Levendary Café: The China Challenge Case Solution
This case revolves around the Levendary Café, which is located in the US.The founder of the company was Howard Leventhal. It is a fast-food chain business,having a worth of $10 billion. The cafe operates in the US market. Initially, when the firm was established, it was only offering salad, sandwiches and small bowl of soups.The main objective of the company was to serve best to its customers, in the US as well as in China. The founder also wanted different menus items to retain the customers by offering them new flavors and more delicious food. This multi-unit restaurant has three segments, including: specialty establishments that are famous for snacks and beverages, quick-service restaurants that work in fast food chains, and facilitating customers by proving counter and drive-through services and casual dining which is with fine dining concept or table services. Levendary lies in a quick casual restaurant segment, with different services and offerings, such as: wholesome soup, sandwiches and salads. The restaurant uses high-quality ingredients and provides quality services with a friendly and comfortable environment. The CCO, Lucian manages the company in the food development group and marketing team. The upper management of the company shares Legendry’s culture by the slogan “Tasty Food Goodness” also TFG. (HAN, 2013)
The CEO of the company is Mia Foster,who is the graduate of Wharton. Previously, she had a career in a major global accounting firm. The company faced challenges when its major expansion in the Chinese market didn’t go well as per the expectations and strategies formulated, such as: designing and menu of stores. However,the company’s current position is good and the company also offers a discount as compared to the competitors operating in the market. The major drawback of the expansion into the Chinese market is the unwillingness of the company’s president:Louis Chen, who slowed down the planning as well as the reporting processes. Another challenge is that the company’s CEO is inexperienced, who is doing this job for the first time. Besides that, discounts were also offered by the company to prevent itself from burning out.
Q1: Evaluate Levendary Cafe’s success in the US market.
A1: Success factors in the US market:
The founder of the company: Howard Leventhal always focused on customer-centric strategies and wanted to satisfy the customers; therefore, he always motivates his staff to emphasize on customers’ likes and dislikes rather than just focusing on sales volume.These words influenced the customers positively, which resulted in attracting new customers by a large number. The company was also offering extra services to its customers, which also contributed to its success in the US market. Therefore, the first factor behind the success of Levendary Café, particularly in the US market, is the value-addition activities for the customers to make them buy products on daily basis.
The second factorrelies over customers’ feedback so that the changes could be made effectively and the customers’ dissatisfaction could be prevented.Therefore, customers’ preferences in taste and buying priorities were considered thoroughly.The changes in the menu and additions also proved to be the significant factors, which contributed-significantly to the success of Levendary in the US market, as more variety of drinks were introduced in the menu, such as drinks with the healthy and high quality ingredients. There was also a concept of new products, five times in a year, with minor or major varieties in the menu. In response to that, the company’s loyal customers were the professionals with white-collar jobs and upper-middle-class women who visited every week, five or six times. The third factor is the speed of order and accuracy which play major rolesin customers’ satisfaction, because one dissatisfied customer can decrease the preferences of other customers by word of mouth criticism.
The last factor for the company’s success is efficient marketing. The marketing team of the company was creative, who worked for maintaining the promises of the company by TFG through different promotional strategies.These factors had significant impact over the customers in the US market as well as the company’s financial performance.However, it also created some challenges for other companies because of the huge amount of competitors in the market and imitation of their strategies.
Q2 (i): What are rationales for expansion into China?
A2 (i): Rationales for Expansion:
There are significant factors that made the company opt for expansion. The relevant factors act as opportunities for the company to enter into new horizons, increasing its market share, international recognition, increasing its operations, creating more employment opportunities and generating more profits. Therefore, there are three rationales for expansion in China, which these are as follows:
Preference of customers for fast food
The success of externalfast food brands urged Levendary to make an entrance in the Chinese market, because ofan increasing preference of customers for fast food. In China, the number of employees working has been increasing rapidly, which is why people have started to prefer easy to buy food and ready-made food, because of their packed schedule.Cheese soup, espresso, beverages and salads were the most famous items on the menu and also in the generation of sales revenue, as a major share of the company’s sales were mostly generated through these offerings.
The company evaluated the market and identified that there are many opportunities in China, as the population was around 1.4 billion and its annual GDP was growing with 14.5%. China had an urban population and there was an increase in the urban population by 36.2%. This was an opportunity for the company to serve the urban population of China, as they are also increasing and are expected to respond well to the company’s offerings.
Increased women workforce
There was a significant increase in the quantity of ladies’ workforce and white-collar class populace. Therefore, this had a huge impact on the country’s culture and food preferences, which is why the company had an opportunity to enter the market and increase its market share.
Coping with current challenges
The company was facing some challenges related to the geographical expansion in 2008, and the reason behind these issues was the slow or zero progress of the company. Therefore, to overcome these challenges;the company decided to opt for global expansion, mainly in China. The concepts and objectives of the company were not going as they were expected, in the local market, so the board of directors wanted to expand the business to China……………
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