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Starbucks Corporation Managing Change Essay

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Updated: Oct 5th, 2021

Introduction

Change management is a process of changing both at the organisational level or individual level. It’s a systematic approach to dealing with change. This is an equivocal term that deals with three factors: effectual change, ability to adopt change, ascendancy change. For an organisation, change management means applying implementing change in the organisation and bring respective profits. The problem while implementing changes is the adoption of changes. Adopting changes is not a very easy chore, but as a matter of fact, the more an organisation adopts changes, the more it flourishes.

Theoretical Concepts

Terry Paulson, author of “Paulson on Change,” quotes:

“It’s easiest to ride a horse in the direction it is going.”

In other words, he tried to convey the message that doesn’t fight against the change try to use for organisations as well as personal benefits. In the computer environment, change management means keeping track of updates for the computer system. Change management is a process of dislodging organisations and people from the current state to desired future state.

Basically, there are two levels of change management

  1. Individual change management
  2. Organizational Change management.

Significance of Change

The change management process is not a standalone process. It involves different related processes. The change management process allows managers to apply some changes for the betterment of the organisation. Effective changes bring great revenues and benefits to the organisation. Different models are designed for different situations. Cull out a proper model according to the organisation’s condition is one of the most difficult steps. One can only take benefits of these models when the best model according to the organisation’s condition is applied at the right time. According to JOHN P Kotters, eight principles for successful change are: Increase urgency, Build the guiding team, Get the vision right, Communicate for buy-in, Empower action, Create short-term wins, Don’t let up Make change stick.

Proper change management brings success to organisations.

Models & approaches to pursue changes

There are several models and approaches for both levels.

A number of models are available for emphasising individuals during phases of change management and fortifying organisational development in the corporate sector. Few models/frameworks are listed below:

  • Unfreeze-Change-Refreeze
  • Kübler-Ross
  • Formula for Change
  • ADKAR

Organisational change management includes a number of frameworks for strengthening an organisation and its revenues. The dynamic conservatism model considers best for organisational management. Other approaches which play a pivotal role in organisational change are Appreciative Inquiry, Scenario Planning: Scenario planning, Organise with Chaos of Rowley and Roevens, Theory U of Otto Scharmer.

Starbucks Change Management

Background of the Organization

Starbucks Corporation was founded in Seattle, Washington. Before Howard Schultz entered Starbucks, it was a small organisation in the market which offered good quality coffee beans for sale. Howard Schultz’s planned idea was to alter the set-up and arrangement of Starbuck’s outlets, adding in an American version of the coffeehouse culture. Initially, his dream was met with immense opposition by Starbuck’s organisation which was ultimately suppressed by high market demands. The strategy to expand massively was also part of Schultz’s planned dream for the new Starbucks.

Before Schultz executed his dream of expanding Starbucks, he wanted to make sure that his workers were dedicated and loyal to the Starbucks brand. Schultz adopted a policy to make Starbucks a terrific space for work. He successfully implemented his strategy for employee contentment by adding worker health benefits, stock opportunity plans and enhancing the whole workplace settings.

In the early 1990s, Schultz moved his planned vision once more. This time he concentrated on the expansion of stores. Starbuck’s strategy was to cover the most important metropolitan regions with outlets even if some stores cannibalised another stores business. In international markets, Starbucks had a two-branched store growth plan: either open company possessed and managed outlets or authorised a company in the host country to manage and direct Starbucks outlets. Starbucks created a new secondary brand by the name of Starbucks Coffee International and started to build the brand at the international level (Hoovers).

At the present time, Starbucks has successfully become a more established and well-known firm heading towards the settled and developed phase in its life cycle. The major concentration now has moved again towards social responsibility (Beverage Daily).

Analysing the question

Change management has a great influence in ameliorating organisational benefits. The success of an organisation depends on how to manage assets, workforce and other resources. The rate of change management in recent years has not slackened but still increasing. In spite of organisational change management, most changes bring failures to many organisations. Few major changes bring failure to organisations: absence of a change champion is one of the major issues of failure, poor executive sponsorship, bad project management skills, hope rested on a one-dimensional solution, political infighting and turf wars, undefined organisational objectives.

Organisational change management depends on a structured process that follows such principles: Sponsorship, Planning, Measurement, Engagement, and Support structures (Change Management, 2008). In today’s world, applying the change in organisational is fraught with uncertainty, but once it is done well, it brings a number of benefits to organisations. Based on Prussic research, change management is divided into three Phases (Change Management, 2008).

  1. Preparing for change
  2. Managing change
  3. Reinforcing change

Evaluation – Example Starbucks Organization Change Management

Evaluate the statement

Schultz has been successful in moving his focus from rapid development and increment to play a role in the community positively. Starbucks has high-level social and environmental principles. Throughout Starbuck’s corporate growth, they have always been in charge of promoting environmental and social stewardship. Starbuck’s coffee is laid on the foundations of helping to conserve the environment. Starbucks campaigns for coffee cultivation methods that protect a range of organisms in the environment and at the same time maintaining healthy surroundings. A rising percentage of their coffees are grown biologically.

