Analyzing Contemporary Issues in Starbucks: A Business Report

This report provides a comprehensive analysis of contemporary issues impacting Starbucks, examining its history, organizational structure, products, and competitive landscape. It explores disruptive technologies like robotic technology, artificial intelligence, and data mining, and analyzes their impact on the company. The report includes SWOT, PEEST, and Porter's Five Forces analyses to assess the external and internal environments. It also investigates Starbucks' responses to disruptive forces and provides strategic recommendations for maintaining a competitive advantage. The report highlights the application of these technologies to various elements of the organization and discusses the implications of these changes, offering innovative strategies and recommendations for the future of Starbucks. The analysis covers the chosen disruptive technologies and their justification, along with insights into the application of these technologies within the organization, ultimately providing a perspective on Starbucks' responses and strategies for the future.

Running head: CONTEMPORARY ISSUES IN ORGANIZATIONS
Contemporary Issues in Organizations
Name of the University:
Name of the Student:
Author’s Note:

1CONTEMPORARY ISSUES IN ORGANIZATIONS
Table of Contents
Introduction......................................................................................................................................3
History of Organization..............................................................................................................3
Structure and People of Starbucks..............................................................................................3
Products and Services of Starbucks............................................................................................3
Main Consumer Segments and Competitors...............................................................................3
Vision and Goals of Starbucks....................................................................................................3
Chosen Disruptive Technologies or Business Processes.................................................................4
Justification the Ways in which Chosen Technology or Processes are Disruptive.........................5
The Disruptive Problem and Question........................................................................................5
Research on Disruptive Process and Technology.......................................................................6
SWOT Model.........................................................................................................................6
PEEST Analysis.....................................................................................................................6
Porter’s Five Forces...............................................................................................................7
Disruptive Process..................................................................................................................8
Disruptive Technology...........................................................................................................8
Application to an Element of Organization................................................................................9
Implications.................................................................................................................................9
Perspective Exploration..............................................................................................................9
Starbucks Response to Disruptive Technologies or Processes........................................................9
Response to Disruptive Technologies.........................................................................................9
Examples of Organizational Response to Disruption...............................................................10
Lessons Learned from Other Organizations Response to Starbucks........................................11
Implications and Perspectives...................................................................................................11

2CONTEMPORARY ISSUES IN ORGANIZATIONS
Disruptive Strategies and Innovative Recommendations..............................................................12
Disruptive Strategies.................................................................................................................12
Innovative Recommendations...................................................................................................14
Conclusion.....................................................................................................................................15
References......................................................................................................................................17

3CONTEMPORARY ISSUES IN ORGANIZATIONS
Introduction
History of Organization
Starbucks Company initiated its business operation in the year 1971 as a retailer and
roaster of whole bean and ground coffee, tea and spices in a single store within Seattle’s Pike
Place market.
Structure and People of Starbucks
Starbucks Company follows the matrix organizational structure that includes the
functional hierarchy, geographic divisions, product-based divisions and the teams. The company
has diverse group of employees that was recorded to be 277000 in the year 2017 that deliver
exceptional consumer experience (Saguy & Sirotinskaya, 2017).
Products and Services of Starbucks
The company offers exceptional range of products for its consumers to enjoy in store or
at home (Popkin & Hawkes, 2016). Such products include coffee, merchandise of coffee and tea
brewing equipments, freshly baked foods, tea and ready-to-drink coffee beverages.
Main Consumer Segments and Competitors
The target consumer segment for this company includes consumers belonging to 25 to 40
years of age belonging to high income group and another target consumer segment includes
consumers belonging to 18-24 years age of richer families (Schopfel, Roche & Hubert, 2015).
The major competitors of Starbucks are observed to include well-established companies like
Café Coffee Day, Dunkin Donuts, Barista and Mc Donald’s Mc Café those offer frequently
innovated products based on changing consumer preference trend (Walker, Decker &
McClements, 2015).
Vision and Goals of Starbucks
The vision of Starbucks Company is to nurture and inspire the human spirit focusing on
“one person, one cup and one neighborhood” at a time. The business goals set by this
organization includes positioning itself as a responsible company through maintaining a balance
between profitability and social conscience and to maintain a sustainable position through
offering exceptional and sustainably sourced coffee beans.

