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Table of Contents

CHAPTER 1: INTRODUCTION.. 4

1.1.     Background of the Chinese fast-food Development 5

1.2.     Rationale. 7

1.3.     Research questions. 8

1.4. Research Objectives. 8

1.4.     Scope. 8

CHAPTER 2: CASE BRIEF. 9

CHAPTER THREE: PLAN OF ANALYSIS. 11

3.1. Problem statement 11

3.2. Research methodology. 12

CHAPTER 3: PROPOSED PLAN OF ANALYSIS. 14

3.2. Literature review.. 14

3.2.1. Marketing Management 14

3.2.2. Marketing Mix 4ps. 16

3.2. 3. Globalisation. 16

3.2.4. The I/R Context 17

3.2.5. Strategic management 18

3.2.6. Sources of data. 19

3.2.7. Ethical Issues. 20

CHAPTER 4: ANALYSIS DEVELOPMENT. 21

4.1. GLOBALISATION.. 21

4.2. MARKETING MANAGEMENT. 25

4.2.1. MARKETING MIX.. 25

4.3. STRATEGIC MANAGEMENT. 28

4.3.1. 29

4.3.2. Generic Strategies. 32

CHAPTER 5: RECOMMENDATIONS. 33

5.1. OVERVIEW OF THE ANALYSIS. 33

5.2. RECOMMENDATION PLAN.. 34

5.3. EVALUATION OF THE PROPOSAL. 39

CHAPTER 6: APPLICATION CASE-KFC.. 41

6.2. RELEVANT CONNECTIONS WITH LEVENDARY CHINA.. 45

6.3. PROPOSED SOLUTIONS FOR KFC.. 46

6.4. CONCLUSION.. 47

References. 48

Abstract

This project will evaluate the business structure of Levendary and the future implications of its present strategies. By evaluating the strategic imperatives like how to increase growth abroad and comprehending the global context, this paper will establish robust and weak business plans of the firm. This paper will then offer an approach and execution suggestions on how Levendary Café can expand as a global business.

CHAPTER 1: INTRODUCTION

To benefit from revenues obtained from owning a robust brand image, superior consumer service, and persistent firm practices throughout its international activities, Levendary Café should enter China as a completely owned business, concentrate previously on accretion-arbitrage plan, and shift its Levendary Cafe activities to a new arm of its leadership pyramid.  Up until now, Levendary Café has encountered a dispersed brand image (Bartlett & Han, 2011). In an attempt to set up as many subsidiaries as imaginable, the company has depended on a wholesome variation plan, which has disjointed its judiciously curated company reputation. If Levendary Cafe wants to have a complete control over its branding, it must only take into account setting up completely-owned operations to circumvent mislaying further control. Through using an accretion-arbitrary plan, the company can as well accomplish its viability by building economies of scales amid its stores and taking advantage of Chinese consumers’ ability to pay extras for foreign food. An accretion-arbitrary plan will change Chinese store activities to turn into a homogenised company that will have an easier time reporting GAAP-adherence financial performance procedures, teaching its personnel using an overall system, and promoting its primary line of menu items instead of disbursing its finances.

This project will be analysing a comprehensive synopsis of the specialty food industry and the function Levendary Cafe plays in it. Levendary Café is in a growth market, and it occupies an ideal comparative position. This project will evaluate the business structure of Levendary and the future implications of its present strategies. By evaluating the strategic imperatives like how to increase growth abroad and comprehending the global context, this paper will establish robust and weak business plans of the firm. This paper will then offer an approach and execution suggestions on how Levendary Café can expand as a global business.

1.1.Background of the Chinese fast-food Development

According to Kotler (2012) in this era of globalisation, individuals have the potential to share any types of food from distinct regions of the world, thanks to internationalised enterprise of food and beverage firms. As the foremost catalyst of global development in consumer food service, the fast food market is getting fresh consumers persistently via enhanced menus, dining experience improvements and fast global growth. As a characteristic of this market and expert multinationals, the American food restaurant groups of Levendary Café and other companies such as McDonald’s and KFC are leading fast food chains both in China and other regions of the globe.  Nevertheless, in spite of the leading status of McDonald’s in the global fast food industry, it experienced severe competition from Levendary China and KFC in the Chinese food industry and increasingly misplacing its market portion. This has taken place in the stage of China, an ancient nations with a well-known history and distinctive oriental culture. One of the likely explanations for this variation between the performances of McDonald’s, Levendary China, KFC and other global restaurants , the gradation and means of their cultural adaptation to the Chinese market was of great interest to this author. In essence, to adjust to a distinct culture is to encounter a huge setback and adhere to a foreign system of regulations in the particular group that needs a clear mind. Therefore, since Levendary China began its business operations in China, has it adapted itself to Chinese culture to a particular degree? These days, China has the biggest population in the globe and is recognised as a speedy growing nation with various increasing GDP. Taking into account the amount of fast food consumption, in 2010, China is ranked the second biggest industry across the globe, with the U.S. taking the first place (Lu, 2010).

Even if the Western outlets, such as Levendary China, have had specific advantages (like quick service, modern technology and rationalised organisation) by taking on some of the benefits and integrating them with domestic food tastes, native fast food outlets have encountered growing success in the domestic market. On the other hand, the 90s witnessed globalisation become a central process of transformation for the urban regions of countries that are encountering fast economic development. Standardisation of food kinds and style throughout the globe fast food revolutions is not a generalizable model. Current Chinese-style fast food outlets only appeared after Western fast food like KFC and McDonald’s were introduced in the Chinese market in 1987 (Li, 2010).

SOURCE: Bloomberg Business, 2013: http://www.bloomberg.com/bw/articles/2013-10-09/kfcs-big-bucket-of-problems-in-china

1.2.Rationale

The aim of this paper is to complete a hypothetical and analytical dissertation which indicates how a company can become successful by utilising the same strategy with regard to local setting. On the other hand, the chief objective is to examine the impact of globalisation strategy on Levendary Cafe and the strategy aspects of the company in China. Thus, in this case, Levendary Café has been used as a case to investigate the aspects that impact the choice of moving figurative connotations via store atmospherics in different regions.

The analysis will be centred on the three areas: Strategic Management, Marketing Management and Globalisation Business Models, because as it will be explicated in chapter three, each of these has crucial influence in fuelling a competitive strategy.

1.3.Research questions

This study will strive to find solutions to the following questions?

1. What are the political, environmental, social and technological factors in the Levendary Café present time?
2. What are the strategies managed by Levendary Café at Global level, as well as from Human Resources and Marketing viewpoint?
3. What are the conclusions and outcomes after using those theoretical models?
4. 1.4. Research Objectives

 

1. To analyse the current situation of Levendary China external and internal environment of the conglomerate.
2. To examine the present strategies of the company from the standpoint of Globalisation, Marketing Management and Strategic Management.
3. To find the germane models of business theories that could address those issues offering strategic goals to sustain a competitive niche.
4. To carry out the hypothetical methods selected and formulate definite, achievable and realistic proposal for the firm.
5. 1.4.Scope

This project will be analysing a comprehensive synopsis of the multi-unit restaurant industry and the function Levendary Cafe plays in it. Levendary Café is in a growth market, and it occupies an ideal comparative position. This project will evaluate the business structure of Levendary and the future implications of its present strategies.

CHAPTER 2: CASE BRIEF

Levendary Café is a popular, publicly traded trademark in the United States and presently entering the Chinese market. According to Bartlett and Han (2011) the company started a miniature salad, soup and sandwich eatery that developed into a billion dollar business.  Levendary Café basics are robust and operation is in line with administration projections yet their stock is trading at rebate. This is a result of the company’s growth slump and the new COO’s lack of initial global management skills makes Wall Street cynical that she simply cannot make Levendary Café a global product. The multi-unit café denotes 30 percent of the food service market that is a 600 billion dollars market with 960,000 positions. Levendary Café is classified into three market sectors: speciality establishments, quick service diners and casual dining. The company is a hybrid of the last two known as quick casual that includes in its line of menu a standard price in the $8-$12 variety. Levendary Café is set apart by two aspects: nutritious diets utilising high quality ingredients and a devotion to service in a relaxed, pleasant setting. The company is as well renowned for its readiness to take risks which was a characteristic of its original founder.  The same characteristic the President of the company has. Levendary Café currently ventured into the fast expanding Chinese market and rather that maintaining the U.S. ideas intact the company altered the store design and menu selections in 23 new stores situated in various Chinese towns. The moment the new COO was unveiled in the company she began to analyse the Chinese operations. At this juncture the Chinese activities had already been established and have been operating successfully for 18 years now.  The new COO recounted her outcomes to the U.S. team and currently they are all infuriated by these adjustments and are insisting things must stay as in the United States. The CEO has attempted to explain that if the company fails to adjust to the environment in a region in the company is attempting to carry out business it will be less successful. Leventhal had spent one and half years opening these 23 settings in China (Bartlett & Han, 2011). However the U.S. based team were worried that if any of the United States consumers travelled to China and became aware of the transformations it would devastate everything the company had accomplished over time. On the contrary, the new chief executive officer compared firms that as well expanded in other nation taking this strategy by radically transforming the whole menu while maintain their rations look and feel. The new CEO also likened what McDonald’s has accomplished globally, maintaining their stores homogenised for the most part and only changing the menu marginally. She also felt neither of these strategies was suitable for the company and that Levendary Café must keep things persistent across borders.

CHAPTER THREE: PLAN OF ANALYSIS

3.1. Problem statement

 

This case will be focusing on three main problems, which are based on Levendary Café case study.

Firstly, this research will be focusing on Levendary Café’s Globalisation issues since its involves creating marketing strategies, and marketing standardised brands in the similar manner everywhere.  It is only global companies that will accomplish long-run success by focusing on what everybody desires as opposed to been distressed about the specifics of what everyone imagines they may like. Which strategy will work is not a matter of belief but necessity.

Secondly, another problem is Marketing management, and it will be critical to examine the position strategy of Levendary Café to gain a competitive edge. Analysing the position and trend of Levendary Café leaves one with a hint of a totally prosperous company. Levendary Café is growing at a fast rate which is mirrored in the fact that the chain has recently opened about 23 subsidiaries in China. According Bartlett and Han (2011), the idea behind this let this growth to continue and the plan is to venture into more markets across the globe.  Levendary Café holds the view that increasing competition from quick services restaurants that have began to offer wholesome foods utilising high quality ingredients in a foreign market, are the key explanations for the company’s superior outcomes.

Thirdly, this paper will be looking at Levendary’s Strategic management as the multi-unit restaurant strategies of differentiation and brand innovation define the firm’s success. With respect to theoretical techniques in this subject, it will be considerable to revise appropriate strategic approach for Levendary Café in order to sustain their competitive advantage in the multi-unit restaurant industry.

3.2. Research methodology

 

This paper will use mixed method strategy (qualitative and quantitative) analyses.  Qualitative archival data is used to inductively expose the aspects and mechanism salient to the field of research and will help in the understanding of research from varied points of views and also different strategies to carry out the research.

Quantitative analysis of archival data illustrates the transformations in the industry and company behaviours between temporal periods. Together, these outcomes serve as evidence to demonstrate the phenomenon of the success of Swatch Group in the watchmaking industry.

Finally, this study will rely on archival data to triangulate (Creswell, 2013) and to search for harmonies and variances in my results through sources. Each data source will be used to analyse how Swatch has responded to competition in the industry.

Sources of data

This research will collect data from multiple sources; following what Creswell (2013) termed a synchronised triangulation strategy, whereby various techniques, data sources, and units of scrutinises are utilised to examine a set of hypothesised interactions within a distinct study.

There are two main kinds of data collection techniques that many researchers have been using, namely Primary data and Secondary data collection method.  Since this study will be focusing on Levendary Café, secondary data only will be used. These data is available in the public domain such as journals articles, books etc.

CHAPTER 3: PROPOSED PLAN OF ANALYSIS

 

A comprehensive evaluation of the data offered within the case demonstrated a myriad of challenges faced by firms, region markets and also different environments. With the time restriction, it would not be practical to have a look at all the challenges. The researcher has thereby decided to concentrate on the situations of Levendary Café. On the basis of the dynamics involved, the following topic areas have been chosen and the relevant appraisal tools recognised as drawn below:

3.2. Literature revieW

 

3.2.1. Marketing Management

 

According to Doyle (2004) marketing strategy is preciselyconsiderably essential for the success of any business. Without it, the effort of the business to attract consumers is random and really unproductive. The main focus of a firm’s strategy should ensure that their product fulfils the demands of the clients and also sustains a competitive advantage.

The moment a firm has developed and implemented its strategy, it is supposed to determine the response from its consumers and if any adjustments or enhancement is needed to be applied for the full satisfaction of consumers.

In that sense, one of the core worries in the process of strategy-making is how a company must position itself above its competition, and then protect that position from other competitors. From the above explication, it can thus be argued that Marketing Management is an important when appraising cavities in the markets that symbolise the opportunities for the firms and to identify the most effective manner to compete against industry opponents. There are limited numbers of consumers in the market. To develop long-run business, it is critical to retain individuals once they have become clients.

