San Francisco Coffee House: An American Style franchise In Croatia Case Study Solution
Recommendations
Based on the above discussion, would you recommend Tensek and Pacek franchise or invest in organic growth? Defend your answer.
On the basis of above discussion; it is recommended that the company should use the franchising growth strategy,because the franchising network bears lower financial investments. Due to Franchising, the company can have the benefit of incurring lower risks, having increased competitiveness, rapid expansion, growth and lower recruitment necessities. By using franchising as a growth strategy, the company can set a benchmark in delivering better and diversified products with standardized quality, because the franchisee gets busy in improving their operations while the franchisor searches for the new product development. In franchising it can be considered as your own business, and you are your own boss.
Q-4: Regardless of our recommendation, if Tensek and Pacek decide to franchise in Croatia what adaptations would they need to make.
Adaptations
If Tensek and Pacek franchise in Croatia, the company would have to follow the legal rules and regulation for franchising the business. The company would have to provide guarantee to the banks for the return of borrowed small loans. They would also need to make a cultural adaptation, which would help the company to hire local management and workers who could easily understand the culture of the company, and its rules and regulation, which the company possesses for having a the smooth transition of the company. The other adaptation that could be taken by the franchisee is to encourage staff participation, because it is staff members who deal with challenges on daily basis. Most of the practical ideas come from the staff. The staff members should be encouraged to participate in the company’s long term planning, because they are the real value and assets of the company who are in the direct contact to the customers at the counter.(Kristina Trifunovska, 2011)
If they franchise, how can Tensek and Pacek protect their intellectual property? How do they fight imitators or major chains like Starbucks if they decide to enter the market?
If Tensek and Pacek franchise, they would have to protect their intellectual property by operating as a franchisor (parent company) and all associated companies (franchisee) as the subsidies to the parent company.
If Tensek and Pacek enter into the market they would be required to work on the following areas in order to fight with the major chains like Starbucks
Consumer loyalty
Consumer’s loyalty is defined as the loyalty in which the consumers favour and prefer your brand over the competitor’s brand. So Tensek and Pacek would have to make their customers/consumers loyal to their brand. In order to achieve their customers’ loyalty, they have to ask them what they want and what they value. They should earn the consumers trust by keeping their promises and making things understandable and easy for them. They should offer different incentives,such as frequent buyer discount, complimentary gifts etc. to their customers. Tensek and Pacek should make their customers satisfied with their products.
Differentiation
Tensek and Pacek have to differentiate their products from their competitors by creating a competitive advantage. They should differentiate their products in terms of taste, quality, services and performance. Introducing a new product line or value adding products might differentiate them from their competitors. They should introduce unique products, which stand as their competitive advantage.
Cost leadership
In order to compete with their competitors, Tensek and Pacek should to set their coffee house’s products prices relatively lower than the competitors, with an aim of improving the coffee house’s customer base, higher profitability and customer satisfaction.
Appendices
Appendix 1:
| Organic Growth Strategy | Franchising Growth Strategy |
| Costly, slow and difficult to control | Lower risk, rapid expansion |
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