Strategy development and organizational learning at Starbucks Corporation

¶ … strategy development" and "organization learning" apply to starbucks corporation

Strategy Development and Organization Learning

At the Starbucks Corporation

Today's organizations strive harder than ever to develop strategies that further increase and consolidate their competitive positions within the market. A relevant example in this instance is the coffee monolith Starbucks. The company was founded in 1971 in Seattle, Washington by intellectuals Zev Siegl, Jerry Baldwin and Gordon Bowker and its operations revolved around the import and sales of coffee beans. In 1987, they sold the company to Howard Schultz (today's Chairman of the Board and CEO), who introduced innovative ideas and turned the organization into the success it represents today (Website of the Starbucks Corporation, 2008). Under Schultz, the management at Starbucks developed and implemented a wide series of strategic approaches in terms of quality, performance, customer satisfaction or employee on-the-job satisfaction. Two of the most relevant courses of action saw the implementation of the concepts of strategy development and organization learning.

2. Strategy Development at Starbucks

The process of strategy development refers to the identification of existent issues within and outside the organization, the identification of the parties affected by the matter, and the development and implementation of a most suitable course of action to resolving the identified issues and sustaining the entity in reaching its established goals (Bryson, 2004). Along its nearly four decades of existence, the Starbucks Corporation has developed and implemented a wide array of strategies to resolve its problems and achieve its objectives. To best understand this, one should look at some clear examples of how the coffee giant has developed and succeeded in several of their strategic developments.

A first innovative strategy occurred during the 1980s, are revolved around the operations of the company. Prior to Howard Schultz's joining the company, Starbucks would simply import and sell coffee beans. Schultz however suggested that the organization begin preparing the coffee and selling the beverage, instead of the beans. This was a time in American history when coffee consumption was a thing to be done in the privacy of one's home, rather than public places or the street. Schultz's suggestion was unwelcome by the founders, but the current CEO still implemented it and achieved great success.

Another story of a successful strategy development is closer to today and revolves around the Starbucks stores. They can be found on nearly every street and they welcome all potential consumers. They reveal a pleasant mood and much of the corporate success has been due to the atmosphere created. The Starbucks stores are easily accessible and their numbers abound - in 2005, the company was opening an average of three stores per day (Stevens, Wrenn, Loudon and Mansfield, 2005).

Making the stores easily accessible however was not sufficient to ensure a flow of customers. This would be further addressed through the development of further strategies. In this order of ideas, the management at Starbucks recognized the diversity of their customers and accordingly diversified their product offering. "Starbucks stores offered a choice of regular or decaffeinated coffee beverages, a special "coffee of the day," and a broad selection of Italian-style espresso drinks. In addition, customers could choose from a wide selection of fresh-roasted whole-bean coffees [...] a selection of fresh pastries and other food items, sodas, juices, teas, and coffee-related hardware and equipment" (Thompson and Gamble, 1999).

Then, the leaders of Starbucks have also recognized the importance of integrating the latest technologies in their operational processes. They purchased newer and better machineries which revealed a triple benefit: reduced costs, increased operational efficiency and easier job for the Starbucks employees, further increasing their on-the-job satisfaction. Also, the company integrated the technological developments to better satisfy the customers. In this order of ideas, the Starbucks stores now offer wireless connection to the internet. They even set the basis to a strategic partnership with Hewlett-Packard, through which they would offer music services (Enderle, 2004).

More recently, the organization understood the importance that their reputation and the protection of the environment and of the communities play for its success and responded by developing and publishing an annual Corporate Social Responsibility Report. "Our commitment to conduct our business in ways that produce social, environmental and economic benefits to the communities where we operate is integral to our overall strategy. In an effort to remain open, transparent and accountable, we publish a Corporate Social Responsibility annual report" (Starbucks 2007 Annual Report).

4. Final Remarks

The Starbucks Corporation is the ultimate epitome of corporate success. Throughout its nearly four decades of existence, the coffee giant has developed and implemented a wide series of strategies which further increased its success and consolidated its competitive position within the global context. The primary reason for their achievements lays in the creativity and innovation brought in by CEO Howard Schultz, but also by the appropriate understanding and integration of theoretical managerial concepts. Two of the most relevant such concepts are the strategy development and the organization learning. The two concepts are interconnected and both rely massively on the firm's ability to analyze the internal and external environments and best adapt to the emergent changes in these environments: seize opportunities, minimize threats, maximize strengths and eliminate weaknesses.