Change Consultation for Starbucks: Possible Scenarios and Implications

The paper discusses three possible scenarios for Starbucks, a global market leader in the coffee industry, and focuses on the implementation of a lower pricing policy. It provides justifications for the same and identifies the implications and barriers to the change.

Running head: CHANGE CONSULTATION
Change Consultation
Name of the Student
Name of the University
Author Note

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Executive Summary:
The paper is focused in the elaboration of three foreseeable scenarios of a chosen
organization named as Starbucks. The organization operates in the coffee shop industry and is
a global market leader of the mentioned industry. The paper presents three possible scenarios
that relates to the organization applying the low pricing strategy, the incorporation of the
technology in the business process and the customization of the products that the chosen
organization offers to the customers of the organization. In addition to this, the paper selects
one specific scenario for further elaboration which is the application of the low pricing policy
and provides appropriate justification for the same. In addition to this, the paper discusses
regarding the three implications of the chosen scenario along with the barriers in the
implementation of the change.

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Table of Contents
Introduction:...............................................................................................................................3
Overview of the Organization:...................................................................................................4
Application of the Lower Pricing Policy:..................................................................................5
Incorporation of the Technology:...............................................................................................6
Customization of the Products:..................................................................................................6
Justifications:..............................................................................................................................7
Implications of the chosen scenario:..........................................................................................8
Lower pricing policy:.............................................................................................................8
Serving in alignment with the requirements of the targeted customers:................................9
Implementation of technology in the business policy:...........................................................9
Barriers to the change:.............................................................................................................10
Conclusion:..............................................................................................................................10
References:...............................................................................................................................11
Bibliography:............................................................................................................................13

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Introduction:
The modern business world is subjected to a rapid change. With the significantly
changing business environment, many of the business organizations are seen to restructure
their strategies for the effective management of the impact of the changes. Adding to this, in
organizational context, the basis of the changes is observed to be the preferences of the
customers and that is pretty evident with the increasing consideration of the organizations
towards the efficient achievement of the varying requirements of the customers
(Macchiavello & Morjaria, 2017). The success of the organizations is seen to be dependent
on the effective management of the changes which have the potential to improve the
condition of the organizations.
The efficient implementation of the change is notably influenced by the vision of the
leaders of the organizations and it is pretty evident that the visionary leadership of the senior
level management of the organizations in anticipating the possible scenarios plays a crucial in
the development of the organizations and the effective implantation of the changes for the
organizations as well (Taylor, Cornelius & Colvin, 2014). The paper is focused in the
elaboration of three possible scenarios in context of a chosen organization which is
Starbucks, a market leader in the coffee industry. The paper provides a brief overview of the
mentioned organization as well to better understand the possibility of those scenarios. Apart
from presenting three scenarios for the chosen organization, the paper focuses on one specific
future scenario which is the effective management of the pricing policy for the mentioned
organization. As the paper concentrates on one specific scenario, it mentions three
implications for that scenario and adding to that, identifies the barriers that the organization is
expected to face in the effective implementation of the change.

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Overview of the Organization:
The mentioned organization, Starbucks Corporation is an American Coffee company
which operates in the coffee shop industry. The organization was founded in the year 1971 in
Seattle, Washington. Gordon Bowker, Zev Siegl and Jerry Baldwin were the main founders
of the organization (Starbucks.com, 2019). The organization is currently having its
headquarter in the city of Washington. The operational excellence of 238000 number of
employees along with the visionary leadership of the chairman of the organization, Myron E.
Ullman, the president and CEO of the organization, Kevin Johnson along with the vice
chairman, Mellody Hobson are considered to be the main reason responsible for the increased
generation of the revenue of 22.387 billion US dollars in the year 2017 for the chosen
organization (Starbucks.com, 2019).
Apart from this, the excellent production of the coffee, beverages, smoothies, tea,
sandwiches and baked goods which enabled the organization to achieve a generation of the
4.135 billion US dollars in the same year, proves the sustainability of the mentioned
organization (Starbucks.com, 2019). Adding to this, the improved business conduction of the
organization has the potential to increase the generation of the profit in near future. However,
in the long run, the company will face considerable number of issues which the company will
be in need to manage with the effective restructuring in the strategies of the organization to
make sure that the company stays relevant to the society and the targeted segment of the
customers of the organization.
With the idea of the possible progress of the company, the three probable scenarios
that can take place in a span of 20 to 30 years are mentioned below:

