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Howard schultz and starbucks case study
Business level strategy of starbucks
Starbucks ethical behaviour
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Introduction
When Howard Schultz began to notice a decline in the Starbucks brand he built from a single coffee house into a multinational chain of over 15,000 locations employing over 172,000 people, he decided to begin 2008 with new direction. He reassumed the role as CEO and proposed a set of new initiatives to reenergize the company as a whole. These initiatives started at the front lines of Starbucks by changing some of the current machinery used to create espresso and coffee. Next he launched new roasted coffee blends that were set to revolutionize overall taste and perception of coffee. Additionally, due to perceived loss of customers, he introduced a revamped rewards program as well as an online forum to allow anyone from employees to patrons the opportunity to give feedback to Starbucks as a whole. Finally, he wanted to go back to the drawing board to find the correct balance of social and environmental goals that Starbucks pursued.
Technology vs Art
Starbucks received criticism on a regular basis about how its baristas were button pushers more than coffee artists as the term usually refers. Shultz saw this as a threat to Starbucks intended model which was to have each employee act like more than just a robot set only to accomplish a task. Employees were expected to accomplish their set duties as creators and servers but were also to generate conversation with customers. Creating this welcoming climate was the idea that originally implemented the larger automated espresso makers that the company was now trying to remove from its locations. It was originally believed that the less time used on creating an order could be more time spent with customers to make their experience as fulfilling as possible. While good...
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...undaries was also extraordinary and allowed Starbucks to be a staple of many people’s day the world over. Starbucks is a company that “defies standard retailing” (Koehn et al., 2008, p.5) by complementing basic corporate initiatives with corporate citizenship.
Works Cited
Buchanan, M. (2008). Starbucks' New "High Performance" Mastrena Espresso Machine. Gizmodo, the Gadget Guide. Retrieved January 29, 2012, from http://gizmodo.com/383417/starbucks-new-high-performance-mastrena-espresso-machine
Koehn, N.F., Besharov, M.A., & Miller, K. (2008). Starbucks Coffee Company in the 21st Century. [Case study]. Boston, MA: Harvard Business School Publishing.
My Starbuck Rewards. (2011). Starbucks Coffee Company. Retrieved January 29, 2012, from http://www.starbucks.com/card/rewards
Robbins, S. P., & Coulter, M. K. (2011). Management (11th ed.). Harlow: Pearson.
Great quality products, customized, served in clean, convenient placed stores for everyday coffee, friendly and fast serving, everything in a pleasant atmosphere - these were just few factors that lead to the great success of Starbucks during the nineties. Their USP was a place where every American could escape from home or work, for a coffee drinking ritual; high quality coffee, according to each customer's taste, served in a special, intimate ambience. Their image was supposed to appeal to anyone, being based on the idea of community, "exploiting" the need of people to interact with each other, in a "third place", away from home or work.
Founded in 1971 at Seattle’s Pike Place Market, Starbucks Coffee, Tea and Spices, as it was originally called, has been “brewing-up” its famous blends in over 43 countries, including the United States. Now called Starbucks Coffee Company, business isn’t just about the coffee and tea anymore. Starbucks has its own line of bottled water, handcrafted beverages, fresh food, entertainment, merchandise and a Starbucks Card. The company has received numerous awards for their outstanding business practices. Fortune Magazine has ranked them as one of “The Best 100 Companies to Work For” in 1998, 2000, 2002, and 2008 (Starbucks, 2008). The Starbucks Experience provides consumers and the general public a direct line a of business communication. From friendly baristas to press releases from CEO Howard Schultz, Starbucks keeps its “partners” informed.
When the 1980’s rolled around, it was a thriving company, in the Seattle area. However, the co-founders began to have other interests and were involved in other careers simultaneously. Despite that, the company was about to undergo a major turnaround. A man by the name of Howard Schultz started to pursue an interest in the company. He noticed that the coffee shop had a wonderful environment.
The importance of economic indicators to the strategic planning process in any organization is the ability to benchmark economic conditions that contribute to improve profitability, business growth and market size. Leadership sets up the mission “to establish Starbucks as the most recognized and respected brand in the world.” In doing so, they have created a set of industry-leading, comprehensive coffee-buying guidelines addressing coffee quality, financial transparency, social and environmental responsibility. Starbucks strategy is also expanding market in globally to provide high quality coffee in convenient and visibility locations. They are continuing to innovate and extend the business with imaginative new ready-to-drink beverages and expanded packaged coffee offerings (Starbucks Corporation, 2007).
Starbucks not only shapes a defined importance on its product, the coffee, but also the relationships on its partners, its customers and its shareholders to create diversity, “to create a place where each of us can be ourselves” (Starbucks Coffee), to treat all related partners with dignity and respect at the greatest corporate level. In this sense, Starbucks involves its customers, its neighbors and is shareholders to participate in the community to “be a force for positive action—bringing together [its] partners, customers, and the community to contribute every day (Starbucks Coffee).
Coffee is a worldwide cash crop of which demand has exponentially increased over the years. “Coffee is (after oil) the world’s second most important traded commodity” (Cleaver 61). Competing coffee brewing companies wage war on offering the freshest, best tasting coffee the market has to offer. With such stiff competition there must be enough coffee beans deemed to be good enough in quality to supply the increasing demand. Starbucks can be considered one of today’s top competitors if not thee top coffee manufacturer presently in business. This successful company has had a huge impact on the coffee industry as well as the world. They have gone through great length to provide consumers with an excellent product as well as create a legacy that shows how to best go about running a massive corporation while keeping the environment clean and healthy.
