...Business Case: Levendary Café Curso: Dirección multinacional Profesor: Albert del Couz Integrantes: Alejandra Butrón Rocío Chan Dayana Silva Katherine Tavera 2016 Levendary Café Levendary Café es una cadena de restaurantes que se caracteriza por las sopas, ensaladas y sándwiches con ingredientes de alta calidad y su compromiso con un servicio en un ambiente cómodo y amigable. Levendary Café está dispuesta a tomar riesgos, sobre todo cuando se trata de continuar con la evolución del negocio. A lo largo de Estados Unidos, Levendary Café se caracteriza por los tonos tierra y decoraciones estandarizadas. Su objetivo en China es crear una marca y mercado para el desarrollo de una franquicia en Asia, así como aumentar sus ventas en el exterior. A continuación, contestaremos las preguntas del caso. PREGUNTA 1: ¿Cuál es su evaluación sobre la forma en que Levendary Café ha entrado en el mercado chino? La entrada de Levendary Café a China, si bien ha sido rápida, ha sido desordenada más allá de la decoración y adaptación de los locales y la marca. Primero, fue desordenada e, incluso, improvisada con la elección de Louis Chen como encargado de las operaciones chinas. Louis Chen apareció como un enérgico emprendedor y se ganó la confianza de los directivos con algunos conocimientos interesantes para el negocio en China y mucho entusiasmo. Llegó, incluso, a cambiar la opinión sobre la entrada con un socio al mercado chino haciendo que el proyecto recayera completamente...
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...Levendary Cafe The stage theory which contains these three types of managers: go-getter, local baron, and professional manager. It is a very useful theory that can helps the CEO to determine whether this manager is the right person for the company at any stage in a long run. In my opinion, a good manager is not only a person who can make high profits for a company, but the one can benefits the company as a whole, such as increase brand value, expand business and so on. In this case, it is a very good timing for entering into the China market since the domestic market in the US growth slowly, and China’s GDP is much higher than the GDP in the US in 2011. So, I believe, Mia should use this stage theory as a basis for managing Chen and the China subsidiary in order to ensure the oversea expansion to China is success at this great timing. There are some important changes that I think Mia should make for better expansion in China. First of all, since there is no one department to manage the financial reports and other businesses for the Levendary Café in China, the CEO should build a headquarter in China or other specific department in order to manage the Lavendary Café in China directly, and report the financial reports to the US headquarter directly. The benefit of this department is to hold more control on the China subsidiary and Chen. Secondly, since Mia’s goal is to keeping the operations standard, the standardization is very important for this company. Therefore, try...
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...Levendary Café 1. What is your evaluation of the way Levendary Café has entered the China market? What is the main issue here? The expansion of a brand is not always an easy task; there are too many concepts related with the expansion. First of all, the communication between the subsidiary from the other two countries and the main office should be constant. That was one of the basic issues that arose when Mia Foster was named CEO of the head office. A lack of communication is an essential factor that we need to avoid in order to develop an expansion process. In this case, the lack of communication in the process between Chen and Foster was unsustainable. Leventhal made important decisions in the past, and communicated to Chen through the CEO position, which were the power taking and making decisions of the operations business of Levendary Café. That was the first issue, since Foster had another way of managing these operations’ strategies. Another important factor in the expansion is about the connections between businesses. Leventhal business in Doha and China were possible because the contacts that he had in Doha and the Chen contact through the MBA at Stanford, which provided him the opportunity to be a CEO. The third is the management factor. Once Foster knew how Chen was working with the franchise and doing operations but there was no strategic plan at all. She decided to travel and meet Chen and the 23 franchises management styles personally. The fourth and the...
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...4357 REV: FEBRUARY 26, 2013 CHRISTOPHER A. BARTLETT ARAR HAN Levendary Café: The China Challenge Levendary Café was spun out from private equity ownership in January 2011, and the following month, Mia Foster was named as its new CEO. The departing CEO, Howard Leventhal, was the beloved founder of the popular chain of 3,500 cafés. He had grown a small Denver soup, salad, and sandwich restaurant into a $10 billion business, but after 32 years was moving on to new interests. This was Foster’s first job as CEO. Previously, the 47-year-old had been president of the U.S. business of a large American fast food company for seven years. She had started her career at a major global accounting firm, leaving to earn an MBA from Wharton. Upon graduation, she had become a consultant at McKinsey before taking a job in product management at P&G, where she worked her way up the ranks. Foster was known for her frank communication style and strong execution. In spite of the promise held by the Levendary brand and Foster’s strong track record, Wall Street was cautious about the stock. While the company’s fundamentals were strong and its performance generally in line with management forecasts, its shares traded at a discount to comparable restaurant stocks. There were two reasons for this. First, analysts were concerned that Levendary’s domestic business was nearly tapped out. Second, given Foster's lack of previous international management experience, they were skeptical of...
