Analysis: Starbucks' Transformation and Renewal Case Study

This case study examines the transformation and renewal of Starbucks Coffee Company from 2008 to 2014, under the leadership of CEO Howard Schultz. It analyzes how Starbucks navigated the Great Recession and intense competition from companies like McDonald's and Dunkin' Donuts, focusing on investments in new products, organizational capabilities, and customer experiences. The study highlights problems such as brand dilution, declining employee morale, and the impact of the financial crisis on consumer behavior. It explores strategies like developing instant coffee, leveraging social media for customer engagement, and improving customer service. Recommendations include prioritizing customer feedback and monitoring the transformation's performance through a 2:1 investment to profit ratio. The case offers insights into management, restructuring, innovation, customer service, and entrepreneurial vision.

Running head: STARBUCKS COFFEE COMPANY: TRANSFORMATION AND RENEWAL
Starbucks Coffee Company: Transformation and Renewal
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2STARBUCKS COFFEE COMPANY: TRANSFORMATION AND RENEWAL
Case Argumentative Essay
“Starbucks Coffee Company: Transformation and Renewal”
This particular case study is about company named as Starbucks where the title is
Transformation and Renewal (Koehn et al., 2014). The case study analyzes the turnaround as
well as reconstruction of Starbucks Coffee Company from the year 2008 to 2014 that was led by
CEO and co-founder named as Howard Schultz. In addition, this case study offer managerial as
well as individual with a chance to inspect in depth on how Schultz and his team had saved
Starbucks from near-collapse by investing in a range of new products, organizational capabilities
as well as customer experiences as it is designed to make business fit for enduring achievement
in a unstable worldwide financial system. It is set against backdrop of Great Recession where the
case study deals with the impact of extraordinary significant shifts in customer expenses as well
as self-assurance and new competitive forces on Starbucks transformation. Therefore, the case
study concluded by analyzing own leadership journey of Schultz where the lessons are learned
individually during conversion of Starbucks on the national stage for redefining the roles as well
as accountability of a community business in the 21st century (Koehn et al., 2014).
After studying the case study, several problems are identified where it is noted that
Starbucks failed to maintain brand personality because expanded operations. Starbucks faces
problem at the time of maintaining motivation levels as well as morale of managers. The
company faced intense competition in the coffee industry where they had to cut profits as well as
market share of the company. During financial crisis, it has deteriorated the buying behavior in
the US market. Therefore, dilution of brand image was noted because of commoditization of the

3STARBUCKS COFFEE COMPANY: TRANSFORMATION AND RENEWAL
product (Koehn et al., 2014). Most of the managers show no interest in their work. They are only
interested in gross margins rather than core values of the company.
It is properly based upon the extensive interview that was conducted with Schultz and
other Executives of Starbucks from the year 2011 to 2014 where the present case study offers a
wide range of fundamental lessons on aspects such as management, restructuring, innovation,
managerial alteration, customer service as well as strategy and entrepreneurial vision.
Schultz had properly highlighted the main loopholes in the present practice of business.
Here the company aims at gathering high profits but the brand image and value proposition
declined because the company has lost brand positioning. The company needs to solve this issue
by setting short-term goals by rebuilding as well as revitalizing customer experience. It is
important for the company to find ways to compete with the competitors and sustain the market
share by providing instant coffee powder with relatively low price for capturing the lost market
after the period of recession (Koehn et al., 2014). It was found by Schultz on visiting stores that
the spirit of Starbucks was missing.
For a given period of time, it is noted that Starbucks faced stiff competition from
McDonald as well as Dunkin Donuts as it has lot of market share from Starbucks operations
because of low process and uniformity of aroma and taste (Koehn et al., 2014). It is because of
the emergence of social media and digital media in the US, the company mainly engages as well
as involve their customers by way of maintaining customer relationship and retention in the near
future.

4STARBUCKS COFFEE COMPANY: TRANSFORMATION AND RENEWAL
Starbucks has strong brand image as well as market penetration in the US market by
enhancing or developing long-term relationship with the customers. In addition, the company has
strong financial cash flows where they can take risk of closing down 7000 stores in the
marketplace (Koehn et al., 2014).
It is recommended to Starbucks for implementing the strategy by developing a low-tier
powder coffee that help in sustaining the aroma as well as freshness of the coffee and
synchronizes with the customer behavior. In addition, Starbucks need to engage with the
customer base by using social media platform for creating significant impact on the custom as
well as building strong relationship based on the service personalization. The company should
take feedback from the customers where they can get ideas and complaints that will help in
understanding the needs, trends and expectations.
At the time of monitoring as well as evaluating the transformation and renewal project,
Starbucks will maintain 2:1 investment to Profit ratio for single stores for analyzing the
performance (Koehn et al., 2014). In addition, Starbucks need to develop a strong check on the
level of performance and develop close relationship with the customers.

5STARBUCKS COFFEE COMPANY: TRANSFORMATION AND RENEWAL
Reference List
Koehn, N. F., McNamara, K., Khan, N. N., & Legris, E. (2014). Starbucks Coffee Company:
Transformation and Renewal (Watertown, MA)