Impact of Internal and External Factors on Starbucks Change Leadership

This report provides a comprehensive analysis of Starbucks' change management strategies, comparing them with those of Costa Coffee to highlight different approaches to adapting to market changes. The report delves into the impact of internal factors like technological capacity, organizational culture, financial management, and employee morale, as well as external factors such as customer behavior, competitor actions, investor influences, and governmental policies. It examines how these factors affect leadership styles and the overall business environment. Furthermore, the report explores change impact analysis techniques, leadership approaches to deal with changes, and strategies for minimizing the negative impacts of change within the organization. The report also identifies barriers to change that influence leadership decisions and concludes with a discussion of effective leadership approaches for navigating organizational transformations, providing a detailed case study on how Starbucks adapts to the ever-changing business landscape.

Understanding and
Leading Change

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1. Comparing different organisations on the basis of their strategies to adopt change........1
P2. Assessing the ways in which internal and external factors of change affect leadership..4
P3. Determining measures that could be used for minimising negative impact of change....6
TASK 2............................................................................................................................................8
P4. Different barriers of change that affects leadership decision in the organisation............8
TASK 3............................................................................................................................................9
P5. Applying leadership approaches in order to deal with changes.......................................9
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Business environment is full of uncertain changes. Thus, it is essential to adopt these
transformations effectively so that company can attain success. This is helpful in improving the
capabilities of an organisation to operate effectually in competitive market. There are so many
advancements that are taking place in today's scenario (Wedding, 2010). This report is about
Starbucks which is an American coffee house chain. In this assignment, impact of various types
of changes will be done by comparing two organisations from the same sector. It assists in
minimising negative effects of these factors on company's behaviour. There are several barriers
that influence the decision making processes of leaders. This report will focus on such hurdles
that comes at the time of taking nay decision. Different approaches of leading are to be discussed
in order to apply it on adopting changes effectively.
TASK 1
P1. Comparing different organisations on the basis of their strategies to adopt change
Organisational changes refer to a process in which a company can adopt the latest trends
of market, culture, consumer behaviour, technology, etc. All these factors lead to some
transformation in the management and operations of enterprise. These practices are very helpful
for the business in achieving competitive advantages and make these changes beneficial and
favourable for firm (Thomas and et. al., 2013). It assists in creating a link with current situations
and grabbing various opportunities in order to meet the needs and wants of customers in an
effective manner. There is the need for comparing different organisations for assessing their
operational strategies to adopt change. The comparison between different firms on the ground of
their strategies are described below :
Starbucks
It is a leading coffee chain of USA. This company is established in the year 1971 by three
partners named Grodon Bowker, Jerry Baldwin and Zev Siegl. It is operating in around 50
nations of the world with more than 15,000 outlets.
Costa
It is a famous company that offers a wide variety of coffee to its customers. This
organisation was formed in the year 1971. It is operating in the streets of UK with approx. 3400
stores. This cafe chain is famous for offering special Italian coffee.
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Both the organisations are having different strategies of adopting changes in their
operational activities and management scenario (Amey, 2010). It is very important for dealing
with the latest trends and advancements taking place in market place. Therefore, comparison
between them is as follows:
Strategies Starbucks Costa
Pricing strategies It is the most important aspect
in order to enhance number of
consumers. Starbucks is a
famous brand due to which it
has high prices of products.
There are some customers who
are not able to spend much on
such expensive beverages.
This could lead to decline in
the interests of buyers as they
can choose other substitutes. It
might affect revenue
generation of this organisation.
Due to such issues,
management of this firm has
adopted policy of economic
product and quality. It includes
the process of cost control so
that expenses incurred on
manufacturing of different
types of coffees can be
reduced. Through this, they
can manage the prices in an
effective way that will assist in
targeting various segments of
buyers. It will help in
This is another company
involved in the same type of
business. It is providing cost
effective products to the
buyers. Their management is
following competitive pricing
strategies so as to achieve
competitive advantages in
local market place (Carter and
et. al., 2013). In the recent
scenario, customers are more
focussed towards quality of
products. In order to save the
cost, they were compromising
with quality. So, there is the
need to make proper policies
for managing prices and
quality in an efficient way.
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generating the positive
outcomes.