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...Analysis Levendary Café – The China Challenge Problem Identification Levendary café is the American based multi-unit restaurant which offers quick casual dining to consumers. With the rapid GDP growth and a growing lifestyle trend to eat out in China, Levendary Café decided to expand its operation into Chinese market to implement its concept of “delighting the customers” with a high quality based offerings (Bartlett & Han, 2013, p.4). Due to the lack of experience and knowledge about Chinese market, CEO Leventhal decided to give Chinese market experienced Louis Chen the full control of running the operations in China. However, after one year operation in China, the company’s head-quarter did not satisfy the Chinese performance. Recently, the company’s domestic demand was declining, as well as its stock price. The new CEO Mia Foster was facing a big challenge by Wall Street’s skepticism, since they did not believe Foster’s ability to build a multi-national brand due to her lack of previous international management experience (Bartlett & Han, 2013, p.1). In addition, because of the communication breakdown between Chen, Foster finally decided to investigate Chinese operations which under Chen’s strategy. Thus, the main problem in this case is the conflict between Foster and Chen due to their different views of the market and different management styles. The first issue that Foster facing is the reporting process from China back to America. Levendary Café’s Chinese...
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...all her shortcomings, to focus on a major expansion into the Chinese market. b) Lucian Leclerc: Has an innate ability to predict food trends as the manager of food development as well as the marketing team in charge of Levendary customer representation. c) Louis Chen: He was picked by the previous CEO to be the primary in the Chinese market. He soon opened over 20 restaurants, however, he made several changes to the menus and appearances of each store, and this was against policy to maintain brand positioning. He was also very risky in his use of non-GAAP data within his financial statement which also led to negative exposure. Finally, he lacked in designing future strategies that were necessary to further expansion of Levendary in China. Why did the company expand from the USA to China? What are their general goals in China? What plan/strategy did they use in how they entered China? 1. China was ripe for investment: With the GDP in China growing almost 15% over the last ten years, couple with their huge population of almost 1.5 billion citizens, China was perfect for expansion purposes since they carried consumption power for both products and services from the United States. 2. Internal reasons: The domestic growth of the Levendary has been decreasing over the last several years and was not seeing much growth in the United States, so an expansion to China would be an excellent idea. 3. Success of other brands: With the pattern of success for other...
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...Levendary Café: China Challenge Levendary Café faced some successes and many challenges when penetrating the Chinese Market for their first time. The goal of this case study is to understand what kind of initial strategies did they adopted and the main problems that arouse as a result of their decisions. The analysis will point out the main issues faced by the organization as well as potential alternatives that could be used to address their concerns. Finally, an optimal solution will be proposed in order to resolve the situation in which Levendary Café is involved. Levendary’s first steps and industry analysis Although Levendary Café’s decision of entering Chinese market faced some tough challenges, the organization also took some good steps. First of all, the decision of entering China as the target market was a good decision. According to a report by IBIS World, “this industry revenue grew by 3.4% to $190.2 billion in 2011 and 2.6% to $195.2 billion in 2012. Industry revenue growth will level off as growth rates approach historical levels and the industry is forced to contend with the market saturation issues it has grappled with over the last 10 years.” (Zwolak, April 2010). Since the American market was already saturated, Chinese market offered an attractive alternative of expansion for Levendary Cafe. China was a market of 1.4 billion people where economic growth was around 14.5% and where growing middle-class citizens, who demonstrated a positive acceptance of quick...
