The Strength of the Chain

In many trades, the market is increasingly dominated by chains. Although the expansion of the chains have created “customer segments” and “market niches”, this has largely been done on the expense of the small and independent business owner. If this be the case, one should ask oneself the question as to why the chains are superior and win the competition. Some attribute it to the superior resources of the chains. This point fails to convince since all chains were small in the beginning.

The question has many answers and a wholly encompassing answer does not exist. Mainly because every branch of business differs so much from next and have different circumstances.

A common trait however is that chains always try to  maintain uniformity in all its establishments. The uniformity expressed through for example:

  • Selection
  • Marketing
  • Interior decoration
  • Signs
  •  Service level

The advantage of uniformity is that the customer knows what to expect from a certain brand.

The fact that the consumer knows this is to be compared to the insecurity when faced by an independent. This advantage has been shown to be considerable. It is not hard to fathom, one simply has to consider one's own thoughts and behaviour.

Let us imagine that we are driving to Gothenburg from Stockholm with the family. Soon enough, we are famished and decide to eat at a restaurant. We pass many alternatives on the way. We also pass several McDonalds.  It is likely that some of the other restaurant have a better selection than McDonalds, both in quality and price. What is equally likely is that some of the others are inferior in this respect. Knowing what is to be expected, is to McDonalds' andvantage.

Not surprisingly it is imperative that there is uniformity in the chain for it to garner any of these advantages over its rivals. Acquiring uniformity is not an easy task and everyone are not successful.  

The difficulty with achieving a high level of uniformity  is that we often have different views on what is the essential in a business concept. To have all ships sailing in the same direction can be difficult. Arguments against uniformity can take the form of “No, it doesn't work here in Eslöv, it is not like other towns.”. It can be very difficult to stand against this when seen from the individual business's perspective. At least in the short term. In the long term and seen from the perspective of the whole chain, uniformity often takes precedence over the needs of the individual unit.

The ability to achieve a competitive uniformity varies depending on decision process within the chain. If there are many who all have to accept a certain manner of working, it will of course take longer time and require more compromising. If there are many independent business owners who have to come to a common decision, the risk for long bench is great. This does not mean that business owners are indecisive, quite to the contrary, everyone wants to decide. This is hardly surprising, since most independent business owners became such because they did not shy in the face if making decisions or lack own will.

Furthermore, one should not be surprised that the chains for which it is the easiest to making uniform changes are the filial chains where one owner decides for all the units.

In chains with independent business owners, the decision-making efficiency depends on the structure of the chain. It is generally the chains with the best circumstances that have the highest chains of achieving uniformity. Franchises chains also have the best ability to change the concept over time. This is because it is the franchisor who owns the business concept and rents it out to franchisees. It is the franchisor that has the final word regarding the concept. Many see this as one of tbe main reasons why franchising is the fastest growing method of building chains in the world.