Running Head: MANAGEMENT AND LEADERSHIP

Marketing Management and Leadership Practice in Starbucks

LUCIE MCADAMS
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Table of Content
Introduction ................................................................................................................................ 4
Purpose of the Report ............................................................................................................. 4

Starbucks ................................................................................................................................ 5

Situational Analysis ................................................................................................................... 6

Current Situation .................................................................................................................... 6

PESTLE Analysis ................................................................................................................... 7

Political Factor .................................................................................................................... 7

Economic Factor ................................................................................................................. 8

Social Factor ....................................................................................................................... 8

Technological Factor .......................................................................................................... 8

Legal Factor ........................................................................................................................ 9

Environmental Factor ......................................................................................................... 9

Cultural Web Model ............................................................................................................. 10

Stories ................................................................................................................................... 12

Ritual and Routine................................................................................................................ 12

Organisational structure ....................................................................................................... 12

Symbols ................................................................................................................................ 12

Power structures ................................................................................................................... 13

McKinsey 7s ......................................................................................................................... 13

Strategy................................................................................................................................. 14

Structure ............................................................................................................................... 14

System .................................................................................................................................. 14

Staff ...................................................................................................................................... 14

Style...................................................................................................................................... 14

Skills ..................................................................................................................................... 14

Shared Values ....................................................................................................................... 14

SWOT ANALYSIS .............................................................................................................. 15

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Strength ............................................................................................................................... 15

Weaknesses ......................................................................................................................... 15

Opportunities ...................................................................................................................... 15

Threats................................................................................................................................. 15

Literature Review of Innovative leadership and Management Approaches ............................ 16

Strategic Recommendations for Starbucks .............................................................................. 19
Changes Required to Implement the Transformational Leadership Style ........................... 19

Implementation and Change Management .............................................................................. 20

1. Establishing the Sense of Urgency ................................................................................... 20

2. Create the Guiding Coalition ........................................................................................... 20

3. Developing Vision and Strategy ...................................................................................... 20

4. Communicating Change Vision ....................................................................................... 21

5. Empowering Broad-Based Action ................................................................................... 21

6. General Short-Term Wins ................................................................................................ 21

7. Consolidating Gains and Producing More Change .......................................................... 21

8. Anchoring New Approaches in Culture ........................................................................... 21

Conclusion ............................................................................................................................... 22
References ................................................................................................................................ 23
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Marketing Management and Leadership Practice in Starbucks

Introduction

Purpose of the Report

The purpose of the report is to present the in-depth analysis of the Starbucks and this

analysis identify its management and leadership models that have been developed within the

past few years. This report discusses the situational analysis of the Starbucks which help to

identify the major issues that are facing by Starbucks. For this, the overall marketing

environment of the Starbucks will be examined which identify issues that are held within the

macro and microenvironment. This examination is possible through using frameworks such as

PESTLE, McKinsey 7s, Cultural Web, and Porter Five Forces. This report will discuss major

issues of the organisation and provide a detail critically assess its importance and implication

and then justify one issue and challenges related to leadership and management.

Moreover, this report also provides a literature review that is based on the ability to

critique different approaches to management and leadership. In addition to this, the literature

review also consists of different innovative management and leadership approaches that might

be adopted by the Starbuck to resolve out the identified challenges. Furthermore, this report

also presents the strategic recommendation that addresses leadership and management

challenges. Moreover, this report also provides a change management plan that is used by

Starbucks to gain support from key business functions.

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Starbucks

The name of the organisation that is used for in-depth analysis is Starbucks. In 1971,

Starbucks was established by Zev Siegel, Gordon Bowker, and Jerry Baldwin who were the

students at the University of San Francisco (Zhao, 2017). In Seattle, Starbucks started its

operation with a single shop that offers whole bean and ground coffee and now its stores are

located in more than 62 countries. In addition to this, approximately 192,000 employees are

currently working in 20,000 stores that are located throughout the world. Starbuck offers a

variety of products that include single-origin premium coffees, Iced Coffee, Cold Brew, Baked

pastries, salads, yoghurt parfaits, fruit cups, and non-coffee blended beverages.

Moreover, products mix of Starbucks is also marketed through different brand names

such as Seattle’s Best Coffee, Starbucks Refreshers, La Boulange, Tazo, and Teavana. Starbuck

is a Business to Consumer (B2C) organisation. Social media has been used by the Starbuck to

be developing a relationship with the customer and engaging with their customers. Starbucks

has approximately 900,000 followers in Instagram which help the company to create an

emotional connection with its loyal customers. Not only this, their customers can share coffee

images of Starbucks with other fans on customers. In the early days, the competitors of

Starbucks were the local speciality and small scale coffee retailers (Sakal, 2018). But by the

passage of time and after its expansion across the world increase its competitors. Such

competitors are Caribou Coffee, Van Houtte, Dunkin Donuts, McDonald’s, and Peet’s coffee.
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The reason to choose this organisation is that it provides key trends, developments, and

customer dynamic of the Starbucks marketing environment which help in the depth assessment

of the company.

