Memorandum - Assignment Example

Memorandum 1. Statement of Problem: The Legendary café is an American based multi-unit restaurant that offers fast-casual foods to its consumers. With the vigorous Growth Development Product changes and a rising lifestyle trend to feeding in China, the Legendary café did an expansion to operate into China market to implement its concept of serving customers with delighting high-quality services. Due to lack of appropriate knowledge and experience about the Chinese market, the chief executive officer Leventhal opted to give Chinese market experienced and skillful Louis Chen the full mandate to control the operations in China. Unfortunately, after one year of operations in China, the company’s headquarter did not satisfy the Chinese performance according to the objectives that were set (Bartlett, Christopher, Sumatra, and Paul, 23). Currently, the organization’s domestic demand was declining as well as its stock price. The new chief executive officer faces a big challenge of building a multinational enterprise due to lack of previous management experience. The CEO should note that the major problem was due to her difference with Chen in the view and management styles of the market. Other major problems were cultural differences and limited international experience. The CEO should curb the above problems by taking cautious analytical procedures that will make the enterprise to perform efficiently and effectively. The CEO should make the following decisions to solve the problems above: 1. To implement an appropriate management style that promotes the goals and objectives of the enterprise. This will create a perfect system that maximizes production in the organization. 2. In the concept of globalization, any element of difference in culture should not be traced in any case. Embracing culture will create a platform of togetherness. This will be depicted by preparing meals of different cultures in the café. 3. CEO should seek international experience by attending various global workshops that focus on building leadership skills. This will trigger an element of understanding the international appropriately thus doing serious business in the café. ______________________________________________________________________________ 2. Alternatives                 Recommendations of a number of fundamental changes to Legendary cafés new that would significantly affect Legendary's relationship with Louis Chen, their future growth and expansion prospects in China, and the interrelationship that exists between their Chinese subsidiary and their Denver corporate headquarters. In the beginning, former CEO Howard Leventhal granted great latitude to Chen for their expansion into the Chinese marketplace (Bartlett, Christopher, Sumatra, and Paul, 57). This alienated hands-off approach specifically set the stage for the problems that you and your executive management team were encountering. The alternatives include: 1. The CEO and her management team should immediately start finding alternatives to Chen’s leadership role in the Chinese market. Appreciate Chen’s entrepreneurial spirit and stay true to brand. 2. Establish effective oversight operations of the Chinese subsidiary. The incorporation of a reported structure implements Generally Accepted Accounting Principles. 3. CEO should understand the difference in relation to the customer and market requirements between China and the United States of America. Learn the business strategy of the success of the competitors and at the same time analyze why other competitors struggle in the market. ______________________________________________________________________________ 3. Decision It will be a good start if you go over the cases during the trip meeting. Whether if you change the strategy or not, the CEO should recommend Levendary Café to hire another marketing sales manager to work next to Chen. This will provide Chen with the recognition that he is working hard, and at the same time, more control over the 23 franchises. With this decision, headquarters makes sure that Chen is still motivated with his new goals, he is more controlled with the additional help position, and there will be more communication between this new person and the headquarters. The huge issue between both is that Chen never communicates the decision of changing some of the locals to the new CEO. In addition to this point, it is important to add in the agenda the delay problems of the break-even point in the income statement of 2010. There is a net loss of $143,620, while in the American income statement there is revenue of $780,563 (Bartlett, Christopher, Sumatra, and Paul, 103). The new CEO should find a way to obtain a profitable income in China, and that successful path should be related to the strategic marketing plan. At the same time, Mr. Steel is the image campaign that Levendary Café has in other stores could not differ that much from the original. Because there is a risk for customers, For example, If there is a frequent user of Levendary Café in the US, and she occasionally visit China for business, and she found out that the store is different from the one she visited in Pudong, it will affect her purchases, because she is unfamiliar with the new surroundings. Nowadays it is observed that the world still working with the magical theory of word of mouth. If something is right or wrong, consumers will know and spread the words. ______________________________________________________________________________ 4. Action steps 1. Instituting computers with accounting software that instantaneously transfer expenditures and revenues to the local business office that is knowledgeable of the Chinese regulatory requirements. This change will allow the individual units to be free from heavy financial concerns and associated costs. The hiring of a local accounting firm to handle will also ensure that the financial reconciliations to GAAP standards, as well as currency exchange, are done in accordance with established practices in the United States.    2. Louis has the incentive, desire, and drive, but he does not have adequate training in restaurant functionality. Although he may have talent in regards to real estate, which does not necessarily translate to the foodservice industry. Louis needs formal training in the restaurant business (Bartlett, Christopher, Sumatra, and Paul, 198). Louis wants to focus on the youth but statistics show that the middle-class women are the largest growing sector of Chinese consumers and this is a philosophical divide between himself and Legendary's executive management team. 3. The domestic Legendary management team needs to be further educated in what drives the Chinese consumer; therefore, the CEO and her subordinates should take courses from Chinese instructors concerning restaurant economics and, most importantly, Chinese consumer behavior and preferences and the strong variations that exist within this broad marketplace. 4. Structuring the appearance (inside and outside) to appeal to the Chinese and developing menus that are preferred choice items will also help to grow Legendary's business model. ______________________________________________________________________________ Work cited Bartlett, Christopher A, Sumantra Ghoshal, and Paul W Beamish. Transnational Management. Boston: McGraw-Hill Education, 2014. Print. Read More