COMPROBACIÓN DE HIPÓTESIS

One of the resources often cited by entrepreneurs as a specific requirement for opening new sites is the need for human capital that could contribute a wealth of reliable local market knowledge (Dant 1995). For organisations expanding into new geographical locations, having access to well-connected, community-focused staff offers significant advantages. An

understanding and involvement within the local community may benefit an organisation through site selection, lease negotiations, community partnerships and cross-promotional opportunities. Thus, resource scarcity encourages franchising as franchisees who sign-up offer the expanding organisation valuable local market knowledge, allowing businesses to better identify suitable geographic locations and local market conditions (Minkler 1992).

Table 5.8 provides a scale rating for each of the five cases in regards to their access to local market knowledge at the time of expansion. A low rating was assigned to organisations that considered the factor important but did not have any access to such local knowledge. Medium ratings were provided to those organisations that could draw upon local market knowledge in a limited capacity. Organisations that recognised the importance of the resource and proved to have good access to local market knowledge were given a rating of high.

Table 5.8: Access to local market knowledge

Case Access local market knowledge

1F Low

2F Medium

1C High

2C Low

3C High

5.6.1 Analysis of access to local market knowledge for franchising cases

For the case 1F owner, the growth of the brand relied heavily on the success of the individual businesses driven by independent owner-operators. This entrepreneur recognised that a strong connection and involvement with the local community was critical for business success. People who knew the area intimately and were involved in the local community would be ideal franchisees, attracting new members through local connections.

The founder of case 2F believed strongly in having local people with local market knowledge operating their own business. Supported by head office, the franchisees were encouraged to get involved in all aspects of the business from the outset. This included site selection, lease negotiations, centre fit out, presale marketing and local community engagement. These aspects were critical to the success of the business.

Table 5.9 provides a summary of access to local market knowledge for the entrepreneurs of franchised sites, together with the importance placed on the criteria.

Table 5.9: Dant factor - access to local market knowledge and companies that expanded by franchising

Case Access to local market knowledge

Importance to decision to franchise

1F Low Lacked this critical resource to achieve goal of rapid expansion. Franchising provided a solution.

2F Medium Had a business development model that was dependent on an owner / operator who was well-connected within the community. Therefore this was of considerable importance in choosing franchising.

5.6.2 Analysis of access to local market knowledge for company cases

As a stalwart of the fitness industry, the entrepreneur of case study 1C believed they knew the Australian fitness market intimately. The owner believed local market knowledge was important but it was not a mandatory requirement for the partnerships they developed. Having run one of the country’s most successful centres, this entrepreneur believed that they would know intuitively what constituted an ideal location. The owner believed that entering into a partnership with someone who had significant local knowledge was not as important as managerial talent qualities and fitness industry experience.

For the owner of case study 2C, access to local market knowledge did not play a significant part in selecting the method of expansion. His strategy of having a manager who had financially invested into the business was, he believed, effective enough to create a successful pathway. Having invested financially into the business, the entrepreneur believed the manager would be significantly motivated to immerse themselves within the local and broader business community, enhancing the reputation of the business and developing partnerships and cross- promotional opportunities.

Prior to opening his first fitness centre, the owner of case study 3C had been running a fitness consultancy for many years. His business delivered sales and marketing services to centres across metropolitan and regional centres throughout Australia. Believing he knew the industry well enough to overcome any specific nuances in local market conditions, he placed little emphasis on the requirement for staff with specific local market knowledge.

Table 5.10 provides a summary of access to local market knowledge for the entrepreneurs of company-owned sites, together with the importance placed on the criteria.

Table 5.10: Dant factor - access to local market knowledge and companies that expanded through company-owned outlets

Access to local market knowledge

Importance to decision to stay with company ownership

1C Medium Did not worry about this resource due to owner's experience and connections.

2C Low Did not worry about this as owner retained the existing manager to continue operating the acquired outlet. 3C High Not seen as important as owner had extensive and wide-