Case study attatchedanswer five out of the seven questions that follow. You must answer Question 1 in Section 1 PLUS two out of three questions in Section 2 PLUS two out of three questions in Section 3.topics cover; working in a organisation – accounting & business finance – marketing – the economic & political context – business ethics – global context
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THE CASE STUDY
Healthy fast food chain Leon reveals profit leap – and its secret martial arts
experiment
Rebecca Burn-Callander, Telegraph.
John Vincent, the co-founder of upmarket fast food chain Leon, jabs a 6ft Shaolin training
spear, tipped with a long blade, at the throat of a man holding two short swords. In a
flash, his spear is knocked to the ground, the edge of a sharp blade pressed against his
jugular.
“It’s about winning, not fighting,” Vincent explains, stepping away from his adversary’s
weapon. “You don’t just try to stop the competition, you attack while you defend, and you
keep moving forward.”
Is he talking about martial arts or his business, founded in 2004 with fellow foodie Henry
Dimbleby, son of David Dimbleby, of Question Time fame?
“Both,” he says. “We never start a fight, but if there is one, we’ll win it.”
We are standing in Vincent’s homemade “kwoon” – a Chinese training hall for martial arts
– at his home near Hayward’s Heath, which he shares with wife Katie Derham, the
broadcaster turned Strictly Come Dancing star, and their two children.
Vincent is wearing a dark tracksuit and trainers, while sparring partner Julian Hitch, one
of the world’s premier instructors in Wing Tsun, looks every inch the “si-fu“ in dark martial
arts robes trimmed with red.
The pair started training together twice a week after meeting last summer, and Hitch has
become one of Vincent’s most valued business advisers. “It’s changed everything: my
approach to business, my stress levels,” Vincent says. Wing Tsun is in fact a Chinese
martial art created by women for women.
The basic principles are: don’t worry about the competition because anyone of any size
can beat their adversary; always find the shortest path to the target; keep moving
forward. The object is never to pick a fight, but to win if challenged.
Vincent has applied these mantras to Leon in a variety of ways. “We always thought that
we needed to struggle to get new ideas, because that showed how hard we were trying,”
he says. “We know that our competition keeps our cookbooks in their development
kitchens. KFC once even admitted it on a TV show. But we never used our own
cookbooks to develop new recipes. Now we do. It’s about taking the shortest line to
success.”
The 44-year-old is now even managing to be Zen about copycats, the permanent thorn in
his side. According to Vincent, recipes such as the sweet potato falafel, superfood
salads, and even the fish finger sandwich, were pioneered by Leon and soon adopted by
rivals.
“It used to upset me when we were copied, but now I accept there’s nothing I can do
about it,” he says. “I no longer worry about the people that copy us, because that still
means we’re setting the agenda, that they’re fixated on us. These days, I’m far more
worried about competitors that ignore us.”
When asked if he has ever been tempted to copy the competition, Vincent is brusque:
“Never.” Leon has certainly poached a few executives, however. John Upton, once at
McDonald’s, is managing director, the company’s supply chain is managed by Gemma
Kearney, formerly of Pizza Express, while Wagamama’s Antony Perring and Chris
Burford now manage Leon’s finances.
These fast-food veterans will help Vincent in his mission to make Leon a global brand.
Next month, Leon will open its first site beyond the UK in Amsterdam’s Schipol airport.
This is the first of “a few sites” that will open in northern Europe, working with franchise
partner, HMSHost. Leon is also making a bold move into the US, starting with Orlando,
Florida. A site has been found and a full refurbishment is under way – the restaurant will
open next spring. Brad Blum, the ex-CEO of Burger King and the man who turned around
Olive Garden, will help to run the American operation.
“Most British brands fail in America,” Vincent admits. “Look at Wagamama, La Tasca, Yo
Sushi. Pret made a few false starts, but invested heavily so is now doing well. We’re
taking this very seriously, we’re not just saying, ‘Hey! Let’s go to America.’” The move
into America will be supported by private equity backers, although nothing has been
finalised yet. It is not clear whether Leon’s existing investor, Active, will up its stake. Nick
Evans, partner at Active, said that it was not the firm’s policy to comment on investee
companies, but said he was “very excited” about the future of the company.
