Managing in a Global Economy Levendary Café- The China Challenge

Managing in a Global Economy Levendary Café- The China Challenge
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Question 1
Strengths
Levendary was in a strong financial position with a net worth of $10 billion, thus providing the firm with opportunities for further investments. The firm had grown to 3500 cafes after 32 years of experience hence gave it a strong competitive edge.
Weaknesses
Levendary’s store designs and its menu selection does not appeal to the Chinese people. The firm is also challenged by slow decision-making processes in addressing various concerns.
Opportunities
China has a population of 1.4 billion that provides a huge potential customer base. There was also an increase in the number of women in the workforce which provides cheap and readily available labor.
Threats
The firm is threatened with competition from KFC and McDonald’s, which are established in the Chinese market. There is also a threat to cultural diversity, that means changing the menu to fit people's demands.
Question 2
There are ways in which a firm can enter foreign, which includes licensing, franchising, and wholly-owned subsidiaries. The decision of Levendary cafe to enter the Chinese is viewed more as opportunistic rather than strategic due to the following reasons. First, the firm feels they have overgrown the US market, hence the urge to exploit overseas markets following the lead of other franchises like KFC and McDonalds. Secondly, the firm wants to exploit the huge number of Chinese people, with a population of 1.4 billion, the urban population rising to 46.6 percent in 2009 from 36.2 percent in 2000. Finally, China has good infrastructural and technological developments, that make it easy to connect with customers.
Question 3
China is the most populated nation in the world, thus offers a perfect opportunity for Levendary. The country has since changed its economic policies, making it lean towards a free-market hence offering great potential to investors. The Chinese market is termed as a virgin, which gives Levendary a good opportunity for tapping into. However, the firm is faced with several challenges. Mia has a big job of convincing investors that she has the necessary expertise to run the firm. Mia also has limited knowledge of the Chinese market; therefore, she needs to work hand in hand with Chen, who is on the ground.
Question 4
Mia’s meeting in china will automatically yield fruits. She will be able to visit some of the Levendary restaurants in the country and compare them with those of their direct competitors. After careful assessment and analysis, a decision will be made on either to replicate the American outlook of the cafes or adopt designs that appeal to the natives. Understanding the dynamism of the Chinese market will help her appreciate the hard work Chen has accomplished in 18 months. Thus, th...