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Starbucks Innovation Competencies
Last year, I wrote to you that the company's improved operational foundation, invigorated innovative muscle, and heightened customer relevance presented us with an opportunity to build a different kind of organization. One that would leverage and extend our strengths both inside and outside our stores. I am pleased to report that in fiscal 2011 we delivered.
Howard Schultz, Starbucks Chair, FY2011 Annual eport -- Welcoming Message
Starbucks is often thought of as a nearly flawless company. Few customers worry about its survival and they continue to love what it is trying to do (Malkin 2007). This seems to be the case even when its record suggests it is going through some very challenging times -- thought to be related to its loss of individualized customer attention (Kwok and abe, n.d.). Starbucks, it seems, simply learned from early on how to ride the wave of innovation!
Kwok, J.S. And Rabe, E. C. 'What went wrong with Starbucks? Financial Analysis and Business Evaluation.' Southwester Conference Case Study. Retrieved from http://southwesternfinance.org/conf-2010/C7-2.pdf.
Malkin, E. 'Founder sees lots of room for more Starbucks, New York Times. Sept. 22, 2007. Retrieved April 22, 2012 from http://www.nytimes.com/2007/09/22/business/22interview.html .
Maney, Kevin. 'How Starbucks Lost its Fidelity.'? CNNMoney.com (2009). Retrieved April 22, 2012 from http://money.cnn.com /2009/09/16/news/companies/kevin_maney_starbucks.fortune/index.htm.
Starbucks, Annual Report, 2011. Corporate Investor Releases. Retrieved April 22, 2012 from http://investor.starbucks.com/phoenix.zhtml?c=99518&p=irol-irhome .
Starbucks' Human esource Management Policies and the Growth Challenge
In recent years, there has been much interest in the notion of "high commitment" human resource management (HM). The high commitment HM is focused on developing self-regulated behavior among employees that is based on mutual trust rather than external sanctions and pressures. Considering this premise, this paper provides a review of the relevant peer-reviewed, scholarly and organizational. literature concerning the advantages of adopting such an approach and an evaluation concerning how closely Starbucks Coffee Company fits the high commitment HM model. To this end, a brief overview of Starbucks is followed by an overview of the high commitment HM model which is then applied to the company's human resource management practices. A summary of the research and important findings are presented in the conclusion.
eview and Analysis
Starbucks' Corporate History
Founded 40 years ago in 1971, Starbucks Coffee Company (hereinafter alternatively…
Avolio, B.J., & Bass, B.M. (2002). Developing Potential across a Full Range of Leadership:
Cases on Transactional and Transformational Leadership. Mahwah, NJ: Lawrence
Burke, R.J. & Cooper, C.L. (2005). Reinventing Human Resources Management: Challenges
Starbucks is a global coffee powerhouse that has had a success record that nearly any company would die for. It has never undertaken much a traditional route in regards to marketing and advertising. Starbucks specialty is using word of mouth, tribal, and viral social formats to promote its products and services. It is recommended in the wake of global populist movements that Starbucks further refine its CSR initiatives internally, and then use this to leverage new consumer segments. If Starbucks takes this approach it will position itself to be more sustainable in terms of the triple bottom line in the wake of a shift in public consciousness.
The coffee retail industry is one of the most multifaceted industries possible. This industry generally relies on the reliance on marketing to drive sales. Marketing undoubtedly…
BBC News, 2011. Time unveils Person of the Year: The Protester. [Online]
Available at: http://www.bbc.co.uk/news/world-us-canada-16184196
[Accessed 20 December 2011].
Conway, M., 2011. Brand Loyalty: Starbucks' Die-Hard Customers. [Online]
The remaining conference paying attention on reenergizing the collecting employees.
3. Do you think that Starbucks has grown rapidly because of its ethical and social responsibility activities or because it provides products and an environment that customers want?
