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.
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”
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.
10.
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.
