Levendary Café: The China Challenge Case Study Analysis

Levendary Café: The China challenge case study analysis
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Question 1-a: The advantages and disadvantages of standardization of operations of
multinational enterprises offering a brand in multiple international locations
Globalization has impacted the international business widely, as the business activities have
witnessed an acceleration across the national boundaries. As a result of globalization, the
development on a side of the globe affects another side at the same time (Shenkar, Luo & Chi
2015). The multinational organizations (MNEs) start their global business with the knowledge
advantage of the home country. Although, the knowledge of the home country provides different
advantages. The standardized components are usually associated with the home knowledge
activities. The subsidiaries might be operating in emerging markets with lower cost resources
and at the same time, they cooperate with subsidiaries located in knowledge-intensive markets
through standardization (Meyer, Mudambi & Narula 2011).
A Significant imbalance exists between the global and local literature of international business
(Cheng 2007). The homogeneity of the markets allows for standardized strategies.
Standardization is the process of applying the standards of the domestic market, including the
tangible and intangible attributes in the foreign markets. The standardization supporters assume
that the greater marketing incentives, communication technology and the increasing global
rivalry have resulted in standardization. They also assume that standardization has advantages
represented in the attractiveness of it as a global marketing strategy for many global companies.
According to Haron (2016), it results in economies of scale, uniform global image, knowledge
transfer and easier control, as follows:
 Economies of scale: Companies are allowed to obtain a competitive edge, business
significance over the nationally oriented competitors. The mass production of the
standardized product results in cost reduction and higher profits.
 Uniform global image: As product dynamics are constant, advertising and services are
introduced in the same way regardless of the market of destination, a uniform global
image is represented.
 Knowledge transfer: experience is likely to transfer from one international market to
another as a result of cooperation and integration of the marketing activities.
 Easier control: As the same product and marketing strategies are used across
international markets, standardization facilitates monitoring, coordination and control.
Quality standards are easier to be implemented, production methods and brand
awareness.
On the other side, the opponents of standardization argue that it leads to lower sales and
revenues when the product and its marketing strategy are inconsistent with the environment
of the foreign country. The disadvantages could be discussed according to Haron (2016), as
follows:
 Governmental and trade restrictions: the legal framework in the host country might
limit the product standardization through imposing a local tariff, promotional rules and
pricing.
 The marketing infrastructure: The nature of the marketing infrastructure differs
according to the level of economic development. This is likely to work against the
standardized strategy.
 The differences between the customers' interests, preferences and needs.
 The variations in the competitive conditions between the world countries.

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Question 2-a: The qualities of Louis Chen that led to success in the Chinese market
Louis Chen has the management qualifications that enabled him to earn the confidence of the
CEO Leventhal and the key stakeholders of Levendary Café. He is energetic and have an
entrepreneurial spirit that enabled him to establish a strong position in the market to franchise
outlets throughout the Chinese market. Chen has adopted the localization strategy to be able to
connect with the younger generation in China that represent the future. Also, he made many
changes in the menu in general and it was also differentiated among the several locations within
the Chinese market (Bartlett & Han 2013).
The national diversity is very important as it is related to the variation of skills due to different
nationalities. According to Watson et al. (1993), as cited in Haas & Nuesch (2012), the project
team with national diversity are likely to outperform the homogenous teams in the long run.
Chen could expand in 23 locations in Beijing and Shanghai. The first location in Pudong was
established according to Levendary's design standards and the menu as well, but the other
locations witnessed wide changes (Bartlett & Han 2013).
The multinational business requires a manager who can be the main responsible for setting the
goals of the team, directions, teamwork organization and support to fulfill the business goals
(Hajro 2010). Chen as an experienced manager could manage the team in China, he could
manage the business with full freedom before the Foster time as CEO.
Question 2- b: CEO Mia Foster’s ability to effectively train an international manager
The multinational teams could be evaluated in a negative way according to their nationality.
They might be considered as less job-related based on the social identity theory. The
development of the skills of the international manager determines the team performance.
Conflicts occur between the members of different subgroups that affect the decision-making
process in the main group and negatively affect the team outputs (Haas & Nuesch 2012; Kraus et
al. 2017). This is the case between Foster the CEO and Chen the manager of the Chinese
operations. As she has faced many difficulties in running the business in China due to Chen
resistance to change. They had completely difference views of the best way to run the business
(Bartlett & Han 2013).
In order to effectively train an international manager, Foster could act according to McDonnell et
al. (2010) and Cerimagic & Smith (2011), as follows:
 Continuously identify the main positions that contribute significantly in the business and
the areas of development.
 Training and development of a talent pool of the high-performing leaders to fill these
positions.
 Development of a differentiated human resource management to facilitate the learning
process and enhance the skills of the managers to be able to lead these positions.
 A preparation training including induction programs relevant to the foreign country
should be provided to the international manager. Mangers should consider the importance
of such training programs that should be dynamic and up to date.
 The quality of the provided training should be revised regularly and matched to the skills
required to fill the position of international managers.