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Global Expansion of U.S. Quick Service Food Restaurant

Global Expansion of U.S. Quick Service Food Restaurants: A Case Study of Levendary-

Café in China

Table of Contents

Background of Chinese fast-food development 4
Aims and objectives 8
Problem statement 12
Research methodology 13
Adaptation vs. Standardisation 14
Brand innovation to cater to Chinese preferences 16
Chinese consumption habit 17
Ethical Issues 19
Sources of data 20
The I/R Context 21
Levendary Café’s Framework 22
The Chinese concept 24
Alternative Future Scenarios 25
Recommendations and Proposed Plan of Action 29
Limitation and Recommendation for Further Study 32
References Cited 36
APPENDIX (List of Figures) 40


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 and Han, 2013). 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.


Background of 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,

Within the past two decades China has experienced fast growth of its economy and
population. Related to this development have been China’s transforming lifestyles and eating
attitudes. One outcome of this has been the explosion in the fast food market. Chinese buyers,
particularly those who are residents of the metropolitan regions, have started embracing
Western-style fast food eateries that include chips and other standard fixings in their line of
menus. Conversely, Chinese-style fast food denotes more to a form of fast consumption as
opposed to homogenised generation and marketing techniques. Its line of menu normally
integrates a scope of alternatives like dumplings, rice, and a huge variety of meat and fish diets.
Noodle and dumpling shops along street boulevards are a mainstream segment of fast foods in
China. Li (2010) the current fast food in China dates back to the late 80s, when KFC became the
initial entrant into the Chinese market. Prior to the late 70s, China deliberately continued to be
secluded from the external world, and only noodle shops along boulevards accomplished fast
service desires. With the present preserved economic development in China that started in the
70s, the earnings level and standard of living amid the Chinese individuals have been growing at
a fast rate. The state of economic development has built unparalleled opportunities for both
global and local firms. Western fast food has recently become available in China reasonably
currently and is drawing important consumer awareness. Like in some other Asia nations, the
growing popularity of global fast food trademarks like Levendary China or KFC, agrees with the
advent of superior number of users with disposal earnings with which to buy expensive foreign
products. The fast food segment has indicated an annual growth of over 20% in the last decade,
with respect to the Chinese National Statistics Bureau. Today there are over 800 Kentucky Fried
Chicken, 500 McDonald’s and 23 Levendary outlets in China and many other global food
trademarks continue to be attracted to China. Realising the ever-infiltrated foreign fast food

restaurants, a lot of budding Chinese capitalists have entered the fast food market also. Chinese
eateries have attempted to utilise conventional Chinese culture to lure consumers into what is
advertised as contemporary fast food chain. Conversely, previous domestic fast food outlets
ignored the essentiality of hygiene, food quality, sociable service, and agreeable physical setting.
Presently, nevertheless, various domestic fast food outlets, after enhancing style, hygiene and
service, have been so infiltrated like McDonald’s and KFC (Li, 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) .
By the 90s dining out had become popular with consumers and had turned as well into a
huge business for Western restaurant outlets. During that time the accomplishment of global fast
food restaurant outlets had heightened the interest of domestic restaurant operators. Various local
outlets emerged in the mid 90s. At the start they were only offering chiefly Western delicacies
like sandwiches, salads and ice cream catering to youngsters who desired a touch of the exotic.
However in the late 90s, establishments began to endorse a native fast food market founded on
noodles, roasted meats, broths and rice pots. These authorities believed that firms like KFC had
served their purpose by establishing the trend and that it was time for Chinese based
organisations to take the lead and tender to the mass industry. The contemporary, yet domestic

