Practise Edexcel Business questions on organisational change, resistance and implementation, applying change-management choices to a strategic case.
Extract F Reimagine, redesign, reorganise: the Starbucks approach to strategic transformation In June 2020, Starbucks reported a large decrease in its American sales. Starbucks announced a significant shift in strategy; the launch of a new service concept called Starbucks Pickup for an 'on-the-go' experience. The company calls this a 'transformational phase' and a 'bridge to the future' that targets customers who simply want to pick up their drink and who prefer advance payment options. After ordering and paying on the Starbucks app, customers just look for their name on the status board when they arrive at the store and collect their order. Starbucks is speeding up plans to roll out the new concept to help boost sales and to allow for mobile ordering. Starbucks has been testing the strategy at two Starbucks Pickup stores in Manhattan and Toronto. The company is also equipping employees with handheld point-of-sale devices to help increase speed of service in drive-throughs. Kevin Johnson, President and CEO said, "Every step of the way, we have thoughtfully addressed the needs of Starbucks' stakeholders and are particularly proud of the industry-leading investments we have made to support our stores while creating a safe, familiar and convenient experience for our customers." Starbucks shares are up more than 30\% since a dip in March 2020 and increased by 6\% after the announcement.
Extract G Starbucks America results, June 2020
Sources for use with Extract H Bob Iger’s management sequel at Disney In Hollywood, a superhero often returns; when an action film does well at the box office, the lead character gets at least one sequel. Disney extended this approach to the company’s governance. It has removed Bob Chapek as its Chief Executive and has brought back his predecessor Bob Iger, who held the top job at Disney from 2005 to 2020. Disney shares initially rose 9% in the hope that Iger will be more successful than Chapek. Share prices had fallen by 40% in 2022 with losses of $1.5bn in just three months at its streaming service Disney+ under the leadership of Chapek. At a meeting with employees announcing Iger’s return he was met with cheers and applause. Iger responded by saying he thought he would cry. During his 15-year term as Disney CEO, Iger oversaw its successful acquisitions of Marvel and Pixar and launched the Disney+ streaming service. Iger will serve for two years until a replacement is found and will set the strategic direction for renewed growth. Susan Arnold, Chair of the Disney board, said, “The board has concluded that Bob Iger is uniquely situated to lead the company through this pivotal period.” Extract I Iger begins shaking up Disney Organisational Structure The next day, after his surprise return to Disney as CEO, Bob Iger sent a memo to his 220,000 employees saying, “Over the coming weeks, we will begin implementing organisational and operating changes within the company. There is a lot to do. Quickly.” The Disney boss faces a difficult task. He must restore morale at the company, particularly at its studio and streaming creative divisions. “It is my intention to restructure things in a way that honours and respects creativity as the heart and soul of who we are. This is a time of enormous change and challenges in our industry, and our work will also focus on creating a more efficient and cost-effective structure,” added Iger.
Sources for use with Section A
Extract A
Selected figures from Burberry's Statement of Comprehensive Income, 31 March 2018
| Item | Value |
|---|---|
| Revenue | £2\,732.8m |
| Cost of sales | £835.4m |
| Gross profit | £1\,897.4m |
| Net operating expenses | £1\,487.1m |
| Operating profit | £410.3m |
Extract B All change at Burberry Group plc
Burberry is a 162-year-old British luxury fashion house with its headquarters in London and has a market capitalisation of £8.3bn. It sells trench coats, outerwear, fashion accessories, fragrances, sunglasses and cosmetics.
Growth slowed after Christopher Bailey became its Chief Executive Officer (CEO) in 2014. Profits dropped and the shareholders lost confidence in him. In July 2017 Marco Gobbetti replaced Bailey as CEO. Christopher Bailey then became the Chief Creative Officer until his resignation in November 2017. This was followed in March 2018 by the appointment of a new Chief Creative Officer, Ricardo Tisci.
As expected, Tisci has shaken things up at one of Britain's best-loved brands. He has already changed the brand's iconic logo. The red, black and beige pattern that has been the brand's most recognisable trademark for over 20 years has now been altered into a more contemporary stripe. The rebranding indicated a major change for the British luxury brand.
Extract C: Burberry share price, September 2017 to September 2018
Extract C
Can Ricardo Tisci reinvent Burberry?
The figure below shows Burberry's share price from September 2017 to September 2018. It identifies Christopher Bailey's departure announcement following Marco Gobbetti's appointment as CEO, Bailey's last Burberry collection at London Fashion Week, and Ricardo Tisci's appointment as Chief Creative Officer.
Extract D
Burberry's digital presence
As one of the first businesses to use technology, we have an outstanding digital reach with over 51 million followers globally, across 13 platforms and 11 languages. Our Burberry app, now available in 33 countries, is our customers' gateway to the world of Burberry. Customers can explore and buy from the new collections while managing all their orders in one place.
In China, over 80% of online shopping is done on a smartphone or tablet. Burberry customers can now book in-store or online appointments with a salesperson via WeChat, China's number one multipurpose social media mobile application.
Extract E
Burberry to stop burning unsold inventory
Burberry came under severe criticism in July 2018 when it admitted to destroying £28.6m of unsold luxury goods in a year to prevent them being sold at below market prices and devaluing the brand. Burberry, whose coats sell for more than £2\,500 and handbags sell for £1\,500, said it would stop this practice and expand efforts to reuse, repair, donate or recycle its unwanted products and work to develop new sustainable materials.
Burberry also said it would follow the likes of Gucci and the leader for ethical fashion, Stella McCartney, in removing real fur from its ranges.
“Modern luxury means being socially and environmentally responsible. This belief is core to us at Burberry and key to our long-term success,” said CEO Marco Gobbetti.
This has come at a time when customer attention to sustainability has increased, with 66% of global consumers willing to pay more for sustainable goods.
Extract B All change at Burberry Group plc
Burberry is a 162-year-old British luxury fashion house with its headquarters in London and has a market capitalisation of £8.3bn. It sells trench coats, outerwear, fashion accessories, fragrances, sunglasses and cosmetics.
Growth slowed after Christopher Bailey became its Chief Executive Officer (CEO) in 2014. Profits dropped and the shareholders lost confidence in him. In July 2017 Marco Gobbetti replaced Bailey as CEO. Christopher Bailey then became the Chief Creative Officer until his resignation in November 2017. This was followed in March 2018 by the appointment of a new Chief Creative Officer, Ricardo Tisci.
As expected, Tisci has shaken things up at one of Britain's best-loved brands. He has already changed the brand's iconic logo. The red, black and beige pattern that has been the brand's most recognisable trademark for over 20 years has now been altered into a more contemporary stripe. The rebranding indicated a major change for the British luxury brand.
Extract C: Burberry share price, September 2017 to September 2018
Extract C
Can Ricardo Tisci reinvent Burberry?
The figure below shows Burberry's share price from September 2017 to September 2018. It identifies Christopher Bailey's departure announcement following Marco Gobbetti's appointment as CEO, Bailey's last Burberry collection at London Fashion Week, and Ricardo Tisci's appointment as Chief Creative Officer.
Using the data in Extracts B and C, discuss the importance of change in the senior leadership for Burberry's success.