A Crack in the Mug: Can Starbucks Mend It? SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Organizational Development
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of A Crack in the Mug: Can Starbucks Mend It?
After 20 years of rapid expansion, the last six months of 2007 saw Starbucks jolted by a decline in share price of 50 per cent and a decrease in customer visits. Its share price was hovering around $19 to $20. By mid-2008, it had declined to $18. Its fiscal first-quarter profit in 2007 rose by less than two per cent, and in January 2008, it announced the closing of 100 U.S. stores. In July, the number was increased to 600. The case was written to encourage classroom discussion and research into the company policy and marketing practices in order to discover the means for a possible turnaround of the company.
Authors :: Michael Herriman, Motohiro Wanikawa, Ryoko Ichinose, Shobana Darak
Swot Analysis of "A Crack in the Mug: Can Starbucks Mend It?" written by Michael Herriman, Motohiro Wanikawa, Ryoko Ichinose, Shobana Darak includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Starbucks Jolted facing as an external strategic factors. Some of the topics covered in A Crack in the Mug: Can Starbucks Mend It? case study are - Strategic Management Strategies, Intellectual property, Marketing, Operations management and Organizational Development.
Some of the macro environment factors that can be used to understand the A Crack in the Mug: Can Starbucks Mend It? casestudy better are - – geopolitical disruptions, increasing government debt because of Covid-19 spendings, cloud computing is disrupting traditional business models, banking and financial system is disrupted by Bitcoin and other crypto currencies, customer relationship management is fast transforming because of increasing concerns over data privacy, supply chains are disrupted by pandemic , increasing inequality as vast percentage of new income is going to the top 1%,
increasing household debt because of falling income levels, central banks are concerned over increasing inflation, etc
Introduction to SWOT Analysis of A Crack in the Mug: Can Starbucks Mend It?
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in A Crack in the Mug: Can Starbucks Mend It? case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Starbucks Jolted, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Starbucks Jolted operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of A Crack in the Mug: Can Starbucks Mend It? can be done for the following purposes –
1. Strategic planning using facts provided in A Crack in the Mug: Can Starbucks Mend It? case study
2. Improving business portfolio management of Starbucks Jolted
3. Assessing feasibility of the new initiative in Organizational Development field.
4. Making a Organizational Development topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Starbucks Jolted
Strengths A Crack in the Mug: Can Starbucks Mend It? | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Starbucks Jolted in A Crack in the Mug: Can Starbucks Mend It? Harvard Business Review case study are -
Highly skilled collaborators
– Starbucks Jolted has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in A Crack in the Mug: Can Starbucks Mend It? HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High brand equity
– Starbucks Jolted has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Starbucks Jolted to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Digital Transformation in Organizational Development segment
- digital transformation varies from industry to industry. For Starbucks Jolted digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Starbucks Jolted has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Successful track record of launching new products
– Starbucks Jolted has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Starbucks Jolted has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Ability to lead change in Organizational Development field
– Starbucks Jolted is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Starbucks Jolted in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Cross disciplinary teams
– Horizontal connected teams at the Starbucks Jolted are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Diverse revenue streams
– Starbucks Jolted is present in almost all the verticals within the industry. This has provided firm in A Crack in the Mug: Can Starbucks Mend It? case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Superior customer experience
– The customer experience strategy of Starbucks Jolted in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Effective Research and Development (R&D)
– Starbucks Jolted has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study A Crack in the Mug: Can Starbucks Mend It? - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Sustainable margins compare to other players in Organizational Development industry
– A Crack in the Mug: Can Starbucks Mend It? firm has clearly differentiated products in the market place. This has enabled Starbucks Jolted to fetch slight price premium compare to the competitors in the Organizational Development industry. The sustainable margins have also helped Starbucks Jolted to invest into research and development (R&D) and innovation.
Organizational Resilience of Starbucks Jolted
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Starbucks Jolted does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Learning organization
- Starbucks Jolted is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Starbucks Jolted is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in A Crack in the Mug: Can Starbucks Mend It? Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Weaknesses A Crack in the Mug: Can Starbucks Mend It? | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of A Crack in the Mug: Can Starbucks Mend It? are -
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Starbucks Jolted supply chain. Even after few cautionary changes mentioned in the HBR case study - A Crack in the Mug: Can Starbucks Mend It?, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Starbucks Jolted vulnerable to further global disruptions in South East Asia.
