Starbucks MBA 435 Organizational Behaviour Case Study 7b
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Starbucks began in 1971 as a small coffee shop in Seattle and has since grown into a global brand under CEO Howard Schultz. The company rapidly expanded to over 2,600 stores but then sensed quality was declining. Schultz implemented a radical change by closing stores for 3.5 hours to retrain all baristas on espresso making. This addressed issues from rapid growth like compromised quality and inconsistent customer service. Schultz's transformation efforts helped Starbucks regain its focus on quality coffee and customer experience.
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Starbucks MBA 435 Organizational Behaviour Case Study 7b
- 2. Grou p 14 – Team Members Roshika S11112281 Nilesh S97000962 Sakiusa S0100664 9 Asaeli S11115026
- 4. Overview Starbucks first opened its store in 1971 at Pike Place Market in Seattle The current chairman and CEO Howard Schultz took over Transformed the company into a global brand Emphasis on building strong customer base Today from humble beginning into an iconic coffee retailer
- 5. Rapid Expansion from 11 stores to 2600 Unique experience for customer Relaxing and comfortable environment After the rapid growth, Howard sensed something had gone wrong. Planned store opening cancelled Closed some of the stores Howards effort to transform the company Decided on doing a radical change Trained all the baristas for 3 ½ hours Todays Starbucks Success Facts of the Case Study
- 6. In February 2008, Starbucks closed 7,100 U.S. stores for 3 1/2 hours to retrain its baristas on how to make the perfect espresso MBA525Team5Presentation
- 8. Causes Solutions Rapid Expansion Compromised Quality Service delivery Environment (interior) Technology advancement Planned Quality Services Personal Touch Redesign the interior Technology modification
- 9. Evaluate Solutions Training- Barista & Customer Quality Services-Observation Personal Touch – intimate interaction Redesign the interior - ambience Technology modification-observation
- 10. Recommendation Training – Planned Change Quality Services - Participation Technology modification Product line expansion eg Tea, Cocoa Franchise – reduces cost Marketing – Social Media Sites Rewards Program – employee & customers Technical Support & Advice (Farmers)
- 11. Conclusion Planned Change Communication and education Building support and commitment Participation Develop positive relationships Implementing Changes Fairly Selecting people who accept change
- 12. Howard Schultz
- 13. Bibliography http://www.slideshare.net/roshikag/savedfiles?s_title=starbucks-ppt-26072549&user https://www.google.com/#q=what+factors+are+most+likely+to+change+when+a+co http://www.starbucks.com/ http://news.starbucks.com/news/corporate+news/financial/2009+annual+m eeting+of+shareholders.htm http://www.oxbridgewriters.com/essays/finance/design-of-goods-and- services.php http://www.slideshare.net/tommy2cruise/starbucks-strategy http://www.slideshare.net/shahkiran79/starbucks-swot-analysis http://www.ukessays.com/essays/marketing/internal-and-external-factors- affecting-starbucks-marketing-essay.php
- 14. Bibliography • http://www.slideshare.net/Heekuk/starbucks-marketing • http://brainmass.com/business/international-business/402609 • http://dc169.4shared.com/doc/XnYqb0C-/preview.html • http://www.slideshare.net/guest020532/starbucks-final-presentation • Berger, A., Buchman, J., Chase, D. & Hsu, S. (2003). Starbucks. Retrieved on November 12, 2009 from, • http://74.125.153.132/search? q=cache:z1kF8ZdXtXoJ:www.loudoffice.com/donald/resume/portfolio/St arbucks.ppt+STARBUCKS+ • B+managing+quality&cd=2&hl=tl&ct=clnk&gl=ph. • Thompson, A. & Gamble, J. (1999). Starbucks Corporation. New York: The McGraw-Hill Companies. Retrieved on November 12, 2009 • Starbucks Website (2009). Starbucks, Inc. Retrieved on November 12, 2009 from, http://news.starbucks.com.
- 15. IT IS NOT JUST COFFEE, IT IS STARBUCKS
Editor's Notes
- A very Good Afternoon to Mr Ben Waqaliti and to all my collegues.
- Ladies and Gentlemen, group 14 consists of 4 members.i am Roshika, we ave nilesh, aseali and sakiusa
- Our Case study frm our text book is about starbucks returning to its roots which focuses on Organisational Change. The case overview and facts would be delivered by me, The problem causes and solution development would be explained by Sakuisa, Asaeli would evaluate the solution, recommendations would be formulated by Nilesh after which the Asaeli would discuss the conclusion.
