Lavendary Café in the Chinese Business Environment Case Study

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Introduction

Business environment often experience dynamics and swings which create short and long term effects on profitability and chances of survival. When faced with a business dilemma that requires critical decisions, companies resort to analytical tools that ensure competitive advantage, besides, cutting a market niche. Thus, this analytical treatise attempts to explicitly review the social, economic, and management segments to understand the general environment facing Lavendary Cafe. Moreover, the paper evaluates decision science adopted by the subsidiary manager and provides an independent review of its effectiveness. In conclusion, the paper describes the main capabilities of this company and expansion model.

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Business DNA in China and America

Several generic competitive strategies are adopted by different business entities across the globe depending on their product, strategic marketing approach, and geographical location. The most common generic competitive strategies in China include low-cost provider, broad differentiation, best-cost provider, market niche low cost, and differentiation based strategies. Lavendary Café has adopted a traditional entry strategy which is based on the Chinese culture.

Besides, Chinese market is characterized by culture oriented clients in low and middle income segments. To benefit from these, the appointment of Chen was a wise decision to initiate an initial friendly touch with the customers. Through the employment of the local talent, it is very easy to understand market operation and make adjustments within fair time frame. In addition, the design of the China branch of the Cafeteria was meant to create the natural and typical Chinese setting with relevant menu for the same purpose.

However, Chen seems to apply an unstructured management strategy characterized by sole decision making with minimal consultation from the headquarters. This form of management is characterized by conflict of interest as the outcome may not be in line with expected capital structure growth, goals, and mission of the mother company (Hill and Jones, 89).

Moreover, Foster’s flight to China to meet Chen is a wise decision rationalized by Chen’s unpromising management skills of. However, it is vital to acknowledge market differences between China and America, especially, in menu, culture, customers’ preferences and income levels. There is no right way to manage; however, there are some fundamental principles and practices that can be employed by managers to iensure the efficiency of management techniques. Accommodative leaders engage others in decision making process before the implementation of new ideas, thus involving the parties that are in the conflict. Chen lacks this aspect.

In business organizations, performance plays a crucial role in determining success, sustainability, and relevance within a competitive edge. When aligning opportunity cost, performance is a key indicator before deciding on the forgone alternative. Therefore, performance indicator analysis is vital and necessary to monitor operational success of the Chinese branch (Lee, 56). Specifically, the mother company has adopted the broad differentiation strategy that captures performance and financial reviews in their numerous models. The same performance review strategy should be implemented in the Chinese branch.

Due to scientific leadership, Lavendary Head Company has strategically cut an excellent market niche due to the highly structured and broad differentiation strategy. This strategy aims at establishing the broadest possible mechanism for optimizing returns by dwelling on specific features which make the product unique and appealing to the target clients. Their branches are top performers all over the world.

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The Chinese branch has successfully adopted the low-cost provider strategy which aims at providing the best quality at minimal possible cost on their customers. Chen has made their products cheaper than most of the produce of their competitors, though they have not lost in quality because of reduced cost. The company benefits from economies of scale, since it optimizes sales through provision of affordable high quality products. However, there is no performance tracking devise in place.

Strategy for Restoring Performance in Lavendary China Branch

Foster should thus introduce financial performance indicator for their Chinese branch. As component of performance indicator analysis, Key Performance Indicator (KIP) tracks performance against specific objective set by the management team within a defined period (Rainer, 67). In this scenario, KIP has stringent predetermined targets which should be realized within a set time frame of one year.

Specifically, the strategy tactic should function on balanced performance indicators which can be calculated based on employee satisfaction, active initiatives in progress, financial progress, number of performance measures collected and those reported. In order to calculate the percentage of active financial performance initiatives in track, a total number of active initiatives are captured, and difference between those on track and those in progress as well as the rest not on track will indicate the performance of initiatives in progress on quarterly basis. Therefore, the percentage of active financial performance initiatives on track is the fraction of the percentage of active financial performance initiatives on track as a fraction of active initiatives within those three months.

The Variables Tracking Tactic Timeline

Basically, this tactic tracks externality and internality variables that are dependent on speed of performance, such as efficiency in period between deliveries, response by customer, and quality of product released into the market. This aspect applies to cost, dependability, efficiency, reliability and quality for that financial year. The above matrix presents the dependability of one aspect to another. The above functions are connected at central point by strategic planning which encompasses costing, speed, quality, flexibility, and dependability to create a smooth continuous operation tracking model that operates like computer in one segment or another. This is indicated in the calculation below.

