The presented case study addressed a question about the development of the corporate responsibility strategy and mission statement of the Starbucks Company. Starbucks is a global brand recognized as one of the leaders in the beverages industry. The case study presented key arguments for the ethical and sustainable character of the business strategy applied in the chosen organization. It summarized primary information about specific social responsibility initiatives implemented in the organization about the environment protection sphere, employees, suppliers, customers, and communities. Based on the summary of case study information, it is obvious that the organization paid high attention to the delivery of sustainable outcomes of its operations to key stakeholders.
Together with this, Starbucks’ CEO Howard Schultz described the situation in the company as complicated due to the current market risks present and the changing expectations of customers. In this context, the ethical and sustainability initiatives of the company do not receive an adequate reaction from the key stakeholders, and the company might lose its brand reputation in the future. Despite all the benefits generated for stakeholders, the positions of Starbucks in the market are being worsened. In this context, Starbucks’ management needs to develop social responsibility strategy and brand strategy to strengthen the positions of the brand in the global market. Otherwise, Starbucks could face opposition from its potential customers, together with the loss of support of loyal clients.
Major Problems and Secondary Issues
The information in the case study also formed the basis for the understanding of current major and secondary challenges faced by the company. Among the major challenges for Starbucks, it is possible to mention the problems of the absence of strategic expansion strategy for the brand and the absence of reliable brand reputation among clients. In the context of the first major problem of the company, it was found that currently, Starbucks faces problems with the selection of a proper expansion approach. While the business aims to diversify its product lines, customers do not demonstrate the expected level of interest and support for the brand. In specific cases, diversification could become a source of risks for the brand, if senior management does not select the proper combination of products and services for clients. From this perspective, there is a risk that the initial brand image of the company could be lost behind a diversified set of products. This situation was a result of the failure of the initial expansion strategy of Starbucks that supposed a simple increase in the number of coffer stores.
The problem of the absence of a reliable brand reputation among customers was also considered as a major problem by the researcher. While in the context of the case study it could be assessed as a secondary problem, it is a major source of risks for business. This problem is related to the fact that despite all the activities of personnel and senior management, Starbucks cannot establish and preserve a positive reputation in the market. Specific challenges contributed to the worsening of the company’s reputation: lack of fair trade coffee, hormone-addled milk, CEO’s financial links to the Israeli government. All these cases create real risks for the brand reputation of the company, weakening its position in the market. They will have to be addressed in the future brand strategy of Starbucks.
Brand reputation challenges could also be considered as ethical and legal issues. Lack of fair trade coffee and hormone-addled milk are ethical concerns that generate uncertainty among customers. Even if these specific cases are simple rumors established to weaken the competitive positions of the brand, the fact of their spread leads to actual losses for the company. An adequate response to these specific challenges is required.
To address the problem of brand strategy development for Starbucks, it is sensible to take the position of the outside independent consultant of the company, who was invited to deal with this specific problem. The position of the independent external consultant was selected due to several important advantages. First, an external consultant is not limited by the existing hierarchy and subordination rules in the company in the process of decision-making and presentation of recommendations. This fact means that in case if a researcher takes a position of an independent contractor, it will be easier to describe the actual situation in the company and provide unpopular recommendations. An employed specialist of the company is usually limited in freedom of worst cases description. The position of an independent expert could allow the researcher to avoid concerns about censorship and approach the problem more effectively.
Together with this, external consultants would be capable to collect information about the company’s environment more effectively, without observable connections with business. To solve the brand reputation problems of Starbucks, it might be sensible to perform benchmark analysis of competitors and market analysis of customers. Independent consultants could collect the required primary information more effectively.
Organizational Strengths and Weaknesses
The major problem selected for the aims of the study included the issue of brand reputation improvement for Starbucks. Among the specific challenges faced in this context by the organization, the following should be mentioned: customer concerns about the quality of the end product; customer concerns about the company’s supply chain management strategy and approach to the selection of suppliers; general reduction of customer demand caused by economic recession and reduction of market activity. Specific strengths and weaknesses of the brand should be discussed in this context.