Utilising this kind of information Levendary Café can tailor communication to the desires of specific people. It is their needs that establish the kind of products and services provided, cost charged, promotions developed and where outlets are situated.So as to develop a marketing strategy that will make it possible to accomplish the needs of the market, strengths and weakness of the firm should first be identified and appraised.

Objectives communicate what marketers want to accomplish, guide marketing actions and are utilised to gauge how appropriately a strategy is working. They can be linked to market share, sales, getting to the target audience and developing cognizance in the market.

Outcomes can be appraised frequently to determine whether objectives are being fulfilled. This kind of response makes it possible for the company to adjust strategies and allows flexibility. The moment marketing goals have been identified; the next step is to explain how they will be accomplished. In that sense, a marketing mix will be put together.

3.2.2. Marketing Mix 4ps

 

McCarthy (1975) formulated the concept of the 4Ps-product, price, promotion, and place marketing mix. Nonetheless, with particular attention being offered to services marketing in recent years, scholars have acknowledged further variables that might be integrated into the 4Ps. Fified and Gillian (1998) acknowledged the following variables as an integral part of the marketing mix-process, physical, and people.  By utilising this apparatus, it results in having value added products with consistent prices, sufficient promotion aspects and sufficient distribution channels.

3.2. 3. Globalisation

 

Globalisation assists firms to have a strategy to a huge potential markets and valuable production aspects like affordable workforce, better sources of raw materials and skilfulexecutives from other regions. Additionally, fast-food firms can make the best use of globalisation to venture into many varied regions across the world. For example, foreign food like Sushi and burrito will have opportunities when introduced into the U.S. local sector and threaten fast-food outlets.

Globalisation involves creating marketing strategies as if the world is a singular entity, marketing homogeneous brands in the equivalent manner universally. Globalised firms use homogeneous products, promotional campaign, prices and supply networks for all markets. Additionally, globalisation includes adapting marketing strategies for distinct countries with respect to cultural, regional and nationwide differences to serve particular target audience.

Since Levendary Café is a global food outlet it needs to appraise strengths, weaknesses, opportunities and threats through SWOT analysis. In that sense, situation analysis is the method for harmonising organisational strengths and weaknesses with environmental opportunities and threats in order to identify the rich position for the company.

3.2.4. The I/R Context

 

The IR context has various suggestions, but the core variables are witnessed in the strategy of the domestic reaction and the strategy of global incorporation. Multinationals can take on global integration by having homogenised brands anywhere in the world and centralise the regulation of the operations. Global incorporation is evaluated by Yip (2012) who states that integration is espousing a global strategy. The global strategy provides a lot of advantages to the multinationals and Yip argues in favour of this strategy. The first advantage is viewed as the reduction of prices via having homogeneous products, which means that organisations can benefits from the economies of scale by integrating production and R&D performance. Second, the brand mixture, and design inside of the global plan, is more restricted and offers high quality related to the strategy of domestic reaction. The last advantage is viewed in the transnational acknowledgment: consumers globally will experience no difficulty when recognising the product and brand offering, hence product loyalty can expand. The policy of domestic response is varied from the transnational strategy. It defines how an organisation benefits from adapting its products that suit the local location and tastes. The framework is somehow varied from the superlative multi-domestic strategy by Yip (2012) since its still takes on particular aspects from the primary idea of the multinational and does not completely modify in every region. The regulation and the operations are regionalised and regularly autonomously managed by domestic executives. The creativeness of the domestic executives is improved by allowing them to be part of creating new products, so product design may be underpinned by having many sources dispensing new responses. The restriction of domestic reaction strategy is a result of the absence of knowledge sharing since every agency inside the multinational operates relatively autonomously from others. Yip (2012) argues for the global strategy, although he still recognises the liabilities of the framework.  The restraint of the strategy is viewed in the manner it can overlook domestic demand. Standardised products may not be suitable for every nation. In this instance Yip is supportive of the manner in which to balance the global strategy. Transnational companies must therefore not over-globalise and in the same degree must not under-globalise.

3.2.5. Strategic management

 

The appraisal of this segment will focus on the suitable strategic approaches for Levendary Café so as to develop and sustain their rich competitive niche in the market. Having a sustained niche and valuable growth is problematic if there a clear lack of robust and differentiate principal business. Furthermore, ensuring this sustainability asks for great investment in the core competencies of the enterprise so as to prevent imitation. Porter (1998) suggests that the competitive strategy aspires to locate a positive, lucrative and sustainable niche in the market. The choice of this plan is founded on the productivity and desirability of the business and the virtual competitive position. In that sense, this author shall use the Five Competitive Forces.

Since the rationale of strategy formulation is to deal with competitors, this framework will help us to better understand how the market dynamics impact the firm environments, and thereby set the action to be implemented in order to adjust to those forces and to utilise them.

3.2.6. Sources of data

As a result of the nature of this study, case study research strategy was utilised as the most suitable apparatus. At the time of carrying out this case study, this author tried to evaluate the variables germane to the topic under investigation. Levendary Café was chosen as the case company. This author aims to produce a rigorous evaluation of a single case-Levendary Café, in regard to which this writer engages in hypothetical examination. Also, this writer has decided that he will use secondary data to analysis Levendary Café. However, there a numerous risk associated with utilising secondary data, for instance, they might not be completely correct, and bias could be produced by the limitations of the initial research. The secondary information utilised is chiefly from academic journals and books.  This writer has also utilised other academic literature which is germane to the study.  The website of Levendary Café has as well been used to collect data about the firm, and their worldwide strategy. Since it has varied platforms, it is possible to find data about Levendary China. In this investigation, important part of empirical information was gathered. Hence the sources of data utilised in this research are reliable. Usually, for the case study research method, the results of a single case cannot be applied more universally to other cases.

3.2.7. Ethical Issues

With respect to the utilisation of secondary data, there are several factors that need to be considered to gather the right information. What is more, secondary data must be reliable, appropriate and accurate (Yin, 2004).

Furthermore, this research will be deferential about the ethical concerns that are presented in business research: objectivity (the research must be objective and founded upon facts, misrepresentation of the findings (the outcomes must not be exaggerated), discretion and plagiarism.

CHAPTER 4: ANALYSIS DEVELOPMENT

In carrying out this evaluation research it is critical to take into account that all the models are associated with the goal of accomplishing and having a strong competitive niche in the market, through brand innovation. With respect to what has been analysed in Chapter 3, applying the tools recommended will strive to review systematically the position of Levendary Café, and to determine the suitable steps that the company must address, with the drive of sustaining an outperformance in the food industry.

4.1. GLOBALISATION

In this area, the author will concentrate in the SWOT analysis concepts and I/R context that were developed through the following methods.

SWOT Analysis

Levendary Café has many strengths when looking at the company; it has a brand recognitions valued at around ten (10) billion dollars. This firm specialty rests on the reputation of its classic, core menu items: the Turkey and Avocado Sandwich, high-quality cheese soup and chicken Ceaser salad.  Many restaurants provide insignificant, local menu versions.  To make a corporation successful there is the need to evaluate the company’s.  In spite of Levendary Café’sattempt at offering nutritious food, their line of menu has not completely been adapted to meet the demands of the Chinese culture.  The other weakness is Levendary’s high employee turnover.  The workers are paid minimum stipend and have a low skilled job, which is often viewed negatively by its personnel. After the firm has reviewed its strengths and weakness, it needs to concentrate on new opportunities and threats. Levendary Café is a growing business and has a lot of new opportunities ahead of them, for instance, there is a swelling demand for healthier nutritious fare. Therefore while the demand for healthier food grows, Levendary Café must usher in food choices in their line of menu and transform its weaknesses into strength. One way the company is trying to expand and make the best use of these opportunities is by opening up more food outlets in China.  Levendary can take advantage of full adaptation of their new operations.

The food industry has gained so much popularity over time, and with their being many varied food outlets Levendary Café should take into account is the issue of competition.

Findings:  Levendary Café U.S. rivals in the quick service industry have each approached China with massively varied strategies, thus all of these competitor have integrated in any case some mark of domestic adaptation to their line of menu.

I/R Context

According to Bartlett and Han (2013) Levendary Café entered the Chinese market in 2009. The company desired to carry out its theory of “delighting the customer” with exclusive based contributions to the Chinese market.  As a result of insufficient insight about China, the head-quarter (HQ) saw it fit to allow the Chinese market pundit Louis Chen implement the tasks independently. Within a span of one year, the Chinese operations and managements failed to achieve what was projected by the HQ. This chapter will evaluate this matter concerning a fragmented strategy between the U.S. based HQ and its Chinese stores. The IR framework centres upon the strategies of global incorporation and local reaction will be analysed so that it would be possible to evaluate how Levendary’s approach lacked in its incorporation within the Chinese chains.

Findings (1): The firm holds firmly the thought of quality and relishes its longstanding demand i.e. increase the culture and everyday activities. For quite some time, Levendary Café and its former president invested in fostering the company’s theory, marketing, brand variety and performance under a classified organisation to ensure that all its chains are affiliated with the strategy. This focused on superior quality commodities; the company supports the relaxed/pleasant environment kind of restaurants that achieve the needs of those individuals who are ready to pay the superior price. In all respects, as result of the Levendary’s detailed understanding and existing institution in the local Chinese-restaurant supply and demand, the company understands that it will be greatly advantageous to imitate its operations by taking full advantage of the economies of scale with marginal modifications. Through instituting the concept, Levendary Café earned the right to reduce costs and obtained high rate of product appreciation and fidelities in the Chinese industry.

McCracken (2005) posits that with restricted understanding and expertise in globalisation, Levendary Café held the notion that it was fundamental to apply a parallel conception in China after seeing the significance of supporting the original company’s concepts together with its local achievements and other rivals response.  It is assumed that integrating the global strategy may be greatly important for the firm when entering a new market accompanied with standardised commodities, streamlined processes and consolidated organisation and regulation with marginal adaptation of the framework and culture. In 2009, Luis Chen was appointed the acting president and was expected to uphold the concept and set up a robust market locus as the foundation for franchising the company’s restaurant stores across China. Levendary Café believed that venturing into China would benefit the firm in the long-run via the focus on economies of scale analogous to the local marketplace.

Findings (2):The 2 year agreement permitted Chen to carry out managerial and regulate decisions in all Levendary’s stores in China. With detailed understanding of the Chinese market and domestic affiliations, he was capable of comprehending the demand and the necessity to adapt the concept and become “domestic reaction” (Bartlett and Han, 2011). This initial concept was applied into particular settings of multi-storey structures, targeting high earning personnel and entrepreneurs. In other settings with frequent visits and middle-class populations, the concept was adapted to cater for the domestic taste; quick and recognisable. Menus and decorations were altered. Various dining structures were removed, and left just the take-away counter. The new CEO then noticed what the demand needs were in the U.S. product with Chinese noticeable food offerings. Within the span of a year, Chen was capable of setting up 23 Levendary China stores. The performances conducted by Chen obviously indicate a missing connection between the incorporation by the Levendary’s previous and the Chinese chains plans. The new CEO was anxious that imitating the transnational approach would not completely achieve the targeted consumers and the approach might result in the loss of competitive advantage, hence making a robust market position difficult. Chen regarded fast profit-making as greatly fundamental elements of business to carry out and independently created varied concepts to cater to domestic tastes. This finally contradicts with the agreed conception and culture of “Forget today’s profit. Have a positive impact on customers’ lives” (Bartlett and Han 2013: pp.4). Preoccupied with the idea of making profits, he set up most of the Chinese restaurants that lacked a link with the Levendary Café’s original brand. For instance, the line of menus was modified with respect to domestic tastes to a degree that a U.S. based visitor was incapable of recognising it as one of the company’s. The service in this new market was profit-oriented and completely ignored the concept of ‘delighting the customers’. In effect, what the U.S. based restaurant expected was their consumers to acknowledge the product globally and every Levendary store thereby needed marginal adaptations in their concepts. The American restaurant wanted the long-term benefits the transnational plan can provide like economies of scale for advanced growth, lower cost of production by generating a huge supply network and global product acknowledgement and fidelities

4.2. MARKETING MANAGEMENT

 

This part will evaluate the manner in which Levendary Café has positioned itself in the market, and the plans that support that position.

4.2.1. MARKETING MIX

Product

One of the objectives of Levendary Café is to develop a standardised set of products that cater to the Chinese preferences. Levendary China learnt that, even if there are considerable costs of savings via standardisation, and the success of adapting to a foreign environment. Adaptation is important for manifold reasons including consumer preferences/tastes. Levendary has provided local menus to cater to the preferences of Chinese people. For instance, the restaurant offers: Chicken soup, Chicken sand, Roast beef sand, BBQ chicken sand, Thai veggie soup, Chicken dumpling, Pork dumpling, Pu-erh tea amid other food types. These all examples of how Levendary China has adapted its brands offer in the global setting.

Place

Levendary Café has over 3,500 outlets across the U.S. The company continues to concentrate on working investment expenditures more productively via farsighted and strategic expansion. Just recently, Levendary Café added 23 more outlets in China. The company acknowledges the potential for development in global markets and plans to take full advantage of what it has learned over time in the U.S. The company’s venture into the Chinese market was a strategy that created a gap between Levendary Café and competition.

