This essay will examine the significance of change within organisations. The key areas of organisational culture, PESTLE and SWOT analysis and change management theories will be analysed within the company of Starbucks. When referring to change, successful management of change is influenced by the organisations culture of openness and the acceptance of new ideas (Mullins and Christy, 2016). There are many types of change, Johnson et. al. (2017) that there are four types of strategic change, adaption, reconstruction, revolution and evolution; the adaptation of an organisation can occur incrementally with the existing culture. Similarly, reconstruction also involves using an existing culture; however, this change is rapid. Revolution refers to a change in both strategy and
Organisational culture is defined as the “underlying beliefs, assumptions, values and way of interacting” that can contribute to the social and psychological environment of an organisation (Cancialosi, 2017). Handy (1993) proposed that there are four types of culture that an organisation can follow, this consists of the power culture, task culture, role culture and person culture. The power culture consists of one or a few people that have control over everything within an organisation, they’re seen as a power central figure; there are often very few rules and regulations, but decisions remain quick within this type of culture (Zov, 2010). Employees are often judged on what they have achieved rather than how they do things, this culture can swiftly turn toxic (Riley, n.d.). (Textbook) states that this type of culture is often found in small entrepreneurial organisations as the control radiates from the centre; however, employees often lack motivation due to the autocratic style of leadership, leading to a lack of creativity. Task culture is all about teamwork, this culture allows employees to form a team in order to work on a project, ensuring that there are different skills available. The task is key rather than the individual or the rules; in addition, individuals are able to complete tasks with more freedom and flexibility as teams are often formed to solve specific problems within the organisation (Zov, 2010). Alternatively, role culture is based on the structure of the organisation with more rules and bureaucracy, work if often decided by the rules and regulations that are set (Riley, n.d.). Within this culture, more than one personal has control over the organisation, as this culture is built on a tall organisational structure, decision making can be slow and indicates that the organisation is less likely to take risks (Zov, 2010). The person culture is extremely different to the other types of culture as (Cancialosi, 2017). Individuals are the focus of the business and as they have the authority to make all decisions regarding specific tasks as there is no hierarchy (Zov, 2010). Starbucks demonstrates that they have a person culture as the organisation focuses on the warmth and belonging of their employees and customers (Pratap, 2019). In addition, each employee is valued as they’re referred to as ‘partners’ rather than employees as the company encourages close bonds between employees, this contributes to developing a comfortable environment within stores (Dudovskiy, 2017). Another characteristic of Starbucks’ culture is the openness within the organisation, employees are encouraged to ask questions and communicate with managers (Ferguson, 2019); this contributes to the success of Starbucks as Mullins and Christy (2016) state that the culture of openness contributes to successful change management. This contributes to the success of Starbucks as employee motivation is increased as employee’s feel as though they’re trusted and valued within the organisation; it may also attract new applicants (Huang, 2017).
A PESTLE analysis is a framework used to analyse the political, economic, social, technological, legal and environmental factors that influence an organisation, this analysis can be useful for gaining context for change and allows organisations to focus on potential areas that make change successful (CIPD, 2018). The political factors address various laws (Frue, 2017), and can include government policies, political stability, corruption, trade and tax policies and trade restrictions (Businesstoyou, 2016); all businesses must work with these policies to avoid legal consequences (Frue, 2017). The political factors that impact Starbucks are the laws and regulations in the countries from where Starbucks buys their raw materials, this is due to the increased activism and political awareness in developing countries (Pestleanalysisofstarbucks, 2015); in addition, the political stability of the countries may also affect Starbucks (Shaw, 2019). The economic factors are determined by the economy’s performance (Businesstoyou, 2016), these factors include inflation rates, disposable income, interest rates, economic growth and unemployment rates (Frue, 2017). These factors can have a long-term impact on a company as the purchasing power of consumers is affected, whilst the supply and demand model may be adjusted; therefore, it affects the way companies price their products (Businesstoyou, 2016). Starbucks faces many economic factors. For instance, there’s a high economic growth of developing countries; this benefits Starbucks as the lower unemployment rates allow Starbucks to gain more revenues from various markets, which enables growth for the company (Smithson, 2017). However, Pestleanalysisofstarbucks (2015) argues that due to the rising labour costs, the organisation has experienced a decrease in profit. Social factors focus on consumers and potential customers, this typically includes population trends such as growth rates, income distribution, career attitudes and cultural barriers (Businesstoyou, 2016). Heavy amount of focus is put into this section of the analysis as many organisations would like to attract new customers and gain loyalty (Frue, 2017). One of the social factors that Starbucks must consider is the growing coffee culture, this is seen as an opportunity for Starbucks to increase its revenue due to the rise in demand for coffee; another social factor that Starbucks face is the increase in health consciousness, as this attracts many health conscious consumers to Starbucks cafes (Smithson, 2017).
