Starbucks : the growth trap

The key to achieve organizational success has been subject of much discussion throughout the years. Many theories tried to explain it, from the industrial organization model to the resource-based view. Still, there was a gap regarding how companies succeeded in dynamic markets. The dynamic capabilities view appeared in response to this breach, arguing that a firm could outperform others if it had a stronger market adaptation’s ability. The present dissertation intends to illustrate this view by using a real business case, pointing out how adaptation to market changes can influence a company’s performance. At a first stage, the case shows the negative impact of not being attentive to changes, and in a second period shows performance improvement by the strengthening of dynamic capabilities. When writing this thesis, I attempted to provide responses to the following questions: What dimensions can lead a strong company to fail? What factors are crucial in a turnaround? How do strategic decisions translate into changes in the resource base? The main findings of the case suggest that the dimensions that form dynamic capabilities are crucial to explain both failure and rebound, depending on the extent by which a given firm exhibits such dimensions in each relevant period. These dimensions can be interrelated, meaning that the lack of one, can affect another. In addition, it shows that dynamic capabilities are not a dichotomous issue (i.e., it is not a matter of having or not, it is rather a question of degree). Furthermore, while having dynamic capabilities can help a company to achieve success, the case suggests that, to achieve this potential, all dimensions included in the dynamic capabilities concept are important