Starbucks also values and takes exceptionally good care of its suppliers. They make sure to pay high amounts of money, which can cover the expenses of coffee growers. Starbucks is also very dedicated to giving back to the communities in which they operate. They also support health education and humanitarian aid programs in all of developing countries in which they have opened their outlets.

Pursuance of managing changes

The aims and objectives established by Mr Schultz were basically to institute Starbucks as the most well-known, acknowledged and valued brand in the world. To attain this aim, the company has applied strategies that concentrate on the speedy progression of its retails operations, development in the area of expertise sales and other operations and selectively chase chances to influence and control the Starbucks brand through the launch of new products and the promotion of new distribution channels.

Mr Schultz has productively instigated this approach and has had remarkable, outstanding success in the expansion in the global market. The recent expansion in Japan has been very successful for the company. So far, the company’s strategy is working adequately, and no major modifications are required.

The question arises that what was Howard Schultz’s unique tactical dream for Starbucks. Is his existing vision for Starbucks different from the one he had in the 1980s? How many times did he keep on changing his tactical vision? Are there any chances of major adjustments in his present strategic vision? When Starbucks was a private company in the 1980s, Mr Schultz’s dream was to make Starbucks a national company with principles and standards that workers would take pride in.

This is not different from the present strategic vision of the company. The major differences are the strength of the markets. Initially, it was the nationalised market that the statement was aiming and the present one is aiming at the international market. This statement is likely to go through major adjustments. The market environment keeps on fluctuating, the technology progress and the strategic visions of the companies changed with respect to these factors. Also, as competition develops, hi-tech technology is introduced, and as the market gets saturated, this strategic vision will go through alterations (FinancialWire, 2007).

Change Management – Internal & External forces

Change management is a sensitive issue but also an important one in today’s dynamic corporate environment. If a company is unable to adapt to change, it runs an inherent risk of dissipating from the competitive environment. Again, organisational culture plays a role in change management as employees represent the backbone of a company. Resistance to change within the corporation will easily translate into a stagnated behavioural pattern when dealing with the external environment.

There are several instances in the past and the present where Starbucks was forced to look forward to some major changes. How the company has dealt with it is definitely subjective, but for Starbucks’ success until this very day, change management should not constitute a problem.

External Forces

Adaptation to international tastes and purchasing powers

Starbucks boasts about their diversity policies when employing its partners. However, since 1996, the company has struggled for an international company (Kim, 2001). Statistics show that coffee sales grew more in Asia than they did in Europe in 1996 (Madden, 1998). Asia, as an example, represents a lucrative market for coffee. Home to many rapidly developing nations, a coffee house such as Starbucks is set to soar with the intense injection of American culture into the domestic markets.

However, with many economies in the region also volatile, coupled with the problems faced in the Middle East, it is fair to say that Starbucks should consider adopting “localised policies” to entice the Asian markets. On the economic front, the pricing of Starbucks products in Asian branches represents the pricing of “high-end imported goods” – those that are more expensive than local goods. Not all consumers are endowed with generous purchasing power to frequent foreign coffee houses, even if it was for the general romantic ambience. Starbucks could consider revising their pricing strategies as part of its change management to allow a better rapport with Asian consumers to flourish.

Internal Forces

Top Management Change Policies

Management spearheads direction in any corporation – regardless of hierarchy structure. Although Starbucks is known as a company with an extremely organic culture, top management alternations are part of their strategy to maintain their presence in the coffee market.

Resistance to change can surface here, and violent objections may also appear when there are changes in management. A new structure denotes different managerial styles and preferences. This can affect subordinates positively or negatively.

According to Liberum Research, most investors will list company management as key investment criteria. It follows that a change in senior management is one of the most crucial events that can occur.

Starbucks takes the leap of their investors’ faith to stay in the marketplace. A new strategy introduced in 2007 was to reconfigure management that would focus on international developments. A new position was introduced in 2007 – chief operating officer (COO) – responsible for global operations. In addition to that, the COO would also be responsible for the US and international store operations and store development, Starbucks global consumer products group, and supply chain operations (Jakocitz, 2007).

Martin Coles was elected to fill the international shoes. Since credibility plays a role in determining management changes, let alone structure, Coles was elected to lead Starbucks’ goal in the international arena through his diverse cocktail of experience. Previous senior posts included those at Reebok International, Nike Inc, Gateway Inc and PepsiCo Inc (Jakocitz, 2007).

Such credibility can only boast confidence towards the partners of Starbucks, curbing any strong anxiety towards resistance to such a change.

