Starbucks is the established leader of the coffee and coffee-based beverages across the entire world. The company helped create business history through the innovative ideas of Howard Schultz and it became established as an epitome of business success.
Recently however, the company had been facing increasing competition and added internal problems. As a result, it conducted an internal process of change and hoped that it would reconsolidate its position. At this level, it is useful to assess this situation through four distinctive lenses, as follows:
The need for change and the process of the change
The benefits of the change process
The risks of the structural change, and last
The financial analysis before and after the change.
The need for change and the process of the change
The change implemented by Starbucks was fueled predominantly by the realization that the firm had been losing its identity. Specifically, throughout the past recent years, the executives at Starbucks had developed and implemented a series of business oriented decisions. These revolved around the generation of operational efficiency and the generation of superior returns on investments. Some examples in this sense include the elimination of grounding machines from the stores and the choice of pre-grounded coffee, the opening of drive-throughs or the addition of sandwiches in the Starbucks menus. While these decisions had been business wise at the time they were taken, they now furthered the company from its initial feel and ambiance.
The challenges for Starbucks increased once McDonald's launched its operations into the coffee industry as well. The fast food chain integrated coffee machines...
The fast food giant argued that its decision to sell coffee was not a direct attack at Starbucks, but a strategy of adapting to the changing needs of their customer base. For instance, as children come to celebrate their birthday parties at the stores or to play in the mini parks, parents can enjoy a cup of coffee.
Still, regardless of the motivation behind McDonald's decision to sell coffee and coffee-based beverages, fact remains that this posed a serious competition for Starbucks. In order to overcome this competition and restore its position within the industry and the market, Starbucks had decided upon a change process. This change processes commenced with the replacement of the Starbucks chief executive officer in 2008. The position was offered to founder and former CEO Howard Schultz, who assumed it and argued that he would strive to return the company to its initial focus. Upon accepting the job, he stated:
"We must address the challenges we face and we know what has to be done. Put simply, we are recommitting ourselves to what has made Starbucks and the Starbucks Experience so unique: ethically sourcing and roasting the highest quality coffee in the world; the relentless focus on the customer; the trust we have built with our people, and the entrepreneurial risk-taking, innovation and creativity that are the hallmarks of our success" (case).
At a more detailed level, the change agenda was focused on four distinctive directions, as follows:
Improving the state of the business in the United States by focusing on the customer experience, the store design, and employee training
Decreasing the rate at which…
