...Case Analysis– Levendary Café: The China Challenge Statement of the Problem Mia Foster, the new CEO of Levendary Café, found that there is a disintegrated strategy between the American HQ and the Chinese subsidiaries. Further more, the huge resistance of Chen to comply with the specific plans and reporting processes required by Foster has greatly increased the tension and frustration between them. Key Problems and Issues * The expansion to China is moving far from Levendary’s well-defined concepts of store design and menu. This might have a great impact on Levendary as a whole as the long established brand image of Levendary is not maintained in the Chinese market. * Misalignment between the objective of the company in the U.S. and Levendary Café China’s operation style * The U.S. market emphasizes on the customer experience – provides place to sit and eat * The China market has a fast food establishment – e.g. take out counters and use of cheap furniture or no furniture at all (Quick casual dining) * Chen has a high reluctance to conform with the company’s planning and reporting processes * Lack of communication between the U.S. headquarter and the China market Secondary Issues * Different financial reporting processes in China and the U.S (not U.S. GAAP) * Is Chen really the best candidate for the role he serves or should he be replaced? Root Cause Analysis Symptoms: Most Levendary Café stores in China have different designs...
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...4357 OCTOBER 24, 2011 CHRISTOPHER A. BARTLETT Documento para uso exclusivo no AESE-SORBONNE 2013 (2013-06-18) 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...
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...ANALYSIS-LEVENDARY CAFÉ: THE CHINA CHALLENGE SPRING 2015 The following are the guidelines for completing the case analysis for Levendary Café: 1. Read the case carefully to gain a good understanding of the case and all the issues facing the company. 2. Identify the Environmental Factors (Political, Legal, and Technical) that exist in China and that have an impact of how business is conducted in China compared to how it is conducted in the United States. Focus on the ones that specifically affect the business that Levendary Café is in. What are these factors and how specifically do they affect Levendary Café’s business in China. 3. Identify the Economic and Demographic factors that exist in China and discuss how they affect Levendary Cafés business in China. 4. Identify the major Cultural Differences between the U.S. and China, and explain how they affect doing business in China for Levendary Café. 5. Identify differences in Ethical practices and values between the U.S. and China and explain how these differences affect doing business in China. Focus on those differences that affect the business that Levendary Café is in. 6. Using Hofstede’s Cultural Dimensions, compare the U.S. with China and explain how the differences would affect doing business in China for Levendary Café. 7. Based on the Cultural differences between the U.S. and China and the Hofstede’s Cultural Dimensions analysis, what is the most effective way for Levendary Café to manage...
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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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...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 was multi-faceted...
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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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...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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...hat 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 was multi-faceted...
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...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 food...
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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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...Case Guide-Levendary Just weeks into her new job, Mia Foster, a first time CEO with no international management experience, is faced with a major challenge at Levendary Café, a $10 billion US-based fast food chain. Strategically, many of her corporate staff have become concerned that the company's major expansion into China is moving too far from Levendary's well-defined concepts of store design and menu. Organizationally, Foster has been frustrated by the apparent unwillingness of Louis Chen, president of Levendary China, to conform to the company's planning and reporting processes. Meanwhile, financial evidence shows that Chen's efforts have produced strong results and suggests that he knows China far better than U.S headquarters does. The entrepreneurial Chen has resisted attempts by Foster and others to discuss corporate plans for China. As Foster flies to China to meet with Chen she faces a decision that will determine the future of Levendary China and perhaps the entire globalization effort: can she manage Chen at all, and if so, how? Learning Objective: 1. To explore the important international strategic issue of standardization versus adaptation, and examine the structures, systems, and processes needed to manage this tension. 2. To review the evolving roles and responsibilities of country subsidiary management and the corresponding changes in the nature of the headquarters-subsidiary relationship. 3. To examine the nature of headquarters-subsidiary controls, by differentiating...
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...Domino’s Pizza The case study chosen by this team is regarding the international food chain Domino’s Pizza. The team gave us some basic information about the food chain. They started off in the United States and quickly expanded through selling franchises. They were successful through creating a supply chain method allowing them to keep the cost of their raw materials cheap throughout their franchises in the US. Eventually they wanted to expand and go international, in doing so they introduced the concept of a master franchisee. This title belonged to someone who owned a number of franchises and sold franchises in a particular geographical area. Team 2 has decided to narrow their areas of focus on three key aspects that impacted Domino’s Pizza in its transition to becoming international: Strategy, Public Relations, and Supply Chain Management. i) Strategy: when going international there strategy was to have low investment and become profitable by creating this framework of a master franchisee. This gave the master franchisee and franchise owners the authority to manage their restaurants as they wished as long as they paid royalties to headquarters. This is quite different to Sasken’s strategy which we discuss as an area of focus in our case study in which the headquarters in India retained majority of the power to make decisions and carried ou the projects, their international offices only acted as intermediary sales offices. ii) Public Relations: Domino’s went through...
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