Strategic change and management essay : Starbucks’s change management 

Abstract:

Intend of the essay is to talk about organizational strategic change. For that, report discusses a model of an organization Starbuck’s strategic change. Afterward, the model’s relevance with current economy has been evaluated. In this context, all the issues related to strategic change have been noticed and discussed in depth. In contrast, intervention techniques and their value of use have also been highlighted. Next, this research report has explained the need for strategic change in Starbucks. Moreover, the factors which are driving the need for organizational strategic change in Starbucks have been illustrated. This paper has also illustrated the development of model involving and associating all the stakeholders in planning of change. In addition, a few change management strategies have been developed taking stakeholders along in planning framework of change. The strategies defined in paper also ensure managing resistance to change. Therefore, a plan to implement a new model for strategic change has been described at the end. Similarly, paper has also identified different multiple measures to monitor the changes and its effect.

1. 1.      Introduction:

Many organizations make strategic changes and implement new processes and policies in this regard. Some of these changes take place from ongoing management fads like organizational culture change, empowerment, engineering in business process and sum of quality. On the other façade of strategic change, initiatives are driven by the organization’s need in order to make themselves sustainable in strong competitive conditions. Moreover, strategic change involves strategy, structure, frameworks, processes and organizational culture. In addition, the difficult part of this is to bring about changes in the way an individual behave within a company (Bloodgood & Morrow Jr, 2003). Here, Starbucks has been chosen for discussing its strategic change model, related issues and stakeholders’ involvement in the development of change plan.

Starbucks is a coffee company which has a coffee chain of it globally. The Company was pretty able to attract a good number of customers even if it had overpriced coffee for them. It drawn a positive impact that many investors invested in Starbucks coffee as it was a profitable investment for them. It has become successful in placing its good image in the business world through its coffee outlets, overpriced coffee and fancy Italian names of coffee. The strategy they took into account for achieving this name and image was a proper planning, systematic understanding of consumers’ behavior, value, taste and their preferences (Starbucks, 2012)

1.1  Models of strategic change:

Changes are categorized on the basis of extent and frequency of its requirement. The first model presented over here in this paper illustrates proper implementation of a change plan. According to this, First of all, company’s competitive position is noticed and evaluated and changes are initiated in accordance with the requirement. Next, Organization identifies its desired state of future perspective in order to make advanced changes and therefore considers the barriers to strategic change being made within the premises. Afterward, company operating and driving changes looks after and analyzes the framework of change. In contrast, each and every feature of change is noticed by the organization to make further improvements. Subsequently, current approach for strategic change is identified and new initiatives for change are designed. Furthermore, changes are managed appropriately and leadership issues are defined with regards to change process and implementation. At the final stage of model, outcomes are assessed with respect to changes made within the organization (Kianfar, Milana & Smith, 2012).

(Source: Balogun, 2001)

Furthermore, there is another important model, which can be presented and explained with respect to Starbucks’ strategic change process and its implementation. It had a few strategies which were being implemented by the management in order to increase effectiveness and efficiency of their business. One of the strategies adopted by Starbucks is competence based strategy. According to this they have made changes in its core competencies and decided to add more values to their products being offered and thus set an image of modishness and extravagance. In this context, the changes took place in relation to their marketing strategies, capabilities of management, operational competency and human resource management. Next, Starbucks has focus strategy leading company’s cost leadership, product differentiation and focus on customers. This model represents strategic business change of Starbucks stating that it focuses on investing in its communities and investors and creates the job for USA.

(Source: The relationship economy, 2010)

1.2  Relevance of model to current economy:

This section of paper highlights the relevancy of strategic change model of Starbucks to current economy. Current economy of USA is facing recession problem. In this case, Starbucks’s strategic change model came into existence and presented its support to bad economic conditions. As Starbucks initiates for making an investment in creating jobs for USA, it makes an attempt to jerk the current economy. Moreover, twofold strategy of Starbucks for its business’ growth includes its aim of investing in key initiatives. In this regard, it focuses on the demand of customers even in the time of economic downturn and creates good fund for economy (Estes, 2011).

Moreover, the relevancy can be seen that a team of Starbucks put an idea forward of partnering with opportunity finance network, that is a national network of financial institutions working for community development. It helped the government and banks at the hard time of recession when banks lost its assets up to some extent and mortgages went wrong. It made a strategic change and created a different and unique site for taking the donations online atwww.CreateJobsForUSA.org. For this, Starbucks made a great investment of around $5 million (Orsini, 2011).

