Levendary café memorandum

MEMORANDUM
TO: Mrs. Mia Foster, CEO Levendary Café

FROM: Consultant (your name)

DATE: 6th April, 2015

RE: Advice on your meetings regarding future of Levendary Café China

WORDS: 806 words

Statement of the problem: The major problems that the company is facing are the response and performance of the China market. The management of the Levendary Café has many issues, and skepticism on the ground of the issue generated out of the new CEO, new strategies, new market, and new reporting procedures. Another issue with the company was that there was poor understanding of the Chinese procedures and policies when planning the penetration strategy. The Levendary Café failed to adopt the GAAPs for accounting revenues collected and, as a result, the company did concur in higher expenses. Levendary Café failed to consider the organizational culture of Chinese businesses where the hierarchical structure is bottom-up rather than the top-down structure of American companies. The error is an indication of lack of communication between Chen and the CEO and also the refusal attitude of implementing any change. As a result of issues facing the company, Levendary Café should make the following decisions

Adopt policies that reinforce transparency
Communication plan
Marketing strategy development
Alternatives: some of the alternatives that can help to solve the problem include

Dismiss the company’s operations in China. It tends to be an appropriate option to consider because the financial statements indicate that the Levendary café is not performing better since it is not making any profits. It is a situation that is not likely to turn around any time soon. The poor management style by Chen as the Chinese operations CEO is not proving to be as profitable as expected. Thus, the organization must reconsider the option of dismissing its operation or make a joint venture so as to enter the Chinese market.
Consider the standardization strategy. Levendary Café should consider replacing the stores that fail to follow their standardization strategy and to make enough changes so as to attract the targeted customers by the American company since the start. The standardization strategy will provide consistency to the company’s brand and will focus on quality features instead of quantity. Additionally, the adoption of the standardization strategy will attract demand and may force the Chinese operations to incur lower net profits since they will be ignoring the advantage of alternative adaptation strategies.
Consider the mixed strategy alternative. Levendary Café can consider using the standardization strategy and also include some local dishes in their menus. They may also consider including different kinds of the menu as it will satisfy the different kinds of demands. Establishing a café that appeals to different tastes is important as it will help Levendary Café to start making profits rather than loss.
Decision: It is the highest time that Levendary Café should consider strategies that will help it make profits. The main costs that require controlling are marketing, labor, and maintenance; thus, there is a need for the American CEO and Chen to define and coordinate marketing strategies and also risk analysis. It will help in identifying the cost drivers. It is also necessary for the CEOs to redefine objectives, expectations, and responsibilities in a formal written agreement that will, include the features essentials to Levendary Café when they are expanding to other locations.

The appropriate action to take is adopting the mixed strategy that will keep standardized strategy to provide consistent brand image and also appeal to the local tastes through the modification of the menu. A standardized strategy such as the GAAPs will reconcile the accounting differences and also enforce transparency through the cafes practices. The criticism for adopting the missed strategy will be that the option will increase the operating and marketing expenses. However, it is necessary to know that, Chen will be able to establish his Chinese operation team that will include Chinese and American employees so as to make it easy to transfer knowledge.

Action: some of the action steps that Mia must take so as to turn the plan into a reality is through

Hiring an international financial analyst who will standardize the accounting procedures.
It is important to retain Chen rather than replacing him; thus, Mia should value his social connection and also his efforts and experience. Thus, Mia should consider training Chen in restaurant functionality so as to help improve his performance.
Mia should also develop long-term goals and strategies aimed at reviving the company in the Chinese market through making sure that Chen understands the importance of brand culture to the company. Foster should perform frequent observations and evaluations.
Mia and her team should take courses from the Chinese instructors so as to learn what drives the Chinese consumer. They should learn about the Chinese consumer preferences and behavior.
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