Brandname: Wai Yuen Tong
Company Name: Wai Yuen Tong Medicine Co Ltd
 
Management Function Analysis
Growth in sales and expansion of coverage in different geographical markets has been achieved through adopting the strategy of franchise operation.

Strategic alliances between the franchiser and independent entrepreneurs enable the company to grow faster with less capital than traditional strategies. Franchises appear in three general forms - product-trade name, business format, and business conversion. Regardless of the form chosen, the advantages to the franchiser are: (a) Access to capital at lower risk; (b). Cost sharing; (c). Rapid market penetration at a relatively lower cost, (d) Economies of scale, and (f).A motivated workforce.

For the franchisees, it provides an opportunity to enter a business at less cost with a proven service-brand name. A franchise system should include the structure, organization, and standardization necessary for the success of what should be seen as a strategic network. Implementing and managing a network involves coordinating its individual activities and its linkages.
 
Implications for SMEs
SMEs can look at the case from two perspectives, the first being from the benefits of entering into franchise relationship with well-known brands and the second, is the way strategic alliance can help expanding their business.

SMEs should bear in mind that franchising may not be suitable for everyone. The advice is if you are overly entrepreneurial and you want to invent your own wheel, or if you are not comfortable with following a system, then don't go down this path. What's more, buying a business is a risky investment for those who lack the confidence or the drive to make it work. Like any small business, a franchise requires a major time commitment as well as a financial one. On the bright side, because the experience is there and the mistakes have already been made, the franchisee would have the opportunity to start and run a business with a greater chance of success.

It is not just the big companies that can benefit from strategic alliance; SMEs can also adopt this strategy. Basically, SMEs can link into alliance clusters, forming a work-linked component in supply chains.