identified in (a) above.
Anil signed a contract with Phelari group to bottle and distribute their soft drink brand Kickapo. The taste of this soft drink was unique and it became the most preferred soft drink consumed by teenagers. The agreement stated that Anil should use the same ingredients used by Phelari group while bottling the product. Identify and give the meaning of this type of enterprise growth opportunity.
Give the meaning of a Franchise Agreement.
Oorja and KTC Wifi are two broadband provider companies operating in South-East Delhi. Both are close competitors and have developed their strong customer base over the years. The COVID-19 pandemic made the offices and schools switch their customer base online. Just then a multinational service provider company, Storex BB, entered the market and launched its services at a much cheaper price with better connectivity. To counter the threat posed by Storex BB, both companies Oorja and KTC Wifi decided to consolidate their business. (a) Identify the enterprise growth strategy adopted by Oorja and KTC Wifi. (b) State the type of growth strategy identified. (c) Give the goal of the type of growth strategy.
Merger between Larsen and Toubro (L&T) with key business area in construction engineering and manufacturing critical equipments and Voltas Limited, an Indian multinational electronics company specialized in manufacturing home appliances, whose business fields are totally unrelated, has taken place. Identify and explain the type of merger between L&T and Voltas Limited.
(a) Explain the advantages a franchisor gains through franchising which are related to expansion risk and cost advantages that result from extensive buying power.
Beta Ltd. is a steel manufacturing company having its headquarters at Mumbai. It is the tenth largest steel manufacturing company of the world. Gama Ltd. are also steel manufacturers with their headquarters in Rangoon, the capital of Myanmar. For a long period the company (Gama Ltd.) had been facing workers unrest and it decided to sell its business to an international bidder. The highest bid for this was made by Beta Ltd. for Rs. 10 lakh crores. Afterwards Beta Ltd. realised that the assets of Gama Ltd. were overvalued and liabilities were under-assessed and hence the price paid by them was higher. The employees of the two entities have different corporate cultures and styles of leadership which led to the problem of co-ordination. Ultimately Beta Ltd. had to close its business. (a) Identify the growth strategy adopted by Beta Ltd. (b) Quoting lines from the paragraph, explain any two reasons for the failure of Beta Ltd. after it took over the business of Gama Ltd.
Explain any four advantages of franchising to a franchisee?
Explain the different types of franchising.
The footwear industry in India is dominated by B-relax Footwear. B-relax Footwear procures 70% of its raw material from Polymers Ltd. The major production of Polymers Ltd. is plastic chips, PU foam and elastic which is used by B-relax Footwear in its manufacturing processes. After due diligence, they decide to merge with each other. If they merge, B-relax Footwear doesn need to look for a vendor and sourcing raw materials would be seamless. On the other hand, as a result of the merger, Polymers Ltd. doesn need to worry about the sales and marketing. All they need to do is to improve their processes to produce better raw materials for B-relax Footwear. After the merger the combined entity will be known as B-relax Inc. (i) Identify and explain the type of merger. (ii) Why is due diligence required before merger? (iii) Which is the most dominant reason for this merger? Explain.
Explain with the help of any four points the advantages of franchising to the franchisee.
Explain Internal expansion and External expansion as part of growth and development of an Enterprise.
Explain Synergy as a reason for Mergers and Acquisitions.
Pretty You is an established brand in the salon and makeover industry. It is currently operating in Delhi with a network of 5 branches. It now wants to make its presence known in different cities of North India and gradually would be establishing its identity throughout the country. For this, the company decides to give exclusive rights to independent retailers to take advantage of the brand Pretty You in return for their payment of royalties and conformance to standardized operating procedures. Identify and explain the form of expansion discussed above.
Explain any six reasons for the failure of mergers and acquisitions.
Give the meaning of Franchise Agreement. Explain the four main ingredients of a Franchise Agreement.
Mergers and Acquisitions are inspired by a desire to diversify or achieve higher growth rate due to varied reasons. Explain any five such reasons for mergers and acquisitions.
Riya, a young entrepreneur, wanted to start her own business in the food industry but lacked experience in establishing a new brand. After researching, she decided to take a franchise of an already established fast-food brand, Burger Delight. The franchisor provided her with training, standard recipes, brand promotion support, and guidance in store design and operations. Within a few months, Riya outlet gained popularity due to the brand reputation and consistent quality standards. State and explain any three advantages of franchising to the franchisee and two advantages of franchising to the franchisor in this case.
Sultan Trucks Limited are the manufacturers of commercial trucks for the last 20 years. The company had been doing good business, but recently due to irregular supply of parts by its suppliers, the company could not make timely delivery of trucks to the parties, who had booked their trucks. The customers cancelled their bookings and there were very few new bookings. The sales of the company started declining that resulted into losses. The management of the company analysed the problem and decided to takeover those two firms because of whom the problem arose, one of them was supplying tyres for its trucks and another axles to the company. The company also extended credit facilities to the customers and started booking the trucks without charging any booking amount. It also decided to employ 100 unemployed youth, with 50% reservation for females to take up the cleaning operations, using the imported machines, inside the factories as well as the surrounding areas. Identify and state the concepts of enterprise marketing and growth strategies discussed in the above paragraph.
