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Levendary Café Analysis Report


Management Challenges Faced by Mia Foster

Leadership Change

When Mia Foster took over Levendary Café as the Chief Executive Officer, it had been led since its inception by Howard Leventhal and a group of long-serving heads of departments who were responsible for all packages that Levendary offered.

This move created a conservative way of working and approaching issues that made the company what it was then. Therefore, when Mia Foster was brought, there was fear from investors on her ability to manage the company to new heights further than it had reached before.

Mia in this case faced transitional challenges that came with change. She had to convince investors that she had the ability to move the company to new heights after analysts felt the company had exhausted its domestic base.

The biggest challenge that Mia had was to convince sceptics that she had the ability to carry the company forward now that she was the new boss because the company was listed on the stock exchange and such analytical scepticism would affect the price of its stock on the market.

This case therefore required her to work hard by cutting an immediate image that will convince shareholders of her abilities to run the company not just locally but also internationally.

According to Santhidran et al. (2013), change management is very dynamic, as it requires the implementer of change to take firm action (p. 349).

She therefore needs to convince investors that she has the necessary expertise to shift the company to a global stage and keep it there. Levendary’s plans to move to the Chinese market have to be boosted by Mia’s strategies on how she envisions the Chinese market and take immediate steps.

Cross Cultural Management

Mia took over the management of Levendary Café when Howard Leventhal had already initiated a move to the Chinese market.

Thus, Mia had challenges towards expanding the market further from where Leventhal had left. Leventhal had entrusted the management of the Chinese entry to Louis Chen who had worked his way into impressing him.

Chen’s management capabilities were not known nor tested by the company. However, he was able to convince Leventhal to give him the Job, which he did. The company had built its name over a long period through the services it offered as well as a brand name that it used for identification.

All its outlets had been made in a similar fashion by depicting the same theme and a common menu that would be found in all outlets. Although the company varied its menu’s depending on the location of the stores, it was apparent that this varying increased its operational expenses.

This case was different from the Chinese market, which required a diverse list of options and more so with an Asian touch. This issue led to Chen setting up independent menus for the restaurants he opened with only the name being the common factor that identified the outlets.

This strategy proved to be a challenge to Mia because, on one hand, she needed to run the company as a franchise by serving its signature menu, while on the other hand she needed to break new ground.

According to Kawar (2012), management varies across cultures and each culture has adopted a specific management style (p. 106).

The Chinese market required a more Asian menu with rice a part of its signature thus posing as a challenge to Mia on how she would handle the situation as it required a move away from the traditional American menu.

Resistance to Change

Mia faced the challenge of resistance to change from two fronts that made the scenario very complicated. On one hand, she faced resistance to the approach that Chen had employed in starting up the Chinese chain by the other American managers who have been there for a long time.

When Chen took Levendary to China, he made so many changes that had not been authorised by the main office back in America. According to him, this strategy was the best way of penetrating the Chinese Market.

This move however was not acceptable by other managers from the headquarters who had been there for a very long time being responsible for developing the company to what it is today.

Therefore, Mia had a challenge in navigating the crisis because she had the culture of the company to keep while on the other hand she needed to break into the Chinese market, which according to Chen, needed a different style.

According to Battilana (2012), “…agents of change may need to overcome resistance from other members of their organisation and encourage them to adopt new practices” (p. 381).

Mia has therefore to find a way of convincing the team at the headquarters on the need to break from tradition if it was necessary. On the other hand, Chen was used to having a free hand in making decisions concerning China.

The coming in of Mia with some probing questions seems to upset him. Chen was resisting the change that Mia was coming in with that would require him to conform to the set standards as well as be answerable to authorities at the head office.

Mia needed in this case to stamp her authority and enforce the necessary changes as long as they were not going to affect the business negatively.

Strategic Planning

The entry of Levendary into the Chinese market can be described as casual from the way it was executed by the then Chief Executive Officer Howard Leventhal.

According to the report at hand, there seems to have been no research done on the Chinese market concerning the entry point as well as the expansion program. All that the Leventhal did was to entrust the whole affair with Chen with the belief that he knew what Levendary upheld.

The company targeted China as the new grounds in which they could invest. However, they did not have a strategic plan for the Chinese market thus leaving Chen to do as he thought was right.

This issue brought about confusion in the financial reporting procedures, which were not standard to the U.S reporting standards, which therefore would force Mia to come up with a strategic plan that should be used by the company to enter into the Chinese market.

Sibony (2012) presents inertia as the trickiest problem in strategic planning and often keeps capital, people, and other resources stuck in similar allocations (p.94). The company did not have a strategic plan for China.