Price

Levendary Café has recognised that, in spite of the cost savings inherent in standardisation, success can often be credited to being capable of adapting to a certain setting. This is certainly the case with its implementation of its pricing strategy that is one of the localisation that internationalisation.  Levendary Café has had to choose the correct price for the Chinese market.

Promotion

Promotion also known as the marketing communication mix was proposed by Kotler (2012) as comprising the five key tools:

1. advertising
2. direct marketing
3. sales promotion
4. public relations
5. personal selling

By utilising these tools, Levendary Café aims to localise its marketing communications strategy as it is expected to take into account the massive variety of cultural and other variations that it encounters in China.

Findings (1): From the above, it can be explained that all of the strategies of the marketing mix have made it possible for Levendary Café to position itself as a strong brand, with reputation based on brand innovation and the ability to adapt to the Chinese market.

Findings (2):Levendary Café has committed itself to working on setting up a Chinese product and change to Chinese life since the company was introduced to this market (Bartlett& Han, 2011). So as to guarantee the implementation of this performance management, just recently, Levendary Café established a taste kitchen and food laboratory to determine Levendary China nutritious food strategy. The purpose of this taste kitchen and food laboratory is to promote its brand innovations and strive to beat the idea of offering unhealthy food.  Essentially, the percentage of localized brands accounts for 30 percent amid the whole Levendary Café brand line. On the contrary, on Levendary Café’s line of menu for China region almost half of the commodities are particularly designed with Chinese feature among 20 brands currently. These brands are enhanced by integrating distinctive Chinese ingredients to cater to Chinese preferences (Anderson and Marja, 2012). Levendary Café targets the “entire family relations” starting with children to elders. The company has made efforts on creating a dining setting of family model in which consumer can experience the cordiality of home. Aspects like the cordiality of family get-together, caring amid various generations, love, among other features can be witnessed in the company ads and external decorations. Both it diversified menu and adapted preferences, these concepts have made Levendary Café prominent to various generations. Rather than utilising celebrity influence like KFC and McDonald’s has done before, Levendary Café inclines to present a narrative or some fascinating act into the infomercials, making it more connected to real time and easier to approach. On the other hand, Levendary Café meal slogan “Tasty Good Freshness” is the company strategy to obtain identification from the consumer group and arouse their eating habits.

Findings (3):In 2008 the American company local growth was slowing, the restaurant’s geographic growth strategy plateaued and they began to notice that their idea did not suit small cities. Understanding that the company’s local market has been exhausted they now looked for benefits to invest overseas (Bartlett& Han, 2011). The other variant is the removal of conflicts in markets abroad. Confronted by this circumstance where the rival firms are attempting to enter the same foreign market an organisation can collude and share the market with competitors or attempt to be somewhat dominant. The latter expands the market dominance for the firm, and raised the imperfections within the whole market. This subsequent variant explicated how Levendary Café ventured into the Chinese marketplace. Bartlett & Han (2013) posit by using horizontal FDI Chen was expected to set up a strong market position as a foundation for franchising stores across China.

4.3. STRATEGIC MANAGEMENT

This area will focus on the concepts of brand management that have been developed through the following methods:

4.3.1. FIVE FORCES ANALYSIS

The intensity of competition amid competitors(High)

1. The intensity of competition amid rivals in the quick service food industry is the most powerful aspect amid those five forces. The rivalry in this sector is very robust as a result of oversaturation of products competition in cost and quality services like McDonald’s, Taco Bell and Wendy’s. Thereby Levendary Café must offer an affordable price, enhance quality of customer and delivery services, as well as develop a robust brand awareness to succeed in this competitive market.
2. Bargaining power of supplier (Low)

In the multi-unit restaurant industry, firms are expected to have a steady and persistent raw materials supply to operate the trade to meet the high demand of the massive consumer base. Hence, developing robust relations with suppliers is essential to sustain a perfect quality of raw materials  Regarding Levendary Café, the company can consider growing its own suppliers of raw maters to ensure a continuous supply.

• Bargaining power of buyers(High)

Since there many substitute brands in this industry, Levendary Café will have to put more attention on consumer demands to gain new clients while sustaining a base of loyal consumers. Clients put special attention to their health and the growth rate of obesity in China, the company will have to provide healthier food in their servings, such like fruits and salads and use oils that are free-off fatty acids.

Threats of new entrants (medium)

The infant businesses that first venture into the food market might have to experience some difficulties in terms of the economies of scale, product fidelity, capital needed and government control. However, this challenges lack the potential of being a threat to the existing firms. The economies of scale might be achieved by standardised products and consolidated R&D in brand and marketing from the United States.

1. Threats of substitutes (medium)

The threat of substitute brands in the multi-unit restaurant business is very high. As a result of globalisation, a lot of foreign food firma have ventured into the domestic and adopted their menus to suit the tastes and preferences of consumers. Many Chinese households still prefer homemade meals, and young adults frequently purchase from mall food courts.

Findings:Levendary Café competitive position is still robust in this instance; however it might be at risk as result of the industry behaviour, particularly from its Chinese competitors. Gaining the information that these five competitive advantages determine the firm’s strategy to follow is brand innovation.

As a symbol of American food outlets, Levendary Café has encountered the challenge of cultural disparity between U.S. and China at the time of venturing into this industry. Judging from its operations, Levendary Café has investigated and adapted to Chines practice to dissimilar degree. Spring festival is regarded as an essential centenary in China; it is the main day of Chinese New Year as well as marks the starting of spring. At the time of the spring centenary, Levendary Café will transform the decoration in its cafes, Chinese features like the China and conforming animal sign for the new years will be integrated to the decorations, infomercials and brand packages and the musing streaming out of Levendary Café eateries will be transformed to custom songs with festal and jolly feelings. Also, the Chinese subsidiary will embellish the cafes with conventional Chinese paper-cutting workings of flowers and animal cryptograms. With respect to language variation between cultures, most global products require to pay special focus on the decoded varieties of their product names when entering a foreign market, particularly in China where individuals display interest on names with auspicious connotations (Lu, 2010).  Again, brand development is as well definitely linked to the perception of adaptation. Over time, Levendary Café has made numerous attempts in brand innovation to gratify the Chinese preferences and luckily this attempt has been identified and appreciated by Chinese consumers because they have offered an affirmative insight on this element. The other positive-allied variable for Levendary Café is “Delighting the customer”. Even if the involved of this variable cannot entirely be associated positively to general adaptation sequence, there is an important link confirmation between “delighting the customer” and they favourable adaptation. Most importantly, what requires a special focus is that store position is negatively associated with the general adaptation sequence of Levendary Café that suggesting that the adaptation endeavour concerning location aspect made by Levendary Café is not appreciated by Chinese consumers for they view adaptation processes as tricky.

4.3.2. Generic Strategies

{Source: www.mindtool.com}

Levendary Café manages a differentiation stratagem because their goal is to provide unique brand to a wide market. This strategy is supported by several aspects:

• Nutritious diets utilising high quality ingredients
• A devotion to service in a relaxed, pleasant setting gives their customer a rich experience
• Finally, their slogan “Tasty Good Freshness” is as well part of their differentiation strategy.

Findings:

Having a market positioning has a progressive impact in differentiation and innovation strategies. On the other hand, there is no relationship between this plan and a low-cost strategy. Furthermore, while determining an appropriate differentiation strategy might be more expensive than a low-cost, for this case makes more sense economic-wise.

CHAPTER 5: RECOMMENDATIONS

5.1. OVERVIEW OF THE ANALYSIS

 

It is possible to say that the study conducted so far, indicates that Levendary Café is yet to enjoy a very robust competitive position in the Chinese market. However, the industry is witnessing severe competition that denotes a huge threat to be sustainable.  The multi-unit restaurant industry is absolutely sophisticated not only as a result of competition, but also to the huge variety of substitute products presence.  Conversely, it will not be very cost-effective because the power of buyer and suppliers is not low.

The landscape of the industry generates the need to compete through a differentiation strategy, which is the one that Levendary Café has chosen. This differentiation strategy Levendary has positioned itself as innovative company, via brand innovation that has redefined consumer attitude.

On the other hand, an adequate solution for Levendary Café is to carry on aiming for the global strategy, but the company would have to identity the correct equation. As Shaw and Goodrich (2012) assert the perfect plan by the U.S. restaurant should incorporate and align its status with the capacity of the Chinese industry.  Sufficient insight is essential to incorporate global strategy and still indicate some reaction toward domestic markets. Information sharing between U.S. based Levendary Café and the Chinese stores will restrict the misconceptions and ensure that the wellbeing between the two companies will be more aligned. Santos and Williamson (2012) offer a context for how an organisation can build its information sharing base and reap big from it. A company is expected to identify inside of its distinct agencies where the knowledge is produced, then how to evaluate it and ultimately how to distribute it. It is just when the information is disseminated that a company will benefit. As Alfred and Chandler (2010) indicate, Levendary Café is required to offer an appropriate structural model to support their endeavours and make sure incorporation between itself and the Chinese stores. This feature may be suitable so as to assess how the company can raise their advantages of the global approach. Fragmented approach between the company and its Chinese outlets is mirrored through the contradictory constructs in the IR context. The global strategy is desired by Levendary Café to incorporate its ideas in the Chinese market with marginal modifications so as to take advantage of the advantages it provides. The company stores, however, acknowledged the fact exploitation is best used within the domestic awareness plan. The misconception of the novel concept builds a crucial circumstance that requires a prompt solution. As explained in the previous chapter, Levendary Café may benefit greatly by carrying on using the global strategy, hence the company should strive to find the correct balance between U.S. based Levendary wish to coalesce the operations and the stores domestic tastes. A context of information mobilisation has been supplemented to support the discussion of how Levendary Café might solve the issues by aligning the knowledge between the Denver HQ and its Chinese stores.

5.2. RECOMMENDATION PLAN

Following are suggestions to improve:

Strategic Management

Levendary Café may analyse potential advantages such a low costs through service and position standardisation, as well as adapting menus provided. Additionally, the CEO is expected to be incorporated in the concept of forgetting current profit and begin formulating long run goals. This will mean that Chen will have to acknowledge and take advantage of the opportunities the Chinese market has to offer.

Contrariwise, regarding carrying out a reasonable and rigorous market plan evaluation, Chen should be made to know that particular facets are important in the process of choosing whether to enter a new market or not. These facets comprise selecting the level of venture portfolio, developing enterprise with the understanding that start-up expenditure may not be provided as well as fiscal need, availability of marketing projections that are important in predicting the profitable future, and restructuring prospect of incentive and acknowledgments aspects in that concern.

Marketing Management

Birkinshaw and Pedersen (2010) explicate branches as a unit that operate value-increasing performances for a company. Their discoveries underpin Yip framework on globalisation, as the two scholars assert that subsidiaries find themselves in a situation more challenging as never before, since CEOs are projected to perform entrepreneurially and authorised as well as adhere to the international principles. Additionally Birkinshaw and Pedersen (2010) elucidate the function of the firm as that is elaborated by the mother corporation.  Levendary China with its 23 stores can be regarded as an important subsidiary for the parent firm. Looking at the challenges of establishing a common base for globalisation ability of the market, and hence the magnitude of the domestic reaction, Foster as the chief executive must manage the subsidiary in an improved manner.

Additionally, she must integrate the original function to create base for more growth in China, and thus the company must include a lucid meaning of the kind of growth it desires. Foster should suggest that Levendary Café does not need development if it compromises with product’s originality to ensure Chen is incapable of devaluing the brand in the Chinese market.

On the contrary, Foster should thus recognise that the approach in China cannot be agreed on in American HQ. As suggested by Birkinshaw and Pedersen, she must align market positioning aspect and a resource expansion aspect.  Chen understands the Chinese market, and the two executives should work together to identify a brand array that caters to this market. Brands are at present slightly distinguished in the United States, therefore this must not a challenge (Bartlett & Han, 2013). With respect to the resource developments elements, Foster should differentiate between resources and potential.

Alfred & Chandler (2010) thus suggest that resources are the variety of aspects accessible for and regulated by the company, while potential is the company’s ability to utilise these resources. Foster should recognise that even if she holds and regulates such resources and potential as fiscal and company-particular information, Chen has expanded some potential like fast improvement and adaptation. In establishing the plan, it is therefore important that Foster involves Chen and his concepts. Taking into account the fact that Levendary Café decided to venture in an entirely owned subsidiary, and provided with the challenges associated with domestic reaction against globalisation, this author will recommend a new strategy for the firm. As posited by Birkinshaw and Pedersen (2010), Foster must establish a new mechanism for mobilising knowledge. This may be accomplished through a global team located in China that would engage both Chen and his members and also the staff based in the U.S. positioned in China. This mechanism might ensure that the connection between the market and resource component of the policy balance is being handled. As result, both Chen and Foster may identify a mutual base in their globalisation obstacle: to decide a suitable level of domestic response and internationalisation.

Reilly & Wallendorf (2010) explicate that in essence many U.S. based restaurant enterprises have entered and continue to enjoy profitable performances in the nation, some have nose-dived desolately. This is an aspect worth recognising in the process of the market venture. It is challenging to understand the fact that many companies with dismal operations in China failed not as a result of ineffective managing but due to failure to carry out comprehensive and succinct evaluations.