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...Levendary Café What is your evaluation of the way Levendary Café has entered the China market? As the newly named CEO, Mia Foster faced enormous challenges in assuming duties from Howard Leventhal, the founder and departing CEO of the popular Levendary Café brand. As a first-time CEO who lacked international management experience, she took the reins of a 3,500-unit, $10 billion business during the midst of a transitional period of expansion into the China market. In 2008 Levendary’s domestic growth had slowed and the company recognized the opportunities the Chinese market could offer. With its rising population, continually growing GDP, and a strong middle class consumer behavior that mirrored Levendary’s domestic formula for success, Foster realized that managing Levendary’s entry into the Chinese growth market would be key to the company’s long term growth and success. This move, however, was met with skepticism from Wall Street and many of Levendary’s corporate staff who held concerns that the company's major expansion into China involved moving too far from Levendary's well-defined concepts of store design and menu. The Levendary brand had a strong track record, but investors as well as internal staff had strong reservations regarding Levendary’s current domestic financial position and that, coupled with Foster’s lack of international experience, caused the Levendary stock to trade at a market discount (Bartlett, 2013). Levendary’ entry strategy into the Chinese market...
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...Levendary Cafe: The China Challenge Case Analysis Levendary Cafe entered into the fast growing China market and instead of keeping their established US concepts intact they changed the store design and menu selections in order to align themselves with the culture of the Chinese people. Although the strategy has proven successful, the American headquarters, prompted by the new CEO, opine that their operational concepts should remain globally intact. In my opinion the main issue in this case is not the entry strategy of Levendary Café into China but a serious communication breakdown in the organization exemplified by the following factors: 1. Management style differences. CEO Leventhal was very hands off with Chen and obviously allowed Chen to have full control over the operations and strategy for China. This differs from Foster’s management style which is more corporate control driven and focused on standardization. 2. Culture differences. It is naïve to ignore cultural differences when globalizing any organization which is the stance taken by the new CEO and the American headquarters. 3. Limited international experience. China is only the second international market that Levendary Café has entered into besides their partnership in Dubai. So, organizationally, they lack globalization experience and this is compounded by the new CEO’s lack of international experience and specifically her unfamiliarity with the China market. Foster should proceed with caution so that...
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...Levendary Cafe Recommendations It appears to us that Mia Foster’s vision for Levendary Cafe’s international expansion most closely resembles an international strategy. In our opinion, this approach is inappropriate considering the type of business model that Levendary has and the domineering preferences in China. Our primary recommendation for the future of Levendary would be to adopt a strategy that incorporates elements of both a transnational strategy and a localization strategy. Since Levendary was founded on principles that stress customer satisfaction and bending to consumer tastes, we think that Foster should embrace the localized approach that Chen has built. If she tries to radically change a growing business, she runs the risk of losing the customer base that was drawn in by Chen’s approach. We also think that Foster’s concerns about straying too far from the brand are valid. For this reason, we think it’s important that there be some features in the restaurants that resemble those of the domestic locations, whether it be color schemes, decorations, or tag lines etc. Another idea we had was that Levendary could first work on is establishing a menu that is more standardized. We think it is important to appeal to local tastes for the locals but to also have options for those visiting from other locations. What they need to do is have options of food that are offered in both the U.S and in all of the China locations on the menu and then alter the menus to market to...
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...LEVENDARY CAFÉ PROPOSAL Introduction In February 2011, Mia Foster became the CEO of Levendary Café, an American franchise chain of restaurants that had engaged in an IPO just one month ago. In 2008, the organisation had started a Greenfield expansion to China, Levendary China. The company did not have a deep understanding about the Chinese market and had left full control of the overseas operations to Louis Chen. When Mia Foster arrived on board, Levendary’s stock market was traded at discount and the Chinese operations were not following the core company’s strategy. After arguing with Chen via videoconference, Foster decides to go to China on May 25 to have a face-to-face meeting with Chen and resolve Levendary’s position in China. Commercial problem The main commercial problem that the company is facing is an uncontrolled an uncoordinated expansion to a new unknown market. It is the first serious international expansion of the organisation and it is a necessary step for the firm in order to increase profits and market share, since it is facing a dramatic slowdown in domestic growth. All in all, the internationalization process is not following the core business values that had made Levendary Café successful in the US. Failure to address the situation could end up in: * Damaging the brand image and losing market share in the US. * Resulting in overall losses and failing to succeed in the Chinese market. * Causing an important fall of stock prices...
