Starbucks Facing Issue Assignment

Added on -2020-07-22

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Table of Contents1. INTRODUCTION.......................................................................................................................21.1 Objective is missing...............................................................................................................21.2 Structure of the assignment....................................................................................................22. History of the company................................................................................................................32.1 The problem-..........................................................................................................................32.2 Data collection.......................................................................................................................52.3 Quantitative data....................................................................................................................52.5 Impact and duration of the problem.......................................................................................82.6 Approach to solve the problem- ............................................................................................83 Analysis and discussion................................................................................................................93.0 Critical appraisal of the approach used..................................................................................93.1 Strength and weakness of the approach...............................................................................121.What is the current approach used, named it..........................................................................123.2 Outcome of the approach used.............................................................................................133.3 Other approach.....................................................................................................................133.4 Suggestion for Starbucks to use other approaches...............................................................143.5 Casual factors of the problem..............................................................................................143.6 Root cause of the problem...................................................................................................153. Stock Market analysis................................................................................................................154. CONCLUSION..........................................................................................................................175. RECOMMENDATION.............................................................................................................186. REFERENCES..........................................................................................................................19
1. INTRODUCTIONMain focus of the report is to discuss the issue that were faced by Starbucks in the year2008. Further, it consists of the ways that were implemented in order to overcome the issues ineffective manner (Cramer, 2017). There were alternative strategies that were applied by the firm.In this context, CEO was changed from Jim Donald toHoward D. Schultz. In the year 1987 to2000, Schultz was CEO, then again he was appointed as the CEO in 2008. The type of perception that was carried out Schultz was different, he focused on developstrong relationship customers (George, Johnson and Smith, 2016). There were feedback takenfrom customers and more than 100 changes were made in the type of services and products thatwere delivered by the firm. Main problem that were faced by the firm was related with the losses that they werefacing fur to crisis of 2008. It is important to take up appropriate step so that the rate ofperformance can be improved and the issue faced can be solved. 1.1 Objective is missingObjectives of this assignment is to focus on the problem that has affected the businessthat already been solved. It consists of critical analysis of the solutions that were made byStarbucks with the help of strategies and theories to take up appropriate decision making. Belowgiven are the objectives that will be covered:1.Managing customers complaints and attaining the targets2.Approaches of management to solve problems.3.Decisions taken by management for better solution.4.Making use of suggested approach.5.Recommendation of solution.1.2 Structure of the assignmentThere are different aspects that will be covered in the research. In this context, mainfocus of the assignment is to determine the decisions that are taken by the business so thatproblems faced can be solved in appropriate manner. Below given is the flow of report that isfollowed:Analysing the issue faced by Starbuck in the year 2008.Approaches applied by the firm to solve the issue.Analysing whether the approach applied was effective enough to solve the problem.
Proposing alternative approach for the issue.Providing recommendations2. History of the companyStarbucks was founded in the year 1971 and was founded by Jerry Balswin, GordonBowker and Zev Siegl in the year 1971 and it is headquartered at America. Currently they havetheir businesses at 26696 locations. It is a leading coffee chain and conduct their operationsacross the various nations. Main focus of cited firm is to deliver high quality services and theprice that is taken from them is also high (Finch, 2016 ). They understand the requirement ofcustomers and make changes in their products and services. In other words, they are well knownfor their taste and quality. Further, the products they deliver include whole bean coffee, espressocoffee, tea products, fresh juices and beverages including snacks, chips, etc. (Fuchigami andet,al., 2016). Cited firm had about 50 stores in US and operates in 43 other countries. Further, ithas attained different type of rewards like “Most Admired Company”, “Best Business”, etc. togive more information on the company and their structure, employees. 2.1 The problem-The world's largest coffee retailer, Starbucks, pulled itself out of the financial meltdownof 2008 by aligning its operations with customer demands through social media. The companycloses 600 stores in the US but with the help of social media platforms they have create theirbrand value and improving their functions and raises its productivity and also tries to add valueby using innovation techniques such as Wi-Fi service so that certain thing directly improve theirquality.
Illustration 1: Starbucks Financial performance(Source: Starbucks, 2015)In accordance with the above figure, it can be stated that the rate of performance relatewith profit made is too low in the year 2008 and 2009. The sales got negatively affected and theywere facing huge losses. However, it is identified that there are improvement in sales since 2009and this was possible with the efforts made by CEO. The rate of competition that are faced by Starbucks is high. There are many other firmsthat delivered customers with similar set of products and services (Schönsleben, 2016 ). Thereare different type of issues that were faced by the business with the crises that occurred in theyear 2008. As per the researchers, it was stated that due to the high price that are charged by thefirm for their services is the main reason for their losses that were faced. At the time of crisis,customers preferred to make use of the services that are delivered to them at low cost. In the year2008, there were 600 shops of Starbucks that were not making much profit and they faced about28% of fall in profits when compared with the profit that were made in the year 2007 (Heizer,2016). Then in the year 2009, 300 stores were closed down and 67000 employees were laid off.
2.2 Data collectionBoth qualitative and quantitative data were gathered so that day to day operations that areperformed by the business can be undertaken in effective manner. This way, it is favourableenough to raise in depth understanding for that strategies that are applied by the firm. The areasin which they need to improve are also considered so as to overcome problem effectively andefficiently.2.3 Quantitative dataThere are many fluctuations that are faced by the Starbucks but they were able tomaintain their operations in effective manner. Below given are the stock markets of the firmfrom the year 2000 to 2009.Illustration 2: CPG Revenue (Source: Starbucks earning, 2015.)In accordance with the above given figure, it can be stated that the rate of revenue thatwere made by the firm is increasing at an increasing rate. This shows that people prefer to makesure that services that are delivered by the firm. However, from the year 2008 the revenue hasfallen. Further, the operating income of the firm has also fallen from 2008. When CEO changed,
then there were strategies implemented in which price of the products were raised and this wasalso a negative impact over the business (Starbucks in Expanding by taking on Debt, 2015).Further, main emphasis was made on understanding the issues or problems that were faced bycustomers. This was helpful to understand the areas in which customers prefer to haveimprovement. Main focus of any firm is to gain maximum profit. This is can be done whenrequirement of service users are satisfied. When Starbucks focused on solving the problemsfaced by customers, then they were able to develop strong relationship with them. As a result, therate of market share slowly improved.2.4 Qualitative dataBy consideration the sales that are made by cited firm, it can be stated that they are notperform with their full efficiency. It is the responsibility of the management to take up propersteps so that they can overcome the problems. The rate of visitors reduced and the main reasonidentified for this was high price that are taken from firm for their products and services. Thereare about 300 stores that were closed down and 6700 employees were sent off from their job.More specifically, below given are the issue or problems that were faced by the firm:Staff skillFail to have strong interaction with customers.Poor understanding of customers’ requirementsEquipment’sLack of understanding among employeesOutdated technologyQualityFailure in maintaining quality by employeesPositioningRequires to have effective positioning of fooddishesHandling methodsNo proper inventory controlNo wastage control systemMonitorEquipment’sMonitoring system to be implementedAccountability of equipmentStaff willingnessLack of team workLack of trainingEquipmentThere is no proper equipment to implement thedifferent ideas given by the customersSpaceThe venture do not have efficient space in theirpremises.

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