profitable variants are different from the mainstream Chinese convenience food chains with
respect to scope, the presence of a formal personnel-employer labour system, complicated
marketing strategies, and other factors embedded in the enterprise culture of an industrial
society. Most of these new domestic competitors’ style themselves upon KFC or McDonald’s,
and even dress their workforce in analogous outfits or decorating their cafes in yellow.
Conversely, a company such as KFC has tried to localise their commodities to portray
themselves as Chinese and to moderate their foreign/international links. Lu (2010) suggests until
the mid 1990s, nevertheless, none of the Chinese restaurants earnestly faced Western fast food
monopoly in the industry. However, KFC and McDonald’s were capable of maintaining their
positions, as a result of integrating cultural representation and real-world appeal. Global fast food
outlets entered the Chinese market with a chief product line chicken-burger and pizza. Because
their commodities are restricted, their plans concentrate upon the reputation creation through
aggressive promotion. To draw more clients, they attempt to set up a strong and creative
reputation of their brand. McDonald’s, for example, served the American style burger while KFC
is the specialised in the American chicken. Chinese based fast food restaurants, conversely, these
days draw more clients by way of advertising their domestic flavour. Chinese consumers favour
the concept of being served fast, but they prefer it especially if the menus appear Chinese and
provide diversity. Domestic fast food outlets thereby are product-focused: they establish which
are the most standard Chinese foods and savour them for mass production. Many domestic
outlets have a crew of Chinese sous-chefs and food specialists for new product creation. Even if
they appear to come second to their Western associates in market endorsements, Chinese
industrialists are confident of business success. This is due to the fact that Chinese fast foods
cater for the preferences of Chinese consumers. In essence, many Chinese individuals take pride

in their cuisine and think of it as grander to gastronomy from foreign cultures. A mainstream
Chinese nourishment comprises chiefly of steamed rice, vegetables prepared in varied means,
dumplings amid others. Cooking techniques of Chinese fast foods are more distinct than the
simple frying and barbecuing utilised for Western fast food, incorporating frying, steaming and
boiling. Chinese based restaurants are inclined to draw clients who favour mainstream taste of
Chinese food rather than the popular and new foods. On top of their benefits in taste and larger
variety, most consumers tend to think that Chinese fast foods are more nourishing than their
Western associates (Li, 2010).

Aims and objectives
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. Cultural effects are
the main concerns for this paper. The demonstration of standardisation and adaptation of
atmospherics putting into consideration representative qualities from varied cultural settings will
be significant for other companies which have previously had or will enter into those regions.


Levendary Café is a popular, publicly traded trademark in the United States and presently
entering the Chinese market. According to Bartlett and Han (2010) 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 and Han, 2013). 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. The food and beverage market is fragmented which suggests no
entrepreneur have important market share, which the multi-unit restaurant enterprise possesses.
China’s GDP growth of 15 percent over the past ten years and the population of over 1 billion
people were ideal for venturing into beside China’s urban population growing from 37 percent to
47 percent in nine years time plus a robust middle class emerged whose per capita earnings grew
from $1000 to $2, 600. Labour cost was a huge cost factor although they have a miniature and
fixed market for CEO’s. Bartlett and Han (2013) the idea of healthful, nutritious eating is part of
Levendary Café’s culture and mirror in their famous advertising catchphrase Tasty Fresh
Goodness. Marketing is designed in such a manner to work with external advertising
organisations to disseminate this idea via advertising image. This imaged displayed across all
3500 chains and franchised stores and stayed constant. Levendary Café foods have always been
of superior quality and ever stable. The company’s operations have strict principles, policies and
practices that permit for tight regulation of daily activities and store level expenditure and
performances. Formal voids in China can sustain a firm from conducting business in this region
if the company is unwilling to handle these formal voids. Any firm is expected to change its

business model for this particular region and take on the voids for it to achieve its objectives.
This is what Levendary Café carried out in various settings in China. For example, some settings
need some drastic transformations like having take away stands without seating arrangement or
altering the line of menu by expunging the whole lot and replace it with an assortment of
domestic dumplings. In another setting, Levendary Café renovated the furniture completely by
utilising a domestic furniture dealer to supply them with synthetically framed seats that was an
option to their typical wooden framed decorated seats. Several settings were capable of
possessing the same outline and menu selection as the U.S. but not the majority. The desire for
personalising Levendary Café had in the United States is analogous to the desires they have in
the Chinese market. The company has adapted to what the consumers need for them to become
successful. For instance, the Chinese consume few dairy products therefore Levendary Café had
a need to modulate their cheese soup, and since the Chinese clients were not familiar with turkey,
the company had to substitute it with chicken as well.