Situational Analysis

Current Situation

The current situation of Starbucks can be identified through five primary factors. To

design a strategic approach to growth is the first factor that demonstrates the feasibility of the

Starbucks business model and also takes the benefits of the demographic groups. The second

factor is that the management and leadership of Starbucks attract the highest quality employees

with the help of the healthcare implementation plan (Sisson and Bowen, 2017). Another factor

is the strategic alliance which allowed the company to create a sustainable supply chain for its

high-quality coffee. The fourth factor is related to the community environment as the leadership

of the company try to remove the social barriers through casual social interactions. The last

and the most important factor is the ability of the management and the leadership to adopt the

changes related to the consumer demographics however such factors may become the challenge

for the company.

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PESTLE Analysis

Macro-environment of the Starbuck has affected due to the constant global economic

recession which becomes a challenge for the leadership of Starbucks. According to the report,

consumers of Starbucks cut down their consumption of coffee to purchase the coffee with lower

prices (Shtal et al., 2018). This shows that the low price of the product still becomes a challenge

for the management and leadership of Starbucks. Consumer awareness about the ethic,

environmental and social norms become the challenge for the company. These issues can be

explained through the PESTLE factors.

Political Factor

Sourcing the raw material is one of the main political factors as it takes a lot of political

attention in the West. The is the reason, the leaders of Starbuck follows the laws related to the

environmental and social norms. Laws and regulations of host countries also become the major

political factor that impacts the business of Starbucks. Not only this, in the USA regulatory

pressures that lie within the home market also creates a challenge for the company. Moreover,

coffee beans that are used in the coffee are imported from various countries (Shtal et al., 2018).

This most challenging factor to the leadership of the company as in those countries high
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taxation imposed on farmers. In the result, Starbuck charged a high price to its customer who

borrows their products. Any fluctuations in tax ultimately passed on to the consumer of the

coffee due to the high price customers switch towards the competitors of the company which

decrease the sales of the company.

Economic Factor

The prime external economic factor that effect the Starbucks is the ongoing global

economic recession. This factor reduces the profitability of the company as this force the buyer

to shit the products at a low price. Not only this, but high inflation rate also increases the cost

of the labor and operational costs which decrease the revenue of the company and also decrease

the salary package of their employees. According to the report, the profit of the firm declined

from 36 million Euros to 15 million in 2017 due to the high inflation rate (Shtal et al., 2018).

Such challenges force the leadership and management team of the Starbucks that they must

make such practices that help the company to maintain its goodwill in the market. Such

methods help out the company to retain its customers who switched to other companies.

Social Factor

It is possible for the Starbuck that they can offer their coffee at a low price but the quality of

the product can be affected. For the management of Starbucks, it becomes the main socio-

cultural challenge. Not only this, another concerning factor is ethical chic and green consumers

that show their concerns over the environment and want that organisation must follow the rules

and regulations to save the environment.

Technological Factor

The technological factor is the most important as it upgrades the company and makes it more

competitive as compared to other competitors. One of such examples is emerging mobile wave

which gives a lot of benefit to the Starbuck (Mason et al., 2017). Starbuck introduced app-
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based discount coupons which help the company to increase its sales through the mobile app.

In addition to this, rapid changes in technology put the management of the company in trouble

as they have to invest a million dollars over new technologies. If other companies increase their

speciality over the machines then it directly threatens the company.

Legal Factor

One of the most important factors is the legal factor related to the employees. In

recent world regulations related to employees has been increased if the management of the

Starbuck does not create any model related to the employees benefit then company face

restriction from the court which may harm the goodwill of the company.

Environmental Factor

Environmental factors such as laws and regulation related to the environment and

increasing global warming affect the goodwill of the company. To protect the world from

global warming the leadership of Starbucks handle this issue with an effective way. Starbuck

addresses the effects of climate change and puts its attention towards the cultivation process

of its supply chain. Not only this, Starbucks leaders robust a plan that is used to address

climate change. This plan consists of three important phases which include cultivation,

packaging, and consumption (see figure).

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Figure: Starbuck Coffee Supply Chain

Source: (Shtal et al., 2018)

Cultural Web Model

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Web Cultural Elements Applied to Starbucks

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Stories  Employees of Starbucks does not

follow the core beliefs of the

company that is welcoming

everybody with respect.

 Not enough employees within the

company.

 Management and leadership of

Starbucks do not communicate with

the employees.

Ritual and Routine  Starbucks deal with millions of

people daily due to which their

quality of service decline.