For example, Pretzel Time was unsuccessful in the Chinese markets as a result of inexperience and sitting design.  The firm underestimated the requirement to investigate and align decent decoration. Hence, the tile decoration that was utilised in its stores was linked with a lavatory and this somehow managed to upset their clients’ attitudes.

The other suggestion is that there is an alternative of dissolving the Chinese company and hence leave the market.  This resolution may be long-lasting or time-based depending upon the basic aspects on the ground. For example, the termination might be made provisionally so as to permit Levendary Café to develop a productive planning strategy prior to resuming its operations again. Foster must consider dismissing the present operation executive, Chen by replacing him with an expert. Equally, the termination may be long-lasting as a result of the fact that company has not recorded profits as yet for the whole phase of operation.

By carrying a succinct evaluation of the given fiscal statements, it is nearly certain that the enterprise is not likely to report any profits in the near future. This is linked with the fact that the restaurant has faced inefficient management for a significantly protracted period. Chen as Levendary China CEO, does not appear to give a clear vision of the company future but rather starts carrying out the operations utilising a mainstream strategy. Permanent termination is as well a feature of obliviousness showed by the Denver HQ granted that the parent company has never started an initiative of being included in the Chinese processes.

Alternatively, the parent company under the leadership of Mia Foster may elect to support a mixed concept aspect. This needs prompt change of the services provided in order to make it possible for extra menus to be served in the same restaurant. As Yan (2009) suggests, Levendary China may be forced to offer its patrons with both the Chinese and Americanised menus so as to fulfil the varied desires of the market. The mixed theory can as well take on another idea that integrates various stores that offer distinct menus. For this model, two outlets may be developed: Levendary China and Levendary American. The former café can be situated in the less advanced regions of the market while its counterpart may be situated in the advanced regions of the same market, so as to draw different consumers.

Contrariwise, regarding carrying out a reasonable and rigorous market plan evaluation, it is suggested that Chen should be made to know that particular facets are important in the process of choosing whether to enter a new market or not. These facets comprise selecting the level of venture portfolio, developing enterprise with the understanding that start-up expenditure may not be provided as well as fiscal need, availability of marketing projections that are important in predicting the profitable future, and restructuring prospect of incentive and acknowledgments aspects in that concern.

Globalisation

According to Bartlett and Chen (2013) one of the biggest difficulties Levendary Café experienced, as they decided to venture into the Chinese market was a classic problem when opening restaurants in a divergent cultural environment. Global accessibility, serviceability and acknowledgment are obviously advantages of a global plan, while the imperfections include greater management expenses as a result of heightened coordination, and the inability to achieve domestic need. In all respects, for a company to perform fully it requires to adapt an international strategy that is suitable for the globalisation ability of the business.

In all respects, for a company to perform fully, it is suggested that Levendary Café must to adapt an international strategy that is suitable for the globalisation ability of the business.

5.3. EVALUATION OF THE PROPOSAL

The sustainability to cultivate the idea recommended in this paper is highly likely, since Levendary Café possess the intangible and tangible resources required. The global strategy provides a lot of advantages to the multinationals and Yip argues in favour of this strategy. The first advantage is viewed as the reduction of prices via having homogeneous products, which means that Levendary Café can benefit from the economies of scale by integrating production and R&D performance.

Chen can reap the advantages of economies of scale from aggregating his raw materials orders and benefit from the increased reputation that comes with cultural arbitrage.  Such a strategy towards standardisation will make it easier for Levendary China to gauge financial performance with regard to GAAP, improve customer service consistency and make it possible for advertising actions to be more concerted. Moreover, the implications for shareholders are negative, because it is greatly unlikely that investors will increase their share value.

CHAPTER 6: APPLICATION CASE-KFC

KFC company’s headquarters are situated in Louisville, Kentucky, United States. Globally it is the biggest fried chicken restaurant estimated by sales. Currently, KFC chiefly sells fried chicken, burgers, chips and beverages amid other Western-style fares. The company opened its first location in China in 1987, in Beijing, a city well known for its cultural diversity.  The data from KFC annual report indicates that the company’s core competence is incorporation of operational resource. KFC’s franchising model is seen as an appropriate one with robust Chinese chains. The multinational’s original strategy of “not starting from scratch” attracted a lot of Chinese stakeholders (Bloomberg, 2012). The standardisation of KFC is commendable. To make sure there is a consistent taste of foods on an international scope, the process of KFC needs comprehensive developments for the company to obtain the deduction from the suitable quantitative criterion. The strategy of Kentucky Fried Chicken is simply growth plan in the Chinese market. The concept of KFC’s “do not start from scratch” is a unique point of franchise of the company in China. This means beginning a resale of profitable and sophisticated cafes, which are made available to franchisees. Franchisees are expected to begin from scratch in order to prevent selecting a location individually. New franchise operators are authorised to run a mature Kentucky Fried Chicken.  The company is part of Yum’s Groups brands. By having multi-brand synergies, it improves the competitive advantage of KFC and incorporates the supply network as well (Alfred & Chandler, 2010).

Aaker (2011) suggest that under the paradigm of brand position and branded with the impact of the parent product makes it effortless for the consumer during the previous contact with reason for unease. This means that it is unproblematic to develop visibility and recognition, but becomes difficult to set preferences and brand image. KFC focuses on specialisation such that it complies with the specialisation of management, technology, brand and service differentiation and market acknowledgment of professionalization (Dickson and Ginter, 2010).  Kentucky Fried Chicken pays serious focus on the research of the growth potential of the industry, in order to make an improved plan for their growth strategy. On the contrary, many aspects impact the cost of operation.  KFC has vastly invested in cost effect resources, thus ensures the standardisation of the company’s basic brands and services countrywide. As multinational fast-food restaurant, KFC has broad experience in the Chinese market. Thereby, from a strategic standpoint, the core aspects impacting the cost of operating are the economies of scale. On the menus of Kentucky Fried Chicken, the company has standardised and integrated main product in China. KFC has spared no efforts to achieve the varied desires of Chinese consumers. In order to make sure the implementation of the concepts, in 2000 the company established Chinese KFC Food Advisory Committee. The role of the committee was to investigate how the company was going to adapt to Chinese preferences, diet and eating attitudes. In 2004, the invention and localisation program enabled KFC products to break the boundaries of Western foods and Chinese fast food. Today, KFC develops its products according to Chinese preferences, for instance, hibiscus fresh vegetable soup, mushrooms and chicken soup, traditional Beijing Chicken roll, amid other fares. These foods are motivated the Chinese cuisine and served quickly with reasonable prices

China is a huge country, and the variations between diverse regions are very clear. The major performance of variations is culture and the rate of economic growth, both of which affect in the food industry. It is effortless to discover that the growth rate of the food market is very varied across the eastern, central regions and western localities of China. The eastern region has the biggest sales of food industry, and the central province experiences fast growth level compared to other areas. Chinese fast food offers more emphasis to the use of grains, beans and vegetables. The technique of preparing food is deep frying to boiling. There is a huge variation between Chinese style fair and Western-style fair. Many western firms target their youth and families as their consumers, but Chinese firms offer more focus to the group aged between 25 to 45 years. When attempting to get an equation between standardization and adaptation, one of the critical facets that impact the global management of brands and commodities is culture facet. From the concept of cross-culture, the Chinese people are overall inquisitive about foreign things. So as to accomplish this inquisitiveness to foreign brands, KFC try to introduce products fast and consequently win many consumers in China. By integrating the core of Chinese mainstream dining culture with the emergence of western food, Kentucky Fried Chicken has achieved the success of implementing the new brand stratagem in cross-culture promotion. KFC introduces new taste of brands in varied season to satisfy the desires of Chinese consumer (Alfred & Chandler, 2010).  It would not have been easily for KFC to achieve the success it enjoys globally, if the company supplied American style foods without taking into account the diversified cultures and traditions of domestic customers in foreign regions.

KFC owns over 140 food outlets in continental China. KFC stores in the Chinese market are normally situated at locations where there are large areas, well-established supply networks, with easy access to domestic consumers and tourists. Consequently, transportation expenses can be saved, and the transforming preferences of domestic consumers can effortlessly be acknowledged and KFC can utilise appropriated approaches to cater to the customer tastes rapidly. For Beijing that is the heart of Chinese political and culture, the populace and holiday business market experiences an increase each year. Hence it has always been valuable for KFC to sell brands and attract consumers. KFC grows their enterprise by collaborating with Chinese products as well. For example, in 2006 KFC launched for types of beverages and carried out advertising by collaborating with QQ (a prominent product in China, particularly recognisable to young individuals) (Kara, 2010). The quick service industry, place stratagem indicates that where to sell the brands and services to consumers. Equally, place policy can be impacted by both in-house elements and peripheral elements. Social culture aspects like domestic law and government rules, religion, language, amid other factors influence this strategy evidently in distinct ways. KFC has its own customary when selecting the appropriate location to set up restaurants. During this activity, the political risk, the fiscal status, the amount of population and the particular culture in numerous regions all the concern to KFC.

Challenges

1. Most of the food its serves lack traditional dishes that appeal to the Chinese
2. KFC has failed to position itself as the cheapest dining alternative
3. Negative publicity

KFC China menus typically consist of over 40 items, in contrast to about 30 in the U.S. The line of menu diversity increases circulation and emboldens repeat visits. Menus provide spicy chicken, rice dishes, egg tarts, shrimp burgers, among others. However, for instance, Shanghai consumers protest that foods were too hot, while others complained that they were too bland. In spite of the endeavours to be successful in the Chinese market, KFC does not position itself as the cheapest dining alternative. Patrons spend the equivalent of $2.50 to $3.50 per visit, a cost point that places KFC way above street retailers and domestic cafes and nearly somewhat above other fast-food outlets, this impacts their total revenue because this customers resort to other food outlets that provide a good value for their money.  KFC China rapid growth poses challenges: An extremely visible firm might easily turn into the target of consumer or administration counterattack against the perceived negatives of fast food.  Several western health issues are already manifested in China, such as obesity, and KFC has received its fair share of backlash.

KFC should put the focus on explaining aspects pertaining to cost drivers, advertising strategies for the enterprise, and the fundamental factor of carrying out frequent risk analysis. Although KFC has already established a considerable consumer base, and performs comparatively fairly in the market, the company seems to discount specific aspects. For instance, KFC does not appear to take into account the value of the consumers. In an attempt to attract more patrons and consequently set up wider consumer base, KFC needs to go the extra mile to promote a personalised approach in its services. So as to fully maximise its potential for expansion, China must be offered its own position within KFC’s company organisation, permitting China to be at the frontline of the firm’s main concern for future development. KFC should also continually attempt to balance its primary sales drivers with offering personalised service to delight the client, just like Levendary Café. Last but no least, KFC must move its focus away from adaptation so as to start building a consistent brand image in China.

6.2. RELEVANT CONNECTIONS WITH LEVENDARY CHINA

Kentucky Fried Chicken (KFC) shares some features that make possible the relocating of learning objectives from one case to another. These features include:

Competitive environment

Both corporations are faced by severe competition. In the case of KFC, the global market of multi-unit restaurants is highly competitive and fragmented, particularly amongst the key incumbents: McDonald’s, Taco Bell, Wendy’s, Applebees, among others. Furthermore, as a result of the growing awareness about health the demands for healthier nutritious demand for this type of food products is also growing, paving way for new actors.

Basic Values

The objective of KFC is to offer consumers with innovative brands that integrate creatively distinct cultures to cater to distinct tasters/preferences. In that sense their vision offers four core principles to guide all the employees and shareholders in decision making and operations. Those values are, to believe in all people, commitment to customers, go for breakthrough and build competence. Analogous to Levendary Café, competence and devotion to the consumers are the heart of the strategy of the company.

6.3. PROPOSED SOLUTIONS FOR KFC

Given that both companies are similar in all the aspects mentions previously, it is possible to proposal core learning points (identifies from the research of Levendary Café) to KFC, so that the company can sustain and enhance its leadership position in the multi-unit restaurant industry.

1. New Product Development

New brand development has been proposed to have a new product such as Dumpling, fish and shrimp burgers. These two products are mainstream dishes for Chinese. In touching an individual’s heart, that person will develop loyalty towards Kentucky Fried Chicken more than any other quick service café. As result, the marketplace share will further be enlarged.

1. Implement market plan

Making a marketing plan and offering actual teaching to the personnel is as well a critical strategy for the development of the company is foreign localities. This will advance global political economic relations.

1. Differentiate its products

It is suggested that KFC must apply differentiation strategy by offering stick-out services. It will shield KFC against competitors in a very robust market like McDonald’s, Pizza Hut.  Firstly, KFC will have to develop their brands differentiate from their rivals by providing new variety of menu to new target audience like consumers who are vegetarians or those who enjoy eating consuming low-carb.

6.4. CONCLUSION

This paper has offered a vastly critical analysis for firms that encounter strong competitive landscape that make susceptible the likelihood of sustaining their competitive niche.In the process of presenting the difference between the company’s strategies, limitation can take place when applying the outcome derived from this research to other firms and markets. Additionally, as a result of specialty of multi-unit restaurant business, further research might be needed when applying the assumption in other globalisation cases.

