Systems Thinking for Starbucks: Improving Business Performance
In the Assignments for this module, you will assume the role of a consultant who has been asked by the upper management team to evaluate an organizational performance problem within an organization. You will present your findings in the form of a written report with an executive summary presented as a PowerPoint presentation. The organization for this evaluation will be one of your choosing, and it should be one with which you are familiar. This organization could be where you currently work or where you have worked in the past.
After selecting an organization with which you are personally familiar, you are to present your evaluation and recommendations in a detailed business report. Additionally, you will prepare an executive summary of your findings to be presented as a PowerPoint slide deck to the organization’s upper management team.
Part 1: Business Improvements (4–5 pages)
Analyze some of the basic details about the organization. At a minimum, the basic details should include: the industry and products/services the organization offers, the overall operational and financial health of the organization, and a qualitative or systems diagram summary of how the organization operates to fulfill its commitments to customers.
Analyze what you believe to be the fundamental physical, policy, or market constraints that are preventing your organization from moving to the next level of performance. Be sure to clearly identify each primary constraint and provide a detailed argument and evidence for why you think each is a primary constraint to organizational performance. Be sure to support your response with appropriate concepts from performance management and/or systems thinking.
For each of the fundamental physical, policy, or market constraints that you identified as preventing your organization from moving to the next level of performance, justify a specific recommendation for how to elevate, support, and potentially eliminate the constraint.
Using the concepts of throughput accounting and Theory of Constraints accounting measurements for each of your recommendations, evaluate how the primary metrics of T, I, and OE would be affected and why the recommendations would make sense from a performance measurement perspective.
Identify the major stakeholders of the organization. Illustrate how the organization’s actions do or do not effect positive social change for these stakeholders (explain in detail).
Through a systems thinking lens, apply improvements to the organization to positively effect social change.
From a systems perspective, evaluate the organization’s performance in terms of diversity and inclusion.
Assess whether there is a relationship between ethics and inclusion (explain and substantiate your position). Recommend what improvements can be implemented to positively impact both.
Defend recommendations you would make to the upper management team to support personal mastery at both the individual level and the organizational level, being sure to include your rationale. (Consider all major stakeholders: employees, customers, and the community.) Provide specific examples to support your position.
Compose your personal vision. (Note that this personal vision goes far beyond traditional goals and objectives and should focus on purpose). In what ways does your personal vision relate to your ability to lead positive social change within your organization, your community, or more broadly?
Executive Summary Presentation (1–2 slides)
Develop an executive summary of your overall evaluation to be presented to the upper management team.
Module 3 Assignment:
Systems Thinking for Starbucks
Report prepared by: FORMTEXT Replace this text with your name.
Date: FORMTEXT Replace this text with the submission date.
Walden University
WMBA 6040: Improving Business Performance
Executive Summary
This paper discusses Starbucks’ performance challenges: rising product prices, higher wage payments, and rising coffee bean prices. Thus, these challenges might push customers to switch preferences to Starbucks’ competitors. However, Starbucks can counter this threat by capitalizing on premium and unique product provisions their consumers prefer to retain clients. In addition, Starbucks’s creation of exceptional client experience outlets, like the launch of Reserve roastery and tasting room outlets, provide tailored and high experience, which will help the company gain new clients despite the rise in their product pricing. Because of the positive benefits of being a socially responsible organization, Starbucks invests in sustainable business activities by promoting diversity, ethics, and inclusion. Through investing in its stakeholders, such as the workforce, competitive remuneration, benefits system, and a chance for stock ownership, Starbucks has an edge in luring and retaining a competent and productive workforce that reduces its recruitment, training, and other turnover expenses.
Part 1: Business Improvements
About Starbucks
Starbucks is a coffeehouse chain based in Seattle. The company has over twenty-eight thousand stores in over sixty-two nations. Starbucks offers tea, snacks, instant coffee, pastries, and beverages. The organization has expanded internationally because the management realized that focusing on growing the Starbucks network is the key to triumphing in the café industry and tackling competition. Starbucks has opened outlets in sixty-two nations as part of its internationalization strategy (Li et al., 2019). Starbucks has a business model premised on the advancement of outlets offering an exceptional client service experience with diverse instant coffee options served to clients together with other food items (Kang & Namkung, 2018). In its internationalization strategy, Starbucks has utilized both product and market development. Thus, Starbucks has expanded its product mix by acquiring organizations like Tazo Tea to concentrate on the tea-drinking markets and LaBoulange bakery. In addition, Starbucks has customized its product portfolio globally to cater to the diverse needs of its clients. Starbucks concentrates on adaptation instead of standardization globally. Starbucks functions to fulfill its promises to clients through the following strategies;
* Selection of the correct market segment: Starbucks targets the upper-class coffee market segment locally and globally and has not conceded on this position.
* Service execution: Starbucks has concentrated on offering a great ambiance through great store design by incorporating local aesthetics into every store as a creative way to connect with its customers.
* Outstanding leadership: The leadership of Schultz and Kevin John has been a great compliment. With Schultz concentrating on social initiatives and international retail expansion of new projects like Starbucks Reserve Roasteries locations, Johnson focuses on steering the organization’s functions and tech development.
Fundamental Market Constraints Facing Starbucks with Recommendations
* Price Increases
Starbucks has been continually leveraging its client’s loyalty and absence of elasticity among its clients by constantly passing on rises in costs because of wages and coffee prices to its clients. Hence, between 2014-2016, the company made four product price increases. The price hike is targeted at safeguarding the operating margins of Starbucks. The main concern is how loyal customers will stick with Starbucks before switching to its competitors if it continues with the price hike (Kang & Namkung, 2018). Starbucks’ main attraction is its welcoming and premium atmosphere. Starbucks has become a prevalent location for casual meetings linked to work or to study while having coffee.
Starbucks continues to create its brand presence through innovative products by launching new concept outlets like Reserve Roastery and tasting room outlets. Thus, these concept outlets are targeted to provide a highly tailored and elevated encounter targeted at wealthy clients and coffee connoisseurs. This is one of the proposals to counter the price hike. Starbucks is targeting ten roasteries providing various coffee experiences such as clover, pour-over, particularly roasted reserve coffee on-site that a client can purchase from a scoop bar, and interactive encounters with bars and baristas (Cao & Qiu, 2021). In addition, Starbucks has witnessed growth in its reward program. Hence though they might lose some clients because of higher prices, it will be more than offset by excellent client retention and rising client acquisitions.
* Higher wage payment
The higher raw material and labor costs push the upsurge in end product prices. It is asserted that a rise in the federal minimum pay will negatively influence Starbucks and its already small margins, mostly at licensed outlets (Kee et al., 2021). However, this assertion fails to integrate that labor expenses are the smallest component of Starbucks’ function costs. In addition, Starbucks already pays salaries much higher than the specified minimum, and it is widespread as a worker’s choice. Hence a rise in federal minimum pay will only assist Starbucks by affecting its competitors negatively.
* The rise in Coffee Prices
The main contributor to the high coffee bean prices is the Vietnam and Brazil drought, which caused enormous numbers of coffee bean producers. Also, the risen coffee demand has outcome in a decrease in the coffee beans inventory level for the year. Hence this has caused a rise in coffee pricing. Because coffee is the leading raw material utilized, a surge in coffee bean pricing a...