1.3  Assessment of strategic intervention techniques:

Thinking for strategic change has emerged over the time as customers get more focused and demand the value and quality of product. Managing a process of change in the organization has the same significance as the change itself has. Over the decades ago, management thinkers have explained multiple strategic intervention techniques to be used in change process. These techniques have been identified from organizational development area which affects the desired organizational change within the premises (Harrison, n.d). This section’s main aim is to assess the value of those intervention techniques. The process and environment of change permits the techniques intervention’s techniques such as role playing, development of team, survey feedback and process consultation.

First, techno structural interventions’ use is to focus mainly on improving and developing organizations’ effectiveness, efficiency and human development. For this, management of an organization concentrates on technology and structure of its business and seeks the changes to be made. Following aspects are considered in using this intervention technique in strategic change process (Argyris, 2004):

Organizational system and structure

• Redesigning of business process
• Space and physical settings within the organization’s environment
• Change management
• Job design/enrichment
• Competency based management
• Knowledge management, Organizational culture and organizational learning

All these aspects considered as techno structure intervention technique have supreme level of value throughout the change process. Next, management and leadership techniques of organizational development are valuable from both individual and professional point of view because this technique aims to increase both formal and informal leaders’ effectiveness by improving organization’s overall performance. For this, following are the terms that are used for improvement (Reed, 2001).

• Professional development by mentoring, coaching and action learning
• Use of management by objective
• Succession planning
• 360 degree feedback system
• Participative management and technical skills training to the leaders.

Similarly, there is another important intervention technique which is team development and group process interventions. Through this technique, goals are set for a team or a group and each member of that team is allocated different task to perform. It also helps developing the interpersonal relationships among group members and clarifies and analyzes the roles. Finally, an individual or interpersonal process can also be taken into consideration while discussing about strategic change intervention techniques. This technique aims to improve individual’s skills, knowledge and competencies to compete with any sort of challenges being faced by the organization. The types of techniques involved in this are learning strategies, interpersonal communication and life transitions (Jones, Aguirre & Calderone, 2004). 

2.1 Need for change:

When it is talked about the need for strategic changes in an organization, there are some factors which indicate the need for change. This can be change in customer’s taste and preference toward a specific product, and competitor’s strong position in the market may also be a point of indication demanding for need of change. Not only such basic factors, but some economic factors such as inflation rate, changes in GDP growth and in interest rates also affect the healthy position of an organization in the market. Budget constraints, changes in legislation, technology, mergers & acquisitions and restructuring operations are other important factors contributing to need for a change within the organization (Starbucks News, n.d).

Furthermore, talking about Starbucks’s need for strategic change in its organization was to enhance customer’s experience. The management of Starbucks decided in a meeting to make some strategic changes to their organization in terms of renewing their focus on customer’s experience. Another reason for change’s need was their weak position in U.S market and floppy stock price. In this regard, company made some job cuts and some of the jobs were reshuffled. They decided to win the customers’ heart by offering them energy drinks and to make entry in health business as well (Linn, 2008).

2.2 Factors driving the need for change:

There are so many factors which drive the need for change within an organization. Most importantly, economic downturn is one of them. In case of Starbucks, it faced major challenges in U.S market in its economically down position. Therefore the situation of global recession in 2008 and 2009 derived the need for change in Starbucks’s strategies and processes. This situation of recession made an impact on both businesses with increasing cost of operations and lesser profit margins, and the consumers of the products (Moreno, 2008). On the other hand, the level of unemployment raised in U.S also affected the organization and derived a need for change in its hiring, retaining and training policies. In this context, political and legal pressures also became most important factors driving the need for change. These legal and political systems included labor laws, regulations regarding food handling and other restrictions in business practices in a ground of both marketing and advertising (Buckstein, 2010).

Moreover, certification from third party used by other organizations in order to gain social responsibility also affected and influenced the organization to make a change and put efforts to be more responsible. Another aspect is product and technology innovation which insist company to make a change in the organization in terms of better customer service through offering them with high energy drinks and healthy products. Similarly, the use of Wi-Fi internet service facility can be provided to seek the attention of the customers that they utilize that technology for their personal or professional use. On a global level, the demographic aspects for coffee industry varies much, therefore, Starbucks can take it as a opportunity and increase its market share and size in US market (Oloiviera, 2011).

2.3 Resource implication:

If resource don not respond to whatever changes are planned and made, it will highly affect company’s business and its operations. The resources that would be a part of this change will be staff of the company, IT infrastructure, other departmental heads and the project team. There can be following implications on account of not responding to the planned change:

First, if there would be improper information technology infrastructure system, it can create issues in implementation of new and unique IT frameworks and may ultimately affect the entire project of change.

