Re-imagining Work and Organisation: Starbucks' Approach to Change

This report analyses Starbucks' organisational changes in response to various environmental factors such as technological innovations, customer preferences, environmental factors, and political and legal requirements. It evaluates the role of organisational leaders in addressing challenges in the contemporary age, including technological adaptation, sustainability policies, customer engagement, and changing menu items. The report highlights Starbucks' failure in the Australian market due to not adapting to local customer preferences and the importance of sustainability in business operations. It also provides recommendations for Starbucks to improve its strategies and sustain growth in a competitive market. Desklib provides students access to similar reports and solved assignments for further study.

Re-imagining Work and Organisation
Starbucks

P a g e | 1
Table of Contents
1. Introduction..................................................................................................................... 2
2. Starbucks........................................................................................................................ 3
3. Environmental Conditions Driving Organisational Change..............................................4
3.1 Technological Innovations............................................................................................4
3.2 Customer preferences and perception..........................................................................5
3.3 Environmental Factors..................................................................................................7
3.4 Political and Legal Requirements..................................................................................7
4. Role of Organisational Leaders in Addressing Challenges in Contemporary Age...........8
4.1 Technological Adaptation..............................................................................................8
4.2 Sustainability Policies...................................................................................................9
4.3 Customer Engagement...............................................................................................10
4.4 Changing Menu Items.................................................................................................11
5. Recommendations........................................................................................................11
6. Conclusion.................................................................................................................... 13
7. References.................................................................................................................... 14
List of Figures
Figure 1: Starbucks Logo.......................................................................................................3
Figure 2: Starbucks Revenue and Market Share....................................................................3
Figure 5: Starbucks Shops in Australia...................................................................................6
Figure 6: Starbucks Coffee Machine......................................................................................8
Figure 7: Starbucks CAFE Program.....................................................................................10

P a g e | 2
1. Introduction
Organisational change has become a pervasive concept as organisations struggle to
adapt or face a decline in their growth due to volatile environments of a global economic and
political world. There is a wide range of factors available in these environments which share
the process of organisational adaptation such as demographic shifts, technological
innovations, intention competition, professionalism and others (Millar, Hind & Magala, 2012).
Due to these factors, organisations are focused on shifting their focus, restructure their roles
and responsibility, develop new forms and modify their goals to remain relevant in the
market. Adopting these policies comes within the scope of organisational change and
redesign. In today’s competitive business world, companies focus on implementing effective
organisational change and redesign policies to ensure that they remain relevant in the
changing business environment. It enables them to adopt as per market conditions and
make changes in their products and services to meet the rapidly changing demand of
customers (Eason, 2014). The objective of this report is to understand how organisations
undergoing change view their environment is structured, managed and learn. An example of
Starbuck is chosen for this report in order to understand the environmental factors that affect
the organisational change policies in the company. The effectiveness of leaders of Starbucks
will be evaluated in relation to addressing the challenges of the contemporary age. This
report will analyse the key factors that affect the business operations of Starbucks and
enforces its leaders to implement organisational change and redesign policies.

P a g e | 3
2. Starbucks
Starbucks Corporation is an America-based corporation which was founded in 1971. The
company has started its operations in Seattle, Washington since then the company has
established its operations in 28,218 locations across the globe (Mourdoukoutas, 2018a). The
company has initially distinguished itself from other coffee-serving venues in the United
States by focusing on its quality, taste and overall customer experience. Starbucks is known
for relying on innovations to improve its offerings which enable the company is expanding its
operations on a global stage. Per week, more than 60 million customers visit Starbucks
stores. Jerry Baldwin, Zev Siegl and Gordon Bowker are the founders of the company, and it
offers a wide range of products to its customers that include smoothies, coffee beverages,
sandwiches, tea and baked goods. Currently, Starbucks has secured 39.8 percent of the US
coffee chain industry, and it reported revenue of $24.72 billion in 2018 from its worldwide
operations (Statista, 2018). The corporation has adopted an effective social media marketing
campaign in order to reach its audience while building a strong relationship with them.
Figure 1: Starbucks Logo
(Source: Starbucks, 2018a)
Figure 2: Starbucks Revenue and Market Share
(Source: Statista, 2018)
The company uses its social media sites to help build meaningful connections with its
customers by resolving their queries and giving them information regarding the products of

