«Starbucks Case Study» - Free Essay Paper
Table of Contents
- Case Study: Starbuck’s Strategic Change Management
- Buy Starbucks Case Study essay paper online
- Change Overview
- Stakeholder Analysis
- Problem Statement
- Change Drivers and Constraints
- Cost/Benefit Analysis
- Change Cost/Benefit Analysis
- Change Assessment
- Evaluation and Recommendations
- Related Case Studies essays
Case Study: Starbuck’s Strategic Change Management
The following essay discusses the organizational change in the Starbucks coffee company. The article outlines the model of the enterprise's strategic change. Furthermore, it expounds on the model’s importance for the economic status of the enterprise and its connection with the current economy of the state. The paper discusses all the issues related to the corporation’s strategic change management. The purpose of the change initiative, the forces behind the need for the change, and the effects of the change to on related issues will be explained.
Starbucks is a prime coffee company that has been founded in 1951 in Seattle in Pike market, but has grown over years and is now a global business operating in more than 50 countries. Starbucks is famous for its quality coffee and unique stores that provide serene meeting places in busy cities. Starbucks has undergone progressive growth despite the competition of other companies such as McDonald’s and Organo Gold. Starbucks has managed to stay in the market and maintain a brand despite its overpriced coffee. The company has managed to attract many customers through the maintenance of a real global image in all of its outlets (Blumenthal 2008). Most people in towns want to associate with the Starbucks’ image. The company uses its strategy to attract more people to their business despite their high prices. Starbucks has always been striving to achieve an excellent brand image that needs proper planning and exhaustive understanding of the customer’s value, behaviors, preferences, and tastes.
An organization introduces change with the purpose of making new policies or implementing new processes. Most strategic changes made to the management and operations of an organization revolve around the quality of product and services, empowerment, cultural shifts or engineering processes (Daft 1994). Additionally, a business entity may introduce strategic change management forums to help them survive in a competitive environment (Bartol & Martin 1994, p. 5). Over the recent years, many businesses have imitated the services and products of Starbucks, hence forcing the company to implement strategic changes to survive in the competitive market. Strategic changes are applied to the business processes, structure, culture, and frameworks. Change is easy to implement, but is part of growth and development of any business (Bamford & Forrester 2003, p. 546). Starbucks’ change of plan will be discussed in this paper through the change model, stakeholders’ participation, the impact, and the related issues involved. The information used will be derived from the company’s website and database reports available on the internet. Additionally, the researcher will be connected to the marketing department for further information about their strategies for curbing stiff competition. The researcher will also include own experience with the stores, services and products of Starbucks in comparison to the other coffee shops in the regions. General knowledge and literature review will also be used to explain the concept of a strategic change management process.
- Starbucks was initially registered as a private company, but later it grew to be a public firm in 1991. The company has since attracted many investors who have become its stakeholders. The company’s stakeholders range from customers, governments, employees, creditors to suppliers. To make significant decisions and strategic changes relevant to the business, all the stakeholders should be involved in the decision-making process (Luecke 2003). In the implementation of the change in marketing of Starbucks, the following stakeholders are involved;
- The company’s managing director;
- Financial manager and other financial officers’
- Information system management manager and department teams;
- Head of the purchasing department;
- Team of sales and its heads;
- Supply chain and logistic heads;
- Director of human resource;
- Head of the Administration department and team
Each shareholder has own role, influence and responsibility when it comes to the operations of the company. To ensure the participation of all the shareholders in evaluating, planning, implementing, monitoring and analyzing the change strategy, efficient communication is necessary. The communication is achieved through postal mail and emails of each respective member or associate of the organization. The external participants took part in surveys, conferences, discussions, presentations and face-to-face interactions. Moreover, the communication strategies used first discuss the purpose of the intended change and the needs and benefits it brings to the company. The stakeholders’ feedback is later considered and used for framing a change strategy and is afterward discussed with all the stakeholders. To help curb any resistance that may occur among the shareholders, the following principles are implemented:
- Communication and education: After the discussion of the intended change, the views of the shareholders are taken into account. Any questions and different opinions are discussed and answered.
- Participation and involvement: The management ensures that all the shareholders are involved in the entire process of change to create more responsibility and reduce opposition. The participation of all the stakeholders in the change process makes them feel like a part of the new improvement.
- Negotiation and agreement: Any change that is implemented in an organization has negative and positive impacts. However, the positive impact should outweigh the negative one. Therefore, all the possible effects should be based on an agreement with all the members of the organization. A collective agreement after negotiation of different opinions helps create unity in the change process.
- Facilitation and support: People who have agreed to the implementation of the change process are supported, since their success draws attention to the opposing party. This situation creates more confidence in the process.
