Integrated Case Study Analysis
Levendary Café is an American company operating in the food industry. Like many other companies in this industry, Levendary Café is looking to get into the international market, and not in the same way as the company has done with Levendary China. Levendary China is more of an independent branch within the larger Levendary organisation, considering that the manager in China is mainly autonomous. In order to manage a large organisation, the management needs to have an overall strategy that is applicable for the organisation in all contexts. This means that the top tier management must have all the autonomy, while the regional divisions operate by the set policies of the larger organisation. In addition, Levendary Café is probably the only one of the most successful restaurant chains that is yet to go international. With the high level and rate of globalisation, all companies are looking to get into the global market, and numerous restaurant chains have proven successful in that context already. Levendary Café has similar prospects based on the company’s success within the U.S. However, the market is sceptical about this company’s chances based on the business model that has limited the company from taking full control of their China branch. The main research problem in this case is the company’s potential and limitations within the international market based on the current business model as implemented by Howard Leventhall. This report applies a number of theories and concepts, including marketing mix, Ansoff matrix, STP, BCG matrix, and value chain to the context of the Levendary Café, and thus interprets the results in relation to the operations and situation of the company. Each of the applied concepts has a specific goal and thus provides specific insights into the whole situation at Levendary Café. Among the findings, the company’s concepts for international business, strategic management, human resources management, and organisational behaviour require revision to fit into the international context. With regard to international business, Levendary Café may be as flexible and as culturally competent as they want when venturing into the international market, but the company cannot and should not under any circumstances compromise on the brand image. Levendary Café should feel like the Levendary Café regardless of where it is located. In terms of strategic management, the company should find and apply the right strategic management policies and processes to align their operations not only in the U.S. and China but also in all of the major markets that they venture into. With operations that are strategically aligned and managed effectively, the company will be able to experience a high level of success internationally. As for human resources management, a good HR strategy that is applicable within the international context will allow the company to make the best out of their people. This means that the company will be able to hire the right people for their positions regardless of location. A comprehensive organisational policy aimed at governing the relationships within the organisation will also be useful in ensuring that the company has happy employees who are willing and able to give their best in term of service quality. Finally, for the company’s organisational behaviour, it must be noted that this company’s organisational structure actually adds value to their whole operation, and it would be best if the hierarchy was maintained; however, in some contexts the company will have to decentralise management and allow for regional heads to make decisions that are relevant and limited to their regions. Louis Chen, for example, has had some experience within the Chinese market and is therefore best suited to make decisions regarding the region’s supply chain. In order to prevent the company’s organisational structure and culture from interfering with the efficiency and speed of the value chain, there is a need for embracing technology to aid in decision making and internal communications. Generally, the company has a good prospect in the international market, but it will require a lot of restructuring for them to realise this potential.
Levendary Café is an American company operating in the food industry. Like many other companies in this industry, Levendary Café is looking to get into the international market, and not in the same way as the company has done with Levendary China. Levendary China is more of an independent branch within the larger Levendary organisation, considering that the manager in China is mainly autonomous. In order to manage a large organisation, the management needs to have an overall strategy that is applicable for the organisation in all contexts. This means that the top tier management must have all the autonomy, while the regional divisions operate by the set policies of the larger organisation. Within Levendary, it is evident that the management has been divided already, and the company needs to re-engineer this strategy and possibly unify the management component to include China in the overall management strategy for consistency and effectiveness in organisational strategy.
Levendary Café is built on the concept of casual dining with special commitment to the idea of a comfortable environment and impressive service. The company hires highly trained personnel in operational and administrative capacities in order to deliver high quality service to the customers. This implies the need for a structured HR system that will maintain high standards all through the organisation. As for the products, the company insists on buying organic grains for their breads and hormone-free meats for their sandwiches and soups. Generally, Levendary Café is an ideal brand for customers who love their food as natural and fresh as possible. The premium market position implies that the customers should be willing to pay a few extra dollars for their favourite foods and snacks. The Levendar Café started as a single soup, salad, and sandwich restaurant in Denver. However, with time, Levendar Café grew significantly to become the international brand that has branches as far as in China.