Organisational structure  Starbucks follows the informal

structure due to which everyone

employees cannot share their

problems with the leadership of the

company (Zhao, 2017).

 This structure discourages the

collaboration among the employees

and the management

Symbols  Starbuck do to commit itself to

waste reduction and it reflects their

careless behaviour.
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Power structures  Power is not equally distributed

among the employees and

management.

 Upper management of the company

does not listen to their lower-level

employees.

McKinsey 7s

Seven 7 Strength Weakness

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Strategy Provide good customer Low strategies related to

services with good quality of competitors

coffee

Structure The strength of the Starbucks needed different

Starbucks country regulation and

company structure when

operating in other countries

(Grant, 2016).

System Good customer complaints Need to improve the product

handling system and internal development sector.

communication.

Staff A large number of Low level of motivation

employees i.e. 200000 among the employees.

which provide their services

(Grant, 2016).

Style Team oriented, and Low competitiveness and

innovative. cooperation.

Skills High knowledge of IT and Motivation skills require in

media sector. management.

Shared Values Distinct Values Unethical Sourcing.

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SWOT ANALYSIS

Strength Weaknesses
 Good Financial Records.  The foreign country imposes heavy

 In the coffee sector, Starbuck is taxes over the coffee beans.

considered as a number one brand.  The high price of the coffee.

 Possesses a long history of  The low budget spends over the

experience. publicity and advertisement.

 Proper and Excellent employee

management (Sholihah et al., 2016).

 It is one of the largest chains of a

coffeehouse in the world.

Opportunities Threats
 Starbucks can extend its supplier  The rising price of dairy products

range. and coffee beans.

 Expansion in products range.  Competition from competitors, and

 Retail operations can expand. local cafes.

 Developed economies have saturated

markets (Sholihah et al., 2016).

 Disruption in the supply chain.

All of the above analysis shows that lack of leadership skills, management skill and

low marketing budget and strategies are the reason for low performance and challenges that

of the Starbucks.
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Literature Review of Innovative leadership and Management Approaches

The most important thing is that when managers and leaders of the organisation know

their roles than they effectively perform it. Most of the challenges that occurred are due to the

lack of management and leadership skills in the company. All of these challenges can be

resolved by adopting the appropriate leadership and management approaches. These

approaches help out the managers to establish good working conditions and relationships which

increase the motivation among the employees to resolve the issues with confidence (Lemus et

al, 2015). Management and leadership approaches can be used by managers and leaders of the

firm to help them to exercise their authority within the organisation. These approaches provide

a plan to the manager about how to organize work and how to deal with challenges that are

related to the micro and macro environment of the firm. To resolve the challenges, Starbuck

can use Transformational leadership and Motivational Approach.

Transformational leadership can be defined as the style in which leaders empower their

employees through change, to create a bond with them, and inspire them through their actions.

Transformational leaders can bring a change within the whole organization from their specific

style. According to the Bui and McCarthy (2015), transformational leadership has been used

by the leaders and it is characterized by the several patterns of their behavior. Such

characteristic is the employ the charisma of leaders, inspiration, intellectual stimulation, bring

creativity, problem-solving skills, and offer individualized considerations. This approach helps

out the leaders of the Starbucks that can meet the objective of the firm by setting the standards

within the organisation. The most important thing that is seen during the analysis of the

Starbuck is that the main reason behind all of the issue is the lack of leadership skills within

the manager. All of the issues can be resolved through the following transformational

leadership skills. Starbuck can manage all the technological changes with the help of
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transformational leadership skills. As such leaders easily understand the changing conditions

and help their employees during the change.

For this, Starbucks managers can train and motivate their employees and also

communicate to their employees that their long-term interest depends over the systemic change

(Lemus et al, 2015). Moreover, this leadership style helps the Starbuck managers and leaders

to easily understand the laws and regulation of other countries so that they can change them

polices according to them. In addition to this, this style encourages employees to bring

creativity within Starbucks. In the result, a company can improve its products with new ideas

and with time.

Moreover, it is analyzed that there is low motivation among the employees of

Starbucks. In this case, motivation is very necessary for the employees of Starbucks as

employees invest themselves in the company. Motivation can not be always measured through

the salary that a company gives to its employees. It can be depending on the happiness that one

has for their work. It is analyzed that Starbuck is depended on its employees as they have to

serve coffee and drink to customers. If the staff of the Starbuck is happy with the company,

then they provide a quality of services to their customers. In the result, customers of Starbucks

will surely visit the store next time. When the manager of the Starbuck gives motivation to

their employees then they think that the work, they are doing is special and they can easily

accept all of the instruction that managers provided to them.