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...Introduction: This case study shows the challenge the one of American Multi-unit restaurant to Chinese market. China was a ripe for investment and it was very attractive for many of the U.S companies because Chinese annual growth in China was 14.5% for the past decade and the population was 1.4 billion people and in contrast, the economy in the U.S.A has been turned down and the market size have been downsizing. However there were a lot of difficulties in success and not all companies succeed in China. The I institutional voids and Chinese politics, culture, specific market needs make difficult for some companies to success in Chinese market. The new CEO, Mia Foster is now Levendary Café is now facing the struggle in management of the Vice President in China and the business strategy. Case Questions: Q1. What is a Multi-unit Restaurant (MuR) Business? How big is it? Is it a consolidated or fragmented industry? What are its economics (use the Porter’s Model to evaluate profitability in addition to the data given in the case)? Multi-Unit restaurant business is a geographically dispersed stores built from standard units which are aggregated into larger geographic groupings such as districts, regions, and divisions. Every tier has its own set of managers. Multi-Unit Restaurant concepts consist of the following 3 segments. I. Specialty Establishments mainly served snack and beverages under$5 such as Starbucks and Dunkin’ Donuts. II. Quick Service Restaurants, as it is called...
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...Have a positive impact on customers U.S.A 4. 4. Market Analysis Introduction I Company Overview I Market Analysis I Industry Analysis I Problems I Plan of Action I Recommended Approach I Conclusion Increasing GDP Stock Market Speculation Lucrative Market Sticking to strategy of international expansion To check the untapped potential Success of competitors like KFC , Mc Donald Local market Saturation Why China ? 5. 5. Industry Analysis Introduction I Company Overview I Market Analysis I Industry Analysis I Problems I Plan of Action I Recommended Approach I Conclusion China : Food intake is increasing Eating habits are different than Americans Largest producer and consumer of Rice 6. 6. Q1) What is your Evaluation of the way Levendary Café has entered the China Market? Introduction I Company Overview I Market Analysis I Industry Analysis I Problems I Plan of Action I Recommended Approach I Conclusion 7. 7. • The organization foundation- Blending Concepts and Operations 8. 8. Leaping into china Louis Chen, a strong market position....
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...Levendary’ entry strategy into the Chinese market was multi-faceted and relied on the expertise and judgment of Louis Chen, who was appointed China VP by Leventhal prior to her appointment as CEO. The company made a strategic decision to forgo opportunities for a joint venture with an established Chinese partner, which is a tempting proposition for many companies. Instead, their strategy was to leverage the attributes and experience Chen brought as China VP to replicate the benefits that a partnership could provide. Louis Chen was a Stanford-educated, multi-cultural and multi-lingual professional who possessed an entrepreneurial spirit, intimate familiarity with the Chinese marketplace, and a network of contacts that made sacrificing control and profits to a partner company unnecessary. This may be evaluated as a significant strategy decision, which contributed to Levendary’s success in China. As the case of Amway’s entry into the Chinese market illustrated, local talent with intimate market familiarity is invaluable (DeVos, 2012). Levendary extensively trained their China VP by rotating him throughout key positions in the company’s domestic operations. Leventhal recognized that granting Chen autonomy was pivotal to establishing the market presence Levendary wanted to capture; however, this decision may have caused what Foster interpreted as reluctance to comply with organizational standards. Nonetheless, the gains allowed flexibility when the local situation did...
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...the Levendary café case 1. Develop CAGE framework for restaurant/food business Cultural distance | Administrative distance | Food and drinking structureLife styleLocal food fashion Labor practice | Tax systemAccountingRegulation and authorization | Geographic distance | Economic distance | Logistical cost and qualityClimateIngredients | Per-capita incomePopulation Engel's coefficientSalary of restaurant staff Local competition | 2. Evaluate the way Levendary entered the China market. Entering the China market is a correct choice, but Levendary café didn’t make a good plan for it. Levendary had been very successful in the U.S.. It owned over 3,500 stores and was beloved by many loyal customers. But in 2008, its domestic growth became slow. The board of directors began to think about its overseas expansion. China was their target market since it had 1.4 billion people, and the 14.5% GDP growth over the past decade. Many American food companies like KFC and McDonald had proved that China was a worthy market to invest. However, Levendary didn’t make a proper plan before they entered China. Firstly, there should be a formal management structure of China business. A headquarter should be made in China , and there should be a local team which carried out the strategy of the Levendary HQ and manage the China business. Secondly, the manager who was responsible for China business should be well concerned since this position was quite important for Levendary. ...
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