For a company to get into the international market, a number of factors must be aligned effectively and strategically based on the specific interests, aims, and objectives of the company in question. This requires consideration of the company’s prevailing situations along with the incorporation of effective management strategies and components that include organisational behaviour, international business, and HRM among others. The basic consideration within these contexts is that the company needs to have all of its management components aligned correctly in order to get to the set objectives.
Levendary Café is probably the only one of the most successful restaurant chains that is yet to go international. With the high level and rate of globalisation, all companies are looking to get into the global market, and many restaurant chains have proven successful in that context already. Levendary Café has similar prospects based on the company’s success within the U.S. However, the market is sceptical about this company’s chances based on the business model that has limited the company from taking full control of their China branch. The main research problem in this case is the company’s potential and limitations within the international market based on the current business model as implemented by Howard Leventhall.
1. What challenges does Levendary Café face in relation to the expansion into the international market?
2. What solutions and recommendations can the company apply in order to be successful within the international market?
Research Aims and Objectives
This research is specifically aimed at understanding the situation at Levendary Café concerning the company’s prospects and interests in the international market. As such, the study will first focus on what is happening within Levendary Café, especially in terms of organisational structure and behaviour, marketing mix, human resources management, and value chain as well as strategic management. The study will then use the available theories and concepts to determine a way forward for the company within the international market.
Structure of the Report
The first chapter in this report is the introductory chapter, and it features background information and research problems, questions, aims, and objectives. Chapter two then looks into the company background and the summary of the case at hand. In chapter three, the paper discusses the theoretical framework based on the available theories and concepts as applicable within the case study. Chapter four presents the findings of the analysis, and chapter five features the solutions and recommendations that are aimed at helping Levendary Café with the situation at hand.
Levendary Café is an American company that specialises in the food and catering industry. The business is built on the concept of casual dining with special commitment to the idea of a comfortable environment and impressive service. According to Bartlett, the company hires highly trained chefs and staff members, while also insisting on organic grains and hormone-free meats. Generally, Levendary Café is an ideal brand for customers who love their food as natural and fresh as possible. The premium market position implies that the customers should be willing to pay a few extra dollars for their favourite foods and snacks.
As a company, Levendary Café’s operating philosophy consists in pleasing their customers. This means that unlike an average business organisation, Levendary is not too keen on their profits. The company is built on the idea that impressing customers has a more solid impact than making a daily profit. As such, the Café has some of the best customer service practices in the American food industry. For example, customers are able to make special requests on how their food should be served. Someone can ask for extra hot soup or to be served a sandwich without the sprouts. Basically, customers are able to ask for anything reasonable within the Café, and the service team will be glad to oblige since they aim to make the customer as comfortable as possible. In addition, each outlet within this restaurant chain embraces a number of local additions to the menu in the spirit of catering to the tastes and preferences of their customers. This particularly helps to widen the customer base rather than limit it to a few customers with a general taste in food.
Like many other business organisations in the 21st century, Levendary Café is looking to build a strong international brand. This means that the company does not only strive to expand beyond the American market but also consolidate the brand position in the global market. In order to do this, Levendary’s new CEO has to ensure that she can retain the current brand image by upholding the same company standards across the organisation. On the one hand, this may seem like an easy task, especially if the company is to continue operating as Levendary China instead of a joint venture or franchising. However, the Chinese branch was entrusted to Louis Chen with a promise of minimal interference by the former CEO and founder Howard Leventhall. This means that Chen has the leeway to run Levendary China as he sees fit rather than conforming to the set standards at Levendary USA. This means that it is Mia Foster’s task to find a common ground and convince Louis Chen to uphold the standards of the Levendary brand for consistency across the global market.