P a g e | 4
the company. One of the key reasons for the success of Starbucks on an international level
is a loyal customer base which prefers the products and services of the company above
anything else (Chua & Banerjee, 2013). Through this strong customer base, the company
has been able to expand its growth while relying on different innovative approaches. There
are various environmental factors which create obstacles in the growth of the company
which are addressed by its management by implementing organisational change and
redesign policies. These policies are focused on considering the major factors which affect
the business of the company and taking precautionary measures to eliminate them in order
to ensure that the company sustains its market growth (Schultz & Gordon, 2012). However,
the company continues to undergo change due to various environmental factors which
makes it difficult for the company to sustain its growth in the market.
3. Environmental Conditions Driving Organisational Change
There are various environmental factors that drive organisational change policies in
Starbucks and enforce its management team to ensure that they take proactive measures to
address these challenges.
3.1 Technological Innovations
The rapid advancement in technologies resulted in creating challenges and
opportunities for businesses which affect their business operations and enforces them to
take measures to support these changes. Challengers can disrupt the market share of
incumbents if they rely on technological advancements to offer better and high-quality
products and services to their customers. A good example is Netflix which relied on
technological advancements to offer better services to its customers that completely shut
down the business of Blockbuster who has captured the market but failed to use
technological innovations to improve its services (Statell, 2014). It shows that companies
should change their operations to ensure that they adopt the latest technological
advancements into their operations which enable them to adopt as per change in customer
demand. In the case of Starbucks, technologies enable the company in reducing its
operations costs and increasing efficiency of the operations. The process of collecting and
processing coffee beans which Starbucks purchase from the farmers in South Africa and
Latin America rely on different technologies to ensure that these beans are of high quality
and ethically sourced (Kessler, 2015).
Moreover, technological factors also affect the way the company communicate and
interact with its customers in order to market its products and resolve their queries. Due to
rapid changes in technologies, it becomes difficult for the company to sustain its growth in

P a g e | 5
the market because competitors use technologies to improve their products and services. A
good example is Costa that is a British coffee chain and a major competitor of Starbucks.
The company supplies a wide range of branded coffee-machines which are suitable to be
used in small retail stores to ensure they have the capability to perform different tasks
including grinding coffee beans and steaming milk (Hughes, 2018). These coffee machines
provide a competitive advantage to Costa over Starbucks since it is easier for stores to use
these machines while preparing coffee for customers. Another good example is Briggo
Coffee Haus which allow its customers to order their coffee through touchscreens in order to
increase the efficiency of the process. These factors create pressure on the management of
Starbucks to ensure that they take appropriate actions to use these technological
innovations in the business to generate and maintain a competitive advantage in the
industry.
3.2 Customer preferences and perception
Building a strong and loyal customer base is crucial for the success of a coffee chain
business to ensure that they sustain their sales in the market. In case the corporation has a
negative brand image or reputation in the market, then it becomes difficult for the company
to sustain its customers (Font-i-Furnols & Guerrero, 2014). The preferences of customers
are changing rapidly based on which companies have to make changes in their products and
services as well to ensure that they cater to their demands. While expanding operations in
international markets, corporations have to change their offerings based on the preference of
customers to ensure that they increase their sales. Teleological theories of organisational
change provide that changes should be intentional decisions taken by the management to
ensure that the company continues to improve its goods and services without adversely
affecting the interest of the stakeholders (Williams, Williams & Morgan, 2013). Thus,
companies should take into consideration the change in preference of customer to take
change decisions which are crucial to meet their demands.
In the case of Starbucks, the management of the company failed to understand this factor
due to which the company failed in the Australian market. The company had to close 60
shops leaving just 22 stores in the country.

P a g e | 6
Figure 3: Starbucks Shops in Australia
(Source: SBS, 2014)
Australian customers are serious about their coffee, and they consume around 3 to 4 times
per day. Starbucks did not take into consideration these factors and avoided changing its
policies as per the preferences of customers. It offered similar products in Australia which it
offers in the United States due to which customers did not prefer its products (SBS, 2014).
The culture of coffee consumption has evolved over the course of a century in Australia
which was not taken into consideration by the management of Starbucks. Australian
customers prefer to drink coffee in small cafés rather than large coffee chains such as
Starbucks. The company simply copied its American business model and implemented it in
Australia which was deemed to be failed. The company did not adopt a consumer-oriented
menu while focusing on the needs of Australian customers due to which the company failed
in Australia (Brooks, 2012). The pricing strategy of the company was wrong as well; almost
all the items of the company were expensive than local baristas due to which customers
prefer to purchase from local shops rather than Starbucks (Mourdoukoutas, 2018b). This
failure highlighted the importance of organisational change without which Starbucks failed in
Australia. Starbucks has a positive brand image for being a sustainable company; however,
the company has a negative brand image on social media due to unhygienic bathrooms.
Many customers have reported that the company did not clean its stores’ bathrooms on a
regular basis due to which the sales of the company have reduced.

