STARBUCK
In 2007-2008, Starbucks encountered
S significant growth-related problems.
The company expanded rapidly,
opening thousands of new stores, but
this growth led to a decline in the
customer experience. The fast
expansion resulted in under-trained staff
and a decrease in customer satisfaction.
The company’s concept of being a
"third place" (a comfortable space
between home and work) suffered, and
loyal customers began giving negative
feedback.
What would you suggest to solve these
problems?
HOWARD SCHULTZ,
STARBUCKS' CEO,
RETURNED IN 2008 TO
ADDRESS THE
CHALLENGES AND LED
THE COMPANY'S Barista Training: Schultz
Store Closures: Starbucks invested heavily in employee
RESTRUCTURING closed hundreds of training. He even closed all
THROUGH SEVERAL underperforming stores to
focus on quality over
Starbucks stores in the U.S.
for a few hours to retrain
STRATEGIC MOVES: quantity. baristas on espresso-making
techniques.
Product Innovation and
Local Engagement: The
Technology: Starbucks
company shifted focus
improved its digital
toward local store
platforms, enhancing its
connections, making efforts
mobile app and loyalty
to build stronger ties with
program to drive customer
the communities where each
engagement and
store was located.
satisfaction.
In 2009-2010, Toyota faced a massive
crisis involving the recall of over 9
million vehicles due to unintended
acceleration issues. This crisis severely
damaged Toyota's reputation, as the
company, known for its quality and
TOYOTA reliability, was now under scrutiny for
safety concerns. The issue led to lawsuits,
a decline in consumer trust, and
congressional hearings in the U.S. The
company’s rapid expansion and focus on
growth had come at the expense of quality
control.
What would you suggest to solve these
problems?
Recalls and Safety Overhaul: Toyota issued recalls of the affected vehicles, acknowledging
the problem and taking responsibility. They overhauled their safety procedures, implementing
stricter quality control measures across all production lines.
Internal Restructuring: Toyota restructured its internal management, shifting focus from
aggressive growth to a renewed emphasis on product quality and safety. They decentralized
decision-making, empowering local managers to respond more quickly to safety concerns.
Leadership Involvement: Toyota's president, Akio Toyoda, personally addressed the public
and government officials, issuing apologies and promising to improve safety standards. His
leadership was key in restoring confidence in the brand.
Customer Outreach and Transparency: Toyota launched a global initiative to regain
customer trust by improving communication, transparency, and customer service. They worked
to rebuild relationships with customers through better outreach and support for affected vehicle
owners.
In 1985, Coca-Cola faced one of the
biggest crises in its history. At the time,
the company was in fierce competition
with Pepsi in the U.S. market. Pepsi was
performing better in blind taste tests, so
Coca-Cola decided to launch a new
COCA-COLA formula called “**New Coke**.”
However, this move backfired. Loyal
Coca-Cola customers reacted negatively,
missing the original formula, and
complaints poured in. This situation
severely damaged Coca-Cola’s brand
image.
What would you suggest to solve these
problems?
Bringing Back the Original Product: After intense backlash from
customers, Coca-Cola reintroduced the original formula just three
months later. It was rebranded as “**Coca-Cola Classic**” and
promoted through a major advertising campaign.
Listening to Customer Feedback: Coca-Cola management realized
they had underestimated customers' emotional attachment to the
original formula. They took this feedback seriously and responded by
bringing back the classic product to regain customer loyalty.
Turning the Crisis into an Opportunity: Coca-Cola leveraged the
media attention and public outcry to its advantage. When "Coca-Cola
Classic" returned, the company turned it into a major PR success.
Advertising campaigns highlighted the emotional connection people
had with the brand, which strengthened customer loyalty even more.
Reevaluating Product Development Strategy: Coca-Cola learned
from this experience and recognized the importance of understanding
consumer expectations and brand loyalty in future product
development decisions.
VOLKSWAGEN
EMISSIONS SCANDAL
In 2015, **Volkswagen (VW)**, one of the largest car manufacturers in the
world, was caught in a major scandal when it was revealed that the company
had installed software in its diesel vehicles to cheat emissions tests. The
software could detect when the car was undergoing testing and adjust the
engine to lower the emissions, making it seem like the cars were compliant
with environmental regulations. However, in real-world driving conditions, the
vehicles were emitting nitrogen oxide pollutants up to 40 times the legal limit.
This deception affected around 11 million vehicles worldwide and resulted in
significant backlash from governments, consumers, and environmental groups.
VW faced legal actions, fines, and a major loss of trust from the public.
Problems Faced by Volkswagen:
1. Legal consequences: VW faced billions of dollars in fines from regulatory
authorities in multiple countries, including the United States and Germany.
2. Reputation damage: Consumers felt betrayed by the company, leading to a severe
loss of brand loyalty and a decline in sales.
3. Environmental impact: The scandal highlighted the company’s disregard for
environmental regulations, leading to a damaged relationship with environmentally
conscious customers and organizations.
What would you suggest to solve these problems?
Rebranding and
sustainability efforts: To
Recalls and compensation: regain public trust, VW
Public apology: The company’s
VW initiated a global recall of the rebranded itself as a company
CEO, Martin Winterkorn, publicly
affected vehicles and offered committed to sustainability. It
apologized and resigned from his
compensation to customers, increased its investment in
position, taking responsibility for
including buybacks and free electric vehicles (EVs) and clean
the company’s actions.
repairs. energy technologies, positioning
itself as a leader in the green car
market.
Organizational restructuring:
Despite the significant
VW restructured its management
financial costs, including
and compliance systems to
fines exceeding $30 billion,
prevent similar incidents in the
VW was able to gradually
future, improving transparency
rebuild its reputation by
and accountability within the
focusing on sustainabil
company.
You are managing a chain of
clothing stores. Your
company’s revenues have
been declining over the past
few quarters, and customer
satisfaction is also
decreasing. To secure the
future of the company and
remain competitive, you
need to create a strategic
plan.
Planning: What are the main problems
your company is facing, and what
strategies would you suggest to solve
these problems? (For example,
expanding to new markets, improving
customer service, increasing product
variety, etc.)
Organizing:What resources and
workforce will you need to implement
these strategies? How would you
structure the teams, and what roles
would you assign?
Leading: What leadership approach
would you use to motivate your teams
and prepare them for the changes? How
would you ensure employees adapt to
these new strategies?
Controlling: How would you monitor
and evaluate the plans? How would you
measure success, and what metrics
would you use? If the expected results
are not achieved, what corrective actions
would you take?
Planning:The company’s issues are declining customer
satisfaction and falling revenues. A solution could involve
improving in-store customer experience, enhancing the e-
commerce platform, and launching targeted advertising
campaigns to reach a broader audience.
Organizing: To strengthen the e-commerce department,
additional staff should be hired, and existing employees
should be trained to improve in-store customer
experience. Closer collaboration between product and
marketing teams would also be necessary.
Leading:A transformational leadership style would be
effective in motivating employees. Regular meetings and
training sessions can help explain the importance of the
new strategies and get buy-in from staff to participate in
the changes.
Controlling: Success can be measured using metrics such
as revenue growth, customer satisfaction survey results,
and online sales volume. If these metrics do not improve
as expected, corrective actions could include reassessing
advertising strategies or revising customer service
processes.
