1. Introduction
Starbucks Corporation, an American company founded in 1971 in Seattle, WA, is a premier roaster, marketer and retailer of specialty coffee around world. Starbucks has about 182,000 employees across 19,767 company operated & licensed stores in 62 countries. Their product mix includes roasted and handcrafted high-quality/premium priced coffees, tea, a variety of fresh food items and other beverages. They also sell a variety of coffee and tea products and license their trademarks through other channels such as licensed stores, grocery and national foodservice accounts. 1 Starbucks also markets its products mix with other brand names within its portfolio of companies, which include Teavana, Tazo, Seattle’s Best Coffee, Starbucks VIA, Starbucks Refreshers, Evolution Fresh, La Boulange and Verismo. Starbucks had total revenue of $14.89 billion as of September 29 th , 2013.
2. External Environment of The Retail Market for Coffee & Snacks
Industry Overview and Analysis
Starbucks primarily operates and competes in the retail coffee and snacks store industry. This industry experienced a major slowdown in 2009 due to the economic crisis and changing consumer tastes, with the industry revenue in the US declining 6.6% to $25.9 billion. Before this, the industry had a decade of growth consistent. Due to the economic slump, consumers spent less on luxuries like eating out, choosing to purchase low-price items instead of high-priced coffee drinks due to shrinking budgets. 3 The industry grew at a low annualized average growth rate of 0.9% from 2008 till 2013 with current industry revenues at $29 billion in the US. The industry is now forecasted to grow at an annualized rate of 3.9% over the next five years, with a potential to reach $35.1 billion revenues in the US. This growth would be mainly driven by an improving economy, increase in consumer confidence and expanding menu offerings within the industry. Starbucks dominates the industry with a market share of 36.7%, Dunkin Brands with 24.6% and other competitors like McDonalds, Costa Coffee, Tim Horton’s etc.
Industry Life Cycle and Market Share Concentration
This industry is in a mature stage with a medium level concentration. Starbucks and Dunkin Brands make up more than 60% of the market share, giving them considerable market power in determining industry trends.
Industry Demand Determinants and Profitability Drivers
The industry’s demand for premium coffee and snack products are mainly driven by a number of factors which include disposable income, per capita coffee consumption, attitudes towards health, world pricing of coffee and demographics. This industry is highly sensitive to the macroeconomic factors that affect the growth in household disposable. During the recession, the decline in household disposable income due to increased unemployment and stagnant wages, caused a downward pressure on the revenue and profitability margins in the industry. Another crucial factor for analyzing the demand in the industry is the per capita coffee consumption where the increase in coffee consumption increases the revenue of coffee & snack shops. The main driver of this consumption increase would be the increase disposable income, as the economy improves and consumers start to relax their budgets. This driver has a positive effect on market revenue. Per capita coffee consumption is expected to increase in 2014. As coffee beans are the primary input in the value chain of the industry participants, the prevailing volatile prices of coffee beans determines market costs and profitability margins. The world price of coffee has risen sharply in recent years due to growing demand in other countries and the resulting supply shortages. During the five years to 2018, coffee bean prices are projected to decrease, which will likely translate into lower market costs and higher profitability. Attitudes towards health also play an important role in determining the demand in the industry. There is expected healthy eating and diet among the consumers in 2014, and this could be a potential threat to the industry as they become more aware of issues related to weight and obesity. There has been a proactive shift among the industry participants to tailor their menus towards more organic and healthy products mix.
Porters Five Forces Analysis of the Retail Coffee and Snacks Industry
● Threat of New Entrants: Moderate
There is a moderate threat of new entrants into the industry as the barriers to entry are not high enough to discourage new competitors to enter the market.
The industry’s saturation is moderately high with a monopolistic competition structure.
For new entrants, the initial investment is not significant as they can lease stores, equipment etc. at a moderate level of investment.
At a localized level, small coffee shops can compete with the likes of Starbucks and Dunkin Brands because there are no switching costs for the consumers. Even thought it’s a competitive industry, the possibility of new entrants to be successful in the industry is moderate.
But this relatively easy entry into the market is usually countered by large incumbent brands identities like Starbucks who have achieved economies of scale by lowering cost, improved efficiency with a huge market share. There is a moderately high barrier for the new entrants as they differentiate themselves from Starbuck’s product quality, its prime real estate locations, and its store ecosystem ‘experience’.
