Measuring Management Performance of America’s Coffee Franchise-Using Data Envelopment Analysis

• Main Authors: Ko, Chiaying, 柯佳吟
• Other Authors: Chen, Tseryieth
• Format: Others
• Language: en_US
• Published: 2011
• Online Access: http://ndltd.ncl.edu.tw/handle/84142781664883831890

碩士 === 國立臺北大學 === 國際企業研究所 === 99 === Franchising is one of the most popular business modes for retailers and services providers. Because of its economic importance and its worldwide development, franchising has not surprisingly caught the attention of researchers from various fields. However, performance of franchising remains an under-explored topic. The franchising literature has mainly focused on the motivations for franchising, the relative failure rates of franchising and the plural form development. Only little literature focuses on franchising efficiency. Therefore, the main characteristic of this paper is that it applies Data Envelopment Analysis (DEA) frontier model to evaluate management performance of coffee franchise industry. Traditionally, most studies focused primarily on the assessment of operating efficiency. However, in this paper, we measured managerial efficiency in two ways: operating efficiency (OE) and financial efficiency (FE). These types of efficiency were respectively based on a two-stage service provision process describing the two essential parts of coffee franchise operations, that is, outputs provided and profit generation. We used service-profit chain to incorporate two sub-processes with multidimensional efficiency into a DEA model in order to evaluate the level of management performance within coffee franchises in the USA. We also used the combination of these two kinds of efficiency to constitute a performance portfolio of the operations of coffee franchises. In this case, management performance was no longer constrained with production efficiency but a broader dimension which covers not only operating activities but also financial outcome. We found that there indeed is a significant difference between operating efficiency and financial efficiency, and we better use these sub-processes DEA model to measure the management performance because of the characteristic of the productive activities in franchise industry. Besides, the global financial crisis influences financial efficiency but not operating efficiency. Furthermore, company-owned ratio and firm size are positively related to performance but the influence of advertisement is not significant. Finally, based on the results of BCG Matrix, we also found that new franchise system can easily get operating efficiency, the mature franchise systems perform well in financial efficiency, and larger franchise systems have the capability to overcome the difficulty from global financial crisis.