Technological factors are levels of advancement in technology (Frue, 2017); this includes technology incentives, technological change, technological awareness and the level of innovation (Businesstoyou, 2016). Technology has an impact on the success of Starbucks as there’s been an increase in in mobile purchases due to the ease of the payment process for customer (Shaw, 2019). However, Smithson (2017) argues that the rising availability of home coffee machines increase the substitutions of Starbucks products. Despite this, Starbucks have allowed Nestle to sell Starbucks pods for coffee machines, which resulted in Starbucks gaining $7.15 billion (Bloomberg, 2018). Although legal and political factors may overlap, legal factors include more specific laws such as employment laws, patent and copyright laws, health and safety laws and consumer protection laws (Businesstoyou, 2016); for example, some organisations may require patents to ensure their competitors don’t copy their products (Frue, 2017). Starbucks must ensure that they do not violate any laws and regulation; due to the increasing employment regulations threaten their access to the labour market (Smithson, 2017). Additionally, the caffeine consumption levels are heavily regulated can affect the success of Starbucks as consumers consider the harmful effects it can have on individuals (Shaw, 2019). Environmental factors are highly considered in marketing (Story, 2019), this is due to the scarcity of raw materials, pollution targets and carbon footprints set by the government (Businesstoyou, 2016). The environmental factors include climate change, weather and eco-friendly products (Frue, 2017). One of the environmental factors Starbucks has considered increasing is the eco-friendly products that they use as Warnick (2019) states that 30,000 Starbucks stores worldwide now use paper straws and cold drinks lid that do not require straws to decrease harmful plastic waste; this can impact the success of Starbucks as they’re gaining popular support for using environmentally friendly products (Smithson, 2017). Although a PESTLE analysis is a simple framework, it allows organisations to gain a greater understanding of the wider business environment (CIPD, 2018), it also allows the business to gain insight on any potential threats or dangers that can affect the organisations success (Post, 2018). However, Frue (2018) argues that the six factors within this analysis rapidly change; for example, political parties can be forced out and technology can be rendered obsolete. Thompson (2019) also argues that there’s a limited viewpoint when using this analysis as there are many other factors that aren’t considered such as internal factors and competition; it’s also suggested that organisations should use this alongside a SWOT analysis to gain a fully founded perspective before making decisions.
A SWOT analysis allows organisations to evaluate a company’s competitive position and develop strategic plan (Grant, 2019). This type of analysis consists of looking at an organisation’s strengths and weaknesses, opportunities and threats; the strengths and weaknesses are internal as organisations are able to make changes, whilst opportunities and threats are external and involves the larger market (Parsons, 2018). Strengths refer to what organisations excel at and distinguishes them from their competitors; this can include a loyal customer base, a strong balance sheet and unique technology (Grant, 2019). The main strengths of Starbucks are that the company has one of the strongest brands; as a result of this, Starbucks have a large population of loyal customers, which ass to the stability of the organisation (Lombardo, 2019). Weaknesses stop an organisation from performing at its optimum level due to many factors such as a weak brand, high level of debt and an inadequate supply chain (Grant, 2019); a weakness of Starbucks includes their high price points as this limits their market share as the affordability of their product is reduced and may not appeal to customers with a lower disposable income (Bush, 2016). Opportunities are external factors that contribute to an organisation’s success (Parsons, 2018), whilst allowing them to gain a competitive advantage (Grant, 2019). The expansion of Starbucks expansion in to developing markets can increase the company’s revenue, this opportunity draws attention away from their larger markets where most of the revenue is typically generates (Lombardo, 2019). Unfortunately, organisations have no control on the threats that can affect success (Grant, 2019), this can involve competitors; for instance, Starbucks competes against many restaurant chains that offer lower prices such as McDonalds, this can have a significant impact on market share (Lombardo, 2019). Although this analysis can help organisations set objectives and create strategic plans, it doesn’t consider factors like government legislation and economic legislation; suggesting a PESTLE and SWOT analysis should be considered to maximise an organisations success within change management (Juneja, 2015).
Change can occur in many different areas of organisation such as leadership change, strategic change, technological change and cultural change (Mullins, 2010). Kotter introduced an eight-step model of change process and claims that undertaking these steps can help organisations avoid failure and become more adept to change; this change model has been used by many organisations such as Starbucks. The first step within the change model is to ‘create a sense of urgency’, this involves making employees aware of the need of urgency for chance; it requires an open and honest dialogue to convince employees of the importance of the action and can often be achieved by discussing potential threats (Mulder, 2012). The CEO of Starbucks established a sense of urgency by ensuring all employees received a letter emphasising that the company must “go back to its core business and become customer centric again instead of focusing on bureaucracy”
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