Case Study on

San Francisco Coffee House

University: BITS Pilani Submitted to: Dr. R. Raghunathan Student BITS ID: 2011H149207P Subject: International Business Date: 27th September 2012

Introduction: San Francisco Coffee House (SFCH) is the first American-style coffee house in Croatia reminiscent of San Franciscos atmosphere. It offered different types of coffee and the novel possibility of getting coffee to go. This unique place where one can enjoy the authentic ambience of this American city got excellent reviews and unusually large media attention in the very first six months of operation. Elite Dcor ranked among 6 best designed restaurants-bars-coffee shops in Croatia. Customers were offered 17 different Latte, mocha variants and American style muffins in several varieties and one can enjoy an unique environment with soft jazz music, foreign newspapers and magazines, free unlimited wireless internet access or coffee to go cups to take the coffee with you to the office, school or when going for a walk. Major client markets were students and business professionals of all ages. Problem Description: Tensek and Pacek are facing with following issues regarding the growth of their business: 1) Should they consider franchising over organic growth? 2) Adjustments needed to make it suitable for Croatian context? 3) How to protect their Intellectual Property and business format know-how? Analysis: Company discovered its restrictions in terms of opening new stores as it requires huge investment putting more capital at risk, hard to manage from one place and with limited staff. Since their coffee shop is gaining local publicity and inquiries from would be franchises it gives a good indication of possible market in other parts of Croatia where similar model can be replicated and huge profits can be earned. So it was essential for Tensek and Pacek to decide on entering the new markets and establishing well themselves before the possible arrival of Star Bucks. If they can enter the market now it will give them first mover advantage and high market penetration and share. Also it will give them time on improving upon the feedback given by local customers and improving on that further. Recommendation Franchising will prove to be a better option for Tensek and Pacek over Organic Growth. Franchising will help them grow faster and thus give them lead in competition from other coffee houses. The option of franchising can lead them to dominate faster and to reach far-off customers without any delay. The franchising decision can also help them to cater the large population who are already aware of San Francisco Coffee House (SFCH) and are waiting it to open branches at different parts of Croatia.

SFCC need to consider the protection of their intellectual property early in the formation of the business. SFCC should put in place relevant protections to prevent their intellectual property being infringed by registering their trademarks and company name.