San Francisco Coffee House: An American Style Franchise in Croatia SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Innovation & Entrepreneurship
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of San Francisco Coffee House: An American Style Franchise in Croatia
On the return to their homeland of Croatia following a six-year visit to the United States, a couple has decided to open their own coffee house, one that is unique to the Croatian environment - a California-style coffee house that offers the quality, service, product assortment, ambiance and efficiency found in sophisticated coffee shops in developed markets, and all for a locally affordable price. The major challenge faced by the couple is how to grow. Specifically, should they consider franchising over organic growth? If so, how should they go about franchising in a country where the market is developing and where franchising is under-regulated, underdeveloped and misunderstood? This case can be used in entrepreneurship, retailing, international marketing or international business classes. The case provides a practical example of when and how to use franchising.
Authors :: Ilan Alon, Mirela Alpeza, Aleksandar Erceq
Swot Analysis of "San Francisco Coffee House: An American Style Franchise in Croatia" written by Ilan Alon, Mirela Alpeza, Aleksandar Erceq includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Franchising Coffee facing as an external strategic factors. Some of the topics covered in San Francisco Coffee House: An American Style Franchise in Croatia case study are - Strategic Management Strategies, Entrepreneurship, Globalization, Growth strategy, Human resource management and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the San Francisco Coffee House: An American Style Franchise in Croatia casestudy better are - – cloud computing is disrupting traditional business models, geopolitical disruptions, increasing energy prices, central banks are concerned over increasing inflation, there is backlash against globalization, talent flight as more people leaving formal jobs, banking and financial system is disrupted by Bitcoin and other crypto currencies,
increasing inequality as vast percentage of new income is going to the top 1%, competitive advantages are harder to sustain because of technology dispersion, etc
Introduction to SWOT Analysis of San Francisco Coffee House: An American Style Franchise in Croatia
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in San Francisco Coffee House: An American Style Franchise in Croatia case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Franchising Coffee, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Franchising Coffee operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of San Francisco Coffee House: An American Style Franchise in Croatia can be done for the following purposes –
1. Strategic planning using facts provided in San Francisco Coffee House: An American Style Franchise in Croatia case study
2. Improving business portfolio management of Franchising Coffee
3. Assessing feasibility of the new initiative in Innovation & Entrepreneurship field.
4. Making a Innovation & Entrepreneurship topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Franchising Coffee
Strengths San Francisco Coffee House: An American Style Franchise in Croatia | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Franchising Coffee in San Francisco Coffee House: An American Style Franchise in Croatia Harvard Business Review case study are -
Strong track record of project management
– Franchising Coffee is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Highly skilled collaborators
– Franchising Coffee has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in San Francisco Coffee House: An American Style Franchise in Croatia HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Superior customer experience
– The customer experience strategy of Franchising Coffee in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Low bargaining power of suppliers
– Suppliers of Franchising Coffee in the sector have low bargaining power. San Francisco Coffee House: An American Style Franchise in Croatia has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Franchising Coffee to manage not only supply disruptions but also source products at highly competitive prices.
Learning organization
- Franchising Coffee is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Franchising Coffee is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in San Francisco Coffee House: An American Style Franchise in Croatia Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Innovation driven organization
– Franchising Coffee is one of the most innovative firm in sector. Manager in San Francisco Coffee House: An American Style Franchise in Croatia Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Ability to recruit top talent
– Franchising Coffee is one of the leading recruiters in the industry. Managers in the San Francisco Coffee House: An American Style Franchise in Croatia are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Operational resilience
– The operational resilience strategy in the San Francisco Coffee House: An American Style Franchise in Croatia Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Training and development
– Franchising Coffee has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in San Francisco Coffee House: An American Style Franchise in Croatia Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Effective Research and Development (R&D)
– Franchising Coffee has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study San Francisco Coffee House: An American Style Franchise in Croatia - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Successful track record of launching new products
– Franchising Coffee has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Franchising Coffee has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Organizational Resilience of Franchising Coffee
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Franchising Coffee does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses San Francisco Coffee House: An American Style Franchise in Croatia | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of San Francisco Coffee House: An American Style Franchise in Croatia are -
High cash cycle compare to competitors
Franchising Coffee has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Franchising Coffee is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study San Francisco Coffee House: An American Style Franchise in Croatia can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Franchising Coffee supply chain. Even after few cautionary changes mentioned in the HBR case study - San Francisco Coffee House: An American Style Franchise in Croatia, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Franchising Coffee vulnerable to further global disruptions in South East Asia.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the San Francisco Coffee House: An American Style Franchise in Croatia HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Franchising Coffee has relatively successful track record of launching new products.
