Analysis of Change Management at Starbucks in the Australian Market

This report analyzes Starbucks' unsuccessful venture in the Australian market, attributing its failure to ineffective change management strategies. The report begins with an executive summary and an introduction to Starbucks' global presence and its challenges in Australia. It identifies both internal factors, such as differing customer service preferences and inadequate employee training, and external factors, including cultural differences and inappropriate pricing strategies, as contributing to the company's downfall. The report then proposes change processes for managers and employees, specifically recommending Kotter's eight-step change model to address the identified issues. It offers detailed recommendations for managers, employees, and similar companies, aimed at improving their approach to market entry and change management. The analysis utilizes change management models, such as Lewin's model and Kotter’s eight-step model, to provide a structured framework for understanding and addressing the challenges faced by Starbucks. The report concludes by emphasizing the importance of understanding local market dynamics and adapting business strategies to ensure success in international expansions.

Running head: CHANGE MANAGEMENT
Change Management
Name of the Student
Name of the University
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Executive Summary
The report has thrown light on analysing the process of change management which has been
implemented by Starbucks, however they have been unsuccessful in the market of Australia.
Furthermore, it has been noticed that there were different internal and external factors which
have affected the overall convenience of the company in a negative manner. Moreover, with
the help of the different change management models such as Lewin’s model and the Kotter’s
eight step change model have been implemented which helped in improving the overall
situation effectively. Lastly, the different recommendations have been provided which helped
in improving the overall status of the company appropriately.

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Table of Contents
1.0 Introduction..........................................................................................................................2
2.0 Causes of the Problem..........................................................................................................3
2.1 Internal Factors.................................................................................................................3
2.2 External Factors...............................................................................................................4
3.0 Proposition of Change Process for Managers and Employees.............................................5
4.0 Recommendations................................................................................................................8
4.1 Recommendations for managers......................................................................................9
4.2 Recommendations for employees....................................................................................9
4.3 Recommendations for similar companies......................................................................10
References................................................................................................................................11

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1.0 Introduction
Starbucks Corporation is one of the American organizations of coffee along with
coffeehouse chain. The company was founded in Seattle, Washington in the year 1971 by
Jerry Baldwin, Zev Siegl and Gordon Bowker. As of the year 2018, the company operates in
more than 28218 locations worldwide (Starbucks.com, 2019). The areas served by Starbucks
is in the entire worldwide and the key people involved in the organization is Myron E.
Ullman who is the chairman of the company. The number of employees working in Starbucks
is 238000 and there has been huge increase in the revenue which is about US$22.387 billion
till the year 2017. The products which are sold by Starbucks includes coffee, beverages along
with baked food products and sandwiches.
The problem which has been faced by Starbucks in the present scenario is relating to
the cultural issue faced by Starbucks after expanding their business operations in the
Australian market. The major reason for the failure was that the company could not match
with the culture of Australia and the customers in the Australia prefer different types of
ambience along with there is differences in the tastes of the coffee and other food items
which are sold by them. The crucial reason was in relation that the Starbucks organization did
not pay attention to the optimization of the product and it affected their profitability in the
competitive market of Australia (BusinessInsider.com, 2019).
The main aim and purpose of the study is to identify the changes which have occurred
in the Starbucks Corporation along with proper analysis of the internal and external factors
which are the major causes of the change. With the implementation of the change
management models, it will be helpful in recommending the different aspects which will be
helpful for improving the issue with the help of the change management models and theories.

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The recommendations are required to be provided for managers, employees along with
similar companies which will be helpful for improving the overall scenario appropriately.
2.0 Causes of the Problem
There are different causes of the problem which has affected the reputation of
Starbucks along with the sales and revenues is due to the cultural differences and the
behavioral aspects of Australian market which is inclusive of both internal and external
factors.
2.1 Internal Factors
As per the internal factors which are concerned, it can be identified that the internal
process of serving the customers were different in United States and Australia. In United
States, the customers prefer the self-serving approach which was not acceptable in Australian
economy. As the customers in Australia preferred that they are provided with the food at their
table and they prefer the most sophisticated approach (Al-Haddad & Kotnour, 2015).
The entire management of the company Starbucks mainly focused on opening
different branches over the space in the last few months and they did not create any kind of
survey in understanding the viewpoints of the customers and their tastes and preferences on
the beverages. The other issue which was highlighted in the internal process was that the few
employees were hired in Australia, however they were not able to adopt to the changes of the
organization.
Due to the same, there was resistance to change among the different employees
which affected the reputation of the organization. The main issue was the poor
communication and lack of engagement among the employees which affected the overall
change management process (Waddell, Creed, Cummings & Worley, 2017). On the other

