Starbucks’ Strategy Essay
Starbuck’s Coffee is a multi-billion dollar company. It was founded in 1971 in Seattle, Washington. It was a single store located in the Park Place Market area of Seattle. The idea started with three friends, Jerry Baldwin, Zev Siegel, and Gordon Bowker. They opened a small shop and began selling fresh-roasted, gourmet coffee beans and brewing and roasting accessories. The company’s total revenue for 2013 was $14.8 Billion Dollars. Today, they have more than 21,000 stores in 65 countries and is the premier roaster and retailer of specialty coffee in the world. The company expects to expand to more countries and open more stores in the future. In this paper, I will discuss Starbucks Organizational Culture that has led to its phenomenal success, the effects of managements’ decisions on the company, the one key management competency of the company, and the success of the current CEO and whether Starbucks would be successful without him.
Starbucks has many key elements in its cultural organization that has led to its phenomenal success. Some of these organizational cultures include: Legendary service, diversity, organizational structure, and organizational ethics. In today’s society a company must have adaptable organizational cultures in order to be successful. One of the major reasons that Starbucks has maintained its ability to be successful is that it maintains the ethical culture within its organization. The company’s business Ethics and compliance programs has helped the partners (employees) in taking ethical business decisions as it provides guidelines in the Standard Business Conduct, which help partners make ethical decisions.
Starbucks is committed to providing legendary customer service, they even hired an cultural anthropologist, Barbara Perry, to help strengthen its foundations for customer care. (Schreiner, 2011). Starbucks has three ways in which it provides legendary service, they include: knowing the Running head:
Starbucks’ Strategy customer, decreasing wait time, and being on the customer’s side. Legendary services offered by Starbucks include: giving the customers respect by knowing their name and type of drink, reducing wait time by acknowledging a customer and keeping the line moving and finally being on the customer’s side.
Starbucks diversity and inclusion are a central part of Starbuck’s corporate strategy. It embraces diversity as an essential component in the way they do business. Twenty-four percent of the top corporate officers are women. Thirteen percent of the top executives are people of color. The most impressive statistic of Starbucks is the company’s continued commitment to its supplier- diversity program, which tracks spending with minority-and women owned businesses. The projected spending with these companies is expected to jump to $140 million dollars this year. Organizational structure is the hierarchical arrangement of lines of authority, communications, rights and duties of an organization (Schreiner, 2011).
Starbucks does not operate under a franchise, however, they do license storefronts. Even though the stores are licensed storefronts, they are still controlled by Starbucks Headquarters. It overseas all of its stores and this allows for more control over how the individual stores are run. It leaves little room for stores not to performing according to company guidelines.
Organizational ethics is the way an organization should respond to external and internal environments (Schreiner, 2011). Starbucks is considered one of the world’s most ethical companies (Screiner, 2011). The company makes a conscience effort to be a responsible company and conducts their business in an eithical manner. It uses its resources, such as; community, sourcing, environment, diversity and wellness. It openly displays its commitment to being a socially responsible company by letting the customers know what they are doing and displays their mission Running head:
statement in each store, prints facts on its coffee cups and puts information on its company’s website. Starbucks as earned this reputation through its actions in all phases of its business and live out the commitment through both its mission statement and values. Starbucks has business ethics program that is used to protect its Missions’ Culture. It is used to assist the partners to make ethical decision at their jobs.
The decisions of the management and its choices for the company has a tremendous effect on employees, customers and the business. Starbucks has created an environment that is very relaxing to customers. It is a one of a kind coffee shop. There is no other coffee shop of this kind. Everything within the Starbuck’s environment is relaxing, calming and tension relieving. They make it the perfect comfort zone.
One key management competency that Starbucks manager is like to have is Leadership Abilities. An individual must have great leadership skill in order to lead others. Leadership is the Process of social influence in which one person can enlist the aid and support of others in the accomplishment of a common task (Schreiner. 2011). There are very few people that can become leaders. It takes a very special individual to become a leader. Leaders lead in ways that serve the greater good of the organization. Starbucks demonstrates servant leadership and goes beyond the needs of its customers to the needs of the community.
At Starbucks, the company’s values and missions are inspiring. They always put customers first. They empower their partners and help develop their full personal capacities. Starbucks help develop their partners to also demonstrate servant leadership. The partners feel far more committed to this company and their values and mission.
When the individual that run companies show concern, respect and care for their employees Running head:
they get better performance from them. It can clearly be seen that Starbucks Leadership is exceptional, they take the time to understand the needs of
their employees. Many can see the difference in the Leadership of company’s such as Wal-Mart and McDonald’s. They have poor Leadership skills. They do not respect their employees. The employees of Wal-Mart and McDonald’s do not respect their jobs, because leadership is bad. If they respected their employees, then one would not always see the protest for more wages, benefits and hors. It is clear that Starbucks is doing something correct. There has never been any protest of kind with Starbucks. Other company’s should follow the Leadership Skill of Starbucks. Starbucks most likely would not maintain its long term sustainability without its current CEO, Howard Shultz. Howard Shultz has been the CEO of Starbucks since 1987.
As the CEO of Starbucks, Howard Shultz made changes to the company at the beginning, that help set the path to its success today. The first change was to turn Starbucks into a coffee bar. He came up with this idea after vacationing in Italy and sitting at a coffee bar in Milan, Italy. He saw that it was a place where the coffee shop played an intregal role in the social life of most of the Italians (Wong, 2013). It was a focal point for the neighborhood, where friends met, mingled and stayed all hours of the day. Hence, this became the idea for Starbucks coffee. They later opened their first coffee bar in Seattle, Washington. He also introduced exotic coffee beverages such as espresso, cappuccino, café-latte, iced coffee and café-mocha. This was the first coffee shop to introduce these types of coffees. He also made the atmosphere clean, well-lighted, where people could relax and enjoy their coffee in comfort.
The most effective change that Shultz made to Starbucks brand was to change the way the company delt with its employees, he implemented an crucial company employment training Running head:
program. Starbucks is aware that the employee can make or break your company. Shultz stated that “friendly, effective service would boost sales (Wong, 2013). He instituted a training program designed to groom knowledgeable employees who would enjoy working behind a counter. “Service is a lost art in America. It’s not viewed as a professional job to work behind a counter” says Shultz. We don’t believe that. We want to provide our people with dignity and self-esteem, so we offer tangible benefits” (Wong, 2013).
Some of the benefits Starbucks offer are complete health insurance for both full and part-time workers and stock options. During a brief 8 year hiatus, Starbucks had a new CEO Jim Donald. During this time Starbucks stocks dropped to 42% and they closed more than 700 stores and layed off more than 700 employees.
After this downfall of the company, they re-instated Howard Shultz as CEO. He has made changes to the company that has made it more successful. These include calling their employees partners instead of employees, redesigned stores, introduced breakfast foods, implemented luxuries such as charging stations and Wi-Fi and most of all, he more than doubled the number of stores opened since he was reinstated as CEO. It can be seen that Starbucks would not be as successful today without the current CEO, Howard Shultz. Most other companies can take a good example from this Leader.
Daft, R. (2012). Management (10th ed.). Mason, OH: Cengage Learning. Schreiner, E. (2011). Starbucks and Its Orgaizational Design. SmallbusinessWong, V. (2013). Starbucks takes Over Your Life, Boots Sales. Businessweek.