The incumbent firms like Starbucks have a larger scale and scope, yielding them a learning curve advantage and favorable access to raw material with the relationship they build with their suppliers.
The expected retaliation from well-established companies for brand equity, resources, prime real estate locations and price competition are moderately high, which creates a moderate barrier to entry.
● Threat of Substitutes: High
There are many reasonable substitute beverages to coffee, which are mainly tea, fruit juices, water, soda’s, energy drinks etc. Bars and Pubs with non/alcoholic beverages could also substitute for the social experience of Starbucks.
Consumers could also make their own home produced coffee with household premium coffee makers at a fraction of the cost for buying from premium coffee retailers like Starbucks.
There are no switching costs for the consumers for switching to substitutes, which makes the threat high.
But its important to note that industry leaders like Starbucks are currently trying to counter this threat by selling coffee makers, premium coffee packs in grocery stores but this threat still puts pressure their the margins.
● Bargaining Power of Buyers: Moderate to Low Pressure
There are many different buyers in this industry and no single buyer can demand price concession.
It offers vertically differentiated products with a diverse consumer base, which make relatively low volume purchases, which erodes the buyer’s power.
Even though there are no switching costs with high availability of substitute products, industry leaders like Starbucks prices its product mix in relation to rivals stores with prevailing market price elasticity and competitive premium pricing.
Consumers have a moderate sensitivity in premium coffee retailing as they pay a premium for higher quality products but are watchful of excessive premium in relation product quality.
● Bargaining Power of Suppliers: Low to Moderate Pressure
The main inputs into the value chain of Starbucks is coffee beans and premium Arabica coffee grown in select regions which are standard inputs, which makes the cost of switching between substitute suppliers, moderately low.
Starbucks, with its size and scale, has the power to take advantage of its suppliers but it maintains a Fair trade certified coffee under its coffee and farmer equity (C.A.F.E) program, which gives its suppliers a fair partnership status, which yields them some moderately, low power.
The suppliers in the industry also pose a low threat of competing against Starbucks by forward vertical integration, which lowers their power.
Starbucks also forms a highly important part of the suppliers business, due its size and scope, which make the power of the suppliers lower. Given these factors, suppliers pose a moderately low bargaining power.
● Intensity of Competitive Rivalry: High to Moderate
The industry has a monopolistic competition, with Starbucks having the largest markets share and its closest competitors also having a significant market share, creating significant pressure on Starbucks.
Consumers do have any cost of switching to other competitors, which crates high intensity in rivalry.
But its important to note that Starbucks maintain some competitive advantage as it differentiates its products with premium products and services, which cause a moderate level of intensity in competition.
The industry is mature and growth rate has been moderately low which cause the intensity of competition among the companies to be moderately high due to all of them seeking to increase market shaper from established firms like Starbucks.
This industry does not have over capacity currently and all these factors contribute to the intensity among rivals to be moderately high.
Looking at the Porters five forces analysis, we can get an aggregate industry analysis that the strength of forces and the profitability in the retail coffee and snacks industry are Moderate.
3. Internal Analysis of Starbucks Corporation
Starbucks Core Competence
The core competence of Starbucks has been its ability to effectively leverage their cornerstone product differentiation strategies by offering a premium product mix of high quality beverages and snacks . Starbuck’s brand equity is built on selling the finest quality coffee and related products, and by providing each customer a unique “ Starbucks Experience ”, which is derived from supreme customer service, clean and well-maintained stores that reflect the culture of the communities in which they operate, thereby building a high degree of customer loyalty with a cult following. Its other core competence is its human resource management’s values- based approach for building very strong internal and external relationships with suppliers, which drives the successful deployment of its business strategy of organic expansion into international markets, horizontal integration through smart acquisitions and alliances that maintains their long-term strategic objective being the most recognized and respected brands in the world.
Starbucks SWOT Analysis
– Strengths
Strong Market Position and Global Brand Recognition: Starbucks has a significant geographical presence across the globe and maintain a 36.7% market share in the United States and has operations in over 60 countries. Starbucks is also the most recognized brand in the coffeehouse segment and is ranked 91st in the best global brands of 2013. Starbucks effectively leverages its rich brand equity by merchandizing products, licensing its brand logo out . Such strong market position and brand recognition allows the company to gain significant competitive advantage in further expanding into international markets and also help register higher growth in both domestic and international markets. Over the years, they have achieved significant economies of scale with superior distribution channels and supplier relationships.
