Starbucks Mission

THE COMMODITIZATION OF STARBUCKS

Explain the reasoning for Starbucks' need for a change in strategic direction in response to McDonald's and then explain the process of the changes

Starbucks has quickly become the world's leading retailer who sells various flavors of brand specialty coffee. Starbucks mission is "to inspire and nurture the human spirit - one person, one cup, and one neighborhood at a time" (Starbucks Corporation, 2012, para. 1).

Starbucks' reasoning for a need of change in a strategic direction in response to McDonald's is due to McDonald's creation of a brand that has emerged globally and that is cost-efficient, known well, and very popular for its sell of cheap food. However, McDonald's rollout of the McCafe coffee shops in many locations is attributed to Starbucks' strategic change more than their focus on value. McCafe choices of coffee, Frappe's , Iced Latte's, Cappuccinos, and hot chocolate with cheaper pricing, and the installment of coffee bars in its U.S. locations is a potential threat that Starbucks' faces.

Starbucks' process of changes is first, "realigning the leadership structure to allow the firm to move quickly in the development of new products and initiatives to enhance the Starbuck's experience" (Enz, 2012, pg. 578). Second, by scaling back the expansion of opening new stores and closing those that isn't performing well. Third, by working to regain their relationship with customers, and bringing back their loyalty to the brand is the key component of their strategy. The company is focusing strategically on getting premium coffee to consumers throughout the world. They are using some differentiated ways of showing their strategies for example, giving that in store experience. Various ways this was done was by "working on in-store renovations to differentiate the coffee shop feeling and create an inimitable experience, making free WiFi available, and being environmentally friendly. The renovations send a message to the competitors that Starbuck's is maintaining their focus on the experience of being at a Starbucks. Also, changing their WiFi provider from T-Mobile to AT&T for better service, and the efforts behind being an environmentally friendly supply chain, send a clear signal to competitors and consumers about the importance of owning the premium market. Additionally, Starbuck's maintained its commitment to specialty and seasonal items, attracting loyal customers to the coffee shop more frequently" (Gardner, Newman, Schneiderman, 2010, p. 14). After all, these loyal customers make a significant contribution to Starbuck's revenue.

Last, Starbuck's is looking into selling new products in the new markets in the future. According to Blatchford, (2011), Howard Schultz explains, "with this, removing the company name from the logo is supposed to represent the firm's ability to free themselves from just the coffee market". In order for Starbuck's to continue being the leaders in specialty coffee, a change strategically was necessary.

In 2008, Starbucks replaced its CEO and realigned its leadership structure. Review the benefits of making this organizational change and why it was necessary.

A Starbuck's organizational change was necessary because their sales as well as profits were declining, less people were frequenting their stores, and they were venturing into things like entertainment and putting emphasis on products that moved away from what they stood for which was the experience of specialty coffee. "There were concerns of this grow, grow, grow mentality" (Laburn, n.d. para. 9). This meant trying to put up as many stores as it could in a short time period. Stocks were also dropping adding pressure from Wall Street to do better. Laburn (n.d.) explains "Schultz sensed that something intrinsic to the Starbucks brand was missing and deflating the brand experience. New espresso machines installed to increase efficiency were too tall, preventing customers from watching baristas create their beverages and engaging with the customer. Also, the full-bodied rich aroma of freshly ground coffee had disappeared due to how coffee grounds were being shipped and stored.

Benefits of making an organizational change were implementing the model of effective communication which allows the corporation to have successful communication in all directions with its employees. It also extends to the customer. "Starbucks does a great job in using technology, marketing tactics, and their employees to communicate success, goals, and vision to the customer" (Seazone, 2009, para. 6). Next, the changes will enable the company to align their leaders closer to their customers and partners and bring everyone together who shares visions and goals to continuously support the business. Additionally, Schultz (2012) points out that "the realignment will allow the company to better deliver on local relevancy and speed of decision-making". By Starbuck's elevating the customer experience, they will benefit from profitable growth.

Assess the risks of making such a structural change in an established company like Starbucks.

The implementation of structural changes within an organization such as Starbucks isn't easy. One risk is that management may run into a situation where there are disagreements among individuals or groups which cause them to conflict with one another. This is called resistance. "These differences can be a barrier to the successful implementation of organizational changes. Managers or leaders of Starbucks must be skillful