Question

Was the decision to fire CEO Jim Donald wise? What are the pros and cons of changing senior managers? Has Starbucks lost its competitive advantage? How could Starbucks make its competitive advantage sustainable over time?

Answer 1

Strategy formulation is outlining of the plan to achieve the long-term overall aims of the organisation. The term strategy was mostly utilised in the military especially during war and referred to the methodology to be adopted for optimal execution of plans, as even slightest errors in implementation of a plan for achieving a given result through an action, could result in disaster, with serious impact on the outcome of the war. Strategy within an organisation ensures achievement of the goals of the organisation, and in the current scenario of global competitiveness is no less than war. Implementation of the strategy needs to be dynamic and proactive and not reactive achieving optimal results and staying ahead in a highly competitive global economic environment. This requires constant monitoring and control through identification of deviations from goals with immediate corrective action. Starbucks has time and again proved extensive implementation of strategy to obtain competitive advantage simultaneous to intensive growth. The organisation utilizes a multi-pronged strategy with the generic competitive strategies ensuring It stays ahead of competition while the intensive growth strategies prioritise goal such as increasing market share and improving market penetration. This results in a perfect balanced approach to strategic management through adequate focus and attention being provided to every aspect of sustenance and growth of the organisation along with achievement of organisational goals.

The capabilities of operations resources perspective involves strategizing around optimisation of resources and core competencies by micro management of all resources to ensure Input and processing are optimal and will lead to a product or service which is satisfactory for the customer. Since operational strategy involves all the processes that combine to form the operations of an organisation it is directly aimed at strategizing the optimal utilisation of all resources available, alongwith procurement and maintenance of the resources, including human resource. The operational strategy needs to identify the core competencies of the organisation and optimise them all whether it may be financial expertise, marketing, efficient employees, and advantageous location or many other which may be unique to each organisation. These core competencies need to be exploited for optimising product or service and maximizing customer satisfaction by meeting all customer requirements and exceeding expectations.

An organisation needs to function as a complete whole, a single unit and team working together in a Cooperative and coordinated manner to achieve the important goals of the organisation, both long term and short term. Strategy is designed to help achieve long term goals which requires absolute involvement with optimal performance from every part of the organisation to successfully implement it and obtain desired result. Operational strategy is an important organ system within the organism represented by the organisation. One cannot function optimally or survive without the other functioning in the required manner. Unless every sub strategy within an organisation reflects the organisational strategythey can both be working at cross purposes towards opposing goals which may lead to conflict and failure of both strategies. The top level of an organisation is involved in decision making mostly because it has the view of the entire organisation and is able to make better informed decisions due to the adequacy of data and information available for taking rational decisions. Operation strategy should be in alignment with the higher level strategy for achievement of operational goals related to the production and distribution networks. It requires the management of operations on the basis of Corporate strategy. If market dominance is required by corporate strategy operation strategy needs to increase production capacity and acquire extra warehousing facilities with strategic location for faster delivery.

The job of the chief executive officer is not only to device corporate strategy but to ensure its implementation and successful achievement of goals. An effective leader needs to generate results in every situation by exhibiting exemplary leadership qualities which enable the person to guide an organisation through crisis situations successfully by taking the required initiative to implement change and facilities transition in a situation requiring a leader to take absolute control and lead from the front why not only addressing concerns of all involve stakeholders but initiating and implementing positive change to ensure sustenance of the organisation during the crisis. in the present extremely dynamic and competitive economic environment most organisations are struggling for growth and survival due to existence of high level of uncertainties threats and constraints. It becomes essential that the management be extremely dynamic and ambidextrous in exploiting all available opportunities while optimising level of efficiency to control threats along with maintaining and gaining competitive advantage. In times of crisis strategy becomes extremely essential maintaining a clear vision with sharper focus on the mission along with goals and objectives of the organisation which helps to strengthen the decision making and motivate employees.

The chief architect approach to corporate strategy where the owner or CEO is the chief strategist and chief entrepreneur exhibiting exemplary and strong leadership by taking strong decisions while handling the implementation of the strategy while taking on the entire responsibility for success of the strategy by ensuring achievement of the desired result. How much shoes CEO of Starbucks is a prominent example of this approach and Organisation was habituated to a strong CEO leading from the front formulating tough and effective strategies along with strong decisions to benefit the organisation whenever required. Jim Donald on the other hand, is a more softer people's person put rhymes on building relationships and giving importance to people and relations in creating growth and success for an organisation. The crisis with the great depression however required IMO dynamic management style with extensive changing strategy to protect and maintain competitive advantage and explore opportunities to offset the impact of the economic downturn on the profitability of the company. Jim Donald failed to adequately formulate strategy to address the crisis along with the concerns of all involve stakeholders regarding the management of the crisis along with the strategy for effectively controlling the negative financial implications.

This resulted in Howard Schultz taking another tough decision to oust the chief executive officer which can be a very major risk for any Global organisation with widespread impact internally as well as externally for the organisation, and once again taking over the reins himself. The associated risk was mitigated by the strong leadership and exemplary strategizing which Howard Schultz is famous for, and the expertise which medium stay on as chief Global strategic and chairman for the company even when he was not chief executive officer.

Starbucks has not lost its competitive advantage and is in fact holding its own in a segment which is extremely competitive. With the new CEO Kevin Johnson taking on the job, while Howard Schultz will continue to interfere and has designed a strategy for running the companies premium reserve brand along with shepherding its roastery locations where it makes a foray into upscale roastery cafe for making a debut into Italy. Starbucks is launching its new us lunch menu in Chicago and it's order ahead campaign has caught on once again proving Starbucks is unbeatable in understanding customer needs and meeting them admirably. It has accurately understood the importance of time management in todays environment and introduced the order ahead concept providing instant coffee instantly.