All it did was to copy and paste the American model to the Chinese market hoping it would work the way it worked in America. That is why Chen was made an intern on a rotational basis to learn about the company’s operations in America.

Therefore, Mia will have to come up with a specific strategic plan for China as a way of penetrating the Chinese market.

Future Prospects of the Market Place in China

The Chinese market should be the new focus for Levendary to centre on as it charters new ways of reinventing itself. According to the report, Levendary has exhausted the American market in such a way that it cannot continue expanding at the rate it uses to expand previously.

This case therefore means that there will be a stagnation of profits, which might as well drop in the end. Levendary should invest in the Chinese market because China is one of the most populous nations in the world. Thus, it offers an opportunity for all to do business there.

The big population and the very large territorial land have made China the new destination for many big companies wishing to diversify their business to other countries.

China had for a long time practiced an economy of exclusion whereby foreign businesses were denied permission to open shops there.

This case has however changed with the change in policy that has now leaned towards the free market hence opening up the potential that the Chinese market had for a long time.

The prospects of Levendary succeeding in China are high because the Chinese market can largely be described as a virgin market with very good potential for tapping, which should therefore give Levendary the impetus of moving fast into the Chinese market and cut a niche for its business.

The other encouraging factor about the Chinese market is the rise in its urban population, which has risen by a 10% margin in the last ten years to about 46%.

This finding is an indication that many people have moved to work in the urban areas and that they will or they might have to eat outside home.

A large working population in urban areas is a blessing to the restaurant business because it acts as a source of clientele who are expected to eat there at different times of the day.

The economic growth of China is also a positive indicator of its market potential. Currently, China has been recording an annual growth to its GDP at the rate of 14.5%.

This figure is one of the highest GDP growths in the world, acting as an indicator to the growth in purchasing power of the Chinese population. Therefore, Levendary has an opportunity to exploit some of these market potentials at a young stage to establish itself within the Chinese market.

So far, there have been only a handful of foreign establishments, which have been able to penetrate the Chinese market such as pizza hut, McDonald’s, and KFC.

Although these establishments have recorded success by opening up many stores in China, they still have not been able to satisfy the market potential that the Chinese market offers. So far, they have just been able to open up outlets in the major cities only.

The Chinese market is made up of a very big young population, which is attracted to the western lifestyle, which is ready to buy into the American menu. This people should form a big target for Levendary because it is the trend for the future.

The advantage of the young Chinese market other than being big is that the Americans are liberal in their choice of menu and that they are ready to spend much more above the normal Chinese market rates.

Most of the American outlets that opened in the Chinese market set their prices along the American market, which are far much higher than the Chinese market.

This therefore restricted them to districts where there is a big population of expatriates who would provide a market for their products.

However, with the young Chinese population setting the trend, Levendary should take the first opportunity to open many stores with an American menu that would attract the young Chinese population.

Levendary should also vary its menu to have an Asian touch. Levendary’s business is in the quick service segment. According to the report, many foreign outlets serving a Chinese menu have succeeded in penetrating the Chinese market.

Therefore, Levendary should move away from its traditional American menu to offer a variety that would allow it to have a Chinese touch as a way of introducing itself to the Chinese market, which is a bit conservative.

The menu should be based on rice dishes, which are a preference for many besides being priced along the low Chinese pricing. This strategy will require Levendary’s entry into the Chinese market to be multipronged in that it enters the market at different levels.

The future of the Chinese market remains big because of the stability of the Chinese market. So far, China’s per capita growth has leaped from RMB 6282 ($942) – RMB17175 ($2576). This growth should give Levendary hope to continue with its pursuit of the Chinese market.

The company should employ a different tactic towards the Chinese market because the dynamics are different between it and the American market.

The top managers back in America should become flexible in the way they approach the Chinese market by not imposing the American style on China. These two countries have different cultures that are distinct.

Thus, the approach employed should be one that will capture the attention of the Chinese market.

Therefore, Chen should be given an opportunity to come up with workable ideas that he feels will capture the attention of the market instead of him being forced to employ foreign approaches that would not work.

The management should take its time to understand the needs of the Chinese market before coming up with a signature product that the company would wish to use as its identity (Hilmerson & Hans, 2012, p. 98).

This move will not be a departure from its previous practices in its American market that allowed it to vary its menu according to regional tastes.

Comparing pizza huts strategy and the recommendations above, Levendary can also take the same path but in an organised manner, better than the path Chen has taken.

Chen’s ideas are good though they need to be organised for building a brand name as well as creating an identity that will be used by Levendary in China.

Therefore, the main office in America should create structures that would guide Chen in establishing a properly running a business in China instead of rubbishing the work he has been doing.

