As businesses expand internationally, there are many variables that they need to consider.In the current environment, businesses must embrace aggressive actions to cope with the realitiesof a globalized economy. Globalization has become a reality that businesses cannot escape. Theworld is increasingly becoming homogenous, and this places extra pressure on businesses thataim to ensure that they […]
To start, you canAs businesses expand internationally, there are many variables that they need to consider.
In the current environment, businesses must embrace aggressive actions to cope with the realities
of a globalized economy. Globalization has become a reality that businesses cannot escape. The
world is increasingly becoming homogenous, and this places extra pressure on businesses that
aim to ensure that they expand and become competitive on a global scale. Global expansion is a
path that has many complexities and difficulties. In the case of Leon, the company has been in
the hospitality industry for some years and is considering expanding its business model. The first
branches of Leon Restaurants were opened in 2004 and 2005. In 2006, the restaurant became a
chain. The business model has been focused on promoting healthy eating through the sale of
healthy food. The company has undertaken massive expansion having 49 restaurants in the U.K.
and opening joints in Washington. The firm plans on expanding in other nations, including
Spain, Bahrain, Saudi Arabia, Tukey, and Kuwait. The company will face several problems in its
quest for expansion, including foreign policies, culture, language barriers, and problems relating
to the management of global teams.
Culture
One of the main problems associated with the global expansion is culture. International
business expands beyond the borders of nations. It is therefore important to factor in the cultural
aspect (Beugelsdijk, Kostova, and Roth, 2017). International business goes beyond national and
cultural borders in the quest to fulfil the needs of the consumers. In any organization, success is
built on having a strong workforce. Employees are thus an important factor in ensuring that a
company achieve success (Florek and Jakubczak, 2018). In the restaurant industry, firms must
Leon Case Study 3
hire employees who possess the skills to communicate with customers drawn from different
cultural backgrounds. The implication of this is that several disciplines have to be integrated into
the management of new branches that Leon has opened and is planning to open. The disciplines
are an international business, international logistics, international marketing, and international
trade and finances.
International business relates to meeting between individuals drawn from various
cultures. Every culture has its own traditions coupled with values. The implication is that the
expansion of Leon will mean having salesmen, consumers, workers, and project managers drawn
from different cultures (Mishra et al., 2019). Leon must thus invest in ensuring that the
management, as well as the employees, have cross-cultural competencies. The employees must
possess the ability to work in an intensive cross-cultural environment. Cross-cultural
communication will be an important goal going forward. Cross-cultural communication
emphasizes the need to ensure that different codes are utilized when dealing with people from
different cultures (Mishra et al., 2019). The expansion will also mean that Leon will have to
improve in occupational and intercultural competencies. The management needs to be equipped
to handle cultural issues that may arise as a result of international expansions.
Culture is extensive and defines the identity of any particular society. It includes the
achievements in a society that are transmitted from one generation to the next. It also includes
rules, concepts, codes of behaviors, and other concepts that are important in any society. Culture
may be viewed as dynamic as opposed to static (Mackie, 2018). It changes and evolves over
time. While culture has an enduring nature based on the fact that it is passed down from one
generation to the next, values and attitudes may change over time and may be influenced by
changes in other spheres of society. Culture is learned in about ten to twenty years. The extensive
Leon Case Study 4
period of time for a culture to be implanted makes it be held dear by many people.
Communication and negotiation are two processes that are heavily influenced by culture. When
negotiators are drawn from different cultural backgrounds, there is a risk of negotiations failing.
The implication is that in its quest for expansion, Leon faces the challenge of negotiating with
business partners and suppliers (Kizgin, Jamal, and Richard, 2018). Words could easily be
misunderstood, and actions, as well as gestures, could be misconstrued to mean different things.
The company thus needs to invest in understanding the cultures of the host nations. Hiring
employees from the host country can help eliminate problems relating to culture.
Cultures can broadly be classified as individual and collectivist. Collectivist cultures
place a huge emphasis on the needs of others. They are thus likely to place the needs of others
above those of individuals (Mastracci and Adams, 2019). In contrast, individualistic cultures
place a huge emphasis on the needs of the individual. While collectivism is rooted in the needs of
communities, individualism is rooted in the needs of each individual. The two sets of cultures
have an impact on various aspects of an individual, including shopping behavior, dressing, and
the conduct of business. The behavior of employees in the workplace can also be analyzed in the
context of their culture. In collectivist nations, employees are likely to strive towards ensuring
that they achieve the goals of the company (Shin et al., 2020). They are likely to sacrifice their
needs and place the needs of the company above their individual needs. In contrast, in an
individualistic society, personal goals are more important than communal goals. For an employee
to remain motivated, they must be provided with an opportunity to attain career progression and
to achieve personal goals.
Leon is planning to run operations in some countries that are classified as individualistic
and others that are classified as collectivist. The United States is categorized as individualistic.
