Starbucks case study PDF

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STARBUCKS 1. What were the most important factors behind Starbuck’s decline in 2007 and 2008? How much of this did Schultz see in 2007? Which factors were less obvious? If Starbucks becomes a mass brand, it will lose its exclusivity. Then it will lose their loyal customers. In 2007, this happened after Starbucks has extremely grown far. Not only open a lot of new branches but also launch a blizzard of new products. Obviously, Starbucks doesn't care about the loyalty of the customer. In the customer loyalty theory, if the company does have a loyalty marketing strategy, it will affect its own development. However, Starbucks reduce the value of the brand for coffee purists. They make the order delivery faster than before, barista have no time to dialogue with customers. And it means that customers cannot customize their drinks. Therefore, more and more people start to switch to Caribou Coffee, Peet's Coffee and other exclusive brands. Another factor was that the coffee industry became a red ocean industry. The market is saturated. In the 2007 consumer report, McDonald's coffee was welcome by consumers, and it eventually defeating Starbucks. Dunkin Donuts and McDonald’s are cheaper than Starbuck's coffee, and they also served the meals in their shops. These brought a big challenge for Starbucks. Why brand experience is important? This is also relevant to customer loyalty. Customer not only buy the products, but they also buy for the brand. For the company, they can maintain minimum consumption and they can be famous in the global community. Brand image is a crucial thing for the company. Besides, brand loyalty can also include the team in the company. if the company have the loyalty from their group, growing up is like a duck to water. Schultz knew what was coming to him in 2007/8. So, he established the warning for the commoditization of the brand in the company, and yet, he found the way to deal with these problems. That's why he started to close the shops that were poor management. And purchased the automatic espresso machines to speed up the service. He began to slow down his every step and put his eyes on expansion the shops overseas. 2. What were the most important aspects of Starbuck’s transformation? Why did these matter to the transformation and survival of the company? How generalizable are such initiatives in the broader context of business turnarounds? 1

In my point of view, Starbucks started to connect the products and the customer. They showed the world that they care about quality and consistency. In addition, Starbucks even spawning like-minded communities to make people connect because of Starbucks. The Starbuck's CEO emphasized their core mission and value and highquality services at every moment. Besides, they have good customers services, people could have a direct link with the high executive and they will listen to the suggestions. Starbucks found that social media is way more important than focus on its sales. Therefore, they didn't push products to their followers, they utilize social media to create their good image. On the other hand, Starbucks's also launched a customer loyalty program. They started to give their customer rewards by registering Starbucks Cards online. This program could attract new customers and retain old customers. Therefore, I would say the most important aspects of Starbucks’ transformation was they used social media to balance the company and the customers. According to Chaffey’s theory, he said social media marketing is " Monitoring and facilitating customers interaction, participation and sharing through digital media to encourage positive engagement with a company and its brands leading to commercial value." For everyone in this generation, we rely on social media a lot. And that reveals an important point that if companies do well on social media, even politician, they all can have advantages on it. Also, create a team by doing this social media marketing can bring forth a huge benefit for the company. In this global community, no one can escape from social media. Consequently, social media marketing is the most important strategy for the survival of the company. 3. What do you think that Schultz means when he says that Starbucks is “redefining the role of a for-profit company?” What do you make of Schultz’s take on corporate responsibility and its impact on the bottom line? When Schultz says that they are redefining their company, I believe that he is telling that for-profit company shouldn't only focus on their achievement but authenticity and humility. This is the duty of the company should have. So he reminds himself, always redefining their company through their value, their strategy, and their leadership to ensure that they won't be derailed from social responsibility. Starbucks has three social responsibility: community, ethical sourcing, and the

environment. The most impressed me is that Starbucks' foundation supported a nonprofit community— Opportunity Finance, to help the small businesses. Besides, Schultz also asked the customers to donate the fund and they'll give 100% of the money to those small businesses. Ethical sourcing and the environment are connected to each other. Starbucks has their bottom line, so they won't over-exploited coffee beans and they ensure that their coffee, tea, and cocoa are purchased in an ethical manner. Starbucks cares about the environment so they attempt to be environmentally friendly in each aspect.

