Assignment:

Starbucks Returns to its Roots

Submitted to:
Dr. Iqbal Mehmood

Submitted by:
Hanan Abid

Roll # 182

Section B (MBA 1.5)

 Question # 1:

What factors are most likely to change when a company grows very rapidly, as Starbucks
did? How can these changes threaten the culture of an Organization?

Answer: Whenever a company grows that rapidly as Starbucks did, from starting with 11
stores in 1987 to 7,000 stores nowadays, a lot of factors change. First of all, a major factor that
changes when a company grows that rapidly is the organizational structure of the company. This
can be especially true when the organization begins to expand to other geographic regions and
the structure of the organization is spread out over many miles (as in the case of Starbucks). A
company may start out small, but, as time goes by, more employees may be hired, necessitating
the introduction of departmental managers to help create a managerial structure.

Additionally, an executive team may be required to run the various aspects of the business, and
there may be the need for middle managers who would report to the managers. What could
describe the above is; decentralization. Now, department managers and middle managers will be
necessary as it is impossible for top management to oversee all the stores.

Top management need to delegate some of its responsibilities and decision-making authority to
others. As more stores are located, the assets will grow and need to be financed.

This can be done by either debt or equity financing in which any company needs to decide its
appropriate approach. Starbucks started as a domestic US coffee shop and began to expand this
to other countries. It could have been possible that they found out that the American culture of
coffee in place did not adequately fit the host country’s culture. On the other hand, cultural
forces in franchise stores might have resulted in a more general culture for Starbucks overall. So,
the original culture of Starbucks might disappear as managers were confused whether to act upon
the old approaches to pursuit this original culture or new approaches. This is what CEO Howard
Schultz was noticing. Starbucks was missing its aura, its spirit and need to find back its soul as
the company had when it started in the US. The same thing could happen to other organizations.
 Question # 2:

Why might this type radical change process be easier for Starbucks to implement than it
would be for other companies?

Answer: The type of radical change used by CEO Howard Schulz to bring back the corporate
culture of Starbucks back to what it was has been relatively easy for Starbucks to implement.
This is due to the following reasons. As Starbucks expanded, the look of the stores in the US
were simply copied and used for the stores located in other countries. The same colors, setting of
tables and chairs, the counter, the mugs, the cakes, sandwiches etc. was used in all the other
stores. Customers get this same Starbucks experience everywhere they found themselves. The
baristas working for Starbucks all know what the ingredients of the variety of coffees and lattes
are and how to approach the customers in whatever country these baristas work. So, this makes it
easier for Starbucks to just use a single afternoon for all the stores to have training on how to let
the customers feel the true Starbucks experience. For this case of Starbucks you could speak of
radical change in a way that it is radical because the change have been implemented in 7,000
stores all over the world. As the change was merely to train the baristas in order to let the
customers feel the true Starbucks experience and to replace the espresso machines that blocked
the interaction between the customer and baristas.

Question # 3:

A great deal of the return to an original culture has been credited to Howard Schultz, who
acted as an idea champion. Explain how Schultz's efforts to change the Starbucks culture
fit with our discussion of culture change earlier in the chapter?

Answer: In this particular case of Starbucks the change that has been implemented was
planned change. Howard Schulz addressed this change as an intentional, goal-oriented activity
just how change has been discussed in this chapter. Howard Schulz its primary mission was
quality control, its goal for the change was the baristas to be trained in order to give the
customers that value the quality Starbucks offers the true Starbucks experience. This connects to
this chapter as the goal of planned change is to change employee behavior. Furthermore, this
chapter talks about ‘change agents’ who are responsible for managing change activities. Howard
Schulz is this change agent and acted as an idea champion. Idea champions are defined as people
who actively and enthusiastically promote the change and build support, overcome resistance,
and ensure it is implemented. Furthermore, these idea champions are willing to take risks and
feel confident about the whole change situation. Howard Schulz was willing to take the risk to
close all 7,000 stores for one afternoon in order to implement the change in each of the stores. He
was confident about the change to succeed in this one afternoon and it did. The change of
bringing back the culture to its roots of a neighborhood coffee shop entranced with the romance
of coffee has saved the company

Question # 4:

Schultz’s change initiative might succeed at another company that values customization
and high levels of customer service, but how would it need to differ at a firm that
emphasizes speed and efficiency of services?

Answer: Starbucks values quality over speed and is avoiding the feeling of mass production.
For Starbucks baristas the quality is provided by pouring every glass of espresso like honey from
a spoon and they do not make several drinks at once but are now in favor of slowly making each
drink for each customer. A company that also values customization and high levels of customer
service but emphasizes on speed and efficiency, needs a change initiative that differs from the
one discussed in the Starbucks case in the following ways. Since the emphasis is on speed, the
employees in the company (restaurant, coffee shop, bakery shop) need to be trained to handle
each customer quickly without looking hasty and making mistakes because of speeding up
certain things. The cues should be short as customers visiting these restaurants or coffee shops
value the fact that their orders are handled quickly and that they can enjoy their coffee or meal in
a short time. A good initiative would be a second espresso machine so that more drinks could be
made at once which raises efficiency. The same change initiative could be suitable for other
companies; however, the major thing that needs to be changed in this change initiative is the
training that is given to the employees.