Table of Contents
The Pros and Cons of Standardization of Business Operations for Multinational Corporations
Standardization is a uniform production process and method in an organization. At an international level, standardization strategy work across a different range of cultures using relatively standard brands, packaging, and formulation as well as positioning and distribution concepts in the global market (Lolidis, 2006, p. 13). Basing on the Levendary Café case study, standardization expresses advantages and disadvantages in respect to different approaches (Bartlett & Han, 2013, p. 1). Among the advantages, standardization of the business operations by an international corporation helps in cutting down the costs through elimination of the duplicated process and systems. This helps the firm to concentrate on the advantages of economies of scale in production. Secondly, with the advanced technology and communication has contributed in making global market standardized. The multinational company like Levendary Café uses the global standardization approach in reaching the global market through unified marketing framework. Furthermore, standardization ensures the effectiveness in different time zones and hence ensuring Levendary Café can save time and money in the respective region. Finally, standardization ensures the international firm protects their brands adequately as there are no changes and differences are made or exposing the brand to risks (Storholm & Scheuing, 1994, p. 184). Therefore, Levendary Café as an international firm focus in maintaining the services and products brands in all the outlets globally.
The disadvantages of standardization include lack of adaptation as international market experience different dynamics and cultures. The idea of standardization is the enjoyment of the mutual gains that are obtained from the employment of similar strategies. In different international locations, the firm experiences challenges in meeting the required systems and strategies and hence being hard to comply with the international changes. According to Storholm and Scheuing (1994), culture and dynamics of the international market tend to influence standardization. Another disadvantage of standardization is the lack of uniqueness. The International approach helps an organization to consider producing products matching to the customer’s demand and interests. In addition, this indicates that firm through the different outlets and regions should concentrate in offering unique product and services beneficial to the company. Therefore, using standardization approach, it means that some beneficial opportunities are foregone and hence not acted upon as the Levendary Café outlets have to conform to the established standard practices.
Critical Tasks and Key Success Factors in the Restaurant Franchising Business in an International Context
Franchising has a great impact on the international business as it opens up different aspects and contexts to franchisors. Levendary Café franchised two-thirds of 3,500 stores whereby the Chief Franchise Officer franchised and recruited a new team of the franchise (Bartlett & Han, 2013). The basic consideration in the franchise is supporting and enforcing the Levendary Café brand and maintaining the operation standards. The critical tasks and the basic success factors of franchising an international restaurant business are ensuring motivation of the management, staffing leverage and also ease in supervision. In retaining good unit of managers, franchising allows the business management to substitute ownership to the managing entity. This tends to motivate the manager for being associated with the operation success of the firm.
The country manager roles are defined by the contribution and managerial responsibilities one is supposed to fulfill to enhance international business operation standards. The qualities and qualifications are not certainly defined but rather have to be collectively meet and standards function of international institutions. Understanding production channel, strategy, and culture of the firm provide an exposure and commitment to the supervisory roles (Baruch, 2002, p. 39). Franchising enables the business owner to introduce country manager with the responsibilities of supervising and genuinely commit to the international business growth.
Under staffing leverage, the headquarters-subsidiary control takes the franchising mandate of allowing the franchisor to articulate functions effectively. The headquarters-subsidiary control provides the ground for overseeing the international business operations, exciting management control procedures and production strategies to meet the stands of the regions or country of the outlet (The Economist, 2007, para 7). Franchisee assumes different responsibilities and hence leverage with intention of reducing the staffing burden, ease in supervision and increasing profitability. More so, the Levendary Café concentrated in ensuring the franchisor has all the desirable qualities to achieve the international business standard in the regions of operations. Therefore, an international manager is supposed to understand the operating environment of the region to enhance competitive ability of the international organization in the region.
Implications for Levendary in Managing Its International Operations
In managing the international business operations, franchising has different implication starting from management and profitability. Franchising approach enables franchisor not to be directly responsible for the day to day activities and management of Levendary café outlet stores. Franchise units concentrate with their contribution toward enhancing success operation of the business and meeting international standards (Wakke, Blind, & Ramel, 2016, p. 321). Moreover, all the micro level management of the international business is mandated to the country management to contrite on the specific managerial roles. Furthermore, the country management understands different regulatory aspects to manage the local business in the region. This indicates that at international operations, it would be easier if the franchising management concept is applied to undertake all the activities on running the business.
Increased profitability would be achieved easily through franchising approach through enhanced staffing leverage and ease in supervision. Franchise organization has been indicated to run a highly profitable international business as they have knowledge and skills regarding the regional context. In addition, the franchise has advance knowledge on the managerial practices such as site selection, negotiation of lease, training, hiring and local marketing strategies in the region. According to Turpin (2009), the organization tends to be more profitable through enhancing the operations of the firm and realizing the demands of the workforce. The accounting, payroll and human resources function is delegated to professionals to undertake the mandate to control the organizational performance. Levendary café has concentrated on the chain of outlets that comply with the international business operation. Local marketing has been advance undertaken by the franchised bodies to enhance productivity, authority compliance and lease negotiation among others practices. In addition, profitability has been realized through an enhanced contribution of different sectors and institutions at the international business operation level. Therefore, franchising of the international business operation has enhanced the Levendary Café in managing its outlets in different locations and regions.
Recommendation to Mia Foster
Levendary Café faces difficulties in operation and sustenance in the international market and especially in China. Chen is aggrieved by the standardization of the Levendary Café operations, process and product, and services they offer. Regional differences are the greater challenge as the international business has to change tactics to comply with the customers need for satisfaction. Having 23 outlets in China, Chen has indicated only the outlets at the United States embassy are showing positive return compared to others from a different location. This shows how standardization is influencing the business operation negatively at international level (Schilke, Reimann, & Thomas, 2009, p. 27). In addition, it is clear that standardization also makes it hard in developing a strategic plan in the international business operations. As a result of unreliability and incompatibility of the customers’ needs and wants, then the firm cannot excel and hence registering negative net income.
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The recommendation to Mia Foster is reviewing the organizational operation and specifically at the international business operation level. Chen is categorical that only the outlets operating at United Embassy are showing a positive return. Mia Foster should understand that the product introduced into the Chinese market is not compatible with the customer’s demand and needs. It is the high time for Mia Foster to outsource other mechanisms of branding that would fit the international business operation. The need of engaging local knowledge from the market survey of the customers need would also enhance the decision making on the best branding to achieve competitive advantage (Paul, 2000, p. 192). With the assistance of the local franchisor, Mia Foster should engage different stakeholders to revise their standardized systems, process, and brand to fit into the Chinese branding. Therefore, this strategic approach would attract more customers and enhance competitive advantage.
The agenda for the next meeting between Mia Foster and Chen should concentrate on the managerial practices and improvement of the Levendary Café brand. The meeting should articulate essential considerations that would enhance international business operations to achieve positive growth and returns. Furthermore, it is the role of the international managerial approach to ensure the organization achieves competitive advantage through improved standardized branding to attract more customers. In addition, another agenda should be on the development of the unique Chinese brand in the international market compatible to the culture of local people (Schlevogt, 2000, p. 209). This would ensure the improvement of the current brand using Chinese cultural background and maintenance of the standards would contribute to improvement in performance and productivity. Therefore, the meeting between Mia Foster and Chen should focus on realizing standardization aspects of the new brand that would perfectly fit the Chinese customers demand to enhance satisfaction.
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