Starbucks’ Transformation Agenda: An Audit of Key Insights Successful implementation of planned change proceeds best from a combination of clear purpose with insightful understanding of the factors involved in the process of change. However, as Campbell and Alexander (1997) warn, “Defining purpose, discovering insights, and combining the two into a strategy is not easy” (“Purpose and Insights”, para. 11). To gain a deeper appreciation for the challenge of leading change, this paper examines key insights gleaned from an analysis of Starbucks’ approach to change before and during implementation of six change initiatives that spearheaded the firm’s Transformation Agenda for strategic renewal. Background The bright halo of success that had long hovered above Starbucks’ illustrious history of record-setting growth and profits dramatically dimmed toward the end of 2006 (Koehn, Besharov, & Miller, 2008). Over time, a combination of worsening economic conditions and an accumulation of self-inflicted wounds from poor decision making and ineffective leadership had put the company’s future in jeopardy (Schultz, 2011). By the end of 2007, the precipitous deterioration in growth and comparative year-over-year store sales (comps) had convinced Howard Schultz to return as CEO. Shortly after, Schultz launched a comprehensive Transformation Agenda to guide the company’s strategic renewal (Schultz, 2011). Historical Insights: Starbucks’ Experience with Change Starbucks’s original business model had evolved from Schultz’s passionate desire to recreate the personally gratifying and uniquely warming environment of “social community” he had experienced while visiting a local Italian coffee shop as a young business man (Schultz, 2011). Propel... ... middle of paper ... ...ander, M. (1997). What’s wrong with strategy? Harvard Business Review. Retrieved from http://hbr.harvardbusiness.org/1997/11/whats-wrong-with-strategy/ar/1 Koehn, N., Besharov, M., & Miller, K. (2008). Starbucks Coffee Company in the 21st century. Boston, MA: Harvard Business School Publishing. Retrieved from http://custom.hbsp.com/b02/en/implicit/viewFileNavBeanImplicit.jhtml?_requestid=36673 Schein, E. (2004). Organizational culture and leadership (3rd ed.). San Francisco: Jossey-Bass. Schultz, H. (2011). Onward: How Starbucks fought for its life without losing its soul. New York: Rodale. SEC Filings (8-K). (2012, January 26). Retrieved from http://investor.starbucks.com/phoenix.zhtml?c=99518&p=irol-sec Zegler, J. (2010, June). New initiatives expand Starbuck’s reach. Beverage Industry 101(18), 62. Retrieved January 25, 2012, from ABI/INFORM Trade & Industry.
In 2002, unexpected findings of a market research showed problems regarding customer satisfaction and brand meaning for Starbucks customers. The situation was unacceptable for a company whose overall objective is to build the most recognized and respected brand in the world. Starbucks was supposed to represent a new and different place where any man would relax and enjoy quality time, alone or with others. But the market research showed that in the mind of the consumers, Starbucks brand is viewed as corporative, trying to expand endlessly and looking to make lots of money. This huge gap between customers' perception and Starbucks' values and goals called for immediate action.
The structure of Starbucks business communication is exceptional. Rather you are in their store buying a Caramel Frappuccino®, visiting their website or watching one of their advertisements on television; as the consumer, the message is loud and clear. Pick up any newspaper and you are likely to find an article about the coffee giant. Starbucks pledges a commitment to their over 172,000 partners (employees) and the community. “We realize our people are the cornerstone of our success, and we know that their ideas, commitment and connection to our customers are truly the essential elements in the Starbucks Experience” (Starbucks, 2008).
When the 1980’s rolled around, it was a thriving company, in the Seattle area. However, the co-founders began to have other interests and were involved in other careers simultaneously. Despite that, the company was about to undergo a major turnaround. A man by the name of Howard Schultz started to pursue an interest in the company. He noticed that the coffee shop had a wonderful environment.
The importance of economic indicators to the strategic planning process in any organization is the ability to benchmark economic conditions that contribute to improve profitability, business growth and market size. Leadership sets up the mission “to establish Starbucks as the most recognized and respected brand in the world.” In doing so, they have created a set of industry-leading, comprehensive coffee-buying guidelines addressing coffee quality, financial transparency, social and environmental responsibility. Starbucks strategy is also expanding market in globally to provide high quality coffee in convenient and visibility locations. They are continuing to innovate and extend the business with imaginative new ready-to-drink beverages and expanded packaged coffee offerings (Starbucks Corporation, 2007).
Starbucks not only shapes a defined importance on its product, the coffee, but also the relationships on its partners, its customers and its shareholders to create diversity, “to create a place where each of us can be ourselves” (Starbucks Coffee), to treat all related partners with dignity and respect at the greatest corporate level. In this sense, Starbucks involves its customers, its neighbors and is shareholders to participate in the community to “be a force for positive action—bringing together [its] partners, customers, and the community to contribute every day (Starbucks Coffee).