Aligning sales with marketing
– It come across in the case study A Crack in the Mug: Can Starbucks Mend It? that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case A Crack in the Mug: Can Starbucks Mend It? can leverage the sales team experience to cultivate customer relationships as Starbucks Jolted is planning to shift buying processes online.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study A Crack in the Mug: Can Starbucks Mend It?, it seems that the employees of Starbucks Jolted don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the A Crack in the Mug: Can Starbucks Mend It? HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Starbucks Jolted has relatively successful track record of launching new products.
High cash cycle compare to competitors
Starbucks Jolted has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study A Crack in the Mug: Can Starbucks Mend It?, is just above the industry average. Starbucks Jolted needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Slow to strategic competitive environment developments
– As A Crack in the Mug: Can Starbucks Mend It? HBR case study mentions - Starbucks Jolted takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Workers concerns about automation
– As automation is fast increasing in the segment, Starbucks Jolted needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
High bargaining power of channel partners
– Because of the regulatory requirements, Michael Herriman, Motohiro Wanikawa, Ryoko Ichinose, Shobana Darak suggests that, Starbucks Jolted is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
No frontier risks strategy
– After analyzing the HBR case study A Crack in the Mug: Can Starbucks Mend It?, it seems that company is thinking about the frontier risks that can impact Organizational Development strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Capital Spending Reduction
– Even during the low interest decade, Starbucks Jolted has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Opportunities A Crack in the Mug: Can Starbucks Mend It? | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study A Crack in the Mug: Can Starbucks Mend It? are -
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Starbucks Jolted can use these opportunities to build new business models that can help the communities that Starbucks Jolted operates in. Secondly it can use opportunities from government spending in Organizational Development sector.
Leveraging digital technologies
– Starbucks Jolted can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Developing new processes and practices
– Starbucks Jolted can develop new processes and procedures in Organizational Development industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Starbucks Jolted in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Organizational Development segment, and it will provide faster access to the consumers.
Building a culture of innovation
– managers at Starbucks Jolted can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Organizational Development segment.
Manufacturing automation
– Starbucks Jolted can use the latest technology developments to improve its manufacturing and designing process in Organizational Development segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Starbucks Jolted to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Starbucks Jolted to hire the very best people irrespective of their geographical location.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Starbucks Jolted in the consumer business. Now Starbucks Jolted can target international markets with far fewer capital restrictions requirements than the existing system.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Starbucks Jolted is facing challenges because of the dominance of functional experts in the organization. A Crack in the Mug: Can Starbucks Mend It? case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Creating value in data economy
– The success of analytics program of Starbucks Jolted has opened avenues for new revenue streams for the organization in the industry. This can help Starbucks Jolted to build a more holistic ecosystem as suggested in the A Crack in the Mug: Can Starbucks Mend It? case study. Starbucks Jolted can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Better consumer reach
– The expansion of the 5G network will help Starbucks Jolted to increase its market reach. Starbucks Jolted will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Buying journey improvements
– Starbucks Jolted can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. A Crack in the Mug: Can Starbucks Mend It? suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Organizational Development industry, but it has also influenced the consumer preferences. Starbucks Jolted can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Threats A Crack in the Mug: Can Starbucks Mend It? External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study A Crack in the Mug: Can Starbucks Mend It? are -
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Shortening product life cycle
– it is one of the major threat that Starbucks Jolted is facing in Organizational Development sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
High dependence on third party suppliers
– Starbucks Jolted high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Starbucks Jolted will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Increasing wage structure of Starbucks Jolted
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Starbucks Jolted.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Starbucks Jolted with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Starbucks Jolted business can come under increasing regulations regarding data privacy, data security, etc.
Consumer confidence and its impact on Starbucks Jolted demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Starbucks Jolted can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study A Crack in the Mug: Can Starbucks Mend It? .
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study A Crack in the Mug: Can Starbucks Mend It?, Starbucks Jolted may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Organizational Development .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Starbucks Jolted in the Organizational Development industry. The Organizational Development industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Regulatory challenges
– Starbucks Jolted needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Organizational Development industry regulations.
Weighted SWOT Analysis of A Crack in the Mug: Can Starbucks Mend It? Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study A Crack in the Mug: Can Starbucks Mend It? needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study A Crack in the Mug: Can Starbucks Mend It? is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study A Crack in the Mug: Can Starbucks Mend It? is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of A Crack in the Mug: Can Starbucks Mend It? is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Starbucks Jolted needs to make to build a sustainable competitive advantage.