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Table of Contents

CHAPTER 1: INTRODUCTION.. 4

1.1.     Background of the Chinese fast-food Development 5

1.2.     Rationale. 7

1.3.     Research questions. 8

1.4. Research Objectives. 8

1.4.     Scope. 8

CHAPTER 2: CASE BRIEF. 9

CHAPTER THREE: PLAN OF ANALYSIS. 11

3.1. Problem statement 11

3.2. Research methodology. 12

CHAPTER 3: PROPOSED PLAN OF ANALYSIS. 14

3.2. Literature review.. 14

3.2.1. Marketing Management 14

3.2.2. Marketing Mix 4ps. 16

3.2. 3. Globalisation. 16

3.2.4. The I/R Context 17

3.2.5. Strategic management 18

3.2.6. Sources of data. 19

3.2.7. Ethical Issues. 20

CHAPTER 4: ANALYSIS DEVELOPMENT. 21

4.1. GLOBALISATION.. 21

4.2. MARKETING MANAGEMENT. 25

4.2.1. MARKETING MIX.. 25

4.3. STRATEGIC MANAGEMENT. 28

4.3.1. 29

4.3.2. Generic Strategies. 32

CHAPTER 5: RECOMMENDATIONS. 33

5.1. OVERVIEW OF THE ANALYSIS. 33

5.2. RECOMMENDATION PLAN.. 34

5.3. EVALUATION OF THE PROPOSAL. 39

CHAPTER 6: APPLICATION CASE-KFC.. 41

6.2. RELEVANT CONNECTIONS WITH LEVENDARY CHINA.. 45

6.3. PROPOSED SOLUTIONS FOR KFC.. 46

6.4. CONCLUSION.. 47

References. 48

Abstract

This project will evaluate the business structure of Levendary and the future implications of its present strategies. By evaluating the strategic imperatives like how to increase growth abroad and comprehending the global context, this paper will establish robust and weak business plans of the firm. This paper will then offer an approach and execution suggestions on how Levendary Café can expand as a global business.

CHAPTER 1: INTRODUCTION

To benefit from revenues obtained from owning a robust brand image, superior consumer service, and persistent firm practices throughout its international activities, Levendary Café should enter China as a completely owned business, concentrate previously on accretion-arbitrage plan, and shift its Levendary Cafe activities to a new arm of its leadership pyramid.  Up until now, Levendary Café has encountered a dispersed brand image (Bartlett & Han, 2011). In an attempt to set up as many subsidiaries as imaginable, the company has depended on a wholesome variation plan, which has disjointed its judiciously curated company reputation. If Levendary Cafe wants to have a complete control over its branding, it must only take into account setting up completely-owned operations to circumvent mislaying further control. Through using an accretion-arbitrary plan, the company can as well accomplish its viability by building economies of scales amid its stores and taking advantage of Chinese consumers’ ability to pay extras for foreign food. An accretion-arbitrary plan will change Chinese store activities to turn into a homogenised company that will have an easier time reporting GAAP-adherence financial performance procedures, teaching its personnel using an overall system, and promoting its primary line of menu items instead of disbursing its finances.

This project will be analysing a comprehensive synopsis of the specialty food industry and the function Levendary Cafe plays in it. Levendary Café is in a growth market, and it occupies an ideal comparative position. This project will evaluate the business structure of Levendary and the future implications of its present strategies. By evaluating the strategic imperatives like how to increase growth abroad and comprehending the global context, this paper will establish robust and weak business plans of the firm. This paper will then offer an approach and execution suggestions on how Levendary Café can expand as a global business.

1.5.Background of the Chinese fast-food Development

According to Kotler (2012) in this era of globalisation, individuals have the potential to share any types of food from distinct regions of the world, thanks to internationalised enterprise of food and beverage firms. As the foremost catalyst of global development in consumer food service, the fast food market is getting fresh consumers persistently via enhanced menus, dining experience improvements and fast global growth. As a characteristic of this market and expert multinationals, the American food restaurant groups of Levendary Café and other companies such as McDonald’s and KFC are leading fast food chains both in China and other regions of the globe.  Nevertheless, in spite of the leading status of McDonald’s in the global fast food industry, it experienced severe competition from Levendary China and KFC in the Chinese food industry and increasingly misplacing its market portion. This has taken place in the stage of China, an ancient nations with a well-known history and distinctive oriental culture. One of the likely explanations for this variation between the performances of McDonald’s, Levendary China, KFC and other global restaurants , the gradation and means of their cultural adaptation to the Chinese market was of great interest to this author. In essence, to adjust to a distinct culture is to encounter a huge setback and adhere to a foreign system of regulations in the particular group that needs a clear mind. Therefore, since Levendary China began its business operations in China, has it adapted itself to Chinese culture to a particular degree? These days, China has the biggest population in the globe and is recognised as a speedy growing nation with various increasing GDP. Taking into account the amount of fast food consumption, in 2010, China is ranked the second biggest industry across the globe, with the U.S. taking the first place (Lu, 2010).

Even if the Western outlets, such as Levendary China, have had specific advantages (like quick service, modern technology and rationalised organisation) by taking on some of the benefits and integrating them with domestic food tastes, native fast food outlets have encountered growing success in the domestic market. On the other hand, the 90s witnessed globalisation become a central process of transformation for the urban regions of countries that are encountering fast economic development. Standardisation of food kinds and style throughout the globe fast food revolutions is not a generalizable model. Current Chinese-style fast food outlets only appeared after Western fast food like KFC and McDonald’s were introduced in the Chinese market in 1987 (Li, 2010).

SOURCE: Bloomberg Business, 2013: http://www.bloomberg.com/bw/articles/2013-10-09/kfcs-big-bucket-of-problems-in-china

1.6.Rationale

The aim of this paper is to complete a hypothetical and analytical dissertation which indicates how a company can become successful

by utilising the same strategy with regard to local setting. On the other hand, the chief objective is to examine the impact of globalisation strategy on Levendary Cafe and the strategy aspects of the company in China. Thus, in this case, Levendary Café has been used as a case to investigate the aspects that impact the choice of moving figurative connotations via store atmospherics in different regions.

The analysis will be centred on the three areas: Strategic Management, Marketing Management and Globalisation Business Models, because as it will be explicated in chapter three, each of these has crucial influence in fuelling a competitive strategy.

1.7.Research questions

This study will strive to find solutions to the following questions?

1. What are the political, environmental, social and technological factors in the Levendary Café present time?
2. What are the strategies managed by Levendary Café at Global level, as well as from Human Resources and Marketing viewpoint?
3. What are the conclusions and outcomes after using those theoretical models
4. 1.4. Research Objectives

 

1. To analyse the current situation of Levendary China external and internal environment of the conglomerate.
2. To examine the present strategies of the company from the standpoint of Globalisation, Marketing Management and Strategic Management.
3. To find the germane models of business theories that could address those issues offering strategic goals to sustain a competitive niche.
4. To carry out the hypothetical methods selected and formulate definite, achievable and realistic proposal for the firm.
5. 1.8.Scope

This project will be analysing a comprehensive synopsis of the multi-unit restaurant industry and the function Levendary Cafe plays in it. Levendary Café is in a growth market, and it occupies an ideal comparative position. This project will evaluate the business structure of Levendary and the future implications of its present strategies.

CHAPTER 2: CASE BRIEF

Levendary Café is a popular, publicly traded trademark in the United States and presently entering the Chinese market. According to Bartlett and Han (2011) the company started a miniature salad, soup and sandwich eatery that developed into a billion dollar business.  Levendary Café basics are robust and operation is in line with administration projections yet their stock is trading at rebate. This is a result of the company’s growth slump and the new COO’s lack of initial global management skills makes Wall Street cynical that she simply cannot make Levendary Café a global product. The multi-unit café denotes 30 percent of the food service market that is a 600 billion dollars market with 960,000 positions. Levendary Café is classified into three market sectors: speciality establishments, quick service diners and casual dining. The company is a hybrid of the last two known as quick casual that includes in its line of menu a standard price in the $8-$12 variety. Levendary Café is set apart by two aspects: nutritious diets utilising high quality ingredients and a devotion to service in a relaxed, pleasant setting. The company is as well renowned for its readiness to take risks which was a characteristic of its original founder.  The same characteristic the President of the company has. Levendary Café currently ventured into the fast expanding Chinese market and rather that maintaining the U.S. ideas intact the company altered the store design and menu selections in 23 new stores situated in various Chinese towns. The moment the new COO was unveiled in the company she began to analyse the Chinese operations. At this juncture the Chinese activities had already been established and have been operating successfully for 18 years now.  The new COO recounted her outcomes to the U.S. team and currently they are all infuriated by these adjustments and are insisting things must stay as in the United States. The CEO has attempted to explain that if the company fails to adjust to the environment in a region in the company is attempting to carry out business it will be less successful. Leventhal had spent one and half years opening these 23 settings in China (Bartlett & Han, 2011). However the U.S. based team were worried that if any of the United States consumers travelled to China and became aware of the transformations it would devastate everything the company had accomplished over time. On the contrary, the new chief executive officer compared firms that as well expanded in other nation taking this strategy by radically transforming the whole menu while maintain their rations look and feel. The new CEO also likened what McDonald’s has accomplished globally, maintaining their stores homogenised for the most part and only changing the menu marginally. She also felt neither of these strategies was suitable for the company and that Levendary Café must keep things persistent across borders.

CHAPTER THREE: PLAN OF ANALYSIS

3.1. Problem statement

This case will be focusing on three main problems, which are based on Levendary Café case study.

Firstly, this research will be focusing on Levendary Café’s Globalisation issues since its involves creating marketing strategies, and marketing standardised brands in the similar manner everywhere.  It is only global companies that will accomplish long-run success by focusing on what everybody desires as opposed to been distressed about the specifics of what everyone imagines they may like. Which strategy will work is not a matter of belief but necessity.

Secondly, another problem is Marketing management, and it will be critical to examine the position strategy of Levendary Café to gain a competitive edge. Analysing the position and trend of Levendary Café leaves one with a hint of a totally prosperous company. Levendary Café is growing at a fast rate which is mirrored in the fact that the chain has recently opened about 23 subsidiaries in China. According Bartlett and Han (2011), the idea behind this let this growth to continue and the plan is to venture into more markets across the globe.  Levendary Café holds the view that increasing competition from quick services restaurants that have began to offer wholesome foods utilising high quality ingredients in a foreign market, are the key explanations for the company’s superior outcomes.

Thirdly, this paper will be looking at Levendary’s Strategic management as the multi-unit restaurant strategies of differentiation and brand innovation define the firm’s success. With respect to theoretical techniques in this subject, it will be considerable to revise appropriate strategic approach for Levendary Café in order to sustain their competitive advantage in the multi-unit restaurant industry.

3.2. Research methodology

This paper will use mixed method strategy (qualitative and quantitative) analyses.  Qualitative archival data is used to inductively expose the aspects and mechanism salient to the field of research and will help in the understanding of research from varied points of views and also different strategies to carry out the research.

Quantitative analysis of archival data illustrates the transformations in the industry and company behaviours between temporal periods. Together, these outcomes serve as evidence to demonstrate the phenomenon of the success of Swatch Group in the watchmaking industry.

Finally, this study will rely on archival data to triangulate (Creswell, 2013) and to search for harmonies and variances in my results through sources. Each data source will be used to analyse how Swatch has responded to competition in the industry.

Sources of data

This research will collect data from multiple sources; following what Creswell (2013) termed a synchronised triangulation strategy, whereby various techniques, data sources, and units of scrutinises are utilised to examine a set of hypothesised interactions within a distinct study.

There are two main kinds of data collection techniques that many researchers have been using, namely Primary data and Secondary data collection method.  Since this study will be focusing on Levendary Café, secondary data only will be used. These data is available in the public domain such as journals articles, books etc.

CHAPTER 3: PROPOSED PLAN OF ANALYSIS

A comprehensive evaluation of the data offered within the case demonstrated a myriad of challenges faced by firms, region markets and also different environments. With the time restriction, it would not be practical to have a look at all the challenges. The researcher has thereby decided to concentrate on the situations of Levendary Café. On the basis of the dynamics involved, the following topic areas have been chosen and the relevant appraisal tools recognised as drawn below:

3.2. Literature review

3.2.1. Marketing Management

According to Doyle (2004) marketing strategy is preciselyconsiderably essential for the success of any business. Without it, the effort of the business to attract consumers is random and really unproductive. The main focus of a firm’s strategy should ensure that their product fulfils the demands of the clients and also sustains a competitive advantage.

The moment a firm has developed and implemented its strategy, it is supposed to determine the response from its consumers and if any adjustments or enhancement is needed to be applied for the full satisfaction of consumers.

In that sense, one of the core worries in the process of strategy-making is how a company must position itself above its competition, and then protect that position from other competitors. From the above explication, it can thus be argued that Marketing Management is an important when appraising cavities in the markets that symbolise the opportunities for the firms and to identify the most effective manner to compete against industry opponents. There are limited numbers of consumers in the market. To develop long-run business, it is critical to retain individuals once they have become clients.

Utilising this kind of information Levendary Café can tailor communication to the desires of specific people. It is their needs that establish the kind of products and services provided, cost charged, promotions developed and where outlets are situated.So as to develop a marketing strategy that will make it possible to accomplish the needs of the market, strengths and weakness of the firm should first be identified and appraised.