Products of the Highest Quality: They give the highest importance to the quality of their products and avoid standardization of their quality even for higher production output.
Location and Aesthetic appeal of its Stores: Starbucks has stores in some of the most prime and strategic location across the globe. They target premium, high-traffic, high-visibility locations near a variety of settings, including downtown and suburban retail centers, office buildings, university campuses, and in select rural and off-highway locations across the world. 10 This has earned them a significant competence and advantage to be able to penetrate prime markets and tap into customers convince factor. Their stores are visually appealing and have a ‘cool’ factor attached to it with being designed to reflect the unique character of the neighborhood they serve in and environmentally friendly. They provide free wifi, great music, great service, warm atmosphere and provide an environment of community meeting spot, which forms a wider part of the ‘Starbucks
Experience’. The main aim for the firm is to make their stores a ‘third place’ besides home and work.
Human Resource Management: Starbucks is know for its highly knowledge base employees. They are the main assets of the company and they are provided with great benefits like stock option, retirement accounts and a healthy culture. This effective human capital management translates into great customer services. It was rated 91 st in the 100 best places to work for by Fortune Magazine.
Goodwill among consumers due to Social Responsibly Initiatives: Their stores are community friendly, focused on recycling and reducing waste. They build goodwill among communities where they operate.
Diverse Product Mix: Starbuck portfolio of products given in Appendix 8, that caters to all age groups demographic factors.
Use of Technology and Mobile Outlets: Starbucks efficiently leverages technology with its mobile application “Starbucks App’ in both apple and android software’s. They make significant investments in technology to support their growth every year.
Customer base loyalty: Starbucks has cult following status among consumers and they have also implemented loyalty-based programs to drive loyalty with the Starbucks Rewards programs and Starbucks Card. The Starbucks Card is a value card program that provides convenience, support gifting, and increase the frequency of store visits by cardholders and integrated with their mobile application.
– Weaknesses
Expensive Products: While Starbucks does differentiate their products with being highly quality couple with the whole ‘Starbucks Experience’, in times of economic sluggishness, consumers to have so switching costs to competitor’s products with lower prices and forgo paying a premium. These premium prices could also pose some weakness for it to succeed in developing countries.
Self-Cannibalization through overcrowding: By aggressive expansion and high saturation due to overcrowding in the market leads to self cannibalization and diminishes long term growth targets of Starbucks. This is happening especially in the United States where Starbucks operates 8078 stores.
Overdependence in the United States market: In line with self-cannibalization of the US market with 8078 stores, Starbucks generates a huge percentage of their total revenue from the US and this makes it very sensitive to prospects of the US economy and growth.
Negative large corporation image: Like any large corporation, Starbucks does come under increased scrutiny and have to invest in corporate social responsibility activates and maintain tight control over labor practices.
American/European coffee culture clash with that of other countries: Starbucks coffee culture may not widely accepted in some countries as part of their international expansion strategy.
– Opportunities
Expansion into Emerging Markets: The increase saturation and self-cannibalization of the US market makes its international strategy even more important. Starbucks has made good inroad into many countries, with India recently joining the list with a joint venture entry. 18 Starbucks has a great growth potential in further expanding into the emerging and developing markets. They can leverage their size, experience, financial prowess and efficiencies to make new market share.
Expanding Product mix and offerings: Starbucks recently started to expand their product mix by venturing into the Tea and fresh juice product offerings with a smart acquisition strategy. This provides significant opportunities for Starbucks.
Expansion of retail operations: Starbucks currently sell its packed coffee products, iced beverages and merchandizes through large box retailers. This market’s potential is yet to be fully realized and this provides Starbucks great opportunities for the future to future monetizes their brand.
Technological advances: Starbucks has leveraged the use of mobile applications and has an investment partnership with Square, a mobile payments app that is integrated with its Starbucks app. This creates an ease of use process for customers, aligns customer loyalty through reward programs. Starbucks has already set the bar in the industry with this advancement and about 10% of its transactions in the US have been made using mobile applications. This is a growing field and would drive more business to their stores as technology advances.
