Business and Management


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    Accordingly, case notes will be collected. case notes should include , answers to the questions at the end of the case, and annotations or additional issues you think are pertinent. These analyses should be approximately 1-2 typed pages.

    Starbucks Returns to its Roots

    You are probably so used to seeing Starbucks coffee shops
    everywhere that you might not realize the company went
    from just 11 stores in 1987 to 2,600 in the year 2000. This
    incredibly rapid growth sprang from the company’s ability
    to create a unique experience for customers who wanted
    to buy its distinct brand of lattes and mochas wherever
    they found themselves. At Starbucks’ core, there was also
    a culture of treating each customer as a valued guest who
    should feel comfortable relaxing and taking in the ambience
    of the store. Whether you were in the company’s
    founding location in Seattle, Washington, or at the other
    end of the country in Miami, Florida, you knew what to
    expect when you went to a Starbucks.
    This uniform culture was truly put to the test in the face
    of massive expansion, however, and by 2006 Starbucks’
    chairman and former CEO Howard Schultz knew something
    had gone wrong. He noted that “As I visited hundreds
    of Starbucks stores in cities around the world, the
    entrepreneurial merchant in me sensed that something
    intrinsic to Starbucks’ brand was missing. An aura. A spirit.
    The stores were lacking a certain soul.” Starbucks’ performance
    had become lackluster, with hundreds of planned
    store openings being canceled and hundreds more stores
    being closed.
    So, Schultz took the dramatic step of coming back as
    CEO and engaging in a companywide effort to change
    the corporate culture back to what it had been before
    its expansion. All 7,000 Starbucks stores were closed
    for a single afternoon as part of a training effort of
    135,000 baristas. Quality control was a primary mission;
    baristas were instructed to pour every glass of espresso
    like honey from a spoon, to preserve the flavor. This emphasis
    on quality over speed ran counter to the principles
    of mass production, but it was just what the company
    needed to ensure it could retain its culture. Espresso machines
    that obscured the customers’ view were replaced

    with lower-profile machines that allowed baristas to look
    directly at guests while making beverages. And “assemblyline
    production,” like making several drinks at once, was
    discouraged in favor of slowly making each drink for
    each customer.
    Schultz is convinced his efforts to take the culture
    back to its roots as a neighborhood coffee shop—one entranced
    with the “romance of coffee” and treating every
    customer as an old friend—has saved the company. Today,
    Starbucks earns more than $10 billion in annual revenue
    and serves more than 50 million customers a week around
    the globe.
    Questions
    1. What factors are most likely to change when a
    company grows very rapidly, as Starbucks did?
    How can these changes threaten the culture of an
    organization?
    2. Why might this type of radical change process be
    easier for Starbucks to implement than it would be
    for other companies?
    3. A great deal of the return to an original culture has
    been credited to Howard Schultz, who acted as an
    idea champion. Explain how Schultz’s efforts to
    change the Starbucks culture fit with our discussion
    of culture change earlier in the chapter.
    4. Schultz’s change initiative might succeed at another
    company that values customization and high levels
    of customer service, but how would it need to differ
    at a firm that emphasizes speed and efficiency of
    service?

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