This is a really complex decision that one CEO must face, which would end in one of two
ways: firing Louis Chen or reigning him in heavily. Since the company went in the IPO
direction, many decisions are really hard to make because the CEO is never really looking at
the best outtake of the situation fo all parties, but for the one the shareholders are most
interested in. In that case, I would suggest a simple sanction and better control of the
decision-making process and operations in China, with an additional setting-up of new game
rules, leaving the existing restaurants as is, and implementing new branding guidelines for
future openings. Now, considering the fact this is a school assignment and I am still able to
come up with new ideas and proposals without any real business world consequences (only a
bad grade, maybe) I would like to discuss here a peculiar approach to the situation.
Considering the fact the market reacted positively to Louis Chen's changes and adaptations of
our brand module that the U.S. division has, it would be a real shame to miss out on this
opportunity with sanctions, firing Chen or cutting off his high level of autonomy are
something I would never do- only if all of this showed as a cost and not a profit earning
move. My suggestion would be to open up a totally new brand concept for Levendary Cafe,
that would be called „Levendary Cafe International“. This concept would allow mixing of
cultures, foods and designs from regions we decide to expand in with the classical American
design and offer we already have established. It could turn out as a great idea, due to high
customization that will be available in the frames of classical look and feel of our restaurants,
while not confusing customers from the U.S. I think a lot of customers might enjoy the fact
that anywhere around the world they will be able to try a new and different meal that is
exclusive to that area, from their favorite restaurant while also offering some classics and
tastes they are already familiar with in combination with permanent pleasant staff and
customer service. This concept is similar to what RockStar Cafe is doing around the world,
selling exclusive merchandise from every city they have a cafe in- which lures in more
customers that collect their merchandise all around the world. However, full autonomy that
Louis Chen experienced will not be able to continue with other areas as well as his own, he
would definitely be put under some kind of control with required reporting of all new and
additional customizations he is doing. So the new subsidiary presidents of Levendary Cafe
International would always report back to Denver with detailed descriptions on ideas and
executions on all the customizations. I would also prefer that they have a cultural and
linguistic background of the region that they will lead expansion in, just like Louis Chen. I
don't think that people should be fired for implementing „thingking outside of the box“,
especially if such approach creates new revenue streams and business opportunities. In those
situations, as a CEO, I would always make the board sit down with me and brainstorm on
how to capture that idea and blend it in.