Introduction
Levendary Café has grown from a small restaurant that offers soup, salad, and sandwiches in Denver to a multibillion quick casual chain that operates 3500 stores around the U.S. The founder of the Levendary Café, Howard Leventhal managed to establish a strong market position for the Levendary Café in the U.S and succeeded in creating a $10 billion business model. The Café has two important elements that differentiate it from its competitors, which were offering nutritious soup, salads, and sandwiches, as well as, providing exceptional service for their guests in a genuine, and friendly manner. The company’s philosophy is satisfying customers’ needs by trying to make an impact on their life and look for the long run profit as encouraged by founder, Howard Leventhal to his staff. After 32 years of experience operating in the U.S domestic market and after a slowdown in the company’s domestic growth, the company considered expending its operation internationally, more precisely in China, a promising market that had shown a strong annual GDP growth of 14.5% in previous years, as well as, the arisen number of middle class income.
The responsibility of overseeing the China operation was given to Louis Chen, a Stanford MBA graduate, after a two-year contract agreement between Leventhal and Chen in September 2009. A year and six months into the two-year term contract, Mia Foster was named the new CEO of the Levendary Café in February 2011. The public press viewed the new CEO as being inexperienced in the international market in addition to some doubt about Foster’s ability to build a multi-national brand. Louis Chen opened the first store in Shanghai in, January 2010; the first location was in a high traffic business area. Within a year Louis Chen was able to allocate 22 additional locations for the Levendary Café, due to his strong knowledge of the country’s geography and his ability to speak both English and Mandarin Chinese.
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However, after a review of China’s operation by the new CEO, Foster was not happy with the way the operation was managed in China, she noticed that the accounting report was not formatted in accordance with U.S. Generally Accepted Accounting Principles (GAAP).
This was the turning point in the relationship between Foster and Chen, who had not met face to face. The new CEO decided to look more closely into the China operation and planned a trip to China to meet with Chen for the first time. Identification of Main Issue
The case presented a number of main issues that Levendary Café faced during the expansion into the Chinese market. From the case the main issue was identified as: the Levendary brand image is not consistent in the United States and China because there is a lack of communication between the parent company and subsidiary. The contributing factors to this were the management styles, the lack of standardization, the cultural differences and the limited experience in the foreign market. These issues have been detailed below.
Management style
The Chinese operation lacks close mentoring and evaluation by former CEO Leventhal, who gave too much freedom to Chen with a very hand off management style. “Do right by the concept” was the expression that Chen had as a guideline for how to strategize for the China operations. As a result, Chen was providing little information to Denver headquarter about how the operation is managed in China, which differs from Foster’s management style who appears to be more demanding than the former CEO. There was no clear strategic plan for the operation in China, when Chen was asked about a plan he mentioned that he had no plan. Standardization
Foster is more process driven and valued standardization, she believed that the China operation should align with Levendary Café standards in the U.S in terms of reports, and look and feel of the Café. However, Chen had a different approach where he was trying to open as many stores as he could in a short period of time, paying little attention to the U.S standardized business model. The issue of standardization clearly was another challenge between Denver headquarters and Chen, as he insists in pushing what he thinks is right and resist what headquarter is asking him to do. Cultural Difference
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Whenever a company is entering a new market it has to take into consideration the cultural differences between countries. Based on the case study analysis, the difference between the two countries in terms of eating out habits and eating preferences seem not to be understood by the Denver headquarter. Denver headquarter believes that it can enforce the same business model applied in the U.S to its stores in China, regardless of local preference. In addition, Foster seems to lack knowledge about the Chinese culture because she was not familiar with the market in China, as she had no experience working internationally. There was a lack of cross-cultural communication between Chen and Foster; even though, Chen had experienced both cultures while studying abroad in the U.S. Limited experience in the foreign market
There was a lack of international market experience since the China market was the second market, Levendary Café entered aside from a partnership in Dubai. Due to this lack of experience Leventhal trusted Chen with implementing the needed actions to grow a successful franchise in China. Leventhal entrusted Chen with this given his strong knowledge of the market in China. Leventhal did not understand that entering a foreign market would take more than knowledge on the country; it would also take strong communication and management skills.
