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Case Study Analysis of Starbucks Corporation

I. Business Level

There are many factors that constitute on how to achieve excellence in management especially in the case of Starbucks under Howard Shultz.  Indeed, management is getting things done, through efficient means that would maximize profit while keeping costs down. In order to be competitive and for an organization to be successful in the field of management and to be productive, there are lots of things to be considered.  Such aspects are the performance of the leaders or managers of the firm and the performance of the firm as whole, safety measures regarding the management, risks that will come along that the organization are going to face and ways to overcome them, and the influence of consultation (Pollock, 2001). 

In line with these factors that management of organization must consider are the needs of the organization.  These needs can be achieved through the knowledge of the management and technological approaches the management would choose (Barclay, 1997).  Dealing with those needs is important and constitute to the excellence in management.
There are lots of experiments on how to achieve excellence in management was done by Shultz in achieving the status Starbucks have today.  Some findings are the need to change strategies, designs

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that can be used to evaluate the organizations’ success, measures as standard basis, methods and ways to adapt to a complex environment; whether to stay with their current strategies in a constant environment or to change due to the changing environment, and many more (Resources, 2006).

II. Corporate- Level

 ‘Establish Starbucks as the most recognized and respected brand in the world’(“Starbuck company”, 2007) .  This statement embodies the totality of Starbucks Corporation’s goals and thrust for their company’s growth and direction. The company aims to achieve this by using only the finest coffee beans and provide the finest coffee blends thus receive the respect and acknowledgement on the world all over.

Since the company has already more than 3,500 stores local and international (Kembell, Hawks, Kembell, Perry, & Olsen, 2002). The company has maintained its 6 principles strictly which is the reason for the company’s success.

The six principles of Starbucks are stated as (“Starbuck company”, 2007).

•          Provide a great work environment and treat each other with respect and dignity.

•          Embrace diversity as an essential component in the way we do business.

•           Apply the highest standards of excellence to the purchasing, roasting and fresh delivery of our coffee.

•          Develop enthusiastically satisfied customers all of the time.

•          Contribute positively to our communities and our environment.

•          Recognize that profitability is essential to our future success

In the company’s endeavor to be the most recognized and respected brand the company have maintained the quality of their products, the ambiance of their branches even to the music that are being played in their outlets. .

Corporate parenting principle can be applied to the Starbucks scenario. The company aims to maintain in providing only the best coffee blends and products. Achievement of this goal is clearly evident in the quality of their blended coffee products by using only Starbuck’s whole coffee beans which are roasted in the company’s roasting facilities (Kembell, Hawks, Kembell, Perry, & Olsen, 2002).

Ambience in their outlets is also maintained by the management. The company wanted an outlet that busy office people can feel like home (Kiviat, 2006). This is evident in the design and layout of their outlets. Even the music played provided by Hear Music, a former music catalog company which was purchased by Starbucks last 1999.

Other components in the Starbucks outlet working environment are also maintained. The term “Baristas” is attributed to the outlet crew who handles the sales, preparation of the brews and food products and handing out of orders. Their uniform is standard regardless of the store outlet’s location. Even the lingoes that baristas used are standard and suited to the company’s requirement.

Another innovation that Starbucks Company has utilized is having a centralized source of information, news and updates which can be accessed worldwide. The company has utilized the internet and information and news can be accessed via starbucks.com (Kembell, Hawks, Kembell, Perry, & Olsen, 2002). This can be also utilized in gathering customer feedback and suggestions.

Horizontal Growth

Over the years since 1987, the company had a very dynamic strategy for its growth and expansion. Since its incorporation, the company’s first thrust was establishment of additional branches in different locations. With the acquisition of a new Roasting Plants the company has

concentrated in their endeavor to open additional outlets within USA with specific targeted number within a targeted time frame.

International branches have been achieved through joint ventures with local business partners who wished to bring Starbucks inside their countries. Today there are Starbucks outlets in Asia, Europe and Australia. As of November 2006 the company has a total of 12,440 outlets worldwide (Kembell, Hawks, Kembell, Perry, & Olsen, 2002). This is a combination of company operated outlets, joint ventures and licensed outlets.

Vertical Growth

The Corporation has not only coffee to offer as its product but also a variety of different things. This has evolved due to the study and feedback from the customers along its many branches. Products available are music, pastries, coffee equipments and items along with its standard product brewed blends (ice and hot) and roasted coffee beans (Kembell, Hawks, Kembell, Perry, & Olsen, 2002).

It is notable to mention one of Starbuck’s signature flavored drink – Frappuccino. This was introduced during 1995 as a result of an experiment of one of the baristas (Kembell, Hawks, Kembell, Perry, & Olsen, 2002).Other products and business ventures were also capitalized by the company. An example would be the retail sales of Starbucks music CD, which is a collection of songs gathered from customers request (Kembell, Hawks, Kembell, Perry, & Olsen, 2002).