4CONTEMPORARY ISSUES IN ORGANIZATIONS
Chosen Disruptive Technologies or Business Processes
Two major disruptive technologies or business processes those are deemed to affect the
business operation of Starbucks Company in the industry for sustaining its competitive position
are explained under:
 Robotic Technology: Business process redesigning or constant improvement in the
internal processes of the business is observed to affect the coffee shop industry. Due to
constant changes in this industry regarding internal change process, the outdated business
strategies used by the coffee organizations will affect their competitive position
(Cobanoglu, Yang Shatskikh & Agarwal, 2015). Certain other technological trends in the
industry is observed to impact the business of Starbucks that includes application of agile
methodologies at scale, robotic technology along with Artificial Intelligence assisted
shopping and conversational commerce with adoption of connected devices along with
“Voice User Interface” (Corbo et al. 2014). The food and beverage service sector is
observed to include four major trends such as chat bots and applications those serve as
virtual assistants to respond to inquiries of target consumers along with the processes that
can easily customize consumer order. Technological advancements have also taken place
to include recommendation engines through which the coffee shop industry has now
made certain advancements in their business processes.
 Data Mining: Innovative data mining technologies are transforming the coffee shop
industry. The innovative changes within the coffee shop industry include optimized user
journeys, in-store digitalization, advanced payment options and digitized consumer
service. Introduction of a full-fledged digital ecosystem is necessary for the companies to
maintain a competitive position. Moreover, equipment innovation is also trending in the
food and beverage sector that increases flexibility and adaptability within the work
processes of the coffee shops (Cuerva, Triguero-Cano & Córcoles, 2014). Through
implementation of such new technology to maintain their rate of manufacturing steady
along with easing the technology, packing along with product delivery. The upgraded
industrial automation along with operational technologies with new architectures.
Systems for real-time decision making leveraging new sources of data. Converged
solutions along with distributed new interfaces such as tablets, smart phones along with
certain new technologies. Due to constant changes in this industry regarding internal

5CONTEMPORARY ISSUES IN ORGANIZATIONS
change process, the outdated business strategies used by the coffee organizations will
affect their competitive position and several opportunities with new technologies are
trending within the coffee shop industry.
 AI Technology: From increasing need for automation within the existing processes, AI
has entered landscape of traditional hospitality with an opportunity to improve hotel
reputation, increase revenue and take consumer experience to another level. The artificial
intelligence will offer several solutions through introducing intelligent chat bots and
voice-enabled services. In order to address changing consumer expectations, the coffee
shops feel the increased need for upgrading their operational system and services through
integrating intelligence based predictive analysis within the coffee shop industry (Corbo
et al., 2014). Artificial intelligence is transforming the way booking inquiries are
managed and the visitors are converted into patron consumers. The front desk coffee shop
employees is responsible for carrying out booking related queries that can be replaced
well with the conversational bots. Such intelligent chat bots are programmed to generate
stimulated conversation by means of ‘natural language processing” and “natural language
generator” in the native language that facilitates increased control along with concise and
effective interactions among humans and computing machines.
Justification the Ways in which Chosen Technology or Processes are Disruptive
The Disruptive Problem and Question
The disruptive innovation in the technologies and the business processes are greatly
observed in the coffee industry that increases the demand for premium coffee and snack products
which is majorly drive by several factors encompassing disposable income, per capita coffee
consumption, coffee pricing, attitudes towards health and demographics (Balasubramaniam,
Martinez-Monteagudo & Gupta, 2015). The disruptive question that is to be answered through
completion of this research is:
 What is the best disruptive technology solution that can provide competitive advantage to
Starbucks?

6CONTEMPORARY ISSUES IN ORGANIZATIONS
Research on Disruptive Process and Technology
SWOT Model
Strengths
 Fully or partially automated process
 On-time delivery or consumer
satisfaction
 Cost reduction
 Continuous improvement
Weaknesses
 5-10% error rate
 Quality checks
 Unstructured input for processing
 Performance variance all through the
system
Opportunities
 Process improvement
 A strong change management
 Data quality process system
incorporation
 Roadmap for future projects
Threats
 Cognitive process
 Unstable process
 Cash of system or hard disk
 Application downtime
PEEST Analysis
Political factors Tax policy and employment laws effect the
business operations of Starbucks. Moreover, laws
and regulations in other nations from where
Starbucks purchases raw materials (Gupta, 2013).
Economic factors Starbucks need to deal with increasing labor and
personal costs. The inflationary business
surrounding and falling profitability is resulting in
an increased stress for the company
(Koumparoulis, 2013).
Environmental factors Several Starbucks business practices concern the
international advocacy groups and activists. Certain
other environmental factors include rules and

