HDL Growth Strategy

Q 1: What was HDL’s growth strategy and core competency during each phase?
Ans: Following are the HDL’s growth strategy and competency during each phase.
1. HDL built an advanced central kitchen and supply chain, which is key to the success of its
hot pot restaurant business.
2. They offered free manicure and shoe shining services to waiting customers.
3. HDL empowered its employees, allowing regular waiters to waive a customer's bill if they
were irritated for some reason.
4. HDL offered exceptional salaries, perks, and benefits not only to its employees but also
to their families, such as daycare, housing, and school facilities.
5. HDL provided necessary knowledge and training to its employees, many of whom came
from rural areas, to adapt to living in a big metropolis. This also helped them grow into
restaurant managers.
6. HDL practiced "fairness and equality" within its culture. Restaurant managers, who were
familiar with the operational details due to being promoted from within, had the authority
to reward or punish their subordinates.
7. HDL hired third-party "mystery customers" to evaluate its restaurants, and serious
interventions were made in the least-rated restaurants (C-rated) based on customer
satisfaction, employee effort, and food safety indicators. Financial indicators were not
given priority.
8. In 1994, HDL adopted a direct operations model instead of a franchise model, unlike its
competitors.
9. In 2010, HDL started diversifying its revenue streams by launching alternate sources of
revenue, such as hot pot delivery business, spinning off a condiment factory, and
expanding into overseas markets.
10. To meet the talent needs of its fast-growing business, Zhang, the co-founder, decided to
adopt the "Amoeba Management Philosophy" and replaced the existing pyramid
structure.
11. HDL centralized performance reviews while decentralizing decision-making at the
restaurant level.
12. HDL encouraged employees to form learning groups to help each other grow. The
introduction of the Mentor-Protégé system and a flat organizational structure composed
of headquarters, restaurant managers, families, and coaching groups provided excellent
monetary benefits for this purpose.
13. The Business Development department was closed.
14. In 2012, HDL expanded globally by opening its first overseas outlet in Singapore.
15. In 2018, Zhang started investing in unmanned kitchens to address food safety risks and
gained worldwide attention.
Q 2: What are some advantages and challenges of the mentor–protégé́ mechanism?
Ans: Here are some advantages of this mechanism, considering the literature review.
1. Employee Retention: Zhang's idea of adopting the mentor-protégé mechanism
contributed to employee retention. Along with mentoring, mentors were also provided
with excellent monetary benefits, which encouraged them to stay attached to the
organization for a long time. Additionally, protégés who received mentoring also had a
higher likelihood of staying in the organization, as they aspired to become future
restaurant managers.
2. Cooperation & Productivity: The composition of a family-like structure, where groups
of protégés and second-generation protégés descended from a single mentor, worked
cohesively, thereby improving coordination and productivity among team members.
3. Monetary Benefits: Both mentors and protégés can earn substantial amounts of money
through the schemes offered by HDL. It is particularly evident in the case of HDL that both
parties earned performance-based pay that exceeded their basic pay.
Challenges in mentor-protégé might be…
1. Future Uncertainty: As the Chinese proverb goes, "Upon finishing his apprenticeship, a
protégé drives his master out of business." This proverb highlights a potential concern for
mentors regarding their future career security. It suggests that mentors may feel insecure
about their own position and, as a result, may be reluctant to fully transfer their skillset
and experience to their protégés, which is crucial for both personal and organizational
growth.
2. Cultural Differences & Diversity: When expanding globally, mentors with local
experience may encounter challenges in transferring their knowledge and values to a
different culture, which can make it difficult to promote a diverse workplace.
Q 3: If you were responsible for exploring an overseas market—the Japanese market,

for example—what strategy would you recommend to Zhang Yong?
Ans: Firstly, Japanese consumers typically have high expectations for quality when it comes to
new entrants in their market. Therefore, prioritizing the quality of food should take
precedence over other factors.
Secondly, ensuring food safety is another important aspect, and this can be achieved by
implementing unmanned kitchens. Such technological advancements in automation and
robotics align well with Japan's reputation in this field. For instance, the use of automatic
conveyor belts in sushi restaurants has gained popularity among Japanese citizens.
Therefore, deploying unmanned kitchens would be warmly appreciated, emphasizing
Japan's affinity for automation and robotics while ensuring food safety.
Thirdly, when implementing the mentor-protégé mechanism in Japan or any foreign

country, it is crucial to provide specific training that aligns with the cultural values and
formalities of Japan. Given that formalities hold great importance in Japanese daily life
and customer service sector, this training should emphasize the significance of upholding
these cultural norms. Furthermore, it is essential to maintain the original taste and
presentation of the food for which HDL is famous. These aspects should not be
compromised under any circumstances, as they contribute to the unique identity and
reputation of the brand.
Lastly, considering the "Amoeba Management Philosophy" would be a beneficial

approach, especially since it originated and was first implemented in Japan, where it has
demonstrated a positive track record for business progress.
Q 4: What is your assessment of Rob Parson’s performance? Should he be promoted?
Ans: It's quite a dilemma to decide because, on one hand, the company culture focuses more
on teamwork, cooperation, and cross-selling. On the other hand, Rob Parson is a volatile
and abrasive person who lacks team player skills. However, at the same time, he is good
at building relationships with clients and has earned Morgan Stanley handsome profits
on many occasions. If Rob Parson is promoted to a leadership position, it may benefit
the company in the short run, but it may not align well with the company culture in the
long run. Although he might provide some immediate benefits, it could have negative
consequences for the company in the long term.

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Q 1: What was HDL’s growth strategy and core competency during each phase?

Q 2: What are some advantages and challenges of the mentor–protégé́ mechanism?

Challenges in mentor-protégé might be…

Q 3: If you were responsible for exploring an overseas market—the Japanese market,

Thirdly, when implementing the mentor-protégé mechanism in Japan or any foreign

Lastly, considering the "Amoeba Management Philosophy" would be a beneficial

Q 4: What is your assessment of Rob Parson’s performance? Should he be promoted?

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