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The reorganization of Starbucks - Research Paper Example

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This research aims to evaluate and present the decision of Starbucks to radically realignment its leadership structure, a process that show it’s CEO, James Donald sent packing and his place taken over by its chairman, Howard Schultz…
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The reorganization of Starbucks
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Download file to see previous pages From this research it is clear that Howard recruitment was informed by the need to reverse the trend where almost all the company figures were declining at an extremely fast rate. According to Howard, the root cause of the problem was the fact that Starbuck had lost its luxurious nature thereby losing the sense of uniqueness and high-end characteristics, and therefore became like any other commodity which could now be challenged by coffee outlets such as McDonald and even Dunkin Donut. According to Howard, this Starbucks experience could only be redeemed by refocusing not just on the customer experience but also rebuilding its heritage of innovation. It was his strong believe that Starbucks performance could only be reclaimed by getting back to what drove its past success, which no doubt was its relationship and focus on customers. That being the case, Howard, assumed office with a clear mind on what was expected of him. First, having being there not just in Starbucks’ good days but also in its most turbulent days preceding his recruitment, there was no doubt that he was the best placed person to turn it around. Noteworthy was also the fact that he was the builder of Starbucks brand and therefore best positioned to take Starbucks back to the path of innovation, while executing a radical organization-wide restructuring process. Re-igniting the emotional attachment that Starbucks enjoyed with its customers was arguably the greatest feat that Howard achieved in his turnaround effort of this entity. (Rushe, 2006). This is because this is all what was needed if Starbucks was to reclaim the uniqueness of its coffee and hence its brands image, which to Howard was the magic bullet for its financial woes. Howard also reasoned that the mushrooming of Starbucks stores literary in every nook and cranny was also to blame for the financial difficulties that the company was experiencing. It was in this regard that he initiated a program that saw a number of underperforming stores closed while others replaced with new ones in strategic locations where they could perform profitably, a process that enabled Starbucks to renew focus on what it referred to as store-level unit economics (Howard, & Gordon, 2011). Howard also believed that the company’s huge investment in socially responsible activities was not contributing to its revenue as would be expected. It is for this reason that he significantly cut the social responsible budget which in his opinion was not commensurate to the revenue it was generating while shifting those funds to other profitable ventures. Howard also restored a number of store design elements that had been lost along the way and which he believed were a major component of the Starbucks’ experience which he was keen to reclaim. Another benefit that his efforts in this regard bore was the accelerated expansion in the international front. This expansion saw the capital resource that was earmarked for Starbucks expansion locally directed to store growth outside US, a move that improved Starbucks consolidated profitability immensely. Howard was also able to re-align its organization while streamlining its management in a way that better supported customer-focused programs. Lastly, Howard, radically changed the leadership organization of Starbucks, something that experts saw as highly risky especially bearing in mind the size of the company at the time and its stage in development. It is not in doubt ...Download file to see next pagesRead More
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