Starbucks Case Study


StarbucksCase Study

StarbucksCase Study

Theimportance of profit making cannot be gainsaid as far as the survivaland sustainability of any business is concerned. Indeed, businessesare only capable of competing in the long-term if they have thecapacity to make substantial revenues from their efforts andinvestments. Part of the efforts to increase the sales of a companywould entail expanding its branches so as to have a wider marketreach. While this may be the case, it is evident that the expansionefforts of Starbucks were a complete failure as a result of too highconcentration on the areas where branches had already been opened.This meant that the marginal returns for the company’s investmentswere reducing, as the varied branches were competing against eachother, meaning that the market remained the same while the capitalused to establish them was still eating into its finances. Thisresulted to losses, closing of numerous branches and subsequently,the retrenchment of a large number of the workers. Unfortunately, thereplacement of the CEO with Howard Schultz did not change mattersmuch as it is evident that the managers and employees were unwillingto give him the right information, instead choosing to lie to him soas to suit his ideas or what he wanted to hear. There are varied waysthat this inefficiency could be corrected.

First,he must create avenues through which the managers and employees willgive him the appropriate information. This can be done by allowingfor a forum through which the employees can do this anonymously. Itis evident that they are afraid of having the CEO castigate them oreven rubbish their ideas pertaining to what would be done. Suchanonymous avenues would eliminate the fears of castigation andprovide real data and information that would be helpful indecision-making (Frey,2002).

Onthe same note, it would be imperative that he decentralizesdecision-making pertaining to individual branches to the individualmanagers. It is noteworthy that as much as some fundamental decisionsmay be made by the managers at the top or the CEO, they may bedifficult to customize in line with the locations or environments inwhich the varied branches are situated. It goes without saying thatthe individual managers know their environment and recognize what mayor may not work in them (Frey,2002).In essence, they know the applicable and inapplicable strategies intheir specific areas. This decentralization would allow for themanagers to take control of the areas under their jurisdiction, inwhich case they would be held accountable for any failures (Frey,2002).This would mean that they would have no option but to put in placethe appropriate information in decision-making so as to ensuresuccess.

Onthe same note, it is imperative that Howard establishes a unitcharged with the responsibility of decision-making. He could be inthis unit as the CEO, but that should not give him an upper hand onmatters under debate. This would allow for proper flow of informationand the making of decisions in a manner that reflects the reality onthe ground (Frey,2002).Further, it would eliminate the possibility that decisions would notbe made in his absence as the fact that every individual would havean equal say in the decisions affecting the company would mean thatthe input of all members is equally important. In instances where themanagers are unable to do this, it may be imperative that he getspeople who are third parties but with substantial experience in thefield or industry.


Frey,B. S. (2002).&nbspSuccessfulmanagement by motivation: Balancing intrinsic and extrinsicincentives : with 11 tables.Berlin: Springer.