Impact on ALLSAT for Adopting Franchise Business in Bulgaria - Dissertation Example

? Research Question The study is aimed to investigate the impact on the business of ALLSAT for adopting franchise business in Bulgaria. The study also seeks to investigate the chances of success for ALLSAT in the business environment of Bulgaria. Apart from that, the perception of consumers about software solution and the factors considered by people before making the final purchase decision is also another important objective. Therefore on the basis of the objectives, following are the research questions. Q1. What the impact of adopting a franchise business in the Bulgarian market by ALLSAT? Q2. What are the chances of success of ALLSAT in Bulgaria? Q3. What are the perceptions of the consumers about the product offered by ALLSAT and the factors considered by them before making any final purchase? CHAPTER III - RESEARCH METHODOLOGY Research Philosophy Research philosophy is the conviction concerning the approach to collect, analyse and use data for a particular subject of concern (H. J. Rubin and I. S. Rubin, 2012; Abbott, 2010; Blaxter, Hughe and Tight, 2006). There are two major research philosophies namely positivism and interpretivism. Positivism philosophy is regarded as the philosophy of research preferring scientific methods of research. On the other hand interpretivism is considered as anti-positivism and hence they do not believe in scientific research. According to Tobin and Joseph (2006) and Mukherji and Albon, 2009; Ashwin, 2011) the researchers believing in the philosophy of positivism also believes that the reality in which everything exists is stable in nature and it can be articulated from an objective point of view (Guba and Lincoln, 2005; City University of Hong Kong, 2011). A researcher believing in positivism philosophy believes that it is sensible to collecting statistical information and thus considers quantitative methodology. On the other hand, according to Hinkel (2005) a researcher who believes in interpretivism philosophy or phenomenological philosophy deems that the behaviour of the human being is the outcome of their perception about the circumstances (Saunders, Lewis and Thornhill, 2009; Wimmer & Dominick, 2011). Interpretivism encompasses a number of specific and focused movements which facilitates a detailed study since the collection of data moves beyond the predetermined categories that are present in deductive research approach (Cooper, 2012, p. 17). For this method of research a strong insight and potential to reflection is necessary for curving out important patterns of information from “a body of observations” (Babbie, 2010, p. 51). An interpretivist tries to gain in-depth insights interpretation and perception about the people and how they see the world around us. They believe that instead of collecting statistical information about the subject of concern, it is judicious to collect in-depth views of the participants. As a result of that, researchers who believe in interpretivism philosophy consider qualitative research to address the area of concern. This study is aimed to evaluate the impact of adopting a German software franchise in Bulgaria and thus it requires collection of qualitative data, hence interpretivism philosophy is appropriate for the study. Research Approach Generally two methods are used for conducting the research and establish the reasoning behind why such approach of research has been adopted. These two approaches of research are the inductive approach and the deductive approach. These two research paradigms follow two different approaches towards research and several researchers have discussed these approaches in light of different perspectives (Hussey and Hussey, 1997; Bryman and Bell, 2007; Ghauri and Gronhaug, 2010; Saunders, Lewis and Thornhill, 2009). Deductive Research Deductive research refers to an approach to research in which the researcher chooses a theoretical assumption to test it through the process of research and establish its validity. The researcher begins her task by studying the theory. Then she generates a hypothesis relevant to the theory and the theme on which the research has to be. The variables identified for this study are observed by the researcher to collect information regarding their activities and the relationship with the other agents and finally the process ends with the conclusion drawn from the study. This model is not appropriate to follow the research objective specified for this study. The researcher has not used the deductive approach because her aim is to develop a hypothesis on the basis of her understanding of the relationships shared by the different variables of study (Shaheen, n.d.; Monette et al., 2005; Snieder and Larner, 2009). The deductive style would provide space for establishment of the existing theory through the research but for developing a theory from a hypothesis a different approach is required. Figure 1 (Source: Burney, 2008) Inductive Research Inductive approach to research is a process that the researcher exploits to use the observations made in the research and derive theoretical inferences from them. On adopting this model the researcher goes through different stages; the conduct of each different variable has to be observed and the relationship shared by these variables with other variables have to be studied; these relationships have to be identified in order to generate a relevant and contextual hypothesis for the on the basis of the observations. Finally the conclusion is reached according