When going international, companies often have to consider the need for consistency in their brand. Using McDonald’s as an example, Chinese customers would buy food from this fast food chain because of the reputation that the American version of the McDonald’s has built over the years. This means that there is an expectation of originality and culture in terms of quality, ambience and service. At Levendary however, there is a discrepancy in the continuity experienced between Levendary USA and Levendary China. This is the major problem currently, considering that the company is in its early stages of establishing the international brand. Once the company convinces Levendary China to join the fold in terms of business strategy and operational policies, the company will have a better chance of gaining some ground in the international market within the restaurant chain industry. Going international requires comprehensive understanding of the implications of operating in the international market. First, it is important for this company to appreciate that the competition that they face is extremely high. Entering China means taking on both local and international competitors. This means that the company cannot afford to join the ranks of the local food establishments. Levendary China needs to be distinctive as an international brand.
China is only the first step for this organisation, considering that there is an increasing call for expansion and growth into the international market. It follows that the company will have to establish and embrace the organisational structure and strategy that will work for the international market. Some of the factors that must be examined and changed in the case of Levendary Café include the strategic management concepts, human resources management, and international business. Under strategic management, the company will need to apply the Ansoff matrix, the BCG matrix and the value chain models in order to find the existing problems and formulate practical solutions. As for the human resource component, Hoftede’s cultural dimensions, IHRM and diversity management concepts must be considered. As for international business, an STP model, a marketing mix and Porter’s five forces analysis will be useful in shaping the company’s approach to the international market.
Statement of the Problems in the Case
When a company is getting into the international market for the first time, there is a need to change many things within the company’s operational and administrative functions in order to accommodate the demands of the international market. Effective international organisations are considerably large; therefore, they need to embrace a number of management concepts that are relevant to the international circumstances within which they operate. Strategic Management in this case means continuous planning, analysing, assessing, monitoring and implementing concepts that are aimed at guiding the organisation towards the set goals and objectives in a holistic setting. A large organisation particularly has a complex strategic management; Levendary Café will have to adapt theirs extremely quickly. Human resources management, on the other hand, involves effective capitalisation of the company’s human capital within the international context as applicable in this case. When looking to get into the international market without compromising on the quality of products and services offered by the company, IHRM must be practiced so that the company continues to get the best talents for their outlets without compromising on culture competence aimed at appealing to the local customers. An international organisation is often only as effective as its internal systems. In addition, the concept of international business is going to be new in this organisation. Therefore, it is conceivable that Levendary Café will be making a number of mandatory changes in how they conduct business in order to fit in successfully within the international market. For instance, this company will have to conform with a lot on international laws and cultural practices or beliefs in order to be successful.
Relevant Literature Review
All of the challenges mentioned above can be dealt with through the effective analysis of the relevant situations within and outside of the organisation in question. Some of the concepts that have been proposed for dealing with Levendary Café’s problems include the STP, marketing mix, porter’s five forces analysis, Hofstede’s cultural dimensions, IHRM, diversity management, Ansoff matrix, BCG matrix, and value chain. Each one of these concepts will be discussed to get a better understanding of what they do and how they can help the organisation in question.
This is a three-step model used to build an effective and specific marketing plan for a given organisation. STP is based on the three building blocks, namely segmentation, targeting and positioning. Each of these has a significant implication on how the product will be appreciated by the consumers. The STP model helps the company in question to find the right products for the identified market segments, thus ensuring that the efforts of the organisation are appreciated in terms of market reception and sales volumes. Matching the right products to the right market also ensures that the company’s marketing activities bear good results.
Porter’s Five Forces
This is a tool that helps the organization to understand the market with regards to the kind of competition that the business will be facing. For a business to function well, there are a number of factors within the external market that must be analysed as they tend to have a significant impact on the direction and the success of the business. The five forces proposed by Porter in this model include the bargaining power of suppliers, the bargaining power of the buyers, the threat of new entrants, the threat of substitute products and the existing industry rivalry in terms of how fierce the competition is. When analyzed accurately, each one of these forces provides a credible direction on the company’s business strategy.
Within the context of the international market, marketing mix is primarily a tool aimed at guiding the company to sell effectively within their chosen market. Marketing mix in this case determines the priorities that the company will focus on in terms of the people, processes, programs and performance related to the organisation. Generally, the marketing mix has to be specific to a given market. However, this tool will help Levendary Café to determine their marketing strategy as they enter the international market.