To help woo the City, Vincent will today announce that Leon has beaten its forecasts for
the past year, opening 12 new sites instead of 11, taking the total to 33. Its 2015
revenues are up almost 40pc.
New innovations, such as additions to its menu like the courgette and kale salad, as well
as a bean and quinoa lunch box, have maintained sales growth in 2016. “They’ve had a
major impact,” Vincent says.
Other changes are currently under way. In March of this year, Vincent started a
seemingly bonkers trial, teaching his baristas Wing Tsun in an attempt to improve
performance, reduce wastage and promote staff wellbeing.
The experiment worked, he says. Some 22 hours of training took place over six weeks,
and the six participants knocked 30 seconds off the time it took them to make six perfect
coffees. Leon baristas are required to manage this number in five minutes, and they not
only took this down to four and a half, they did it with a lower heart rate, meaning that
they were less stressed despite the extra speed.
Leon has now rolled out a Wing Tsun programme across all of its baristas, kitchen and
head office staff – 300 people in total, half of its workforce. This forms part of a wider
£600,000 programme of wellbeing and development events and training – that’s almost
£1,000 per employee.
Hitch, who says that he practises one of the purest forms of the martial art, a style of
Wing Tsun practised by Bruce Lee’s instructor, Yip Man, is helping to design a “kung fu
barista” professional qualification, which could take on a life of its own if taken up by
other coffee companies. He and Vincent are also co-authoring a new book with Vincent,
entitled Winning Not Fighting.
These aren’t Vincent’s only side projects. He and Dimbleby are still pushing their school
meals agenda. The pair worked alongside celebrity chef Jamie Oliver to promote
healthier recipes for schools, and boost cooking as a key subject.
“We’re making progress on all our recommendations,” Vincent says. “Children get free
school meals for the first three years of school, Ofsted [the Government’s education
watchdog] is getting more involved, but it’s a major cultural change so it could take
another 20 years to be entrenched.”
Leon has also worked with Oliver on the so-called “sugar tax”, a levy on sugary drinks
that will be phased in by 2018. “We introduced our own sugar tax at Leon to prove it can
work,” Vincent says. “We added about 10p to all our sugary drinks and we’re raising
£50,000 for children’s charity Sustain, which has used the money to install water
fountains in schools.”
Vincent starts talking about his other schemes – Cook Five, a project to teach as many
young people as possible to cook five dishes, and a partnership with Key For Life to
rehabilitate kids who have been to prison. Doesn’t this all distract from the main
business?
“They feed the energy of the business,” he insists.
“We used to say at Leon, ‘Do the right thing, not the easy thing’,” he says. “Now we say,
‘Make the right thing the easy thing’.
“Sajid Javid [the Business Secretary] spoke at an event recently where he said the
purpose of capitalism was to make money, but do it in a sustainable way,” he continues.
“That’s not true.
“The purpose of business should be to make the lives of humans and the health of the
planet better, and it should do that by being financially sustainable. We’re looking down
the wrong end of the telescope. I’m not trying to be hippy or clever or sound cool, it’s a
reality.”
This is one idea that Vincent hopes the copycats will latch on to, but he’s sceptical.
“Businesses just care about their share prices now. We’ve lost the idea of a 20-year
horizon, it’s all about working out how to make more money today.”
(Source: The Telegraph, 2016)
1.2 Structure of the EMA
This assignment has been designed to assess your understanding of the module as a
whole, including the materials covered by Block 7. First, you are required to read a case
study. The case study describes a company, Leon, and outlines some of the challenges it
faces. You do not have to look for any further information on this company in order to
answer the questions in the EMA. All the questions can be answered with reference to
the information on Leon provided in this EMA booklet; markers will not be looking for
evidence of any further research. Please do not contact the company for additional
information.
After you have read the case study, you are required to answer five questions within an
overall word limit of 3,000 words. All questions carry equal weighting; therefore it is
advisable to write approximately 600 words on each question you answer (however,
there is no strict word limit for each question). The general rules for word limits, as
outlined in your TMA instructions, apply.
The EMA has three sections. You must answer FIVE questions in total: Question 1
from Section 1 AND any two questions from Section 2 AND any two questions
from Section 3.
Section 1 contains Question 1, which relates to Block 1 and is worth 20 marks. This is a
compulsory question that all students must answer.
