Starbucks Company’ Decline and Change Management

Subject: Company Analysis
Pages: 6
Words: 1648
Reading time:
6 min
Study level: Master

Introduction: Starbucks’ Transformation and the Company’s New Challenges

Starbucks is one of those companies that need no introductions. Having been established in the global market for several years, entrepreneurship has had rather extensive experience in the global market. With a rich history of operating in the environment of the global economy, and having established relatively successful communication with its target customers, the company is often viewed as a prime example of stellar success.

However, a closer look at the specifics of the company’s operations in the target environment will reveal that it may have some problems. Although Starbucks seems to have become a household name for a significant part of the population across the world, it has seen its dark days, when the company’s leaders were trying to find the solution that would make the company unique and memorable, while at the same time expanding into the global economy and catering to a new audience (Koehn et al. 1-3).

Much to the credit of the company’s leaders, the firm has undergone a variety of transformations that created the conditions for a successful transition to the environment of the new market, and the subsequent promotion of the brand product to a new audience.

Furthermore, the approach designed by Starbucks’s leader helped to enhance the significance of the company’s technological progress, therefore inviting opportunities for deploying a wide array of IT tools and innovative equipment for improving sales. However, when considering the factors that determine the firm’s position in the target market, one must give credit to the management of internal processes, and in particular, the promotion of responsibility and the redesign of the company’s corporate ethics so that the employees could deliver their best performance.

Point of Conflict: Traditions and Control Issues

When it comes to determining the factors that contributed to the company’s decline in 2007 and 2008, one must mention the lack of cohesion between the propensity of the company leader to reinforce the significance of traditions, and the evident need for the company to change, evolving in the context of the global economic environment.

As the authors of the case study pointed out, Starbucks has been suffering from relatively tight control that has not allowed for implementing the changes necessary for the firm’s success in the target market. Additionally, the issue of innovation needs to be brought up. To stay successful and relevant in a specific environment, one must consider options for updating the quality of services and products regularly, therefore regularly offering the target customers new options. Otherwise, even the most successful idea will sooner or later become stale, and the clients will switch to the organizations that will offer them a wider range of options (Pyzdek & Keller, 2014).

Finally, the process of promoting the brand product and creating new channels needs to be mentioned as an issue of concern. Without a strong leadership framework that will help maintain every individual link of the supply chain in order, it will barely be possible to make sure that every single process in the firm is performed at the requisite quality level. Even though the present-day leadership approach, designed by the head of the company, offers an abundance of room for the parties involved to feel independent and make relevant decisions, it may fail to promote the necessity of an unceasing communication process, and the concept of customer satisfaction as the highest priority.

Solutions: Their Strengths and Weaknesses

The idea of focusing on catering to the specific needs of the target customers can be viewed as a stellar solution to the problems that the entrepreneurship was facing in 2007. Similarly, the focus on technological development that the company has been maintaining over the past few years is an advantage that needs to be encouraged. Although Starbucks has lacked appropriate technological development, as the authors of the case study note, the current emphasis on the incorporation of IT innovations into the framework of the company’s operations can be viewed as a step in the right direction (Aalbers & Dorfsma, 2016).

One should also give credit to the idea of using rewards as a means of attracting new customers and retaining the old ones. Although the idea of offering prizes and other opportunities to customers is not new, its effects are impressive in most cases, Starbucks’ program being no exception. However, the approach that the company uses to gain popularity among the target members of the population has both its advantages and its problems.

Despite the large chance of a rapid increase in the number of clients, the concept of rewards as a strategy to increase sales implies that the company is capable of making the prizes and incentives new and exciting. Otherwise, as soon as the clients get used to the prizes, and the incentives wear out their novelty, the firm will face a similar problem once more.

Another strategy that Starbucks has deployed to improve its sales rates, the use of social media as a means of reaching out to the target audience, has its pros and cons, as well. On the one hand, the application of the specified strategy allows for grabbing the attention of a wide range of people, including customers of different age groups.

Consequently, the approach can be deemed to be very efficient in terms of promoting the company’s product and gaining public attention. Moreover, the strategy does not require as many financial costs as other tools for advertising, such as the traditional use of billboards, advertisements on television, in magazines, and more. However, the framework also has a few dents in it. First and most obvious, the use of software that blocks online advertisements is gaining in popularity.