This is a tool used for strategic planning within an organisation. According to the tool, companies have about four alternative growth strategies that they can pursue, and these include market penetration, market development, product development and diversification. The matrix in this case is used to determine the activities of the organisation and the direction where these activities are leading the company. Within the context of Levendary Café, market penetration is a good choice for the growth strategy, but current activities of the company will determine if they are actually working towards penetrating the international market.
This tool helps the company to analyse their operations and identify the internal strengths and weaknesses, thus determining how to set organisational priorities. The BCG matrix comprises of four quadrants, each of which has a different level of importance to the company in question. These quadrants include dogs, cash cows, stars and question marks. It depends on the organisation to determine which projects go into which quadrants, thus allocating the relevant amount of time and resources to it. Not all projects within the organisation are beneficial, and it is important to understand when the company is prioritizing the wrong investments to avoid compromising the growth prospects in the long term.
The value chain analysis is a step-by-step analysis that follows the activities of the organisation from the sourcing of raw materials to the point where the product reaches the end consumer. The value chain analysis is particularly effective in ensuring that all the company’s activities are aligned with the organisational goals and objectives. In the case of Levendary Café, the value chain analysis will be aimed at ascertaining whether the operations of the company are in line with the set standards of quality and organic produce within the organisation, and how feasible this concept is for the international market.
Hofstede’s Cultural Dimensions
These dimensions are particularly effective in getting to understand the foreign culture in which the business will be operating. The dimensions inform the company of any existing cultural differences that would require to be addressed when adjusting from one country to the next. This model will allow Levendary to make necessary adjustments to the corporate culture as the company ventures into new regions all over the world. The dimensions in this case include power distance, individualism, uncertainty avoidance, long-term vs short term orientation, indulgence vs restraint and masculinity vs femininity.
Organizational Diversity Management
This is a management concept or strategy that focuses on harnessing the power of diversity within a given organization. The concept is particularly useful for companies that need to operate within a diversified context thus requiring a global work force. This basically implies recognizing the different ethnic backgrounds represented in the organization and placing value on these differences as aligned towards organizational goals and objectives. Basically, this concept will help Levendary to understand their workforce and thus capitalize on the existing ethnic differences.
This is a relatively new HRM concept that is aimed at empowering organizations to succeed within the international markets. IHRM involves managing home country, host country and third country employees effectively and seamlessly across the whole organization. The numerous activities within this concept will be useful to Levendary as the company seeks to spread out and dominate the global food industry. Unlike domestic HRM, IHRM removes the geographic limitations on the labour industry thus opening the company to a lot of possibilities in terms of recruitment and selection.
Proposed Plan of Analysis
All of the theories and concepts discussed above will simply be applied to the context of Levendary Café and thus interpreted in relation to the operations and situation of the company. This means that the analysis will be systematic, with the concepts being applied simultaneously to maintain independence in terms of the results. Each of the applied concepts has a specific goal, thus creating the need to find and treat the results separately.
Sources of Data
This case study analysis mainly focuses on Levendary Café with its operations in the U.S. and China. Therefore, the major portion of the information required in the study is specific to Levendary Café. For this reason, the information will be obtained from public records and company press releases among others. The theories and concepts applied in this case study have been sourced from scholarly databases both online and offline in order to ensure that all the theoretical frameworks of the study are within the acceptable standards of validity and reliability.
Chapter 4 Findings
Only a third of the outlets of Levendary Café are company-owned. However, the franchisees understand the company’s requirements and standards in terms of the operational contexts. They are all expected to conform to these set standards; otherwise, they risk losing the franchising relationship. This means that the company is directly responsible for all the operations undertaken within the outlets. However, Levendary China remains rather autonomous based on the agreement between Louis Chen and the former CEO Howard Leventhall. An effective strategic management component within this organisation currently features getting Levendary China to work with Levendary USA in the expansion strategy rather than becoming distinctive and using unique approaches in the Chinese market.
The findings of the analysis indicate among other things that the company is actually focused on market penetration. The organisational structure in this case rests the operational decisions with the Chief Operations Officer; and in Levendary’s case, the decisions are made based on the hierarchical structure of feedback that sees the store managers reporting to area managers, who then report to the market vice presidents, and the report eventually gets to the COO. On the one hand, this system ensures that the organisation is directed based on the actual internal environment. The COO is guided in decision making by the information obtained from the lower levels of the organisation.
