In 2009, Starbucks' net income fell precipitously. The stores needed to make a change, so Schultz temporarily close all the stores and re-train the entire

Question

25 users unlocked this solution today!

In 2009, Starbucks' net income fell precipitously. The stores needed to make a change, so Schultz temporarily close all the stores and re-train the entire staff, (Schultz, 2013). Schultz felt the company was no longer committed to the core principles which originally propelled the tremendous success. The store closed an estimated 900 stores and reduced the number of stores it planned to open from 270 to 180. CEO Howard Schultz reduced his salary from $1.2 million a year to less than $10,000 a year. Schultz recognized that the core of Starbucks' business was coffee, and he went back to ensuring that the company's primary focus was to make the best coffee, not the best Frappuccino. Schultz exhibited great leadership. He did not simply manage the business through the crisis, but took executive action to minimize corporate losses, store closures, and employees' layoffs. Starbucks introduced new equipment that cut the time it took to heat food to help address the corporation's growth.

Power Base

As the CEO, Schultz exhibited legitimate power. As one of the earliest employees of Starbucks, Schultz traveled to Italy and studied Italian coffee bars. He believed that there was a market in America for a place where citizens could meet over a great cup of coffee and enjoy wonderful conversations.When the business experienced a decline in sales, Schultz used his legitimate power to close stores, lay off employees, and reduce the number of startups. He took the steps necessary to ensure that Starbucks reduced its losses and retained its reputation as an employee-friendly corporation.