Business development

Why does a company need branches?

A branch is a separate subdivision of a company that performs the functions of the main organization partially or completely. Expanding and scaling the business is the main reason for opening new branches.

It provides an opportunity to delegate responsibilities and increase turnover. For example, managing communications, concluding contracts and agreements, and conducting trade and production in several places simultaneously.

In this article, we’ll break down why a business might need branches. But before we start, we would like to recommend you this great Bitcoin blender.

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Why do I need to open an affiliate?

There is a general list of reasons why new branches are created and developed. If a company is opening its first branches, it is certainly not always possible to clearly articulate its strategic objectives. However, when more than ten branches are opened, the network development program should be subordinate to the main strategic goals.

The first issue that needs elaboration is to determine the role of the branch network in the development of the company. A network always presupposes big long-term investments, due to which competitive advantages in the markets are formed. When working out the regional development strategy, it is necessary to define the main goals by blocks:

  1. The concept of the branch network.
  2. Pricing.
  3. Distribution and logistics.
  4. Promotion system.

These blocks make up the strategy of any company. However, when working with remote units, you need to decide how centralized each of these tasks will be.


How to choose a place to open a branch office?

Every serious self-respecting company conducts a detailed analysis region. It is recommended to carry out this estimation by complex consideration of the following basic indicators concerning both general tendencies and special parameters of development of the concrete area:

  1. The main economic characteristics of the region (solvency, investment attractiveness, etc.).
  2. The capacity of the local market.
  3. The growth rate of the local market.
  4. Potential logistics costs.
  5. The local level of competition.
  6. Demand.
  7. The loyalty of local customers.

After each parameter is calculated, the region is awarded a certain score on a 10-point system, assessing its attractiveness for the development of a branch network in that location.

It is quite obvious that the regions with the maximum score will be a priority for opening a branch. But this does not mean that other regions should be rejected. However, those places that scored the minimum number of points it is not recommended for consideration for opening a branch.

What else is there to consider?

When you have definitely decided that you want to open a branch, and you have even already decided on a promising region, you will need to understand exactly how you will conduct your expansion. Consider the following points:

  1. Where and how branches will open – in shopping malls, airports, first floors in bedroom communities, etc. To find the right model, you need to understand whether you can sell your product or promote your service equally well in other regions and how best to do it.
  2. Where will you get the money – you may be required to hire staff, implement new technology, buy equipment, and create reporting systems to measure and manage results, all of which require funds.
  3. When exactly will you scale – you need to try to get to a time when the market is at the peak of demand and when competition is at a minimum. That way, you can make sure you have a smooth and safe entry into the new space.