to the findings from the analysis of data. This entire process moves in exactly the reverse direction of deductive approach of research. In deductive approach the researcher follows a theory and aims at establishing a theory after studying the observations from the research, while in the inductive approach the researcher at first makes the observations and then establishes a theory according to whether the hypothesis is accepted or rejected. Figure 2 (Source: Burney, 2008) This particular research work has been done in the inductive approach. Since the qualitative research method is closely associated with the inductive style of research, analysis of data has been done in the qualitative manner in this research. Qualitative research is mostly used in research works of behavioural sciences (Seale, 2012) since it maximizes outcomes of social research (Golicic, et al., 2005). The purpose of using this research method is to discover “the underlying motives of human behaviour” (Kumar, 2011, p. 8). According to Denzin and Lincoln (2011), inductive approach of research is “a problem-solving methodology” (Denzin & Lincoln, 2011, p. 62) that contrasts and replaces Aristotle’s logic behind conducting the research in deductive method. While the deductive approach allows the researcher to trace the information collected to the point where the process of research had begun, the inductive approach is a process that gives scope to the researcher to analyse the data in such a way that it would “lead to the emergence of concepts” (Yin, 2010, p. 94). Qualitative research provides the chance to consider different aspects of the daily social life while collecting information for the study; such as, public policies and economic updates in the current political and social setting (Analysegruppen, 2012; Nsf, 2012; Alby, 2006; Boeree, 2012; Creswell, 1998, Nargundkar, 2008). Explanatory Research The strategy of qualitative research can be categorized into three strategic classes; explanatory research, interpretive research and critical research (McNabb, 2010). These methods are most commonly used in research of social science. Qualitative research helps in explaining the different social phenomena (Smartpsych, 2004; Lambin, 2000). This sequence of qualitative research method roughly matches with the quantitative research process; exploratory research, descriptive research and casual research (McNabb, 2010). Explanatory strategies play similar role in the process of qualitative research just like the exploratory research process plays in the quantitative research method. The researcher might take various routes in order to conduct exploratory research. The process might involve review of literature and/or carry out focus group interview. The researcher can seek to study new phenomena which might help her to gain better understanding of the phenomenon, test whether a study can be made more extensively on this theme and also determine which method of study would be appropriate to make consecutive studies. These aspects of explanatory form of research makes this research process a wide in focus. Instead of providing precise answers to any particular research question, it allows the researcher to gain interesting insights into the subject of study. Exploratory research method is conducted with the aim of identifying the central issues involved in the study and the key variables to be studied (Harvard University, 2013). The research strategy: Survey Research strategy refers to the roadmap or plan proposed by the researcher in undertaking the process of exploration of an interesting phenomenon systematically (Marshall and Rossman, 2010). Research methods act as explicit tools for carrying out such exploration. In-depth interview policy is a method utilized by the researcher as method of collecting primary data. (Marshall and Rossman, 2010). The research strategy helps the researcher to formulate the pattern in which the research would be conducted; to draw boundaries around the research plan in the sense what methods would be used for carrying out the research and the resources that have to be devoted for the study, thereby helping the researcher to identify and maintain the focus on the central objective of study. The credibility and integrity of qualitative report is judged on the basis of rigorous field work, and to the extent to which the researcher has been able to fundamentally appreciate ‘naturalistic inquiry’ (Marshall and Rossman, 2010), her holistic thinking and the uprightness with which she conducts the research. For developing a research strategy, the researcher has to consider various factors, such as, competency of the chosen strategy and also informational adequacy. It is important to evaluate and judge these two factors before putting the strategy into action. Adequacy of the data to be collected through the particular method, resource constraints in the form of time and availability of funds, various other costs that might have to be incurred by the participants or/and the researcher, all these and other similar issues must be considered before picking a research strategy. The researcher has determined to conduct the research with the help of unstructured and semi structured interview, which allows the researcher to modify the interview according to the course of the interview. Such flexibility keeps space for dynamic results on the basis of the outcome received at the end of each stage of interviews. The Research Choice: Mono method & time horizon The qualitative method of research has been used for conducting