Levendary Cafe: Multi-Unit Restaurant Business And International Strategy

1. What is a Multi-unit Restaurant (MuR) Business? How big is it? Is it a consolidated or fragmented industry?

2. Which international strategy and entry mode has the company used? How did its US foundation match against China market needs? (Compare US vs China markets in terms of customers and operations.)

3. Using Hofstede’s Dimensions of Culture, compare and discuss USA and China cultures (use latest dimensions (6) from http://geert-hofstede.com/index.php ). Relate these dimensions to the impact on the market entry process and specifically, comment on impact on the corporate/managerial values.

4. What are the key issues facing Mia Foster and what would you recommend to her in addressing these issues?

Multi-Unit Restaurant Business

Levendary Café was turned out from private parity proprietorship in January 2011, and the subsequent month, Mia Foster was titled as its new Chief Executive Officer. The retiring CEO, Howard Leventhal, was the adored creator of the widely held series of 3,500 cafés. They had developed a Denver salad, soup, and sandwich restaurant into a $10 billion industry, but after 32 years was affecting on to new benefits. In the following, an effort has been made to discuss the Multi-unit Restaurant business, the international strategy and entry mode used by the company, compare U.S.A and China culture, and key issues faced by Mia Foster (Bonache and Noethen, 2014)

1. A multi-unit Restaurant Business is a notion of possessing more than one unit of a franchise and presently being the franchise proprietor owning more than one unit or store. In other words, operating more than one unit of the same industry is considered a MuR.

Usually, sovereign operators represent 70% of the business while the multi-unit operators are the balance, which marks this small percentage by entities (Garg, Priem and Rasheed, 2013).

The food and beverage business is fragmented, which means no one retailer or top vendors have a substantial market share, which the Multi-unit Restaurant Industry falls under creating it fragmented as well.

China's GDP development of 14.5% over the past 10 years and the populace of 1.4 billion individuals were perfect for spending in this nation alongside China's urban populace growing from 36.2% to 46.6% in 9 years and a robust middle class developed whose per capita revenue departed from $1,008 to $2,758 (Brown, 2015).

2. Franchising is the international strategy used by the company and an entry mode to enter into the global market. As around two-thirds of Levendary 3,500 supplies were franchised, help existing franchisees, and imposed brand and functioning standards in franchised stores (Rahatullah and Raeside, 2018). 

Levendary Café's culture was all about the customer. The original creator drilled the idea of "delighting the consumer" into the staff. They supposed that if accommodations were provided to the customer they would come next time. This was a hit with the white-collar specialists and upper middle-class females, which come nearly five or six times a week. Operations in the US were order accuracy and speed of service, which was identical, and when orders were modified to accommodate the consumer, yet personalization was part of the purpose they were profitable.

Levendary Cafe's International Strategy

This need of branding they had in the US was alike to the requirements they have in China. They had to adjust to what the consumers required in order to prosper their needs as they are in the US. For example, the Chinese eat some dairy products so they had a need to restrain their cheese soup and they were not aware of the turkey culture so they replaced chicken. This type of necessity justifies the variations they made to their menus in numerous locations and to the advent of the stores. It was all to provide accommodations to the customers in China (Anderson and Sutherland, 2015).

3. Hofstede’s clarified the dimension of individualism, power distance, uncertainty avoidance, and masculinity dimension which are founded on the corporate values that the PDI of China is 80 while America is 40. The indicators show that inequality is satisfactory in China; on the other hand, Americans are equal. China is enhanced than America in this dimension. This can be attributed mainly to the Communist rule and traditions of loyalty, esteem for age and superiority, and emphasis on harmony. Market entry is the amount to which the less influential members of organizations and establishments within a nation assume and admit the power, which is dispersed inequitably (Contractor et al., 2014).

