Levendary Café-the China Challenge Case Solution

The unique selling point of the company is to provide a flexible and adaptable menu on the basis of customized needs of their products which mainly focuses on improving their interior design. The action plan will be focusing on to compete with the already successful brands in the Chinese market by creating differentiation point through the offering of organic food items which are healthy and tastier.

The Chinese economy is saturated in such a way that it has high competition with less brand cautious people and they prefer to fulfill their needs at relatively low prices so this leads to the low-profit-margin for the company from Chinese operations. The policies used by Chen should be altered by availing the opportunity of expanding globally with strategic mission and the ways to achieve those objectives, which will eventually lead to convert the losses into profits for the company from operations of China.

The answer to Q4:

Foster needs to make team with Chen so that she can bring positive and maximum results for the company with the experience and better communication skills with Mr. Chen. He has been given freedom of action, so his performance should be evaluated by managers so that he may be provided with the guidelines and there should be maintained an appropriate communication and coordination of Chinese firm with US firm. This will lead to the maximum profits of the company globally.

The answer to Q5:  Success Factors for Restaurant Franchising Business:

The success of any restaurant franchising its business is dependent upon the fulfillment of many factors. However, the factors which are most relevant for a restaurant business consists of the effective and trained workforce, maximizing the benefits from recognized brand names, improving inventory cost by reducing holding and ordering cost by minimizing the wastage, running the operations of business with expertise, clarity of market positioning and last but not the least is the dedicated and loyal customer base.

The effective workforce has an ability to guide its customers properly by getting proper training for the maintenance of its product quality and better services to its customers. The workforce used by franchisee is normally young and enthusiastic who strive for the growth. Moreover, the success of the restaurant business is dependent on the maximization from the company’s brand name which has already created brand awareness in the mind of its customers and this results in generating high profits for franchisee.

Furthermore, Franchise can benefit from minimizing its inventory cost by meeting the demand of its customers through reduction of its inventory holiday cost by proper planning and maintaining a certain level of safety stock to meet the seasonal demand of the product. This will lead to the low wastage of the product for the company.

Another success factor is to utilize the leadership and guidance skills of the franchisor which will result in the effective business model for the franchisee.It will also lead to the better working conditions and ethical standards for the employees of the franchisee.

The success factors also involve maintaining a better product positioning for retaining the existing loyal customer base by targeting those customers which have a need for the product of the company with some more marketing tactics for maximizing its profits.

Answer to Q6: Implications of international operations

Implications faced by Levendary café for managing the international operations consist of the lack of accountability and responsibility of the US-based company to manage the operations in China. There was no proper check and balance and audit of the books of accounts maintained by Chen. Levendary Café lost its brand name by doing so many alterations in its menu and focusing more on its customers.

Another implication faced by the company was to align the accounts and operations maintained by a Chinese and American company and maintaining the recording of its books of accounts by using similar accounting standard such as GAAP and amounts in dollars so that the presentation currency remains the same after taking into account the exchange rate fluctuations. Chinese company maintained books without complying with the GAPP requirements which created a great risk for the company.

Moreover, the lack of strategic planning of Chen resulted in lowering its prices and capturing more customers through making its menu flexible which resulted in the loss for the company due to the high cost of managing the customized orders of the customers and lack of expertise in managing the business.

Furthermore, the major implication of the business was the lack of agreeableness nature of the Chen. The company faced losses by lack of strategic planning, which Chen was not agreeing and trying to defend and resisted to the arguments of Mia. Moreover, the lack of assigning the duties and responsibilities resulted in aloss for the company.

The answer to Q7:  Recommendations to Mia Foster:

After analyzing the possible implications, it can be recommended that accountants maintaining Chinese company’s book of accounts should be provided training for the compliance of GAAP requirements and there should be proper check and balance of its books of accounts through an audit to make it compliant with the regulatory requirements of US.

It is recommended to appoint someone who can properly monitor the performance and strategies used by Chen for the betterment of results through monthly follow up and the operations of Chinese firm should be in line with US operations…………………..

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