Considering that one individual is at the helm of the operational decisions at Levendary, it can be anticipated that the company’s strategic management concepts are effectively generated based on the internal and external environments of the organisation. This means that other than the usual channels of making decisions, the company expects the COO to hold frequent meetings with the top tier executives and middle level management in order to formulate a strategy that will guide the company through its operations.
It was noted here that the company’s strategic management component did not involve the operations of Levendary China. Louis Chen has the capacity and authority to plan his own operations within the Chinese market, and the only common aspect that Levendary China shares with Levendary USA is the Levendary Brand. The COO in Levendary USA interacts with all the middle level managers within the company’s USA operations, but he has no jurisdiction whatsoever in Levendary China. This limits the company’s strategic management within the USA.
Human Resources Management
Levendary Café has about 300 staff in the company headquarters, and these are mostly administrative positions that are aimed at running the organisation smoothly. They comprise people from the company’s real estate, legal, finance, purchasing and information systems among other things. In addition, Leverndary does not have an international division for the administrative function. Therefore, the expectation may be to expand this workforce or simply increase the workload on each employee. Regardless of the decision made on the way forward, one main observation in this organisation is that Levendary China manages all of their operations on their own. This means that currently, the HR department at Levendary USA remains largely on domestic HRM. Leventhall’s friend and partner in Dubai also runs the operations in Dubai independently.
Considering that the company generally manages the operations within all of the outlets albeit indirectly for the franchised locations, it can be noted that the company is relatively in charge of the HR component within their U.S. market. Each store manager has to report to the area manager when it comes to performance and strategies as employed within all Levendary Café outlets. All locations have a guide for their HR practices, including the recruitment and training processes that are geared towards finding the right people and enabling them to perform in accordance with company standards.
In order to accomplish consistency and uniformity, the HR component in this company is particularly strict in regard to employer-employee relationships. The aim is to ensure that all the employees within the organisation are treated well and are thus committed to their work in various locations. An overall HRM strategy ensures that the company’s employees are all uniformly dedicated and motivated within the organisation. Recently, the company started working on employee engagement as a HR strategy aimed at making the employees a more significant part of the organisational fabric. However, the HRM component at Levendary Café only works within their domestic operations. Once the company expands into the international market, there will be a need to embrace IHRM for more effective operations. With the current system, the company will have to export employees to their new branches abroad. If they embrace IHRM, this may not need to happen.
Levendary Café is currently limited to the U.S. in terms of their market penetration. Having seen that the company’s international business is currently managed independently, it can be appreciated that Levendary Café is not in any way prepared for the international market. The operational locations are currently managed within the American market, meaning that the company’s marketing strategy is currently restrained. However, the company has demonstrated that they have the accurate resources to conduct a thorough research and analysis on the international market. This means that they can formulate a practical marketing strategy for any market provided the management agrees to the expansion.
Within the American market, the company has been able to maintain a consistent brand image in terms of how the locations are designed, the quality of products and services, and the overall ambience of Levendary Café. However, the company seeks to meet specific needs of their customers within a given location by incorporating local menus into the standard menu offered by the Levendary brand abroad. This means that the marketing strategy is also flexible enough to embrace culture competence as part of the marketing strategy.
Within the international context, this strategy may become a problem. Levendary China has embraced a lot of Chinese essence in their overseas operations, and this may be seen to compromise on the brand’s identity, especially in the globalised market where consistency is part of the appeal for the international consumer. While the cultural adaptations are a good thing for the company’s customer-oriented business model, there may be a need to reconsider the extent to which Levendary Café outlets can embrace a new cultural component beyond the menu. A company like McDonald’s is a hit internationally because they have maintained their signature menu and layout across the board. Therefore, the customers appreciate the familiar feeling of being in McDonald’s regardless of the actual location.
