Starbucks executive summary

I’m going to upload a document about Starbucks.

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please read the uploaded file carefully, and write a one page double-spaced MLA format as an executive summary of the organizations.

  

o Identify the organization (manufacturing, service, government, import/export, etc)

o Identify human relations theory, communication issues, intercultural relationships, and ethics as they relate to your organization. 

o Explain your role in the organization, if any.  

STARBUCKS

Principles

of Management 300

Professor: Frank Fabela

May 24, 2016

Group 1

Alexandra Campbell

Jazmin Vargas

Alexis Dragus

Fahad Alsuwaidi

Peter F. Drucker once said, “ Whenever you see a successful business, someone once made a courageous decision.” Our team chose to analyze Starbucks Corporation in efforts of understanding where the business was, where it is currently, and where it has the ability to go. Currently, Starbucks is doing fantastic, however, as eloquently put by Drucker- some courageous and sometimes scary decisions had to be made by management to get them where they are today. Through thorough analyzation of the Starbucks Corporation, our team was able to see their mistakes, as well as their accomplishments and the struggles they have been through to get where they are today.

Organizational Context

The Starbucks Corporation is a coffee company based in the United States. It was first founded in Seattle, Washington in the year 1971. It has a worldwide coverage and an estimated 23,450 stores in the whole world. Among the stores are those located in the United States and others in the China, Canada, Japan and the United Kingdom (Gordon & Schultz 3).

The Starbuck locations serve hot and cold drinks, micro-ground instant coffee commonly known as the VIA, and whole bean coffee among others. These include the evolution juices, pastries, different frappuccinos and snacks.

Many stores sell prepackaged food items such as hot and cold sandwiches and drink ware including tumblers and mugs. Starbucks brand coffee, bottled cold coffee drinks, and ice cream are also sold at grocery stores.

Starbucks became profitable first in the Seattle in the early 1980s. The company experienced revitalized prosperity with its entry in California in the early 1990s. The first location of Starbucks outside North America opened in Tokyo in the year 1996s. The properties now constitute one-third of its stores. It is estimated that the company had opened two new locations daily between the 1987 and 2007(Gordon & Schultz 80).

During 1980, the total sales of the coffee in the United States were falling. In the year 1984 the original owners of the Starbucks, led by Jerry Baldwin, managed to purchase one of their competitor’s Peet’s Coffee & Tea. The only difference is that the sales of the specialty coffee increased forming about the 10% of the market in the year 1989 as compared to the 3% in the year 1983.In the year 1987, the original owners of the company sold it to the former employee called Howard Schultz. He rebranded his Giornale coffee outlets as the Starbucks and decided to expand quickly.

In that year, it opened its first location outside Seattle at the Waterfront Station in Vancouver, British Columbia and then Chicago and finally in Illinois. By the year 1989, the company already had 46 stores across the Northwest and the Midwest and annually Starbucks was roasting up to 2,000,000 pounds of coffee. At the time of its first public appearance on the stock market, that is in June 1992, it had around 140 outlets with a revenue base of close to $ 73.5 million.

In July 2013, over 10% of the in-store purchases of the company were made through the use of the mobile device applications that is the Starbucks application. The company managed to utilize the mobile plant from when it launched the promotion that was referred to as the Tweet a Coffee promotion in October 2013(Gordon & Schultz 3)

(Gordon & Schultz. 106).

The first locations of Starbucks outside North America were opened in Tokyo Japan. This happened in the year. It entered the United Kingdom market in the year 1998 with $83 million. The business managed to open its first store in Latin America in the year 2002 at Mexico City. Currently, there are close to 500 locations in Mexico. Currently, Starbucks is considered one of the companies that offer cheaper brands of coffee which are however seen as very luxurious.

Environment in which the Organization Operates (Task/General Environment)

Starbucks is one of the biggest coffee houses globally. It has chain stores in over 60 countries in the world. It was started by three individuals: Jerry Baldwin, Zev Siegl and Gordon Bowker in the United States. Starbucks has since then grown rapidly as it uses unique means to make its coffee taste marvelous. Other coffee houses rarely offer the kind of coffee Starbucks offers (In Zemanek 97).

Starbucks has a very wide market all over the globe. This is based on the fact that the stores are based in over 60 countries and it has over 18,000 stores. The coffee house also has a lot of customers who enjoy their coffee. Many of Starbuck’s stores are based in the United States, therefore making it the country with a lot of customers (Wührer 67). This has really helped the coffee house to grow and gain more profits.