Analysis and Evaluation
Operational Analysis
The operational analysis will cover the company’s internal strengths and weaknesses as well as their external opportunities and threats. The SWOT analysis will be on Levendary Café U.S. operations. This report will also look at problems with standardization in the China operations. Levendary Café has gained much strength over its 32 years of business (Bartlett & Han, 2013).
The company has created brand recognition around the United States with its 3,500 café’s (Bartlett & Han, 2013).
There is good brand consistency across all 3,500 café’s due to standardization of the Levendary product. Each café has a similar design and atmosphere and offer the same core products. Levendary Café’s standardization has allowed the company to franchise their product and resulted in expansion across the United States. Currently, two-thirds of the company’s cafés are franchised (Bartlett & Han, 2013).
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Levendary main issue is not entering Chain's market but whether such decision is a right decision and if do so how to survive in such aggressively competitive market, to which extent the management have a detailed plan about and control over the penetration in the new market, adequate information about the culture and a proper communication with the management in china. When Levendary entered ...
Each region also offers different menu items from one and other, on top of the core menu items.
For example, fewer soups are offered in the southern regions of the United States (Bartlett & Han, 2013).
This adds to the company’s strong business culture of “delighting the customer” and creating a personalized experience for each customer (Bartlett & Han, 2013).
Levendary Café detailed and strict operating standards, policies and practices has allowed for tight control of store level expenses and close monitoring of operations (Bartlett & Han, 2013).
The founder, Howard Leventhal, is an entrepreneur who wasn’t afraid to take risks (Bartlett & Han, 2013).
His willingness to take calculated risk led to the company using organic grains in its bread and hormone-free naturally raised meats (Bartlett & Han, 2013).
Levendary Café became part of the growing trend of consumers wanting healthier and more natural menu options. 81% of Americans over the age of 50 have become more conscious of what they eat (Agriculture and Agri-Foods Canada, 2010).
Levendary Café target market is white-collar professionals and upper-middle-class women (Bartlett & Han, 2013).
Their choice to shift towards healthier menu options is meeting their target markets change in tastes. A fully scaled test kitchen and food science laboratory also allows the company to meet the changing tastes of their consumers (Bartlett & Han, 2013).
The food team, which includes highly trained chefs from the Culinary Institute of America, is responsible for the test kitchen and laboratory, as well as conducting quality checks across all 3,500 café’s (Bartlett & Han, 2013).
Levendary Café has a good organizational structure. Each knowledgeable and highly experienced member of the management team knows their responsibilities and who responds to them. There is a clear power structure.
The Business plan on Levendary Cafe Case Analysis
Levendary Café is a quick casual dining experience that is expanding into China. The new CEO, Mia Foster, took over the company and began looking into the eighteen-month expansion that was occurring in China. She discovered that the Levendary Café China President, Louis Chen, was up to no good. He was given free reign from the previous CEO and he needed to be handled with. First, Foster is going ...
Finally, Levendary Café has a strong training program for their retail employees called Operating Tools and Learning (OTL) (Bartlett & Han, 2013).
OTL sets operating standards and provides employees with materials to enhance their learning (Bartlett & Han, 2013).
All these strengths have resulted in Levendary Café being a successful business in the United States. Levendary Café also has internal weaknesses. The U.S. operations are beginning to slow and investors are losing confidence in Levendary Café (Bartlett & Han, 2013).
This is one of the reasons the company chose to expand into China. However, there is no separate international division from the Denver Headquarters and the new CEO, Mia Foster, lacks international management experience. Although Levendary Café personalized touch has led to repeat business, it is also considered a weakness because it slows down the speed of service. Currently, there is a lack of brand recognition in China for Levendary Café.
Finally, financial reports from China are being submitted in their own format and the U.S. operations are then “massaging” them to apply the U.S. Generally Accepted Accounting Principles (GAAP) (Bartlett & Han, 2013).