P a g e | 7
3.3 Environmental Factors
In the past few decades, the importance of corporate responsibility has increased
substantially, and companies are forced to take steps which are targeted towards sustaining
their growth in the market while the focus on the interest of key stakeholders. One of the key
responsibilities of companies is the protection of the environment and its resources while
taking business decisions. In order to comply with this responsibility, companies have to
adopt organisational change policies in order to ensure that they change their processes to
protect the environment and its resources (Benn, Edwards & Williams, 2014). This is a major
factor which drives organisational change since customers prefer to purchase products from
those companies that have adopted a sustainability business model. A recent study found
out that 73 percent of millennial customers prefer to pay extra for sustainable goods rather
than purchase cheaper products which are made by harming the environment (Curtin, 2018).
Thus, companies are enforced to change their operations to ensure that they reduce their
carbon footprint and protect the key stakeholders who are affected by their operations. In
case sustainability goals are not meet by the companies, they have to adopt organisational
change policies which often increase their operating costs and overall expenses.
Implementation of environmental friendly operations in Starbucks resulted in increasing the
overall costs of the company which reduces its profits. However, if the company did not
adopt as per these changes, then its sales are likely to decrease in the long run.
3.4 Political and Legal Requirements
While managing its operations worldwide, there are various political and legal factors
which affect the operations of Starbucks and adversely affect the profitability of the
company. The trade bans imposed by Trump Administration affect the international
operations of Starbucks due to which the company has to change its policies to ensure that it
sustain its growth. The changes in food safety laws also affect the operations of Starbucks
which shows that importance of organisational change policies (Sun, 2017). Dialectical
theories of organisational change provide that changes are a result of conflicts. As per these
theories, organisations manage their operations in a plural world in which forces and events
constantly shape and change the business operations of the company. For example, the
introduction of new food safety laws and changes in the previous policies affects the
business of Starbucks; however, effective organisational change policies enable the
company in adopting as per these changes and sustain its growth in the market (Elsmore,
2017).

P a g e | 8
4. Role of Organisational Leaders in Addressing Challenges in
Contemporary Age
Leaders play a crucial role in implementing organisational change policies in the
companies without which it becomes difficult for the company to sustain its growth in the
contemporary age. Without effective leadership, it becomes difficult for companies to
implement change policies in the business. They face resistance from employees, and their
profits are more likely to plummet without implementing effective change policies (Kempster,
Higgs & Wuerz, 2014). In the case of Starbucks, the leadership plays a crucial role in
addressing major challenges faced by the company; however, there are various areas where
the leadership has failed as well.
4.1 Technological Adaptation
Starbucks is not known for using effective technology in the business due to lack of
effective organisational change policies. In 2008, the company purchased the Coffee
Equipment Co. which is known for its coffee brewing machines called “Clover” (Allison,
2008). The company faced resistance from their employees while installing these machines
in their stores; however, the leaders used effective organisational change policies to move
forward with this strategy. For example, the company installed small coffee machines
through which its employees were able to buy coffee by using a contactless payment card
which becomes very popular (Bacheldor, 2009).
Figure 4: Starbucks Coffee Machine

P a g e | 9
(Source: Bacheldor, 2009)
It shows how the leaders at Starbucks address the issues of employee resistance
while implementing organisational change policies. The management has also launched
Starbucks mobile application through which customers can find local Starbucks stores and
book their coffee before visiting the store which saves their time. In order to adopt these
change policies, the company has to train its staff members to make sure that they know
how to use these new technologies which resulted in increasing efficiency of the operations
(Aiello & Dickinson, 2014). Thus, effective organisational change policies enable Starbucks
in ensuring that it sustains its growth in the market while catering to the demand of
customers.
4.2 Sustainability Policies
The management of Starbucks understands the importance of implementing
sustainability policies in the business by relying on effective organisational change policies.
Implementation of sustainable policies requires companies to change their processes due to
which they face resistance, increase in operating costs and other issues; however, it enables
them to sustain their growth in the long run. Starbucks has built a strong customer base
through its sustainable brand image in the market. The company has initiated a program
called C.A.F.E to ensure that the coffee beans which it purchased are 100 percent ethical
and it also supports local coffee farmers through this program (Starbucks, 2018a). This
program also invests in providing education for children living on farms. This resulted in
increasing the operating costs of the company and increases the time taken to get the coffee
bean within a reasonable period of time; however, the company has overcome these issues
through organisational change policies.