The coffee house, big as it is, also has competitors all around the world. One competitor is Caribou coffee house which is also based in the United States. It is coming up also as it also has a lot of customers and a lot of stores. Other competitors like Mcdonald’s and Dunkin are also expanding. The procedure for preparing the coffee and the taste is easily duplicable and this poses a big threat to Starbucks. This is because the other coffee houses may make better brands of coffee (Palmer 254).

Starbucks coffee house gets its coffee beans from Africa. The coffee house is supplied by coffee beans from one source. The sugar is also processed from natural sugarcane which is obtained from different parts of the world (In Zemanek 97). The suppliers ensure that the coffee house is continuously distributed with the raw materials necessary for the production process because it is wide and has so many branches which must ever be providing coffee to the customers.

The regulatory groups make sure that the product is made of quality in that the coffee is enjoyed by many of its customers. It also ensures that it complies with the laws put in place by the government. It also ensures their relations with the government are good. They ensure food safety reviews in that they ensure the coffee is up to standards and is good for consumption (Wührer 67).

The external environment is the factors that affect the business externally. One of the factors that affect is the economic factor. When there is negative economic growth the disposable income for the consumers is less. This therefore makes them have a low spending rate and therefore may not purchase the products produced in the coffee house. This therefore makes the sales volume of the coffee house reduce (Palmer 254). This can be avoided by making the global market better.

Another one is the political environment. When the taxes imposed to coffee farmers are increased, this makes the farmers producing quality coffee beans reduce their numbers which will make the sales of the coffee house to reduce. This can be avoided by the government reducing the taxes and also supporting them (In Zemanek 97).

Another factor in the external environment is technological environment. Starbucks has involved in a lot of technological advancements which has enabled it to stay ahead. One is the mobile payment system. This enabled the customer to pay for the products bought on their smart phones. One another advancement is the launch of an iPhone application. This enables the customer to pay for their products also (Wührer 67). These advancements make the products to be convenient for the consumers therefore increasing the sales of Starbucks.

Social and cultural factors also affect the external environment of the business. Starbucks has placed its stores in a convenient location where most people are high income earners. Because of this there will be a high purchasing power for the products. This will in turn increase its sales (Palmer 254).

Organization Mission/Vision and Goals

Mission: “To inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.”

Vision: “Establish Starbucks as the premier provider of the finest coffee in the world while maintaining our compromising principles while we grow.”

Starbucks Coffee’s mission statement and vision statement mirror the company’s emphasis on leadership in the coffeehouse business. The firm’s mission statement attends as an indicator of what the company wants to do at the core of its business. On the other hand, Starbucks Coffee’s vision statement shows what the company would like to achieve in the future. In this regard, through the mission statement and vision statement, the firm leads the activities of all employees, and shows customers what the business can potentially attain. In particular, the Starbucks Coffee mission statement shows customers the beneficial value that they can receive from the company. Starbucks Coffee stimulates and fosters the human spirit starting with its partners also known as employees. To address this component of its mission statement, the company preserves a small company culture, where tight bonds and warmth are a huge factor. This factor of Starbucks Coffee’s mission statement also falls into customers’ experience. The company expands its warmth and small company culture to its consumers. At Starbucks, partners and consumers first names are used when greeted or approached. Also, the design of Starbucks cafés has a welcoming, warm, and cozy feel. These approaches motivate and cultivate meaningful and sincere relationships. Starbucks Coffee’s mission statement also directs a personal and steady approach. The one person, one cup and one neighbor at a time factor of the mission statement shows that the firm guarantees meaningful impact on every employee and customer they receive. This portion of the mission statement also means that Starbucks Coffee plans to continually and gradually grow the business, one place or neighborhood one step at a time. Starbucks Coffee craves to attain leadership when it comes to providing its products, especially coffee of the best quality. Starbucks has already attained the historical component of its vision statement because it is now the chief coffee and coffeehouse company in the world. Consequently, the firm effectively addresses its vision statement.

Organization’s Strategy

Starbucks generic strategy which can be referenced based on Porter’s model, is accountable for its importance on specialty coffee products. On the other hand, a twist of intensive growth strategies influences the tactic that Starbucks uses for expansion and growth. These rigorous strategies for growth are also directly connected to the company’s generic approach. Intensive growth strategies must be allied with the general strategy to exploit the firm’s performance and possible success. In this case, such placement is noticeable in the firm’s constant emphasis on penetrating markets with its specialty products, while proposing these products to consumers from numerous divisions. Thus, Starbucks successfully aligns and abides by its generic strategy and intensive growth methods.