Starbucks Coffee, Tea, and Spice opened its first store in April 1971 in the Pike Place Market in Seattle, by owners who had a passion for dark-roasted coffee that was popular in Europe, but hard to find in the U.S. (Harrison et al., 2005; Venkatraman & Nelson, 2008). The company’s mission was to provide Seattle with the best access to dark-roasted coffee, and sought to educated customers about the product. As a matter of customer education and acceptance of the product, Starbucks grew and expanded into the successful domestic market it is today. Much of this success can be attributed to a focus on the total customer experience and s...
Schultz, Howard, and Joanne Gordon. Onward: How Starbucks Fought for Its Life Without Losing Its Soul. New York: Rodale, 2011. N. pag. Print.
Starbucks is currently the industry leader in specialty coffee. They purchased more high quality coffee beans than anyone else in the world and keep in good standings with the producers to ensure they get the best beans. Getting the best beans is only the first part, Starbucks also has a “closed loop system” that protects the beans from oxygen immediately after roasting to the time of packaging. They did this through their invention of a one-way valve which let the natural gasses escape but keeping oxygen out. This gave them the unique ability to ensure freshness and extended the shelf life to 26 weeks. Starbucks isn’t only about the coffee, it’s also about a place where people can escape to enjoy music, reflect, read, or just chat. It is a total coffee experience. The retail outlet has been responsible for much of Starbucks growth and has contributed substantially to their brand equity.
Business was good, but it was not without its problems. There was the political upheaval in the Middle East, followed by further tension after then CEO Howard Schultz commented on growing anti-Semitism in the region. Their integrity came under fire when certain Non-Governmental Organizations (NGO's) accused them of purchasing coffee beans under questionable social and economic conditions. These situations, together with difficult economic times globally, meant that Starbucks was likely going to take a hit somewhere. Eventually, they shut down their Israeli operations altogether.
... middle of paper ... ... Strategic planning kit for dummies, 2nd edition. Retrieved from http://www.dummies.com/how-to/content/strategic-planning-diversification.html “Starbucks”.
Starbucks case study: background 1971-87; private company 1987-92. (1997). McGraw-Hill Companies. Retrieved March 20, 2007, from the McGraw-Hill Companies website: http://www.mhhe.com/business/management/thompson/11e/case/starbucks-1.html
Schultz has had a lot of success with Starbucks, not only in revenue but he has continued to expand the brands in their portfolio, increase store locations and reach all new highs. Starbucks is now an international company with more than 21,000 stores in over 65 countries (Starbucks Coffee International, n.d.). Starbucks believes their global success has a lot to do with their international partners. Schultz explained it nicely when he said, “We remain highly respectful of the culture and traditions of the countries in which we do business. We recognize that our success is not an entitlement, and we must continue to earn the trust and respect of customers every day” (Starbucks Coffee International, n.d.). Schultz continually sees opportunity and the ability for growth, with an increase in locations across the globe every year and the ability to keep up with the latest in technology (websites, online shopping, a Starbucks application with the ability to pay and reload loyalty cards on your smart phone), etc.
Starbucks is a worldwide company, known for is delicious brews of coffee and seasonal varieties of tasty drinks for any occasion. Starbucks opened with two main goals, sharing great coffee with friends and to help make the world a little better. It originated in the historic Pike Place Market of Seattle, Washington in 1971 by Jerry Baldwin, Zev Siegl and Gordon Bowker. The creation of Starbucks’ name came from the seafaring tradition of early coffee traders and the romance evoked from Moby Dick. At the time, this individual shop specialized in the towering quality of coffee over competitors and other brewing services enabling its growth to becoming the largest coffee chain in Washington with numerous locations. In the early 1980s, the current CEO Schultz saw an opportunity for growth in the niche market. After a trip to Italy he brought back the idea of a café style environment of leisure and social meetings to the United States we now see in Starbucks locations today. Schultz ultimately left Starbucks to open his own coffee shop, Il Giornale which turned out to be a tremendous success. Fast forward a year later, Schultz got wind that Starbucks was going to sell all their components of Starbucks including their stores and factories, he immediately acquired the funds to buy Starbucks and linked both operations. Within five years he was able to open more than 125 stores starting in New England, Boston, Chicago, and gradually entered California. He wanted Starbucks to be a franchise system based on the mission of telling the truth and emphasize the quality,
With clear core values towards providing quality coffee, the best service, and atmosphere, Starbucks has enjoyed great success since it was founded 30 years ago. The company has being doing very well for last 11 years with 5% or more store sales increase, even with the rest economy still reeling from the post-9/11 recession. However recent research, conducted to Starbucks, have showed some concerns regarding company’s problem meeting customers’ expectations.
The smell that wakes most people up combined with friendly service is guaranteed to be a game changer. Around most corners in big cities worldwide, there is a Starbucks waiting to welcome in a customer. It has become one of the brands most cherished not only in America but across the globe. Why is that? Globalization, not happy with simply spreading across the United States Starbucks decided to branch out into the unknown. Let’s take a look at how this all happened and what is occurring right now with popular brand.