Starbucks organizational culture, leadership, and business strategy

Starbucks' Strategy

Key elements of success in Starbucks' organizational culture

Today Starbucks Corporation has become a leading retailer, coffee brand and roaster all over the world. It has more than 12,000 licensed and company-operated locations in Europe, North America, Middle East, Latin America as well as Asia Pacific. The products that are offered by Starbucks along with their coffee are today being sold in many airports, hotels, grocery stores, universities and many other famous retailers with the help of different licensing arrangements (Starbucks, 2012a).

The internationally licensed retail stores of Starbucks are being run with the help of the joint ventures and licensing arrangements that have been made mainly with the established restaurant operators or retailers (Starbucks, 2012a).

Ethical conduct, social responsibility and good governance are given a lot of importance at Starbucks and these factors have played a very important role in helping the brand to not only create but also increase the shareholder value. The company puts in a lot of effort to make sure that they have a good relationship with the shareholders and pays a lot of importance to their feedback and inputs on the issues that are importance to both Starbucks and the shareholders (Starbucks, 2012a).

Management's role with creating and sustaining the organizational culture

The responsibility of managing and operating the company according to the strong governance and ethical principles has been given by the board of directors of Starbucks to the management. There are a total of 11 members in the board presently. The independence requirements laid down by NASDAQ.® are met by 8 members from among these 11 (Starbucks, 2012a).

There are independent directors present in all the three committees of the board and all of these directors have specific charters, which are

Nominating and Corporate Governance;

Audit and Compliance; and •

Management Development and Audit and Compliance (Starbucks, 2012a).

When it comes to the selection of new board members there exists well-defined criteria, the most important among these criteria is the expected boards members clear demonstration of their own ethical values and personal integrity. The company tries to have diversity when it comes to the board members with regards to their race, professional background, ethnicity, gender and other characteristics that differentiate them from the others (Starbucks, 2012a; 2012c).

This diversity helps the company in increasing the innovativeness and creativity as they are able to get many different ideas and opinions. From among the 11 members that form the Starbucks board two are African-Americans from among whom one is a female, one member is Latino and there is one other female on the board (Starbucks, 2012a; 2012c).

In order to maintain the continuity and stability along with some other reasons Starbucks has always had a classified board. However, the fact has been questioned by Starbucks that if the accountability of the directors is reduced due to the classified board as, it places limits on the ability of the shareholder to elect the board members on annual basis and to evaluate them as well (Starbucks, 2012b).

Effectiveness of Starbucks' management decisions to innovate

One of the major reasons for the success of Starbucks is their ability to maintain the ethical culture within the organization. Starbucks Business Ethics and Compliance (BEC) programhas helped the partners in taking ethical business decisions as it provides guidelines in the Standards of Business Conduct which help the partners in the ethical decision making by giving them ethics training, providing mechanism for the partners to say their concerns out loud and to facilitate the legal obedience. There is a Business Conduct Helpline that the partners are encouraged to use if they have any related concerns (Starbucks, 2012b).

There is also an Auditline that is maintained by Starbucks for the third parties like the investors, customers and vendors. This Auditline is there so that any kind of auditing or accounting irregularities could be reported. The Starbucks partners also have access to this Auditline. The program is very well established in all of the North America as it has been in place there since 1999. It was in 2004 that the program was launched internationally and since then it has been rolling out in the company-owned markets through acquisitions and market openings (Starbucks, 2012b).

Key management competency and its advantage

There is continuous evolvement in the way the CSR is being managed. This is being done in order to make sure that the emerging issues are not only identified but prioritized and dealt with as well and that too in a manner which is more integrated and systematic (Starbucks, 2012c; Starbucks, 2012d).

Although throughout the company there exists a shared sense of accountability when it comes to CSR but there also exists a CSR group that the company relies on. This group reports the daily management activities especially the ones related to initiative regarding CSR to the senior vice president of CSR. Motivation as well as broad oversight is also provided by this group for additional CSR programs that are implemented and managed on the department, unit or division level (Starbucks, 2012c; Starbucks, 2012d).

Apart from the committed CSR group there are three cross-functional teams that have been developed by Starbucks and which have responsibilities specific to the governance of the company and its CSR. These three cross-functional teams are: