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

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