this research. The basic reason behind choosing Mono method is that this method is not as complex as the other two methods, mixed and multi methods and therefore consumes lesser time (Daymon & Holloway, 2010). It is context bound and is designed to obtain the answer of questions about the complex character of the phenomena under study. The mono-method is context bound and is followed with the intention of understanding and explaining the phenomenon that is being researched (Cottrell and McKenzie, 2010). While the multi-strategy research process is gaining popularity, it faces various limitations; in terms of proper design, research questions and more importantly investment of resources (Giddens, 2010). Although in qualitative method the data is represented by using words, the analyses are made in such a way that the lack of numerical representation is fulfilled. Hence it does not stand behind quantitative methods in any way. Time horizon: Cross-sectional The researcher has collected the information for this research “at a single point in time” (Michalski, 2011, p. 4). Time horizon for the research work is selected on the basis of “the research question” (Piepenburg, 2011, p. 49) selected by the interviewer. This paper represents the data collected by a cross sectional study, which denotes the “study of a particular phenomenon at a particular time” (Piepenburg, 2011, p. 49). Techniques and procedures: Data collection method The method of data collection is central to the research. For this particular research, method of data collection has been adhered primarily to two methods; focus group interview and questionnaire survey. These two methods are most reliable for collection of such information that would be useful for analysing through qualitative method. Focus group interview is one type of strategy that involves more than one respondent and the topic of discussion relates to a well-defined topic (Bryman, 2007; Duval, 2005). In conducting focus group interview the researcher enjoys the liberty of modifying different aspects of research design in the course of doing the research. According to the responses received from the respondents and the understanding of the information received by the researcher, she modifies the consequent questions asked considering the objectives of research. Qualitative research gives the researcher the scope of conducting unstructured or semi structured interviews, that does not set any pre-determined options for the responses to follow and the allows the respondents to answer the questions fully in the way in which they feel comfortable to furnish the answers. It provides the opportunity to the interviewer to come up with follow-up questions so that she can establish better relationship with the interviewee and extract more reliable answers (Andrew, Pederson and McEvoy, 2011). Structured questionnaire survey would also be conducted by the researcher using open ended question. These questions would be addressed to the executives of the firms in Bulgaria that are the potential participants of ALLSAT. It would allow the researcher to learn information that would not be possible to learn through close ended questions meant for quantitative analysis (Dantzker and Hunter, 2011). Many researchers consider that there are stark differences between these two research methods (Katsirikou & Skiadas, 2010). The sample size for the executives of ALLSAT is 5 respondents and that of the potential firms in Bulgaria is 20 respondents among the executives of these firms. Blue Ocean Strategy The blue ocean strategy refers to the pattern of conducting business by increasing demand in unconventional ways and breaking away from the existing competition (Autor and Mauborgne, 2005). Businesses adopt blue ocean strategy in order to challenge the steep competition in the existing market and find space for the firm instead of partitioning out space for the firm from the crowded existing market. In this context the blood red ocean signifies the steep competition, and the blue ocean signifies a new and uncontested market space. ALLSAT, originally based in Germany, is venturing out to Bulgaria thereby creating a blue ocean in this new market. Rather considering competition as the benchmark of performance, the management of this company is guided by a new logic called value innovation. Companies that can create a blue ocean for achievement of success do not consider competition a benchmark of performance. A different logic, known as value innovation, guides their management (Autor and Mauborgne, 2005). Blue Ocean Strategy holds value innovation as its keystone. Neither technological innovation nor pioneering marketing strategies are the factors that separate the losers from the winning firms. The factor that distinguishes the winning firms from the losers is the value innovation made by the losers in their way of thinking in a novel way and implementing these strategies. Ethical considerations The researcher has abided by a standard code of conduct while conducting this research (MRS, 2010). Personal information of the participants has been kept confidential. Researcher has explained the objective of research to all the respondents prior to making the research and has taken their consent in involving them in the interview. The employees also have the liberty to leave the interview process whenever they desire. It has been taken care that the respondents are not harmed physically or otherwise while they participate in the interview process. The data has been reported accurately without making any major