Lack of clear differentiation of Franchising Coffee products
– To increase the profitability and margins on the products, Franchising Coffee needs to provide more differentiated products than what it is currently offering in the marketplace.
High operating costs
– Compare to the competitors, firm in the HBR case study San Francisco Coffee House: An American Style Franchise in Croatia has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Franchising Coffee 's lucrative customers.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study San Francisco Coffee House: An American Style Franchise in Croatia, it seems that the employees of Franchising Coffee don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Workers concerns about automation
– As automation is fast increasing in the segment, Franchising Coffee needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study San Francisco Coffee House: An American Style Franchise in Croatia, is just above the industry average. Franchising Coffee needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Skills based hiring
– The stress on hiring functional specialists at Franchising Coffee has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
High bargaining power of channel partners
– Because of the regulatory requirements, Ilan Alon, Mirela Alpeza, Aleksandar Erceq suggests that, Franchising Coffee is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Opportunities San Francisco Coffee House: An American Style Franchise in Croatia | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study San Francisco Coffee House: An American Style Franchise in Croatia are -
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Franchising Coffee can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Franchising Coffee in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Innovation & Entrepreneurship segment, and it will provide faster access to the consumers.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Franchising Coffee can use these opportunities to build new business models that can help the communities that Franchising Coffee operates in. Secondly it can use opportunities from government spending in Innovation & Entrepreneurship sector.
Better consumer reach
– The expansion of the 5G network will help Franchising Coffee to increase its market reach. Franchising Coffee will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Buying journey improvements
– Franchising Coffee can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. San Francisco Coffee House: An American Style Franchise in Croatia suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Franchising Coffee to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Franchising Coffee to hire the very best people irrespective of their geographical location.
Developing new processes and practices
– Franchising Coffee can develop new processes and procedures in Innovation & Entrepreneurship industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Leveraging digital technologies
– Franchising Coffee can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Building a culture of innovation
– managers at Franchising Coffee can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Innovation & Entrepreneurship segment.
Creating value in data economy
– The success of analytics program of Franchising Coffee has opened avenues for new revenue streams for the organization in the industry. This can help Franchising Coffee to build a more holistic ecosystem as suggested in the San Francisco Coffee House: An American Style Franchise in Croatia case study. Franchising Coffee can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Franchising Coffee can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, San Francisco Coffee House: An American Style Franchise in Croatia, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Using analytics as competitive advantage
– Franchising Coffee has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study San Francisco Coffee House: An American Style Franchise in Croatia - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Franchising Coffee to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Learning at scale
– Online learning technologies has now opened space for Franchising Coffee to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Threats San Francisco Coffee House: An American Style Franchise in Croatia External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study San Francisco Coffee House: An American Style Franchise in Croatia are -
Technology acceleration in Forth Industrial Revolution
– Franchising Coffee has witnessed rapid integration of technology during Covid-19 in the Innovation & Entrepreneurship industry. As one of the leading players in the industry, Franchising Coffee needs to keep up with the evolution of technology in the Innovation & Entrepreneurship sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study San Francisco Coffee House: An American Style Franchise in Croatia, Franchising Coffee may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Innovation & Entrepreneurship .
Easy access to finance
– Easy access to finance in Innovation & Entrepreneurship field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Franchising Coffee can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Environmental challenges
– Franchising Coffee needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Franchising Coffee can take advantage of this fund but it will also bring new competitors in the Innovation & Entrepreneurship industry.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Franchising Coffee will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Increasing wage structure of Franchising Coffee
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Franchising Coffee.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Franchising Coffee in the Innovation & Entrepreneurship industry. The Innovation & Entrepreneurship industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Franchising Coffee needs to understand the core reasons impacting the Innovation & Entrepreneurship industry. This will help it in building a better workplace.
Regulatory challenges
– Franchising Coffee needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Innovation & Entrepreneurship industry regulations.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Franchising Coffee in the Innovation & Entrepreneurship sector and impact the bottomline of the organization.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Franchising Coffee can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study San Francisco Coffee House: An American Style Franchise in Croatia .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Franchising Coffee with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Weighted SWOT Analysis of San Francisco Coffee House: An American Style Franchise in Croatia Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study San Francisco Coffee House: An American Style Franchise in Croatia needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study San Francisco Coffee House: An American Style Franchise in Croatia is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study San Francisco Coffee House: An American Style Franchise in Croatia is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of San Francisco Coffee House: An American Style Franchise in Croatia is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Franchising Coffee needs to make to build a sustainable competitive advantage.
