Levendary Cafe Assignment Recommendations and Advice Memo - Case Study Example

Levendary Cafe Assignment Recommendations and Advice Memo Statement of the Problem The main problems which Levendary Cafe has faced when they decided to penetrate the Chinese marketplace are as follows: 1. The domestic business of Levendary Cafe was almost tapped out. 2. Taste and preferences of the Chinese customers are very different from those of Americans. The menu of the restaurant was very different from not only the US population but also from the local place point of view. 3. Lack of global management experience of Mia Foster was a hurdle to make an international brand (Barlett and Han 1). 4. The attitude of “Louis Chen-Levendary China’s President” is also one of the problems. The apparent reluctance of Louis Chen on conforming the reporting and planning process of the company is the basic problem (Barlett and Han 1). The company does not even have a single tactical plan to operate. Moreover, Chen clarified that he does not even require one because of the unambiguousness of carrying business in China. 5. None of the Senior Executive is having the perception of China market because none of them have visited China since a year. 6. The cost to the company is the main problem because the occupancy, labor, food, supply, and marketing cost altogether incur a heavy cost for the restaurant. The occupancy cost includes maintenance of common area, real estate charge, as well as waste disposal cost. Altogether they comprise of 10% of returns. Labor cost signifies 25% to 30% of revenues. Food costs represent around 32% of revenues. Supply cost signifies around 4% of total returns. Marketing fee accounts for 2% - 10% of revenue and overhead represents 5% - 15% 0f revenue. So, altogether the restaurant has to incur heavy costs on all these elements. Therefore, the gross profit of the restaurant is less (Barlett and Han 2). 7. It was also discovered that the financial report documents were incorrect. The decisions which the company is required to make regarding the situation of Levendary Café in China are as follows: 1. Financial reporting: One of the main decisions should be that there could be a China Headquarter in order to manage the financial report in the Chinese format. 2. Restaurant design: The design of the restaurant should be reliable with the designs of the US restaurants. It doesn’t matter whether the restaurants are big or small, but it should go well with the location. 3. Food menu: As the main competitors are McDonald and KFC, so the menu design of either McDonald or KFC should be used. 4. Louis Chen: Mia can attempt to make Chen understand that consistency is essential and could be achieved. Alternatives The different courses of action which could be taken in order to deal with Louis Chen and solve these problems were: 1. Exit: The restaurant could be close down i.e. leaving the market of China. 2. American Concept: She could grow exclusively restaurant of American concept because Chinese pay more in terms of foreign food. 3. Fully Chinese: The Company could either adopt American concept or keep their menu fully Chinese thereby targeting the low income group people. 4. Positioning: The present layout of restaurant should be renovated. Better quality of food should be offered and the service should be fast so that the customer should not have to wait for their order. An excellent positioning change the attitude of customers towards the product (Viardot 149; Hooley, Piercy and Nicoulaud 205). 5. Competition: It determines the suitability of a company’s activities which can add to its presentation (Porter). As the competition is high, so, the company should keep its margin low in order to attract more customer and they should create high awareness about their brand i.e. food quality in order to perform better from their competitors. Decision The decisions which are needed to be taken for the better future of Levendary Café are: Mia Foster can make Chen understand that what are the core values of the restaurant and also should build a panel for Louis Chen. She could also follow the approach of KFC or McDonald or other restaurants which are doing well in their business. Apart from that, she could also construct training program for employees and motivate and reward them for their effort. The company should maintain transparency in their operation. Action 1. Mia Foster has to examine the situation and plan the schedule accordingly for having the conference with Chen. It is also suggested that she have to do conversation regarding the financial management as well as other issues about which Chen is having problems and then taking into consideration the above mentioned suggested steps. 2. To examine the entry of the company in the Chinese marketplace, PESTEL analysis i.e. (political, economic, social, technological, environmental and legal) could be done (Murray-Webster 90). It will present an analysis structure for the stress or pressures on the company or a team. 3. The main action on what the Levendary Café can do in order to develop their strategies and business in China is to do an exact study of the circumstances with the objective to discover the weak spot. 4. Promotion: Brand awareness could be increased by promoting healthy and natural food. Moreover, marketing campaign can also be introduced to create awareness about the food offered in the restaurant. The promotional strategy should be attuned with overall marketing plan (Chaston 148). 5. Segmentation: It means division of market according to the characteristics or needs of customer (Bose 513; Kumar 180). Low middle income group people should be targeted who are looking for options of fast food and the menu prices should be low. The restaurant should be located in the semi developed regions of China. Work Cited Barlett, Christopher A. and Arar Han. “Levendary Café: The China Challenge”. Harvard Business School Brief Case., 2011. 10 Nov. 2014. Bose, D. Chandra. Principles of Management. New Delhi: Prentice-Hall of India Pvt. Ltd, 2004. Print. Chaston, Ian. New Marketing Strategies: Evolving Flexible Processes to Fit Market Circumstance. London: SAGE Publication, 1999. Print. Hooley, Graham, Nigel F. Piercy. and Brigitte Nicoulaud. Marketing Strategy and Competitive Positioning. United Kingdom: Pearson Education Ltd, 2008. Print. Kumar, Prasanna. Marketing of Hospitality and Tourism Services. New Delhi: Tata McGraw Hill, 2010. Print. Murray-Webster, Ruth. Management of Risk: guidance for Practitioners. United Kingdom: The Stationery office, 2010. Print. Porter, Michael E. Competitive Advantage: Creating and Sustaining Superior Performance. New York: Simon & Schuster, 2008. Print. Viardot, Eric. Successful Marketing Strategy for High-tech Firms. Norwood: Artech House, Inc, 2004. Print. Read More