New CEO Kevin Johnson took over in March 2017, and times were already tough. His first order of business was to convince shareholders he had a plan to restore lackluster sales. Starbucks was suffering from the stiff competition of other restaurants, such as fast-food giant McDonald’s, and the fact that their mobile ordering platform is causing traffic jams in their stores. Essentially, Johnson became CEO just as the company reported earnings less than projected across most categories. However, the company claimed that it could still meet its annual earnings, although it revised its forecast downward from $2.14 to a range of $2.08 to $2.12. Starbucks said its mall-based Teavana sales were declining and it is pursuing strategic options for some of those locations. Even though Howard Shultz, the founder, and former CEO, stayed on as Chairman with the arrival of Johnson, the change caused the stock price to drop. Domestically, Starbucks is accelerating the roll-out of its lunch items (sandwiches and salads) dubbed Mercato. However, the mobile ordering problems are hampering lunch sales as well. The company is considering adding tablets and more employees to help streamline the process. Answer all four (4) questions below in detail. 1. Did Starbucks’ control systems fail when it came to introducing a mobile-ordering app? Why or why not?
New CEO Kevin Johnson took over in March 2017, and times were already tough. His first order of business was to convince shareholders he had a plan to restore lackluster sales. Starbucks was suffering from the stiff competition of other restaurants, such as fast-food giant McDonald’s, and the fact that their mobile ordering platform is causing traffic jams in their stores. Essentially, Johnson became CEO
just as the company reported earnings less than projected across most categories. However, the company claimed that it could still meet its annual earnings, although it revised its forecast downward from $2.14 to a range of $2.08 to $2.12. Starbucks said its mall-based Teavana sales were declining and it is pursuing strategic options for some of those locations.
Even though Howard Shultz, the founder, and former CEO, stayed on as Chairman with the arrival of
Johnson, the change caused the stock price to drop. Domestically, Starbucks is accelerating the roll-out
of its lunch items (sandwiches and salads) dubbed Mercato. However, the mobile ordering problems are hampering lunch sales as well. The company is considering adding tablets and more employees to help streamline the process.
Answer all four (4) questions below in detail.
1. Did Starbucks’
2. Describe the organizational control process as it relates to Starbucks’ Mercato business.
3. Explain why the mobile-ordering app has been such a headache for store managers and employees in terms of day-to-day business and overall store performance.
4. What are some of the challenges the new Starbucks CEO faces in terms of organizational culture after taking over CEO duties from Howard Schultz?
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