A new approach to problem-solving

Franchise consulting is a specialised category of professional assistance for investors, entrepreneurs and enterprises. Such consultants are hired by both franchisors and prospective franchisee. For a prospective franchisee, the consultant assists in exploring opportunities and selecting the most appropriate franchise to invest in. For franchisors, consultants provide their experience in developing franchise networks.

They are involved, right from the start-up to the sale of the whole network, to assisting the prospective franchisors in making decisions on the strategy, structure, economics, commercial policies and recruitment, and screening and selection methods of the franchisee.

INDUSTRY STATUS

With the end of the first quarter ending April, the industry has seen a growth of 25-30% in the number of brands expanding through franchising in all the major categories over the same period last year. The market size of franchising industry of the country is currently estimated at US$ 16 billion (roughly Rs 80,000 crore) and is expected to reach US$ 20 billion by 2013.

The franchising industry has witnessed a surge in the past decade and the role of consultants is diversifying. From developing franchise networks, the scope of services offered has also started to incorporate diagnostics of the business.

With a number of brands entering the maturity stage of the franchise life cycle, a new analytical approach to problem-solving has been noticed. The consultants no longer assist only new entrants into franchising, but also guide the mature players by suggesting formal methodologies or frameworks to identify problems and solutions.

GROWTH AREAS

As the industry matures, one would also see franchise consulting become more specialised where consultants would take on niche roles rather than collective end-to-end roles like those of a franchise field-consultant, whose role is to assist a franchisor with new store openings for his franchisee. In the days to come, we will witness a change in the role as consultants would begin

holding specialised group counselling and training sessions for the franchisee.

SKILL-SETS REQUIRED

The skills required to excel in this area include a logical approach, analytical thinking, zeal, persistence and confidence. Though not a requirement, a student can enrich his or her chances in the profession with a background in disciplines like business management, economics and psychology.

The consultant often works in-sync with the senior management of companies besides employees at all levels. Newly hired graduates usually work on gathering and collating data, process figures for the client’s senior management, take briefs from clients and other key individuals, and research external sources.

Consulting professionals are responsible for assembling and analysing data to make growth forecasts, create an understanding of the nature of the problem, layout potential options and develop objective conclusions and specific recommendations for the client.

REMUNERATION

Depending on the role and function, salaries may vary. A new entrant can fetch a CTC of anything between Rs 2.5 and 3 lakh per-annum. For an individual with an experience of three to five years, the salary can vary between Rs five and 10 lakh per-annum.

Letter of Credit

What Does Letter Of Credit Mean?

A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. In the event that the buyer is unable to make payment on the purchase, the bank will be required to cover the full or remaining amount of the purchase.

Letter Of Credit

Letters of credit are often used in international transactions to ensure that payment will be received. Due to the nature of international dealings including factors such as distance, differing laws in each country and difficulty in knowing each party personally, the use of letters of credit has become a very important aspect of international trade. The bank also acts on behalf of the buyer (holder of letter of credit) by ensuring that the supplier will not be paid until the bank receives a confirmation that the goods have been shipped.

Reverse Swap

1. An exchange of cash flow streams that undoes the effects of an existing swap. Reverse swaps are used, instead of simply canceling the original swap, because they allow investors to avoid negative tax or accounting implications.

Reverse swaps also allow investors to mitigate the original risk that they are exposed to upon entering a swap, or to cancel a position if they feel that market conditions will change in such a way as to give the original swap a negative value.

2. Swaps are private transactions that are traded over the counter, and as such are subject to credit risk. These contracts exchange assets, liabilities, currencies, securities, equity participations and commodities. They are generally used for risk management by institutions, and are less common among individual investors.

Behave Ethically by Respecting Others

There has been a lot of debate in the past few years about what is ethical in business. There are certainly gray areas, but recognizing that your actions impact others is the first step toward ethical behavior. Here are two rules to consider when trying to do what's right:

Help others while respecting their dignity. Offering assistance to colleagues is ethical. But, no matter how intended, the offer could come off as patronizing. Balance your desire to help with their need for self-respect.

Remember you are responsible to others. No one exists in isolation and while American work culture may emphasize individual achievement, remember that you rely on, impact, and collaborate with others.

J-curve

1. The theory that the Internal Rate of Return of a fund will be low in its early stages, particularly due to costs incurred in starting the fund, but then as the firm becomes more stable and profitable, that its internal rate of return will increase. The shape of this, if graphed over time, would look like a J.

2. The shape of a country's trade balance after it devaluates its currency. The immediate effect of a devaluation is an increase in the trade deficit, though this will shift into an increased international demand for the country's exports due to a lowered exchange rate, as well as a decrease in the demand for more expensive imports. An appreciation in the value of a country's currency can result in an inverted J-curve.

random error

Discrepancy or uncontrolled variation between an observed (measured) value and the value predicted by a specification, standard, or model. Where numbers are sufficiently large (as in repeated measurements or mass production), random errors tend to cancel each other out, and their sum approaches zero. Also called chance error or statistical error.

5 Easy Ways To Ruin Your Financial Life

1. Insurance - Too Little, Too Late

Having inadequate insurance is an easy way to ruin your financial life. Every year there are reports of significant catastrophic flooding in some part of the United States, and every year that means some homeowners are facing an economic wipeout. Standard homeowners insurance excludes flood damage, and many homeowners neglect to buy a flood policy.