These are all weaknesses for Levendary Café. Every company faces external opportunities and threats. As domestic business for Levendary Café is beginning to slow, the company must look at opportunities to continue to be successful. Firstly, Levendary Café is part of an emerging category in the restaurant industry called the “quick casual”. Another opportunity is to expand internationally. Other than the expansion into China, Levendary Café is experimenting with a licensing deal in Dubai (Bartlett & Han, 2013).
Some potential threats for Levendary Café are the rising food costs and shifts in food trends. Food costs are beginning to rise due to a variety of factors such as climate change and a rise in oil prices (Oxfam Canada).
A change in food trends is a potential threat for any restaurant.
If a restaurants’ product does not meet consumer’s tastes, then revenues will decrease. Levendary Café will need to look at their external opportunities and threats. Levendary Café China operations has three areas that need to be standardized: look and feel of the restaurant, menu options and accounting practices. Firstly, all 23 restaurants have a different design and atmosphere. The first location to open was similar to Levendary design standards, but the second location in Shanghai was a takeaway counter with no seating (Bartlett & Han, 2013).
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Denver Headquarters should understand that they cannot put the same restaurant that is in the U.S., in China. There should be extensive market research conducted on design and atmosphere that would be successful in China. Another option is to follow what Café Coffee Days did in India. Café Coffee Days offers three different formats of stores, ranging from a smaller grab and go coffee shop to a larger café with areas to sit down.
Levendary Café could have different formats for restaurants; however each format would have a similar atmosphere to help standardize the brand in China. Secondly, menu options are vastly different across all 23 locations. For example, the Shanghai Koreatown offers dumplings with an average check of $2 (Bartlett & Han, 2013).
The Beijing Embassy location offers sandwiches and soups with an average check of $10 (Bartlett & Han, 2013).
Some menu items were offered at all locations, such as the chicken sandwich. A solution to standardize the menu is to do something similar to the U.S. operations. All locations would offer the same core menu items, but each region would have some different menu items that vary from one another.
Chefs that have been trained in China and educated on different regional tastes should help create the core menu items and the different regional items. The final area that must be standardized is accounting practices. The current financial reports are being sent to the U.S. and massaged to meet U.S. GAAP (Bartlett & Han, 2013).
All enterprises in China are required to use the Chinese Accounting Standards (CAS) such as the Accounting System for Business Enterprises (ASBE) (China Briefing, 2014).
ASBE has similar standings to the U.S. GAAP and the International Financial Reporting Standards (China Briefing, 2014).
An international financial analyst should be hired in order to deal with both China and the U.S. financial reports and audits. Financial Analysis
A financial analysis of the U.S. and China operations provided information on Levendary Café’s current financial status. The income statement for China can be seen below. In China, their food and paper cost is at 51%, which can be attributed to their high number of food options on the menu and the lack of distribution system set up. Once a core menu is created and more locations begin to open, Levendary Café will be able to take advantage of economy of scale and lower food and paper cost. China also has a high occupancy cost at 24%. This could be a result of having to pay extra to get the better locations. In addition the Chinese real estate market is very high meaning that any location is very expensive.
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During the time of the case study the Chinese real estate was going through a “golden decade” (Ranasinghe, 2014) which can demonstrate the higher occupancy cost that the Chinese division occurred compared to the United States. The pre-opening expenses (12%) also contributed to the loss of income in the first year for China. After the first year of business, China had a loss of $143,620. China operations also have a lower marketing expense. Marketing is generally not a large expense in China because the local population listens more to radio advertisement, which are cheaper, and rely on word of mouth. Income Statement- China
The financial statement of the U.S. operations, which can be seen below, shows that Levendary Café generally follows industry standards. Their food and supply cost are slightly lower than industry standards. Generally, food and supply costs are about 29% of total sales, but Levendary Café food and supply cost are at 24% of total sales. Occupancy costs for Levendary Café are about 4% lower than industry standards. Levendary Café spends more on marketing then industry standards, about 2% higher. Income Statement- United States
Cultural Analysis
**The above information was sourced from The Hofstede Centre Website (Hofstede Centre, 2010).**
By completing a cultural analysis on the two countries, United States and China, it was easy to determine how the key issue, being communication, came about. Geert Hofstede identified five different dimensions that demonstrate how “values in the workplace are influenced by culture” (International Business Centre, 2014).
