Mgmt 5602 - Levendary Café

MGMT 5602

Group Proposal (Levendary café)

By

Ichinkhorloo Jargalsaikhan (z5093864)

Tingting Song (z5097329)

Jing Song (z5093723)

Kewei Fan (z5084247)

Hari Priya Tammineedi (z5146012)

External consultant proposal

Overview of the case study

Levendary café is a US-based fast food chain. Mia Foster is a CEO of Levendary café, who does not have international management experience. The Levendary café have their own concept and approach (delighting the customers) to obtain the US market. However, with the depression of domestic market, Levendary eyes the Chinese market to expansion. After one year of its expansion into the Chinese market, the staff has become concerned that company’s major problem of moving too far from the concept of Levendary store design and local menu, which is detrimental to build a positive brand image in China. There was a lack of strategic plan and inconsistency, Furthermore, different reporting and internal management structure is another problem CEO faced. Headquarter Managers including CEO and CFO want to solve the problem by changing the Chinese store design and menu, and hiring international financial analyst even though the financial report that is provided by Peter Steele(CFO) shows that Louis Chen (president of Levendary China) provided great achievements. Therefore, this proposal will give some strategies to deal with the problems of core concept, reporting and company structure that similar company will face, and will analyze these commercial problems with some theories.

Recommendation and benefits

There are several recommendations, which could be implemented for cross collaboration management and effective decision-making.

1.   Strengthening research and cultural intelligence of the foreign markets

2.    Establishing shared goals and documentation

3.    Adjusting the organizational structure and management team

Firstly, building cultural intelligence appears to be an ideal method to address the issues of different cultural backgrounds in the service-oriented business context. It not only helps to understand how people from different countries interact with stakeholders such as government agencies, partners, rivals and customers, but also how these cultural values affect customer's purchasing decisions and their satisfactions. (Tian, R & Wang, C 2010) For instance, launching the business in China should have an in-depth knowledge about the importance of the personal relationship, called Guanxi, protecting the reputations and bureaucratic systems (Qin, C & Zhang, C 2015). This would also result in positive effects in terms of adopting the restaurant concepts, involving the brand images, marketing programs, location choices, controlling cost structure and management styles as well.  

Second, understanding mutual goals can play a pivotal role in service-oriented businesses in overseas market by working with partners and managing a geographically dispersed team. This could overcome the miscommunication raised by the different language, conflicts, and cultural noises. To establish a common goal with partners, there are clear documentations for key performance indicators (KPI) and reporting systems. In order to compete for lower margin restaurant businesses, quick reaction based on the performance should help to keep the market share in China.

Third, establishing a new functional department in China appears to be an ideal strategy to address the issue of decision-making. Such department should involve independent marketing, food development and operating functions, which may reduce the problem of the hierarchy of parent companies. Furthermore, this new department should build the team members by the experienced headquarters workers and new local workers. For this recommendation to be effective, this department should able to create decision-making protocols and assigning responsibilities.

These would also result in positive effects in terms of commercial reasons, It can be seen that in Chinese revenue per customer is relatively lower than the US market. Increasing sales volume and saving the fixed costs appears to be an ideal strategy to address this issues based on the case study. Understanding of ethnic culture and business environment can help to encourage sales revenues in quick casual segments. Furthermore, creating shared goals and documentation could possibly minimize the administration costs and prevent the sunk cost related to marketing and pre-opening expenses. Establishing independent department should promote effective strategic decision making associated with brand images, exterior and interior design, which lead to increase in market shares and reputation of its business.

Analysis

When first entering new markets, MNEs may face a problem that corporate culture may clash with the local culture. This clash may result from various factors such as culture differences, and different wage levels, etc. In order to minimize clash, it is significant for MNEs to conduct market research and build cultural intelligence. According to Meyer (2015), the adaptation of a company’s culture often plays a key role in company’s success, and how corporate culture maintains depends on their products or competitors.