Levendary Café-the China Challenge Case Study Solution
Background:
This case revolves around a famous private equity ownership café named Levendary which was founded and made public by Leventhal in the beginning of the year 2011. It is famous for providing high-quality food items which are checked through its quality control department. The company has franchised its business and it is operating restaurants’ multi-chain unit of around 3500 café s which consists of around 2300 franchised restaurants whereas, around 1200 restaurants are owned by the company.
One month after becoming a public company, new CEO (Mia Foster) was appointed by a company with good exposure and experience in critical analysis. Moreover, in 2010, the company earned around 1 billion dollars revenue. Company’s prime focus is to provide high-quality food by using organic ingredients which makes the product consumer friendly and they pay premium prices for the product. Moreover, policies of the company are customer-centric and they are focusing mainly on the interior design of the outlets and they have high domestic demand in their local territory i.e. the USA.
Analysis:
The performance of the company is evaluated on the basis of its global expansion from the USA to China and Dubai.
The answer to Q1: Evaluation of the way to enter Chinese market:
The approach of Levendaryto enter Chinese market is based on achieving its strategic objectives rather they have merely focused on to grasp the opportunity to expand in the Chinese market with its unique offerings. The Chinese market is growing rapidly in terms of the fast food cravings so this provides an opportunity for Levendary Café to maximize it by creating brand positioning differently than its competing brands.
This expansion was necessary because the company has reached its maturity level which does not provide any further growth opportunities there to grow further, the company has expanded in the Chinese market. The major brands leading the Chinese market are Pizza Hut, KFC and McDonald’s etc. However, two of the major brands were unable to adjust to the Chinese culture and different needs and adapt accordingly.
The company appointed Mr. Chen to take over the operations in Chinese market and he followed his own rules which were flexible as compared to the strict rules of US. This leads to capturing the market by providing unique features in its offerings such as flexible and adaptable menu items on the basis of changing consumer’s needs. In this way, the company became an instant hit in the Chinese market.
When Levendary entered the Chinese market, the economy was growing rapidly and per capita income was growing with a percentage of around 280%. So, the company had to come up with a more viable business plan which results in the profitability of the company along with capturing more and more customers.
However, the approach used by Mr. Chen was not in accordance with US policies and regulations and there was no any control from there. This leads to changing the company’s culture according to the different needs of the customers which resulted in the loss of brand recognition and identification rather it turned out to be a completely different restaurant by focusing too much on flexibility and adaptability in its menu items.
The answer to Q2:
The approach used at the headquarters by Mr. Chen was creating a better brand positioning in the mind of its customers as a high-quality product which needs to be encouraged further by Ms. Mia Foster to capture more market share through the utilization of its effective promotion of the product.
Mia Foster can create more brand awareness and rely on improving the interior design of the product in such a way that it provides a sense of prestige for the customer while using the product and he becomes ready for paying a premium price for the product.
The company has an opportunity to promote its product more on the grounds like providing organic food without using any harmonic meat in the sandwiches. This will lead to the healthy and tastier food for its customers. Ms. Foster can create the demand for its product in such a way that it targets the market consisting of high-end customers and charge mid to high price from them.The company was placing its product through Chen which can be distributed by delivering the product through other distributors for reaching more customers quickly through its effective distribution network.
Foster can change the methods used for targeting the customers without any strategic planning which will be changed by developing proper marketing mix strategies by making the combinations of the appropriate price at which profits are maximized without losing its market share.The company is mainly focusing on the standardized products on the basis of the taste of European customers which faces a very less competition by charging higher prices known as premium pricing for its product for maximizing its profits.
Q3: Action Program for Chinese Market:
Foster can prepare an action plan to capture the growing trend of the Chinese market by targeting differently from competitors by setting objectives and sales targets to be achieved and action plans to achieve that objective by preparing proper segmentation on the basis of low-income people who will be ready to pay lower prices for the Levendary products.
The action plan can mainly focus on developing the strategy in such a way that it looks different and unique from its competitive products in the market such as it may focus on the quick and cheap products which will be providing high quality at relatively reasonable prices. Action place will be following the growth trend by charging lower prices in the beginning by charging penetration based pricing which will capture more and more customers in the beginning which will result in creating high demand for its product in the Chinese market..................
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