manipulation. Limitations This research has few limitations. Primary data is not easily available and moreover, the market in Bulgaria is a new one. Hence few firms have been selected for conducting the interview with their executives. The researcher has faced difficulty in setting up the interviews and has taken assistance from industry experts. Besides, the researcher has accepted the information provided by the respondents and has not been able to judge the validity of the information. CHAPTER IV – FINDINGS AND ANALYSIS 4.1 Findings and Analysis of Questionnaire Survey The questionnaire survey was meant for the probable customers of the company. It was that the major customers of ALLSAT in Germany are small and medium size enterprise and private companies. The list includes surveyors, supplier of gas, power, water; surveying authorities in different countries and new receiver manufacturers who do not have a proper software solution for applications in Germany. Similarly, the company is supposed to target the same industry for selling their software package license and generate revenue. As a result of that the target respondents were also the same business groups of Bulgaria. Open ended questionnaire were used to record data from the respondents. The first question asked to them was related with the demographic factors. Although, demographics factors did not have significance for this study, but to keep a record of their though demographic questions were put forward. It revealed that among the 20 respondents, 11 were male and the remaining 9 were female. Most of them hold managerial designation and only few of them were executives of operations of the chosen firm. Figure 3 – Distribution of Respondents Figure 4 – Designation of the Respondents The second question asked to the respondents was related with the extent to which the company is dependent on software packages to run daily business. In response to this question most of the respondents put emphasis on the fact that the business houses are highly dependent on the technology. Around 13 respondents highlighted that in the current business scenario it becomes difficult for the companies to survive without technology. However, they do not use technology in every business departments. Around 4 of the respondents stated that their company uses software in almost every department. The respondents further mentioned that their company is highly dependent on technology. Starting from performance management of the employees to market research, in every aspect some kind of software package is used. On the other hand, 3 respondents mentioned that they do not depend on technology for the purpose of conducting daily operation. Figure 5 – Dependence of Technology From the above findings it is evident that in Bulgaria, the dependence of technology on technology of the business houses is extremely high. Moreover, technology has equal importance in every business sector. Hence, ALLSAT has a good chance of success in the market. The next question asked to the executives and managers of different companies were related to their effort and frequency of updating their current IT infrastructure. In regards to this question, several respondents mentioned that they update their existing infrastructure very often. 14 respondents stated that they always try to keep their systems updated with the latest technology. Moreover, these companies also has a feeling that it is imperative to ensure the company is using the most updates software version as it helps them to gain competitive advantage. Moreover, they also have feelings that if updated technology is used, they will lose their position in the market and hence can be disadvantage for the firms. The remaining 6 of the respondents marked that they have a certain time frame after which the company upgrades its existing infrastructure. Figure 6 – Frequency of Updating the Existing Infrastructure The above findings make it evident that the companies of Bulgaria depend heavily on technology and they consider it as a way of gaining competitive advantage. Hence, it has been found that 70% of the chosen companies very often upgrade their existing infrastructure. Only a handful population do not judge technology upgrade as significant activity from an organizational perspective. The overall motive of the business houses of Bulgaria makes it clear that they are technology dependent and thus ALLSAT has a good chance of success. The third question in the questionnaire for the respondents was regarding the budget allotted for carrying out operation and purchase of equipments and licenses pertaining to information technology infrastructure. This question helped to get an idea of the amount of money used spent by companies for enhancing IT operation. Around 12 respondents have stated that their IT budget is less than $10,000. However, 4 executives enlightened that their current IT budget varies within $10,000 to $15,000. The remaining 6 executives highlighted that their spending in IT infrastructure development is more than $15,000. Figure 7 – IT Budget The data above makes it evident that Bulgarian companies make substantial amount of investments in developing their current IT infrastructure. The respondents also made it clear that their respective companies invest such large sums of money not to just upgrade the existing infrastructure but also to buy and implement new technologies. Therefore it is a great sign for ALLSAT to succeed in the market place. The next question to the respondents was regarding the factors considered by them