Competency strategies It is concerned with analysing
tastes and preferences of
buyers so as to adopt it in
plans. Firstly, they were
involved in delivering same
type of products but after
implementing changes, they
have introduced different
varieties of coffee in order to
target buyers of various age
groups. Now, they provide fast
food like sandwiches and
burgers along with hot and
cold beverages. For targeting
health conscious people, they
have low calorie products.
Their menu card provides a
wide range of varieties to its
clients in order to meet their
different tastes and
preferences.
This restaurant chain is
delivering teas, chocolates,
shakes, ice creams and coffees.
It shows that their products are
already meeting different
needs of buyers. But consumer
behaviour is very dynamic and
so, company has to adopt
effective policies to deal with
the changing demands by
assessing it on timely basis.
Along with that, there is the
need to bring some changes in
rate policies. Extra charges
must be levied in a proper way
so that it will not affect the
pricing. For this purpose,
strategies are to be made in
order to use resources
efficiently for controlling
additional costs.
Promotions and advertising
strategies
They have invested a huge
amount on promoting their
products in introduction phase.
Modes like TV, radio and print
media have been used due to
which cost of product has been
increased. It helped in making
This company is not spending
too much on marketing and
promotion of its products.
They are focussing more on
maintaining quality instead of
marketing. But, as per the
current market conditions, it is
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its brand name stronger and
enhanced its market share. As
per recent the trends in
technological scenario, they
have adopted mode of digital
advertising in order to capture
minds of customers at a wide
range.
required that they will adopt a
proper mode to promote their
brand name. This will help in
increasing brand awareness
amongst customers grab their
attraction through impressive
presentation on
advertisements. It is necessary
to create product
differentiation and attain
competitive advantages.
Bohner and Arnold Change Impact Analysis
Bohner and Arnold has defined change impact analysis (IA) as the recognition of
possible results , or figuring out what requires to be altered for accomplishing a change. This
techniques are usually categorised into three kinds :
 Trace
 Dependency
 Experimental
Arnold and Bohner has proposed two classes of IA that is dependency and traceability. In,
impact analysation; traceability is connected with needs, designing elements, specifications and
tests are being captured and such relations could be evaluated for determining the scope of a
beginning change. On the other hand, in dependency IA, link among modules, parts, variables,
logic, etc. are accessed in order to identify the outcomes of starting a change.
P2. Assessing the ways in which internal and external factors of change affect leadership
Leadership refers to the ability that enables a person to influence others for attaining
common objectives. It is very important for making individuals focussed towards goals, targets
and motives of an organisation. Such competencies facilitates a person to lead various teams,
groups and division of Starbucks. These competencies are result of past experiences and own
efforts of an individual (Davis and Marshall, 2014). There are several types of styles that are
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adopted by leaders. It depends on nature of team and their objectives, that which approach is to
be followed. But, main aim of all these styles is to motivate teammates to perform efficiently and
attain goals in given time.
Change refers to uncertain situation that is taking place in the market. It affects business
environment of Starbucks both in macro and micro terms. There are several challenges that are
generated due to these dynamic conditions. It affects leadership styles, individual behaviours and
functions of teams. Hence, some of the internal and external factors of change are as follows-
Internal drivers of change-
Technological capacity- It is most important element that requires continuous innovation.
Business operations can be made effective and efficient through these advancements. Entire
production process of Starbucks could be changed by using modern techniques. It is vital internal
force that affects leadership style. Thus, Starbucks have to use such behaviour that will assist in
encouraging others to adopt technological changes properly so as to avail its benefits.
Organisational culture- It is a systematic study that focusses on attitudes and behaviours
of teams and individuals of an organisation (Drover and Ariel, 2015). This plays a major role in
adopting changes taking place in business environment. If employees are not forward looking
then they will not be able to take risks involved in change. It could affect leadership and group
behaviour in Starbucks as employees might not be very supportive with innovations. It could
raise issues like lack of coordination, employee turnover etc. Therefore, a leader must be able to
lead the team in such a way, that positive culture could be created within workplace.
Financial management- Finance is another major force related with internal business. To
adopt changes effectively, there is need for adequate funds in Starbucks. Thus, their leader
should adopt appropriate style that will assist in influencing others to make proper use of money.
Employee morale- Another internal driving force is morale of workers. Thus, it is
required for Starbucks to have motivated employees so that they can adopt changes in effective
manner (Fragouli and Ibidapo, 2015). This aspect affects behaviour of leader as they have to
encourage employees to work properly for taking risks and challenges.