Leon Case Study 5
Individuals in the U.S. focus on being independent and autonomous. The Netherlands, Britain,
France, Spain are also highly individualistic countries. In expanding to these countries, Leon
needs to hire managers who embrace direct communication (Aliyev and Wagner, 2018). All
customers must be treated equally and the focus should be on delivery of quality products as
opposed to maintaining strong relations. Managers need to understand that customers place a lot
of value on self-respect, and this means that all employees will be expected to handle customers
as individuals as opposed to groups. In contrast, China, Kuwait, and Saudi Arabia are collectivist
societies. To this end, a different approach is needed (Aliyev and Wagner, 2018). Consumers in
these countries need to be handled as a group. In addition, relations are equally important to the
products. The company thus needs to ensure that it invests heavily in customer relations.
Customer relations will dictate whether or not the company achieves success. There is a lot of
emphasis on communal goals. As a result, the company will need to invest in corporate social
responsibility. In collectivist cultures, consumers are likely to purchase goods from companies
that are actively involved in giving back to society. The company needs to ensure that it plays a
role in ensuring that the communities achieve various goals.
Language
Different nations speak different languages. To this end, it is important to ensure that
language barriers do not affect operations. Language barriers can pose significant problems to
experienced companies on the international business front (Takino, 2020). A business can run
into problems in case it has not invested in learning new languages in creating menus. Leon
needs to ensure that it comes up with the correct language that will help customers understand
what the business offers. In America, one of the issues that relate to language and culture is
whether or not the clients will respond to a Mediterranean menu. The same problem will present
Leon Case Study 6
itself in other countries. The company will need to communicate in an effective way to the
consumers. The connection between the company and the consumers will be the foundation of its
success.
Leon is venturing into countries that do not speak the same language. The pragmatic
differences will create a language barrier. The company’s employees may be unable to
communicate with the clients effectively if they are drawn from different societies that speak
different languages. Miscommunication can be a serious problem because it touches on various
integral parts of the business (Tenzer, Terjesen, and Harzing, 2017). When employees are
executing their different functions, they need to do so as a team. The implication is that proper
communication is the foundation of strong teamwork. Communication in the workplace is not
limited to verbal interactions and goes beyond the interaction between the speaker and the
listener. When the sender of information is unable to get their message through, it can cause
frustration (Tenzer, Terjesen, and Harzing, 2017). The frustrations can create a hostile work
environment, and this can have an impact on the morale and motivation of employees. One of the
ways that Leon can overcome this pitfall is ensuring that it hires individuals from the host
community and ensuring that it engages the services of an interpreter (Tenzer, Terjesen, and
Harzing, 2017). Employees also need to be provided with training on how to handle individuals
drawn from various cultural backgrounds. Visual methods should also be used to ensure that
communication is eased. Employees should seek to use plain language instead of using jargon
that they may not understand.
Resourcing and Talent Management Issues
Impact of Brexit on the Business
Leon Case Study 7
Brexit prompts concerns over labor supply in future (Barnard and Leinarte, 2020). The
business faces an uncertainty that requires workforce planning and organization by taking a more
flexible approach. This is an issue for Lean given its rapid expansion, and this may imply that the
management has not keenly considered the impact that Brexit will have on the company’s talent
base. One of the implications is that if Brexit was to go through, the U.K. would regain control of
its borders, limiting the number of immigrants. Restricting the free movement of workers within
the E.U. will result in a shortage of workers (Bloom et al., 2019). This is a challenge for Lean,
which would have to work with the available team as opposed to working with the best team. A
looming worker shortage is a challenge for the company, especially because it is opening many
branches and thus will require a huge labor force.
Statistics show that half the foreign-born labor force is from E.U. countries; they are
equally divided between Central and Eastern Europe (CEE) and Western Europe (Vargas-Silva
and Markaki, 2016). Anecdotal evidence shows that a significant number of E.U. nationals will
be unwilling to remain in the U.K. if Brexit goes through (Gumbrell-McCormick and Hyman,
2017). This is mainly because of the fear that the climate in the U.K. will be insecure and
unwelcoming. These are issues that Leon must consider as this means that most businesses will
be working to rem
Brexit is beyond the company’s control. However, even should it go through, there is a
possibility that U.E. nationals will receive residence rights. Leon needs to understand legal
implications related to working with such employees to ensure compliance and protect itself
from worker shortages.
Employees’ rights in the U.K
Leon Case Study 8
E.U. employment regulations differ from those enforced in the U.K., albeit slightly. For
instance, there are disparities in the working time regulations. The E.U. directive requires that
workers be allowed at least 20 days of paid holiday yearly (Kitching et al., 2015). The U.K.
government made changes, and now employees are entitled to 28 days paid annual holiday.
Additionally, employees working hours per week should be limited to 48 hours (Kitching et al.,
2015). The varying regulations pose a challenge for a business operating in the U.K. as the
country’s laws apply. Should Brexit go through, the problem that Leon has is in tracking changes
in laws that may be instituted in the U.K. that may vary from E.U. directives now that the U.K.
will be operating independently.
