Importance of Strategic Management and Change Management in Starbucks

This report discusses the importance of strategic management and change management in Starbucks, including the process used to determine their strategy, critical models and tools used, and the application of these tools to Starbucks. It also appraises the importance of change management based on the complexity of the transformation process, its costs, risks, and sustainability.

Individual Report

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
An introduction including a definition of strategic management................................................1
A critical assessment of the process used by organisations to determine their strategy..............2
An evaluation of the critical models and tools used by organisations to determine their
strategy. .......................................................................................................................................2
An application of these tools to a real organisation of your choice.............................................5
Critically appraise the importance of change management based on the complexity of the
transformation process, its costs, risks and sustainability............................................................6
CONCLUSION................................................................................................................................6
REFERENCE ..................................................................................................................................8

INTRODUCTION
Strategic management is defined as process of formulation, implementation and
application of changes in a organization which can help to develop a business and increase the
organizational profitability. In other words, strategic management is the ongoing process of
planning, organizing, directing, monitoring and assessment of all necessities that uses by an
individual to meet with organizational goals and objectives (Jayatilleke and Lai, 2018). This is
important for all organization to understand the needs and wants of their customers and
formulate the planning accordingly which can provide the higher benefits and develop a business
in the changing environment continuously. The management of organization is responsible for
all functions and activities which are important for their business that provides the higher brand
image and market share in changing environment. To understand about this Starbucks has been
selected that is American multinational chain of coffee houses that offers better quality and taste
of coffee to customers which can help to increase the sales. This report consider concept and
model that relates to organizational strategy, and importance of change management.
MAIN BODY
An introduction including a definition of strategic management.
Strategic management is explained as management of company's resources to achieve
goals and objectives. For all organization it is important to understand the needs and wants then
formulate planning which can help to develop a business in competitive environment. For each
organization strategies are important as it helps to deal with problems and bring them optimum
solution which helps to maintain the higher productivity and profitability (Dang and et.al., 2019).
According to Hayes (2018), strategic management extending internal and external
communication practices that uses to track and ensures organizational performance which can
help to increase the sales and performance. This involves analysis, formation, execution, and
evaluation which can help to develop a business and attain the higher performance in changing
environment.
Starbucks is an American multinational chain of Coffee House which was founded in
March 1971 by Jerry Baldwin, Gordon Bowker etc. for the purpose of providing good quality of
coffee to their customers and increase the business performance. The management of such
organization formulate effective planning and strategies which can help to develop a business

and attain the higher profitability. This is well known organization wherein management identify
the problems and get better solution which can help to increase the sales and performance
effectively. The management of chosen organization formulate different planning and strategies
which can help to develop a business and increase the performance in competitive environment.
A critical assessment of the process used by organisations to determine their strategy.
Strategies are most important for organization as it uses to identify the problems which
are pertaining in environment and bring the changes in organizational performance that can help
to attain the higher productivity and profitability. In context to Starbucks, management formulate
effective planning and process to make the right business decisions that are as explained:
Determine the strategic position – This is the stage of identifying position of
organization and problems which are pertaining in competitive environment. In context to
Starbucks, management uses this process of identify the problems by knowing the position so
that effective planning can be develop by management in order to increase sales.
Prioritise the objectives – In this, management of Starbucks give prioritise to goals and
objectives of organization which they have decided for the purpose of running and attaining
profits (Ngugi, O'Sullivan and Osman, 2020).
Develop a strategic plan – This stage is uses to prepare and formulate the strategic plan
in relation to Starbucks operation that can help to increase the sales and performance in changing
environment and develop a business effectively.
Execute and manage plan – When a plan has been formulated by management of
Starbucks then require to execute them which can help to develop a business and attain the
higher profitability. This is important stage for reaching the targeted customers and attaining the
profitability.
Review and Revise Plan – In this stage strategies and planning should be evaluated by
management Starbucks that can help to increase the sales and performance in changing
environment and attain the profitability.
An evaluation of the critical models and tools used by organisations to determine their strategy.
Starbucks is famous for the coffee chain in all over world .It began with the journey of
coffee chain and helps in providing exceptional customer services and helps in paying the
attention to each customer and bringing their customer back again. Different varieties of coffee
are provided by the Starbucks and five different cups in which coffees are served-Short,tall

Grande, Venti and Trenta. The first store of Starbucks opened in 1971 and started expanding in
1987.It is a luxury brand and almost everyone can afford it to buy . Starbucks gives an ability to
order on their app, pay from their app and pick up their drinks without waiting.
PESTEL analysis of Starbucks:
Political analysis: The relation of factors with tax rates, government stability, rules and
regulations that affects a business or industry in competitive market. Starbucks is operating and
managing their business in various countries by following the government rules and political
stability which provides an opportunity to grow their business. Starbucks have to follow proper
laws and regulation from where the Starbucks buy the raw materials. Starbucks has to face the
regulatory pressure in united states because of greater scrutiny of the business that might be
create problem in running and developing business (BURKE, ROBINSON and Choi, 2020).
Economic analysis: This factor is related to economic growth, increasing population
interest rate, and inflation that has affected the business in changing environment. Increasing
population in all countries can be opportunity for chosen organization as it can develop their
business in the changing environment by offering better taste and quality of coffee and other
food items which can help to develop business. On the other side, Cheaper alternatives of
Starbucks creates highly competitive market that might be reduce the sales and profitability.
Social factors: This can be explained as population growth age, changing in lifestyle,
and others which are important to consider while running a business. Social factors of Starbucks
are as they offer cheaper product but for this they have to sacrifice their quality but it helps in
expanding the customer from lower and middle income tiers. Consumer preferences are also
changing as now consumers are shifted to different brands which is major issue. Level of
education in the local market is one of the issue as people do not have knowledge about this
brand.
Technology analysis: This factor is related to new technology and innovation that needs
to be consider while operation. In context to Starbucks, management are using new technology
such as AR, VR and others become an opportunity for organization to increase sales. Moreover,
due to Pandemic in 2019, customers wants to product by maintaining social distancing where
Starbucks grab the higher market share in changing environment which can help to increase sales
and performance. Oppositely, adopting new technology and innovation by Starbucks spendings
can be increase which might be affected the profitability resulting reduction.

Environmental analysis: This factor is important for organization to increase sales by
attaining competitive advantages as it involves scarcity of raw material, pollution, and other
activities which might be affected the business. Environment disasters in countries which
produce coffee beans. Global warming increases while producing the beans is also the issue of
environmental factors. On the other side, reducing wastages and participating in environmental
protection activities, it build customer's confidence and maintain the good performance by
influencing number of customers (HENG, 2019).
Legal factors: The relation of legal factor with rules and regulation that are formulated
by government and increase the business performance by managing all activities. Legal factors
of Starbucks are the company should not violate any law in the home market from where they
buy raw materials, should alert about caffeine production and consumption policies by health
authorities,licensing regulation related to industry, focuses on non-discrimination and equal
treatment of the employees and helps in reducing the chance of legal hassles helps in creating
good brand image.
From the above it has analysed that external factors should be analysis by organization
before and while running a business that can help to know which factor might be affected the
business. This also states position and current situation of business in changing environment
which can help to operate a business and increase effectiveness.
Porter's five forces – This is another model which can be use by organization in
operating the business by analysing market to know who are their main competitors and how to
attain the competitive advantages by running their business in changing environment. This is
important for Starbucks to analyse the all activities and performance then formulate effective
strategies which can help to attain the competitive advantages that are as explained:
Bargaining power of suppliers – The Starbucks is using roasted beans which are getting
from Africa and other important country who are their regular suppliers that can help to operate a
business and increase the sales. The bargaining power of suppliers is High as they can charge the
higher price for their raw material and coffee beans that has to pay by Starbucks in order to
operate and regulate their activities continuously.
Bargaining power of buyers – In changing environment needs and wants of customers
are changing which are observing by organization in order to operate and run their business
effectively. Starbucks is providing better quality and taste of coffee which increases its brand

