Contemporary Management Issues: Strategic Decision Making and the Impact on Starbucks

This article discusses contemporary management issues in the context of Starbucks. It explores the nature of pressure exerted by drivers of change on strategic decision making, focusing on the organization's current response to recycling cups. It also highlights the benefits gained through this response and examines how customers and technological advancements drive change in the company.

Contemporary
Management Issues

INTRODUCTION......................................................................................................................3
Nature of pressure exerted by the drivers of change..............................................................3
Organization Current response relating to Recycling of the Cups:........................................6
Recommending the benefits which is gained through the response helps in next decade.....9
CONCLUSION........................................................................................................................11
REFERENCES.........................................................................................................................13

INTRODUCTION
Contemporary management is concerned with planning, leading, organizing and
controlling business operations by the organization in order to achieve the desired goals and
objectives. It is imperative for all the managers at each level to use contemporary
management as an effective tool to ensure continuous growth and consistency in the business.
Starbucks is an American coffee house chain founded in Seattle, Washington in the year 1971
by Jerry Baldwin, Zev Siegl and Gordon Bowker. The company not only deals in serving
coffee to its customers but also manufactures the coffee beans that are sold worldwide.
Another major source of revenue for Starbucks are its pre-packaged food,desserts, mugs and
other baked goods. As of 2019, Starbucks operates in more than 30,000 locations with over
300,000 employees managing it. The current CEO of Starbucks is Kevin Johnson and annual
revenue for the year 2018 was US $24.71 billion dollars. The current study will focus on
different factors that affect the strategic decision making of Starbucks and its impact on the
growth and success of organization.
Nature of pressure exerted by the drivers of change
Strategic decision making is concerned with the process of making a detailed plan
based on the long-term organizational goals and objectives. It is necessary for every
organization whether big or small, to make strategic decision in order to achieve competitive
advantage over other players in the industry. Many managers also use strategic decision
making as a tool to review their company’s policies so that they can take faster business
decisions. It is the responsibility of top-level management to take strategic decisions because
they involve a lot of risk and also require continuous changes due to the dynamic
environment that a business operates in. Starbucks company takes several strategic decisions
to accelerate its long-term growth and increase in profitability systematically (Real and
Percell, 2018). The major drivers that influence the strategic decision making of Starbucks
are its customers and technological advancement. Contemporary management is an effective
tool for planning, leading, organizing and controlling business activities whereas
contemporary management issues focus on the way of thinking that is needed to address
issues as they emerge. Certain examples of contemporary issues may include economic crisis,
global warming and income inequality.

Based on the case study, Starbucks came up with the proposal to develop the fully
recyclable and compostable cups. The company has come up with this idea because of the
changing needs, perceptionof the consumers along with the increasing awareness among the
consumers about the well-being of the surrounding environment. The key driving force are
the customers and the technological advancement, which is discussed below.
Customers
Nowadays, customers are more knowledgeable and aware about the changing
environmental conditions and the major causes for the same. Customers are demanding the
organization to use environment friendly products in order to reduce the negative impact of it
on the environment (Greener Cups and Packaging. 2020).Starbucks have considered this
pressure very seriously. In 2018, Starbucks has entered into partnership with Closed Loop
Partners with the objective of identify the next generation of recyclable solutions. It will
phase out plastic straws from its 29000 stores by 2020 which means over 1 billion straws a
year. Thus, this pressure has led to the positive change in the company and the environment
as well.
Customer is the king of the market and it is important for an organization to identify
their needs and wants and then develop a product or service accordingly if they wish to
survive in the industry. Starbucks has always given priority to its customers and the company
has made various strategic decisions like providing sugar free drinks to take care of the health
of its customers (Nanda Dwipamurti, Mawardi and Nuralam, 2018). Another decision that
was taken by Starbucks involves the idea of producing fully recyclable coffee cups within the
next three years and the company is willing to invest US $10 million for this initiative. The
main reason behind the manufacturing of recyclable cups was not only to protect the
environment but also to satisfy the needs of its customers as many people complained about
the plastic cups and expressed their dissatisfaction towards the brand.
Moreover, it is the social obligation of every organization to protect and preserve the
environment by offering nature friendly products and services. Also, Starbucks has realized
that by offering recyclable cups the company can also reduce its operational cost and increase
its revenue subsequently. The company has introduced a new initiative under which it offers
discount to the customers that bring the re used cup back and it is mainly done to create
awareness among customers. The sustainable strategy by Starbucks will also improve its

