Donald Out, Schultz Back In at Starbucks
Starbucks is facing some challenges as it moves ahead and the company has made the decision that the best person to lead it into that uncertain future is the same man who grew the company from a small seller of gourmet beans into a phenomenon that changed the way Americans and others around the world think about and drink coffee.
Howard Schultz was named to return to the position of chief executive of Starbucks, succeeding Jim Donald who is leaving the company. Mr. Donald joined Starbucks from the Pathmark supermarket chain in 2002 and was made president and CEO of the company back in 2005.
Mr. Schultz takes back over a company that has seen customer traffic slow down for a variety of reasons, ranging from the economy to increased competition from a host of foodservice and retail competitors. Just yesterday, The Wall Street Journal reported that McDonald’s planned to open coffee bars staffed by baristas at its 14,000 restaurants in the U.S.
Setting Starbucks right is not as difficult as it could be, Mr. Schultz maintained in a letter to employees, because many of the challenges it faces were of the company’s “own making.”
Mr. Schultz’s plan focuses on returning to the customer experience that made Starbucks business during its growth years. He cited the need for: “Re-igniting our emotional attachment with our customers by restoring the connection our customers have with you, our coffee, our brand, and our stores. Unlike many other places that sell coffee, Starbucks built the equity of our brand through the Starbucks Experience. It comes to life every day in the relationship our people have with our customers. By focusing again on the Starbucks Experience, we will create a renewed level of meaningful differentiation and separation in the market between us and others who are attempting to sell coffee.”
Other steps planned to turn Starbucks around include slowing new store openings in the U.S., closing underperforming units, streamlining management and expanding more aggressively overseas.
Discussion Questions: What do you see as the root causes behind the challenges faced by Starbucks over the past year? What will be its challenges for the future? Is Howard Schultz the right person to lead the company at this time? What are your thoughts on Mr. Schultz’s plans for the company?
- Letter and Voicemail to Partners – Starbucks
- Starbucks Announces Strategic Initiatives to Increase Shareholder Value; Chairman Howard Schultz Returns as CEO – Starbucks
- Transforming Starbucks for the Future (letter to consumers) – Starbucks
- McDonald’s Takes On ?A Weakened Starbucks – The Wall Street Journal