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 - – banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing inequality as vast percentage of new income is going to the top 1%, cloud computing is disrupting traditional business models, increasing household debt because of falling income levels, increasing energy prices, increasing transportation and logistics costs, there is backlash against globalization,
challanges to central banks by blockchain based private currencies, digital marketing is dominated by two big players Facebook and Google, 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 -
Strong track record of project management
– Starbucks Jolted is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
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.
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.
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.
Ability to recruit top talent
– Starbucks Jolted is one of the leading recruiters in the industry. Managers in the A Crack in the Mug: Can Starbucks Mend It? are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
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.
Low bargaining power of suppliers
– Suppliers of Starbucks Jolted in the sector have low bargaining power. A Crack in the Mug: Can Starbucks Mend It? has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Starbucks Jolted to manage not only supply disruptions but also source products at highly competitive prices.
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.
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.
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.
Training and development
– Starbucks Jolted has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in A Crack in the Mug: Can Starbucks Mend It? Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
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 operating costs
– Compare to the competitors, firm in the HBR case study A Crack in the Mug: Can Starbucks Mend It? has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Starbucks Jolted 's lucrative customers.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study A Crack in the Mug: Can Starbucks Mend It?, in the dynamic environment Starbucks Jolted has struggled to respond to the nimble upstart competition. Starbucks Jolted has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Increasing silos among functional specialists
– The organizational structure of Starbucks Jolted is dominated by functional specialists. It is not different from other players in the Organizational Development segment. Starbucks Jolted needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Starbucks Jolted to focus more on services rather than just following the product oriented approach.
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.
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.
Need for greater diversity
– Starbucks Jolted has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Starbucks Jolted is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study A Crack in the Mug: Can Starbucks Mend It? can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Products dominated business model
– Even though Starbucks Jolted has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - A Crack in the Mug: Can Starbucks Mend It? should strive to include more intangible value offerings along with its core products and services.
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.
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.
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 -
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Starbucks Jolted to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Using analytics as competitive advantage
– Starbucks Jolted has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study A Crack in the Mug: Can Starbucks Mend It? - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Starbucks Jolted to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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.
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.
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.
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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Starbucks Jolted can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Starbucks Jolted can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, A Crack in the Mug: Can Starbucks Mend It?, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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.
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.
Learning at scale
– Online learning technologies has now opened space for Starbucks Jolted to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Starbucks Jolted can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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 -
Technology acceleration in Forth Industrial Revolution
– Starbucks Jolted has witnessed rapid integration of technology during Covid-19 in the Organizational Development industry. As one of the leading players in the industry, Starbucks Jolted needs to keep up with the evolution of technology in the Organizational Development sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
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.
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.
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.
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.
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.
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.
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 .
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.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Starbucks Jolted needs to understand the core reasons impacting the Organizational Development industry. This will help it in building a better workplace.
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.
Easy access to finance
– Easy access to finance in Organizational Development field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Starbucks Jolted can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.