before purchasing any application or software. This question was aimed to test and suggest some vital factors to ALLSAT before starting their operation. Moreover, this question also an important step towards the uncovering the consumer behaviour of Bulgaria. In response to this question, there were several common attributes that a company looks before making the final purchase decision. One of the respondent shed light on the fact that the after sales service and support from the telephone support provider is the most essential criteria. The manager argued that companies often face complexities in using new applications as they are mostly customized. Hence, after sales support greatly help companies to get accustomed with the new software. Moreover, telephone support and online support also help companies to get familiar with the usability of the software. Another executive mentioned that price is the most important factor for them before deciding to make a purchase of the product. Several of them mentioned that interface of the website is also important. They stress on the fact that irrespective of the price and services of the application, the user friendliness of the application is enormously important. Consumption of memory and resource is also important for the consumers. Figure 8 – Factors Considered before pricing According to the findings, the usability of the product is much more important as this point is portrayed out buy most of the respondents. It is also evident from the graph that companies does not considering any single criteria for evaluating a product, rather several of them are considered for making the final purchase decision. Therefore, the company should consider all these facts before making the final decision. The next question thrown to the respondents was regarding their type of application use. However, this question did not considered the broader aspect, rather it directly aimed to know the previous experience of users pertaining to the use of surveying software. The question was Have you used any survey software previously? Do you intend to use it in the near future? In response to this question around 16 managers of the respective companies put emphasis on the fact that they have already used surveying software. They further stated that survey software is the one of the essential elements for them before starting any project. The survey process is the most important task of any project and it is also expected that the results of the survey will be accurate. As a result of that they give high importance to this software. However, some of the companies are not satisfied with the software they use. One of the reasons highlighted by the manger of one of the firm is that the cost associated with the software and the interface is not user friendly. Moreover, due to unavailability of companies involved in offering such solution within the Bulgarian market is a cause of concern for these companies. On the other hand 4 companies still rely on the manual calculation method to know about the survey results. On asking those about the future probability 2 of them mentioned they have already started the process of implementing survey software solution. Figure 9 – Previous experience in Using Survey Software Application From the discussion it is evident that a large percentage of the companies use survey software. However, the most interesting and encouraging fact is that most of the companies are either facing difficulties in using the existing software and some companies are planning to purchase such solution. Hence, this gives a great opportunity to ALLSAT to get success in the Bulgarian market. The last question asked to them was related with the expectation of the potential consumers about the Software. It has been observed that a variety of responses came from the respondents. Some of the most common ones as stated by the customers were wide range of features such as measuring data, geodetic evaluations, visualization and data exchange, efficient data management tool, quality testing, data base connections, office suite, GPS technology, user friendly, and low system requirement. Figure 10 – Desired Features Hence, it is evident, Bulgarian companies are looking product which is a one stop solution. Hence, for this reason the company should try to integrate some more features to its current portfolio. Apart from that customized solution can also be a great way to serve the purpose the company. 4.2 Findings and Analysis of Focus Group Survey Another group of respondents were the executives of the company. The first question asked to them was related with the factors that fostered the company to initiate operation in Bulgaria. In addition, they were also asked about the reason behind choosing franchise model. In response to these questions, most of the executives of the company put emphasis on several factors which they considered for starting operation in Bulgaria. The common ones as stated by the respondents were cheap labor cost in Bulgaria as compared to Germany, and low operational expenses. In addition, the country is also favorable for doing software business. However, the most crucial one was pointed out by one of the senior manager of the company. According to him, the company mainly decided to start operation in Bulgaria is because of the fact that there is no other similar business and hence the company will be able to operate in a monopoly market. Figure 11 – Driving Factors for Doing Business in Bulgaria In the meantime, the managers mentioned that the major reason behind