Case Analysis #1

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West Texas A&M University *

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4315

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Management

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Apr 3, 2024

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docx

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Uploaded by AgentKangarooPerson994

MGT-4315-01 1. How did Starbucks create its uniqueness in the first place? Why was this uniqueness so successful? Starbucks could trademark its unique consumer experience by offering a relaxing atmosphere, including music and comfy chairs while enjoying artisan coffee. Also, they enhanced their menu with multiple kinds of coffee drinks, and consumers could customize their favorite drinks that fit their tastiness and diet. As a loyal member of Starbucks, I consider Starbucks the “third place” between home and work/school. As mentioned in the case, the aroma of coffee is one of the significant factors attracting consumers throughout the operation hours. I go to Starbucks almost every day to get my customized favorite drink, even though I can make my coffee myself. However, the fresh coffee scent from Starbucks might lure me into going there very often, although they have been using the expresso machine, which might lessen customer experience. 2. To be a source of competitive advantage over time, core competencies need to be continuously honed and upgraded. Why and how did Starbucks lose its uniqueness and struggle in the mid-2000s? What strategic initiatives did Howard Schultz, following his return as CEO in 2008, put in place to re-create Starbucks’ uniqueness? In the mid-2000s, Starbucks lost its throne in the coffee industry because it tried to expand its business and moved away from its core competency to create "a unique consumer experience." It started offering ice cream and expanded food menus, such as sandwiches, books, music, and other retail merchandise. In addition, Starbucks tried to make a shortcut by grinding all the coffee beans in the morning to enhance sales and efficiency instead of grinding their

coffee beans every time a new pot of coffee needed to be made. Therefore, it affected the consumer experience of the fresh aroma of coffee. When Schultz returned from his retirement in the decline in Starbucks' sales, he decided to close more than 7,000 stores across the states to re- train employees to reinforce the company's core business as a "third place" rather than offering coffee only. Its revenue lost significantly over 6 million. 3. What is your assessment of Howard Schult as a strategic leader? Where on the Level-5 pyramid of strategic leadership (see Exhibit 2.2) would you place Schultz? Why? Explain? I would consider Schultz a level 4 leader , “an effective leader,” which is a “compelling vision and mission to guide group toward superior performance and doing the right things.” Based on the case, it discussed how Starbucks developed after the return of Schulz in 2008. The number of stores and revenue significantly increased after 2008 from Exhibit MC2.2. He focused on the company’s mission and vision, which Starbucks was doing the right things to improve customer experience. Moreover, he used his business knowledge, skills, and intelligence to restore the company by retraining employees no matter how much loss the company experienced. 4. Howard Schulz, as the creator of the Starbucks brand that we know today, is a larger- than-life figure in the company and business community. Do you think it is difficult to follow such an iconic leader? Why, or why not? It would be difficult for a new leader who just joined a corporation to follow such an iconic leader as Howard Schultz. First, new leaders could struggle to bring their ideas to maintain the company’s core competency, which is already too good to change. Additionally, innovation and change would be challenging following leaders. In the case of Schulz, he chose to

follow the mission when he first started his business but renovated it to keep up with changes in the world. However, Kevin Johson decided to operate the company based more on rationale and data analysis while focusing on the original mission of Starbucks, according to the last paragraph. 5. How is Kevin Johnson as CEO different from Howard Schultz? What leadership style is Johson pursuing? Do you think he will be successful? Why, or why not? Kevin Johnson's leadership style focuses on data analytics, completely different from Howard Schultz's, based on intuition and emotion. Based on his technical background as a CEO of Juniper Networks, he enhanced customer experience by emphasizing technology initiatives, such as mobile payment and ordering, and the Starbucks app, which would help save time and collect rewards to save money (Ignatius, 2019). In addition, both leaders shared the same perspective on expanding Starbucks globally. Jonhson planned to open 12,000 stores in the world by 2021. It would be difficult for him to achieve his goals during the changes in advanced technology and consumer preferences. Furthermore, communication could be one of his strengths to prove himself. In this case, he often opened meetings to confirm his leadership style, which might be necessary to create a positive workplace environment. Therefore, for the reasons below, Kevin Johnson would successfully lead the company profitably.

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References Rothaermel, F. T. (2021). Strategic Management (5 th ed). New York, NY: McGraw-Hill Education. Ignatius, A. (2019, September 26). Starbucks CEO Kevin Johnson on Work, Joy, and, Yes, Coffee. Harvard Business Review. https://hbr.org/2019/09/starbucks-ceo-kevin-johnson-on- work-joy-and-yes-coffee.

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