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Recommendations to Starbucks
In 2007-2008, Starbucks, like many other firms had to contend with one of the worst
crises in its time. The financial crisis of the time was for the firm worsened by a fail in
management practices, leading to the loss of jobs for almost 180,000 people and their families
(Schultz 4). The renowned coffee shop chain was brought almost to a halt by the break of
emotional attachment with its consumers. After the tumultuous period, the firm geared its
efforts towards ensuring they provided their clients with not only quality coffee, but also top
notch customer service in a welcoming environment (Higbee 3). A change in management
and several practices were implemented in an effort to save the conglomerate from imminent
failure. Although the business managed to escape sinking, it is yet to regain its previous glory
among retail food chains, the efforts likely to salvage Starbucks range from political,
economic, social, to managerial.
In an era where social awareness determines the value of a brand, Starbucks found
itself in the middle of serious allegations of wastage of natural resources in 2008. A story was
written in the Sun, in London, alleging the firm’s wastage of millions of liters of water
through what was referred to as a “dipper well” (Higbee 2). Although the allegations were not
immediately known to the firm’s management, they for a while affected the brand (Schultz 3).
Starbucks reputation was spared albeit through concerted efforts and numerous court battles
with conservation groups. To prevent similar occurrences in future, the firm can use digital
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media, social media, and smart technology to remain abreast with changing trends, and

making certain that they manage the accuracy of information being dispensed to the public.

Secondly, political influence plays a significant role in determining the outcome in any

business venture. Political influences in a business are difficult to foresee or control even for a

firm as significant as Starbucks (Higbee 5). When labor costs such as general market wage

levels, increased costs of healthcare and worker’s compensation have a direct influence in the

earnings of a business. Political influence in a business may, however, be addressed by

providing cushions in the contracts signed by new employees. For instance, a contract may

have a clause indicating that Starbucks as the employer holds the sole discretion of

determining wage and salary increments despite governmental influence (Quelch 3). In so

doing, the firm will be safeguarded in the event that the government of the day decided to

increase minimum wage, much to the peril of large corporations.

As a business franchise, Starbucks growth has been attributed to the increase in

number of stores across America and other parts of the world. Availability of the store in

almost every locality removed the uniqueness of the brand and made it commonplace. In

2008, Starbucks was grossly affected when attempted to command a premium price for an

experience that was no longer considered special (Quelch 1). Much as growth is a good sign

in business, for the firm, it was disadvantageous. In July 2008, an announcement was made to

the effect that up to 600 stores would be closed in an effort to downsize. Starbucks would be

advised to apply stringent measures before opening new stores (Higbee 3). As a result,

complaints such as “loss of the store’s soul” would be avoided. Customers would get value

for the costs incurred at Starbucks.

In conclusion, Starbucks did not suffer during the 2007-2008 crisis because of poor

business etiquette; but, it was a result of overconfidence that led to gross miscalculations. In
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the age of digital communication, the firm should strive to ensure that it controls all the

information reaching the public concerning its operations and initiatives. Secondly, the firm

may cushion itself from unforeseen political influences especially on remuneration of

employees, by being keen during drawing of contracts. Furthermore, Starbucks is also advised

to limit the number of stores they open to ensure that the Starbucks experience does not

become commonplace.
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Works Cited
Higbee, Zack, et al. "The Future of Starbucks." Analysis Report. 2018.
https://www.mcafee.cc/Classes/BEM106/Papers/2018/Starbucks.pdf Accessed
January 25th, 2018
Quelch, John. How Starbucks’ Growth Destroyed Brand Value. 02 July 2008.
https://hbr.org/2008/07/how-starbucks-growth-destroyed Accessed 29 January 2018.
Schultz, Howard. The HBR Interview: “We Had to Own the Mistakes” Havard Business
Review. August 2010. https://hbr.org/2010/07/the-hbr-interview-we-had-to-own-the-
mistakes Accessed 29 January 2018
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