Answer these questions:
In 1999, an entrepreneur called Zhang Gang founded Little Sheep Catering Chain Co. in Inner Mongolia, one of the most remote and underdeveloped corners of the world. Zhang managed to open two additional restaurants within two months, with a very enthusiastic customer response. Notwithstanding this success, To prepare for an initial public offering (IPO), he believed that the company needed to attract not only additional capital, but also a partner with the capability to provide much-needed industry knowledge and expertise. Little Sheep’s extraordinary growth and brand name recognition attracted many willing investors, including such prestigious investment banks as Morgan Stanley and Goldman Sachs. Private-equity firm 3i noted Little Sheep’s success and approached the company. 3i demonstrated its industry expertise and the benefits it could offer Little Sheep, subsequently beating rivals Morgan Stanley and Goldman Sachs. Given the information offered, please answer the following three questions.
From an industry-based view, identify some of the competitive forces affecting the Chinese restaurant industry.
What are the key factors that explain the success of Little Sheep?
If you were an entrepreneur at a firm in China (such as Little Sheep) or in emerging economies in general, what lesson(s) would you draw from this case?