Objectives communicate what marketers want to accomplish, guide marketing actions and are utilised to gauge how appropriately a strategy is working. They can be linked to market share, sales, getting to the target audience and developing cognizance in the market.

Outcomes can be appraised frequently to determine whether objectives are being fulfilled. This kind of response makes it possible for the company to adjust strategies and allows flexibility. The moment marketing goals have been identified; the next step is to explain how they will be accomplished. In that sense, a marketing mix will be put together.

3.2.2. Marketing Mix 4ps

McCarthy (1975) formulated the concept of the 4Ps-product, price, promotion, and place marketing mix. Nonetheless, with particular attention being offered to services marketing in recent years, scholars have acknowledged further variables that might be integrated into the 4Ps. Fified and Gillian (1998) acknowledged the following variables as an integral part of the marketing mix-process, physical, and people.  By utilising this apparatus, it results in having value added products with consistent prices, sufficient promotion aspects and sufficient distribution channels.

3.2. 3. Globalisation

Globalisation assists firms to have a strategy to a huge potential markets and valuable production aspects like affordable workforce, better sources of raw materials and skilfulexecutives from other regions. Additionally, fast-food firms can make the best use of globalisation to venture into many varied regions across the world. For example, foreign food like Sushi and burrito will have opportunities when introduced into the U.S. local sector and threaten fast-food outlets.

Globalisation involves creating marketing strategies as if the world is a singular entity, marketing homogeneous brands in the equivalent manner universally. Globalised firms use homogeneous products, promotional campaign, prices and supply networks for all markets. Additionally, globalisation includes adapting marketing strategies for distinct countries with respect to cultural, regional and nationwide differences to serve particular target audience.

Since Levendary Café is a global food outlet it needs to appraise strengths, weaknesses, opportunities and threats through SWOT analysis. In that sense, situation analysis is the method for harmonising organisational strengths and weaknesses with environmental opportunities and threats in order to identify the rich position for the company.

3.2.4. The I/R Context

The IR context has various suggestions, but the core variables are witnessed in the strategy of the domestic reaction and the strategy of global incorporation. Multinationals can take on global integration by having homogenised brands anywhere in the world and centralise the regulation of the operations. Global incorporation is evaluated by Yip (2012) who states that integration is espousing a global strategy. The global strategy provides a lot of advantages to the multinationals and Yip argues in favour of this strategy. The first advantage is viewed as the reduction of prices via having homogeneous products, which means that organisations can benefits from the economies of scale by integrating production and R&D performance. Second, the brand mixture, and design inside of the global plan, is more restricted and offers high quality related to the strategy of domestic reaction. The last advantage is viewed in the transnational acknowledgment: consumers globally will experience no difficulty when recognising the product and brand offering, hence product loyalty can expand. The policy of domestic response is varied from the transnational strategy. It defines how an organisation benefits from adapting its products that suit the local location and tastes. The framework is somehow varied from the superlative multi-domestic strategy by Yip (2012) since its still takes on particular aspects from the primary idea of the multinational and does not completely modify in every region. The regulation and the operations are regionalised and regularly autonomously managed by domestic executives. The creativeness of the domestic executives is improved by allowing them to be part of creating new products, so product design may be underpinned by having many sources dispensing new responses. The restriction of domestic reaction strategy is a result of the absence of knowledge sharing since every agency inside the multinational operates relatively autonomously from others. Yip (2012) argues for the global strategy, although he still recognises the liabilities of the framework.  The restraint of the strategy is viewed in the manner it can overlook domestic demand. Standardised products may not be suitable for every nation. In this instance Yip is supportive of the manner in which to balance the global strategy. Transnational companies must therefore not over-globalise and in the same degree must not under-globalise.

3.2.5. Strategic management

The appraisal of this segment will focus on the suitable strategic approaches for Levendary Café so as to develop and sustain their rich competitive niche in the market. Having a sustained niche and valuable growth is problematic if there a clear lack of robust and differentiate principal business. Furthermore, ensuring this sustainability asks for great investment in the core competencies of the enterprise so as to prevent imitation. Porter (1998) suggests that the competitive strategy aspires to locate a positive, lucrative and sustainable niche in the market. The choice of this plan is founded on the productivity and desirability of the business and the virtual competitive position. In that sense, this author shall use the Five Competitive Forces.

Since the rationale of strategy formulation is to deal with competitors, this framework will help us to better understand how the market dynamics impact the firm environments, and thereby set the action to be implemented in order to adjust to those forces and to utilise them.

3.2.6. Sources of data

As a result of the nature of this study, case study research strategy was utilised as the most suitable apparatus. At the time of carrying out this case study, this author tried to evaluate the variables germane to the topic under investigation. Levendary Café was chosen as the case company. This author aims to produce a rigorous evaluation of a single case-Levendary Café, in regard to which this writer engages in hypothetical examination. Also, this writer has decided that he will use secondary data to analysis Levendary Café. However, there a numerous risk associated with utilising secondary data, for instance, they might not be completely correct, and bias could be produced by the limitations of the initial research. The secondary information utilised is chiefly from academic journals and books.  This writer has also utilised other academic literature which is germane to the study.  The website of Levendary Café has as well been used to collect data about the firm, and their worldwide strategy. Since it has varied platforms, it is possible to find data about Levendary China. In this investigation, important part of empirical information was gathered. Hence the sources of data utilised in this research are reliable. Usually, for the case study research method, the results of a single case cannot be applied more universally to other cases.

3.2.7. Ethical Issues

With respect to the utilisation of secondary data, there are several factors that need to be considered to gather the right information. What is more, secondary data must be reliable, appropriate and accurate (Yin, 2004).

Furthermore, this research will be deferential about the ethical concerns that are presented in business research: objectivity (the research must be objective and founded upon facts, misrepresentation of the findings (the outcomes must not be exaggerated), discretion and plagiarism.

CHAPTER 4: ANALYSIS DEVELOPMENT

In carrying out this evaluation research it is critical to take into account that all the models are associated with the goal of accomplishing and having a strong competitive niche in the market, through brand innovation. With respect to what has been analysed in Chapter 3, applying the tools recommended will strive to review systematically the position of Levendary Café, and to determine the suitable steps that the company must address, with the drive of sustaining an outperformance in the food industry.

4.1. GLOBALISATION

In this area, the author will concentrate in the SWOT analysis concepts and I/R context that were developed through the following methods.

SWOT Analysis

Levendary Café has many strengths when looking at the company; it has a brand recognitions valued at around ten (10) billion dollars. This firm specialty rests on the reputation of its classic, core menu items: the Turkey and Avocado Sandwich, high-quality cheese soup and chicken Ceaser salad.  Many restaurants provide insignificant, local menu versions.  To make a corporation successful there is the need to evaluate the company’s.  In spite of Levendary Café’sattempt at offering nutritious food, their line of menu has not completely been adapted to meet the demands of the Chinese culture.  The other weakness is Levendary’s high employee turnover.  The workers are paid minimum stipend and have a low skilled job, which is often viewed negatively by its personnel. After the firm has reviewed its strengths and weakness, it needs to concentrate on new opportunities and threats. Levendary Café is a growing business and has a lot of new opportunities ahead of them, for instance, there is a swelling demand for healthier nutritious fare. Therefore while the demand for healthier food grows, Levendary Café must usher in food choices in their line of menu and transform its weaknesses into strength. One way the company is trying to expand and make the best use of these opportunities is by opening up more food outlets in China.  Levendary can take advantage of full adaptation of their new operations.

The food industry has gained so much popularity over time, and with their being many varied food outlets Levendary Café should take into account is the issue of competition.

Findings:  Levendary Café U.S. rivals in the quick service industry have each approached China with massively varied strategies, thus all of these competitor have integrated in any case some mark of domestic adaptation to their line of menu.

I/R Context

According to Bartlett and Han (2013) Levendary Café entered the Chinese market in 2009. The company desired to carry out its theory of “delighting the customer” with exclusive based contributions to the Chinese market.  As a result of insufficient insight about China, the head-quarter (HQ) saw it fit to allow the Chinese market pundit Louis Chen implement the tasks independently. Within a span of one year, the Chinese operations and managements failed to achieve what was projected by the HQ. This chapter will evaluate this matter concerning a fragmented strategy between the U.S. based HQ and its Chinese stores. The IR framework centres upon the strategies of global incorporation and local reaction will be analysed so that it would be possible to evaluate how Levendary’s approach lacked in its incorporation within the Chinese chains.

Findings (1): The firm holds firmly the thought of quality and relishes its longstanding demand i.e. increase the culture and everyday activities. For quite some time, Levendary Café and its former president invested in fostering the company’s theory, marketing, brand variety and performance under a classified organisation to ensure that all its chains are affiliated with the strategy. This focused on superior quality commodities; the company supports the relaxed/pleasant environment kind of restaurants that achieve the needs of those individuals who are ready to pay the superior price. In all respects, as result of the Levendary’s detailed understanding and existing institution in the local Chinese-restaurant supply and demand, the company understands that it will be greatly advantageous to imitate its operations by taking full advantage of the economies of scale with marginal modifications. Through instituting the concept, Levendary Café earned the right to reduce costs and obtained high rate of product appreciation and fidelities in the Chinese industry.

McCracken (2005) posits that with restricted understanding and expertise in globalisation, Levendary Café held the notion that it was fundamental to apply a parallel conception in China after seeing the significance of supporting the original company’s concepts together with its local achievements and other rivals response.  It is assumed that integrating the global strategy may be greatly important for the firm when entering a new market accompanied with standardised commodities, streamlined processes and consolidated organisation and regulation with marginal adaptation of the framework and culture. In 2009, Luis Chen was appointed the acting president and was expected to uphold the concept and set up a robust market locus as the foundation for franchising the company’s restaurant stores across China. Levendary Café believed that venturing into China would benefit the firm in the long-run via the focus on economies of scale analogous to the local marketplace.

Findings (2):The 2 year agreement permitted Chen to carry out managerial and regulate decisions in all Levendary’s stores in China. With detailed understanding of the Chinese market and domestic affiliations, he was capable of comprehending the demand and the necessity to adapt the concept and become “domestic reaction” (Bartlett and Han, 2011). This initial concept was applied into particular settings of multi-storey structures, targeting high earning personnel and entrepreneurs. In other settings with frequent visits and middle-class populations, the concept was adapted to cater for the domestic taste; quick and recognisable. Menus and decorations were altered. Various dining structures were removed, and left just the take-away counter. The new CEO then noticed what the demand needs were in the U.S. product with Chinese noticeable food offerings. Within the span of a year, Chen was capable of setting up 23 Levendary China stores. The performances conducted by Chen obviously indicate a missing connection between the incorporation by the Levendary’s previous and the Chinese chains plans. The new CEO was anxious that imitating the transnational approach would not completely achieve the targeted consumers and the approach might result in the loss of competitive advantage, hence making a robust market position difficult. Chen regarded fast profit-making as greatly fundamental elements of business to carry out and independently created varied concepts to cater to domestic tastes. This finally contradicts with the agreed conception and culture of “Forget today’s profit. Have a positive impact on customers’ lives” (Bartlett and Han 2013: pp.4). Preoccupied with the idea of making profits, he set up most of the Chinese restaurants that lacked a link with the Levendary Café’s original brand. For instance, the line of menus was modified with respect to domestic tastes to a degree that a U.S. based visitor was incapable of recognising it as one of the company’s. The service in this new market was profit-oriented and completely ignored the concept of ‘delighting the customers’. In effect, what the U.S. based restaurant expected was their consumers to acknowledge the product globally and every Levendary store thereby needed marginal adaptations in their concepts. The American restaurant wanted the long-term benefits the transnational plan can provide like economies of scale for advanced growth, lower cost of production by generating a huge supply network and global product acknowledgement and fidelities

4.2. MARKETING MANAGEMENT

This part will evaluate the manner in which Levendary Café has positioned itself in the market, and the plans that support that position.

4.2.1. MARKETING MIX

Product

One of the objectives of Levendary Café is to develop a standardised set of products that cater to the Chinese preferences. Levendary China learnt that, even if there are considerable costs of savings via standardisation, and the success of adapting to a foreign environment. Adaptation is important for manifold reasons including consumer preferences/tastes. Levendary has provided local menus to cater to the preferences of Chinese people. For instance, the restaurant offers: Chicken soup, Chicken sand, Roast beef sand, BBQ chicken sand, Thai veggie soup, Chicken dumpling, Pork dumpling, Pu-erh tea amid other food types. These all examples of how Levendary China has adapted its brands offer in the global setting.

Place

Levendary Café has over 3,500 outlets across the U.S. The company continues to concentrate on working investment expenditures more productively via farsighted and strategic expansion. Just recently, Levendary Café added 23 more outlets in China. The company acknowledges the potential for development in global markets and plans to take full advantage of what it has learned over time in the U.S. The company’s venture into the Chinese market was a strategy that created a gap between Levendary Café and competition.

Price

Levendary Café has recognised that, in spite of the cost savings inherent in standardisation, success can often be credited to being capable of adapting to a certain setting. This is certainly the case with its implementation of its pricing strategy that is one of the localisation that internationalisation.  Levendary Café has had to choose the correct price for the Chinese market.