P a g e | 10
Figure 5: Starbucks CAFE Program
(Starbucks, 2017)
4.3 Customer Engagement
Starbucks is known for using social media sites to engage with their customers and
advertise its products to them. The company did not use these sites to simply market its
products to its customers; instead, the corporation launch campaigns in which customers
can participate to learn more about products of the company. For example, the company
promoted its blonde roast coffee in 2011 by setting up a coffee giveaway which was
promoted through its social media channels (Moth, 2014). Through this campaign,
customers learn about the new product of the company while it also increased the sales of
the company. Another highly successful campaign was ‘return of pumpkin latte’ which
company promoted through its social media sites as well. The company has also made
purchasing through its mobile application a game for its customers through which they can
earn more points to get a free coffee. The management implements change policies in the
business to promote the customer engagement policies which ensure the effectiveness of
these programs and ensure the success of the company (Tu, Wang & Chang, 2012). The

P a g e | 11
company has also launched a loyalty program for its customers through which they can earn
points and redeem them to get rewards which include free drinks.
4.4 Changing Menu Items
Starbucks not only implements organisational change policies to improve its business
processes, but the company also uses them to change its offerings to continue to meet the
demands of customers. For example, the company changes its cups’ design based on
holidays and special events, and it also launches limited edition drinks such as Unicorn
Frappuccino to ensure that customers did not get bored from its basic offerings (Harrison,
2017).These policies require the company to change its business operations which the
company achieves by adopting effective organisational change policies through employee
engagement and training. The corporation has adopted a learning and development
program through which it offers Barista basics training facilities to its employees to ensure
that they under these changes in products of the company and offer high quality services to
customers (Starbucks, 2018b).
5. Recommendations
Although the management of Starbucks has adopted effective organisational change
policies to ensure that they change as per market requirements; however, following
recommendations can assist them in addressing major issues which the company faces in
order to sustain its market growth.
 While expanding its operations in the international market, the company should
evaluate the change in needs and demands of customers to make sure that its
products match their requirements (Lin, 2012). For example, thorough market
research regarding Australian customers before expanding its operations would have
saved the company from loss.
 The company should make sure that its employees are ready for organisational
change policies while implementing them without which it becomes difficult for the
company to ensure its effectiveness. Avoiding resistance among employees and
matching their skills and knowledge with the change policies can ensure the
effectiveness of organisational change policies.
 The company should collect reviews from its customers and understand their
concerns regarding its services while implementing organisational change policies
(Van der Hurk, 2014). For example, the company should understand that its brand
reputation is challenged due to its dirty and unhygienic toilets based on which the
company should adopt organisational change policies to address this issue by

P a g e | 12
monitoring the actions of its employees. It should make sure that its bathrooms and
toilets are clean to maintain a positive brand image in the market.

P a g e | 13
6. Conclusion
In conclusion, effective organisational change policies enable companies in ensuring that
they sustain their market growth in adverse market conditions. In the case of Starbucks,
there are various external and internal factors which highlight the importance of
organisational change policies such as political, technology, legal factors, customer
preferences and others. The management of the company adopted different organisational
change policies to address these challenges such as adopting sustainability policies,
customer engagement, changing menu items and technology adaptation. Although these
policies are effective; however, there are areas of improvements for which recommendations
are given such as training and development program for employees, collection and
implementation of customer reviews and evaluation of customers’ preference while
expanding operations in international markets. Compliance with these policies will assist
Starbucks in maintain its positive brand reputation and sustain its future growth in the
industry.

P a g e | 14
7. References
Aiello, G., & Dickinson, G. (2014). Beyond authenticity: A visual-material analysis of locality
in the global redesign of Starbucks stores. Visual Communication, 13(3), 303-321.
Allison, M. (2008). Clover coffee machines catch Starbucks’ fancy. Retrieved from
https://www.seattletimes.com/business/clover-coffee-machines-catch-starbucks-
fancy/
Bacheldor, B. (2009). Starbucks Brews Up Coffee Machines With Contactless Payment
Technology. Retrieved from https://www.rfidjournal.com/articles/view?4704
Benn, S., Edwards, M., & Williams, T. (2014). Organizational change for corporate
sustainability. Abingdon: Routledge.
Brooks, B. W. (2012). Starbucks: maintaining a clear position. Journal of the International
Academy for Case Studies, 18(3), 39.
Chua, A. Y., & Banerjee, S. (2013). Customer knowledge management via social media: the
case of Starbucks. Journal of Knowledge Management, 17(2), 237-249.
Curtin, M. (2018). 73 Percent of Millennials are Willing to Spend More Money on This 1 Type
of Product. Retrieved from https://www.inc.com/melanie-curtin/73-percent-of-
millennials-are-willing-to-spend-more-money-on-this-1-type-of-product.html
Eason, K. D. (2014). Information technology and organisational change. Florida: CRC Press.
Elsmore, P. (2017). Organisational Culture: Organisational Change?: Organisational
Change?. Abingdon: Routledge.
Font-i-Furnols, M., & Guerrero, L. (2014). Consumer preference, behavior and perception
about meat and meat products: An overview. Meat science, 98(3), 361-371.
Harrison, K. (2017). 5 Marketing Tactics From Starbuck's Unicorn Frappuccino Launch You
Can Copy. Retrieved from https://www.forbes.com/sites/kateharrison/2017/04/23/5-
marketing-tactics-from-starbucks-unicorn-frappuccino-launch-you-can-copy/
#6c90a1536e35
Hughes, I. (2018). Costa rolls out new look for Express self-serve machines. Retrieved from
https://www.conveniencestore.co.uk/news/costa-rolls-out-new-look-for-express-self-
serve-machines/572992.article