New distribution channels: Starbucks introduced a beta version of a delivery system called Mobile Pour. This presents a great opportunity for the future by expanding their end product distribution systems and could drive more revenue if the implementation is successful.
Brand extension: Starbucks carries a powerful brand image and it can leverage it to extend into horizontal lines of its business and also venture into product diversification with keeping brand dilution risk in check.
– Threats
Increased Competition: This is by far the biggest threat that Starbucks faces with the market being at a mature stage, there is increased pressure on Starbucks from its competitors like Dunkin Brands, McDonalds, Costa Coffee, Pete’s Coffee, mom and pop specialty coffee stores. Dunkin Brands had at its main threat in the US market by trailing Starbucks with a 24.6% share.
Price Volatility in the Global Coffee Market: There has be significant fluctuations in the market prices of high quality coffee beans, which Starbucks can’t control.
Developed Countries Market Saturation: Starbucks derives a significant amount of its revenue from the development markets and there is increased market saturation currently.
Developed Countries Economy: In an increasingly economically integrated world, an economic crisis like the one in 2008 could have a trickle down effect from the developed markets to the developing markets. This threat would hurt revenues for Starbucks as consumers shift away from premium product mix to stay in limited budgets during economic hardships.
Changing Consumer tastes and lifestyle choices: The shift of consumers toward more healthy products and the risk of coffee culture being just a fad represent a threat for Starbucks going into the future.
4. Starbucks Key strategies
One of the key strategy that Starbucks followed since its inception is that of product differentiation offering differentiators such as premium product mix, locations, coffee beverages reputation and supreme customer service that translated to building a premium valued brand which is costly to imitate for competitors. Starbucks has also followed a shrewd strategy of strategic alliance and making smart acquisitions. Sta rbucks didn’t follow franchising model and operated company oriented stores and joint ventures in international markets. Starbucks has made some key acquisitions such as Teavana (Tea products), Bay Breads (premium bread products), Evolution Fresh (fresh juice products) etc. to use the product diversification strategy. Appendix 7 gives a whole list of joint ventures, strategic alliances and acquisitions of Starbucks. Starbucks acquisition strategy, as shown in their acquisition history in Appendix, has been horizontal, product and market extensions acquisitions. Another crucial strategy for Starbuck’s growth has been its international strategies of expanding into key developed and emerging markets to geographically diversify, and it has been highly successful with operation spanning 60 countries. All these strategies have derive considerable competitive advantage for Starbucks over its competitors.
5. Starbucks Financial Performance Analysis
Looking at a six year period ratio & growth analysis of Starbucks’s financials from 2008 to 2013, we can see that the revenue growth of the company has experience a drop of -5.9% during the 2008/09 recession but from then on, Starbucks posted a healthy revenue growth of from FY2010 to FY2013 with posting a great growth of 13.7% in FY2012 and currently posted revenues $14.9 billion for FY2013. The operating income margins have increase substantially from 4.9% in FY2008 to a high of 15% in FY2012. Starbucks posted an operating loss in FY2013 and this resulted in a operating margin of -2.2% for that year and the main reason for that is due to a litigation charge of $2.8 billion to Kraft Foods for terminating an agreement with them. This charges is treated as extraordinary event and therefore should be discounted from the overall healthy operational performance of Starbucks. Starbucks ROE and ROA have been impressive with 29.2% and 17.8% respectively for FY2012. Looking at Starbucks efficiency ratios, Starbucks has gained significant operational efficiency with impressive asset and inventory turnover ratios with a low of 1.51 and 5.4 respectively for FY2013. But its interesting to note that the company’s cash conversion cycle has increase to high 54.7 in FY2013, which is where Starbucks should concentrate on to reduce to attain higher efficiency. Starbucks boasts good financial health with low debt/leverage with a debt/equity ratio of 0.29 for FY2013 and maintains decent current and quick ratios.
6. Recommendations
Starbucks biggest growth is in its International segment. The emerging markets of Brazil, India, China, South Africa and Mexico with a growing middle-class population continue to offer significant opportunities to add new stores and serve more customers. Starbucks has already made significant inroads into the Chinese market but there still is a lot of untapped potential growth in these markets. Starbucks should grow in these emerging markets by winning locally Starbucks must remain relevant to the customer in order to grow in these markets, and its management teams should have the freedom to operate within their overall framework to tailor store format, introduce local product mix and price points to the needs, lifestyles and tastes of each individual market/community.