Problem statement

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 (2013),
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. On the contrary,
even if varied aspects of atmospherics have been argued to different scope in marketing research,
there is an unexpected lack of hypothetically-oriented frameworks dealing with the function of
cultural orientation. It has been suggested, however, that the convenience orientation denotes a
segmentation procedure that surpasses countrywide and cultural boundaries that increasingly
endorses standardisation strategy for multi-unit restaurants. Nevertheless, initial study has stated
that an environment that generates a specific reaction in a person or group of people at a
specified duration might generate a completely varied reaction in another person or group.
Values differ under different cultural contexts; therefore the same atmosphere might carry
distinct connotations in distinct nations. Although links and variances between eastern and
western culture have for long time been investigated in the academic domain, our knowledge
about the impact of a consumers’ cultural and subcultural effect on the opinion of marketing
setting is reasonably unfledged at this stage. So as to conduct the evaluation, the author first
investigated relative literatures and hypothesis about adaptation/standardization, and further
broke down these hypotheses to culture and cultural adaptation framework. Hence in order to get
extensive knowledge about the significance of strategies and the implementation process, the
author also decided to investigate the Levendary Café’s globalisation strategy in China.

Research methodology
The research method will assist the reader(s) to follow the course the writer has
undertaken to make this paper come true. This chapter includes the choice of methodology
information and data gatherings, process and the selection regarding the case company.
Conversely, methodology is the apparatus utilised to examine whether a hypothesis is good or
not. There are various techniques of carrying out research. The chief purpose of research
methodology is to collect rational, demonstrable information, and most essentially, the
appropriate recording of that information. There are two kinds of methodologies that can be
utilised to write a research paper, like qualitative and quantitative technique. The most important
variation between these two is how to utilise figures and statistics. The function of utilising the
qualitative technique is to achieve the knowledge of what is being examined. Conversely, the
role of utilising quantitative technique is to collect information so as to be capable of measuring
and conducting statistical appraisals. Because the purpose of this research is to investigate
Levendary Café globalisation strategy and what it should do to be successful in the Chinese
market, qualitative approach has been identified as more suitable for this paper.
In collecting information and data for this paper, the author utilised numerous materials
concerning Levendary Café. These comprise of the firm’s website, online newspapers and other
useful online resources to gather preliminary information concerning Levendary Café’s
background and monetary position. The author collected data on online magazine articles that
analyse the perceptions and intuitions of corporate writers and editors, investors and analysts on
the present position of Levendary Café and other companies, such as KFC and McDonald’s.
Academic books and journals authored by expert management, marketing and commercial
scholars were utilised as a guide in examining the present position of Levendary Café. These

academic materials were as well utilised to offer the fundamental principles for the suggestions
on the needs for a strategic transformation in the management and business performances of
Levendary Café. Because the function of this paper is analyse globalisation strategy process. It
was important to concretise and investigate the process deeply within an actual company that is
recognisable and prominent globally.

Adaptation vs. Standardisation
According to Hodgetts and Luthans (2014) when a person or company first ventures into
a foreign environment with different culture, it is usually acknowledged that the cross-cultural
interaction will generate pressure for them. Experiencing such strain, some select to stay their
own traits, but others select to be integrated into the new setting with their own traits. Most
scholars have suggested that standardisation is not practicable or wanted as a result of the
changes in the legal, cultural and climatic settings. Still when looked through the prism of
prevalent adaptation of mass modification methods, the matter involving adaptation still must be
put into account (Kotler, 2012). Customization in features or brands to fulfil legal consumer
wants is at times a condition for venturing into alien markets. Because customers redefine the
product’s marketing actions when looking at its cultural background, products closeness to
domestic culture will permit them to develop improved links with their clients and to better react
to their expectations. To some degree, this discourse has been ineffective because neither whole
adaptation nor whole standardisation is likely. Various experts have suggested that the
globalisation must be considered as an integration of these two alternatives. Kotler (2012) further
posits that for the consumers, this is a way of communication that amounts to a culture that is
neither global nor standardised throughout nations or actually a group of varied domestic

cultures, but a case of division where varied societies coexist. Hence, global firms are expected
to have a balance to achieve this new fragmented consumer society. When looking at the concept
of cultural adaptation in some particular industry, it can be regarded as a type of interactive
adaptation of the present corporation as a legitimate individual. Most academicians have
hypothesised and investigated the concept of cross-cultural adaptation that has the tendency of
shifting from one culture to another by get used to certain aspects like regulations, traditions and
principles and dialect of the foreign culture. To adapt to a new culture is to encounter a huge
challenge and to follow a new mechanism of regulations in a certain group that needs a libertine
mind. Overall, cross-cultural adaptation is the process of adjusting the alien thinking techniques
and attitudes to be constant with the domestic culture. Even if these researchers chiefly
concentrated upon the adaptation attitudes for a person in a foreign culture setting but not an
organisation in a new marketing atmosphere, their hypotheses and mechanisms are considered
important in guiding this study. In essence, the cultural, interactive and individual aspects are all
separately impacting the consumer attitude in the industry (Calantone et al., 2010). Through
investigating and comprehending the consumer attitudes, corporations will be capable of arriving
at their ultimate choice of marketing mix. Nevertheless, various critiques are formulates against
the marketing mix, by suggesting that the absence of strategic content in them makes it
unsuitable as development tool. There exist just two chief restrictions of the marketing mix as a
planning instrument, collective in all analysed platforms, namely the framework’s interior
orientation and the absence of customisation. Other scholars have disapproved marketing mix
since it concentrates more on the short term market dealings instead of the social process of
association development.