The different dimensions that Geert Hofstede identified are: Power Distance, Uncertainty Avoidance, Individualism vs. Collectivism, Masculinity vs. Femininity, and Long Term Orientation vs. Short Term Orientation.
Through using these five dimensions one can evaluate how each culture approaches these dimensions and how it influences them in the workplace. The score beside each dimension determines how much value they place towards each dimension. It is interesting to note that on only one dimension, Masculinity vs. Femininity, the two countries have a comparative score. It is with these differences that communication issues between the two countries can be seen. Power Distance
The Power Distance Dimension looks at the relationship that people hold with others in that country. China scores very highly on this dimension as people value their superiors and do not act outside of their ranking in society. In regards to the case study it is confounding that Chen is unobservant of his superiors power being Mia Foster. In the case Chen is continually rude to Mia and questions her authority. This can be attributed to two different factors. The first of which is that Chen was originally hired by Howard Leventhal therefore Chen believes that Mia is not his superior. Leventhal gave Chen freedom to expand the Levendary business into China with little guidance or instruction.
To have a new CEO enter the business Chen will not feel the need to respect Mia, as he still believes his true superior is Leventhal. In addition Chen, while he is from the Chinese culture, had many experiences and training in the United States. Therefore it can be seen that Chen was of American culture and acted as such. The United States had a low score on the Power Distance so while Chen is with the Chinese branch of Levendary he still has the American cultural values. Uncertainty Avoidance
Uncertainty Avoidance looks at the way that culture embraces uncertainty. With a low ranking in the Chinese culture it is evident that this country looks at laws as flexible. This is seen in Levendary China as the standards between all the restaurants vary and are different from the brand standards
that are seen in the United States Levendary stores. In addition the difference in accounting practices can be seen. The China division was very lenient about their reporting of finance to the US Division.
Individualism vs. Collectivism
This dimension looks at how individuals think and act, if it is for the greater good or if it is for their own well-being. The Chinese culture looks out for the group when making decisions. This is demonstrated in the case when Chen disrespects Mia Foster. He previously considered Leventhal to be his group and when Mia takes Leventhal’s position then he does not recognize her as an insider. This results in his mistrust of Mia and her authority within the Levendary Café company.
Masculinity vs. Femininity
The Chinese culture has high ranking in this and is seen through Chen’s demeanor. He is very competitive and is eager to be successful. This is seen through his urge to keep his position with Levendary China and the fast pace in which he opened the stores in China. In addition his actions of being very abrasive with Mia Foster is because he feels threatened that she is trying to take over his position with Levendary. He had never had his business interfered before by anyone from the Denver Headquarters so he put his back up when Mia started to interfere with how he was running his operation.
Long Term Orientation vs. Short Term Orientation
Long Term and Short Term Orientation looks at how a culture is prepared for the future. The Chinese culture is very focused on planning for a long-term future. This dimension demonstrated the American culture that Chen must have picked up on his time in America. With his time managing the Chinese division of Levendary, Chen was very short sighted and opened up a large amount of stores in a short period time. Instead of formulating a business plan, which would encourage growth for the future of the business, Chen did not have one and was simply opening businesses when he found an available location.
Parent Company vs. Subsidiary
In this case, the parent company would be Levendary Café U.S. operations and the subsidiary would be Levendary Café China operations. In terms of restaurant size, U.S. restaurants range from 2,500-4,000 square feet. China restaurants are smaller in size; they range from 500-1,500 square feet. These results in less staff needed for China restaurants, approximately 13-20 staff members. The U.S. restaurants need about 24-26 staff members. The larger U.S. restaurants are able to accommodate more customers; they usually have 84-120 seats and can serve anywhere from 560-3,210 guests per day. Due to smaller size, China restaurants have a maximum of 80 seats currently and can serve 260-430 guests per day.