P a g e | 15
Kempster, S., Higgs, M., & Wuerz, T. (2014). Pilots for change: exploring organisational
change through distributed leadership. Leadership & Organization Development
Journal, 35(2), 152-167.
Kessler, B. (2015). A Starbucks boycott percolates over Fair Trade and organic ingredients.
Retrieved from https://www.binghamtonhomepage.com/news/a-starbucks-boycott-
percolates-over-fair-trade-and-organic-ingredients/188397633
Lin, E. Y. (2012). Starbucks as the third place: Glimpses into Taiwan's consumer culture and
lifestyles. Journal of International Consumer Marketing, 24(1-2), 119-128.
Millar, C., Hind, P., & Magala, S. (2012). Sustainability and the need for change:
organisational change and transformational vision. Journal of Organizational Change
Management, 25(4), 489-500.
Moth, D. (2014). Eight awesome social campaigns from Starbucks. Retrieved from
https://econsultancy.com/eight-awesome-social-campaigns-from-starbucks/
Mourdoukoutas, P. (2018a). How To Spot The Next McDonald's And The Next Starbucks.
Retrieved from https://www.forbes.com/sites/panosmourdoukoutas/2018/07/04/how-
to-spot-the-next-mcdonalds-and-the-next-starbucks/#2297580c6be4
Mourdoukoutas, P. (2018b). Starbucks' Greek Problem In Australia: Mikel Coffee
Community. Retrieved from
https://www.forbes.com/sites/panosmourdoukoutas/2018/09/08/starbucks-greek-
problem-in-australia-mikel-coffee-community/#6b5f3eb3647e
SBS. (2014). Why Starbucks just can't crack the Australian market. Retrieved from
https://www.sbs.com.au/news/thefeed/story/why-starbucks-just-cant-crack-australian-
market
Schultz, H., & Gordon, J. (2012). Onward: How Starbucks fought for its life without losing its
soul. Pennsylvania: Rodale books.
Starbucks. (2017). Sustainability is at the heart of Starbucks coffee sourcing. Retrieved from
https://stories.starbucks.com/stories/2017/sustainability-is-at-the-heart-of-starbucks-
coffee-sourcing/
Starbucks. (2018). Ethical Sourcing – Coffee. Retrieved from
http://www.starbucks.co.za/responsibility/coffee-sourcing

P a g e | 16
Starbucks. (2018b). Learning and Development. Retrieved from
http://www.starbucks.com.hk/about-us/become-a-partner/learning-and-development
Statell, G. (2014). A Look Back At Why Blockbuster Really Failed And Why It Didn’t Have
To. Retrieved from https://www.forbes.com/sites/gregsatell/2014/09/05/a-look-back-
at-why-blockbuster-really-failed-and-why-it-didnt-have-to/#7c1b7ea71d64
Statista. (2018). Starbucks – Statistics & Facts. Retrieved from
https://www.statista.com/topics/1246/starbucks/
Sun, L. (2017). Are Starbucks' Political Statements Backfiring?. Retrieved from
https://www.fool.com/investing/2017/03/11/are-starbucks-political-statements-
backfiring.aspx
Tu, Y. T., Wang, C. M., & Chang, H. C. (2012). Corporate brand image and customer
satisfaction on loyalty: An empirical study of Starbucks coffee in Taiwan. Journal of
Social and Development Sciences, 3(1), 24-32.
Van den Hurk, H. (2014). Starbucks versus the People. Bulletin International for
Taxation, 68(1), 27-34.
Williams, J., Williams, M. D., & Morgan, A. (2013). A teleological process theory for
managing ERP implementations. Journal of Enterprise Information
Management, 26(3), 235-249.