image. In this, bargaining power of customers is low it never compromise with its quality and
prices which its maintaining that -provide opportunity to grow their business and attain
profitability (Kordana, 2018).
Threat of new entrants – In relation to food court industry there is high threat of new
entrants that mean any organization can enter in to market by offering better quality and prices of
products. This can be create a challenge for Starbucks to operate and regulate their business in
changing environment which can help to maintain the higher productivity and profitability.
Threat of substitutes – This means having substitution of products which are offering by
organization can create the challenge for other business as reduction in sales. In context to
Starbucks, there is high threat of substitution as tea, soft drinks, juice and others can be use by
customers which can help to operate a business and attain the higher profitability in changing
environment (Kruskal and et.al., 2019).
Threat of competitors – This means competitors who are selling similar kind of
products and services that can create the challenge for business. The main competitor of
Starbucks are Caffè Nero, Costa Coffee, Mc Café, Dunkin Donuts, Cafè Ritazza, Café Coffee
Day, Coffee Republic, Dilmah Tea, KFC and Tim Hortons that provides low prices of products.
For overcoming this problem, management of Starbucks have to decide low prices which can
help to influence number of customers and provide competitive advantages that helps to maintain
higher profitability.
An application of these tools to a real organisation of your choice.
Starbucks is uses the PESTLE and Porter's five forces model for the purpose of
evaluating current situation and formulate the planning effectively which can help to provide the
higher competitive advantages and attain the profitability. With the help of PESTLE,
management analysis the external situation that states how such factors affected the business
which are uncontrollable.
By applying the porter's five forces model, Starbucks is facing the problem in relation to
high threat of suppliers, threat of new entrants, substitution and having many competitors which
could be affected the business negatively. For overcoming from such threat management is
required to adopt competitive pricing strategy, better quality, roaster beans and good relation
with customers that can help to run a business in competitive market and increase the
organizational performance as well as competitive advantages (Han, 2018).

Critically appraise the importance of change management based on the complexity of the
transformation process, its costs, risks and sustainability
Change management is the continuous process which uses by organization y identifying
the problems and bring the changes accordingly that can help to sustain in competitive
environment and attain the competitive advantages. In Starbucks change management is highly
important as supports to develop the business by bringing changes and innovation through Burke
Litwin change model such as:
Transformation process: This is the process of communicating between two and more
than two person which can help to run all activities effectively. By using the Burke Litwin model
and new technology Starbucks is maintaining good relation with their customers and provide
them right information that can help to increase sale and productivity effectively. In selected
organization, management maintain effective communication and guide their employees which
can help to manage the workings and attain the higher profitability.
Cost: This means while running a business cost arises in many activity as buying raw
material producing products, transportation, maintenance, structure and others that are important
to develop a business. The management of Starbucks bring the change in their cost as they
formulate a budget every year and spend the money which can help to sustain a business in
changing environment and attain the profitability (Lombardi and Rodriguez, 2019) .
Risk: This can be defined as important aspects of organization that taken by management
for the purpose of increasing sales and profitability. The management of Starbucks bring the
change in their structure, taste and prices in order to expand their business in changing
environment that might be success or fail. Therefore, a risk taken activity uses by Starbucks that
leads to develop a business and attain the profitability in changing environment.
Therefore, by using Burke Litwin change model in each activity management of
Starbucks increasing their sales and performance which can help to develop and sustain their
profitability in competitive environment and maintain the higher performance. This also helps to
increase the number of customers and business expansion in challenging environment
effectively.
CONCLUSION
From the above report it can be concluded that strategies and planning is important for
organization as it helps to increase the sales and performance by implementing effective

strategies in their business. PESTLE analysis is uses to analysis of factors which can be occurred
while operation and affected the productivity. Porter's five forces model is uses of who are main
competitors and bring the changes in their organization that can help to operate a business and
supports to attain the competitive advantages. Management of organization is playing important
roles as they analysis the situation and formulate planning which can help to increase sales and
profitability in competitive environment.

REFERENCE
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