In the company’s outlets, there has been a decline in the number of customers over a period. The possible causes for this decline are the changes in tastes, preferences of the target market and an increase in substitute companies. To react to the changes, Starbucks planned strategies to curb the competition and increase customer satisfaction. The proposed amendments included revising the company’s packages to add more varieties of items and improve their structures by adopting the latest pop culture. The changes were to be incorporated in all of their outlets to ensure uniformity and attract more customers. External factors that influenced the need for a change in the company operations included the economic issue of inflation. Other factors include changes in interest rates and GDP, which affect the position of the business in the market. Additionally, changes in legislation policies, technological advancements, and mergers and acquisitions were the internal factors that also contributed to the need for change.
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Change Drivers and Constraints
Various factors drive the need for strategic change interventions in a company. One of the driving forces for a change can be the economic downturn. In the US market, Starbucks has been facing significant challenges during its growth due to varying economic situations. After the global recession of 2008, the economic value of most businesses declined, and so did the value of Starbucks. Due to this change, the organization had to change some of its processes and strategies. The recession caused an increase in the cost of operations, reduced consumption rates and reduced profits. As a result, the company had to revise its hiring, retaining, and training policies due to the increase in the unemployment level after the industrial recession. During the same period, the political and legal pressure of labor laws involved foodstuff and other product lines handling affecting both advertising and marketing practices.
Any change is expected to increase profits, create more employment, maximize the use of the available resources, and reduce the costs of production. Moreover, he change is expected to affect the pricing of the products and services in a positive way. Despite the fact that Starbucks’ coffee is overpriced, the business is expected to prosper in different regions due to its exceptional standards of service. The change to be implemented should help improve the value of Starbucks brand.
Change Cost/Benefit Analysis
Costs of implementing change management
Benefits of implementing change
· Dedicated personnel resources to the project. Managerial team, departmental heads, stakeholders, employees, and the customers will all participate in the change process. Discussions, seminars, and surveys will be conducted to give and derive information to the groups.
· Procurement of tools and methodology for utilization by the change management process resources.
· Purchase of materials for use by the management team to train the stakeholders.
· Training costs and time for all the stakeholders.
· Perspective A: Achievement of faster adoption speed, more cooperation, and greater proficiency.
· Perspective B: Cost avoidance. Poor management of change is costly for the organization.
· Perspective C: Risk reduction. The organization, the project, and the stakeholders involved are put under the risk when the change is poorly managed. Proper management of a change process mitigates risks.
· Perspective D: Benefits realization Insurance. It is necessary to consider whether the process depends on the stakeholders accomplishing their tasks differently. Change management provides benefits realization insurance.
· Perspective E: Profitability of achieving goals. Effective change management increases the chances of achieving core objectives and goals. Change management increases the profitability of attaining success.
The changes to be implemented have been categorized according to how frequently they are used in the organization’s operations. To assess the implication of the change, an excellent model of implementation was used. The company’s competitive strategy was first identified and evaluated, then changes were initiated base on their required frequency. Starbucks recognized its desired condition of future perspective to make the relevant advance changes considering the possible barriers to the achievement of the implemented change. Later, the company monitored and evaluated the operations and forces that pushed for the implementation of the change. After monitoring and evaluating the factors driving the change, they analyzed the framework of the change to suit the best possible strategy and model. The aim of the analysis was to identify possible improvement strategies of dominating the current market against the existing rivals. Through the derived information, a needed approach and implementation strategy were identified. Then again, new initiatives for change were designed. The application of the changes was then undertaken, and the leadership roles were restructured in agreement with the needed change. After the implementation, the outcomes of the model were assessed with respect to their effect on the company.
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The model chosen for the implementation of the needed change in Starbucks had an empirical-rational strategy. This approach works along with the concept of rationality. People have an urge to follow their self-interests. The change to be implemented in this model is based on the incentives used to communicate the information. Starbucks used a few strategies for communicating the information about the change in an efficient way. One of the strategies used was a competence-based technique. The changes were made to the core competencies and more value was added to the products, which improved the image by adopting the modern theme. The mentioned changes were implemented in all the stakeholders' relation departments to improve operations, ensure competence, and achieve a better relationship with the company. The company also aimed at adopting a cost-effective model that would create more product differentiation. Another purpose of Starbucks was to provide unique services to the community, make enormous profits for investors, and create employment for the US population.
The implementation plan of the company had great concern for the factors that highly affected its operations. First, Starbucks did an environmental assessment to delineate the enterprises that had an impact on its operations and overall business. The company also supported human resources during the implementation of the change by creating strategies concerning the staff welfare. Concern for the personnel makes them feel important and valued by the company, which improves their performance levels. The company linked the strategic and operational changes to help stakeholders adapt to the changes more quickly. A strategy helps make the change implemented practical and feasible (Yee 1998, p. 284). Furthermore, the company should set acceptable agendas for the staff concerning mission, directions, values, and vision. The agenda set should be consistent enough to serve as a competitive advantage of the company (Paryani 2012, p. 45).