• Secondly, Problem of increasing project time may arise due to lack of inactive participation and cooperation of departmental heads. This will further result in exceeded cost of the project in implementation of new IT systems in the organization as IT team will not be able to meet its deadline on time of requirement (Nielsen & Mortensen, 2008).
• Lack of project team’s motivation and dedication toward their work may affect the overall quality and planning of the project and on the other hand IT team will automatically scrap the whole project.
• Moreover, if the staff is not well trained for working on new IT systems, they may also cause a major problem and errors as they will not be able to fully utilize the system properly on account of not being motivated or trained.
• The organization itself will have to bear a huge loss and face serious issues which may result in financial loss to the company and affect its future growth and sustainability.
• Finally, this implication with respect to IT system, project team, staff and department head will also affect the operational activities of the organization, as the motivation and enthusiasm level of the staff will be greatly impacted by this (Choi & Ruona, 2010).

3.1 Systems to involve stakeholders in planning for change:

Stakeholders such as customers, employees, government, creditors, suppliers, etc have their interest vested with an organization as a whole. Therefore, it is required to take every stakeholder in confidence and convince properly in order to make successful and effective changes at company level. In case of Starbucks, following will be stakeholders who would be considered in change process:

• First, managing director of the company
• Second, finance head and entire team
• Director of information system department and team
• Head of the purchasing department and team
• Team of sales and sales head
• Head of supply chain and logistics and entire team
• Director of human resource and team
• Lastly, head of admin department and their team (Knowhow Non Profit, 2011)

Moreover, there are a few activities which are needed to be taken in order to convince the stakeholders to get them involved in planning of change within the organization. The activities are as follows:

• Communication strategy: If a proper communication strategy is formed in order to involve and inform the stakeholders about the change planning process, half of the job is considered to be done. These strategies can include meeting, conferences, e-mails, presentations, interviews, discussions and face-to-face interactions. Through this, stakeholders consider themselves to be a key part of that process and feel working with enthusiasm and motivation (Altria corporate services, 2004).
• Next, every stakeholder should be sent a formal invitation for attending meeting and presentations describing the purpose of change.
• Afterward, they are made aware of the need and benefits of the changes that are being adopted. Similarly, minutes of the meeting are sent to the stakeholders via e-mail to get their feedbacks on same.
• Consequently, key issues raised by the stakeholders in their sent feedbacks are resolved by framing a strategy and then they are told about it and convinced on the change’s need (NCVO, 2012).

3.2 Developing a change management strategy with stakeholders:

There can be two kinds of people in strategic change decision planning. First, who are enthusiastic, motivated and are ready to accept the changes for the organization. Second, people those who can put resistance to change because of their personal behavior and emotional responses. Therefore, taking such individual behaviors into consideration, planned and well-established strategies should be brought forward to decide upon.

• Leverage strategies: This strategy is focused upon for those who are the good adopters and always ready to grip the change. They support and cooperate with changes and make their significant influence.
• Engagement strategies: This strategy mainly focuses on chief stakeholders those who have significant influence on the change but are unwilling to adopt the changes. Therefore, strategy’s main aim is alteration of influencers into adopters and then to utilize their influence on those who are less committed and interested toward changes’ adoption (Freeman, 2010).
• Containment strategies: It is focused on the people who have high skills, competencies, experience and knowledge and can contribute to the changes but are not ready to adopt the changes and are resistance laggard.
• Outplacement strategies: In this strategy, those people are focused who people are high and powerful influential resistance straggler. In addition, they are provided with an opportunity to show their interest and commitment for process of change. Nonetheless, if they do not get agree to it at all then explicit consequences are taken into account to deal with them (Marcus Ball, 2007).

3.3 Evaluation of systems used for stakeholders’ involvement:

Each and every stakeholder will be impacted by the changes within the organization. Therefore, it should be ensured that they have been informed about the requirement of change being taken into account. Every stage of the change process should be dictated to the stakeholders. As it has been discussed above that all this is made possible with the help of a communication strategy, it is also necessary to educate and make them aware of their importance in whole process. Afterward, feedbacks and reviews received from every stakeholder are made a vital part of the change process and considered at every stage of process. This makes them feel more involved, confident, engaged and motivated when they notice that they are being heard and given more significance in the entire process of change. As a result, the involvement of stakeholders in this process makes its smoother. In addition, they should not be treated in a way where they feel ignored or neglected (The open group, 2011).