public image and help the business in achieving competitive advantage.The company has
participated in various sustainability campaigns like energy and water conservation, use of
renewable energy in all Starbucks stores through solar plants. As part of its new “greener
stores” initiative the company has decided to make 10,000 of its stores into environmentally
friendly. With green stores initiative, the company will save up to US $30 million
annually.The green store initiative will also include ‘water stewardship’ concept that will
help in conserving up to 1.3 billion gallons of water annually. Along with it, the company is
planning on managing and reducing its annual waste by developing waste diversion
management and donating the unsold food to food banks. Starbucks has created its brand
image mainly because of its ethical and sustainable activities and this is the major reason
behind success of the company despiteoffering much more expensive products and services
as compared to its competitors. Also, most of the Starbucks store in North America have
stopped using plastic straws and instead started the use of paper or metal straws (Dorn,
Messner and Wänke, 2016). The company has shifted its operations in manufacturing
recyclable cups which are expected to get ready within 3 years. It will also act as a cost-
effective technique for Starbucks as the company will save a lot of money by using recycled
and reusable cups. This will prove the brand as a trendsetter in the industry and also establish
a global image of the brand which will increase its market share and further help the company
grow subsequently.
Technological advancement
Along with customers, the advancement in technology has also put a huge pressure on
the Starbucks for innovating its products and services for meeting increasing customers
pressure. This innovation is the factor that has driven this change (Sokolowsky, 2019).The
purpose of it to move the industry at the faster rate and achieving sustainability through it by
getting rid of plastic. By using the technology and innovation in developing reusable cups.
Technological advancement is another important driver of change for Starbucks. It
involves the use of latest and modern technology in the organization to reduce the cost of
operations and to increase profits subsequently. Technological advancement focuses on
capital intensive technique so that it reduces the overall time and efforts for the business. In
today’s competitive industry, it is necessary for every business to use latest technology if they
wish to survive in the market. Starbucks company has developed a mobile application

through which customers can order their drinks and can also pay through the application. It is
an effective way to increase the number of customers as many people do not wish to enter in
the queue while ordering their food and drinks. The mobile application also provides exciting
offers and discounts which help the company in attracting large number of customers and
increase their sales (Parsons, Maclaran and Chatzidakis, 2017). Also, the company has been
working on its reinforcement learning technology that makes complex decisions based on the
feedback and reviews given by the customers. It will help the company in providing a more
personalized and unique experience to the customers that use the mobile application.
Furthermore, it will not only help the company in increasing its consumer base but
will also help in retaining the previous consumers. In order to achieve competitive advantage,
the organization has started using artificial intelligence through which the needs and
preferences of consumers are detected and saved. The mobile application will detect the order
history and choices of its customers and based on that it will give recommendations on what
customer should order next. For instance, if a consumer orders dairy free product then it will
always recommend them the same type of products or if a consumer orders only vegetarian
food then the application will only give them preference of vegetarian food. The main idea is
to save the time of consumers so that they can order quickly and become satisfied. Thus, it is
a unique concept developed by the company which will make the application more user
friendly and thus allow customers to order more often through mobile application.
The company is also working towards updating its drive through with the help of
using artificial intelligence so that the wait time per person reduces and their orders are
delivered quickly. Technology is also used to manufacture coffee beans from which the
coffee is made to offer an authentic and unique taste to the audience which is important to
increase the market share in industry (Rothaermel, 2016). The company is also planning to
develop unique technology that can help in temperature control, reducing waste and avoiding
water wastage in order to reduce its operational costs and also to protect the environment.
The company is planning to purchase renewable energy resources and use them carefully to
reduce electricity usage in its stores.
Organization Current response relating to Recycling of the Cups:
Acharya and Gupta (2018) stated that the organization is supporting environment in
major ways as the main reason of bringing the recycling things in their coffee mugs is

