2023 Starbucks Business Strategy Analysis & Future Coffee Trends

Starbucks Announces New Leadership

Last September Starbucks announced Laxman Narasimhan as Chief Executive Officer (CEO), taking charge of the company in April. In the meantime Howard Schultz continued as interim CEO, guiding Narasimhan through the company team, its brand and culture, and its reshaping plan.

Challenges Ahead

Narasimhan's arrival comes with an urgent agenda: the unionization of baristas in the United States, slowing global competition, shipping disruptions and coffee price swings. He will also need to drive change in underperforming markets, develop new business operations and redesign store layouts.

All of that depends on cooperation from the rest of the management team, yet after Schultz returned as CEO last year the company went through a leadership reshuffle and corporate reforms, and many senior executives left. The result is a shortage of personnel across departments.

Over the past year Starbucks North America head Rossann Williams, General Counsel Rachel Gonzalez, Executive Vice President of Global Supply Chain George Dowdie and Chief Operating Officer John Culver all left or were dismissed. Long-time board member Javier Teruel resigned at the end of 2022. Just days ago, Starbucks' Vice President of Creative Studio announced her departure after 14 years with the coffee giant.

New Leadership Strategy

The turnover may signal that Schultz and Narasimhan both have new candidates and strategies in mind. Narasimhan brings nearly 30 years of leadership experience at McKinsey, PepsiCo and Reckitt, as well as experience advising global consumer-facing brands.

Whenever Narasimhan joins a new company, he acts decisively, often dismissing veteran managers and bringing in new talent. That fits Schultz's remark last year: "My return is not a long-term solution; we need younger, more visionary people with high execution capabilities to take over." The statement applies not only to the CEO seat but to every senior executive position.

Current Challenges

As things stand, Howard has resolved some issues and begun reshaping Starbucks' corporate culture, but the American unions, rising employee turnover and declining performance in the Chinese market remain. Howard's efforts alone are not enough.

Another reason for choosing Narasimhan is his extensive qualifications in the consumer industry and overseas market management, with the United States and Asia being Starbucks' two largest markets.

Future Outlook

After China's policy relaxation, Starbucks' performance in the Chinese region has shown some recovery, but new layouts and strategies are still needed. Meanwhile the American union issue remains difficult. We hope Narasimhan's appointment will open a new chapter for Starbucks.

FrontStreet Coffee Recommendation

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