The most important thing that Starbuck analyzed is that it is necessary to build respect

and trust among employees and leaders (Mullins and Christy, 2016). Through committing

employees' success, creating an interesting environment, and defining employee goals and

objective a company create a value of its customers. According to the theory of Mintzberg, a

company must have a regional director for each region so that they can overlook the matters
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and do the legal authority for customers and employees. In addition to this, Starbuck also

employ district manage who perform its role to motivate the employees and connect upper

management and employees for upward and downward communication. According to the

theory of Fredrick Herzberg, it can be measured and analyzed about the satisfaction of the

employees about the job workplace and their employment conditions. This theory also termed

as Two-factor theory of motivation and their factors can be seen below:

When this theory applies in Starbucks then it is analyzed that and also shown in the

above figure that the most hygiene factors for the employees are the security and salary. When

Starbucks faces a challenge from the political environment about the high tax then it creates

insecurity among the employees that they salary will be cut down by the company. In addition

to this, another factor is security as every employee wants security in the workplace but if they

can not find out then they put resignation. Such factors create low morale among the other

employees of the Starbucks that company can not fulfil its duty in terms of security (Sisson
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and Bowen, 2017). Such factors create low morale among the employees and discourage

motivation among the employees.

Strategic Recommendations for Starbucks

If Starbucks wants to achieve its goals and objectives either related to the economic,

in terms of customer, and more productivity within the employees. Then it is recommended

that the company should follow the transformational leadership style:

Changes Required to Implement the Transformational Leadership Style

 Starbucks should reshape the organisational structure through the

implementation of intellectual stimulation. As it helps the transformational

leaders to inspire other employees to create more new innovative ideas that

improve product development.

 Should Provide guidance and encouragement among the employees so that they

can accept the new leadership style.

 Starbucks leaders should create check and balance which encourage employees

to communicate with their store staff. This change can help the leader to know

the experience of the customers.

 Leaders should enhance their leadership skills which increase the motivation

among the employees.

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Implementation and Change Management

The analysis of the transformational and leadership shows that a proper step should be

taken by Starbucks to improve the motivation of the employees. For this purpose, Kotter's

eight-step change model is chosen (Kotter and Cohen, 2012). Following are the steps of the

change management model of Kotter’s:

1. Establishing the Sense of Urgency

It is necessary for the Starbucks that the leaders of the company must examine the

current market and competitive realities. This helps out Starbucks to discuss the crises related

to employee motivation and major opportunities related to the market in terms of innovation.

2. Create the Guiding Coalition

The most important thing for Starbucks is that a leader of the company must together all the

employees. In addition to this, also provide enough power to them so that they can handle

change.

3. Developing Vision and Strategy

Transformational leaders must create vision and strategy so every employee must know

their responsibility to achieve the goal. This development of vision and strategy create

motivation among the employees that they work for a use full thing and their work is special.
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4. Communicating Change Vision

Transformation leaders must encourage every medium for communication either it is

upward and downward communication or to establish new communication strategies and

vision (Doppelt, 2017). This helps out the manager to listen to their employees to sort out their

problems. Also inform them about upcoming events, changes that are going to be implemented.

5. Empowering Broad-Based Action

It is necessary for the transformational leader that they must remove the obstacles that

held during the change system which undermine the change vision.

6. General Short-Term Wins

The transformational leader of Starbucks motivates its employees through rewarding them and

must make planning for visible improvement in performance.

7. Consolidating Gains and Producing More Change

This is the most important step as it helps the leader in promoting, developing, and

hiring employees who implement change vision in future.

8. Anchoring New Approaches in Culture

The transformational leader through productive and customer-oriented behavior can

create a better performance of Starbucks employees (Thi, 2017). In addition to this, it also

improves the morale of the Starbucks employees through effective management, and with

better leadership.

The most important thing that any leader or a company face during the implementation

of the change management plan is the resistance that comes from the employees. As change

demands more effort and work from the employees and sometimes employees do not

understand the strategy behind the plan. For instance, Starbucks decided to change the

leadership style of their manager and now employees have to communicate directly with their
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managers (Doppelt, 2017). In this situation, employees of Starbucks may face problem to

directly communicate with the manager. Transformational leadership style of a manager helps

to provide confidence to employees that they can feel comfortable while sharing their ideas. In

the result, motivation will be increased among the employees and they work hard to achieve

the objective of Starbucks.

Conclusion

To conclude that the current situation of Starbucks can be identified through five

primary factors. To design a strategic approach to growth is the first factor that demonstrates

the feasibility of the Starbucks business model and also takes the benefits of the demographic

groups. Laws and regulations of host countries also become the major political factor that

impacts the business of Starbucks. The prime external economic factor that effect the Starbucks

is the ongoing global economic recession. The most important thing is that when managers and

leaders of the organisation know their roles than they effectively perform it. Most of the

challenges that occurred are due to the lack of management and leadership skills in the

company. The most important thing that any leader or a company face during the

implementation of the change management plan is the resistance that comes from the

employees.
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