Under Starbucks international strategy, it should transfer its core competencies and capabilities country to country and then gradually build profit drivers in several countries as it continues its global expansion in an organic way.
Starbucks has great growth opportunities in Tea and Fresh Juice products mix. They should build up these products along the same line of their core coffee products.
Also as consumer tastes and lifestyle shift towards more snacks and beverages options, Starbucks should tailor its menu’s and expand to give more healthy product offerings in its mix .
Coffee beans are a significant input into Starbucks value chain and there have been wide fluctuations in the market prices of high quality coffee beans. Starbucks could mitigate this price volatility risky by implementing an effective hedging strategy like future contracts to lock in their estimated quantity inputs at a low swing price so that the future costs can be managed to a greater extent.
Starbucks growth strategy in the saturated U.S. market should focus on getting additional penetration into untapped rural markets.
Another growth sector is its packaged coffee packets and iced beverage products. Starbucks should build better relationships with big box retailers to get premium shelf space and increase the efficiency of this distribution channel.
From their 10- K’s , we can see that Starbucks invest very little in advertising and marketing initiatives. It would be recommended that Starbucks make significant investments in advertising and marketing initiatives in the face of increased competition in the market.
Further build and retain customer loyalty, by building on beta concept of on-the-go home delivery.
Their mobile apps business drove 10% of the sales in the US, so it would be recommended for further building to stream lining ease of use and payment process which would help drive more customers, decrease wait time in stores and increase efficiency. Integrating Starbucks loyalty program with the mobile application would also be recommended.
Market penetration strategy
Starbucks should opt for an aggressive expansion strategy in emerging markets. The aggressive strategic choice can be justified because Starbucks has a strong competitive position which can be perfectly utilized in a fast-growing market. The company should utilize its internal strengths to develop market share in emerging economies, in particular India and Brazil. It is further recommended to enter new markets with the help of key strategic partners since they dispose of the necessary market knowledge and political ties which can greatly facilitate the entry. Moreover, the licensing strategy should be continued for new markets since it allows local store managers to tailor store format, product mixes, and price points to the needs, lifestyles, and tastes of local customers and communities.
Market development strategy in China
Starbucks has already made significant inroads into China. However, there still remains a lot of untapped potential which the company can capitalize on. In China it is important to develop marketing strategies that appeal to younger generations who fantasize about western coffee culture as a symbol of modern lifestyle.104 Moreover, the importance of partnering up with local retailers to gain market presence cannot be stressed enough. Since China is not a homogenous market (it is far too big for that), Starbucks is advised to nurture existing partnerships as each partner contributes different strengths and local expertise that can help Starbucks gain an understanding of the different tastes and preferences of local Chinese customers. Once the market is consolidated, Starbucks is advised to continue its centralization strategy of buying back stores from local partners to increase profits and reduce the threat of intellectual property theft.
Market segment development strategy
Starbucks should apply a market segment development strategy for niche markets in developed economies, in particular the single-serve-, courtesy-, and flavored coffee segments. Those segments portray 104 Cf. Wang, H. (2012): Online publication 60 positive growth rates and must be exploited if the company plans to increase market shares in established markets.
Product development strategy
on business level, the company is advised to further develop successful product lines (Frappuccino, Paninis) so that they do not loose attractiveness in the eyes of customers. Starbucks also has great growth potential in Tea and Fresh Juice products, and the company is advised to build up those product lines alongside their core coffee and food products.
Product positioning strategy
trendy products such as K-cups and VIA instant coffee packs need to be better positioned in their respective segments in order to fully exploit profit potentials. The company is advised to build better relationships with specialty retailers or convenient stores to clinch premium shelf space for such product lines to increase customer awareness. Moreover, tailored marketing campaigns are necessary to highlight the benefits such products have over competitors.
Retrenchment Strategy
Starbucks should consider slimming-down unprofitable product categories, such as merchandise and traditional coffee equipment. This will free up additional financial resources which is necessary to further drive the extension of profitable and currently “hip” product lines. A liquidation strategy for the entire merchandise category is not recommendable as certain products still enjoy high demand among customers (e.g. tumblers and Verismo® machines).