Followed by that Starbucks rigorous methods to grow consist of penetrating the market, developing the market, and the development of products. Market penetration being their main approach, which supports increasing revenues from existing markets, Starbucks already has presence in countless countries. How they comply with these intense strategies is by opening more company owned stores. Starbucks then uses market development as its second approach, this strategy maintains the company’s growth by providing revenues in new markets. Lastly, Starbucks uses product development as another strategy to help the firm expand. This method consists of developing new products to help increase on more revenues.

Organizational Structure and Control

Starbucks is organized so that the CEO is the head of everything and then below him is the offices that Starbucks would need to focus on such as Human resources, North American Retail, International retail, Finance, Worldwide public affairs, and legal and crop affairs. These are the main offices that are the highest up in Starbucks because they are the ones that directly relate to what the company wants to focus on. Then when it comes to social responsibility, they want to open up new stores that help them reduce their water consumption. This so happens to go with how they want to be better with the environment and make sure that their company has a better carbon footprint, this way they do not destroy and use up all of their resources. This will then make sure that they are respected in their communities because that way they are being helpful in their communities.

They also want to make sure that their jobs are specialized, especially at the retail level. This makes sense because this way they really know what they are suppose to do and this way they will not go outside of their job to try and do somebody else’s job. It makes more sense that there is more specialization at retail because those are the people that are the baristas and the managers of the store. They also make sure to spend time to train their employees. The people that are to train the new partners in Starbucks make sure that they are really good at what they do so that they can be more beneficial to the company. This includes the baristas that know how to make every drink on the menu. There are special tricks that they can use that help them know how to make the drinks, such as the base of the drinks are almost the same and then from there they only have to add the flavoring.

The span of control has the district managers travel to eight to ten different Starbucks locations to make sure that they all fit the requirements and have the right number of people, along with anything else that they need to do to make sure that the locations are living up to their responsibilities.

Ethics and Social Responsibility

To improve ethics within the competition they have to take an ethical training course that teaches them to stay to the standards of the company and make sure that they are a trusted company. They know that a company and a brand is very fragile and they know that they need to have high ethics so that the brand will not be destroyed. They also encourage their employees to help the company be more ethical so they have phone numbers that they can call so that Starbucks can work on that aspect of their company. They even have a booklet that tells their partners how to be more ethical and what to do in certain scenarios.

This booklet goes to tell them what the company sees as ethical. These things include no off records accounts, that way their stockholders know where all the money is and they know that they can trust the company. Then they can not sells Starbucks secrets because that is what makes them unique and gives them a competitive edge. Then of course they can not break the law in any way because that will destroy their brand and everything that they stand for. Then their ethics go to making sure that their community is in a good place and that they can ethically source all their products. These are values that are important to Starbucks and will help them stand apart from other coffee shops.

Organizational Culture

In analyzing starbucks corporation’s Organizational Culture, our team took a deeper look into the personality of the organization through employee testimonials, research into the core values and beliefs of the company, and many factors that play a role in the culture of the company. Their mission statements states the company wants “To inspire and nurture the human spirit- one person, one cup, and one neighborhood at a time.” This mentality that Starbucks wants to do more than sell coffee is apparent throughout many facets of the company. From the way that they focus on helping the community, to the way they treat their employees, to the language they use in creating the names of their drinks.

Starbucks focuses on giving the customer a “third place” to be and feel comfortable. Starbucks knows there are many people who go to starbucks to meet up with friends, relax or even get work done and they are focused on accommodating all of these people in new and innovative ways. One of the big ways starbucks aims to accommodate these customers and help them feel welcomed is through their employees. Starbucks focuses heavily on viewing their employees as “partners,” which is meant to create a sense of loyalty and enjoyment for working with starbucks. Starbucks focuses on making sure the employees offer their services with an amicable personality so the customer feels welcomed at all times. One way in which Starbucks aims to ensure the loyalty of their employees is through offering full benefits to part time employees, aid with tuition, and many other plans that help their partners feel good about that they’re doing. Since the baristas at the face of the company and what the customer is interacting with, it only makes sense that they would want to keep their partners happy since they reflect the company and all that it is trying to do.

Starbucks has also focused-across the entire organization-on challenging the status quo and becoming innovative, again, they recognize they do more than just sell coffee. Whether this is through their advancements in technology using their app, embedding technology in their cafe areas, or carefully choosing how they use language in their advertising and drink selection. they are definitely trying to be a head of the curve. Not only this, but they have also begun looking into new ways of bringing new menu items to their cafes. With the opening of new cafes that include evening menus and alcoholic beverages, they are exploring new avenues of business that may provide great gains for them in the future. While we have seen some controversy over some of their innovative moves, as well as some signs of caution the fact of the matter is they are still making these innovative decisions for their business that are at the core of what they are trying to do as a company. As mentioned above, starbucks makes sure to take the language used into consideration. In analyzing their language usage we found that starbucks focused on using words associated with love, specifically the latin language. The idea behind using this language for the drink sizes as well as some drinks is that they are said to elicit feelings of warmth and welcoming, which is what they want their customers to feel. These carefully thought out decisions are perfect examples of why starbucks has been doing so great and will continue to do so!

