The document analyzes the failure of Levendary Café's expansion into China. Some key points: - Levendary Café opened its first location in China in 2009 and aimed for rapid growth, opening 23 stores in the first year under CEO Louis Chen. - However, most locations did not conform to Levendary Café's standards for food, service, and atmosphere. There was wide variation between stores. - By 2010, Levendary Café China was losing money, reporting a $143,620 loss that year. This raised questions about whether the research underestimated challenges of the Chinese market and Louis Chen's leadership abilities. - Cultural differences may have contributed to the failure, as Chen took a more pragmatic

1. Levendary Café – should it
resurrect from a
culture shock?
An analysis.

2. The Story.
• Howard Leventhal was the beloved
founder of the popular chain of 3500
cafes.
• During 2008, company’s domestic growth
was slowing so they wanted to explore
opportunities overseas.
• After a green flag from the research team,
china was going to be their next target.

3. • Term starting September 2009, Louis
Chen is named the CEO of Levendary
café china on an annual contract basis
that lasts for 2 years.
• January 2011, they go for an IPO. Howard
quits to pursue other interests.
• Mia Foster is named as it new CEO.

4. The problem?

5. Levendary China’s income statement(2010)
- a loss of 143,620$
 Did the research team miss something?
 Was china market not ready for an american stylized
café – conflicts of culture?
 Was Louis Chen an incompetent leader?
 Did the organizational structure hamper the decision
making to prevent such loss?

6. Market research - China
• A population of 1.4 billion.
• Urban population rose from 36.2% in 2000
to 46.6% in 2010.
• By 2010, a new middle class emerged
whose per capita income surged.
• KFC was successfully running 3,000
restaurants and McDonalds had 1,100
outlets in 110 cities in China.

7. The levendary ‘concept’ of a
cafe
• A healthful, wholesome eating. Tasty fresh
goodness. A rich experience.
• A quick-casual restaurant. Healthy diet
with an informal self-serve dining
experience. Sales driven by core items.
• Howard was usually heard saying, “let’s
forget about profits today. Let’s just make
the customers happy”

8. Hey I’m howard and..

9. Louis Chen and the issues
about standardization.
• He opened 23 stores in the first year.
• Only 3-4 locations conformed to the
standards while others had alarming
variations.
• No seating at one, no salads at the other,
wooden chairs replaced by plastic ones
and much more.

11. • Means oriented v/s goal oriented.
– Goal oriented. Impersonal results
– Relates better with ‘what’ than ‘how’.
• Internally driven v/s externally driven
– Externally driven. Customer oriented.
– Less regard for business ethics and honesty
– Pragmatism overpowers ethical attitude.
Culture dimensions - Hofstede

12. • Local v/s professional
– Local. Identify with the boss.
– Less regard for the profession.
– No cross check with the standards or
specifications of a particular job.
• The degree of acceptance of a leadership
style
– Chen’s leadership style not in line with his
immediate boss’s (Mia’s) preference.
– Too negative and obnoxious attitude.