Starbucks is an American company that specializes in the roasting of quality been coffees. Over the recent past, the company has been experiencing a decline in profit due to the emergence of some issues such as those related to the company itself, effects of the external marketplace and reduction of the larger US economy. This way the company has come up with a transformation program that is expected to transform it to regaining its form.
- To what degree was Starbucks decline attributable to the company itself (i.e., such as due to the ways in which it was doing business in 2007 and to the strategies it was pursuing).
From the Starbucks case study, it is evident that the company has been experiencing economic crisis, particularly in the 2007 era. The strategies the company was applying were not useful as consumer tastes hastily changed while the profits dropped abruptly. This means that apart from the external factors, the company itself was so responsible for its downfall considering that poor management and lack of actual pricing led to a decline in sales. In fact, the company recorded an estimated 6.6 % decline in profits it was channeling initially. For instance, consumers had all the reasons to boycott the overpriced coffee products.
- To what degree was Starbucks decline attributable to the external marketplace? Why didn’t Starbucks leadership recognize the growing competitive threats earlier? For example, how did the executives Miss McDonald’s increasingly big bet on specialty coffee? Did they look the other way as Dunkin’ Donuts was expanding its role and presence in the space where Starbucks had been such a big and powerful player?
The external marketplace has affected Starbucks to large extents, this because of the increased competition that could be hardly noticeable by the former management. The rapid growth of the industry blinded the executives that the company was so consistent and was too far from the competition threats. In this case, the arrival of Dunkin proved a significant threat to Starbucks as Dunkin dominated some the strongest Starbucks marketplaces. This was mainly due to the better price deals and quality of the coffee products Dunkin provided to its customers as compared to Starbucks.
- Beginning in 2008 the larger U.S. economy started to decline very rapidly. How did this contribute to the deterioration of Starbuck’s position?
Starbucks is a company that had focused on long-term strategies for its growth in consistency. This way, the decline in the larger US economy affected the long-term strategies employed by Starbucks, as there were no enough resources to fund the company growth due to the decrease in the enterprise’s profits. Considering that the company had been facing several problems emerging from the internal and external marketplace, the decline in the larger US economy only accelerated downturns sustainability in Starbucks. Besides, it was not easy to adjust the long-term strategies to short-term strategies that could quickly adapt to the dynamic US economy.
- What were the fundamental objectives of the transformation? What are the most important components of Starbucks’ change?
One of the major goals that Starbucks included in its transformation procedure is regaining of its profits and reclaiming its market dominance. When Schultz retook the company, he employed several conversion strategies that focused on innovation, discipline, and strategy. This way, he came up with several big moves that that embraced that were meant to embrace the company’s order and success in the prospect.
- Apart from the initiatives themselves, consider Schultz’s leadership through the transformation. How much of the transformation does success should be attributed to Schultz himself? What do you take to be the lessons on leadership we can take from his navigation of Starbucks through the transformation?
In this case, it is fair to conclude that Schultz was all Starbucks needed to regain its production and market power. Apart from the change initiatives, Schultz proved to be a reliable and efficient leader considering that he was able to create a methodical road map that brought Starbucks from the brink of complete collapse.