Brand innovation to cater to Chinese preferences

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 and Han, 2013).
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.

Chinese consumption habit

According to Li and He (2011) for Chinese consumers, going to a food outlet means
more than just having dinner; they consider this as an incident to interact with one another,
socialise with close relations for a while. Going by recent research, the initial selection for
Chinese individuals to see close relations is to go to an eatery, rather than inviting them to their
homes. In contrast, in the case of Americans, fast food joints are selected for its fast food service
and expedient access. For that reason, Levendary Café is simply situated along street corners in
the United States. Nevertheless in China, Levendary has built most of its stores in downtown
locations where population is condensed. Until recently, the idea of “drive thru cafes” has been
introduced to China, and Levendary Café has started to strategies its own drive-thru model in
China. Orders are systematically made utilising a microphone and collected individually at the
booth. Yet this driver-thru café is a setback for Levendary Café. In the U.S. the extent of food
bought via drive-thru eateries is responsible for a huge quantity of the entire restaurant
consumption. The lifestyle with motor vehicles has not actually been fully recognised by most of
Chinese consumers. As indicated previously, dining is an integration of eating, socialising,
relaxing and enjoyment. Chinese drivers may favour eating prior to driving, or walk to a
restaurant and relax following a nerve-wracking journey. 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 are 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.

Ethical Issues
Even if Levendary Café attempts to promote healthy eating, the food provided by this
company and others contributes to obesity and heart disease. Not only do some of Levendary
Café’s brands hurt personal welfare, they are as well having an impact upon some East Asian
cultures with the company’s venture into the region. According to McCracken (2011) the fast

spread of foreign brands, such as Levendary Café and its quick service restaurants rivals will
undermine native cuisines and assist to develop a standardised, global culture. Chinese parents
want to link their children to the foreign world; thereby they award them with a visitation to
Levendary Café, however this action is drifting them away from their culture. In the next two
decades or so, the Chinese youth will not even give much thought about the alien origin of
Levendary Café and its competitors which will be offering regular food to individuals more
concerned in getting a quick gourmet fare instead of getting a cultural experience. Another key
challenge introduced to China by the entry by Levendary Café and other U.S. based firms, is the
preoccupation with American culture. For instance, before the arrival of Kentucky Fried
Chicken, celebrations marking young individuals’ particular birth dates were unfamiliar in great
parts of East Asia. With the existence of Levendary Café in Asian regions, and the
complementary American cultural practices, young people in these nations are acknowledging
the prospect for feting individual birthdates. Levendary Café might one day find itself exploiting
this cultural transformation to market party packages to Chinese youth who wish to celebrate this
new occurrence. In essence, Levendary Café sudden existence in China will ultimately change
the Chinese culture, and traditional practices will be lost if the company adopts party packages to
cater to the young generation (Kara, 2010).

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.

According to Bartlett and Han (2013) Levendary Café entered the Chinese market in

  1. 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. The evaluation will be centred upon the following research question:
How does international integration and domestic reaction context IR hypothesize on the matter
of fragmentation between the interest of Levendary Café U.S. and its stores in China?

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.

Levendary Café’s Framework
“Forget today’s profit. Have a positive impact on customers’ lives. Make them want to
come back. That’s how we’ll win in the long run.” (Bartlett & Arar 2013: pp.4)
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.

The Chinese concept
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, 2013). 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. The economies of scale might be achieved by standardised products and consolidated
R&D in brand and marketing from the United States. Chen’s strategy of ignoring the company’s
concept can be regarded as the lack of knowledge of how the international strategy will
positively impact the Levendary in the long-term.