Alliances
Typical question mark products, such as ground and whole bean coffee products, should not be given up on since they portray the heart of Starbuck product portfolio. Growth in this segment can be revived by forming alliances with key strategic retail partners (e.g. Tata Group or Kraft Foods) who dispose of the necessary market spread to distribute traditional coffee products.
Aggressive marketing campaign in emerging markets
Room for improvement exists in the implementation of marketing campaigns in developing countries. Unlike in developed markets where Starbucks has already made a name for itself, in emerging markets Starbuck cannot rely on world-of-mouth marketing as it first has to establish and consolidate its presence. It is therefore recommended to increase the marketing budget for growth markets. Marketing campaigns featuring the western, highquality, and “hip” image of Starbucks can help the company offset the low-price advantage of competitors. Also in developed markets it is necessary to step up advertising. In contrast to emerging markets, which require a rather all-embracing marketing strategy, the marketing strategy for developed countries should be finetuned to specific niche markets.
Premium-pricing strategy
It is advisable to aggressively expand the number of stores at home and abroad in order to not fall behind competitors, who, based on the their low-cost advantage, are able to attract more customers particularly from the fastgrowing and highly coffee-conscious middle-class in emerging economies. Aggressive expansion does not mean undercutting competitors. On the contrary, Starbucks should hold on to its high-quality image. Lowering prices would most likely mediocritize Starbucks’ excellent brand image and reputation as a provider of premium coffee and exceptional service. The company has shown that customers still value good service, high quality, and a cozy store atmosphere and that they are willing to pay an extra price to feel “special”. Especially in emerging markets, pushing for market share by cutting prices is a losing strategy as new entrants can never “outcut” the prices of local competitors.
Trend-scouting departments
In the last decade Starbucks has failed to foresee and capitalize on emerging trends in the coffee market. It is advisable for the company to establish trend-scouting facilities to better unravel changes in consumer expectations and behavior.
Price hedging strategy
There have been wide fluctuations in the market prices of high-quality Arabica coffee beans. Although Starbucks has been able to mollify extensive price peaks with its excellent supply chain management orientation, the company could further mitigate price volatility by applying effective hedging 105 Cf. Wang, H. (2012): Online publication 62 strategies. One option could be to use future contracts for purchasing future quantities at an agreed on price in the present.
TASK 3 of 3
7. Developing a change management strategy with stakeholders
There can be two kinds of people in strategic change decision planning. First, who are enthusiastic, motivated and are ready to accept the changes for the organization. Second, people those who can put resistance to change because of their personal behavior and emotional responses. Therefore, taking such individual behaviors into consideration, planned and well-established strategies should be brought forward to decide upon.
Leverage strategies
This strategy is focused upon for those who are the good adopters and always ready to grip the change. They support and cooperate with changes and make their significant influence.
Engagement strategies
This strategy mainly focuses on chief stakeholders those who have significant influence on the change but are unwilling to adopt the changes. Therefore, strategy’s main aim is alteration of influencers into adopters and then to utilize their influence on those who are less committed and interested toward changes’ adoption (Freeman, 2010).
Containment strategies
It is focused on the people who have high skills, competencies, experience and knowledge and can contribute to the changes but are not ready to adopt the changes and are resistance laggard.
Outplacement strategies
In this strategy, those people are focused who people are high and powerful influential resistance straggler. In addition, they are provided with an opportunity to show their interest and commitment for process of change. Nonetheless, if they do not get agree to it at all then explicit consequences are taken into account to deal with them (Marcus Ball, 2007).
8. Evaluation of systems used for stakeholders’ involvement
Each and every stakeholder will be impacted by the changes within the organization. Therefore, it should be ensured that they have been informed about the requirement of change being taken into account. Every stage of the change process should be dictated to the stakeholders. As it has been discussed above that all this is made possible with the help of a communication strategy, it is also necessary to educate and make them aware of their importance in whole process. Afterward, feedbacks and reviews received from every stakeholder are made a vital part of the change process and considered at every stage of process. This makes them feel more involved, confident, engaged and motivated when they notice that they are being heard and given more significance in the entire process of change. As a result, the involvement of stakeholders in this process makes its smoother. In addition, they should not be treated in a way where they feel ignored or neglected (The open group, 2011).
