Levendary Café Essays

Levendary Cafà © Essays Levendary Cafà © Paper Levendary Cafà © Paper Levendary cafe is a US-based fast food chain. Mia Foster is a CEO of Levendary cafe, who does not have international management experience. The Levendary cafe 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 . 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 customers 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. Moreover, if employees fully adapt to corporate core culture, it may be difficult for them to deal with domestic suppliers and partners. In Levendary cafe’s case, Levendary cafe US is very proud of its tasty and high-quality foods as well as its restaurant designs. However, it is challenging for Levendary cafe’ to accepted by Chinese customers due to culture and wage levels difference. If Chinese branch VP Chen maintains all of foods and design from Levendary in the USA, he may fail in China because Chinese customers have different tastes and consumer views from Americans. Therefore, MNEs should focus on adapting their corporate cultures to domestic cultures carefully when they are entering new markets. Cultural variables affect the Cross-Communication process and Decision making the process by influencing a person’s perception or attitude, organizations, and their past versus future orientation. Therefore, understanding Hofstede’s and Trompenar’s cultural value dimensions of the host countries would help the headquarters manage across borders without culture shock In the Communication process, these cultural variables cause cultural noise, which means misinterpretation of the message from a sender to receiver or anything that undermines the communication of the intended meaning. Ethnocentric attitude is one of the sources of noise in cross culture communication (Deresky, 2017) In the Levendary cafe case study, Foster insisted hiring a financial analyst to manage China audit team and Chen refused to cooperate. In addition, when Foster raised concerns about Levendary’s reputation and image, Chen felt his hard work and efforts were not being appreciated. To avoid cultural noise, Foster should develop cultural sensitivity, show empathy, and have face- face communication Besides cultural differences, the headquarters should comply with the local law and government regulations regarding taxes and accounting system of the subsidiary country, which doesn’t apply to the US Generally Accepted Accounting Principles (GAAP). Therefore, to standardize the reporting structures and other financial procedures, a new division in the company with global team members should be created, specifically to oversee all the operations of the US controlled foreign subsidiaries, and henceforth streamline the communication between them, and evaluate the operation performances and strategy implementations in monthly or quarterly periods. Due to the lack of international management and expanding experience, Levendary cafe needs to recruit more local or foreign employees to build a new department for China market, because China is a potential market with its growing GDP. Furthermore, for improving the effectiveness of communication and increasing the efficiency, the headquarter could provide a separate path for Chinese managers to directly report to headquarter. Other established players like KFC, McDonalds are more standardized and successful in Asia though they haven’t made many changes to menus, Deny’s in Japan changed the entire menu catering towards local taste preferences but the levendary cafe in China changed both the menu and the look and feel of it depending on the location. Therefore, â€Å"Thinking Local and Acting Global† is a successful and mature strategy for quick service restaurant chain to develop foreign markets.