III. Functional Level

One design that will constitute on the excellence in management of an organization is through the giving incentives to the individual.  This will be dependent on their performance in their field of work.  This is called the pay-for-performance system (William K. Redmon, 2005). Starbuck’s Coffee won one of the dealings on the supply chain excellence; speed.  To measure the excellence in management of the Starbuck’s Coffee, a checklist was made with all the criteria of being excellent in management as the standard basis.

Criteria
Starbucks  (does the company possess the following)
YES
No
Strategic Planning
Effective Delivery
Accountability
Innovation
Sustainability
Learning Culture
Measurement of Achievement
Workforce Development
Enterprise
Leadership
Customers Intimacy
For the simple reason, the aim for additional income, the Starbucks’ development can be achieve by doing this coupled with diversification strategies.  By doing this, the gap in the Starbucks’ goal and the organizational goal can be lessen or even better, will be gone.  In addition, the costs of goods and services are also in its minimal due to the incentive pays that motivates employees.  This motivation factors makes employees to become more productive.  In fact, some of the companies are now changing their way on how to pay their employees, from normal salary basis and or hourly basis wage systems, to payment based on the employee’s performance (pay-for-performance system).

As of this time, Starbucks are having difficulty recruiting baristas.  This may be due to the minimum wage salaries that they offer. The strict maintenance of the quality of Starbucks baristas can also be attributed for the slow pace of employment in Starbucks operations especially overseas.  Because of this reason, the Starbucks Corporation and other organizations are thinking of ways on how to attract new workers and to retain the old ones.  Other companies have the way of increasing the employee’s salaries, thus making an addition to their expenses and labor costs.  In addition to this, performance of these newly hired workers cannot be said to have reached the organization’s needs.  Then the need for performance improvement are then on the play.

Here comes the study on how to management motivates employees that will become a great use in achieving organizational goal.  Organizations have used incentives using incentives such as additional pay depending on the performance of individual employees (Studies, 2004).  What others have done is to give those who are in the hard work for the organization’s goal some incentives in the form of not a monetary value but for the recognition of their behaviors.  Such examples of non-monetary value incentives are promotions.  Most organizations do such things like this for motivating their employees to be more productive.  Together with the individual’s aim for promotion, is the organization having greater profit and lessens the costs of services.  Other non-monetary value incentives are recognition of the employees, for example, employee of the month award, best employee of the year, and many more.  Such behavioral way of motivations is of great help in achieving excellence in management of an organization.

IV.  Global Level

After acquiring Seattle’s Best and Tazo Tea in 2003, implementation of a goal through goal-setting program can be used by management to evaluate employee’s performances.  Feedback program especially when Starbucks opened its overseas operation in Japan in 1995 was added and to this method.  Feedback may be of good or bad based on the goal settled by the organization.  For employees perception of this settled goal may have different effects depending on the individual.  Some responds to the better productivity, while others have done absenteeism.  An increase in productivity means the goal settled by the management served as a challenge and thus motivates the employee for better work.  On the other hand, this served as constraints for other workers.  Feedbacks however are used to chase away criticism but are used for employee’s performance evaluation.  That’s for the reason that criticisms are agents of exploitation that management didn’t want to interfere with the management.  What feedback supposed to do is to give an evaluation, whether it may be bad or good, that will serve as a constructive criticism to employees.  If the feedback was bad, that doesn’t mean that the employee was bad at all, but to show the deficiency the employee have and to overcome for the employee to overcome this.  If the feedback was good, that means that the employees work was recognized and then the tendency of being a more hard working employee will come up to the mind of the employee.  This is how behavioral management in Starbucks Corporation plays.

References:

Kembell, B., Hawks, M., Kembell, S., Perry, L., & Olsen, L. (2002). Catching the Starbucks Fever.   Retrieved June 24, 2007, from http://www.academicmind.com/scholarlypapers/business/marketing/2002-04-000aag-catching-the-starbucks-fever.html

Kiviat, B. (2006). The Big Gulp at Starbucks.   Retrieved June 24, 2007, from http://www.time.com/time/magazine/printout/0,8816,1568488,00.html

Pollock, N. (2001). Knowledge Management: Next Step to Competitive Advantage – Organizational Excellence.   Retrieved June 24, 2007, from http://findarticles.com/p/articles/mi_m0KAA/is_5_30/ai_80747127

Resources, B. (2006). Developing an Accessible Technology Plan.   Retrieved June 24, 2007, from http://www.microsoft.com/enable/business/plan.aspx

Starbuck company. (2007).   Retrieved June 24, 2007, from http://www.starbucks.com/aboutus/overview.asp

Studies, F. (2004). Federation Study 2001: A Study of the Incentive Merchandise and Travel Marketplace Retrieved June 24 2007, from http://www.incentivecentral.org/Federation_Study_2001__A_Study_of_the_Incentive_Merch.457.0.html

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