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Application of the Lower Pricing Policy:
The organization is one of the renowned name in the coffee industry for their
excellence in the services of the products that they offer to customers of the organizations.
The company is currently applying the premium pricing policy for the products and the
services that the company is offering to the customers (Van den Hurk, 2014). This forces the
organization towards the allocation of the higher prices for the products that they offer to the
customers. The company is currently conducting the business in an efficient manner which is
also evident with the increasing the generation of the profit from the part of the organization.
However, the company is facing a severe impact of the competition within the
mentioned industry and that is pretty evident with the effective with the rise of the companies
such as Dunkin’ Donuts or Coffee Costa (Dunkindonuts.com, 2019). The above mentioned
organizations are seen to employ the lower pricing policy for their products and that proves to
be significant for the mentioned organizations in increasing their market share. Hence it is
pretty evident that the chosen organization will face tough competition from the mentioned
competitor organizations in near future as well. The effective management of the impact of
the competition can be effectively conducted with the introduction of the products at lower
prices (Wilson & Wilson, 2014). As the company is currently operating by following the
premium pricing policy, the introduction of the products at cheaper rates will be a major
change for the company. With the idea of the intensity of the change and the impact of the
change on the various shareholders, and stakeholders of the organization, the implementation
of the change could take 20 to 25 years for the company to accomplish all the aspects of the
change in the desired manner (Amer, Daim & Jetter, 2013).

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Incorporation of the Technology:
The application of the technology in the modern business world is considered to be a
significantly important aspect. It is pretty evident that the increasing speed in the life style of
the modern people is a crucial aspect for the organizations to match. Considering that, the
organizations are facing the necessity of reducing the time consumed for the preparation of
the products that the organization offers to the customers. Under such situation, the
incorporation of the robotics is expected to be a much needed aspect for the operations of the
organization in 20 years’ time (Ivanov & Webster, 2019). The incorporation of the robotics is
expected to be conducted in the production of the food and beverage products that the
company offers to the customers. This part of incorporating technology into the business
operation of the company is expected to be only directed towards the effective management
of the time that the service and manufacturing department of the company takes for the
processing of the products. The conduction of the operational activities through the usage of
the robotics will also increase the efficiency of the organization (Ivanov & Webster, 2019).
Customization of the Products:
One of the major modern trend in the modern business operations of the coffee
industry is observed to be their interest in creating a better environment for the customers of
the organization. Adding to this, the customization of the products that the company will
offer in future will also be a key aspect for the organization in retaining their customers in an
effective manner. This will make sure that the company allocates a particular space in each of
the outlets of it for providing the optimum quality environment to the customers (Wu, 2017).
Adding to this, the incorporation of the automated robots for the customization of the
products that the company will offer to the customers, will be of great significance for the
organization as that will increase the level of satisfaction for the customers of the
organization. Apart from that, the increasing level of customer satisfaction through the

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improvement of the environment and the customization of the products will trigger the
intention of the repetitive purchases of the customers of the organization.
The focus is on the selected scenario, which is the incorporation of the lower pricing
strategy for the chosen organization Starbucks. Starbucks is known for using its premium
pricing policy. But Starbucks has been clearly declining from its market when compared to
its main competitors in the market. The slowing down of the economy has changed the
people’s spending habit (Adams, Hayes, & Lampe, 2018). People has been reducing their
spending in the top products and specialty coffees of Starbucks.
According to Sholihah et al., (2016) the prices for the food, commodities are always
high, which prompts the firm to increase the price of the products twice from the past years.
Recently the company is facing high competition from the brands like McDonald and
Dunking Donuts. As reported by Luca (2016), the annual revenue of McDonald for the year
2018 was US $965.025 billion dollars. McDonald shares had also traded more than over $145
per share. Dunkin which is an international multinational coffee company and a quick service
restaurant in America had a total revenue earnings of US $828.9 billion dollar in the year
2018 (JAIN & SHAH, 2017). The total revenue earned by Starbucks in the year 2018 was US
$823.25 billion dollars (Purkayastha et al., 2019). Therefore it can be clearly seen that due to
less marketing policy of the company and not properly using the potential of the company,
the company is facing high competition from the competitor brands.
Justifications:
The market for Starbucks is slowly closing down due to high priced products but it is
clear that the competitor’s brands are not much affected. Due to their premium pricing they
are unable to set out any outlets in the lower economic parts (Garthwaite, Brown & Merkley,
2017). The Starbucks market planning team is unable to determine where the stores should be

