RECOMMENDATIONS FOR IMPROVEMENT

1. Revamp the employee reward system 2. Tighten focus on creating the Third Place environment 3. Focus profitability measures on profitable sales, not just reduction in staffing

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REVAMP EMPLOYEE REWARD SYSTEM

Large percentage of the staff are under the age of twenty Benefits package focuses on medical, dental, and vision care, as well as the employee stock options Outside of hourly wage, and semiannual raises, there are few monetary rewards

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IMPROVE THIRD PLACE ENVIRONMENT

Site has a very high employee turnover rate Manager promoted to a another store in hopes of improving their poor performance Site has very poor handicapped accessibility Condition of restroom in each of our visits was poor and had no baby changing area
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FOCUS PROFITABILITY MEASURES ON MORE THAN JUST STAFFING

Store is underperforming on some high margin product segments Too high a focus on minimizing direct labor as a key to achieve profitability Focus on high-margin items and profitable addon sales By increasing pastry sales by 33%, store would realize a $16K increase in contribution

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FOCUSED RECOMMENDATION

IMPROVE THIRD PLACE ENVIRONMENT

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PROS AND CONS OF DISCOUNTED OPPORTUNITIES

Revamp the employee reward system

Pros
Employees are motivated with more incentive to perform Lower employee turnover rates Positive reinforcement which leads to higher feelings of job satisfaction

Cons
Pay and benefit structures dictated by corporate HQ Cost of benefits would additional benefits lower site profitability New reward system requires additional management
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PROS AND CONS OF DISCOUNTED OPPORTUNITIES (CONT.)

Focus Profitability Measures on More Than Just Staffing

Pros
Higher staffing levels benefit other employees Better customer service Improved customer focus could lead to higher sales

Cons
Staffing is a cost that will decrease profitability Upper-level management perception of low employee productivity Employees may get in each Energised Stars others way

THREE-STEP ACTION PLAN FOR IMPROVEMENT

Decrease employee turnover rate
Focus on hiring older employees where benefits package is more appropriate Base raises on performance rather than maximizing raises for economic reasons Develop and actively maintain a reward system for employees (i.e. employee of the month) Develop a system of regular employee communications / meetings
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ACTION PLAN (CONT.)

Improve site accessibility and cleanliness
Upgrade front door and restrooms for handicapped accessibility Add a baby changing station Redesign restroom to separate cleaning supplies from bathroom or move cleaning supplies to another location Focus employee attention on restroom cleanliness
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ACTION PLAN (CONT.)

Enhance Starbucks differentiated atmosphere
Utilize entertainment budget to hire outside entertainers, have book / poetry readings, etc. Display the stores collection of games and activities more prominently Make the location more of a scene

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IMPACT ANALYSIS - BENEFITS

By focusing on the initial recruitment and hiring stage, and by rewarding employees based on merit current turnover rates will be reduced. By focusing on site accessibility and cleanliness, the physical facility will not detract from atmosphere. By improving Starbucks atmosphere, it will become a more attractive place to go.

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POTENTIAL RISKS
Customers may not react positively to the changes being made Not enough available employees to meet realigned hiring needs Claims of age discrimination and negative affect on sales in youth demographic Costs associated with planned change

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WRAP-UP
Starbucks is the market leader in a growing market segment Starbucks is known world-wide for its highquality food products and differentiated Third Place atmosphere The Wellesley location embodies the ideals of the corporate mission and has been very profitable, but there are still opportunities for improvement Energised Stars
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BIBLIOGRAPHY
(Kotler, Philip,Kellar,Kevin L,Burton,Suzan. Marketing Management,13th Edition. Pearson Education Australia, Mario, Dr Peter.Facilitator MBA 437 Marketing http://www.consumerpsychologist.com http://www.en.wikipedia.org/wiki/starbucks
http://www.learnmarketing.net/consumer.htm www.learnmanagement2.com http://www.startups.co.uk/Sahar_Hashemi.YZw1NAVoyivadQ .html http://www.caterersearch.com/Articles/2006/05/04/306587 /uk-leads-europe-as-market-for-branded-coffee.html

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Questions ????

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