Organizational Change Upper Management Starbucks Future Challenges

¶ … Organizational Change

Upper Management

Starbucks Future Challenges

Over the last several years, Starbucks has been facing considerable challenges. This is because the firm's business model has been emulated by a number of competitors around the globe. As a result, the operating environment for the industry has become fractured. At the same time, the increases in energy prices and the switch to environmentally friendly practices are forcing farmers to pass higher prices onto Starbucks. This resulted in the company closing a number of stores in an effort to streamline costs. These issues are problematic, as they have the potential to negatively impact on the long-term viability of the firm. To avoid these kinds of challenges, the company must continue to embrace its traditional mission statement. Yet, it also needs to understand and effectively respond to various threats. This means that managers have to be willing to take a new approach when addressing these challenges.

The Relevance of Starbucks Mission Statement

The relevance of Starbuck's mission statement is that it is providing everyone with strategic direction in the types of practices that are utilized by the firm. This is encouraging employees to create an atmosphere that is focused on improving the experiences for customers. Over the course of time, this approach has allowed the company to be able to create a unique brand that has helped them to redefine the traditional coffee market. ("Our Starbucks Mission Statement," 2012)

However, there are some issues with following these guidelines. Most notably, they are having an impact on the firm's underlying wholesale costs (which are increasing dramatically). The reason why is because, the company has specific policies that are designed to buy from farmers (who are supportive of their workers and the environment). While this is a socially responsible practice; the reality is that these policies have resulted in the firm paying higher prices for coffee (by dealing with middlemen during this process). This has forced the company to experience tighter profit margins. ("Our Starbucks Mission Statement," 2012) ("Top Challenges Facing Starbucks,")

To address these challenges the company can follow the mission statement. The biggest differences will be in the practices that are utilized by the firm. For example, in the case of high coffee prices, Starbucks could own their farms. This will allow them to implement these same kinds of standards when: working with employees and protecting the environment. At the same time, it will reduce the costs dramatically for purchasing coffee. This is illustrating how the firm could maintain these basic principles. While augmenting, their strategy with a new approach that will help the company to achieve its larger organizational objectives. ("Our Starbucks Mission Statement," 2012) ("Top Challenges Facing Starbucks,")

The Internal and Global Factors Management must Consider

The internal factors that management must consider is: if they will need to establish a logistics chain for delivering the coffee directly to stores. This could be achieved by outsourcing all or select functions to third party providers. At the same time, they could create their supply chain management system that will streamline costs even further. This could be combined with their current strategy to improve efficiency and inventory levels. Moreover, Starbucks has the options of becoming a coffee whole seller to various regions of the world. ("Top Challenges Facing Starbucks,")

At the same time, executives need to examine the impact of this strategy on local communities. This is where they would want to see how these activities will affect farmers they are currently working with. Once this takes place, is when the firm could identify techniques to mitigate any kind of negative impact on the regional economy. These elements are showing how these challenges could cause executives to go against the mission statement of the firm. As a result, careful deliberation must occur in order to prevent the firm from engaging practices that are in violation of these guidelines. If the above tactics are utilized, they will help Starbucks to be able to increase its profit margins and remain in compliance with the mission statement. This is how the firm can effectively deal with a host of challenges in the future. ("Top Challenges Facing Starbucks,")