Role of different management functions

1. CASE STUDY
ON
STARBUCKS

2. CASE STUDY CONTENTS
1- INTRODUCTION
2- STARBUCKS STORY
3- CLOSING OF STORES AND JOB CUTS
4- REASON BEHIND STARBUCK DOWNFALL
5- RETURN OF HOWARD.D.SCHULTZ
6- MEASURS TAKEN TO GAIN INVESTORS CONFIDENCE
7- EFFECTS OF EXPANDING STORES
8- REBIRTH OF STARBUCK
9- SOCIAL MEDIA CAMPAIGNS
10-TRANSFORMING THE INSTORE EXPERIENCE
11-EMPLOYEES AND BARISTAS
12-ROLES OF DIFFERENT MANAGEMENT FUNCTIONS IN A CASE
13-CONCLUSION
14-QUESTIONS TO DEBATE

3. THE WORLDS LARGEST COFFEE
RETAILER STARBUKS PULLED
ITSELF OUT OF THE FINANCIAL
MELTDOWN OF 2008 BY
ALIGINING ITS OPERATIONS WITH
CUSTOMER DEMAND THROUGH
SOCIAL MEDIA.

4. INTRODUCTION
STARBUKS founded in 1971 in SEATTLE, It
has there outlet in 43 countries around the
world. It is one of the most respected brand,
winning award such as-
 BEST BUSINESS
 MOST ADMIRED COMPANY
 100 BEST CORPORATE CITIZENS
There was a time when WALL STREET
portrayed STARBUKS as the “THIRD PLACE”
after HOME and WORK.

5. JOB CUTS
While its quality is unquestionable, its price has always been
higher than those offered by the domestic coffee houses in
various countries.
This was one of the reasons why the company took a hit
during the economic slowdown of 2008 as customers opted
for cheaper options for their everyday coffee. STARBUKS
forced to shut 600 shops that were not making profit.
By MARCH 30, 2008 its profit had fallen 28%compared to
the same period in 2007.
In 2009, it closed another 300 stores and laid of 6700
employees.
The closer will account for 8% of all company operated US
stores and will leave the company with 6600 US outlets.
They have to eliminate as many as 12000 full and part time
positions as a result.

6. RETURN OF HOWARD.D.SCHULTZ
On January 8, 2008 HOWARD.D.SCHULTZ returned as a
CEO of STARBUKS after a gap of 8 years replacing JIM
DONALD.
Experience of SCHULTZ- He nurtured the
company since 1982, when it had only 4 outlets. He
had served as a CEO from 1987 to 2000.

7. TWO MAJOR REASONS BEHIND
COMPANY’S DOWN FALL AND
CLOSING ITS STORES
1-Economic crises in US and world economy.
2-STARBUCKS rapid expansion strategy.
These two factors distracted it from making its cafes
an inviting place with new products. It also faced
competition from Mc Donald’s which had in 2008,
started setting up coffee bars that sold espresso.

8. WHAT ARE THE EFFECTS AFTER
EXPANDING ITS STORES AND
CHASING GROWTH TARGETS-
1-The regular customers who valued the club like
atmosphere of relaxing over quality cup of coffee
found themselves in minority. They didn’t believe
in the speed of order rather than prefer
recognition by and conversation with baristas. As
a result many STARBUCKS veterans have now
switched to PEETS, CARIBU and other more
exclusive brand.
2-STARBUCKS introduced many new products to
broaden its appeal for EX- sandwiches.
3-Opening of new stores and launching a blizzard of
new products create only superficial growth.

9. WHAT DIFFERENT STARBUCKS
DID TO REGAIN THE CONFIDENCE
OF INVESTORS AND
STAKEHOLDERS
Every time when this kind of situation arises top leadership
blamed the economy and the higher cost of products. However
SCHULTZ adopted a entirely different kind of approach. He told
his employees-
“The company shouldn’t just blame the economy;
STARBUCKS heavy spending to accommodate its
expansion has created a bureaucracy that masked it
problems.”
SCHULTZ recognised the problem that STARBUKS growth
strategy is root cause behind its downfall. “Stores no longer
have the soul of the past and reflect a chain of stores Vs
the warm feeling of neighbourhood store.”
They tried to add value through innovation, offering, Wi Fi
services, creating and selling its own music and in the end they
put their focus back on the COFFEE, revitalizing the quality of
its STANDARD.

10. REBIRTH OF
STARBUCKS
In a departure from conventional strategies
STARBUKS soon embraced on a technology
oriented strategy. Where employees could
think freely about the organisation and
contribute in term of strategies and ideas was
forecasted. As a result a community
involvement concept was developed.