Wastage- It is common that wastage will occur in manufacturing process. This affects
productivity due to which cost of product will be increased in mentioned company.
External drivers of change-
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Customers- It is most important aspect of external drivers to change. Customers are the
target audience for whom Starbucks is producing goods and services. Their behaviour is very
dynamic as their tastes and preferences towards a product keeps on changing. It is another
element that influences leadership, team and behaviours of individuals working in a company.
Competitors- It is another important component as there is intense rivalry in market
place. There are so many risks involved due to this competition. It is another driver of change
that affects leadership, teams and individual in Starbucks.
Investors- The given organisation needs huge fund to operate its projects and plans in
effective manner. There are several investors who invest their funds in Starbucks. But when a
person invests their money in this venture then it provides them several rights in management. It
could influence leadership style and working of groups and individuals in an institution.
Government- Another driver to change is policies and plans made by government that are
to be followed within the cited firm (Goldstein, Sauer and O'Donnell, 2014). These rules are to
be adopted by management in its operational activities due to which individual's, teams and
leadership style gets affected.
Leadership and drivers to change-
Leaders are the person who motivate groups and teams in a company in order to attain
common objectives. Hence, it is very important for Starbucks that they will adopt all the changes
taking place in business environment. This takes place due to internal and external drivers. To
motivate employees to effectively handle these issues, leaders have to play several important
roles. They can encourage workers to give higher performance to attain objectives related with
the change management.
Lack of support- Another negative impact concerned with change is lack of support from staff
members. Employees have fear that they might face some risks due to transformation in several
process and procedures (McLoughlin, 2011). They could feel that their capabilities are not
enough to work in changed environment. To deal with such issues, leader should assure
employees that their rights and positions will be secured even after adoption of change. They
should be motivated in an effective manner that these transformations are beneficial for them for
their future growth. This will make them motivated to improve their performance.
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P3. Determining measures that could be used for minimising negative impact of change
Adoption of changes and advancements includes so many risk factors. It affects overall
working conditions and structure of Starbucks. To make these transformations in favour of
company and minimize the impact of uncertainties involved in that, there is need to make proper
strategies in this regard. It is very important to evaluate these risks in effective way so that
corrective actions could be take. There are different negative impacts that might occur during the
process of implementation of change. There are some effects that use to reduce negative impact
of changes-
Employee turnover- Whenever changes are implemented, it results in modification in the style of
working (Groppel, 2011). Sometimes, employees have to put more efforts to deal with these
issues in an effective way. Procedures and processes are to be transformed as per the changes.
There are chances that workers will not feel comfortable with such changes. It could result in
high rate of employee turnover in company. So, there is the need to conduct adequate training
and development sessions to make manpower more capable in implementing modifications.
Cost- When changes are to be adopted, there is the need for spending higher amount to
implement new plans and policies. It increases the cost of all human activity and procedures
related with operational activities of business. Due to this, production expenses will be more and
might affect the profitability of firm. It is important that leaders and managers of organisation
will adopt the most appropriate method for generating funds and manage it in a productive way
so as to control such costs.
Coordination with team members : In order to reduce the impact of change, it is important to
have presence or feeling of coordination among all team members as well as leaders.
Kurt lewin's theory – these kind of theories are used to make effective change in organisation to
get higher business advantages easily. In a business organisation some negative activities are
negatively affect ion employees working skill and their approaches so for them it is very
important to get higher training and development from their senior employees to reduce conflicts
easily. Changes are done to getting higher business advantages and challenges from target
market. These changes help to providing opportunity to adopt new ideas easily.
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TASK 2
P4. Different barriers of change that affects leadership decision in the organisation
Leadership is an important concept that assists in effective accomplishment of goals and
objectives. Leaders plays an important role in making employees focussed towards change
management. They contributes a lot in effective decision making as they makes plans and
strategies to achieve higher level of productivity and profitability (NHS England, 2016). But,
there are different hurdles that could affect process of decision making in Starbucks. These are as
follows-
Lack of employee support- This is amongst major barrier that could affect process of
decision making of leaders. Sometimes, administration takes steps to adopt changes without
consulting it with employees. Due to this workers are not very much motivated to support the
procedure of change management. This could affect the process of decision making as staff
members will uncomfortable to accept these challenges.
