Maintaining quality standards in franchise chains
Article Abstract:
A study was conducted to identify the relevant features of markets targeted by a franchise chain which dictate how motivated the chain owner will be to monitor the behavior of individual franchisees. This examination is concerned with a hypothetical retail chain with two outlets. Results showed that market characteristics that act as incentives for owners to check the behavior of their franchises are the size of the market served by the outlet, the extent of volatility in the demand conditions facing each outlet, and the extent of competition from other chains facing each outlet. The owners of outlets that are serving smaller markets and those that are faced with greater variability in the demand conditions are more likely to monitor outlets.
Publication Name: Management Science
Subject: Business, general
ISSN: 0025-1909
Year: 1995
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Consumer heterogeneity and strategic quality decisions
Article Abstract:
A game-theoretic model explaining conditions under which offering a product of similar quality is optimal is presented. This framework describes how consumers consider the quality and price of a product as well as their heterogeneous tastes along other attributes which are not observable to the firms. The impact of heterogeneity in terms of the unobservable attributes on both quality and price equilibrium is investigated through a two-stage game framework. It demonstrates that the firms offer products with similar qualities in equilibrium if consumers are heterogeneous enough along the unobservable attributes. If heterogeneity is low, quality differentiation is needed by the firms. Implications of the findings are discussed.
Publication Name: Management Science
Subject: Business, general
ISSN: 0025-1909
Year: 1996
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Consumer protection laws: violator detection and enforcement strategy
Article Abstract:
Nonenforcement of consumer protection laws is due to high costs and lack of personnel. Prosecution of offenders is random at best. An evaluative model is proposed to determine the violation rate and characteristics of the offender, as well as a cost-efficient law enforcement program. The program is a short-term campaign aimed mainly against offenders reflecting a violator profile. The model is based on an interrupted stratified time series design. The stratification scheme utilizes minimum variance criteria, which can be permutated to represent the changing characteristics of probable violators.
Publication Name: Management Science
Subject: Business, general
ISSN: 0025-1909
Year: 1987
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