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← Roles of ManagerStrategic Capabilities and Competitive Advantage Assessment →

Levendary Cafe

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1. The way in which Levendary Café has entered Chinese market and the consequences of the business abroad remain very controversial. After the conduction of strategic research opportunities in China, it seemed, as the market was ready to accept another U.S. restaurant company. However, there were many challenges along with the Levendary Café project implementation (Bartlett & Hann, 2011).

The way that Chen was chosen to become a responsible person for the development of this business in China could predict his prospective business activities. Although Chen managed to open twenty-three restaurants during one year, the suspicions arose when the headquarters received completely different from the original requested financial reports. The headquarters office and newly appointed CEO Forster started close communication with Chinese side and soon found out that the Levendary Café brings bad image of the brand.

The company did not have any strategic plan to operate, and Chen explained that he did not even need one due to the specifics of doing business in China. The menu was very different not only from the U.S. one, but from one local place to another; they used different types of utensils and some of the restaurants did not have places to sit.

The question of Levendary Café entering the China remains controversial, as the specifics of doing business are quite different from the U.S. At the same time, it is hard to both agree and disagree with Chen because he is native Chinese and he knows how to deal there.

However, the way he communicated with Forster, the facts of incorrect financial reporting documents and his apparent absence of systematic thinking of considering and supporting general corporate culture are far behind the expectancies. Maybe Chen’s behavior is appropriate for developing their local business, but the brand business shall be kept as the brand.

2. Mia Foster should work more closely with the business that is conducted abroad. It looked like Chen did not have enough practice to be a country representative of Levendary Café brand. Thus, Forster has to decide whether he shall continue his business and whether he is honest at all.

I would propose the headquarters to take the following steps:

-   Organizing international audit to check all of the financial documentation of the business from the very beginning;

-   Conducting of the interviews with the current management stuff of the company in China and select those who fit their positions;

-    Conducting a special training on developing the skills needed for doing the business;

-   Chen, if further decided to expand the contract shall take a special management training including branding and corporate culture topics;

-  Having the headquarters’ management representative responsible for the area and monitoring the situation constantly.

-    Conducting permanent financial control over the Chen’s activities until making sure that everything works smoothly.

Forster has to be constantly updated on the situation and, if necessary, conduct her own business trips to China. She also has to clarify why there was not any financial support from the headquarters, and study the situation closely why all of that happened.

The same task is for the headquarters: to have a mutual and constant communication with any foreign representative. Such situation that we have gives a lot of space for maneuvers. Thus, the chosen foreign representative has to be a trustworthy person and, the least conflict provoker and suspect of possible machinations.

3. Foster has to have a specific action program for dealing with the continued business growth in China. First, she has to analyze the situation and plan the agenda for the meeting with Chen. She has to discuss with him financial, management and other questions that Chen faces problems with and taking into the consideration the aforementioned suggested steps.

In order to analyze the entrance of Levendary Café to the Chinese market, let us consider PESTEL (Political, Economic, Social, Technical, Environment and Legislative) strategic planning technique, which provides an analysis framework for the pressures on a team or an organization (Rogers, 1999; Havergal & Edmonstone, 1999).

The entrance of Levendary Café compared, for example, to McDonald’s to the Chinese market, according to Chen’s activities was more complicated technically as he had to change the menu adjusting it to the local market. McDonald’s has decided to keep their original menu being able to import the products from the U.S.

Despite the food at Levendary Café was more environmentally friendly, McDonald’s popularization did not go down as well. However, the café food was also attractive and economically profitable because Chinese people were willing to pay more for foreign food. However, the way that Chen adjusted in to the local culture did not benefit from the social point of view and McDonald’s was still winning. There were no political or legislative obstacles obvious except for potential somebody’s interest in keeping Chen on that position.

The main recommendation on what Levendary cafe should do to improve their business and strategies in China in this particular case is precise studying of the situation with the aim to find the weak points. After that, the aforementioned steps shall be taken into the consideration by the headquarters office, and further by the management staff. Once everything is regulated on the higher level, the accents shall be done with the local business representatives.

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