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located in order to excel their business. They are now using a smart tool app which is
developed by Esri. The tool is used to evaluate massive amount of data such as the
demographics of a place, traffic patterns, and other recommendations in opening a new store.
This is the main reason why they are unable to increase their market share and sales in the
market.
The Starbucks Company targets its products to the teenagers of the country. Most of
the teenagers do not have the mindset of spending a lot of money in the quick grab food
department of Starbucks which includes the pastries, muffins, doughnuts. The strategy of
Starbucks of not stooping down to the level of a fast food provider will be hurting the internal
strategy of the company during its economic downturn (Lee & Vachon, 2016). The
operations cost of the company can be decreased in order to lower down the higher pricing
policy of the products, which are offered by the company. In order to lower down the
operations cost of the company can implement new ideas in promoting the robotics instead
humans. The company can start the plan of implementing the Café X of Starbucks where
people would have to stand in a line in the morning to have a breakfast. The robots will be
able to serve the people faster than the manual servings of the company. The robots will also
be faster in making different types of fast foods and coffee.
Implications of the chosen scenario:
Lower pricing policy:
Starbucks should lower its price in the premium products which are provided by the
company. If the company lowers down the price of the products then it can market its
products to each and every segment of the society. Lowering down the price of the products
will lead the company to market new area and sell its products in a wider range. Recently the
company is also facing various problems with the stores in the densely populated areas. The

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company is trying to explore the strategic options in order to license the company operated
stores in various appropriate markets which will lead the company to meet the customer
needs. Lowering down the price of the products of the products will lead to greater capture of
the market. The company will be able to understand the varying requirements of the
customers. After understanding the varying requirements of the products from the customers
the food chain will be increased. This can lead the company to deliver new dishes in an
online marketing policy. The online marketing of the products will also lead to an increase in
the market of the company in the next twenty years.
Serving in alignment with the requirements of the targeted customers:
Starbucks is the leaders in the fast food, beverages and drinks industry, which is
mainly targeted to the youth of the nation. The higher pricing policy and maintained quality
of the products of Starbucks lead to lower the attraction of the youth in the business. The
targeted youth is not ready make a high amount of expense for the breakfast deals and
evening meals sold by Starbucks (Davies, 2019). The stores of Starbucks in many areas are
located far away from the cities and busy office areas where it becomes very difficult for the
youth to visit to the stores and enjoy treating themselves (Nan & Li, 2017).
Implementation of technology in the business policy:
In order to reduce the operating cost of the company, Starbucks can implement the
introduction of robotics in the industry. The introduction of robotics in the industry will lead
lesser operations cost (Plessis, 2018). The human cost to the company will be reduced as
because the robots are one tie investment. People these days have very less time to spend in a
long queue to have their evening meal. The introduction of robotics will help them by serving
food faster. Introduction of robots will help the company to lessen the electricity cost as well
as human labor cost. This will lead to lesser the operations cost to the company where the

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company will have scope to lower the price of the products which are offered by the
company.
Barriers to the change:
The shareholders of the company will be strongly denying the fact to decrease the
pricing of the products of the company. If the price of the products are decreased in order to
attract the customers. The shareholders have to increase their investments in the company,
which they would not agree to do. The major problem, which will be faced by Starbucks in
order to attract the youth, is marketing strategies. Now a day the youth is very bus in their
own work. They do not have much time in listening to the advertisings set by the company in
college campuses, advertisements in newspapers, radio stations. If the company is also
advertising their products through the online media like video games and video, youth these
days skip the advertisements. These can be huge barrier to the company when attracting the
youth to the business. The barriers that will be faced by the company in implementing the
robotics to the business are that the company has to implement a huge amount of expense to
incorporate the technology. The shareholders of the company can also defend the fact and
might not increase their investment in the business (Mosey, Kirkham & Noke, 2017).
Conclusion:
In order to conclude the paper, the chosen company Starbucks which is using the
premium pricing policy is facing various types of problems like market segmentation, higher
operations cost and technological factors. It is expected that in a span of 20 years the
company will be able to overcome the present barriers which are faced by the company. The
implementation to the barriers as discussed in the paper are lowering down the operations
cost, proper market segmentation that is the youth, and introduction of robotics and using the
latest technologies available in the market.

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