Alternative Future Scenarios
In spite of Yip’s (2012) argument for a firm to take on the global strategy, there is
however a constraint in the IR framework. 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. For instance, 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. 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. This chapter explained that 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.

On the contrary, Friedmann (2011) suggests that globalisation must be regarded as the
incorporation of all with everything else; especially so the incorporation of markets, finance and
technology in manner in which that changes the world to be lesser than it has ever occurred
before. This section will look at how Levendary Café has selected to purse Foreign Direct
Investment (FDI) in the Chinese market, what problems the firm has encountered as result of

strategic challenges of domestic reaction juxtaposed with internationals co-operation and
ultimately what benefits the company has to restructure its investments in China when tackling
supplementary strategy. In this subsection, Hymer’s concept of FDI was applied as well as
Birkinshaw and Pedersen’s context of strategy and management in global firms.
Hymer in his hypothesis of foreign direct investment suggests that FDI was only inspired
by the pursuit for reduced costs in foreign environments it would be problematic to explicate
why domestic companies fail to compete effectively with foreign ones (Letto-Gilles, 2012).
Rather he posits that these imperfections are operational ones, arising from the market structure.
Here he highlights the inadequacies inside an oligopolistic market structure controlled by just
limited organisations, where Levendary Café falls in the Chinese market. Also, Hymer suggests
that the two chief determinants of direct investment overseas impacted by market inadequacies
and the firm’s need to improve its market dominance status. The importance being the definite
benefits a company can successfully exploit overseas. This first variant explicates why
Levendary selected to venture in China. 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 and Han, 2013). 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.
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. As Chen was offered the
mandate to establish Levendary China, his core duty was to replicate the processes of the Denver
head-quarters and the divergent stores. To achieve this Chen was put in the U.S. for a period of 6
weeks internship, yet alongside this he was offered practically no restrictions in managing the
opening of Chinese outlets. When Foster was introduced as the new CEO of the parent company
in 2011, and decides to inspect Chen’s manner of doing business in China, she discovered that
the subsidiary in China appeared to adapt a largely multidomestic approach. This can be
witnessed as Chen had tailored brand and standardised operations. The board and fiscal reports
were sent to the U.S head-quarters, Chinese format, one of the Shanghai outlets were made a
wholesome take-away, one store in Beijing had its signature wooden fittings replaced with
domestic fittings and some branches had entirely domestic menus (Bartlett and Han, 2013).
Conversely, the new executive favoured a more global strategy; operations like fiscal reports
must be standardises, and although Foster recognised there must be certain level of domestic
reaction, she desired to see a more homogenous brand in order for the company to be more
recognisable for international consumers.

Recommendations and Proposed Plan of Action
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. China
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, I 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
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. On the contrary,
Levendary Café’s strategy to venture into the Chinese was not carried out productively. 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
anexpert. 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, 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.

Limitation and Recommendation for Further Study
The first limitation rests in the point that there are different causes for the operation of
Levendary Café in the Chinese market, including costs and price discount, however in this paper
standardisation, adaptation and globalisation strategy aspects were deliberated. The writer
appraised the importance of globalisation features just according to the extent of cultural
adaptation and standardisation; therefore it is not a comprehensive research of all the critical
success for the company. In the process of presenting the difference between the company’s
cultural adaptations efforts, limitation can take place when applying the outcome derived from
this research to other firms and markets. Additionally, as a result of specialty of fast food
industry and particularly U.S. fast food business, further research might be needed when
applying the assumption in other globalisation cases. More so, this research was conducted from
the market and consumer perspective, a lot of the data of the adaptation process was collected
from secondary data resources such as textbooks, journals, media reports. Such knowledge
concerning business strategies might have more detailed and concise information if only the
writer can be provided with the chance to engage with the CEOs of both the parent company and

its Chinese subsidiary. Lastly, the concepts and discussions in the paper are not perfect and
complete. Other tools may be utilised to improve the reliability of the gathered information.

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

References Cited

Aaker D.A. (2010). Building strong brands. London: Simon & Schuster UK Ltd.

Aaker. D.A. (2011). Managing brand equity: Capitalizing on the value of the brand name. New
York: The Free Press.
Alfred. D. Chandler, Jr. (2010). Strategy and Structure: Chapters in the History of the American
Industrial Enterprise. Massachusetts: The MIT Press.
Alibaba (2012). The Difference between Regular sales and Franchise Chains.

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