If a guest injures themselves on your property and you are not adequately insured, you may be forced to pay out of pocket for their expenses. The same can be true for people you hire to work on your house and even trespassers.

If you run your own business, make sure that you are adequately covered for any damage that may be done to your customers' property, any injuries to your workers, and so on. Just a single on-site injury could end costing a quarter-million dollars, and that would be enough to wipe out most small businesses.

2. Crime

A criminal record can disqualify you from admission to schools, the receipt of financial aid, qualification for loans, employment and security clearance. Even a "youthful indiscretion" that results in no jail time can haunt a person for years and prevent them from gaining employment in certain industries.

The advice here is pretty straight-forward - stay out of trouble. Failing that, a criminal record does not have to ruin your life if you are committed to turning it around. Accept that there will be long-term consequences to your wrongdoing and approach it honestly; do not try to hide your record, understand that you will get many rejections and do everything you can to prove that you are a conscientious and trustworthy employee when you are given a chance.

3. An Unplanned Family

It can be entirely true that there are rewards to having children that far exceed the financial ramifications of parenthood, but the reality remains that an unplanned family can drastically alter a person's financial future.

When a child is born, there is a legal financial obligation for both parents to support that child until he or she reaches adulthood, and that obligation is usually assessed as a percentage of income. Child support averages nearly $300 a month, a significant number that is close to 10% of the national average for take-home pay. What's more, courts typically make this a very high priority obligation and will pursue nonpayment through various legal channels including incarceration and garnishment.

Raising a child can cost from $6,000 to over $10,000 a year, and that can be quite a burden for an unprepared couple that is still paying off school loans, still in school, or in the early lower-earning years of a career. On top of the explicit financial costs, there are all manner of opportunity costs - time that parents cannot spend at work furthering their career, lost educational opportunities, and an inability to save as much for retirement.

4. Excessive Spending and Debt

Most often people turn to credit cards to fill the gaps between what they have and what they want, and that kind of debt carries the closest thing to legal knee-breaker rates. What's worse, is that many of those who rely on credit cards cannot (or will not) pay them off promptly and so the debt continues to cascade and accumulate.

Some people who use debt to buy a car only look at the car payment and ignore the cost of insurance, maintenance, gasoline, parking and so on - costs that can easily match the monthly car payment. By not thinking through the full cost of ownership, these people end up with much more debt than they can actually support. The same is true of homes - people often over-buy and get a house that is too large or too upscale for their actual needs and financial wherewithal.

Even if you can afford these payments, you're spending money on an unproductive asset that you could be saving and investing. Make a habit of buying more car or more house than you really need and you may be well along the path to ruining your financial future.

5. Being a Bad Employee

For the vast majority of people, work will be the overwhelming source of their wealth. One way to torpedo that earnings potential is by establishing a reputation as a bad employee.

There are innumerable ways to be a bad employee - laziness, dishonesty, unpleasantness, immaturity, and so on. The bottom line is that if people do not like work that you do, and the process of working with you, they will not promote you, they will not give you raises, they will not give you more rewarding work, and they will not help you advance your career.

There are limits on what employers can legally do to impair a bad employee's future prospects (giving a negative reference, for instance), but sometimes a lack of support and positive assistance is all that it takes to put a ceiling on a once-promising career. Employers often look askance at an employment history that shows frequent changes and/or a lack of upward progress and those are often the outward signs of a bad employee who has to move around from job to job or cannot get promoted at their current position.

The Bottom Line

A successful financial life is about maximizing the positives and minimizing the negatives. The good news is that all of these negatives can be controlled and avoided. A little research and a fair bit of self-discipline is all that it takes to avoid some very costly mistakes.

loss given default

LGD. The actual total loss that is experienced by a bank when a debtor defaults on a loan from that bank. The loss given default is not always equal to the total amount of the loan; for example, if the debtor pledged collateral against the loan, the bank could receive these assets, and their total loss would not be greater than the amount of the loan minus the value of the assets.

Dividend Aristocrat

A company that has continuously increased the amount of dividends it pays to its shareholders. To be considered a dividend aristocrat, a company must typically have raised dividends for at least 25 years. More specifically, the company needs to have a managed dividend policy that increased its dividend every year for those 25 years.

Companies that are able to maintain high dividend yields are often considered to be more stable than others, and because stocks maintaining this association must keep yields consistently high, the list of aristocrats is often under 100 companies.

Annual EMBA ranking

Financial Times has just published the results of its annual ranking of the world’s best business schools in executive education programmes. HEC Paris’ executive education has been ranked number one in the world. This ranking evaluates open-enrolment programmes (OEP) for individuals as well as custom-made programmes for companies. HEC Paris has been ranked number one worldwide for the following criteria: faculty, new skills and learning, aims achieved and value for money. On the other hand, in this year’s open-enrolment survey, Darden’s acclaimed faculty took the number one position for the seventh year in a row. The paper ranks its executive education programmes number five globally. Also, Thunderbird School of Global Management is listed among the world’s top 10 providers of executive education. The publication places Thunderbird number nine in the overall executive education ranking, number two for OEP (tied with Harvard Business School) and number 21 for custom programmes.

INSEAD, on the other hand, has been ranked number 10, thus making its executive education programme the highest ranked offering in Asia. European School of Management and Technology (ESMT) ranked 17 th globally. The only business school based in Germany in the ranking, ESMT in Berlin has been placed among the 10 best business schools in Europe in this year’s FT rankings.