Strategic Issues Analysis of a Global Company
To complete this Shared Activity:
• Read and Review the analysis below.
• Respond to this analysis by offering potential critical directing questions and specific and constructive ideas for improving this analysis. (2 paragraphs)
• Be sure to support your postings with evidence. Consult the Harvard Referencing Style Guide for proper citation and referencing information.
Strategic Analysis of a Third Place Strategy
An urban sociologist, Ray Oldenburg, coined the term "Third Place" to mean a location other than home or work, where people relax and socialize on a regular basis (Oldenburg, 1989). When Howard Schultz purchased the company in 1987 his strategy was to make Starbucks this Third Place, to fill what he saw was a powerful need for Americans (Schultz & Yang, 1997).
So, while this is the strategy that I most admire of the Starbucks Corporation, it is also the first topic that comes to mind when asked about a major strategic issue they are currently facing: How do they remain appealing as a "Third Place" and still remain profitable?
In order to obtain this "Third Place" status, Starbucks focused on more than simply providing coffee. They sought out to create and maintain a certain ambience by offering large and comfortable seating areas, free Wi-Fi and great customer service (Rajasekaran, 2015).
The effort to create and maintain this elite luxurious status costs money, and I think it is one of the reasons behind that $4 cup of coffee mentioned on the McDonald's billboards (Schultz, 2010). When Starbucks began this journey, it was a bit of a blue ocean with few competitors having the same goals, but today competitors range from McDonalds to co-working spaces this their strategy framework has had to change from Prospector to Defender (Pitt &Koufopoulos, 2012).
When the profit margin was in distress, Schultz returned to the company to really take the helm back and become the leader the organization needed (Schultz, 2010). In that role, he had to make the decisions needed to get the company back on track, but more importantly he had to face up to the employees and let them know the results of those decisions such as $581 million in cost-cutting efforts and explaining to shareholders why he shut stores down for three and a half hours for training (Schultz, 2010).
From a concept that I admire, to a leadership style that I admire I have to say that I support Starbucks' actions because they were able to stay true to their initial vision and reputation by staying innovative, and above all for treating people as human beings as opposed to simply sources of profit. The decision to put the employee's health care above corporate profit (Schultz, 2010) not only gained support of those Starbucks employee, but of any customer who happened to hear of the deed, in addition to the support of a few non-coffee drinkers like myself.
References
Oldenburg, R. (1089) The Great Good Place: Cafes, Coffee Shops, Community Centers, General Stores, Bars, Hangouts, and How They Get You through the Day Boston, Massachusetts: Da Capo Press
Pitt, M., & D. N. Koufopoulos, (2012) Essentials of Strategic Management, London: Sage
Rajasekaran, R. (2015) 'Starbucks' Entry into Tea-Drinking India', IUP Journal of Brand Management Vol 12 (3) pp 45-58
Schultz, Interviewed by: Smith, R., (July-August 2010) Available at: https://hbr.org/2010/07/the-hbr-interview-we-had-to-own-the-mistakes (accessed 2/9/2016)
Schultz, H & D. Yang (1997) Pour Your Heart Into It: How Starbucks Built a Company One Cup at a Time New York, NY: Hyperion