ORGANIZING FOR PERFORMANCE: FOUR VIGNETTES VIGNETTE ONE: WALMART 1. What decisions should a Walmart store manager be allowed to make? (e.g., Should they be able to make pricing decisions, stocking, decisions, etc…?) Walmart' perfectly described a low-cost strategy. In generic competitive strategies, overall cost leadership is the way that Walmart chose; this strategy makes Walmart obtain a competitive advantage by effectively reducing costs and making the total cost of the enterprise lower than the price of the competitor, or even the most economical cost in the same industry. Therefore, Walmart's managers won't be allowed in making pricing decisions. Since Walmart prices are fixed and low, they cannot make pricing decisions by following different markets conditions. If they do so, they will lose their customers. This strategy gives customers benefits from lower costs and higher quality. And the team in Walmart work-process, they can focus on the particular function so they will have higher effectiveness. Also, for the company, they have advantages in these economies of scale. This strategy promotes a prosperous economy and provides a huge benefit to the global community. 2. In Figure 2, the size of the boxes illustrate the relative resources allocated to different functions. Which of these diagrams do you believe best illustrates the way Walmart should allocate span of control to maintain its “Everyday Low Prices” strategy? Explain your reasoning. In my opinion, I would choose the diagrams of the left to describe Walmart's “Every day Low Prices” strategy. Since they need to drive standardization, low cost, and economies of scale, they'll need allocating more resources to the operating core. In fact, this is a span of control to efficiency. As I mentioned above, higher effectiveness

and lower price are the core of Walmart. Therefore, this diagram is more appropriate to describe Walmart's strategy. VIGNETTE TWO: STARBUCKS 1. Why did Starbucks adopt a “local value creation” configuration? Starbucks tries to combine the culture and their own coffee by adopting "local value creation" configuration. For example, Japan has a cherry blossom white chocolate latte and Korea has an Affogato. Starbucks focuses on marketing, they make retailers meet local needs and preferences. Therefore, each country has its own special menu, meet the need for different habits in different places. As long as they focus on the market, customers will return back. For the Starbucks team, their primary is connecting with the customers and helping the organization growing bigger. And each organization in its country needs to figure it out what products fit the local tastes and preference. Also, Starbucks has its own global community. Since they still remain their consistency in some aspects, customers won't feel unfamiliar with Starbucks when they travel the world. 2. In designing this new structure, which functions should Starbucks retain at the corporate center? Which should be posted out of the regions? Explain your reasoning. They still need to retain the main core which is connecting customers and create community. Whereas Walmart has a low-cost strategy, Starbucks don't have to use this strategy because at the beginning they already define themselves into a high-end brand. Of course, Starbucks has good coffee, but the added value is the thing that pushes them into worldwide. They should retain classic coffee flavor and their core mission into different regions. If it changed, Starbucks will vanish and lose its brand. People would choose other coffee shops but not Starbucks. The reason why Starbucks is so successful is that it has a lot to do with his community creation. VIGNETTE THREE: HARVARD BUSINESS SCHOOL: A COMMUNITY OF EXPERTS 1. Given the two organization charts in Figure 4, which do you think would best serve Harvard Business School (HBS)?

The second organization chart is best to fit HBS. This chart has more categories, including the MBA program, doctoral program, executive education, and other business. These are more specific classification than another one. For instance, except for the MBA and doctoral program, their case studies, research, the business journal and contribute articles are all in other business. They earn money from academic papers and research. It's the part of HBS business. 2. Who is the primary customer in each of these charts? I assumed that all the categories in the first and second charts are relative to the students. The central core of Harvard Business School still has a lot to do with education. And those who benefit from education are students. As a result, the primary customer in these two charts is students. VIGNETTE FOUR: GOOGLE: ORGANIZING INFORMATION FOR THE WORLD 1. What are the different ways that Google could structure its business? (Be as complete as possible in developing your list of alternatives) Google has five major business: Search, advertising, operating systems and platforms, enterprise. and hardware products. Google can structure these businesses separated into two categories. First, people-oriented department. They focus on marketing and organized the product and customers. Depending on the customer's demand, they will need to possess specialized expertise and knowledge about the customer, also knowing their preferences. Therefore, in this aspect, they will have marketing and sales unit, economies in production, and customer services department. In contrast, another would be the item-based department, such as an R&D department, an information technology department, and a product controller’s department. 2. Which of these organization design choices do you think is best? Explain your reasoning. As far as I can tell, no organization design is the best. They both have their advantages. The best organization design is always mixed with different types of organization. Organization design should according to different conditions and make it not the same as always. In conclusion, I would recommend google to set up a sales company in each country, but only retain the production division in a particular place....