Chapter 5 Solutions and Recommendations
Levendary Café requires a new component of strategic management aimed at improving the company’s performance within the international market. By definition, strategic management is primarily the alignment of business targets with all of the required and available resources within the organisation. An effective strategic management process ensures that the company has a specific direction towards which their processes and efforts are aligned. With the right strategic management considerations and processes, the company should be able to ensure that all the available resources are utilised effectively based on the organisational goals and objectives. In terms of Levendary Café, it will be significant for the company to define their international operations within their strategic management component in order to ensure that they can actually align their business processes with the available resources.
In order to accomplish this, it will be prudent for Mia Foster to first ensure that Louis Chen is on board regarding the consolidation of the operations of Levendary China with those of the main organisation. This does not imply taking away Chen’s leadership of Levendary China. Instead, the new CEO has to ensure that Chen understands the importance of having consistency in the brand image when operating in the international market. Once Chen is able to limit his autonomy in the Chinese branch, there will have to be some restructuring in terms of the management to ensure that the overall top tier management is also responsible for the operations of the company in the international markets. With the right strategic management policies and processes, this company will be able to align their operations not only in the U.S. and China but in all of the major markets that they venture into. With operations that are strategically aligned and thus managed effectively, the company will be able to experience a high level of success internationally.
Human Resources Management
The first solution for this company’s limitations in light of their HR component would be to introduce IHRM as a strategy aimed at preparing the organisation for the international market. While operating within foreign markets, the company must be able to balance their global integration with the existing local responsiveness. This will require a deep understanding of numerous facets that are applicable within the context of the host country in question. This means that the company will be able to effectively operate within a new geographical location if they find the right HR systems that allow them to include local employees in the overall HR strategy within the organisation.
Currently, the company has franchised more than two thirds of their locations within the U.S. When venturing into the international market, regardless of whether the mode of entry will be joint ventures, company-owned or even franchising, the company must have a comprehensive IHRM component in place. Unlike domestic HRM, IHRM allows the company to hire locally in their host country without compromising on the quality of the products or services within the new location. The local employees are trained and evaluated based on the company’s universalised IHRM strategies and policies. This further plays a large and effective role in improving the company’s consistency in service quality within the international market. The local influence of the employees ensures cultural competence without compromising on their adherence to international standards, which is appreciated by the customers. A good HR strategy that is applicable within the international context will allow the company to make the best out of their people. This means that the company will be able to hire the right people for their positions regardless of location. A comprehensive organisational policy aimed at governing the relationships within the organisation will also be useful in ensuring that the company has happy employees who are willing and able to give their best in terms of service quality.
Within the American market, the company has been able to maintain a consistent brand image in terms of how the locations are designed, the quality of products and services and the overall ambience of Levendary Café. However, the company seeks to meet specific needs of their customers within a given location by incorporating local menus into the standard menu offered by the Levendary brand abroad. This means that the marketing strategy is also flexible enough to embrace culture competence as part of the marketing strategy. This same system should be embraced but within a larger context for the international market. First, the company’s marketing strategy needs to be largely consistent. This means that the company should continue with their TFG concept that continues to attract customers all over the United States. Regardless of the specific cultural location that the company is operating within, the Levendary brand has to remain attached to the idea of tasty fresh goodness. Tasty fresh goodness is the basic component which the company’s marketing strategy should be built on. Essentially, when venturing into the international market, Levendary may be as flexible and culturally competent as they want, but the company cannot and should not under any circumstances compromise on the brand image. Levendary Café should feel like the Levendary Café regardless of where it is located. The menu may be a little different to accommodate the local cuisine and ingredients, but the restaurant should always maintain the layout and design of the original Levendary Café in order to capitalise on the appeal of familiarity to international customers.
Levendary Cafe is a relatively large company that is seeking to venture into the international market. At the moment however, the company is still operating within a local context. This means that the company will have to undergo a lot of changes as defined in this paper. The most important adjustments will be with regards to the company’s HRM, Strategic management and international business. On one hand, it can be appreciated that the company has already started going international as can be seen with the Levendary China. However, this is not sufficient considering that the Chinese department has been autonomous in terms of operations. An international organization must exhibit some level of consistency as part of the brand image in the international market.