Management of Change (MSL 831)

Quiz

Submitted to: Prof (Dr) Arup Roy Choudhury

Submitted by: Rupjilika Timungpi (2020SMF6613)

Starbucks Coffee Company: Transformation and Renewal

This case study revolves around the crisis of decreasing customer satisfaction of Starbucks,
its international expansion plan and the steps taken by the leadership team to overcome the
obstacles.

The main issues faced by Starbucks are underlined as follows:

 Absence of strategic market decisions: Big moves like international expansion

should be made after due consideration of market size, growth opportunities in the
particular areas, customer expectations, etc. However, Starbucks expanded and built
their new stores in a haste without undertaking proper research resulting in their stores
in new locations being unable to garner considerable customer attention and market
revenue

 Cost-conscious customers: Customers were more inclined to the products of

competitors since they viewed those brands as more economical

 Absence of differentiating factors: Competitors of Starbucks differentiated

themselves by offering services in digital platforms, an aspect where Starbucks lagged
far behind than the others. This ultimately led to its downfall.

 Poor employee management: Starbucks transferred good store managers to oversee

their new stores. However, for the management of the existing ones, they simply
promoted a barista to the higher position without training them properly and
equipping them well with the roles and responsibilities of the new designation.

Steps taken by Schultz to bring Starbucks back on track:

Following strategic initiatives were undertaken:

 Improve market share of Starbucks in the US
 Reignite emotional bonding with the Starbucks brand
 Make long term changes to the business foundation

In order to fulfill the above strategic initiatives:

 Changes were brought in the leadership team
 Digital platforms were improved/initiated for better customer interaction, convenient
payment modes for enhanced customer experience
 Customer rewards were introduced to ensure brand loyalty
 Undertook many environmental/social initiatives to enhance Starbucks’ positioning in
particular regions
  Integrated local preferences to their functioning/offerings

The Starbucks case has been very interesting, informative and is a wonderful representation
of how new changes are necessary to be brought about under an able leadership team for an
organization to gain a strategic competitive advantage over its competitors.