Executive Summary Levendary Café is currently in a complex strategic position, where immediate corrective action is strongly recommendable. This report will be focusing on key issues and problems that Levendary Café faces both internally and externally. The key internal issues of the company are: standardization of the business model in China, expansion of operations, management conflict between CEO Mrs. Mia Foster and head of China operations Mr. Louis Chen, as well as the standardization of the accounting practices/systems between regional centers. Hence the internal issues, company is externally facing major potential problems associated with adaptation to the new market (China) and bad stock price as a result of a perceived management inability by the NY Stock Exchange analysts. The following part of the report will be oriented towards analyzing and developing solutions for the issues listed above and offering recommended solutions as well as the proposal of the implementation plan. Primary tools that will be utilized for breakdown and analysis of the problems are Porter’s “Five Forces” model, which will be looking at the strategic competitiveness of the company, and further McKinsey’s “7S” model that will be used to analyze core aspects of the operations required for the company to achieve expansion and growth in the Chinese hospitality market place. Porter’s 5 Forces Model Bargaining Power of Consumers: HIGH Chinese fast-food market is proven to be complex environment that is hard to operate in as well as to compete in, by many players who entered that market before. Among the three different industry segments of broader Multi-unit Restaurant category, Levendary Café be classified as “quick casual” sub-category that is perceived by customers as healthy fast food alternative to typical either fast food or full service restaurant. In Chinese market place we are dealing with very powerful customers that have plenty indirect alternatives. Due to this reason, it can be concluded that Levendary Café operates in a niche market, where the switching cost for the customers is very small or almost non-existent. This further implies that Levandary Café needs to be very responsive to the markets needs, more precisely customer taste and preferences, in order to stay competitive. Development of the thorough market analysis and constant updates/monitoring process are potentially the only way for company to stay alert and ready to change/adapt. Bargaining Power of Suppliers: LOW China being the market that currently holds the image of the world’s supplier has enough supplies opportunities for Levendary Café’s current and future expanded operations. Cost of labor for relatively low-skilled labor in Chinese market is still very low and supply is significantly big, which puts Levendary Café as a potentially desirable place to search for job opportunities, and gives Levendary Café better negotiations position, which further implies that Chinese job market in relation to us will have low bargaining power. Moreover Chinese market place is also being regarded as fresh food rich, that in normal market circumstances has pretty high market supply and significant demand that generates competition, which provides customer with a fair market prices, and lower potential for dependence on small number of suppliers. This situation puts Levendary Café to be less dependent on suppliers and the conclusion is that food & beverage suppliers will have low influence of the company. On the other hand, suppliers necessary for other aspects of Levendary’s operations, especially those regarding further expansion of the business will not be an issue, due to the similar market situation as in the case of fresh food market, but necessary political connections may be required. Role of Mr. Louis Chen can be very beneficial in this aspect. Threat of New Entrants: Extremely HIGH The difficulty of assessing the threat of new entrants is that the cost of switching is very low as mentioned above in the “bargaining power of customers” section, and at the same time we are operating in a niche market that has low barriers to entry, due to unoccupied market space among other factors. Moreover large multinational chains may become interested in that particular niche, and be willing to flood the market with the investment, which can present a serious threat to Levendary Café due to weakened financial position, that in combination with poor assessment of the stock value is a potentially dangerous to the extent of rendering company’s operations completely uncompetitive. Another plausible scenario comes from Mc Donald’s that is already a major indirect and potentially direct competitor. Reason for This is that in the different parts of the world McDonald’s launched niche market operations under the brand McCafé, hence this McDonald’s owns chain of casual healthier food restaurants in the Hong Kong under the nam