HOW STARBUCKS EXPLOITS SOCIAL MEDIA TO ENHANCE CUSTOMER

The external environment for many organisations now days is characterised by turbulence associated with globalization, deregulation of markets, changing customer and investor demands and increasing product-market competition (Jashapara, 2011). There is a growing need in organisations to move beyond solving existing problems to improving continuously in the face of changing conditions (Hamel and Prahalad, 1994). Knowledge has emerged as the most strategically significant resource of the firm (Grant, 1996) and the ability of a firm to learn faster than its competitors as the only sustainable form of competitive advantage (De Geus, 1988). In accordance with the view of knowledge as a capability Newell et al. (2009) define knowledge management as processes aimed at improving the ways in which firms facing highly turbulent environments can leverage their knowledge assets in order to ensure continuous innovation. Innovations rely heavily on social interactions between different interests (Jashapara, 2011). Hence Jashapara (2011) concludes that social networks are essential for the success of innovations. Starbucks is an international coffee house chain, which consistently attracted around 60 million weekly visitors across the globe (Michelli, 2007), before it saw its earnings drop drastically in 2008 (York, 2010). To re-boost its decreasing sales Starbucks started experimenting with social media services (Schultz and Gordon, 2011). In 2010 the coffee chain began to see sales lifts following its social media endeavours (York, 2010).  The following formal report will: first, critically discuss the nature and process of knowledge creation and transfer within organisations; second, critically evaluate how organisational and social dynamics combine to engender innovation; third, analyse how Starbucks applied the discussed concepts and theories to its customer-centric knowledge management strategy; fourth, provide recommendations for Starbucks how to even increase its innovation capacity with further exploitation of social media.