business (the franchiser). Various restrictions may be placed on the franchisee in terms of facility design, inputs used, processes and the training of manpower. A franchising arrangement enables the franchiser to avoid heavy investments and penetrate a new geographic region quickly. For the franchisee, the risks are limited. The trading strategy and methods have been tried and tested elsewhere. The franchiser’s name and logos may have wide customer recognition and loyalty, adequate demand for the product or service from day one. (See also: Licensing) Free Rider A player who moves into an industry later, after learning from the of the first mover and avoiding similar mistakes. Sometimes, it does not make sense to be the first mover. In the Internet browser market for instance, Netscape moved first but it was Microsoft which ultimately turned out to be the winner. (See also: First Mover Advantage). Full Costing A budgeted method which attempts to allocate all costs incurred in an organization to various cost centers. Both direct and indirect costs are considered and the possibility of losses by under pricing is avoided. labor and material costs can be easily allocated to an activity or a product. Some direct overheads may also be easy to allocate. But overheads cannot be allocated easily. An example of full costing would be allocating 35 per cent of the overhead cost of rent to the shop if it occupies 35 per cent of the factory space. Activity based (ABC) is a better technique for allocating overheads. ABC would costing look at the actual pattern of usage of the machine shop, instead of just going by the space occupied. Functional Strategy Strategies pursued by various individual functions such as marketing, finance, operations and human resources. Functional strategies facilitate the implementation of corporate strategy in the sub-units of a company and must be aligned with the long-term corporate strategy. Thus, strategies in marketing may deal with product, price, place and
business (the franchiser). Various restrictions may be placed on the franchisee in terms of facility design, inputs used, processes and the training of manpower. A franchising arrangement enables the franchiser to avoid heavy investments and penetrate a new geographic region quickly. For the franchisee, the risks are limited. The trading strategy and methods have been tried and tested elsewhere. The franchiser’s name and logos may have wide customer recognition and loyalty, adequate demand for the product or service from day one. (See also: Licensing) Free Rider A player who moves into an industry later, after learning from the of the first mover and avoiding similar mistakes. Sometimes, it does not make sense to be the first mover. In the Internet browser market for instance, Netscape moved first but it was Microsoft which ultimately turned out to be the winner. (See also: First Mover Advantage). Full Costing A budgeted method which attempts to allocate all costs incurred in an organization to various cost centers. Both direct and indirect costs are considered and the possibility of losses by under pricing is avoided. labor and material costs can be easily allocated to an activity or a product. Some direct overheads may also be easy to allocate. But overheads cannot be allocated easily. An example of full costing would be allocating 35 per cent of the overhead cost of rent to the shop if it occupies 35 per cent of the factory space. Activity based costing (ABC) is a better technique for allocating overheads. ABC would look at the actual pattern of usage of the machine shop, instead of just going by the space occupied. Functional Strategy Strategies pursued by various individual functions such as marketing, finance, operations and human resources. Functional strategies facilitate the implementation of corporate strategy in the sub-units of a company and must be aligned with the long-term corporate strategy. Thus, strategies in marketing may deal with product, price, place and