Growth Destroyed Brand Value
Starbucks Corporation is an international coffee and coffeehouse chain based in United States.It is currently the largest coffeehouse in the world.However, in 2007, a leaked internal memo written by founder Howard Schultz has revealed that the brand value of Starbucks was no longer as good as it was when in the golden age of the company in customers and has faced a series of problems.
As a consequence, I now have been assumingly appointed by the senior manager to be in charge of the case, which requires me to identify the problems the company has faced and provide consequent recommended solutions; and authenticated to provide strategies in order to recreate and restore the brand value in customers, which needs me to point out the current stakeholders of Starbucks and offer the better approach to make connection and communication with them.
The case is responsibly investigated and the report related to the case is presented by me who assumed to be assigned by the senior manager of Starbucks to be in charge of the case. * Identification of the problems and presentation of the analysis report on the reasons of issues by acquiring and assessing the diverse types of information and knowledge through various sources. Inadequacies and weaknesses within the organization are included in the report. Problems identified are as follows.
First, it was hard to maintain the glory of Starbucks as before and there was a tendency to the loss of Starbucks’ brand value. Moreover, Starbucks’ customer traffic has a slowdown therefore profits of Starbucks tend to decline to 28%, according to the previous sales revenue. To an extent, the brand culture of Starbucks was at the bottleneck, as customers cite that the company is focused on maximum profit earning instead of brand value. Reasons to these problems can be analyzed as following.
First, the buildup of infrastructure which supports Starbuck’s growth resulted in bureaucracy. (media. corporate-ir. net) This could be the reason why Starbucks found that it is hard to maintain the glory as old times. Information can be found through the type of quantitative information such as Starbucks’ annual financial reports which issued to Starbucks Official Website on the Internet as formal information source. It is therefore a secondary research which has been conducted by using the Internet.
Second, it is because the lost the focus on the customer. It is the reason that Starbucks has a slow traffic on its customers. In other words, the customers were declined. This happened due to, first; the early customers who adapted and valued Starbucks’ atmosphere and relaxing over quality coffee recognize themselves as a group of minority that the company mainly focused on those grabs and go type of customers; second, there are too many new products introduced; third, new stores opening and new products launching made superficial growth. (blogs. hbr.org)
The types of information which relates to the reason could be identified as the service and past information, through which the trend of customer traffic can be clarified. The information can be acquired through the sources of primary and customer information. Lastly, fail to commit to the continuous and creative enhancement of the Starbucks Experience. Reasons for brand value loss, which is an identified problem, from Starbucks could be found. As the identification through various information types, strategic and future information can be the types that used to clarify how the problem is there.
These two types of information can be gathered from the sources of internal and unofficial secondary information data. Alternative solutions for solving the problems. The solution currently taken by Starbucks is to “transform Starbucks for the future by embracing our rich heritage and renewing our focus on coffee as our core. ” (media. corporate-ir. net) It involves “introducing new, exciting products and programs to our partners, and store enhancements to increase our focus on the customer. ” (media. corporate-ir.net)
Furthermore, the solutions taken involves the closure of 600 Starbucks stores in the US. (blogs. hbr. org) However, as the problems identified are not only limited to those solutions as previously mentioned, there could be an expansion to those solutions for solving the problems in a more flexible approach. Therefore, Starbucks could be suggested to review and rebuild the Starbucks Experience program for its customers. Even the focus of the company is on coffee as a fundamental one, innovations still need to be done in relation to customers.
New products and experiences would be debuted in Starbucks’ coffeehouse for customers to actually get the feeling that it’s all for them and made enjoyment through it. As a result, initiatives of recalling the creativity of the company should therefore be taken as customers and partners are reminded such step the company taken. Recommendations for future improvement to Starbucks relating to information and knowledge management. It is recommended that, in order to make future improvement of the company, Starbucks could consider these following methods of information and knowledge management as their candidate options.
Given the current ability of how Starbucks deal with information, the information system which could be used to improve Starbucks’ information accessing abilities is the Management Information Systems (MIS). The MIS provides a chance for Starbucks to transform data from internal and external sources into information. For Starbucks, in a board meeting in which the CEO, Howard Schultz, has been questioned about the lack of profitability, he has cited the importance of such system by saying, “… we’re going to keep losing money until we can do three things.
We need a computer information system sophisticated enough to keep track of sales in hundreds and hundreds of stores. ” (www. mhhe. com) For that reason, by applying the MIS, the expectation of such computer system can be fulfilled that enable the management incorporate appropriate information into decision making processes. Another additional method for the company can be the implement of the Decision Support Systems (DSS). The DSS is beneficial when there is a lack of interpersonal communication or the company is becoming less competitive in its business. For Starbucks, 2. The decisions and recommendations have been adopted by Starbucks.
