A random sampling of some this week's franchise announcements shows that, while global agreements are becoming more popular, geographic gaps still exist.
{complink 12816|Mouser Electronics Inc.} announced its distribution agreement with Phoenix Contact now includes Europe, making Mouser one of the few European catalogue distributors for Phoenix Contact. The new European agreement with Phoenix Contact coincides with Mouser’s international expansion strategy by adding another high-profile manufacturer to Mouser’s European lineup.
Avnet Memec has confirmed a new pan-European distribution agreement with {complink 12722|Renesas Electronics Corp.}, following the merger between Renesas Technology Corp. and NEC Electronics. The agreement makes Avnet Memec a key distribution partner for the entire portfolio of Renesas microcontrollers and system-on-chip, analog, and power products throughout the Europe, Middle East, and Africa (EMEA) region.
Austriamicrosystems, a leading global designer and manufacturer of high-performance analog ICs, has entered into an agreement in which {complink 2164|Future Electronics} will now distribute austriamicrosystems products to customers worldwide. This expands on the previous agreement that covered Europe and the Americas.
Suppliers franchise distributors on a region-by-region basis to avoid over-distribution of their products and minimize conflict within their sales channels. The problem with this practice is that a distributor that serves a global customer may be authorized to sell a product in North America but not in China. Exceptions are often granted, but there's always a lot of paperwork involved.
Suppliers increasingly are filling in those gaps by expanding existing distribution agreements into multiple regions. This practice helps both suppliers and distributors better serve customers and moves the industry another step toward true globalization.
It is really good move to go through distributors to reach to faraway regions/countries. Colocation with the customers is one of the most important aspects of doing business globally.
The debate over which private school to send ones kids is definitely moot!
The government's been quite aggressive in going after options backdating violators. A microelectronics executive was recently ordered to wear an electronic bracelet confined to his house. The ultimate irony would be if he made the parts that went into that bracelet.
These stock options are really great way to lure employees. It really works in well established and big companies but in start ups you just have to wait a long to see the results. Normally the terms and conditions on stock options are such a way that you can hardly make much money soon.
The suppliers just want to reach the customers if not directly let it be franchises. If the consumer gets what he needs and quicky its a win win situation for both the parties.
I have been interviewing recently, and some of the companies still seem to be offering options… no, it's not nearly as common as it used to be, but it's still around.
But I do agree that the changes in accounting rules have certainly helped to defray their “power” somewhat and that the era of people expecting to get rich off their options is long gone.
I believe I was much luckier when it came to options than most people, so I can't complain too much.
I remember those days well, when overnight a person could go from having a worthless piece of paper to suddenly owning the IRS hundreds of thousands of dollars in taxes.
But seriously, Stock Options is indeed a good way to encourage employees to go above and beyond, even when the gain was not that large, they were a way to get people to feel more responsible about not only their work, but the quality of their work and products.
In my first company, I was offered the option to buy 36 shares of the privately held company. As being just an engineer, that was all I was allowed. Annual dividend was one penny a share per year. Oh and I had to pay two dollars a share. Not overwhelming, but being a stockholder had very interesting side benefits. At the annual stockholders meeting, we each recieved a very good meal and got to meet the real owners of the company. Getting face time with the CEO and CFO can sometimes be very beneficial during issues when you have to go before either and discuss issues. When the recall seeing you at the annual meetings, you get preferrential treatment over someone who just works for them.
All in all, I greatly encourage companies to either provide stock options or at least an employee stock purchase plan. There is no more tangible way to get people to buy into your corporate strategy than to make them part owners, even at 36 shares, it is still better than nothing.
I know after the ENRON debacle, that owning your company stock, or being forced to get your 401K or profit sharing money in only company stock has been risky. It still is, but if you agreed to work for the company, you must have had some commitment that they would prosper or you should not have joined the company. As always, Buyer Beware! But, if you do your homework on the company and its future growth and survivability, then it is fine to put some of your assets in your company stock.
At my last company, I steadily invested in the employee stock purchase plan and am currently enjoying a 700% return on my investment. So miricles can happen, but the circumstances in my purchases were unique, but in my case, the risk paid out.
So if your company offers stock options or EPP plans, check them out. If your company does not have them, ask why not.
Thanks for the positive story, DB. It is easier to remember the abuses of the system rather than the folks that benefited from it. I appreciate the contrasting perspective–and good for you!
There's no question that global franchises benefit the customer, the supplier and the distributor. Regional franchises served their purpose when there were a dozen distributors in one area competing for a supplier's attention and the same OEM customers. Suppliers had to be very careful to not be over-distributed and dilute their market share by being sold though too many channels.
At the same time, suppliers have developed long-term relationships with regional distributors in developing or geographically fragmented markets. The key is to find the right combination of global/local services the customer needs.
Making Franchises are the best way for companies, to market their products and to expand their presence with a minimal effort. It gave some good benefits for the company also, primarily it’s the duty of the franchise to market the products. There is No direct risk involved for the companies, because the franchise peoples will look after the entire thing. In most cases the companies will allocate franchise only to well established banners with proven track record. Companies have to only direct or guide them as per their policy, else they can also spoil the name of parent companies too.