selecting franchise mode is that the company will be able to access the financing packages, get associated with a good or reputed company, comply with norms of Bulgaria and can reduce market risks greatly. However, majority of them have stated that the market risk will be greatly reduced. Figure 12 –Reasons of Franchising They executives believe that the company has great chances of success in the Bulgarian market. Moreover, they consider that with the franchise model the company will be able to get greater which would not have been possible with FDI (Foreign Direct Investment). Apart from the monopoly market and industry growth are also encouraging factors for the company. On asking the executives and managers about the USP of the product, which they believe will drive the sales. In regards to this question, most of them state that it’s the wide range of features. However, some of them also believe that in order to get success in Bulgaria; the company needs to ensure it delivers customized solution to the candidates. Apart from that some of the executives also deem the utility of the application can also be another sales driver of the company (Javad, n.d.). Figure 13 – Possible Sales Driver of the Company The executives of the company further stated that they are planning to offer customized solution to the Bulgarian clients. However, the executives added that they will not make any changes in the pricing of the application. Therefore, from the thoughts of the senior managers and executives of the company it is evident that the company is focusing on the quality of solution rather than penetrating in the market with low price. This can be a reason for the monopolistic market. Another inference which can be drawn from the findings is that the company is trying to aim the same segment of customer whom they cater to in the markets of Germany. Conclusion The study was aimed to evaluate the impact of adopting a German software franchise in Bulgaria. The study also tried to assess the chances of success of ALLSAT in Bulgaria. The consumer perception about such product and the factors considered by them before making the final decision is also another important objective. The study revealed that the company will be highly benefitted for adopting to franchise business in Bulgaria. This mode of international expansion will help the company to get access of the financing packages, associate with reputed companies, comply with norms of Bulgaria and reduce market risks greatly. Hence, it can be concluded that the decision of the company to expand with franchised mode is highly justified. The study also pointed out that the probable customers in Bulgaria are highly sensitive towards after sales support and product features. As a result of that the company is recommended to concentrate more on these two aspects. One of the biggest advantages for the company is that there are no companies that offer such solutions to the clients in Bulgaria and hence this offers great opportunities of ALLSAT to get success and sustain in the Bulgarian business environment. Recommendations The recommendations are for the company, ALLSAT regarding the way they can achieve excellence in service delivery and can tap more customer segments. The company is recommended to offer customized solution to the customers of Bulgaria. In addition, the study revealed that Bulgarian people are less price sensitive, despite that the company is recommended to make some alteration in price. Bulgaria is financially weaker than Germany and hence a slight price reduction can be effective. Another recommendation to the company is that they should outsource the after sales support to one of the reputed companies of Bulgaria as Bulgarian customer judge after sales support as an important feature. The company is recommended to operate in a B2b (Business to Business Channel). This is principally because of the fact that the company is principally targeting business segments to drive sales. References Abbott, D., 2010. Sociology Revision - Methodology, Positivism and Interpretivism. [online] Available at: [Accessed 11 May 2013]. Alby, F., 2006. Methods of collecting data: Interviews and questionnaires in practice. [pdf] Available at: Accessed 11 May 2013]. Analysegruppen, 2012. Qualitative Methods. [online] Available at: [Accessed 11 May 2013]. Andrew, D. P. S., Pederson, P. M. and McEvoy, C. D., 2011. Research Methods in Sport Management. Illinios: Human Kinetics 10%. Ashwin, M., 2011. The Proceedings of the 10th European Conference on Research Methodology for Business and Management Studies: Ecrm 2011. London: Academic Conferences Limited. Autor, W. C. and Mauborgne, R., 2005. Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant. 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How often you consider updating the existing IT infrastructure? 3. What is the total budget allocated for IT operation? 4. What factors are considered by you before purchasing any application or software? 5. Have you used any survey software previously? Do you intend to use it? 6. What features and benefits will you look for in that software? Appendix II - Focus Group Interview (For the Executives and Managers of ALLSAT) 1. What are the reasons behind considering operation in Bulgaria? 2. Why instead of making FDI you choose franchised business model? 3. What according to you are the chances of success for the company in Bulgaria? 4. What is USP (Unique Selling Proposition) of your product? 5. Are you thinking to make GART 2000 customized for the Bulgarian customers? Read More