relating to facing the heavy plastic materials in their existing products. As the information is
gathered through the survey regarding getting detail about the company in respect of
excessive use of plastic which is affecting the environment in wider ways. By this aspects,
the current response which the organization is gaining is relating to the getting heavy users
for the products who are availing the products for longer way.
As Starbucks carrying the renowned brand name in the market and also carrying
specialty in the field of the coffee. As they carry the famous ingredient in respect of
producing the coffee which is relating to using the different type of coffee beans and also not
mixing whole coffee beans into the coffee (Chakravarty, 2017). Thus the flavor which attract
the customer is the smell of that coffee beans which is mixed with the coffee. Thus, it results
in attracting the driver for changes in better way. In this aspects, technology advancement
play the major role in respect of promoting the products of the Starbucks and its innovative
concepts in longer way.
In this, the innovative concepts which is adapted by the Starbucks is relating to selling
the coffee in the coffee mugs which is made from paper. Thus, technology play the important
role in this aspects as most of the people are less aware about the facts regarding using the
excessive plastic and also they are contributing to the environment more pollution. By
adapting the advanced technology results in interacting and building personal interaction with
the people (Ertz and et.al., 2017). This helps in providing the guidance and importance of
using the paper cups instead of demanding for the plastic cups. Thus, to build the strong
response among the customer regarding the innovative concepts, Starbuck offer the additional
12% discount, if the customer are taking the coffee on paper cups.
By providing this offer, the sale of the Starbuck coffee increased in respect of getting
more users to buy the coffee in paper mugs and also avoid the plastic mugs. It is also stated
that the response is shared by the renowned person regarding understanding the impact upon
the environment through the plastic garbage or other ingredients which is affecting the
environment in adverse ways (Jones, 2018). In respect of continue examining the company
strategies and goals to be achieved through this aspects, it helps in undertaking the realistic
information and also provide fair details to the customer regarding the usage of the products
or it selling strategies.
As it is examined that it is not easy to bring the paper or composite cups in market
without carrying any trail procedure of its stability and sustainability to retain the coffee and

its taste for longer way. Thus, before promoting this concept in market, it is necessary to
check the sustainability and for that, they approaches to various points to view the
infrastructure regarding carrying excessive heat to break down the materials (Gilbert, Nguyen
and Spiegelhoff, 2019). After getting the appropriate places, they deal in making the
composite cups through buying the waste from the municipalities waste management system.
Thus, it results in taking the overall procedure through planning to make the paper or
composite mugs.
It is highlighted that the major innovation is done on the bases of the straws which is
previously made from plastic but in recent time, the innovation is done. It is recorded that the
Starbucks which is presently located in many places and also carrying around 28,000 stores
worldwide are now using the recycling straws in most of their iced drinks (Lieberman, Duke
and Amir, 2019). Thus, the statement which is made by CEO Kevin Johnson stated that they
are seeing the future of the Starbucks in brighter way and also sustaining the planet through
reducing the impact of pollution in country.
Starbuck major challenges is to put the innovation for longer way and also managed
to promote the innovative ideas which is to be adapted by the person for longer way. As it is
tough to manage the interest of the customer towards one things for longer time and thus in
respect of providing the additional discount for the particular time period is not enough (Lee
and et.al., 2019). By this manner, various innovative and creative ideas are to be adapted in
respect of retaining the concept for longer way. Thus, it arises to be the major challenges for
the Starbucks in respect of regaining the concept by every business regarding contributing to
the society.
McCallum (2018) interpreted that in respect of continuing this innovation in country,
they invested in Valor siren Ventures which is managed by the Valor equity partner in respect
of investing in such start up business and also finding such type of business which are dealing
in food or retail products. By this aspects, they are investing in such business regarding
adapting the concept of paper materials in business. Through this aspects, the current position
of the Starbucks is determined regarding contributing some amount of resources or needs to
the country in form of securing the environment (Smith, 2016). As usually in most of the
cases, the support of government is higher as in such cases they also support financially
regarding promoting such ideas in country and also helps other business to adapt such ideas.

In respect of understanding about the usefulness of technology, it is stated that
Starbucks are using the advanced technology through reaching to large number of customers.
The supplier which they are approaching is also delivering quality products to them and also
support the business by working as per their set directions (Melville, 2018). As customer rely
less on technology and news which is promoted in respect of attracting the customer. If
customer views the news personally or also the procedure which is used to prepare such mugs
through paper, helps in attracting and retaining their interest for longer way.
By this manner, the Starbucks current response regarding this innovation is higher and
also they are getting more reviews from the customer who are attracted towards the Starbucks
brand from longer way (Mendez, 2018). But this results in facing lot of technical issues
regarding conducting the market research, determining the needs and preference of the
customer towards availing the products or also after conducting the meeting with the various
department, the innovation is undertaken.
Recommending the benefits which is gained through the response helps in next decade
Starbucks is famous for its management strategies and also they manage the business
and new techniques in better way. Thus it helps in carrying the renowned brand image
through its management techniques which they adapted regarding managing the internal and
external working of the business. This helps in next decade regarding planning new things
and also implementing them to bring better changes in near future. As management is one of
the basic strategies which is usually managed in the organization in respect of sustaining the
business for longer terms (Nguyen, 2016). It also satisfying the needs of the employees
towards the business to bring innovative ideas and also implementing them to bring better
and useful changes. Most of the employee shared the internal responses regarding getting
effective management during the time of the bringing their innovation. As they provide
flexibility in working and also guided to adapt the particular path.
Another factors which is recommended to Starbucks during attaining the next decade
is relating to adapting the advanced technology concept which helps in reaching to large
number of customers. As similar to the paper cups and straws, by promoting the usefulness of
their products in market through the technology helps in getting more benefits instead of
changing the way of serving coffee to customer in physical stores (Nguyen, 2016). As it is
not necessary that technology mainly plays role in respect of sharing the news and company
new promotion to the customer. But also they resolve the issues of customer in respect of
providing the guidance to adapt the best strategies.