Section 2 contains three questions: Question 2, which relates to Block 2; Question 3,
which relates to Block 3; and Question 4, which relates to Block 4. You must answer two
out of these three questions. Each of these questions is worth 20 marks.
Section 3 also contains three questions: Question 5, which relates to Block 5; Question 6,
which relates to Block 6; and Question 7, which relates to Block 7. You must answer two
out of these three questions. Each of these questions is worth 20 marks.
THE QUESTIONS
Question 1 (Block 1)
Make sure you answer both parts of the question.
Q1a. From the information contained in the case study above, conduct an analysis of
Leon’s external environment using the STEEPLE model. Your analysis should cover and
identify each of the factors as they relate to the case study. (16 marks)
Q1b. Based on your STEEPLE analysis in Q1a, what two issues do you think Leon need
to pay most attention to and why? (4 marks)
(Total for Question 1: 20 marks)
Question 1 Guidance to students
Q1a asks you to conduct an analysis of Leon’s external environment using the STEEPLE
model. You need to be explicit in using relevant module concepts and the information
contained in the case study in order to answer this question.
For this question you will have to apply the STEEPLE model to analyse the external
environment of Leon as covered in Reading 5. You need to cover all the factors in
STEEPLE, i.e. Sociological (S), Technological (T), Economic (E), Environmental (E),
Political (P), Legal (L) and Ethical (E). In using this model you should list the key issues
under each factor and label them accordingly. As the module material makes clear, the
distinction between each factor can sometimes be artificial; and it is up to you to use your
judgement in selecting which factor an issue belongs to. There may be more information
on some factors in the case study than others; where the case study does not provide
you with enough information to make a comment on a particular factor, state this. You
may display your analysis in any appropriate manner – however it should be clear which
issue belongs to which factor. It is important that your analysis focuses on the external
environment as discussed in Reading 5 – this provides important information on what you
should include in a STEEPLE analysis. This part of the question is worth 16 marks and
you should allocate your word count accordingly.
Q1b requires you to conclude your analysis from Q1a with a short paragraph to describe
the two most important issues that Leon needs to pay attention to in its external
environment. You should look at your STEEPLE analysis and select two of the issues
identified within it that, in your view, Leon needs to pay particular attention to. Give
reasons for your answer. This part of the question is worth 4 marks. Allocate your word
count accordingly.
Now move on to Section 2 of the EMA.
Section 2
This section contains Questions 2, 3, and 4. You must answer TWO out of the three
questions in this section
Question 2 – Working in organisations (Block 2)
First, read the short extract from Leon’s website below, in which the company advertises
itself as a good employer to work for.
Jobs
At Leon we have one simple goal: to help everyone to eat well and live well. That
means both customers and our teams. We know that there are lots of reasons why
people want to work flexibly. Helping our people balance work and home keeps
them well. And that makes us happy. For now we will indicate which jobs are
flexible, and are determined to find ways to open up the rest. Feel free to talk to us
about it when you apply.
TEAM MEMBERS
We are currently looking for team members who are full of sun to work on our counters
as well as in our kitchens. No previous experience is needed (but it’d be preferable) as
full training is provided. We can’t train you to be full of sun, but we can train you how to
do the job. Get in touch if you’d like to be part of a family where:
•
Work for the most exciting fast food brand in London.
•
You can enjoy Leon meals, on us, on your paid break.
•
You are rewarded for learning more about your journey at Leon.
•
You earn a bonus for giving great service by being yourself.
•
We love to celebrate and we have regular parties.
•
Your potential is realised and the chance to develop is given. Many team members
go on to be team leaders, managers and join us in our Head Office.
•
We offer treats like massages and team discounts.
•
Our starting salary is up to £8.20 per hour including weekly bonus.
MANAGERS
We are looking for managers at all levels to come and help us achieve our vision, and
help us grow big and strong. If you believe in the following as much as we do, then you’ll
fit right in:
•
We only serve food that is good enough to serve our best friends.
•
We give the biggest welcomes to everyone who comes to Leon. Everyone is
treated as if they have come over from Australia, just to eat at Leon.
•
Our restaurants are so clean that you could eat your lunch off the table.
•
Openness and honesty is delivered with gravitas for the good of your team’s
development and the future growth of Leon.