Another way in which Starbucks holds true to its core values is through giving back to the community. Over that past decade, significant improvements have been made toward giving back and helping their surrounding areas. The company has always been keen to helping the community and in the past has encouraged the entire stores to take a day off and help at a local community service event. Recently, Starbucks announced their Food-Share program, where they will donate food, that is near its expiration date that has not yet been sold, to local centers for people in need. With this new program they hope to provide 5 million meals a year, with a goal to hit 50 million meals by 2021. It is initiatives like these that show why Starbucks is such a leader in its industry and why people enjoy going here. Many people may not know everything that starbucks is involved in, but they more than likely do know that they are not solely focused on a profit- a theme which is very apparent to many customers.

In recognizing the culture of the company it is also important to identify the important symbols and artifacts starbucks associates itself with. The most important symbol is of course, their logo, which includes the siren and is what the company is most associated with. As the image has evolved over the years it has always been a mystery to understand what the siren stands for. As noted on their website, Starbucks sees the siren as a muse, a source of integrity and a steady reminder of their past as well as where they want to go. It is the “person” they look to before making a decision to see if she approves. This type of symbol is more than just a pretty picture, it signifies much much more than that and something this corporation needs to look to other than their values.

Leadership

After having analyzed the company’s Organizational Structure and the personality of the business, we analyzed the current leadership being utilized in this organization and how effective it is for the company. Our group wanted to analyze the current CEO, Howard Schultz, in particular since he is the head of the organization and his leadership values would reflect the company as a whole. In analyzing Schultz and his methods for communicating and leading we associated him with three types of leadership we felt he encompassed. These include: Transformational, democratic and servant leadership. Transformational Leadership is built upon the advancement of higher level morals and motivation. Schultz constant relation to the business moves being made and their core values that fall in line with their decisions is very admirable and is something leaders need to be doing more. By reminding employees or partners why they do the things they do and bringing the discussion back to their values he is instilling a sense of loyalty and respect for the corporation, which is vital for the growth of a company. The next type of leadership we associated Schultz with was Democratic Leadership, which allows for the exercise of opinion. Although the organization does have some mechanistic features, we feel that it is also organic in many ways. Because many partners feel there is room for their opinion to be heard, there is consequently room for innovation and creativity in the workplace, which is something that has made starbucks one of the leaders of their industry. The last type of leadership we thought described him was Servant Leadership, which encompasses leading by giving to others and serving the greater good. This particular mixture of leadership traits breeds loyalty, motivation, and productivity among their employees.

Through researching different testimonials about working in Starbucks we found that many people actually enjoyed working at starbucks. While every job has its good days and its bad days we feel the majority of the people working at starbucks were happy with this experience. Our team believes this is due to the leadership expected of starbucks managers, which fall in line with the leadership styles Schultz portrays. Because of the organic features of this company we feel that Schultz sets the precedence over what a starbucks manager, leader, and partner should be like in order for the company to keep going in the direction it is.

SWOT analysis

Strengths

When analyzing Starbucks Strengths , our team decided to view the corporation from both a financial perspective as well as a management perspective to look at their strengths from multiple perspectives. From a financial perspective it is plain to see that starbucks is doing extremely well. In the past year their revenues have increased by 16.5%, and of those revenues their profits have grown by 33% overall. Simply put, they are doing very well and increasingly their sales and sale revenue steadily- keeping in line with their financial growth and expansion goals. As far as their cafe expansion plans, they have opened up 1600 new stores in the past year internationally and are expanding at a very good pace.