Usually the cases raised in respect of infringing the information or concepts which the
Starbucks is adapted through the technology. Thus, the results of negative impact raised upon
the customer regarding not securing their personal information in the company sites. By this
manner, they mainly deal in adapting the high coded security in their official sites which
results in securing their information and also providing limited usages of the company sites
with the owner prior permission (Poortinga, Nash and Hoeijmakers, 2019). This helps in
reflecting the accurate information and also it not distract the mind of the customer towards
the company in any manner.
The role of customer are also important in respect of promoting any business globally.
Similar in this case of the customer not support the new innovation, it results in increasing the
number of pollution in country and also they are supporting the carbon footprints to harm the
country resources in larger way (5 Ways Starbucks is Innovating the Customer Experience,
2020). Usually the mind set of customer depends upon the techniques and strategies which
the company uses to present their ideas. In respect of written format, they usually interpret
less and also not understand the seriousness of the matters. Thus, in this aspects the company
uses the template, posters and campaign procedure through which they telecast or promote
the creative thoughts to the customers.
In respect of future decade this is useful, as it helps Starbucks in deciding the impact
of campaign and posters to grow the business for longer way. As technology now a days are
mainly adapted by most of the users but they usually understand the point through personally
viewing the things happening near to their places (Rodeia, 2017). Thus, in such aspects,
conducting market research and also promoting the new concept of the business is mainly
undertaken in the posh places where the visitors and person frequently visit to such places.
This helps in undertaking the planning and implementing the latest strategies in market in
easier way.
To sustain the business for longer way, the sales of the products is necessary and also
it is to be made on continuous bases. By this innovative ideas, it results in gaining the
Knowledge about handling the market and also balances the taste and preference of the
customer towards the products. As customer prefer the Starbucks coffee by reflecting the
logo and also the taste of the coffee which they put in the covered plastic mugs. This is the
biggest challenge which is faced in respect of maintain the taste in the paper mugs as well
and also providing straws which is not made from plastic (Rosenbergová, 2017). In this

aspects the innovation in respect of recycling the products which helps in getting the positive
reviews on their official sites which results in sustaining their business for longer way.
The responses is raised in respect of treating the employees well and also adapting the
innovative and creative brand localization which attract the customer interest for longer way.
In next decade, this is useful in respect of getting more efficient employees to work in the
company and deal in bringing innovative ideas which results in longer growth in business.
Thus, recommendation in this point reflects the matters relating to appointing and recruiting
the skilled and trained person which carry the skills in respect of thinking out of their
capability and mind (Šilarová, 2016). This is helpful in next decade in respect of building
trust and loyalty among the employees and also they can accomplish the work with more
loyalty. Thus, in such manner, they mainly focus on bringing the revolutionary drive – thru
model in which the company bring the internal brand strength to the outside lane results in
gaining benefits in adapting the live communicating with the customers. This helps in
building more trust among them and also they considered to be the largest capital expenditure
in the history of the add drive which he adds in their system.
Thus, following points are to be recommended which is gathered from the response and also
it helps the Starbucks to enter into the next decade with renowned brand image.
CONCLUSION
From the above study it can be concluded that contemporary management is an
important tool for every business as not only it helps in planning and organizing operations
but also allow employees to take independent decisions and then make changes accordingly.
It helps in keeping the employees motivated which further improves their efficiency and it
leads to achievement of organizational goals more systematically. However, there are certain
issues with contemporary management like underutilization of resources and it may some
times lead to wastage of time and efforts. The report also focused on drivers of change that
impact the strategic decision making of Starbucks like consumers and technological
advancement. Both consumers and technology have played a crucial role in making
Starbucks a global brand and therefore it had become very important for company to give
importance to these aspects before taking strategic decisions. Thus, Starbucks always focuses
on its consumers needs and wants and developing products accordingly and the company also
uses latest technology in every field of production to remain a market leader and also to
reduce its cost of operations.

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