They planned to retain customer loyalty and respond to rumors by improving customer service. Therefore, the job of me is listed as follows. * Identification of the personnel, including customers, stakeholders and other contacts, with the relevance to business relationship of Starbucks. Starbucks’ stakeholders can be identified as employees, customers, suppliers, farmers, shareholders, governments, community members, environmental groups, activists and so on. These stakeholders of Starbucks have been specified as follows. – Employees: According to the record, Starbucks has approximately 137,000 employees worldwide.
Their jobs are not solely keen on the coffee shops’ operations which are located around the globe; moreover, they participated in a series of voluntary programs. For example, as the 2005 struck of Hurricane Katrina in New Orleans, United States, employees of Starbucks participate in the reconstruction of New Orleans. They worked on various projects, including houses, planting trees and an urban garden. (en. wikipedia. com) Their efforts helped Starbucks to make a positive effect on its public relations in business. – Customers: These are the people who constantly visit the store of Starbucks.
Enjoyment of their trip could be of extraordinary importance to the company. As for the nature of customers, Starbucks provided different kind of methods for them in order to make contact more easily and effective with them, such as phone, regular mail or e-mail services. These could be used as feedback channels for monitoring the company’s performance as a fundamental method to Starbucks’ business. – Suppliers: It is essentially important that to make sure Starbuck’s suppliers fully aware of the needs required by the company and keep a permanent and positive relationship with qualified ones.
Therefore, the Starbucks Coffee Sourcing Guidelines (CSGs) are issued, which have ended the company’s previous two-year pilot. The CSGs basically “aim to set standards for producers, which, if achieved, guarantee a premium price for their coffee crop. ” (www. greenbiz. com) As a result, in order to successfully get the premium price, the suppliers must make sure that they have made the checking on their own to meet the requirements of the Guideline, which also includes additional taste tests by Starbucks.
This is an endeavor made by Starbucks in its business that to keep the constant high quality on its brand through suppliers. – Farmers: Fair trade has played an important role in this kind of stakeholders. As a matter of fact, Starbucks purchases coffee from farmers in 29 different countries. Once farmers have achieved multiple qualifications which set down by the Fair Trade Foundation and Starbucks practices, the company will therefore buy their coffee at a higher than market price and make sure of the contentious purchases in the future. (www.treehugger. com)
Resulting from this, the farmers get more stability and security on whether or not their crops will be sold and, as mentioned previously, they are able to get the premium price if they followed the Starbucks Coffee Sourcing Guidelines. This is not only for making sustain supplies in Starbucks’ business, but also for farmers’ benefits and their motivation on supplying quality coffee corns. – Shareholders: Starbuck’s shareholders will be given dividends and they have the right to vote on the company’s initiatives. – Governments:
Issues of Starbucks sometimes need the support of municipal governments. – Community members: “Every Starbucks is a part of community. ” (www. starbucks. com) This is a belief held by the company. In other words, Starbucks believes that being good neighbors and helping them thrive would be the commitment wherever we do business. – Environmental group: As we all are living on the same and only planet, ecological considerations must be taken. There are indeed some customers of Starbucks who care about environments ask about the paper cups used.
In struggling with reducing environmental impacts by the company, these questions could be answered, not only for the customer in the business but also for the earth we live in where we run business. Therefore, in order to accurately and adequately spend the time and money on environmental issues, it requires the partnership of the environmental groups for support. – Activists: Consumer activists are the people who could give the up-to-date information on Starbucks activities through a range of Internet communication tools, such as Facebook, Twitter, MySpace and other online communication services.
Development of business networking, by appropriate methods, from the contact made with the identified sources. – Business networking with stakeholders can be formulated as shareholders meeting. By definition, a meeting is “a group of people coming together for the purpose of resolving problems and making decisions. ” (Management 2004: 502) As for Starbucks, the shareholders’ meeting, as always, is organized by the company that encourages attendances of its shareholders every year. (www. starbucks.com)
The meeting can either be attended on-spot at a chosen place by the company or as convenient as logging on to a webcast of the meeting on the Internet, wherever you are. In this way, shareholders of Starbuck are given the chance to acquire a review of the company’s recent performance, vote on some business proposals and ask some questions they have in mind with answers given. – Business networking with stakeholders could be formed through Internet by the Starbucks Digital Network.
The Starbucks Digital Network, in partnership with Yahoo!, The Economist, ESPN Insider and other websites yet to be established, create the opportunity that, by serving up a collection of news, entertainment, lifestyle and other channel contents, a dynamic and flexible way to make a business network. (www. sjrtmdl. org) In spite of a series of channels which are included in the network, a section called My Starbucks Idea virtually made the innovation endeavors to anyone, who can use Internet and are interested in Starbucks business, to participate with their spear time favorably fulfilled and their valuable ideas given for the company.