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Among the key strengths of the Starbucks brand that could allow the company to address the stated challenges in the future, the following must be mentioned: sustainable supply chain management strategy; environmental protection initiatives; customer-oriented approach to the development of the products and services; orientation on the needs of major stakeholder categories. In the aspect of supply chain management, the company aimed to control cooperation with suppliers in a way to mitigate risks of unsustainable practices development. Together with this, orientation on the needs and expectations of key categories of stakeholders, including customers, allows Starbucks to find optimal brand development strategies that could satisfy the company’s contributors.
Nevertheless, the desire to satisfy all the engaged parties of the company could lead to a conflict of interests, which would have to be solved. This argument, together with the findings of the case study, leads to the description of key weaknesses of the brand, including the following: ineffective product diversification strategy; poor quality of media representation of business; ineffective placing element in the marketing strategy of the brand; reputational losses in previous operations. Product diversification strategy led to the partial loss of the initial brand reputation of Starbucks. Together with this, ineffective placing strategy raised the level of clients’ concerns about the reputation of the company. Finally, previous cases of brand challenges, including the case with the company’s CEO and Israeli capital, removed a serious part of customer support from the brand. The company might not be capable to deal with old problems but will have to avoid the occurrence of similar challenges in the future.
Alternatives and Recommended Solution
To address the problem of brand strategy development for Starbucks, it is sensible to consider alternative solutions. First, the company could perform a major brand image reconstruction process, including strategic mergers with leading industry players that could strengthen the brand reputation of the company. Specific merger decisions could be based on the specific needs of the company. For example, since Starbucks will have to deal with the problem of hormone-rich milk rumors, it is sensible to enter strategic partnership relations with a brand that has an unquestioned reputation in the sphere of high-quality milk production and supply. Such an approach leads to a synergetic effect, where reputations of partners create significant growth of customer interest and demand. Such a solution could be one of the costly but reliable options. Among the limitations of such a solution, the problem of best candidate selection is relevant. If a company makes a mistake in the selection of partners, reputational losses could be even worsened. To implement this strategy, the cooperation between company’s experts and independent marketers is required. It will be necessary to develop a negotiation strategy that would guarantee potential partners’ interest in the merger.
Another solution could be related to the implementation of a customer-oriented market analysis procedure with the aim of customer needs and expectations assessment. It is sensible to perform a market analysis to collect information about key customer concerns related to the operations of Starbucks. This strategy seems to be a basic element of any type of market research. Nevertheless, in the stated case it will be important to perform the complex study, which would unite different customers of current and potential clients. The complicating aspect of the study is that it will be important to assess the current vision of the ethical aspect of the company’s operations among clients. There is a risk of the low quality of study outcomes and biases. Anyway, the outcomes of such a study could help senior management in the definition of future steps in the process of brand development.
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Among the proposed alternatives, an optimal recommendation is related to the development of strategic partnership relations with the companies that have the strongest reputation in the industry. The procedure of outcomes assessment would be based on the assessment of the specific ethical issues that were addressed using this method. For example, to address the problem of rumors about the application of the hormone-rich milk at Starbucks, the management of the company established strategic partnership relations with the best and most reliable producer of natural milk in the market – Company A. Marketing department of Starbucks presented the results of the merger agreement, stating that this result was mainly achieved to improve quality of the product for end clients.
After the realization of the merger, it will be important to collect information about customer reactions to the product and the brand in general. It is sensible to collect primary data using the mobile app of the brand and offline customer feedback forms in Starbucks’ cafes. Clients should be asked about the quality of the product they consumed, and specifically about the changes in the specific aspects of the product that were previously an object of customer concern. The rising share of positive feedbacks should be considered as a key indicator of changes in public opinion. Customers should change their image of Starbucks and develop trust in the quality of the company’s products.
Together with this, it will be important to perform benchmark analysis of the independent media resources that accumulate information about customer feedback on the performance of Starbucks. Independent rating resources could present useful information about key concerns and complaints of the clients. The reduction in the share of negative feedbacks could be considered as an outcome of the effective realization of the proposed strategy.