San Francisco Coffee House Case Essay

1. Should Tensek and Pacek guess franchising over organic growth? Do a qualitative cost-benefit Analysis. (4 Points)In regards to whether Tensek and Pacek should consider franchising over exploitation special business enterprise locations organic all(prenominal)y, there are m both factors that the couple mustiness suck into account. Whether they choose to balloon utilize a franchising or organic approach, there are major be and benefits that allow for dramatically affect San Fransisco Coffee dwelling.First, the high society must take into account the costs associated with expanding the keep conjunction organically. opening and starting virtually any business requires an individual to hazard a substantial amount of capital. Although the starting line location was a success and gained regional notoriety, the couple would beget to danger their own money to fund the venture. This particular investment includes financing the purchases of equipment, sign supplies, an d furnishing the location. The couple spent an initial 40,000 euros as their start up capital, and would be un able to spend less on additional locations, as the intragroup and ambience it domiciliates are perhaps the most important characteristics of the business. The design cognitive operation would require an investment of important time and money.In addition to the invaluable number of hours that would be spent finding a location with a reasonable monthly rental cost, Tensek and Pacek would likewise be required to discontinue a location that would permit them entree to their target demographics, (students and businessmen). For each additional location, the couple would also be responsible for hiring and training new ply members. This task would also require the couple to establish a paysheet and benefits plan for new team members.The benefits of expanding the business organically include some(prenominal) major items. If SFCH chooses to expand organically, the federat ion depart have a a lot easier time controlling the image and publicity of the business. The couple will have the ability to handpick and train employees exploitation the effective techniques they used at their rare location. Pacek and Tensek will alsobe able to decorate the vital interiors of additional locations. These techniques will ensure that additional locations will provide the excellent node service and the casual American ambience that the initial location provided.Opening their own additional locations would also allow the couple to retain all of the earnings, as opposed to sharing the profits with a franchisee. The Croatian parsimoniousness is more geared towards entrepreneurs opening their own businesses. If the couple is able to rescind franchising and expand organically, local anesthetic banks would be more inclined to effectivenessly provide SFCH with financing.Croatian franchising has many potential barriers to entry. The agriculturals economic and policy- making landscapes have continued to evolve over the past few decades however, the country is still developing. callable to the developing state of the country, no true franchising legitimate system has been put into place. If SFCH chooses to beget franchising, the fraternity might be showcase to legislative forms which could potentially negatively impact the financial situation of the political party. SFCH must also take into account the public view of franchising in Croatia.Due to the smaller population and limited number of franchises in the country, franchising is not a hearty known practice in Croatia. Not only is the universal public misinformed about franchising, local banks have virtually no catch of the practice. This situation limits the number of people who might be interested in potentially purchasing a franchise of SFCH and also decreases the likelihood of a Croatian bank providing a franchisee with a loan.thither are a number of benefits SFCH would receive if the partnership elected to begin franchising. SFCH would be able to utilize the Croatian Franchising Association as a imagination to access potential franchisees. Franchising would require much less of a financial investment and would not require as much of a time lading from the couple as organically growing the company one remembering at a time. This strategy would also allow the company to involve royalties mend only having to provide advertising, the use of the company name, use of the company infrastructure and perhaps assistance with trainingand interior design strategies. change magnitude the number of locations will additionally build brand awareness, as well as establish a stronghold on the untapped Croatian coffee market. SFCH will also benefit from the first mover advantages. at one time Croatia figures the European Union, major coffee companies will undoubtedly try to enter the market. SFCHs stronghold on the American-Style coffeehouse market will bushel itself to be extremely valuable. Additionally, Tensek and Pacek would have a lot less risk of exposure if they were to franchise their business rather than open an additional store themselves. typically with a franchise the risk is on the part of the franchisee and not the owners of the all company. It is up to the owner of the specific franchise to take the major risk to get the location going.After reviewing the costs and benefits associated with both organically growing the company, as well as franchising, it is apparent that SFCH would be wise to begin franchising. The startup costs associated with opening one additional store at a time, as well as the time it would cost the company clearly indicates that organically growing the company is an unwise decision. Though it seems Croatians breakt quite grasp the concept of franchising, the positive numbers in exhibit 4 and 5 indicate that