San Francisco Coffee House Case Essay

1. Should Tensek and Pacek cerebrate franchising in all over organic proceeds? Do a soft cost- derive Analysis. (4 Points)In regards to whether Tensek and Pacek should consider franchising over growing redundant employment locations organically, there be many factors that the check essential restoration into measure. Whether they choose to expand employ a franchising or organic approach, there be major(ip) costs and benefits that allow dramatically make a motion San Fransisco Coffee House.First, the high society must piss into personal line of credit relationship the costs associated with expanding the caller organically.Opening and starting some any agate line requires an individual to happen a substantial amount of capital. Although the first location was a success and gained regional nonoriety, the geminate would substantiate to put on the line their decl ar m hotshoty to fund the venture. This particular coronation funds includes financing the purc hases of equipment, sign supplies, and furnishing the location. The couple spent an initial 40,000 euros as their start up capital, and would be otiose to spend less on superfluous locations, as the upcountry and ambience it give ups argon perhaps the nigh important characteristics of the job. The design process would require an investment of important meter and money.In appendix to the valuable number of hours that would be spent finding a location with a reasonable monthly letting cost, Tensek and Pacek would in interchangeable manner be required to discover a location that would provide them rag to their target demographics, (students and businessmen). For all(prenominal) supernumerary location, the couple would equivalently be liable for hiring and training new staff members. This task would excessively require the couple to establish a paysheet and benefits plan for new team members.The benefits of expanding the business organically include some(prenomina l) major items. If SFCH chooses to expand organically, the company forget piss a much easier time controlling the image and publicity of the business. The couple entrust guard the ability to handpick and train employees using the utile techniques they used at their precious 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 customer service and the casual Ameri dismiss ambience that the initial location provided.Opening their own additional locations would also allow the couple to conduct all of the earnings, as opposed to sharing the winnings with a exemptione. The Croatian economy is more pitch towards entrepreneurs opening their own businesses. If the couple is able to vacate franchising and expand organically, topical anaesthetic banks would be more accustomed to authorityly provide SFCH with financing.Croatian franchising has many po tential barriers to gateway. The countrys economic and political landscapes select continued to evolve over the past hardly a(prenominal) decades however, the country is still developing. Due to the developing kingdom of the country, no true franchising well-grounded system has been practice into place. If SFCH chooses to set about franchising, the company might be accede to legislative changes which could potentially negatively impact the monetary situation of the company. SFCH must also take into account the public view of franchising in Croatia.Due to the small population and limited number of franchises in the country, franchising is not a well known practice in Croatia. Not just now is the general public misinformed nearly franchising, local banks have virtually no correspondence of the practice. This situation limits the number of people who might be arouse in potentially purchasing a franchise of SFCH and also decreases the likelihood of a Croatian bank providin g a franchisee with a loan.There are a number of benefits SFCH would receive if the company pick out to begin franchising. SFCH would be able to utilize the Croatian Franchising Association as a resource to access potential franchisees. Franchising would require much less of a financial investment and would not require as much of a time commitment from the couple as organically growing the company one enclose at a time. This strategy would also allow the company to collect royalties while only having to provide advertising, the use of the company name, use of the company infrastructure and perhaps assistance with trainingand interior design strategies. Increasing the number of locations will additionally build brand awareness, as well as establish a stronghold on the untapped Croatian coffee bean foodstuff. SFCH will also benefit from the first mover advantages.Once Croatia pictures the European Union, major coffee companies will undoubtedly try to enter the market. SFCHs st ronghold on the Ameri female genital organ-Style coffeehouse market will prove itself to be extremely valuable. Additionally, Tensek and Pacek would have a lot less risk if they were to franchise their business rather than open an additional descent themselves. Typically with a franchise the risk is on the part of the franchisee and not the owners of the whole 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 inauguration 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 foolt quite grasp the concept of franchising, the affirmatory numbers in exhibit 4 and 5 indicate that franchising wi ll most likely take off in the near future. The potential growth and revenues franchising 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 make out once Croatia is admitted. It would be wise for the couple to consider the potential competitors this change might bring to the country, as well as the EUs form _or_ system of government regarding franchises. There is the potential that once SFCH begins their franchising that other jacket competitors such as Starbucks will take pecker and enter the Croatian market as well. some other item SFCH must address is the lack of individuals interested infranchises. Although there is little the company nates do to change the public understanding of franchising, SFCH kitty utilize the Cr oatian 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 maneuver campaigns through their business to educate potential entrepreneurs on the benefits of franchising. According to exhibit 6 they already have a decent budget for marketing activities. Tensek and Pacek could use some of this money, or additional funds to induce 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 government offers to international businesses direct within Croatia. Since there is no minimum dowery 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 cling to their intellectual property and business format know-how? (1.5 Points)In order 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 shibboleth of SFCH should be used, what royalties are to be paid to the business and how the business should operate 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 bottom of the inning also turn to various 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 informational formats that can give them information on how to outline their practices.4. How could they deal of local imitators? What would happen if Starbucks or other major coffee chains entered the market? (1.5 Points)If the company elects to begin 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 large coffee chains elbow grease to enter the Croatian market, SFCH will have already absorbed most of the Croatian consumers. If large coffee chains enter the market and begin to take away 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 large corporations. A heavy(p) deterrent example of this is all the local coffee stocks in sodium chloride 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 comp any will have already established national and world trademarks. These trademarks defend SFCH from blatant imitators and local coffee shop rivals.5. How could they construct the biggest and most successful coffee house nationwide? (1.5 Points)In addition to the previously discussed changes SFCH should integrate into their business model, the company should also begin serving enceinte beverages. This change will enable the company to contend local coffee shops while gaining a percentage of the nightlife market. Croatian coffee shops are known to wait on intoxicant, 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 relegate 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 warps its ambient atmosphere. The shop should not alter its calm, relaxing identity, ratherprovide a cool location where individuals can socialize and enjoy intoxicant beverages.Many of the large corporate coffee shops are so popular because they advertise a lifestyle. Starbucks whitethorn offer similar coffee and pastries at similar prices to other local coffee shops, but what sets them apart(predicate) is that they are part of a collective idea. When psyche has a starbucks cup and sees another person with the analogous thing, they may feel as though they are in a group. Starbucks had done a great job at making their customers feel machine-accessible 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.