Organizational Behavior, Third Edition

Chapter 14. Organizational Change and Development

Exploring Behavior in Action: Reinventing the Dream at Starbucks

Howard Schultz, the entrepreneurial force behind the organization, provided the guiding vision and a golden touch in building Starbucks into a huge company with 16,700+ stores at the beginning of 2010. Although Starbucks has achieved amazing success, it has experienced some "bumps in the road" along the way. In 2008, Starbucks began experiencing a reduction in its average sales per store for the first time in its history. The decline continued for 2008 and 2009. There are several reasons for the weakness in Starbucks's performance. Among them are increased competition (from national and local coffee wholesalers and retailers such as Green Mountain Coffee roasters and others introducing gourmet coffees, such as McDonald's) and the global recession's causing potential customers to reduce their discretionary purchases (Starbucks coffee is viewed by most as a luxury item). As a result there was a stock-price decline that became serious for Starbucks shareholders because it made its shares less attractive to potential investors.

In January 2010, Starbucks announced its first quarterly increases since 2008 in average sales per store open at least one year; and its quarterly profit tripled. The 4 percent increase was achieved through a series of major changes in Starbucks' operations. Prior to these changes, Howard Schultz stepped back in as the chief executive officer (CEO). ...