Kapoor Merrytime Ltd. is a renowned name in naturally flavoured ice-creams made from fresh fruits and edible vegetables. The company has its presence in Maharashtra and Goa. Its ice-creams sell under the brand name Satvika. The company has a strong foothold in Maharashtra but is struggling for success in the Goa market. The reason is the presence of a successful local brand by Pastle Ice-creams Ltd. in the market. Pastle Ice-creams Ltd. is selling natural ice-creams with locally preferred flavours. Kapoor Merrytime Ltd. tried to negotiate its way but because of the goodwill of Pastle Ice-creams Ltd., it could not succeed in its efforts. Frustrated, Kapoor Merrytime Ltd. started buying the shares of Pastle Ice-creams Ltd. to gain control over the management of Pastle Ice-creams Ltd. (a) Identify and explain the type of business combination adopted by Kapoor Merrytime Ltd. (b) Explain any two advantages which Kapoor Merrytime Ltd. would have by adopting its designed strategy.
Mergers and Acquisitions are inspired by a desire to diversify or achieve higher growth rate due to varied reasons. Explain any five such reasons of mergers and acquisitions.
Give the meaning of Franchise Agreement. Explain the four main ingredients of a Franchise Agreement.
When two companies that may not compete with each other but exist in the same supply chain merge, it is known as :
Merger between 'Larsen and Toubro (L & T)' with key business area in construction engineering and manufacturing critical equipments and 'Voltas Limited', an Indian multinational electronics company specialized in manufacturing home appliances, whose business fields are totally unrelated, has taken place. Identify and explain the type of merger between 'Larsen and Toubro (L & T)' and 'Voltas Limited'.
'Mergers and Aquisitions' are inspired by a desire to diversify or achieve higher growth rate due to varied reasons. Explain any five such reasons of mergers and aquisitions. Give the meaning of 'Skimming method of pricing'. State any two advantages and two disadvantages of this method of pricing.
'Nipro Electronics' was the leading player in the electronics industry for the last fifteen years. A few years back, 'Mobe Electronics', a smaller company as compared to 'Nipro Electronics' entered the market. 'Nipro Electronics' started losing its market share to 'Mobe Electronics' day-by-day due to its innovative products. To maintain or develop a competitive edge and to upgrade its technology, 'Nipro Electronics' decided to acquire 'Mobe Electronics' under friendly terms but that failed. Now it decided to buy majority shares of 'Mobe Electronics' and hence initiated the acquisition. From the following, identify the type of acquisition which 'Nipro Electronics' adopted after failing on friendly terms :
Explain the advantages a franchisor gains through franchising which are related to 'expansion risk' and 'cost advantages' that result from extensive buying power. Explain 'Number of buyers' and 'Types of buyers' as considerations related to market while selecting a channel of distribution.
'Bharat Cars Ltd.' is the manufacturer of small cars in India and 'Swadeshi Ltd.' is the manufacturer and supplier of car parts. Both the companies decide to merge as such a merger would allow 'Bharat Cars Ltd.' to obtain better pricing on parts and have better control over the manufacturing process. 'Swadeshi Ltd.' would also be guaranteed a steady stream of business. The type of merger is :
In __________ acquisition, a public company is taken over by a private company.
'Chai Cart', an Indian company, was set up in 2021 near a prime office hub in Nurgaon. The company aimed to fulfil the high demand for tea among office goers. Within a few months, the demand picked up and the business started earning good profits. In response to the rising demand, the company decided to expand its operations. Expansion of its business could be based on activities or on acquisition of ownership and control of other business concerns. 'Chai Cart' expanded its present production capacity by adding more machines. Furthermore, it opened its branches in shopping malls, airports and suburban locations, allowing it to reach more customers and to increase brand visibility. They also introduced new products, including a wider range of food items, coffee and other beverages to attract more customers. In this way, the company increased its business activities and broadened its present capital structure. (a) Identify and explain the type of expansion discussed in the above paragraph. (b) Also explain one other type of expansion.
What is meant by 'franchising' ? Explain the main components of a franchise agreement. Explain any five forms of 'Synergy'.
Horizontal merger is a merger between __________.
When a private company takes over a public company, the type of acquisition is :
Explain 'Contract Explanation' and 'Operations Manual' as main ingredients of a franchise agreement.
Reena opened a franchise of a well-known fast food chain. One of the main reasons she entered into this business was that it already had an accepted name. She did not have to spend resources trying to establish the credibility of the business as it already exists. The franchisor also provided managerial assistance to her. She was offered training on all aspects of operating the franchise including accounting, personnel management, marketing and production. The franchisor also offered her years of experience in business and knowledge of the market. However, she started facing challenges soon. The franchisor exerted a high degree of control which limited her ability to experiment with new ideas leaving her feeling over-guided or over-influenced. Moreover, apart from the original franchise fee, Reena had to share a percentage of her revenue as ongoing royalty. Additional costs were also charged for services like advertising and training. These expenses made the business model far more expensive than she had anticipated. Identify and explain three advantages and two disadvantages of the franchise mode of expansion, as discussed above.