Hence, tools such as AdBlocker, AdBlocker Plus, uBlock Origin, etc. (Shewman, 2015), are likely to not only reduce the company’s revenues but also impede the process of promoting the product. Moreover, when considering the use of social media, one must bear in mind that the stratification of the target audience is also a necessity. Thus, several types of advertisements must be designed, for different groups of customers to be reached.

Finally, the fact that online ads are annoying, and often serve, not as the means of attracting people, but instead, annoying them to the point that they start connecting their negative feelings to the advertised product, needs to be brought up as a strong argument against the use of advertisements in the context of social media. Unless the represented tool for attracting a new audience becomes subtler and is used in a way that will not distract the target audience from the communication process, the use of social media as a means of enhancing the company’s sales can hardly be viewed as sensible (Friedman, 2015).

Alternative Strategies: What Could Have Been Done

It could be argued that the approaches described above are not the only tools for improving operations at Starbucks. Apart from focusing on technological innovation as the most efficient tool in making the organization competitive in the target environment, one may also consider the idea of rebranding. For instance, the company could consider creating a new product that could represent the organization from a new and entirely different perspective.

Without making the changes radical, so that loyal customers should not refrain from purchasing the new product while allowing for the rest of the audience to be thrilled about new opportunities, the company would be able to explore new options related to its development. As a result of creating a new brand, Starbucks would gain an extra competitive advantage, which is especially important in the context of the global economy, where the threat of new entries is always high, and the emergence of a new product may jeopardize the sales of a range of organizations.

A tighter focus on the internal factors that affect the company’s operations should also be considered an appropriate step to take, in the wake of the company’s restructuring, and the threat of losing its current market positions. For instance, Starbucks could consider the use of such tools as the enhancement of corporate values within its organizational setting.

As stressed above, the company has been focusing on improving its relationships with customers; however, the promotion of a more customer-focused approach is hardly possible, unless there is a strong ethical and philosophical foundation for the identified principles in the firm. Whereas Starbucks’ corporate ethics cannot be considered flawed, the company’s set of values could be redefined, with the idea of customer satisfaction as the highest priority. As a result, a rapid increase in the company’s customer satisfaction rates and, therefore, in the profit of the company, is expected.

It is also suggested that the changes listed above should be carried out with the Six Sigma framework in mind. By applying the DMAIC framework, one is likely to make the required changes in as efficient a manner as possible. Indeed, by definition, the tool in question can be used to enhance changes, by designing both an elaborate tool for managing the alterations and a measurement system that will allow for assessing progress (Kubiak & Benbow, 2014).

Conclusion and Recommendations: Sustainable Usage of All Resources

Creating an environment in which traditions are kept and followed, yet where innovations are encouraged and viewed as the hallmarks of the company’s further development, is an admittedly challenging task. Starbucks has been caught in the conundrum of its rather rusty quality standards and development philosophy, as well as the increasingly high demands among the company’s clients, along with their unceasing need for novelties. For Starbucks to maintain its corporate integrity, and at the same time cater to the needs of the target audience, the company will have to consider a strategy that will allow for consistent improvement and customer satisfaction. With their minds set on the needs of the company as well as themselves, the company’s employees will be able to excel in their performance.

Reference List

Aalbers, N., & Dorfsma, W. (2016). Innovation networks: Managing the networked organization. New York, NY: Routledge.

Friedman, J. (2015). PR 2.0: How digital media can help you build a sustainable brand. New York, NY: Do Sustainability.

Koehn, Nancy F., Kelly McNamara, Nora N. Khan, and Elizabeth Legris. Starbucks Coffee Company: Transformation and Renewal. Harvard, MA: Harvard Business Review, 2014. Print.

Kubiak, T. M., & Benbow, D. W. (2014). The Certified Six Sigma Black Belt Handbook. (2nd ed.). Milwaukee, WI: ASQ.

Pyzdek, T., & Keller, P. (2014). The Six Sigma handbook. (2nd ed.). Upper Saddle River, NJ: McGraw-Hill.

Shewman, A. (2015). The rise of ad blockers: Should advertisers be panicking?