7CONTEMPORARY ISSUES IN ORGANIZATIONS
regulations along with environmental issues at a
global level (Iglinski et al., 2016).
Social factors Starbucks can provide cheaper products in
consideration to demand of consumers (Barbara et
al., 2017). These social factors include changing
family patterns in USA and Europe and changing
values of population.
Technological factors Starbucks introduced Wi-Fi abilities through which
consumers can sip coffee and surf web along with
enjoying work. The company has also enabled
mobile payments (Zalengera et al., 2014).
Porter’s Five Forces
Competitive rivalry or competition The large number of competitor organizations and
low switching costs has strong force. Variety of
companies operating in the industry has moderate
force (Porter & Heppelmann, 2014)
Bargaining power of consumers Low switching costs and high substitutes
availability has strong force and the small size of
individual buyers have a weak force (E. Dobbs,
2014).
Bargaining power of suppliers Moderate size of individual supplies has moderate
force and the high supply variety and large overall
supply has a weak force (Cheng, 2013).
Threat of Substitutes Strong forces include high substitute availability,
low switching costs and high affordability of
substitute products (Delgado, Porter & Stern,
2014).
Threat of New Entrants Cost of operating business and the supply chain
cost have moderate force. Moreover, high cost of
brand development has weak force (Ghazavi &
Cheraghali, 2013)

8CONTEMPORARY ISSUES IN ORGANIZATIONS
Disruptive Process
 Disruptive robotic technology based business process that is trending in the coffee shop
industry is diversification of product portfolio and maintaining food and beverage
stocked through bringing their distribution centres sorted and sequenced that can rapidly
facilitate in re-stocking shelves in a single day. One such trending business process
development observed in the coffee shop industry is implementing “flow-through sorting
system” in order to make the task of re-stocking easier. This serves as an automated
storage along with retrieval solutions that has structure like wheels for moving around
automatically (Geum, Jeon & Lee, 2016).
 Artificial Intelligence based advanced business process is also facilitating most of the
companies operating within food and beverage sector to acquire the inventory in a rapid
manner and break it down to include transporting trays and order pallets. These are
observed to improve product quality which has an increased effect on consumer
satisfaction which can enhance business at an alarming rate (Martins, Rindova &
Greenbaum, 2015).
Disruptive Technology
 Artificial Intelligence facilitates in tailoring the process of product development for
several kinds of innovations and a company can offer itself an opportunity to develop
new product revenues along with tapping future opportunities. Considering the trend of
this disruptive innovation of AI trending in the coffee shop industry, companies are now
seeking to develop an innovative framework of breakout products development along
with consciously decreasing the exploration of disruptive opportunities (Huang et al.,
2017). Categorizing innovations through considering advanced product development
framework can serve as an effective way in making sure that the target consumers attain
products as per their expectations and that any organization seeking to innovative has an
effective system for the same.
 Robotic technology development observed in the coffee shop industry is implementing
“flow-through sorting system” in order to make the task of re-stocking easier. This serves
as an automated storage along with retrieval solutions that has structure like wheels for
moving around automatically (Huang et al., 2017).

9CONTEMPORARY ISSUES IN ORGANIZATIONS
Application to an Element of Organization
Robotic Technology is observed to be applicable to Starbucks in attaining improvement
of its declining sales margin. This disruptive technology will facilitate in implementing
innovative methods of rolling out services all across its coffee joints. In dealing with such issue,
Starbucks can implement this technology to modernize its product offering process through
performing simple functions such as creating beverages and brewing coffee in all its coffee
joints. Moreover, cloud computing process of data mining is also deemed to be an applicable
business development process in the business of Starbucks Company as it can facilitate the
business to improve consumer satisfaction along with restoring relationships through simplifying
process of consumer orders.
Implications
Implementation of Robotic Technology and Artificial Intelligence in the process of
product offering can provide Starbucks with decreasing their workforce overhead. Moreover,
implementation of cloud computing data mining applications can facilitate the company in
improving its coffee ordering process as it can recommend food and drinks items to consumers
and encourage them to try something new. These technologies can also facilitated the company
in developing a point-of-sale system that will be capable of identifying the target consumers
through their smart phones and serve them with preferred orders.
Perspective Exploration
The perspective towards implementation of robotic, AI and data mining or cloud
computing process and technology is observed to be highly positive as most of the major
organizations such as Barista and may other coffee joints. This is for the reason that through
implementation of such disruptive technologies has helped them in getting food delivery and
preparation automated that saves them time and to offer consumers with fine-dining experience
(Geum, Jeon & Lee, 2016).
Starbucks Response to Disruptive Technologies or Processes
Response to Disruptive Technologies
Starbucks Company can respond to such disruptive technology for bringing in “tsunami
of Change” in its business process and increase its sales margin. The company can use artificial