11. MY STARBUKS IDEA
In March 2008 “MY STARBUCK IDEA” was rolled
out for customers to exchange ideas with each
other and directly with the company. As a part of it
customers were able to give opinions on everything
such as products, services, layouts, advertising
corporate social responsibility, instore music and so
on. More than 93000, ideas were shared by about 1.3
million users on social media and page view per
month rose to 5.5 million.
STARBUKS implemented over 100 ideas. Through
this initiative, the coffee retailer builds a robust fan
base. By giving customers a platform to voice their
ideas and views on the brand by responding to it, It
was able to reignite the brand trust.

12. MY STARBUCKS
SIGNATURE
The company embraced mobile apps much
before its competitors they uses it to reach
to their customers and helped their
costumers to personalize their companies
offering to customize the company’s
offerings. The initiative “MY
STARBUCKD SIGNATURE” helps
consumers to develop their own signature
drinks (hot or cold coffee) name the drink
and share the new flavor with community.

13. EMPLOYEES AND
BARISTAS
They are awakes an integral part of STARBUCK
ONLINE and SOCIAL MEDIA COMMUNITY. It has a
separate page for its employees who used to
generate and debate ideas.
“THE CRISIS AT STARBUCKS WAS AS MUCH
AS THE RESULT OF THE ECONOMIC
RECESSION AS DUE TO EXPANSION OF THE
STORE NETWORK IN THE PREVIOUS YEARS.
SO TO RECONNECT WITH ITS COSTUMERS
STARBUCKS USED SOCIAL MEDIA
TOENGAGE INDIVIDUAL COSTUMERS WITH
ITS PRODUCT AND BRANDS”

14. Roles of different management
function
We can observe that how much important role
these management functions play in the case study.
Planning
As we all know planning is the conscious determination
of future course of action.in this case we can see that in
the lack of proper planning improper situation analysis
and inappropriate decision making is the biggest reason
for the downfall of the STARBUCKS. Initially they
failed on the forecasting part and did not consider the
economic condition which resulted in decline of
revenue and their brand value.
After a considerable planning effort by a reappointed
CEO Mr. Howard Schultz STARBUCKS regained the
market share and the brand value.
.

15. Organizing
Organizing functions can be viewed as a bridge
connecting the conceptual ideas developed in
planning two specific means for accomplishing
these ideas. STARBUCKS has always followed a
strategy to blanket a region with its new stores.
This means that by opening multiple stores in the
same street or close by location it could, reduce
the customers rush in one store, and also increase
it revenue through new stores, but this strategy
seriously backfired because of lack in
implementation on the ground level and they
failed in the organizing efforts which affected its
brand image.
When Schultz returned as a CEO he brings back
the old charm of the STARBUCKS with the proper
organizing efforts and team work.

16. STAFFING
Staffing involves manning the organization structure
through proper and effective selection, appraisal and
development of the personals to fill the roles assigned to
the employers/workforce.
 STARBUCKS wants to make every employee a part
of a worldwide family and in order to do so to make
them aware of challenges of the company.
 Every partner/barista hired for a retail job in a
STARBUCKS and they have to master a STAR
SKILL.
 STARBUCKS has a very rich culture and their
employee customer relationship is very strong they
believe that –
`Customers can replicate the products
STARBUCKS serves, but competitors
can’t replicate the STARBUCKS people
serving their products to customers.

17. DIRECTING
When people are available in organization, they
must know what they are expected to do in
organization.
Directing is said to be a process in which the
managers instruct, guide and oversee the
performance of the workers to achieve
predetermined goals. Directing is said to be the
heart of management process.
In the case of STARBUCKS
HOWARD.D.SCHULTJ is a beautiful example,
how he leaded from front. He nurtured the
company since 1982, when it had only 4 outlets.
He had served as a CEO from 1987 to 2000.

18. CONTROLING
Controlling involves identification of actual result,
comparison of actual result with expected result
as set by planning process, identification of
deviation between the two, if any and taking of
corrective actions so that actual result match
with expected result.
This case study is a perfect application of
controlling function. We can observe that
for any company expansion is a good
thing but that was not in the case of
Starbucks, due to inappropriate execution
of different management functions, they
failed on achieving there goals.
With the proper controlling and team
efforts of all the employees and top level
management they regained their MARKET
SHARE and BRAND IMAGE.

19. Conclusion
To conclude we can say that STARBUKS is a great
example of brand turning around its business by
returning to its roots and reconnecting directly with
its customers. While many companies are struggling
to get back to pre-2007 financial figures,
STARBUKS has shown that people are willing to
spend $5 or 3 pound every day on their LATTE and
TWEETS about it.
STARBUCKS is a company to watch out for as it
continuous to innovate, a story where every customer
is a stakeholder and vested in the company.

20. REFRENCE
ANJA LAMBRECHT
Assistant Professor of Marketing, LBS
John Quelch
Professor at Harvard Business School
Tripti Lochan
Chief Executive officier,VML Qais