From a Management perspective, our team wanted to take a look at the current leadership style being used by the higher level management officials of the corporation. We understand that Starbucks is a huge operation and chose to focus on higher ,management because we felt it would give us a better sense of what type of management was expected at all levels of management. When analyzing Howard Schultz, the current CEO, we noticed three distinct styles of leadership he exhibited:transformational, democratic, and servant leadership. Transformational leadership is built upon advancement through higher levels of morality and intrinsic motivation. This type of leadership is great because the leader works with the company’s goals and objectives in mind while still making sure their decisions stay true to the values of the company. Democratic Leadership allows for free exercise of opinion, which goes hand in hand with their organic style of communication across departments. Currently, starbucks prides itself on being innovative and bringing new ideas to the table, this type of leadership allows for this innovation to cultivate and is clearly helping the company grow. The last type of leadership our team saw in Schultz was servant leadership, which is the most difficult to understand. Servant leadership is the act of leading by serving others, it is a selfless form of leadership that focuses on the greater good of the organization. Some of the pros of this type of leadership is that it breeds loyalty, motivation, and productivity. Altogether these leadership styles can create a dynamic style that can definitely take any business in the right direction, and it is. Throughout the entire project, we have come to see in many different facets of the company that they are focused on more than just selling coffee. Starbucks has said repeatedly that they want to give customers a “third place” to enjoy a cup of coffee, hang out with friends, do work, or simply take a break. And clearly , they are doing just that. There is a portion of their mission statement that reads, “We make sure everything we do is through the lens of humanity,” and if that doesn’t speak to the core values of starbucks and the way they carry themselves in all interactions we don’t know what does. Whether it be through their philanthropic endeavors, helping the community, innovative technology in their cafes or the best cold brew, starbucks is doing more than plainly selling a cup of joe.

Weaknesses

Some of the weaknesses that affects Starbucks are their high prices. This makes it more difficult for the lower class people to buy their products, because not everybody has the money to pay for the high priced drinks at Starbucks and they will use the alternative. In this case it could be the McCafe drinks at McDonalds, which will then cut into the profits of Starbucks. This then relates to their next weakness is that they have products that can easily be copied. Yes their competitors can not use the name Frappuccinos on their blended drinks but they can still copy them. They will have different names but they are able to be copied, and will probably be sold at a cheaper price thus cutting into Starbucks’ profit. Then another weakness that they have is that their store layout is able to be copied by their competitors. This is easy because they only have four different layouts for their stores and they are all laid out on line so a smaller shop can copy the layout of starbucks and create the same atmosphere.

Opportunities

First, Expanding Product Mix and Offerings lately, Starbucks started to expand its mix by adding Tea and fresh juice products. Second, Technological Advances – Starbucks has leveraged the use of mobile applications. The “Starbucks App” provides reward programs and creates a friendly, comfortable environment for the customers. Today, 10% of transactions in the US are being made through mobile.Third, New Way of Distribution – Starbucks introduced a new delivery system called “Mobile Pour”. The idea behind the make-believe app is simple; Starbucks has placed 2 baristas on scooters in every square mile of 7 of the country’s largest cities. Their main goal is to deliver you coffee at the whim of your GPS enabled smartphone. Finally, Expansion in Asia, the Middle East, and Africa – Starbucks just opened its 1,600th store in China. It’s essential to use this popularity and expand in the Middle East and Africa, where the company currently has minimal presence

Threats

Threats that Starbucks is currently or potentially facing consists of increased competition from low cost coffee sellers, the price of coffee beans, change of lifestyle and preferences, and brand imitation. First off, Mcdonald’s and Dunkin Donuts are in competition with Starbucks due to the fact that they sell their coffee at an affordable price compared to Starbucks pricey coffee. Second of all, if the price of coffee beans increase this will then force Starbucks to increase their prices on coffee which can potentially drive current or future consumers away. Third of all, change of lifestyle and preference are coming into play based on the fact that consumers are more conscious of what they put into their bodies and majority of consumers now prefer and look at quality of the product they buy. Based on this, consumers need to know that what Starbucks products are providing value to their wellbeing. Lastly, brand imitation is huge one because other companies can imitate Starbucks image and succeed at it. Starbuck must stand out above any competitors. They have the power to maintain competitiveness since they are highly known worldwide.

Recommendations

As a team we believe that the firm has the business strength to maintain competitiveness. However, the company must exploit opportunities for global expansion as soon as possible, to gain advantage over other firms also attempting to expand globally. To address the issue of competition with low-cost coffee products, Starbucks can emphasize quality and uniqueness in innovation of products to differentiate them. Starbucks can also increase efforts for trademark and intellectual property protection to reduce the threat of imitation.

Works Cited

In Zemanek, A. (2014). Media in China, China in the Media: Processes, Strategies, Images, Identities.

Palmer, A. (2012). Introduction to marketing: Theory and practice. Oxford: Oxford University Press.

Wührer, G., & Bilgin, F. Z. (2013). International Marketing Compact. Wien: Linde Verlag Ges.m.b.H.

Gordon J & Schultz H Onward: How Starbucks has Fought for Its Life without Losing Its Soul 2012

“Starbucks & Its Organizational Design.” Small Business. N.p., n.d. Web. 19 Apr. 2016.

“Organization Structure.” Organization Structure. N.p., n.d. Web. 19 Apr. 2016.