Lack of proper communication- Another barrier related with this scenario is lack of
effective interaction between administration and workers. If employees are informed in advance
that firm is adopting some changes in operational activities then it enables them to be prepare for
such modifications. But if there is lack of adequate mode of communication then there will be
more chances of confusions and disputes. So, it is responsibility of management that they will
take appropriate strategy to inform staff members about changes taking place in company. This
will help in making them feel privileged and they will make themselves as prepared for these
challenges.
Ineffective planning- When an organisation is established, there is need to form effective
plans for the purpose of change and risk management. It provides proper framework and
guideline to leaders in the process of decision making. But in case, these plans are not relevant
and flexible then it may lead to barriers for this activity.
Lack of coordination- Another barrier that affects the process of decision making by
leader is lack of proper coordination between various functional units of company. It could
create lots of problems for leader in order to take proper decision in this regard.
Therefore, these are several obstacles that could lead improper decisions in process of
implementing changes (Pelling, 2010). It is required to overcome all these issues in order to
make appropriate strategies and policies in this context. Organisational goals and objectives can
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be attained in timely manner. It is very useful in meeting dynamic needs and wants of consumers
and provide them maximum level of satisfaction. This will reduce chances of failure and disputes
in the process of change management. Employees will actively participate in these activities and
they will be always ready to deal with challenging issues.
Some of the other barriers are listed below :
 Fear of unknown : There are some unknown things which happens randomly within an
enterprise that impacts on the decision making of leaders. These are sudden in nature so
leaders remains in fear for that as they are not prepared for that.
 Breaking routine : Sudden changes occurred in company might break the regular routine
and act as obstructor for the entire organisation. Leaders also has to face several problems
due to that as their consistent speed of doing tasks gets reduced or hampered from this.
 Incongruence team dynamics : This has been examined that groups used to develop and
implementing agreement via a set of rules that provide guidance to behaviours of team.
However, this conformity to the current norms would discourage workers from accepting
corporation – al change. Thus, it also act as obstructor for leaders and influences on their
process of decision making.
 Forced filed analysis : This is considered as a common tool to analyse the factors
systematically that are found in complex issues. It is used to frame problems in terms of
pressures that supports the restraining forces and driving forces as well.
TASK 3
P5. Applying leadership approaches in order to deal with changes
Leadership plays a crucial role in the process of change-management. There are so many
approaches that assists in dealing with changes that are taking place in Starbucks. This helps in
encouraging employees to adopt and manage these modifications in operational activities of this
company. Leaders are responsible to influence others to work efficiently in accepting these
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changes (Different type of leadership styles, 2017). Therefore, some of the approaches for
leadership are as follows-
Situational leadership- In this type of leadership approach, leaders adopts behaviour as
per the nature of situation they are dealing with. They develops their skills and abilities which is
important for handling different type of attitudes of employees (Reiman and Pietikäinen, 2012).
Along with that, leader works for enhancing knowledge base and capabilities of workers that is
required to adopt particular change in effective manner.
Transformational leadership- It is a mixture of various skills of leaders that are required
for managing workforce in efficient manner. These abilities are concerned with creation of
adequate goals and objectives, change management, problem solving and motivation of team
members. This approach is very useful in building healthy relations with employees and
encourage them to adopt all the changes in proper way.
Democratic leadership- In this type of leadership approach, leader allows their followers
to actively participate in decision making and various other important activities concerned with
change. This assists in motivating employees by asking their views and opinions in important
activities. Through this activity, an organisation can effectively deal with changes as decision is
made after taking creative ideas of staff members.
Laissez faire- In this approach of leadership, leader gives all the responsibilities to
employees. They are allowed to take decisions as per their wish. This helps in ensuring self-
management and motivation of workers (Thomas and et. al., 2013). They can work much better
in free environment so changes will be accepted in effective manner. But, there is need to keep
control over them so that they will not make inappropriate use of their authorities.
Transactional approach- This style of approach focusses on maintaining performance of
employees by using strategies of appreciation, rewards, promotions, and recognition etc. This
helps in motivating staff members to deliver better performance (Wedding, 2010). If they will
get these aspects in return then they automatically gets motivated for putting more efforts.
Therefore, these are some approaches that could be adopted by leaders. It will help them
in dealing effectively with changes. This also assists in making workers more motivated and
focussed towards this process of transformation.
Kotler’s 8 steps Change Model
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