9. Strategy for managing resistance to change
If changes occur within an organization, resistance is also a part of it. This shows that an organization can be affected by both positive and negative ways. Following are the principles for managing resistance to change:
Education and communication
Concerned stakeholders may be educated properly about the changes that have to be adopted and their confusions and misapprehensions can be reshuffled. Additionally, their questions and worries can be answered out by communicating with them properly.
Participation and involvement
If the stakeholders are actively involved in the process of change through a well and appropriate strategy, this makes them feel a part of that and convince them not to resist the changes (Barbara & Jocelyne, 2006).
Negotiation and agreement
When an organization thinks and plans for a strategic change, it has to put a lot of thing at stake. Therefore, it needs to move equally towards the process by framing an agreement with all its members and negotiation with management of the organization.
Facilitation and support
If people those who have participated in change process are facilitated and supported in an effective way, it boosts and foster their level of confidence and therefore sets an example for others who resist to change and are not ready to adopt them (Mullins, 2010).
10. Change model to implement
After viewing and discussing stakeholders’ involvement in change process, a change model can be represented here for Starbucks to be implemented within their organization.
Environmental assessment
First of all, Starbucks should delineate some systems for monitoring both internal and external factors for company which may have positive or negative impact on company’s overall business and other operational activities.
Human capital as assets and liabilities
Human resources are valuable assets for any company. Therefore, Starbucks should create a strategy concerning the staff so they that they feel their importance and value in the organization and thus support in each and every activity of the company.
Linking both strategic and operational changes
If the organization takes a step ahead and links the strategic changes with staff’s routine works, it will help the staff accepting strategic changes easily.
Leading the change
Starbucks should set the agenda concerning the directions, mission, vision and values of the change. Moreover, these directions and values should be acceptable by the staff in order to contribute to the changes.
Overall consistency
Finally, the set agenda for strategic change and the plan should be consistent and should be the one which can serve competitive advantage to the organization (Value based management, 2011).
Afterward, developing an implementation plan for strategic change in Starbucks, a complete process should be followed for implementation. Next section of this paper discusses that implementation plan in this regard.
11. Implementation plan
An implementation plan determines the success and failure of the business’ projects and becomes a stepping stone for further movements. One of the following plan has been described below which is accepted widely for a strategic change by the organizations.
First, stakeholders’ support should be gained and they all should be provided with full information about need of adopting changes within the context.
Second, a full detailed plan should be prepared including starting date and multiple stages of process and it should be approved by all department/senior heads and the decision-makers.
Then, a strategy is required in order to make the change feasible and practicable (Irwin, 2011).
All the departments including, IT, HR, marketing, operations, finance, and admin should be asked for their specific contributions. Moreover, the staff should be rewarded on the basis of their performance and successful achievements. Apart from this, training & development programs should be conducted to train the employees for skills required in process. Appropriate control methods and performance management systems should be there at place. Additionally, every stage should be monitored and evaluated properly. Areas creating problems and becoming hurdles during the plan should be taken in care and be removed (Management center Europe, 2012).
12. Measures to monitor progress
Monitoring of change process is an important part of it because it helps analyzing the current status of performance of the staff and change’s happening. Therefore, further steps can be taken to improve the performance in order to achieve the objective of change effectively.
The measures for monitoring progress are as follows
– SMART objectives should be set for each individual team and review should be done on monthly basis.
– Review policy should be adopted by both the individual and team level.
– Standards or benchmarking should be established by the management and the performance should be evaluated against those standards.
– Moreover, performance systems should be set based on quantity system instead of quality system while standards should be set based on quality systems and then performance should be compared.
– Lastly, it can be said that 360 degree feedback system is regarded as one of the best systems among all to monitor the performance and to analyze directly or indirectly associated aspects (Cummings & Worley, 2001).
References
∙ Starbucks 2013 10-K Form for FY ended on September 29th , 2013
∙ IBIS World : The Coffee & Snack Shop Industry in the US Report, October 2013
∙ http://www.starbucks.com/about-us/company-information/mission-statement
∙ http://www.starbucks.com/responsibility/sourcing/coffee
∙ http://interbrand.com/en/best-global-brands/2013/Starbucks
∙ Starbucks Corporation Research Report, March 2013
∙ http://www.chinabriefing.com/news/2013/10/09/chinas-coffee-industry-is-brewing.html
∙ http://www.china.org.cn/business/2011-06/03/content_22707678.htm