We are looking for the following qualities in our managers:
•
You believe in doing the right thing, not the easy thing.
•
Your energy levels through the roof.
•
You are continuously growing and developing, and can spot the potential in those
around you to do the same.
•
You know what it takes for your restaurant to be at the top of the Champions
League.
•
You learn from your mistakes and can implement changes to make systems better.
•
You are a natural born sales driver and take great pleasure in maximising your
restaurant’s business potential.
•
You are the best of the best.
We can offer you:
•
An environment where you can learn and develop, and potential is realised.
•
A competetive salary and bonus package to reward your development.
•
Wellbeing days.
If this is you, email your CV to partofthefamily@leonrestaurants.co.uk, along with 10
words that best describe your personality. Send us something to make us laugh too.
(Source: Leon n.d)
Q2. What do Leon believe will motivate people to work for them? Use the information
above and two theories of motivation from Reading 12 to help you answer this
question. (20 marks)
(Total for Question 2: 20 marks)
Question 2 Guidance to students
Q2 is about what motivates people to work. You will need to use theories from Reading
12 to answer this question. You need to be explicit in using relevant module concepts
and the information contained in the case study in order to answer this question. Leon
are trying to attract potential early career employees by describing the main features and
some of the advantages that working for the company would have. While they are – of
course – not explicitly referring to any theories of motivation, they will have an underlying
understanding of what would motivate potential employees to work for them. This
question asks you to link what Leon say about working for them to the theories of
motivation you have learnt about in Block 2. Start your answer by identifying and briefly
describing two theories of motivation that you think will be useful here. 8 marks are
available for your understanding of these theories. Then you need to select information
from the website excerpt above and link it to the two theories you have selected to show
how these theories can be used to explain what might motivate people to work for Leon
(or at least what Leon think will motivate potential employees). 12 marks are available for
this application of the theories to the case study information.
Question 3 – Accounting and business finance (Block 3)
If you choose this question, make sure you answer all four parts of it.
Leon Restaurants Limited is a private limited company registered in England and Wales.
Summarised information from the financial statements of Leon Restaurants Ltd. at 31
December 2015 and 2014 follow.
Please base your answers to this question only on the information provided here and in
the case study provided, and on the content provided in your B100 module materials –
there is no need to undertake further research into the published financial statements of
Leon Restaurants Ltd. (and to do so would be more likely to weaken your answer rather
than improve it).
Leon Restaurants Ltd. income statement for the financial periods ended 31 December 2015
and 2014 (simplified and amended for academic purposes)
Year to 31
Dec 2015
Year to 31
Dec 2014
£000
£000
Sales revenue
26,614
19,077
Cost of goods sold
(7,867)
(5,099)
Gross profit
18,747
13,979
(18,110)
(13,065)
637
914
(453)
(150)
184
764
Corporation tax
200
0
Profit for the year
retained in the business
384
764
Total Expenses
Operating Profit
Less finance costs:
Interest paid
Profit before taxation
Less Taxes:
Leon Restaurants Ltd. balance sheet at 31 December 2015 and 2014 (simplified and
amended for academic purposes)
Year to 31 Dec
2015
Year to 31 Dec
2014
£000
£000
9,948
5,202
Non-current assets
Property, plant and
equipment
Other non-current assets
503
240
Total non-current assets
10,451
5,442
Inventory
205
65
Receivables
319
48
Cash at bank and in hand
1,221
534
Other current assets
2,227
1,204
Total current assets
3,972
1,851
2,467
1,341
Bank overdrafts
739
549
Short term loans
3,621
1,482
Other current liabilities
924
324
Total current liabilities
7,751
3,696
(3,779)
(1,845)
6,672
3,597
Loans
3,896
1,205
Net Assets
2,776
2,392
Current assets
Current liabilities
Payables
Net current
assets/working capital
Total assets less current
liabilities
Long-term liabilities
Equity
Share capital
1,000
1,000
Reserve: retained earnings
1,776
1,392
Total Equity
2,776
2,392
Q3a.
•
i.Leon Restaurants Ltd. is a private limited company which appears from the case
study to have a single equity external investor, Active. The other long-term
financing is provided by loans. Were the business to continue growing in size, it
may consider becoming a public limited company. Discuss the financial advant …
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