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In the world's capital markets, changing the leader of each corporate giant can be said to be a very cautious matter. Recently, Starbucks' temporary change of leadership has sparked heated discussions in the market and even led to a sharp rise in stock prices. People can't help but wonder if changing the boss can really save the performance?

1. Starbucks's stock price surged after a change of leadership

According to a report from China News Network, Starbucks, headquartered in Seattle, USA, announced on the 13th local time that Brian Niccol, CEO of the American chain restaurant company Chipotle Mexican Grill, will serve as CEO of Starbucks, and Laxman Narasimhan will no longer hold the position.

Starbucks issued a statement on the same day saying that Nicole will serve as the company's chairman and CEO from September 9. Prior to this, the company's chief financial officer Rachel Ruggeri will serve as interim CEO. In addition, the company's chairman Mellody Hobson will become the lead independent director. Narasimhan will step down as Starbucks CEO and will no longer be a member of the board of directors.

Starbucks said that Nicol has served as CEO and director of Chipore Mexican Grill since March 2018 and became chairman in March 2020. Prior to that, he served as CEO of Taco Bell. The statement said that Nicol changed Chipore Mexican Grill, driving significant growth in the company's revenue, stock price and other indicators, and improving employee benefits.

Starbucks announced on September 1, 2023 that Narasimhan, CEO of British household goods giant Reckitt Benckiser, will serve as Starbucks' CEO-designate from October 1 of that year. He will officially take office as Starbucks CEO on April 1, 2023 and join the company's board of directors.

Starbucks has reported poor results in recent quarters and its stock price has fallen more than 20% so far this year.

2. Can changing the boss really save the performance?

In today's competitive business world, the rise and fall of a company is often closely related to the decisions and management of its leadership. Starbucks, the world-renowned coffee chain giant, has recently attracted widespread attention for its last-minute change of leadership, and its stock price has risen sharply. How should we view this?

First, Starbucks' performance this year has been unsatisfactory. The stock price has fallen by more than 20%, which undoubtedly sends a worrying signal to investors and the market. Judging from the financial report, various key indicators have also failed to meet expectations. Sales growth is weak, and market share is facing double squeezes from emerging brands and traditional competitors.

Starbucks has been caught in a dilemma of poor performance due to the interweaving of factors such as changes in consumer demand, intensified market competition and internal management problems. In this context, reform has become an imminent choice for Starbucks.

Secondly, Starbucks' new leader has a deep background in the catering industry, which sends a positive signal to the market. Compared with his predecessor, the new leader's rich experience and deep insights in the catering industry can help the company better cope with the current challenges. For example, the new leader may know more about how to adjust the menu to meet the taste preferences of different markets, or reduce costs by optimizing supply chain management. More importantly, the new leader may bring new business concepts and innovative thinking, which is crucial for a brand that needs to rekindle consumer interest.

Third, although the change of leadership has brought a short-term increase in Starbucks' stock price and improved market expectations, the difficulties and challenges faced by the company cannot be ignored. Among them, high prices and insufficient product strength are one of Starbucks' most prominent problems.

As consumers pay more and more attention to cost-effectiveness and market competition intensifies, Starbucks' high-price strategy has gradually lost its appeal. At the same time, some consumers believe that Starbucks' product innovation is insufficient and it is difficult to meet their increasingly diverse needs. These problems have directly led to a decline in Starbucks' same-store sales and a shrinking market share.

For the new leaders, how to effectively reduce product prices and improve product competitiveness while maintaining the brand's high-end positioning will be a major challenge they face. In addition, they also need to continue to work hard in digital transformation, supply chain optimization, market expansion, etc. to comprehensively improve Starbucks' competitiveness and profitability.

Fourth, from a long-term perspective, although changing the leader before the battle is considered a taboo in traditional military tactics, timely leadership changes are sometimes necessary in modern corporate management. Especially when companies face challenges such as declining performance and changes in the market environment, changing the leadership can bring new management ideas and strategic directions, helping companies get out of trouble. If Starbucks's change of leadership can bring about effective strategic adjustments and operational improvements, it will be beneficial to the recovery and growth of corporate performance in the long run. Investors' reactions, to a certain extent, reflect the market's positive expectations for this change.