Total number of financial active initiative within a period of three consecutive months = n

Total number of annual active financial initiatives on track = y

Percentage of active financial initiatives on track = number of active initiatives on track/total number of active initiatives*100

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Therefore, percentage of performance of active initiatives on track = y/n*100

When these values are fed in the performance tracking table, the results are indicated below.

KPIFrequencyTargetResultDeviation from TargetRanking(+ or -)
Percentage of active financial performance initiatives on trackmonthly70%N1S1
Employees satisfaction with the process management methodologyQuarterly100%N2S2
Percentage of MoFA KPI measured and reportedMonthly70%N3S3

Performance Review Indicators

As a matter of fact, when all the indications from arithmetic calculation reveal negative skewed value, it becomes necessary to review projectiles by the management. In addition, when the percentage of MoFA KPI which captures the percentage of measured and reported performance indicate a negative deviation from the expectation in the performance measurement scale, it is important to introduce systematic consultative decision mechanism (Rainer, 45). This ensures sustainability and strong capital structure which determines the intensity of returns on investment.

Reflecting on the above financial review strategy, Foster should draw clear reform agenda to push the percentage of active financial performance initiatives on track indicator since its performance is worse as compared to that of other indicators. Foster should use the market niche (focused) strategy which is based on differentiation depending on market niche. For instance, the branch in China serves both the traditional and other meals.

The same trend is used to appeal to customers in other continents who are looking for quality and cultural integration in services. Since the target group for the Chinese branch is already established, the company should strive to remain profitable and has an admirable potential for growth at presentii. Besides, few rivals are interested in the upend market clients while the Chinese branch has already had a working business engagement with middle and low income earners due to their affordability in services.

Alternative Strategy

The main reason for poor performance can be explained by the impractical and difficult to use or understand manuals that come with these initiatives. When there is no apparent collaborative process of performance base and goal review methodology, the measured and monitored results may be frustrating. Just like machines, creation of optimal interactive component within performance sphere influences the magnitude and nature of the outcome.

Therefore, the company should introduce an active initiative which requires continuous, constant, and relevant training in order to create a sphere of integrity and professionalism in performance. In addition, clear communicative structure between active implementers of these initiatives and the monitoring management team is vitaliii. When this occurs, the continuous and constructive feedback channel becomes stable and sustainable (Lee, 78).

Conclusively, performance indicators are crucial in monitoring progress and eliminating unnecessary overhead costs which have a negative impact on financial status of a form. As a matter of fact, initiative implementation depends on relevant training, extensive research, and piloting projects before rolling its implementation back.

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Works Cited

Hill, Charles W. L. and Gareth R. Jones. Strategic Management Theory: An Integrated Approach, Alabama: Cangage Learning, 2009. Print.

Lee, Markus. How to Outsmart China: The Complete Guide to Successful Business in China, London: Marcus Lee, 2007. Print.

Rainer, Thomm. Business China: a practical insight into doing business in China, London: Business & Professional Publishing, 2000. Print.

  1. See Jones, and Charles, 2009, especially chapter seven and eight.
  2. See Lee, 2007, chapter three and four on strategic positioning within China.
  3. See Rainer, 2000, from page 45-78, on China’s business environment.
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IvyPanda. (2020, November 28). Lavendary Café in the Chinese Business Environment. https://ivypanda.com/essays/lavendary-caf-in-the-chinese-business-environment/

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"Lavendary Café in the Chinese Business Environment." IvyPanda, 28 Nov. 2020, ivypanda.com/essays/lavendary-caf-in-the-chinese-business-environment/.

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IvyPanda. (2020) 'Lavendary Café in the Chinese Business Environment'. 28 November.

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IvyPanda. 2020. "Lavendary Café in the Chinese Business Environment." November 28, 2020. https://ivypanda.com/essays/lavendary-caf-in-the-chinese-business-environment/.

1. IvyPanda. "Lavendary Café in the Chinese Business Environment." November 28, 2020. https://ivypanda.com/essays/lavendary-caf-in-the-chinese-business-environment/.


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IvyPanda. "Lavendary Café in the Chinese Business Environment." November 28, 2020. https://ivypanda.com/essays/lavendary-caf-in-the-chinese-business-environment/.

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