Promotion

Promotion also known as the marketing communication mix was proposed by Kotler (2012) as comprising the five key tools:

1. advertising
2. direct marketing
3. sales promotion
4. public relations
5. personal selling

By utilising these tools, Levendary Café aims to localise its marketing communications strategy as it is expected to take into account the massive variety of cultural and other variations that it encounters in China.

Findings (1): From the above, it can be explained that all of the strategies of the marketing mix have made it possible for Levendary Café to position itself as a strong brand, with reputation based on brand innovation and the ability to adapt to the Chinese market.

Findings (2):Levendary Café has committed itself to working on setting up a Chinese product and change to Chinese life since the company was introduced to this market (Bartlett& Han, 2011). So as to guarantee the implementation of this performance management, just recently, Levendary Café established a taste kitchen and food laboratory to determine Levendary China nutritious food strategy. The purpose of this taste kitchen and food laboratory is to promote its brand innovations and strive to beat the idea of offering unhealthy food.  Essentially, the percentage of localized brands accounts for 30 percent amid the whole Levendary Café brand line. On the contrary, on Levendary Café’s line of menu for China region almost half of the commodities are particularly designed with Chinese feature among 20 brands currently. These brands are enhanced by integrating distinctive Chinese ingredients to cater to Chinese preferences (Anderson and Marja, 2012). Levendary Café targets the “entire family relations” starting with children to elders. The company has made efforts on creating a dining setting of family model in which consumer can experience the cordiality of home. Aspects like the cordiality of family get-together, caring amid various generations, love, among other features can be witnessed in the company ads and external decorations. Both it diversified menu and adapted preferences, these concepts have made Levendary Café prominent to various generations. Rather than utilising celebrity influence like KFC and McDonald’s has done before, Levendary Café inclines to present a narrative or some fascinating act into the infomercials, making it more connected to real time and easier to approach. On the other hand, Levendary Café meal slogan “Tasty Good Freshness” is the company strategy to obtain identification from the consumer group and arouse their eating habits.

Findings (3):In 2008 the American company local growth was slowing, the restaurant’s geographic growth strategy plateaued and they began to notice that their idea did not suit small cities. Understanding that the company’s local market has been exhausted they now looked for benefits to invest overseas (Bartlett& Han, 2011). The other variant is the removal of conflicts in markets abroad. Confronted by this circumstance where the rival firms are attempting to enter the same foreign market an organisation can collude and share the market with competitors or attempt to be somewhat dominant. The latter expands the market dominance for the firm, and raised the imperfections within the whole market. This subsequent variant explicated how Levendary Café ventured into the Chinese marketplace. Bartlett & Han (2013) posit by using horizontal FDI Chen was expected to set up a strong market position as a foundation for franchising stores across China.

4.3. STRATEGIC MANAGEMENT

This area will focus on the concepts of brand management that have been developed through the following methods:

4.3.1. FIVE FORCES ANALYSIS

The intensity of competition amid competitors(High)

1. The intensity of competition amid rivals in the quick service food industry is the most powerful aspect amid those five forces. The rivalry in this sector is very robust as a result of oversaturation of products competition in cost and quality services like McDonald’s, Taco Bell and Wendy’s. Thereby Levendary Café must offer an affordable price, enhance quality of customer and delivery services, as well as develop a robust brand awareness to succeed in this competitive market.

• Bargaining power of supplier (Low)

In the multi-unit restaurant industry, firms are expected to have a steady and persistent raw materials supply to operate the trade to meet the high demand of the massive consumer base. Hence, developing robust relations with suppliers is essential to sustain a perfect quality of raw materials  Regarding Levendary Café, the company can consider growing its own suppliers of raw maters to ensure a continuous supply.

• Bargaining power of buyers(High)

Since there many substitute brands in this industry, Levendary Café will have to put more attention on consumer demands to gain new clients while sustaining a base of loyal consumers. Clients put special attention to their health and the growth rate of obesity in China, the company will have to provide healthier food in their servings, such like fruits and salads and use oils that are free-off fatty acids.

Threats of new entrants (medium)

The infant businesses that first venture into the food market might have to experience some difficulties in terms of the economies of scale, product fidelity, capital needed and government control. However, this challenges lack the potential of being a threat to the existing firms. The economies of scale might be achieved by standardised products and consolidated R&D in brand and marketing from the United States.

1. Threats of substitutes (medium)

The threat of substitute brands in the multi-unit restaurant business is very high. As a result of globalisation, a lot of foreign food firma have ventured into the domestic and adopted their menus to suit the tastes and preferences of consumers. Many Chinese households still prefer homemade meals, and young adults frequently purchase from mall food courts.

Findings:Legendary Café competitive position is still robust in this instance; however it might be at risk as result of the industry behaviour, particularly from its Chinese competitors. Gaining the information that these five competitive advantages determine the firm’s strategy to follow is brand innovation.

As a symbol of American food outlets, Levendary Café has encountered the challenge of cultural disparity between U.S. and China at the time of venturing into this industry. Judging from its operations, Levendary Café has investigated and adapted to Chines practice to dissimilar degree. Spring festival is regarded as an essential centenary in China; it is the main day of Chinese New Year as well as marks the starting of spring. At the time of the spring centenary, Levendary Café will transform the decoration in its cafes, Chinese features like the China and conforming animal sign for the new years will be integrated to the decorations, infomercials and brand packages and the musing streaming out of Levendary Café eateries will be transformed to custom songs with festal and jolly feelings. Also, the Chinese subsidiary will embellish the cafes with conventional Chinese paper-cutting workings of flowers and animal cryptograms. With respect to language variation between cultures, most global products require to pay special focus on the decoded varieties of their product names when entering a foreign market, particularly in China where individuals display interest on names with auspicious connotations (Lu, 2010).  Again, brand development is as well definitely linked to the perception of adaptation. Over time, Levendary Café has made numerous attempts in brand innovation to gratify the Chinese preferences and luckily this attempt has been identified and appreciated by Chinese consumers because they have offered an affirmative insight on this element. The other positive-allied variable for Levendary Café is “Delighting the customer”. Even if the involved of this variable cannot entirely be associated positively to general adaptation sequence, there is an important link confirmation between “delighting the customer” and they favourable adaptation. Most importantly, what requires a special focus is that store position is negatively associated with the general adaptation sequence of Levendary Café that suggesting that the adaptation endeavour concerning location aspect made by Levendary Café is not appreciated by Chinese consumers for they view adaptation processes as tricky.

4.3.2. Generic Strategies

{Source: www.mindtool.com}

Levendary Café manages a differentiation stratagem because their goal is to provide unique brand to a wide market. This strategy is supported by several aspects:

• Nutritious diets utilising high quality ingredients
• A devotion to service in a relaxed, pleasant setting gives their customer a rich experience
• Finally, their slogan “Tasty Good Freshness” is as well part of their differentiation strategy.

Findings:

Having a market positioning has a progressive impact in differentiation and innovation strategies. On the other hand, there is no relationship between this plan and a low-cost strategy. Furthermore, while determining an appropriate differentiation strategy might be more expensive than a low-cost, for this case makes more sense economic-wise.

CHAPTER 5: RECOMMENDATION

5.1. OVERVIEW OF THE ANALYSIS

It is possible to say that the study conducted so far, indicates that Levendary Café is yet to enjoy a very robust competitive position in the Chinese market. However, the industry is witnessing severe competition that denotes a huge threat to be sustainable.  The multi-unit restaurant industry is absolutely sophisticated not only as a result of competition, but also to the huge variety of substitute products presence.  Conversely, it will not be very cost-effective because the power of buyer and suppliers is not low.

The landscape of the industry generates the need to compete through a differentiation strategy, which is the one that Levendary Café has chosen. This differentiation strategy Levendary has positioned itself as innovative company, via brand innovation that has redefined consumer attitude.

On the other hand, an adequate solution for Levendary Café is to carry on aiming for the global strategy, but the company would have to identity the correct equation. As Shaw and Goodrich (2012) assert the perfect plan by the U.S. restaurant should incorporate and align its status with the capacity of the Chinese industry.  Sufficient insight is essential to incorporate global strategy and still indicate some reaction toward domestic markets. Information sharing between U.S. based Levendary Café and the Chinese stores will restrict the misconceptions and ensure that the wellbeing between the two companies will be more aligned. Santos and Williamson (2012) offer a context for how an organisation can build its information sharing base and reap big from it. A company is expected to identify inside of its distinct agencies where the knowledge is produced, then how to evaluate it and ultimately how to distribute it. It is just when the information is disseminated that a company will benefit. As Alfred and Chandler (2010) indicate, Levendary Café is required to offer an appropriate structural model to support their endeavours and make sure incorporation between itself and the Chinese stores. This feature may be suitable so as to assess how the company can raise their advantages of the global approach. Fragmented approach between the company and its Chinese outlets is mirrored through the contradictory constructs in the IR context. The global strategy is desired by Levendary Café to incorporate its ideas in the Chinese market with marginal modifications so as to take advantage of the advantages it provides. The company stores, however, acknowledged the fact exploitation is best used within the domestic awareness plan. The misconception of the novel concept builds a crucial circumstance that requires a prompt solution. As explained in the previous chapter, Levendary Café may benefit greatly by carrying on using the global strategy, hence the company should strive to find the correct balance between U.S. based Levendary wish to coalesce the operations and the stores domestic tastes. A context of information mobilisation has been supplemented to support the discussion of how Levendary Café might solve the issues by aligning the knowledge between the Denver HQ and its Chinese stores.

5.2. RECOMMENDATION PLAN

Following are suggestions to improve:

Strategic Management

Levendary Café may analyse potential advantages such a low costs through service and position standardisation, as well as adapting menus provided. Additionally, the CEO is expected to be incorporated in the concept of forgetting current profit and begin formulating long run goals. This will mean that Chen will have to acknowledge and take advantage of the opportunities the Chinese market has to offer.

Contrariwise, regarding carrying out a reasonable and rigorous market plan evaluation, Chen should be made to know that particular facets are important in the process of choosing whether to enter a new market or not. These facets comprise selecting the level of venture portfolio, developing enterprise with the understanding that start-up expenditure may not be provided as well as fiscal need, availability of marketing projections that are important in predicting the profitable future, and restructuring prospect of incentive and acknowledgments aspects in that concern.

Marketing Management

Birkinshaw and Pedersen (2010) explicate branches as a unit that operate value-increasing performances for a company. Their discoveries underpin Yip framework on globalisation, as the two scholars assert that subsidiaries find themselves in a situation more challenging as never before, since CEOs are projected to perform entrepreneurially and authorised as well as adhere to the international principles. Additionally Birkinshaw and Pedersen (2010) elucidate the function of the firm as that is elaborated by the mother corporation.  Levendary China with its 23 stores can be regarded as an important subsidiary for the parent firm. Looking at the challenges of establishing a common base for globalisation ability of the market, and hence the magnitude of the domestic reaction, Foster as the chief executive must manage the subsidiary in an improved manner.

Additionally, she must integrate the original function to create base for more growth in China, and thus the company must include a lucid meaning of the kind of growth it desires. Foster should suggest that Levendary Café does not need development if it compromises with product’s originality to ensure Chen is incapable of devaluing the brand in the Chinese market.

On the contrary, Foster should thus recognise that the approach in China cannot be agreed on in American HQ. As suggested by Birkinshaw and Pedersen, she must align market positioning aspect and a resource expansion aspect.  Chen understands the Chinese market, and the two executives should work together to identify a brand array that caters to this market. Brands are at present slightly distinguished in the United States, therefore this must not a challenge (Bartlett & Han, 2013). With respect to the resource developments elements, Foster should differentiate between resources and potential.

Alfred & Chandler (2010) thus suggest that resources are the variety of aspects accessible for and regulated by the company, while potential is the company’s ability to utilise these resources. Foster should recognise that even if she holds and regulates such resources and potential as fiscal and company-particular information, Chen has expanded some potential like fast improvement and adaptation. In establishing the plan, it is therefore important that Foster involves Chen and his concepts. Taking into account the fact that Levendary Café decided to venture in an entirely owned subsidiary, and provided with the challenges associated with domestic reaction against globalisation, this author will recommend a new strategy for the firm. As posited by Birkinshaw and Pedersen (2010), Foster must establish a new mechanism for mobilising knowledge. This may be accomplished through a global team located in China that would engage both Chen and his members and also the staff based in the U.S. positioned in China. This mechanism might ensure that the connection between the market and resource component of the policy balance is being handled. As result, both Chen and Foster may identify a mutual base in their globalisation obstacle: to decide a suitable level of domestic response and internationalisation.

Reilly & Wallendorf (2010) explicate that in essence many U.S. based restaurant enterprises have entered and continue to enjoy profitable performances in the nation, some have nose-dived desolately. This is an aspect worth recognising in the process of the market venture. It is challenging to understand the fact that many companies with dismal operations in China failed not as a result of ineffective managing but due to failure to carry out comprehensive and succinct evaluations.

For example, Pretzel Time was unsuccessful in the Chinese markets as a result of inexperience and sitting design.  The firm underestimated the requirement to investigate and align decent decoration. Hence, the tile decoration that was utilised in its stores was linked with a lavatory and this somehow managed to upset their clients’ attitudes.