franchising will most plausibly take off in the near future. The potential growth and revenues fran chising would provide clearly outweigh the potential barriers to entry SFCH would have to overcome.2. What adjustments would they need to make for franchising in the Croatian context? (1.5 Points)Croatias eventual entry into the European Union allows SFCH to prepare for the legal changes and repercussions that will occur once Croatia is admitted. It would be wise for the couple to consider the potential competitors this change might flummox to the country, as well as the EUs policy regarding franchises. There is the potential that once SFCH begins their franchising that differentwise top competitors such as Starbucks will take notice and enter the Croatian market as well. other item SFCH must address is the lack of individuals interested infranchises. Although there is little the company can do to change the public apprehensiveness of franchising, SFCH can utilize the Croatian Franchising Association as a resource for finding potential franchisees. The Association offers several tools that help expanding companies connect with potential franchisees. SFCH has the potential to run campaigns finished their business to educate potential entrepreneurs on the benefits of franchising. According to exhibit 6 they already have a overnice budget for merchandise activities. Tensek and Pacek could use some of this money, or additional bullion to create marketing campaigns around educating people on franchising, specifically with SFCH.SFCH should also partner with an international entity to receive all of the tax benefits the Croatian presidential term offers to international businesses operating within Croatia. Since there is no minimum fortune of ownership required to receive the benefits, SFCH could offer a minimal constituent of ownership to an international partner with a competitive advantage the business could use.3. How could they cheer their intellectual property and business format know-how? (1.5 Points)In guild to ensure franchisees are operating in a manner that the company requires, SFCH should seek legal advice and draw up contracts. These documents should include how the image, logo and guideword of SFCH should be used, what royalties are to be paid to the business and how the business should croak in general. In addition to this agreement, the company should trademark the logos, slogans and name of the company in Croatia, and after they partner with an international entity, register their business devices through the World Intellectual Property Organization.SFCH can also turn to non-homogeneous other business organizations including the EU. These organizations often offer guidelines or resources for entrepreneurs. By using internet resources Tensek and Pacek have access to many dataal formats that can give them information on how to outline their practices.4. How could they fight of local imitators? What would happen if Starbucks or other major coffee chains entered the market? (1.5 Points)If the company elects to beg in franchising, the company will expand much more quickly than if it had chosen to expand organically. This expansion will provide SFCH with the first mover advantage. Even if local companies, or epic coffee chains attempt to enter the Croatian market, SFCH will have already absorbed most of the Croatian consumers. If hulky coffee chains enter the market and begin to take onward from SFCHs market share, the couple must determine what marketing, menu, and overall changes should be made in order to mitigate the chains Croatian success. It is also important to remember that small businesses can work amongst sizable corporations. A great example of this is all the local coffee buy ats in Salt Lake City that are profiting alongside the many Starbucks locations that are in the city as well.In addition to having the first mover advantage, the company will have already established national and world trademarks. These trademarks protect SFCH from blatant imitators and local coffee shop rivals.5. How could they become the biggest and most palmy coffee house nationally? (1.5 Points)In addition to the previously discussed changes SFCH should immix into their business model, the company should also begin serving adult beverages. This change will enable the company to challenge local coffee shops while gaining a percentage of the nightlife market. Croatian coffee shops are known to see alcohol, however, SFCH has not attempted to enter this market. This change will provide the company with additional revenues while taking advantage of an alcohol-friendly market. Exposure to nightlife locals could also potentially expose the SFCH to coffee consumers that did not previously know of the shops existence. The only potential pitfall of incorporating alcohol into the menu, is if the company alters its ambient atmosphere. The shop should not alter its calm, relaxing identity, ratherprovide a unflustered location where individuals can socialize and enjoy alcoholic beverages. Many of the large corporate coffee shops are so popular because they advertise a lifestyle. Starbucks may offer similar coffee and pastries at similar prices to other local coffee shops, but what sets them apart is that they are part of a collective idea. When someone has a starbucks cup and sees another person with the aforementioned(prenominal) thing, they may sprightliness as though they are in a group. Starbucks had done a great job at making their customers feel connected and like they belong to the Starbucks family. SFCH would benefit by additional marketing to make their customers feel like they are part of the San Francisco Coffee House family, much like Starbucks has done. This is something that can be achieved through marketing and will only get stronger through continued growth.