At the same time, it would be prudent for the main office to come up with a strategic plan for the Chinese market as a guide to its operations as well as a benchmark for its performance.

For any organisation to have any meaningful progress, it must deploy a policy through strategic planning (Aldehayyat, 2012, p. 17).

Chen has run the Chinese operations in a streetwise manner, which may not be very professional and thus the need to prepare a plan for China after getting the right information about the Chinese market.

Mia Foster’s Approach towards Chen

Mia foster should approach Chen with an open mind that will allow her listen to Chen because Chen, being on the ground, has a lot of knowledge about the Chinese market.By listening to him, Mia will be able to learn a few things about the Chinese market that she did not know about.

According to the behavioural science approach, the behaviour of individuals in the organisation affect the way the organization will function (Owens & Hekman, 2012, p. 790).

Thus, if Mia approaches Chen from a position that will allow him to vent his opinion, Mia will be able to come up with the best mix for the company’s business in China.

Mia foster should be firm when dealing with Chen but then in a reasonable way. She should be able to make Chen understand the position of the company concerning its history as well as its objectives and make him appreciate why some things have to happen the way the main office has decided.According to Tonus (2012), all personnel in a company are subject to company regulations and rules (p. 175) because, according to the report, Chen seems not to want to let go of the free hand he had been given in the running of the Chinese business.

He seems to throw tantrums whenever he is asked to conform to certain standards. Thus, Mia should be diplomatic and convincing when dealing with Chen but firm at the same time because she is the authority.

Mia should be able to negotiate and convince Chen on the importance of keeping standard operation procedures for all the branches operating under the Levendary café name.This strategy will be the best way of managing costs because varying standards would mean that extra costs are incurred in managing the different variations.

Therefore, Mia should make Chen understand that at a larger scale, there would be a rise in costs in such areas like inventory, which will be unique to each other (Yukl, 2012, p. 69).

In this case, Mia should apply her informal leadership skills that would allow her make Chen see the sense in what the management wants.

Mia should be flexible when dealing with Chen because there is pressure so far from the management at the headquarters that the Chinese business should be run on the American model and that Mia should push Chen to follow that order.Being flexible will allow Mia to evaluate without the biased Chen’s ideas on how the Chinese venture should look like because the whole company had never come up with the Chinese blue print and thus they do not have any information on the state of affairs in China.

She should be ready to buy ideas from Chen while at the same time evaluate the same ideas to make sure they are the best for the system (Mohd, 2013, p. 94).

Mia’s tone should also be friendly as compared to when she would communicate with Chen during their phone calls and video conferencing. During that time, the conversation sounded more like an order to which Chen resented.

Her flexibility should allow her to deal with Chen more as a colleague than as a subordinate for them to develop a harmonious working relationship.

Reference List

Aldehayyat, J., & AlKhateb, A. (2013). Strategic Planning and Organizational Effectiveness in Jordanian Hotels. International Journal of Business & Management, 8(1), 11-25.

Battilana, J. (2012). Change Agents, Networks and Institutions: A Contigency Theory of Organizational Change. Academy of Management Journal, 55(2), 381-398.

Hilmerson, M., & Hans, J. (2012). Reducing Uncertainity in the Emerging Market Entry Process: On the Relationship Among International Experiential Knowledge, Institutional Distance and Uncertainity. Journal of International Marketing, 20(4), 96-110.

Kawar, T. (2012). Cross Cultural Differences in Management. International Journal of Business and Social Sciences, 3(6), 105-111.

Mohd, S. (2013). Effects of Perceived Leadership Styles and Organisational Citizenship Behaviour on Employee Engagement: The Mediating Role of Conflict Management. International Journal of Business Management, 8(8), 91-99.

Owens, B., & Hekman, D. (2012). Modelling How to Grow: an Inductive Examination of Humble Leader Behaviors, Contingencies and Outcomes. Academy of Management Journal, 55(4), 787-818.

Santhidran, S., Chadran, V., & Borromeo, J. (2013). Enabling Organisational Change- Leadership, Commitment to Change and Mediating Role of Change Readiness. Journal of Business Economics & Management, 14(2), 348-363.

Sibony, O. (2012). Collaborative Strategic Planning. McKinsey Quarterly, 1(2), 94-97.

Tonus, Z. (2012). Unethical Behaviours and their Management in Human Resource Management: A Content Analysis of a Company’s Personnel Regulation. Turkish Journal of Business Ethics, 5(10), 173-181.

Yukl, G. (2012). Effective Leadership Behaviour: What We Know and What Questions Need More Attention. Academy of Management Perspectives, 26(4), 66-85.

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