The change process was later implemented in different departments through the following strategies. In various fields, more packages were offered on the menu in order to increase extra varieties of products. In addition to coffee, latte, and other drinks, ice cream was added. The appearance of the stores was also enhanced by replacing the old furniture with the modern interior. This change increased the stores’ attractiveness and helped match the new stores’ outlooks. The working hours of the stores were extended to enable them serve a bigger clientele than before. The outlets were earlier opened from 9 am to 12 am, and were from that point forward changed to 24-hours operation. The extended hours created more convenience for the public and gave the business a competitive advantage over other stores in the regions. The company also increased its capacity volume. The spacious look of the stores increased convenience and comfort for the clients, and more customers preferred being in the Starbucks shop stores than any other. The new stores began to adopt new outlooks. However, they had magnified the strength of the pricing strategy. They had set more pocket friendlier prices than those of the Starbucks and brought in other new products. After the assessment of the environmental changes around towns, the tastes, preferences, and choices of most customers had not changed, but most were adventurous for new services. With the use of the given information, the Starbucks company reacted to the reports by modernizing premises, services, and products. Through the given changes, the company matched the needs of most of the target market.
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Monitoring the change process helps analyze the progress of change and check the need for adjustments at an early stage. Evaluation of the process helps the project stay relevant to the primary or set objectives of the change. The measures of the assessment and monitoring process are undertaken with the following steps:
- The assessment objectives are set in a SMART strategy for every department, and the review is done at the end of each month;
- The review policies should be accepted and adopted by the shareholders at individual and team levels;
- The benchmarking standards were established by the management and evaluation was based on those standards;
- The Starbucks’ performance systems were set on quantity system basis, and the standards were set on quality basis to enable comparison of performance levels;
- To monitor and analyze the performance of all the aspects indirectly and directly, the company adopted the 360-degree feedback system technique. The method is well known for being the most successful tool used in business performance assessment (Schermerhorn 2012, p. 56).
Evaluation and Recommendations
The above sessions outlined and discussed the strategic plan and process of change in the Starbucks chain of stores. After the application and assessment of the assimilation of the process in the company’s practices, a follow-up assessment was done to establish whether the change was a failure or success for the enterprise. The comparison of the earlier performance of the stores in every department and as a whole and was done. The set benchmark goals were the tool that were used to assess the effects of the implemented change in the company.
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The evaluation process helps identify the need for engaging all the stakeholders actively in the change process planning and management. Additionally, the company resources are analyzed, and their implications are established. Starbucks’ resources revolve around the key operations such as marketing, IT, personnel, finances, and operations and their response to the new change initiative. The resistance management process is another strategy, which has shown that efficacy in educating, supporting, and motivating the stakeholders and the staff has made the change process easy to be accepted by the company. The implementation process that was developed considered the key stakeholders’ opinions and involvement to create more unity and diversified skill sets and achieve goals in a more efficient manner. The managerial personnel evaluated all the possible change implementation models and chose the best one. Among the primary four strategies that were evaluated the environment adaptive model, normative re-educative model, coercive power model, and empirical rational model were used. The empirical analytical model proved to be the best for the implementation process for it was based on different individual interests, tastes, and preferences. The SMART objectives, benchmarking, and set standards were suggested as the tools for the measure of the impact of the change process in order to achieve an excellent comparison of the activities and performances after the change implementation. Advertisement and extensive marketing were done to ensure that all the potential and current clientele was reached and was made aware of the new changes in the Starbucks’ outlets.
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After the implementation of the change in Starbucks company, a number of customers increased and other changes were also experienced. New products and stores became much more attractive than their old versions. The company had introduced more flavors of their brand products such as coffee, tea, and ice cream. The management also advertised a discount offer for the first week after the reopening of each outlet. The discount offers increased the desire of many people in the market to try new products and enjoy the renovated environment in the shops. At the same time, the company had achieved its goal by adding more value to its brand without necessarily having to reduce prices. The increase in the number of customers continued even after the end of the offer, and thus an increase in the profits was gained (Flamholtz & Randle 2008, p. 88)
During the introduction of the change initiative to the existing personnel, training was done to make sure that they acquire the needed skills for the operations (Nixon 2008). These practices were aimed at increasing the performance of the workforce in the company. Other well-skilled personnel were also recruited due to the rise in the volume of customers and extended working hours. The increase in the volume of work in the company helped achieve the goal of creating more employment for the US population.