In terms of menu options, the only item that is offered in both the U.S. and China is the chicken sandwich. The Suburban U.S./Denver restaurants make more revenue and have a larger square footage then the China restaurants. However, the China restaurants have higher average revenue per square foot. Restaurants in Beijing make $537.33 revenue per square foot and restaurants in Shanghai make $576.00 revenue per square foot. The Suburban U.S./Denver restaurants make $531.50 revenue per square foot. A chart can be seen below which clearly details the difference between the parent and subsidiary company.
Alternatives and Recommendations
Alternatives
Mia Foster is left with a very difficult decision at the end of the Levendary Café case study. As the new CEO of the company she has to make a decision that will result in profitability for the company and chose an action plan that ensures long-term success for the business. As such that are a variety of alternatives that Mia Foster will have to chose from in order to move forward with the company. The following list presents the many alternatives that should be considered: 1. Shut down all operations and solely focus business in the United States. The China division stores look and feel vary from what the Levendary Brand is trying promote in their US Division. In order to continue with the stores in China then restoration will need to be completed to all the stores. Mia Foster will need to determine if the China division profits are worth the renovations and continuation of Levendary China. 2. Fire Louis Chen and hire a new manager for the China Division. Louis Chen has proven himself as a capable entrepreneur and someone who is knowledgeable of the Chinese retail market. However he lacks communication skills, which was noticeable through the expansion of 23 Levendary shops in China that do not fit with the brand image.
Chen is also extremely confrontational and may not be the best fit with the new CEO, Mia Foster, as he already had built a rapport with Howard Leventhal, the previous CEO. If Louis Chen cannot properly function and communicate with the US Levendary division then he may need to be replaced by someone with a fresh perspective on the business. 3. Hire a management firm to manage the China Division of Levendary. It is apparent through the case study that the US Division of Levendary has not been able to communicate in an effective manner with an international branch of their company. The Hofstede Dimensions that were listed above demonstrates the cultural differences that separate the two branches of Levendary. With no cultural training Mia Foster and the US Division are not communicating properly with Louis Chen. An alternative to the situation would be to hire a management firm to look after the China division. A management firm with International experience would be a solution to the communication problem because they would understand how to conduct business while ensuring good communication.
4. Create a separate division of Levendary for the China stores. The Levendary stores in China are off brand from the original concept that is seen through out the United States. This is largely due to the fact there is limited communication because the key players in the United States and Louis Chen in China. In order to fix this problem it would be wise to bring the structure that works so well in the United States and duplicate this order in China. With 23 stores in China, Levendary will need a separate branch in China, as it will provide structure to that side of the business. With more supporting players in China, asides from Louis Chen, then Levendary will be able to maintain the brand and in addition, more supporting managers will ensure that communication is maintained between the US Division and the China Division. 5. Make a joint venture with TATA Group to expand into China. The TATA Group is a “global enterprise headquartered in India, and comprises over 100 operating companies, with operations in more than 100 countries” (TATA, 2015).
TATA has operating companies in China and as such they will be able to reduce the large operating costs that Levendary China is currently experiencing. As noted in the Analysis and Evaluation section, the operating costs are very high. Entering into a joint venture with a company who has established infrastructure will help eliminate these costs and allow Levendary to increase their profits for the first couple of years. In addition the joint venture will allow Levendary to be partnered with people who are culturally aware and possess cultural intelligence. 6. Replace the US Division Chief Operating Officer, Nick White. It was easy to identify that communication was a large issue between the US and China Division Levendary.
It is easy to target Louis Chen as the main culprit of this issue as he was combative and disrespectful to Mia Foster. However the blame can also be placed onto the COO of the US Division, Nick White because he was responsible for keeping communication with China and overseeing the brand image in China. Nick White clearly let this responsibility go and as a result the China Division does not reflect the US vision for Levendary. If someone has to answer for the mistakes that were made in China than perhaps it should not be Louis Chen but instead it could be Nick White.