3.4 Strategy for managing resistance to change:

If changes occur within an organization, resistance is also a part of it. This shows that an organization can be affected by both positive and negative ways. Following are the principles for managing resistance to change:

• Education and communication: Concerned stakeholders may be educated properly about the changes that have to be adopted and their confusions and misapprehensions can be reshuffled. Additionally, their questions and worries can be answered out by communicating with them properly.
• Participation and involvement: If the stakeholders are actively involved in the process of change through a well and appropriate strategy, this makes them feel a part of that and convince them not to resist the changes (Barbara & Jocelyne, 2006).
• Negotiation and agreement: When an organization thinks and plans for a strategic change, it has to put a lot of thing at stake. Therefore, it needs to move equally towards the process by framing an agreement with all its members and negotiation with management of the organization.
• Facilitation and support: If people those who have participated in change process are facilitated and supported in an effective way, it boosts and foster their level of confidence and therefore sets an example for others who resist to change and are not ready to adopt them (Mullins, 2010).

4.1 Change model to implement:

After viewing and discussing stakeholders’ involvement in change process, a change model can be represented here for Starbucks to be implemented within their organization.

• Environmental assessment: First of all, Starbucks should delineate some systems for monitoring both internal and external factors for company which may have positive or negative impact on company’s overall business and other operational activities.
• Human capital as assets and liabilities: Human resources are valuable assets for any company. Therefore, Starbucks should create a strategy concerning the staff so they that they feel their importance and value in the organization and thus support in each and every activity of the company.
• Linking both strategic and operational changes: If the organization takes a step ahead and links the strategic changes with staff’s routine works, it will help the staff accepting strategic changes easily.
• Leading the change: Starbucks should set the agenda concerning the directions, mission, vision and values of the change. Moreover, these directions and values should be acceptable by the staff in order to contribute to the changes.
• Overall consistency: Finally, the set agenda for strategic change and the plan should be consistent and should be the one which can serve competitive advantage to the organization (Value based management, 2011).

Afterward, developing an implementation plan for strategic change in Starbucks, a complete process should be followed for implementation. Next section of this paper discusses that implementation plan in this regard.

4.2 Implementation plan:

An implementation plan determines the success and failure of the business’ projects and becomes a stepping stone for further movements. One of the following plan has been described below which is accepted widely for a strategic change by the organizations.

• First, stakeholders’ support should be gained and they all should be provided with full information about need of adopting changes within the context.
• Second, a full detailed plan should be prepared including starting date and multiple stages of process and it should be approved by all department/senior heads and the decision-makers.
• Then, a strategy is required in order to make the change feasible and practicable (Irwin, 2011).
• All the departments including, IT, HR, marketing, operations, finance, and admin should be asked for their specific contributions. Moreover, the staff should be rewarded on the basis of their performance and successful achievements.
• Apart from this, training & development programs should be conducted to train the employees for skills required in process.
• Appropriate control methods and performance management systems should be there at place. Additionally, every stage should be monitored and evaluated properly.
• Areas creating problems and becoming hurdles during the plan should be taken in care and be removed (Management center Europe, 2012).

4.3 Measures to monitor progress:

Monitoring of change process is an important part of it because it helps analyzing the current status of performance of the staff and change’s happening. Therefore, further steps can be taken to improve the performance in order to achieve the objective of change effectively.

The measures for monitoring progress are as follows:

• SMART objectives should be set for each individual team and review should be done on monthly basis.
• Review policy should be adopted by both the individual and team level.
• Standards or benchmarking should be established by the management and the performance should be evaluated against those standards.
• Moreover, performance systems should be set based on quantity system instead of quality system while standards should be set based on quality systems and then performance should be compared.
• Lastly, it can be said that 360 degree feedback system is regarded as one of the best systems among all to monitor the performance and to analyze directly or indirectly associated aspects (Cummings & Worley, 2001).

5. Conclusion:

This paper discusses the case of Starbucks and highlights its strategic change plan and process and its implementation. In this regard, the paper has attempted to identify both internal and external factors concerning its strategic intervention techniques. In addition, this paper also helped identifying the need and adoption of change and the strategy to engage every stakeholder actively. However, the research has highlighted the development of strategies and their evaluation in order to seek the implementation of a new plan or process for change. Besides, resource implication in terms of Company’s IT, HR, marketing, operations and finance’s has also been presented in the discussion of paper and their response with regards to the change.

Similarly, a strategy for managing resistance to change is also a part of the discussion stating that by properly educating, motivating, supporting and facilitating the staff and stakeholders, changes can be made possible and accepted by all. At the end of the paper, an implementation plan has been developed taking key stakeholders and their involvement into consideration in change process. Besides, paper has made further investigation and researched all key strategies in order to define one of the best among all. Lastly, measures such as options of benchmarking, SMART objectives and standards have been suggested to monitor the progress of entire process of change. To achieve the objectives of strategic change, it needs more investigation, evaluation of the activities and performance throughout the process.

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