Starbucks Corp.’s new chief, who took the job this month, isn’t getting much of a honeymoon. The shares declined as much as 3.8 percent Friday after quarterly sales missed analysts’ estimates, renewing concerns that competition and mobile-ordering problems are weighing on growth. Same-store sales—a key benchmark—rose 3 percent last quarter, the Seattle-based company said Thursday. Analysts polled by Consensus Metrix projected a 3.6 percent gain. The company also lowered its earnings forecast for the year. The results leave it up to Chief Executive Officer Kevin Johnson to reassure investors he has a plan for reigniting sales—especially as cheaper rivals target his company’s market share. McDonald’s Corp. has been advertising $1 and $2 drink specials this year, while the Dunkin’ Donuts loyalty program is drawing more converts. “It seems likely slower sales growth in the U.S. may become the new norm,” said Jennifer Bartashus, an analyst at Bloomberg Intelligence. “There is an awful lot of competition out there.” Starbucks also has suffered problems with its much-vaunted mobile-ordering technology. As more customers embrace the platform, it has caused traffic jams within cafes. Starbucks warned earlier this year that the problems were taking a toll on results. “It isn’t that surprising that they were not able to solve mobile related traffic issues in one quarter,” Bartashus said. “That type of operational analysis and change takes time.”

Questions for Discussion 

1. Did Starbucks’ control systems fail when it came to introducing a mobile-ordering app? Why or why not? 

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?