Recommendation
After evaluating all of the above alternatives for Mia Foster and Levendary Café to pursue it was decided that the best alternative would be number 4, create a separate division of Levendary for the China stores. This alternative includes renewing the contract for Louis Chen and brings more managers to China to help grow Levendary in the China market with the vision and brand image of the US Division. Levendary in the United States can contribute a large portion of their success to their hierarchal structure as it allowed for proper communication and good reporting methods. If Levendary China were to create a China Division then it would allow for better communication between the United States and China and Chen would have the support he needs to ensure the brand image is seen between all stores.
Action Plan
In order to properly implement the alternative that was stated above, an action plan is needed. The action plan is detailed below through three different stages. The Short Term Plan looks at what the business should do in one years time, the Medium Term plan looks at what the business should do in two to three years time and the Long Term plan encompasses a five year outlook. This is detailed below:
Short Term:
1) The first critical step that needs to be taken is to ensure that proper communication starts immediately between Mia Foster and Louis Chen. If the two parties were to sit together and put all of their issues out then they can sort their current problems. Starting with good communication between Foster and Chen will ensure that it continues into their future business dealings.
2) Renew the contract with that Louis Chen has with Levendary China. Louis Chen has proven to be a valuable asset with Levendary Café as he knows the retail market and is passionate about the work that he is doing. While it is arguable that Chen did not complete his work in a successful manner, he was with out support and was given little direction and free reign from the former CEO, Leventhal. With support and proper structure Chen should be able to work within these constraints. Therefore it can be seen that his contract should be renewed for another term with the stipulation that Chen will be working underneath other Levendary managers in China.
3) Denver Headquarters will need to create a business plan for their operations in China. With 23 locations currently in China they will have to decide which locations needs renovations and if all 23 should be maintained. By restructuring the current operations in China, Levendary Café will have a more focused plan that will allow for the China operations to strive. If the Denver Headquarters were to work with Chen and use his knowledge of the China market than they can collaborate and develop a structured business plan.
4) Once a proper business plan has been developed Chen will need immediate support in China. By creating a separate China Division Chen will have the support he needs to standardize operations and reinvigorate the Levendary brand. Managers with cultural training should be placed into the new China Headquarters. Chen will be a regional Vice President however a new top manager will be placed in this division who will be above Chen on the hierarchy and will be the direct contact between itself and Denver.
Medium Term:
1) Standardize operations all throughout the China Division. This includes a standardized brand image through all stores and a consistent menu. As with all locations in the United States there are set menu items in all locations with special items according to the region. Levendary China will need conduct market research that will allow them to understand menu staples that should be available in all locations. In addition regional specialties should be included on the menu. 2) In addition to the standardization of restaurant practices the accounting practices will also need to be redeveloped. As per Chinese law all foreign business enterprises must follow the Chinese Generally Accepted Accounting Principles (China Briefing , 2013).
Levendary China must follow “Accounting Standards for Business Enterprises” (China Briefing , 2013) and the Denver Headquarters should hire an international auditor who can then transfer all numbers to follow the US GAAP. 3) Monitor the new business plan for Levendary China and ensure that it is being properly followed and that brand standards are being maintained.
Long Term:
1) Mia Foster should monitor and evaluate China operations on a constant basis. This will ensure that communication is kept to a high standard and that the brand image remains constant. 2) Once operations in China find their place in the market, Levendary China should appoint a Chief Franchise Officer who will develop franchise opportunities in China. This will allow more stores to be built and the brand to have more exposure with less of a expense put on the company. 3) A re-evaluation of their foreign expansion should be completed. The company should decide if they would like to find other potential foreign markets where they could continue the growth of Levendary or if they should focus directly on their domestic growth.