The channel-only business model can be very successful if the demand is properly calculated. It decreases marketing/PR costs and allows more exposure especially if the product is worth it. This same idea translates to the franchise model if done right. Look at McDonald's for example.
Choosing different distributors over the separate regions also provides huge benefits to the suppliers since they actually have a choice. So rather than just having single global distributor the suppliers can choose their distributors based on their customers in particular region. One more added advantage to the suppliers is that they will be present in all the distributor websites. So if an engineer tries to find a particular component then the supplier can be visible in all the major distributors.
I clearly agree with Dbertke in this regard. The companies who believe in themselves and who believe in people always share the profits with the employees. I know the case of ENRON was one black dot and could have impacted many employees to dissolve their stock. I feel the stock options will create a bond and attachment to the company.
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by 
It is really good move to go through distributors to reach to faraway regions/countries. Colocation with the customers is one of the most important aspects of doing business globally.
The debate over which private school to send ones kids is definitely moot!
The government's been quite aggressive in going after options backdating violators. A microelectronics executive was recently ordered to wear an electronic bracelet confined to his house. The ultimate irony would be if he made the parts that went into that bracelet.
These stock options are really great way to lure employees. It really works in well established and big companies but in start ups you just have to wait a long to see the results. Normally the terms and conditions on stock options are such a way that you can hardly make much money soon.
The suppliers just want to reach the customers if not directly let it be franchises. If the consumer gets what he needs and quicky its a win win situation for both the parties.
I have been interviewing recently, and some of the companies still seem to be offering options… no, it's not nearly as common as it used to be, but it's still around.
But I do agree that the changes in accounting rules have certainly helped to defray their “power” somewhat and that the era of people expecting to get rich off their options is long gone.
I believe I was much luckier when it came to options than most people, so I can't complain too much.
I remember those days well, when overnight a person could go from having a worthless piece of paper to suddenly owning the IRS hundreds of thousands of dollars in taxes.
But seriously, Stock Options is indeed a good way to encourage employees to go above and beyond, even when the gain was not that large, they were a way to get people to feel more responsible about not only their work, but the quality of their work and products.
In my first company, I was offered the option to buy 36 shares of the privately held company. As being just an engineer, that was all I was allowed. Annual dividend was one penny a share per year. Oh and I had to pay two dollars a share. Not overwhelming, but being a stockholder had very interesting side benefits. At the annual stockholders meeting, we each recieved a very good meal and got to meet the real owners of the company. Getting face time with the CEO and CFO can sometimes be very beneficial during issues when you have to go before either and discuss issues. When the recall seeing you at the annual meetings, you get preferrential treatment over someone who just works for them.
All in all, I greatly encourage companies to either provide stock options or at least an employee stock purchase plan. There is no more tangible way to get people to buy into your corporate strategy than to make them part owners, even at 36 shares, it is still better than nothing.
I know after the ENRON debacle, that owning your company stock, or being forced to get your 401K or profit sharing money in only company stock has been risky. It still is, but if you agreed to work for the company, you must have had some commitment that they would prosper or you should not have joined the company. As always, Buyer Beware! But, if you do your homework on the company and its future growth and survivability, then it is fine to put some of your assets in your company stock.
At my last company, I steadily invested in the employee stock purchase plan and am currently enjoying a 700% return on my investment. So miricles can happen, but the circumstances in my purchases were unique, but in my case, the risk paid out.
So if your company offers stock options or EPP plans, check them out. If your company does not have them, ask why not.
Good Luck,
DAB
Thanks for the positive story, DB. It is easier to remember the abuses of the system rather than the folks that benefited from it. I appreciate the contrasting perspective–and good for you!
There's no question that global franchises benefit the customer, the supplier and the distributor. Regional franchises served their purpose when there were a dozen distributors in one area competing for a supplier's attention and the same OEM customers. Suppliers had to be very careful to not be over-distributed and dilute their market share by being sold though too many channels.
At the same time, suppliers have developed long-term relationships with regional distributors in developing or geographically fragmented markets. The key is to find the right combination of global/local services the customer needs.
Making Franchises are the best way for companies, to market their products and to expand their presence with a minimal effort. It gave some good benefits for the company also, primarily it’s the duty of the franchise to market the products. There is No direct risk involved for the companies, because the franchise peoples will look after the entire thing. In most cases the companies will allocate franchise only to well established banners with proven track record. Companies have to only direct or guide them as per their policy, else they can also spoil the name of parent companies too.
The channel-only business model can be very successful if the demand is properly calculated. It decreases marketing/PR costs and allows more exposure especially if the product is worth it. This same idea translates to the franchise model if done right. Look at McDonald's for example.
Choosing different distributors over the separate regions also provides huge benefits to the suppliers since they actually have a choice. So rather than just having single global distributor the suppliers can choose their distributors based on their customers in particular region. One more added advantage to the suppliers is that they will be present in all the distributor websites. So if an engineer tries to find a particular component then the supplier can be visible in all the major distributors.
I clearly agree with Dbertke in this regard. The companies who believe in themselves and who believe in people always share the profits with the employees. I know the case of ENRON was one black dot and could have impacted many employees to dissolve their stock. I feel the stock options will create a bond and attachment to the company.