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hand, Starbucks did not train the employees and there was gap between the communication
process between the managers and employees. With the help of the Lewin’s change
management model, Starbucks was unable to unfreeze the internal situation of workplace
as they were not able to determine the change which is required for improving the internal
organizational structure in Australia (Pugh, 2016). The company did not feel the need for
change and it affected the overall profitability of the firm negatively.
2.2 External Factors
As per the external factors are concerned, the main issue was the approach of the
company to maintain their business in the Australian market. Starbucks was unable to
understand the different demands of the customers as they followed the different methods
which they followed in United States of America and it affected their brand image in the
market.
Unfortunately, what worked for Starbucks in the US market were not of huge
importance in the Australian market as the Australian customers prefer the different coffee
and coffee-based smoothies which are preferable. Furthermore, the pricing strategy was not
appropriate as the premium pricing strategy did not work for the Australian economy and it
affected their overall profitability.
Due to the external factors, it can be identified that the customers felt such issues and
the customers felt that the change is the sign of instability at Starbucks and it did not
succeed in the market of Australia as well which led to close down of the stores in the market
(Noe et al., 2017). In the respective scenario, Starbucks was not able to change and refreeze
the external situation as per the Lewin’s change management model, as it was noticed that
the Australian customers did not prefer the taste of the different products sold by them and
they could not anchor the changes in the culture of Australia as well (.

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Therefore, from the internal and external changes which have occurred in the
Starbucks Corporation, it has been found that there was lack of adjustment among the
company in adopting to the changes of the Australian economy. It was the main reason of the
failure and the other factor which was affecting the growth of the company is that the
preferences of the customers were not provided with proper importance that affected their
profitability as the stores were closed down and it affected the brand image of Starbucks
negatively in the entire competitive business environment.
3.0 Proposition of Change Process for Managers and Employees
Change Management is the process which is necessary to be conducted for the
successful organizational transitions. The purpose of the change management process is to
control the overall lifecycle of the different changes which will be enabling the beneficial
changes which will be made with minimum disruption in IT services. Change is the planned
process which is required to be followed by the Starbucks employees and managers in order
to improve their internal and external process (Hrebiniak, 2006).
In order to improve their status in Australian economy, the managers and the
employees of Starbucks can adopt the Kotter’s 8 Step change model which can be helpful in
focusing on the people and less on the change which is required to be adopted. The theory of
Kotter’s works in the following manner:
 Creating a sense of urgency
 Building a core coalition
 Forming a strategic vision
 Getting everyone on board
 Removing barriers and reducing friction
 Generating short-term wins

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 Sustaining acceleration
 Anchor the Changes in Corporate Culture
Firstly, the idea of change is necessary for the company as it will be helpful in making
them successful in performing the different operations. In case of creating sense of urgency, it
is required for the management to make the employees understand the need for change along
with identifying the requirements of the country wherein they are expanding their business
(Hickman & Silva, 2018). In case of Starbucks, the management should have surveyed the
different tastes and preferences of the Australian customers before setting up the business.
However, the main motive of Starbucks was to bring change by expanding the business in the
market of Australia, however they did not analyse the choices of customers and it was the
main loophole in decrease of revenues in the market.
Furthermore, while building a coalition, it is necessary for the employees and the
managers of the organization are required to convince the stakeholders and convince them of
the need of the change (Doppelt, 2017). However, in case of Starbucks it was not done as the
company had no idea on the tastes and preferences of the customers which affected their
brand image and this led down to the close down of the stores. On the other hand, the
employees who were hired for the stores in Australia were not having any knowledge on
handling the activities as they were unaware of the process and it led to resistance to change
among the employees as well.
Additionally, forming a strategic vision is necessary in which the changes are required
to be defined and the vision which is aimed by them. However, in case of Starbucks, they did
not write down the different values which are required to be achieved by them in Australian
economy (Cook, 2015). The communication of the vision was not done by Starbucks which
created huge negative impact on the brand image. In order to improve the scenario, Starbucks