Additional Questions
1. As it relates to the case, explain what this passage implies: An old mentor had once told Foster that there were three types of managers in a new business’s evolution to greater scale: the go-getter, the local baron, and the professional manager. All three types could be entrepreneurial in spirit, but not all were equally well suited for the various stages of a business’s growth. Chen was clearly a go-getter who had evolved to become a local baron. The question in Foster’s mind was whether he could transition to become a professional manager. Before answering the question of whether or not Louis Chen can become a professional manager, it is important to identify the characteristics of one. The discussion in class brought to light that a professional manager is someone that has an understanding of the long term goals of a company, understands the value of standardization among all locations and understands the value and importance of brand image. A professional manager should also be educated and trained; furthermore, this individual needs to assume the role of middleman and understand top management’s goals and relay this information to his employees while collecting their feedback.
Lastly, the class discussion brought to the surface that a professional manager should have extensive core knowledge on how the company should operate. Further research has shown that a professional manager should know how to plan, organize, lead and control all the efforts of his/her employees to complement the company’s values and standards (Sandeep, 2013).
Howard Leventhal chose Louis Chen for his role because of Chen’s energy and enthusiasm. On a personal level it reminded Leventhal of himself at a younger age. Howard had told Chen to establish a strong market position as a base to eventually franchise outlets throughout China with the instructions to “do the right thing by the concept” but was given the freedom to operate the restaurants as he saw fit (Han & Bartlett, 2013).
To enter the market in China Chen said himself “We just have to be flexible…Chinese eat few dairy products, so we should downplay our cheese soup…most people aren’t familiar with turkey, but they love chicken, so we’ll adapt the menu just as we do in the States” (Han & Bartlett, 2013).
Chen believed that Levendary could succeed if it adapted its food and concept. According to Merriam-Webster Dictionary a go-getter is a person who works very hard and who wants very much to succeed (Encyclopoedia Britannica Company).
Chen demonstrated the characteristics of a go getter as he opened up the first Levendary Café only three months after returning from Denver. This location was a corner ground floor location in a new high-rise office building and the concept of the restaurant was prominent and luxurious. This restaurant was positioned as casual dining with table service and higher prices than local fast food concepts (Han & Bartlett, 2013).
This location proved to be a hit among the white-collar employees working in the building. Because of competition Chen was forced to move quickly to purchase locations for the remaining restaurants and in the first year managed to secure prime locations for good prices and grow the chain to 23 restaurants. Then Chen demonstrated he was a local baron with his in depth knowledge of the Chinese market and was familiar with the neighborhoods in Shanghai and Beijing; his real estate knowledge was a major asset for the Levendary brand. He said it himself that he was in the trenches running 23 restaurants that he had built by reading market needs and sending opportunities (Han & Bartlett, 2013).
Based on the information collected from the case it does not appear that Chen could develop into a professional manager. Because Chen wasn’t given any direction, he took it upon himself to change the concept, the look and feel and the menu items of Levendary Café. However, the way he handled Mia Foster and her colleagues from Denver and based on the definition of a professional manager Chen can’t develop into a professional manager and Levendary should look for someone to lead the China team while he continues to focus on the 23 restaurants that he has already built.
Chen also became very defensive when Mia tried to communicate with him and based on the definition of a professional, he should be open to listen to their suggestions and input and adapt them to Levendary in China. If Chen had the instincts of a professional manager he would have taken it upon himself to contact his colleagues in Denver to update them on the progress he was making in China and should have taken the standards and values of Levendary Café and applied them in China because that was his responsibility. To become a professional manager Chen would have to see the value of standardizing all the restaurants; however he did provide a great platform for the future growth of Levendary in China and should be kept on the team with certain responsibilities and be made aware of the expectations from Mia Foster.
Works Cited
Agriculture and Agri-Foods Canada. (2010).
Health and Wellness Trends : U.S. Market. Ottawa: Government of Canada. Bartlett, C., & Han, A. (2013).
Levendary Cafe: The China Challenge. Boston: Harvard Business School. China Briefing . (2013, February 5).
China GAAP vs. U.S. GAAP and IFRS. Retrieved February 10, 2015, from China Briefing: http://www.china-briefing.com/news/2013/02/05/china-gaap-vs-u-s-gaap-and-ifrs.html China Briefing. (2014).
Retrieved February 10, 2015, from China GAAP vs. U.S. GAAp and IFRS:
