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Objectives Block · To effectively use the library database; · To thoroughly understand research report format and layout; · To make a set of formal recommendations in a professional setting. Task The...

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Objectives Block
· To effectively use the li
ary database;
· To thoroughly understand research report format and layout;
· To make a set of formal recommendations in a professional setting.
Task
The executive team at Sta
ucks has hired you as a consultant to come in and sort out the problem the organization is facing. (For an example of a public relations firm that does this kind of work, see Fleishman Hillard.) You are going to carefully analyse the problem and craft a research report approximately XXXXXXXXXXwords in length (main content of the document not including Letter of Transmittal, Title Page, Exec Summary, References, and so on) which is going to tell the senior management how organization should remedy the situation. You may use content from the case study if you wish.
Report should address the following central questions:
1. What is the problem facing Sta
ucks? Remember you should have identified the problem in the case assignment; use that.
2. What underlying factors gave rise to the problem? You should have given some thought to underlying factors in the second question in the case study worksheet. Feel free to use this content.
3. What recommendations are you going to make to your superior to ensure that problem is properly handled? While we are making three recommendations, not offering three alternatives, you can bo
ow from some of the alternatives you created in your case.
Report will include at least one effectively titled visual. Effective headings are essential.
Assignment Deliverables
A. Report
Report Components (These are not headings.)
Report Components 
Report should be XXXXXXXXXXwords in length (main content in the “Report Body” of your document, not including tables and references) and should employ standalone headings. Assignment should follow problem-solution structure introduced in video lecture. Document should be:
· Composed in Microsoft Word;
· Uploaded to URCourses;
· Checked for spelling, punctuation, and grammatical e
ors.
Carefully follow my video instructions when you create your report.
B. Visual
Report should contain at least one high-quality “visual”. Visuals which contain data should be formatted by you and not simply screen-copied from other internet sources. Think of it this way: Consultants are well-paid for the information they provide their clients. Would a client be happy if her consultant took a screen shot of a bar chart found somewhere on the internet?
Remember that you have to draw the reader’s attention to the visual in the text. Remember that your visual also needs a caption. Source of your visual should be included in references. If you create your own visual from material you have synthesized yourself, you need not include a reference
C. References 
Please include at least 10 references. Remember, good references include diverse materials such as government documents, industry reports, academic articles, case studies, law cases, reputable web sites, and authoritative news content. You may use the references included in the case study if you think appropriate.




9B19M117


STARBUCKS, HOWARD SCHULTZ, AND THE TRUMP EFFECT1


Ken Mark wrote this case under the supervision of Professor W. Glenn Rowe solely to provide material for class discussion. The
authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised
certain names and other identifying information to protect confidentiality.

This publication may not be transmitted, photocopied, digitized, or otherwise reproduced in any form or by any means without the
permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights
organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western
University, London, Ontario, Canada, N6G 0N1; (t XXXXXXXXXX; (e) XXXXXXXXXX; www.iveycases.com. Our goal is to publish
materials of the highest quality; submit any e
ata to XXXXXXXXXX. i1v2e5y5pubs

Copyright © 2019, Ivey Business School Foundation Version: XXXXXXXXXX


“Who’s Afraid of Howard Schultz?” was the headline of the Wall Street Journal’s editorial posted on
January 30, XXXXXXXXXXA few days before, Schultz, the former chief executive officer (CEO) and former
executive chairman of Sta
ucks, had declared that he was thinking of running, as an independent candidate,
to become the president of the United States in 2020. Schultz’s plan was widely criticized by Democratic
observers and contenders, who believed that his candidacy—as a centrist—would have the effect of drawing
votes away from a Democratic nominee, resulting in President Donald J. Trump being re-elected for another
four-year term. “If Howard Schultz runs for president, Sta
ucks will be on the ballot, too,”3 stated an article
in the Washington Post on January 28, 2019, even though Schultz had stepped down from his role as
executive chairman on June 26, 2018 and had no further business dealings with the coffee chain.4 This
article was not the first effort by pundits to link Schultz with Sta
ucks.

During the 2016 presidential elections, while Schultz was still CEO of Sta
ucks, he had publicly endorsed
Democratic candidate Hillary Clinton, Trump’s chief rival, stating:

Hopefully Hillary Clinton will be elected president. I think it’s obvious that Hillary Clinton needs
to be the next president. On the other side, we’ve seen such [a] vitriolic display of bigotry and hate
and divisiveness, and that is not the leadership we need for the future of the country.5

Schultz, then the CEO of Sta
ucks, a major, publicly traded Fortune 500 firm on NASDAQ, had made his
political views known in an era when most CEOs were choosing to avoid taking such a public political
stance. Trump’s supporters wasted no time in denouncing Schultz, using the hashtag “#Boycott Sta
ucks.”
Trump himself added that he was thinking of removing the Sta
ucks store from the Trump Tower building
in New York City.6

While Schultz’s first efforts to engage in the political dialogue drew criticism from conservatives—and had
potentially negatively affected the company’s sales (see Exhibit 1) and share price—his second effort, less
than three years later, was attracting angry voices from liberals. Commentators suggested that Sta
ucks’
operations could again be negatively affected by Schultz’s moves. Mark Kalinowski of Kalinowski Equity
Research stated:

Sta
ucks’ fairly
oad U.S. customer base—it is, after all, the #2 restaurant
and in the U.S. as
measured by domestic system-wide sales—nevertheless skews somewhat toward the Democratic
Page 2 9B19M117


side of the political spectrum XXXXXXXXXXIf Mr. Schultz is widely seen as doing something meaningful that
could help tip the U.S. presidential election toward the cu
ent Republican incumbent, the relevant
question for Sta
ucks’ shareholders might not be if Sta
ucks’ business would be harmed by Mr.
Schultz’s actions—only by how much.7

On January 30, 2019, it was reported in the press that Kevin Johnson, Sta
ucks’ CEO, had sent an email to
the company’s 350,000 employees in an effort to distance the coffee company from its former leader, writing,
“As a company, we don’t get involved in national political campaigns. And nothing changes for Sta
ucks.”8


THE SPECIALTY COFFEE CONSUMER

The market for specialty coffee in the United States was $1.3 billion9 in 2016. According to research by the
Specialty Coffee Association of America, consumers of specialty coffee looked for quality, convenient
locations, and friendly and knowledgeable staff. Victrola, a popular independent coffee shop in Seattle, was
described this way:

A chrome-covered, vastly complicated, all-manual espresso machine yowled and hissed. The joint
eeked of fresh roasted coffee. With spiky hair, great gobs of eye shadow and ga
ulous ways, two
aristas ground beans for each new shot of espresso. Slowly and carefully, they created lattes in
heavy china cups, each drink with its own distinctive floral pattern.

Around the store, customers hunched over laptops, sponging up free Wi-Fi, slowly nursing their
espresso investments. A sca
ed but serviceable, upright piano stood off in the corner. It is played,
sometimes with virtuosity, by stragglers coming off the street. . . .

“Look at the baristas!,” [said a customer], pointing to the intense women on the business side of
the espresso machine. “This is a calling, what they do, like an old-school European ba
er. This is
not pulling fries out of the vat when the thing beeps at you. With these old machines, you run the
isk of variability in every cup. But sometimes you get art.”10

Relatively speaking, the price of a coffee drink was not a big concern to aficionados. In 2017, a survey
found that two-thirds of Americans drink a cup of coffee each day. This rate of coffee consumption was the
highest in five years.11 A National Coffee Association survey found that the majority of coffee drinkers
consume coffee in the early and mid-morning periods, with relatively fewer people drinking coffee from
the afternoon onward.12


COMPETITORS

Sta
ucks’ key competitors were smaller chains such as Caribou Coffee with 440 stores, Peet’s Coffee with
190 stores, and privately owned, independent coffee shops. Quick-service chains such as Dunkin’ Donuts and
McDonald’s had been adding coffee to their menus, in an attempt to capitalize on Sta
ucks’ efforts to develop
the market for premium coffee. For major restaurant chains, coffee sales represented a way to boost revenues.