There is a need to balance employee protection and flexibility. Since Leon has already
established some branches in the U.K., it should adopt the regulation laws, understand the
implications of Brexit on them and then. The U.K. government lays a lot of emphasis on quality
and efficiency at the workplace than on legislation. Thus, Leon should come up with policies that
work for them but that are compliant with laid down employment laws. Additionally, flexible
working hours enhances worker flexibility, thus promoting staff retention (Kitching et al., 2015).
Leon should work on ensuring that workers are flexible; this will increase their levels of
satisfaction and enhance retention rates. High retention is crucial for a franchise as maintaining
the same quality of services and products in all the branches works towards attracting more
customers and maintaining their loyalty.
Health and Safety Policies in the U.S
In the U.S, an employer has the Duty of Care towards employees. The company
management must understand the threat that employees are likely to face and respond to such
threats from a preventive perspective. According to the U.S government, it is not sufficient for an
Leon Case Study 9
employer to be aware of the countries Laws and regulations, such as compensation of employees
and OSHA, that may affect employees (Fisher and Phillips, 2021). An employer must adequately
and sufficiently address the needs of its employees. In a world where threats and global issues
emerge daily, Leon is faced with the challenge of ensuring that it upholds its Duty of Care
obligations in all its branches operating within the U.S. or even outside but have employed U.S
citizens residing elsewhere.
The company should understand and address its ethical, financial, moral, legal, as well as
Duty of care obligations. Understanding the scope of the company’s legal mandate and
responsibilities will help ensure that Leon prevents risks that could eventually lead to
negligence-related litigations. This can be done by ensuring that the company has a legal
department and employees, lawyers and legal experts who are conversant with the country’s
legal system relating to employment and the labor sector in general. Such expert advice will save
the company from many avoidable challenges that could also affect the safety of employees.
The U.S Business Environment
Analysis shows that there are different taxes charged on foreign investors operating in the
United States (Contractor et al., 2020). High taxes mean that Leon will incur higher operating
costs in its branches in the country. It will also face stiff competition from local businesses
whose taxes may be lower than what local businesses are charged.
However, Leon can still open more branches in the country. Economic literature reveals
that tax rates are not a priority consideration for businesses venturing into emerging markets.
Rather than focusing on the high tax rates, Leon management should focus on other factors in the
U.S market such as the availability of resources, both human and materials needed to run the
Leon Case Study 10
restaurants, the potential of the host country and the general business environment. The
management of Leon should consider these factors and see the viability of the U.S. markets as a
potential environment for growth and expansion. The company should not compare tax rates
between the different countries where it will be venturing as doing so may be unimportant if
other factors differ. For instance, if the U.S has a large market size and a favorable business
environment, then the business is likely to do well regardless of the fact that the tax rates in this
country are higher than in other countries.
Hvozdyk and Mercer-Blackman (2009) suggest that an investor should consider the
governance and fiscal regime. If these are good, then the tax rate itself will not matter much to
the success of the business. Given the empirical evidence then, Leon should consider other
important factors that are more likely to determine the success of its business outlets and are
more critical than tax rates. Additionally, in 2017, the U.S. Tax and Jobs Act reduced the
statutory corporate tax (Mercer-Blackman and Camingue, 2020). The corporate alternative
minimum tax rate was reduced. Such reductions are the business environment more favorable
and thus conducive for Leon company to venture into more cities and states within the country.
The U.S, as well as with other destinations, present the business with a wide variety of
resourcing opportunities. The U.S. labor market attracts high wages. Jobs that pay low rates do
not attract workers. The country, however, has a large pool of varied talent. The company can
put together a strong team of employees. However, the wage rates are high and thus needs to pay
well to get the best from that market.
Decline in Sales
Leon Case Study 11
The decline in sales in part of 2017 was a challenge for the business. While expansion
tends to increase sales and broaden the revenue base, it may take quite a while for the company
to realize the full value of the expansion. Besides, the idea of healthy fast foods was still new to
most people. The perception of customers has an impact on sales and the consequent financial
success of the business.
The decline in sales could mainly be from the new locations. It is expected as the new
branches need to attract customers and work out logistical kinks. It takes time for this to be fully
realized. Sales do not grow magically in a new location (Yi et al., 2019). As such, Leon should
be patient and watch the new branches grow so that sale patterns can be identified. It is only after
a few months that the management can tell how well or badly any of the branches are doing.
However, with many branches opening upon different locations, Leon should consider analyzing
sales per branch as opposed to overall comprehensive analysis.
Conclusion
Overall, Leon has many resourcing opportunities in the different destinations it hopes to
expand. Every labor market in the different countries is, however, different. Proper expert
analysis is required so as to maximize the potentials of each destination and ensure that risks are
avoided. The company also faces different challenges in different countries. Some challenges are
unique to specific locations. For instance, the issue of health and safety regulations in the U.S is
a serious issue that needs expert advice. On the other hand, the availability of employees in the
U.K., considering the Brexit issue, poses a unique challenge. In Europe, the E.U. directives will
guide the company to ensure that it meets its ethical, legal and moral obligations even as it
operates within its borders. Overall, the various recommendations embedded in different
Leon Case Study 12
segments of the paper explain how to navigate the different environments and ensure that the
company expands its operations successfully.
Leon Case Study 13
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