A U-turn to product policies

When writing “Pour Your Heart Into It,” in 1997, Howard Schultz emphasised the importance of branding and product differentiation that Starbucks had to concentrate on. There was nothing more important than overlooking the basics of coffee as a beverage. After diving in the blue ocean, 12,000 stores in addition and ten years later, Howard Schultz released an internal memo to the public (Moore, 2007).

“Over the past ten years, in order to achieve the growth, development, and scale necessary to go from less than 1,000 stores to 13,000 stores and beyond, we have had to make a series of decisions that, in retrospect, have to lead to the watering down of the Starbucks experience, and, what some might call the commoditisation of our brand.”

Howard Schultz | Internal memo (Feb. 14, 2007)

Schultz now feels that Starbucks is losing the edge of the Starbucks experience. Here are a few reasons why.

With the advance of technology, Starbucks has been remarkable in adapting their change management to the new know-how of coffee – such as automated coffee machines. The ambience of the romantic rendezvous has been substituted with the quick-to-get coffee that consumers now see in Starbucks branches all around the world. Technology has taken over the personal touches that Starbucks has always had to offer.

In addition to that, Moore speaks of Starbucks’ persistence in retaining customers through their sales of entertainment media. He criticises this method of marketing and recommends that Starbucks goes back to concentrating on what they had first set out to do – sell coffee.

Here are just basic examples where change management can distract a company’s vision and manipulate the corporation into thinking that the new route is always the better route. Though technology advancements and marketing gimmicks always play a role in boosting sales, this may be short-lived, especially through obsolescence and customer irritants, respectively.

Luckily for Starbucks, their observant (and frank) leader twinned with their ability to adapt to change, taking a U-turn and looking back at their core values should be possible.

How internal & external forces related to change Management at Starbucks

  1. Increase the business by continuously adding up more outlets all over the world: The Company has immense accomplishment in opening stores around the world. It has employed its global strategy efficiently and has enjoyed an increase in sales from the global functions.
  2. Store design, planning and construction are included in the strategic plan. The company started to create its own in house architects and designers to design Starbucks spots. These spots are designed in such a way that consumers come to meet, unwind or take pleasure in the calm settings during their break time. Each location was designed signal to indicate the most excellent class and to be a sign of the personality of the community and the neighbourhood.
  3. Product Line: Starbucks has vast and diverse product lines and is continuously in efforts to innovate new ideas, new products and new events for their consumers.
  4. The selection of employees and giving them the required training are also the major elements of the strategy. Starbucks employs diverse people who represent the community. The training given to the workers is to bring out their best abilities and skills.
  5. Escalating sales by new methods of selling: Starbucks is indulged in mail-order sales which are printed and circulated six times a year. It also has an online store through which it sells its products (Sellers, 2008).
  6. Joint ventures and Licensing: Starbucks opted for joint ventures with PepsiCo and Dreyer’s Grand Ice Cream. It also enjoys approved agreements with Marriott Host International, Horizon Airlines, United Airlines, Nordstrom’s, Barnes & Noble book store and Wells Fargo Bank.

Conclusion

Starbucks has proven to be a dynamic corporation right down to its core values. It challenges the norm in many ways, and this is quite apparent from a simple study addressing its human resources strategies. Creating a doting environment has placed Starbucks as a forerunner in the employment market with recognition towards its values as an organisation with a strong favourable culture. With its punctuated culture, too, the corporation has been able to adapt to different changes in the environment.

Though all three elements have been criticised by different observers, overall, Starbucks’ organic organisational behaviour and perspectives within and outside of the company provides them with valid workaround possibilities that will benefit Starbucks in the long run.

Starbucks has successfully established itself as the leading brand in the coffee bean and beverage business, and its strategy has been very efficient. From the start, Schultz, the company’s owner, has perceived a firm, steady expansion approach. He feels that it is essential to keep all stores of the company-owned to get better and expand the business further. To grow further, Starbucks will need to install outlets in other areas of the United States as well as worldwide.

Future joint ventures will be helpful in the expansion of the Starbucks brand. Other joint ventures will give Starbucks to grow in the brewery trade, which will offer an alcoholic drink with Starbuck’s coffee beans. Other partnerships will bring new unique products for Starbucks, which includes jazz CDs and cycle units with bagel bakeries. With the growth of the company, the culture and corporate tactics must be maintained to ensure success. This will be beneficial for the organisation in the future.

References List

Change Management, 2008. Web.

Change Management Systems, 2008. Web.

Jacovitz, R, 2007 Starbucks Works Hard to Remain on Top, Management Turnover as Change. Web.

Kim, S-M. 2002 Starbucks Coffee Corporations, College of Business Administration, University of Hawaii, Manoa.

Moore, J & Starbucks BOD, 2007. What Starbucks Should Do, Online Manifesto, Caribou Coffee, Starbucks Roll Out Plans To Provide Customers With Free Wi-Fi. FinancialWire.

Starbucks Corporation. 2008. Web.

Starbucks thrives on consumer coffee habit. Web.

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