The other suggestion is that there is an alternative of dissolving the Chinese company and hence leave the market.  This resolution may be long-lasting or time-based depending upon the basic aspects on the ground. For example, the termination might be made provisionally so as to permit Levendary Café to develop a productive planning strategy prior to resuming its operations again. Foster must consider dismissing the present operation executive, Chen by replacing him with an expert. Equally, the termination may be long-lasting as a result of the fact that company has not recorded profits as yet for the whole phase of operation.

By carrying a succinct evaluation of the given fiscal statements, it is nearly certain that the enterprise is not likely to report any profits in the near future. This is linked with the fact that the restaurant has faced inefficient management for a significantly protracted period. Chen as Levendary China CEO, does not appear to give a clear vision of the company future but rather starts carrying out the operations utilising a mainstream strategy. Permanent termination is as well a feature of obliviousness showed by the Denver HQ granted that the parent company has never started an initiative of being included in the Chinese processes.

Alternatively, the parent company under the leadership of Mia Foster may elect to support a mixed concept aspect. This needs prompt change of the services provided in order to make it possible for extra menus to be served in the same restaurant. As Yan (2009) suggests, Levendary China may be forced to offer its patrons with both the Chinese and Americanised menus so as to fulfil the varied desires of the market. The mixed theory can as well take on another idea that integrates various stores that offer distinct menus. For this model, two outlets may be developed: Levendary China and Levendary American. The former café can be situated in the less advanced regions of the market while its counterpart may be situated in the advanced regions of the same market, so as to draw different consumers.

Contrariwise, regarding carrying out a reasonable and rigorous market plan evaluation, it is suggested that Chen should be made to know that particular facets are important in the process of choosing whether to enter a new market or not. These facets comprise selecting the level of venture portfolio, developing enterprise with the understanding that start-up expenditure may not be provided as well as fiscal need, availability of marketing projections that are important in predicting the profitable future, and restructuring prospect of incentive and acknowledgments aspects in that concern.

Globalisation

According to Bartlett and Chen (2013) one of the biggest difficulties Levendary Café experienced, as they decided to venture into the Chinese market was a classic problem when opening restaurants in a divergent cultural environment. Global accessibility, serviceability and acknowledgment are obviously advantages of a global plan, while the imperfections include greater management expenses as a result of heightened coordination, and the inability to achieve domestic need. In all respects, for a company to perform fully it requires to adapt an international strategy that is suitable for the globalisation ability of the business.

In all respects, for a company to perform fully, it is suggested that Levendary Café must to adapt an international strategy that is suitable for the globalisation ability of the business.

5.3. EVALUATION OF THE PROPOSAL

The sustainability to cultivate the idea recommended in this paper is highly likely, since Levendary Café possess the intangible and tangible resources required. The global strategy provides a lot of advantages to the multinationals and Yip argues in favour of this strategy. The first advantage is viewed as the reduction of prices via having homogeneous products, which means that Levendary Café can benefit from the economies of scale by integrating production and R&D performance.

Chen can reap the advantages of economies of scale from aggregating his raw materials orders and benefit from the increased reputation that comes with cultural arbitrage.  Such a strategy towards standardisation will make it easier for Levendary China to gauge financial performance with regard to GAAP, improve customer service consistency and make it possible for advertising actions to be more concerted. Moreover, the implications for shareholders are negative, because it is greatly unlikely that investors will increase their share value.

CHAPTER 6: APPLICATION CASE-KFC

KFC company’s headquarters are situated in Louisville, Kentucky, United States. Globally it is the biggest fried chicken restaurant estimated by sales. Currently, KFC chiefly sells fried chicken, burgers, chips and beverages amid other Western-style fares. The company opened its first location in China in 1987, in Beijing, a city well known for its cultural diversity.  The data from KFC annual report indicates that the company’s core competence is incorporation of operational resource. KFC’s franchising model is seen as an appropriate one with robust Chinese chains. The multinational’s original strategy of “not starting from scratch” attracted a lot of Chinese stakeholders (Bloomberg, 2012). The standardisation of KFC is commendable. To make sure there is a consistent taste of foods on an international scope, the process of KFC needs comprehensive developments for the company to obtain the deduction from the suitable quantitative criterion. The strategy of Kentucky Fried Chicken is simply growth plan in the Chinese market. The concept of KFC’s “do not start from scratch” is a unique point of franchise of the company in China. This means beginning a resale of profitable and sophisticated cafes, which are made available to franchisees. Franchisees are expected to begin from scratch in order to prevent selecting a location individually. New franchise operators are authorised to run a mature Kentucky Fried Chicken.  The company is part of Yum’s Groups brands. By having multi-brand synergies, it improves the competitive advantage of KFC and incorporates the supply network as well (Alfred & Chandler, 2010).

Aaker (2011) suggest that under the paradigm of brand position and branded with the impact of the parent product makes it effortless for the consumer during the previous contact with reason for unease. This means that it is unproblematic to develop visibility and recognition, but becomes difficult to set preferences and brand image. KFC focuses on specialisation such that it complies with the specialisation of management, technology, brand and service differentiation and market acknowledgment of professionalization (Dickson and Ginter, 2010).  Kentucky Fried Chicken pays serious focus on the research of the growth potential of the industry, in order to make an improved plan for their growth strategy. On the contrary, many aspects impact the cost of operation.  KFC has vastly invested in cost effect resources, thus ensures the standardisation of the company’s basic brands and services countrywide. As multinational fast-food restaurant, KFC has broad experience in the Chinese market. Thereby, from a strategic standpoint, the core aspects impacting the cost of operating are the economies of scale. On the menus of Kentucky Fried Chicken, the company has standardised and integrated main product in China. KFC has spared no efforts to achieve the varied desires of Chinese consumers. In order to make sure the implementation of the concepts, in 2000 the company established Chinese KFC Food Advisory Committee. The role of the committee was to investigate how the company was going to adapt to Chinese preferences, diet and eating attitudes. In 2004, the invention and localisation program enabled KFC products to break the boundaries of Western foods and Chinese fast food. Today, KFC develops its products according to Chinese preferences, for instance, hibiscus fresh vegetable soup, mushrooms and chicken soup, traditional Beijing Chicken roll, amid other fares. These foods are motivated the Chinese cuisine and served quickly with reasonable prices

China is a huge country, and the variations between diverse regions are very clear. The major performance of variations is culture and the rate of economic growth, both of which affect in the food industry. It is effortless to discover that the growth rate of the food market is very varied across the eastern, central regions and western localities of China. The eastern region has the biggest sales of food industry, and the central province experiences fast growth level compared to other areas. Chinese fast food offers more emphasis to the use of grains, beans and vegetables. The technique of preparing food is deep frying to boiling. There is a huge variation between Chinese style fair and Western-style fair. Many western firms target their youth and families as their consumers, but Chinese firms offer more focus to the group aged between 25 to 45 years. When attempting to get an equation between standardization and adaptation, one of the critical facets that impact the global management of brands and commodities is culture facet. From the concept of cross-culture, the Chinese people are overall inquisitive about foreign things. So as to accomplish this inquisitiveness to foreign brands, KFC try to introduce products fast and consequently win many consumers in China. By integrating the core of Chinese mainstream dining culture with the emergence of western food, Kentucky Fried Chicken has achieved the success of implementing the new brand stratagem in cross-culture promotion. KFC introduces new taste of brands in varied season to satisfy the desires of Chinese consumer (Alfred & Chandler, 2010).  It would not have been easily for KFC to achieve the success it enjoys globally, if the company supplied American style foods without taking into account the diversified cultures and traditions of domestic customers in foreign regions.

KFC owns over 140 food outlets in continental China. KFC stores in the Chinese market are normally situated at locations where there are large areas, well-established supply networks, with easy access to domestic consumers and tourists. Consequently, transportation expenses can be saved, and the transforming preferences of domestic consumers can effortlessly be acknowledged and KFC can utilise appropriated approaches to cater to the customer tastes rapidly. For Beijing that is the heart of Chinese political and culture, the populace and holiday business market experiences an increase each year. Hence it has always been valuable for KFC to sell brands and attract consumers. KFC grows their enterprise by collaborating with Chinese products as well. For example, in 2006 KFC launched for types of beverages and carried out advertising by collaborating with QQ (a prominent product in China, particularly recognisable to young individuals) (Kara, 2010). The quick service industry, place stratagem indicates that where to sell the brands and services to consumers. Equally, place policy can be impacted by both in-house elements and peripheral elements. Social culture aspects like domestic law and government rules, religion, language, amid other factors influence this strategy evidently in distinct ways. KFC has its own customary when selecting the appropriate location to set up restaurants. During this activity, the political risk, the fiscal status, the amount of population and the particular culture in numerous regions all the concern to KFC.

Challenges

1. Most of the food its serves lack traditional dishes that appeal to the Chinese
2. KFC has failed to position itself as the cheapest dining alternative
3. Negative publicity

KFC China menus typically consist of over 40 items, in contrast to about 30 in the U.S. The line of menu diversity increases circulation and emboldens repeat visits. Menus provide spicy chicken, rice dishes, egg tarts, shrimp burgers, among others. However, for instance, Shanghai consumers protest that foods were too hot, while others complained that they were too bland. In spite of the endeavours to be successful in the Chinese market, KFC does not position itself as the cheapest dining alternative. Patrons spend the equivalent of $2.50 to $3.50 per visit, a cost point that places KFC way above street retailers and domestic cafes and nearly somewhat above other fast-food outlets, this impacts their total revenue because this customers resort to other food outlets that provide a good value for their money.  KFC China rapid growth poses challenges: An extremely visible firm might easily turn into the target of consumer or administration counterattack against the perceived negatives of fast food.  Several western health issues are already manifested in China, such as obesity, and KFC has received its fair share of backlash.

KFC should put the focus on explaining aspects pertaining to cost drivers, advertising strategies for the enterprise, and the fundamental factor of carrying out frequent risk analysis. Although KFC has already established a considerable consumer base, and performs comparatively fairly in the market, the company seems to discount specific aspects. For instance, KFC does not appear to take into account the value of the consumers. In an attempt to attract more patrons and consequently set up wider consumer base, KFC needs to go the extra mile to promote a personalised approach in its services. So as to fully maximise its potential for expansion, China must be offered its own position within KFC’s company organisation, permitting China to be at the frontline of the firm’s main concern for future development. KFC should also continually attempt to balance its primary sales drivers with offering personalised service to delight the client, just like Levendary Café. Last but no least, KFC must move its focus away from adaptation so as to start building a consistent brand image in China.

6.2. RELEVANT CONNECTIONS WITH LEVENDARY CHINA

Kentucky Fried Chicken (KFC) shares some features that make possible the relocating of learning objectives from one case to another. These features include:

Competitive environment

Both corporations are faced by severe competition. In the case of KFC, the global market of multi-unit restaurants is highly competitive and fragmented, particularly amongst the key incumbents: McDonald’s, Taco Bell, Wendy’s, Applebees, among others. Furthermore, as a result of the growing awareness about health the demands for healthier nutritious demand for this type of food products is also growing, paving way for new actors.

Basic Values

The objective of KFC is to offer consumers with innovative brands that integrate creatively distinct cultures to cater to distinct tasters/preferences. In that sense their vision offers four core principles to guide all the employees and shareholders in decision making and operations. Those values are, to believe in all people, commitment to customers, go for breakthrough and build competence. Analogous to Levendary Café, competence and devotion to the consumers are the heart of the strategy of the company.

6.3. PROPOSED SOLUTIONS FOR KFC

Given that both companies are similar in all the aspects mentions previously, it is possible to proposal core learning points (identifies from the research of Levendary Café) to KFC, so that the company can sustain and enhance its leadership position in the multi-unit restaurant industry.

1. New Product Development

New brand development has been proposed to have a new product such as Dumpling, fish and shrimp burgers. These two products are mainstream dishes for Chinese. In touching an individual’s heart, that person will develop loyalty towards Kentucky Fried Chicken more than any other quick service café. As result, the marketplace share will further be enlarged.

1. Implement market plan

Making a marketing plan and offering actual teaching to the personnel is as well a critical strategy for the development of the company is foreign localities. This will advance global political economic relations.

1. Differentiate its products

It is suggested that KFC must apply differentiation strategy by offering stick-out services. It will shield KFC against competitors in a very robust market like McDonald’s, Pizza Hut.  Firstly, KFC will have to develop their brands differentiate from their rivals by providing new variety of menu to new target audience like consumers who are vegetarians or those who enjoy eating consuming low-carb.

6.4. CONCLUSION

This paper has offered a vastly critical analysis for firms that encounter strong competitive landscape that make susceptible the likelihood of sustaining their competitive niche.In the process of presenting the difference between the company’s strategies, limitation can take place when applying the outcome derived from this research to other firms and markets. Additionally, as a result of specialty of multi-unit restaurant business, further research might be needed when applying the assumption in other globalisation cases.

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APPENDIX (List of Figures)

Figure 1: KFC’s Online Survey

 

Figure 2: KFC Lunch poster (KFC 2015)

 

Figure 3:  China’s GDP as of 2015

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