10CONTEMPORARY ISSUES IN ORGANIZATIONS
intelligence technology in connecting with all its consumers for increasing sales. It can alo
develop cloud based “digital flywheel” that can offer personalized consumer experience
worldwide. To enhance consumer service, Starbucks can personalize its consumer service
through developing its e-mail program. It can develop a real-time artificial intelligence based
personalized engine that can be linked with reward cards spending data that can facilitate
automatic generation of 400,000 personalized variants each week (Cuerva, Triguero-Cano &
Córcoles, 2014). Cloud computing based data mining system can facilitate in developing
effective ownership models through getting major pieces of data from all such stores all across
the world by the cloud system. This encompasses enhancing real-time order management along
with facilitating offering better tracking processes with increasing visibility of the incoming
orders. Moreover, cloud computing can also facilitate in innovating business processes can
facilitate the company to respond to market competition through constantly enhancing efficiency
of its business technologies. In responding to the market competition from the disruptive
technologies, Starbucks can use cloud computing data mining technology the company can
organize work in a manner that it can organize the work in a manner that can address increasing
demand (Martins, Rindova & Greenbaum, 2015).
Examples of Organizational Response to Disruption
In response to technological business process disruption within the food and beverage
industry, it has been observed that AI technology is used by "CHOPCHOP" in guiding their
users through the cooking orders till its preparation step-by-step. This food joint also offers the
opportunity to its users a list of ingredients along with coordinating with the suppliers in
delivering food to consumers’ doorstep. Moreover, an effective instance of cloud computing use
for data mining is observed in "Briggo Company" where they maintain a pool of computing
resources in support of application workloads which can be assessed everywhere and facilitates
in personalizing account of consumers and along with saving their favorites so tht they exactly
obtain the drink they desire within minutes. Moreover, an effective example of implementation
of Robotics in the food and beverage industry is observed in case of Briggo's robotic technology
in which they have developed an industrial robot which will memorize orders of the consumers
to make it personalized for each of them. This technology of the company can facilitate its
consumers in placing their order on touch screen built within wooden facade of the robot and
they can key in an emergency order for cappuccino order by means of companion i-phone

11CONTEMPORARY ISSUES IN ORGANIZATIONS
application.
Lessons Learned from Other Organizations Response to Starbucks
From observing the practical implementation of disruptive technologies by companies
such as "CHOPCHOP" and "Briggo Company" and the lessons learned from their efficient use
of AI, cloud computing and robotic technology has facilitated in developing suitable
technological response by Starbucks. From analysis of the technology used by these companies,
Starbucks can focus on using robotics in trying to improve its coffee cart though mechanization.
Based on the consumers’ selection, this technology implementation can facilitate in calculating
the quantity of ingredients, Moreover, it can also make efficient use of AI technology in setting
the parameters that will include milk fat, temperature, size and additional additives that can
develop a fine quality brewed coffee for its consumers with technology. Moreover, based on
technological improvements in data mining by Briggo, Starbucks can make effective use of
cloud computing to manage its data in order to transform its coffee experience (Popkin &
Hawkes, 2016). Moreover, this technology implementation can also be used by Starbucks to
attain competitive edge in the market through attaining better management of big data.
Moreover, Starbucks can also respond to such disruptive technology prevailing within the market
through implementing "Software as Service (SaaS)" which is a subscription to cloud-hosted
software, which they can use without making efforts to maintain the software or hardware.
Through using this cloud computing technique, the company can modify its "Point of Sale
(POS)" that can facilitate the coffee joint in reducing its on-site malfunction risk that can affect
its overall payment system.
Implications and Perspectives
It has been observed that there are several implications of implementing disruptive
technologies in Starbucks focused on the ongoing market trends. For instance, effective use of
artificial technology implementation can facilitate Starbucks in attaining advantage of improving
consumer experience and maintain sustainable position in the marketplace. Moreover, managing
big data with cloud computing can also have positive implications on the company's managing
costs and operational systems through automating the operational aspect of the company. Cloud
computing can also facilitate in innovating business processes can facilitate the company to
respond to market competition through constantly enhancing efficiency of its business