(Hofstede, 2017)

In the individuality, China is concentrated on groups rather than individuals. America is a country, which gives emphases highly on individuals. The nations with the maximum and minimum individualism scores are the U.S. (91) and China with a score of (68) as it is much lower than the U.S. Both the China and America are at a maximum score on masculinity, it specifies that people in China and America pay much consideration to competition, attainment, and success. China scored lesser on UAI than America as China may not continuously place great importance on laws. On the other hand, Americans are very particular about the rules and regulations (Koch et al., 2016).

                                                      (Beugelsdijk, Maseland and Van Hoorn, 2015)

4. Mia is facing various issues, which are the reporting procedure from China back to the US. This problem needs to be addressed to evade the risks of not prescribing the US Generally Accepted Accounting Principles (GAAP). China's accounting principles are not as severe as the United States. The Levendary Café is frequently US based which is a very significant rule to adhere. They need to file complaint with the local tax regulations in China or could face while it closed down. In order to put the precise framework in place to hand over the monetary records to the format of the US would be a costly expense (Ostrom et al., 2015).

Cultural Differences between USA and China

Another issue Mia is facing was the adaptation. China requires adapting with the store design and menu because, for a business, these issues should be taken into reflection before it becomes successful in their market. China markets just adapt the essential changes to become fruitful but Mia does not see them. Mia is just concentrated on keeping the operations standard and dependable in the US market. Therefore, this, unfortunately, has not work in China (Knudson?Martin et al., 2015).

Conclusion:

In conclusion, adhering to the future strategy would safeguard Foster’s confidentiality in managing Chinese stores, and allow developing a workable advertising plan that pleases everyone i.e. Wall Street and Foster. Such a method would safeguard success and better adjustments for the Levendary Cafés in China.  They should not participate in expanding into China but focus on growing their industry in the United States. Mia should decide to transform their standard processes and adjust to the cultures in China. They should endure the expansion and with the appropriate controls and policies so that it will be profitable in the future.

References:

Anderson, J. and Sutherland, D. (2015) Entry mode and emerging market MNEs: An analysis of Chinese greenfield and acquisition FDI in the United States. Research in International Business and Finance, 35, pp.88-103.

Beugelsdijk, S., Maseland, R. and Van Hoorn, A. (2015) Are Scores on H ofstede's Dimensions of National Culture Stable over Time? A Cohort Analysis. Global Strategy Journal, 5(3), pp.223-240.

Bonache, J. and Noethen, D. (2014) The impact of individual performance on organizational success and its implications for the management of expatriates. The International Journal of Human Resource Management, 25(14), pp.1960-1977.

Brown, R.S. (2015) Franchising as a Collective Action Mechanism in Fragmented Industry Structures. Journal of Managerial Issues, 27.

Contractor, F.J., Lahiri, S., Elango, B. and Kundu, S.K. (2014) Institutional, cultural and industry related determinants of ownership choices in emerging market FDI acquisitions. International Business Review, 23(5), pp.931-941.

Garg, V.K., Priem, R.L. and Rasheed, A.A. (2013) A theoretical explanation of the cost advantages of multi-unit franchising. Journal of Marketing Channels, 20(1-2), pp.52-72.

Hofstede, G. (2017) China and the United states compared using Hofstede’s current dimesions. [Online] Available from: https://geerthofstede.com/landing-page/ [Accessed 11/09/2018]

Knudson?Martin, C., Huenergardt, D., Lafontant, K., Bishop, L., Schaepper, J. and Wells, M. (2015) Competencies for addressing gender and power in couple therapy: A socio emotional approach. Journal of Marital and Family Therapy, 41(2), pp.205-220.

Koch, P.T., Koch, B., Menon, T. and Shenkar, O. (2016) Cultural friction in leadership beliefs and foreign-invested enterprise survival. Journal of International Business Studies, 47(4), pp.453-470.

Ostrom, A.L., Parasuraman, A., Bowen, D.E., Patricio, L. and Voss, C.A. (2015) Service research priorities in a rapidly changing context. Journal of Service Research, 18(2), pp.127-159.

Rahatullah, M.K. and Raeside, R. (2018) Franchisee actions trigger franchisor power strategy alterations. Journal for International Business and Entrepreneurship Development, 11(2), pp.140-162.