Starbucks is currently the industry leader in specialty coffee. They purchased more high quality coffee beans than anyone else in the world and keep in good standings with the producers to ensure they get the best beans. Getting the best beans is only the first part, Starbucks also has a “closed loop system” that protects the beans from oxygen immediately after roasting to the time of packaging. They did this through their invention of a one-way valve which let the natural gasses escape but keeping oxygen out. This gave them the unique ability to ensure freshness and extended the shelf life to 26 weeks. Starbucks isn’t only about the coffee, it’s also about a place where people can escape to enjoy music, reflect, read, or just chat. It is a total coffee experience. The retail outlet has been responsible for much of Starbucks growth and has contributed substantially to their brand equity.
Starbucks began its retention plan by analyzing their employees’ needs. The analysis drew variables of importance, such as positive culture, employee development, and benefits. As a result of the analysis, Starbucks CEO, Howard Schultz, came up with a plan to start a long-term retention program in his company. Mr. Schultz made sure that “he made it a point to put himself at the top of a respect pyramid in which he would be sure to be kind to everyone in the company with whom he interacted, with them passing on the respectful treatment, right down to the pyramid’s base”(“How Starbucks retains its employees”). The company also set up an online portal for employee development. Starbucks also launched a program to help its employees to achieve a college education. This educational program sends employees to Arizona State’s online program, providing juniors with free tuition and sophomores with financial aid. As a result of this initiative, Forbes (2015) has named Starbucks as one of “America’s Best
Everything centers on the organizational culture within Starbucks. While being a customer service-based company and understanding that the customer satisfaction and loyalty are what will make the company profitable, Starbucks takes a different approach to customer service than other companies. By hiring employees that fit in the organizational culture (ICFAI, 2005) and treating their employees well (Lefevere, n.d.), Starbucks brings in and retains customers through their happy employees. The qualities that Starbucks hires for are "adaptability, dependability and the ability to work in a team" (ICFAI, 2005). The culture is supportive and laid back (Montana, 2005). Howard Shultz, Starbucks president and CEO, has the theory "that if you treat your employees well, they will treat your customers well" (Starbucks, 1997).
Starbucks is a worldwide company, known for is delicious brews of coffee and seasonal varieties of tasty drinks for any occasion. Starbucks opened with two main goals, sharing great coffee with friends and to help make the world a little better. It originated in the historic Pike Place Market of Seattle, Washington in 1971 by Jerry Baldwin, Zev Siegl and Gordon Bowker. The creation of Starbucks’ name came from the seafaring tradition of early coffee traders and the romance evoked from Moby Dick. At the time, this individual shop specialized in the towering quality of coffee over competitors and other brewing services enabling its growth to becoming the largest coffee chain in Washington with numerous locations. In the early 1980s, the current CEO Schultz saw an opportunity for growth in the niche market. After a trip to Italy he brought back the idea of a café style environment of leisure and social meetings to the United States we now see in Starbucks locations today. Schultz ultimately left Starbucks to open his own coffee shop, Il Giornale which turned out to be a tremendous success. Fast forward a year later, Schultz got wind that Starbucks was going to sell all their components of Starbucks including their stores and factories, he immediately acquired the funds to buy Starbucks and linked both operations. Within five years he was able to open more than 125 stores starting in New England, Boston, Chicago, and gradually entered California. He wanted Starbucks to be a franchise system based on the mission of telling the truth and emphasize the quality,
One could argue that this could be imitated by competitors but it also is very costly. Another strategy is their strategic alliances and acquisitions such as Teavana (Tea), Bay Breads, Evolution Fresh, and many more. Their acquisition strategy has known to be very horizontal. This gives Starbucks the ability to effectively leverage their cornerstone product differentiation strategies by offering a premium product mix of the highest quality beverages and snacks. Starbucks’ goal is to provide each and every customer with a unique “Starbucks Experience” excellent customer service, and well maintained stores which in turn translates to a high degree of customer loyalty. Its HRM value-based approach is for building strong internal and external relationships with suppliers which helps its deployment to international markets, horizontal integration, and organic expansion across the world. Starbucks is known for its high knowledge employees. Human capital is the main asset for most companies and they are provided with great benefits, stock options, retirement accounts, and competitive pay. Good human capital translates into great customer service. I talked to my friends about working at Starbucks and they both said it
Bruss (2001) argues that the company hopes as well to make new investments in new coffee types. Starbucks has recently developed a new type of coffee called green-coffee. These strategies are created with the objective of support Starbucks’ commitment to buy coffee that has grown and processed by suppliers. They meet certain conditions of social, economic and quality standards. In addition to that, the company is paying additional premiums to those vendors who meet the specific requirements that the company wants.
As we know, Starbucks has made a name for itself making and selling coffee and specialty coffee drinks. It has made its biggest impression by becoming the espresso expert and public educator of how to make the perfect espresso; "Roasters" of the company are trained for one year.
With clear core values towards providing quality coffee, the best service, and atmosphere, Starbucks has enjoyed great success since it was founded 30 years ago. The company has being doing very well for last 11 years with 5% or more store sales increase, even with the rest economy still reeling from the post-9/11 recession. However recent research, conducted to Starbucks, have showed some concerns regarding company’s problem meeting customers’ expectations.