The collapse of Starbucks in 2007 was caused by a number of issues, one of which could be the damage to interpersonal relationships. Schultz saw that as fewer baristas recalled customers’ names and as enormous coffee machines concealed the actual process of producing coffee, the business gradually lost its connection with clients (Koehn et al., 2014). The success of the company was based on the aforementioned method, which was of tremendous importance to Schultz. The businessman also wanted each location to connect customers and share the Starbucks story emotionally.
Additionally, the restructuring of the stores caused a dilution that was manifested in the loss of a cozy neighborhood vibe. In other words, it reduced customer loyalty and exposed Starbucks’ shortcomings in comparison to rivals. Schultz observed in 2008 that the business provided an abundance of food (Koehn et al., 2014). He did not like the fact that the coffee shops sold much food because the scent of sandwiches overpowered the aroma of the coffee. After realizing that coffee was what set Starbucks apart from other fast-food restaurants, the businessman considered ways to advance the technologies used in food preparation.
Schultz identified the need for the business to return to its foundations. After home and work, Starbucks has established itself as a place where people enjoy spending time (Goh et al., 2020). Schultz introduced numerous crucial transformation initiatives in this context, such as fostering brand loyalty among consumers, boosting the business’s competitive edge in the U.S., and upgrading internal concerns like healthcare benefits and ethical sourcing. The two main objectives that emerged from the foundation of transformation, which was focused on long-term changes, were innovation and reinvention. The emphasized parts of the company’s transformation are significant since they call for genuine customer satisfaction and strong relationships between consumers and staff.
Schultz firmly removed non-core sectors that had devolved into a sort of flea market in an effort to get an advantage over the new competitors in the market. I think that removing unnecessary business sectors is universal for businesses in any industry. Several difficult decisions had to be made by Schultz in order to save Starbucks. All of the company’s efforts were directed by Schultz toward mitigating the crisis’s effects and enhancing customer service (Koehn et al., 2014). Starbucks needed to undergo a transformation in order to exist in a setting that was changing quickly. Otherwise, the business might have lost its edge on the American market and become just another ordinary coffee shop.
Schultz understood that in addition to his rightful power as the CEO of Starbucks, he also needed to create referent, expert, and formal authority. Starbucks, according to Schultz, is “redefining the role of a for-profit company.” (Koehn et al., 2014, p. 36). In my opinion, he was expressing his desire to combine profit stimulation with social concern with this comment. In other terms, the strategic leadership covered a wide range of topics, from investments in environmental protection to providing the right health services for workers who put in more than 20 hours a week.
While acknowledging that Starbucks is a flawed company, Schultz believes that honesty and transparency are the cornerstones of leadership effectiveness. Starbucks is dedicated to using its size for good. The corporation put citizenship above politics now more than ever. It seems to me that Schultz set himself the goal of reviving the brand that was once loved by the whole world in order for the company to win world recognition once again. Schultz provided three examples of Starbucks’ endeavors to build a performance-driven company while taking care of its customers. It covered things like creating work opportunities in the USA, banding together to support one another, and providing services for military personnel and their families, as well as veterans.
References
Goh, S. Y., Kee, D. M. H., Ooi, Q. E., Boo, J. J., Chen, P. Y., Alosaimi, A., & Ghansal, M. (2020). Organizational culture at Starbucks. Journal of the Community Development in Asia (JCDA), 3(2), 28-34. Web.
Koehn, N. F., McNamara, K., Khan, N. N., & Legris, E. (2014). Starbucks coffee company: Transformation and renewal. Harvard Business School Case. Web.