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Critical Thinking in Action
Introduction
The business field is broad, and there are many ways to solve problems in different firms. In this case, however, critical thinking and application of the VUCA (volatility, uncertainty, complexity, ambiguity) concept have been used by various companies. One good example is the Panera Bread Company, which applied the concepts of VUCA and critical thinking in solving its “mosh pit” situation. As a result, the company became more successful after finding the appropriate resolutions. The same method can be applied in the Starbucks Company, which has been facing many challenges lately (Maze, 2018). Proposing evidence-based solutions while using the concepts of VUCA could help the company regain its popularity among its customers and win back the loyalty of those who had left.
Situation
Starbucks is the world’s largest coffee chain and has its branches in over 70 countries globally. However, the company has been facing various issues, but the root of all the problems has been the escalating prices of its products (Forbes, 2016). The company seems to be focusing on growth and profit-making rather than its customers’ needs. The company has traded its customers’ loyalty for more profits and growth. Even before the Covid 19 pandemic hit, the company had increased its prices, and many customers left for other brands. During the pandemic, there were financial crises all over the world, and all businesses were affected. Despite every company finding ways to avoid significant losses, Starbucks decided to even increase its prices to meet the high wages and the rising cost of raw materials, which is coffee.
The company has also increased its branches all over the world, to raise more profits. While taking various measures to increase profits, the company would have first considered the customers because the company has very many competitors, such as Mcdonalds’ (Maze, 2018). Due to these measures, the company has lost many customers to the competitors, and it has reduced its trust among loyal customers. In June 2020, the company decided to close 400 stores in the US and Canada. Obviously, for the company to maintain its profits, it will have to increase prices and the cost of maintenance. This will even drive away more customers.
Critical Thinking
Despite the company facing the threat of losing its customers, it is quite hard to lose customers at once. The company, as mentioned before, is a multinational coffee brand. Over the years, it has built its brand, and the main thing that attracts customers to Starbucks is its premium and inviting atmosphere (Nellako, 2020). Many people still hold casual meetings at the place. But with the rising of any other coffee companies, how long will the customers stick around before moving to other companies. This remains uncertain, but it is meant to happen if competitors lure the customers with other factors, such as building more premium centers. The company seems to be aware of the advantage it has, and therefore, it is opening up more centers and introducing better features such as roasteries. These attract wealthy customers, but customers who feel the prices are too high will move to other coffee companies.
Since the company raises its process due to the high cost of labor and raw materials, there are some measures the company can implement to reduce the high cost of production. Online buying has become a more familiar and efficient way of purchasing products. Customers can order whatever they want using online services. If the company invests more in improving its delivery services and expanding its delivery areas, it will curb the issue of investing in building more structures. The company would not have to close the stores if it grew at a more controlled pace, and in turn, it won’t have to increase prices to keep up with its profits. The company could also find other ways to reduce production costs, rather than to impose the burden on the customers, such as reducing some employees and looking for cheaper raw materials.
Application of VUCA
In Starbucks’ situation, elements of VUCA are applicable, and they affect both the case and resolutions. Using the principles of volatility, rapid and frequent changes are inevitable in Starbucks. Despite the company raising its prices, especially during the pandemic, most companies did the same, and the company wants to gain profits. Recommending the company to look for cheaper labor and raw materials would have been better than increasing its prices. The uncertainty principle applies where the company still has many customers due to its premium environment, but how long will it take before competitors come up with better premium features?
Using the complexity principle, higher production costs have led to an increase in prices, which has led to the loss of some customers. The company should prioritize the customers’ needs first because if it fails to address their needs, they will move to other companies. Lastly, ambiguity is there since the company is not clear on its agendas to increase profits. The company could reduce prices in the outlets it has to attract more customers. On the other hand, the company can still build more outlets to easily access the products and attract more customers.
Conclusion
Using critical thinking and applying VUCA principles has worked for the Panera Bread Company and the company is thriving. Applying the same to Starbucks would help identify the problems and resolutions the company would implement because the method involves critically analyzing both the company and customers’ needs (Szymanski, 2020). Finding measures to meet both needs would benefit both the company and customers. It might be an opportunity for the company to win back its popularity and customer loyalty.
References
Forbes. (2016, December 5). Starbucks’ Challenges And How It Can Overcome Them. https://www.forbes.com/sites/greatspeculations/2016/12/05/starbucks-challenges-and-how-it-can-overcome-them/?sh=6cb27c714be9
Maze, J. (2018, June 20). Starbucks suddenly struggling. Restaurant Business. https://www.restaurantbusinessonline.com/financing/why-starbucks-suddenly-struggling#
Nellako. (2020, October 2). The primary issue with Starbucks’ brand growth. Modern Buyer Behaviour. https://modernbuyerbehaviour.wordpress.com/2020/10/02/the-major-issue-with-starbucks-brand-growth/
Szymanski, J. G. (2020, May 28). Critical thinking in action. Medium. https://medium.com/@janetgregorekszymanski/critical-thinking-in-action-221e542c861c
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