STARBUCKS

Sta
ucks had started in 1971 as a single store in Seattle and had originally been owned by two teachers
and a writer inspired by Peet’s Coffee. Schultz join Sta
ucks in 1982 as director of retail operations and
Page 3 9B19M117


marketing, left to start a coffee company called Il Giornale, and then purchased Sta
ucks in XXXXXXXXXXFive
years later, with 165 outlets, Sta
ucks had its initial public offering and began to expand rapidly across the
United States. Featuring premium coffee in various blends, Sta
ucks was responsible for popularizing
specialty coffee drinks in the United States. Its early stores were known for their warm, inviting, and often
distinctive décor. Coffee beans were roasted on site and served fresh. Its employees—known as
“partners”—enjoyed health-care benefits and stock options,14 which were then unheard of for U.S. retail
employees. In 2018, Sta
ucks employed 291,000 people worldwide, of whom 191,000 were in the United
States. Of those employees, 183,000 employees
Answered 3 days AfterMar 14, 2022

Solution

Parul answered on Mar 16 2022
40 Votes
Assignment – Sta
uck Case
Assignment – Sta
uck Case
Contents
1    Executive Summary    1
2    Problems faced by Sta
ucks    1
3    Underlying factors that gave rise to the problem    2
4    Recommendation    4
5    References    6
Executive Summary
The Sta
ucks was established in 1971 by Je
y Baldwin, Zev Seigel and Gordon Bowker with an overall vision to educate American audience about real and passionate coffee drinking experience. In the year 1987, Howard Schultz came into the business and completely transformed it to a multi-million dollar business that builds on the personal relationship with the customers and coffee. Within a couple of years they grew from boutique coffee parlor into a multi-million dollar player in the industry by utilizing the best ingredients that are available offer an unparalleled store experience. The ultimate mission of the Sta
uck is to inspire and conjure the human soul - one cup, one person and one neighborhood at a time. Fresh
ewed coffee, roasted beans and different flavors are the critical product of Sta
ucks along with cakes, pastries, teas etc. Customer can have the option to taste different flavor of coffee which includes both hot and cold. The
ain behind building a successful business and strong legacy of company Sta
ucks had announced that he would be step down from his position of Chairman of Sta
ucks. Howard Schultz, CEO will be stepping down from his position of power in the company for the second time after FY2000. Howard Schultz’s decided to come in position again in FY2008 after rampant decrease in the earning per share and tremendous reduction in the share price of Sta
ucks. His return as CEO actually helped in galvanizing the coffee giant once again.
Problems faced by Sta
ucks
The share price of Sta
ucks was consistently dropping as the company was getting dragged in number of political activities and issues. People started to lose their trust in the organization that used to serve their favorite beverages rather turning into a place of judgmental executives.
The real issue and problem faced by Sta
ucks is that the CEO and leader of the company is too vocal about his political opinions and aspirations. Therefore, there are many business analysts and investors don’t feel that Howard Schultz can live up to the vision and values of Sta
ucks as a
and. From a business point of view Sta
ucks is place where customers go to get that warm and cozy feeling of neighborhood store. If politics gets involved in this space it creates massive conflict with the overall value proposition. Sta
ucks have made a lot of news in a negative way with the election of Donald Trump. Furthermore, being extremely vocal and active on various political agendas like rights for veteran, race relations, Mexican Wall, and growing debt for students have put the business in the tentacles of public scrutiny. Moreover, Schultz have travelled to different states opening talking about the dysfunction in American Elections and chaos in Washington. Essentially, Schultz consistent opinion on political activities and stance on the Trump's election is consistently waging war against the Sta
ucks as a business (Sorkin, 2016). His open support to campaigns like "Race Together" definitely
ings a lot of impact on the business. This campaign emerged from the death of unarmed and innocent black man, however this initiative failed to attract attention and get any success. However, the corporate executives led the campaign that encouraged baristas to participate in Race Together on the coffee cups as well as engage the conversations with the customers. This further led to the backlash on various social platforms (Ca
, 2015). Sta
ucks was getting invested in the political chaos and had a lot of...
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