Levendary Café : the China Challenge
Mahra Al-Qahtani 2013
Question 1:
What is your evaluation of the way Levendary Cafe has entered the China market?
The entrance of china was more opportunistic expansion rather than strategic. The huge population of 1.4 billion people and annual GDP growth of 14.5% over the past decade, China’s urban population rise from 36.2% of the total in 2000 to 46.6% in 2009, and the strong middle class whose per capital income surged from RMB 6,282 to RMB 17,175 (In 2010, RMB 1 = USD 0.15.) all made china as great opportunity for the restaurant that was facing a mature market that had a growth of merely 1%. Another attractive factor of china market was the success of many American restaurants such as KFC, McDonald’s and Pizza Hut’s. However China has proven a difficult market for US restaurant chains such as California Pizza Kitchen and Applebee’s because such extremely different culture needs new commerce to strongly adapt to their culture. Levendary main issue is not entering Chain's market but whether such decision is a right decision and if do so how to survive in such aggressively competitive market, to which extent the management have a detailed plan about and control over the penetration in the new market, adequate information about the culture and a proper communication with the management in china. When Levendary entered China they gave Chen the full control over the operations there, although a well-developed detailed plan and a clear tactic of how to implement this plan is a must. However it is clearly this is not the case whereas everything had been handed to Chen from A to Z. The chain of Levendary Café in USA are run by a strict set of rules and allowing modifications only after approval from the concept group regarding the “look and feel” of the firm. The Levendary Café in China is following a business model which is completely different from that of the US operation model. Chen wanted this café to adapt to the changing tastes of people from place to
Question 1:
What is your evaluation of the way Levendary Cafe has entered the China market?
The entrance of china was more opportunistic expansion rather than strategic. The huge population of 1.4 billion people and annual GDP growth of 14.5% over the past decade, China’s urban population rise from 36.2% of the total in 2000 to 46.6% in 2009, and the strong middle class whose per capital income surged from RMB 6,282 to RMB 17,175 (In 2010, RMB 1 = USD 0.15.) all made china as great opportunity for the restaurant that was facing a mature market that had a growth of merely 1%. Another attractive factor of china market was the success of many American restaurants such as KFC, McDonald’s and Pizza Hut’s. However China has proven a difficult market for US restaurant chains such as California Pizza Kitchen and Applebee’s because such extremely different culture needs new commerce to strongly adapt to their culture. Levendary main issue is not entering Chain's market but whether such decision is a right decision and if do so how to survive in such aggressively competitive market, to which extent the management have a detailed plan about and control over the penetration in the new market, adequate information about the culture and a proper communication with the management in china. When Levendary entered China they gave Chen the full control over the operations there, although a well-developed detailed plan and a clear tactic of how to implement this plan is a must. However it is clearly this is not the case whereas everything had been handed to Chen from A to Z. The chain of Levendary Café in USA are run by a strict set of rules and allowing modifications only after approval from the concept group regarding the “look and feel” of the firm. The Levendary Café in China is following a business model which is completely different from that of the US operation model. Chen wanted this café to adapt to the changing tastes of people from place to