- Starbucks is an American global coffee company which first opened its store in 1971 at Pike Place Market in Seattle. There was a business downturn. At that tym Howard was the chairman and the ceo at that tym was not fixing the problems at starbucks. Howard sent an email to the Ceo to get the problems fixed.this email however leaked to the media and later the ceo got fired and howard stepped in. Howard Transformed the company into a global brand There is a huge Emphasis on building strong customer base Today from humble beginning, Starbucks has became an iconic coffee retailer…
- The company grew rapidly from 11 stores in 1987 to 2600 in year 2000 Starbucks provided the customers a very unique experience. The core of Starbucks, there was a culture of treating each customer as a valued guest who should feel comfortable relaxing and taking in the ambience of the store. The environment was very relaxing and comfortable After the rapid growth, In 2006 the chairman n former CEO Howard Schultz sensed something was wrong.he sensed that starbucks performance was lack lusture and the spirit and soul was missing. It was having quality problems and was losing customers. Planned store opening cancelled Some existing stores had been closed Howards effort to transform the company Decided on doing a radical change which is to return to its root concept In Feb 2008,All 7100 starbucks stores were closed for a single afternoon as part of a training effort of 135000 baristas in which quality control was a primary mission; baristas were instructed to pour every glass of espresso like honey from a spoon so that the flavour could be preserved. Todays Starbucks is the largest coffeehouse company in the world, with 20,891 stores in 64 countries, and earns more than $10 billion in annual revenue and serves more than 50million customers a week around the globe
- Here is a notice pasted on the door of one of the stores which was closed so that training could have been conducted. Moving on, we would now show a video on starbucks
- Expansion- Schultz was more focusing on getting high revenue returns & was moving away from the mission of Starbucks and that was the intimate relationship between the barista & the customers Comprised quality- Due to rapid expansion, mass production is a must to cater for the high operation cost that the company is using. This will allow employees to overcome some qualities such as customer service. E.g Service delivery-Starbuck they were serving plenty customers at a time rather than the old culture of serving one customer @ a time and interact with well. This was the stronghold & spirit of that starbuck Environment- the environment was not favourable to customer need as different customer level of customers. Technology- Due the mass production, technology is required so that turnarond time for serving customers was met overlooking the real desire of customer. SOLTION- Kotter’s eight-step plan Establish a sense of urgency- Schultz sensed that something had gone wrong..he visited some stores & noticed the spirit of Starbuck is missing Form a coalition- Schultz hired Chief technological officer from Amazon.com (online purchasing) to update Starbucks website @ improve overall social media press Create a new vision- he was determined to go back to the root starbuck i.e to bring back Starbuck spirit. He included suvey feedback by inviting people to e-mail him on their view of the store. He even made phone calls to other stores seeking their view & ideas. He has openness trait. Communicate the vision- Schultz made a decision to close all the stores in order to deliver & train all the employees the way to achieve his vision Empower others by removing barriers- Schultz shook up his senior management & later added members of technological companies to its board of directors, including Google’s COO Sheryl Sandberg Create and reward short-term ‘wins’- change of working environment, increase in pay, introduction of health insurance of the employees Consolidate, reassess and adjust- He assessed all the possible changes /solution that have been discussed in the table. E.g to nix heated breakfast sandwiches from menu because he thought the aroma of the sandwiches was overpowering the smell of coffee. They reassessed the decsion and improved sandwiches with healthier ingredients resulted in restocking heated sandwiches. The company replenish all outdated cash registers and computers with updated. This leads to increase in turnaround time. The replacement of espresso machine with the Masterna a sophisticated Swiss-made machine. Reinforce the changes – Schultz announced the pay increase according to merit so that quality of service deliver is maintained. The company was also committed to doubling its annual purchase of fair trade certificate coffee to 40 million pounds. Use of customer reward card to convince customer to buy the product eventhough the price was high.
- Training – information sessions decreased employee anxiety about change employee behavior. Also providing high quality information to increase employee commitment to it. Quality - in terms of the quality of services and the product. Starbucks introduced PIKE PLACE to roast to show it was serious about coffee Starbucks decided to only deliver whole-bean coffee to its stores, and required baristas to grind beans in the stores. Any coffee that had been sitting more than 30 minutes was to be tossed. Personal Touch – Starbucks overhauled the entertainment division, scaling back on all the CD’s and books that had started to overpower the stores. Replacement of all Espresso machine with Mastrena,a sophisticated Swiss-made machine. Technology - Replacement of all Espresso machine with Mastrena,a sophisticated Swiss-made machine. Starbucks replaced all of its outdated cash registers and computers.
- Forces for Change on both change and planned change. Change is making things different and planned change is an intentional, goal-oriented activity. Communication and Education – Reduce employee resistance on two levels. First it fights effects of misinformation & poor communication and secondly can help “sell the need for change by packaging it properly. Building Support and Commitment – when fear and anxiety is high counseling and therapy, new skills training may facilitate adjustment. Participation – difficult to resist a change decision when you participation, involvement. Develop Positive Relationships – employees willing to accept changes when they trust managers implementing them. Implement changes Fairly – minimize negative impacts so that changes is implemented fairly. Employees may perceive outcome as negative. Selecting people who accept change – related to personality. Some people have more positive attitudes about change than others. They are open to experience willing to take risks and flexible in their behaviour,positive self- concept coped with high risk tolerance, higher general mental ability and able to learn and adapt to change in the workplace. In summary organization can facilitate change by selecting people predisposed to it.