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required to communicate the vision to new employees and the customers of the Australian
economy by convincing them and providing different discounts and offers which will make
them feel essential.
While implementing the change and appointing the new employees in the
organization, it is the sole responsibility of the company to get everyone on board which is
inclusive of the front-line employees (Cook, 2017). However, in case of Starbucks, there was
no such meeting and the customers were not informed about the different aspects which were
followed as there was no such survey conducted. Starbucks could have improved the overall
position by creating open feedback options for the employees and the customers at Australian
to gain their views on the items which are being introduced in the list of the Starbucks.
There should be reduction of the barriers and frictions while implementing the
changes as it will provide them access to the changes which are being done. However, in
Starbucks, there were barriers and it blocked the progress of the change as well (Chang,
2016). While operating the Starbucks stores at Australia, there were no such training
provided to employees and it affected their morale and overall productivity of the
organization negatively. Starbucks could have handled the situation by holding back the
changes and understand the necessities of the customers in the Australian market.
The generation of short term wins is essential as to improve their process which will
be improving the brand image of the company as well. However, Starbucks did not divide the
long term in to short term goals that affected the process of change management (Cândido &
Santos, 2015). Starbucks could have improved the overall process of change management by
making the employees analyse the changes and it would have been proved to be successful
for the company.

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Sustaining the acceleration is one of the other aspects which is required for analysing
the success or failure which will be gained by the team. However, in terms of Starbucks,
there were no such sustaining of acceleration and it created huge negative impact on the
profitability of the company. Starbucks could have improved the process by sustaining their
change through becoming vigilant which will be the initial motivation to improve morale of
employees and increase the presence of customers in the market as well.
Lastly, anchoring the changes in the corporate culture is the other aspect which is
required to be maintained by companies as it will reflect in the culture of the company.
Furthermore, the updating of the formal processes can be reflected in the change and there
can be promotion of the changes which will endure the company to move forward
(Altamony, Al-Salti, Gharaibeh & Elyas, 2016).
Therefore, from the above aspect, it can be identified and analyzed that the change
management is one of the most essential aspects which should be implemented by Starbucks,
however with proper implementation of the steps and there can be creation of urgency for
both employees and the customers which will be creating alternation for interacting with the
change and improve their brand image by increasing the overall revenues of the company in
comparison to the other competitors in the market. The first few stages of the Kotter’s change
management model will be setting foundations for the creation of sense of urgency and
become more significant in their operations.
4.0 Recommendations
After the overall analysis of the change management process, there are different
recommendations which can be provided to Starbucks as to improve their overall status of the
company in the Australian market. In adopting the change management process, it is essential
for the company to adopt few aspects which will be beneficial in improving the process of

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change management appropriately (Altamony, Al-Salti, Gharaibeh & Elyas, 2016).
Communication is the key element which should be adopted by the managers and employees
as to improve the process and it will be effective in bringing success in the organization as
well.
4.1 Recommendations for managers
In case of the managers, they should be able to conduct an external environment
analysis of the country wherein they will expanding their business. In case of Starbucks, the
company needs to analyse the external environment of the organization in such a manner
which will be helpful for them to implement their business activities. Furthermore, the
management of Starbucks needs to conduct survey among customers of Australia to
understand their tastes and preferences which will be beneficial for the growth of the
company in the competitive business environment.
On the other hand, Starbucks needs to appoint employees who are based in Australia
as it will provide the company with the scope to learn about the different kinds of preferences
of the customers and improve the overall status of the company. By providing such support to
the employees, there will be increase in morale of the employees and the possibility of
unsuccessful change management is reduced within the company as well. With the effective
kind of change management process, it will be lowering the risk associated with change and
there will be positive brand image of the company in the new country.
4.2 Recommendations for employees
On the other hand, for the employees, they should understand the requirement of the
change management process. In case of Starbucks, the company should be appointing the
Australian employees who will be having knowledge on the different preferences of the
customers based out at Australian economy. Furthermore, by hiring such employees, it will

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be creating an opportunity for the development of the best practices along with leadership
development that will be essential for the growth of the firm. The employees who will be
hired are required to be provided with the different trainings which will be helpful in
managing the tasks appropriately without much issues and it will generate success for the
organization.
As Starbucks tries to expand their business in Australian economy, the trained
employees of the Australian society will be essential for increasing morale of the staffs and
they will be understanding the change management process which will make the staffs feel
supported and understand the process of the overall change which will be essential in
reducing the unplanned change. Additionally, the employees at Starbucks can serve the
customers as per the basis of the etiquette which is being followed by the customers in
Australia which will improve their overall brand image in the market of Australia and gain
competitive advantage.
4.3 Recommendations for similar companies
Lastly, in order to improve the change management process of the other similar
companies, it is essential for the company to follow the different steps which will be helpful
in improving the overall brand image and the change management is successful as well.
Firstly, communication is the key aspect which should be followed by the company as
it will remove the different obstacles which are being handled by the firm. The employees
working in the organization should be involved in the process of change management as it
will be creating an environment which is trustworthy and employees will be provided with
supportive working environment as well.
Furthermore, the change management process should be communicated to the
customers as well which will help the company in providing support which will be beneficial