To understand how Starbucks takes care of customers and the role of that management in its achievement, we need to look at the history and growth of Starbucks as a corporation. The first stores did not distribute coffee drinks. They were vendors of fresh-roasted coffee beans, exotic teas, and seasonings. Every now and then the person behind the counter would prepare a pot and dole out free samples in Styrofoam cups (Badaracco & ebb, 2009).
Until the end of the 1970s, Starbucks had five retail stores, a mail-order division, and a wholesale group. Sales were two million dollars annually. Schultz, who is now chairman and CEO, was hired by Starbucks in 1981…
Badaracco, J. And P. Webb. "Business Ethics: A View from the Trenches." California Management Review, Vol. 37, 2009.
Bollier, D. "Aiming Higher: 25 Stories of How Companies Prosper by Combining Sound Management and Social Vision." The Business Enterprise Trust, AMA-COM, American Management Association, New York, NY, 2006.
Starbucks is the established leader of the coffee and coffee-based beverages across the entire world. The company helped create business history through the innovative ideas of Howard Schultz and it became established as an epitome of business success.
ecently however, the company had been facing increasing competition and added internal problems. As a result, it conducted an internal process of change and hoped that it would reconsolidate its position. At this level, it is useful to assess this situation through four distinctive lenses, as follows:
The need for change and the process of the change
The benefits of the change process
The risks of the structural change, and last
The financial analysis before and after the change.
The need for change and the process of the change
The change implemented by Starbucks was fueled predominantly by the realization that the firm had been losing its identity. Specifically, throughout the past…
Craig, J.C., Sadler, P., 2003, Strategic management, 2nd edition, Kogan Page Publishers
2012, Yahoo Finance, http://finance.yahoo.com/q/ks?s=YHOO+Key+Statistics last accessed on February 23, 2012
2012, Investopedia, http://investopedia.com / last accessed on February 23, 2012
Case 7: The commodization of Starbucks
Starbucks is the leader of the coffee and coffee-based beverages industry across the world, having transformed the simple act of drinking coffee into a valuable and memorable experience. The business model implemented by the firm is based on the creation of various coffee and coffee-based beverages, of a multitude of flavors and sold in pleasant stores across the globe. The Starbucks stores integrate relaxing and modern ambiance, free wireless internet, pleasant music and they are the fashionable place for young adults to meet and share enjoyable experiences.
Starbuck's mission is represented by the desire to "inspire and nurture the human spirit -- one person, one cup and one neighborhood at a time" (Website of Starbucks, 2012). Its vision is that of being a place where people meet and experience pleasant moment, beyond the consumption of coffee, and that this vision be transported throughout the entire world. The goals and principles…
Colvin, M. (2010). Starbucks accused of poor treatment of Ethiopian coffee growers. ABC. http://www.abc.net.au/pm/content/2006/s1774565.htm accessed on December 6, 2012
(2012). 100 best companies to work for. CNN Money. http://money.cnn.com /magazines/fortune/best-companies/2012/snapshots/73.html accessed on December 6, 2012
(2012). Website of Starbucks. http://www.starbucks.com accessed on December 6, 2012
However, the company has in general enjoyed success overseas and as a result international sales now account for 27% of operating income (2010 Starbucks Annual Report). The international division remains a key source for growth at Starbucks, in particular the Chinese market, where Starbucks has enjoyed considerable success and now sits at over 500 stores.
The company struggled in the mid-2000s due to two main factors. The first was the entry of new competitors into its space. Both Dunkin Donuts and McDonalds upgraded their coffee offerings in an attempt to win business from Starbucks. These moves were in response to Starbucks use of snack foods to win breakfast business away from fast food chains. These events reframed Starbucks' competitive positioning. The view that Starbucks was strictly a coffee company competing against other caffeine marketers became obsolete -- Starbucks was now in the quick service food industry, using coffee as its…
2010 Starbucks Annual Report. In possession of the author
Allison, M. (2008). Starbucks closing 5% of U.S. stores. Seattle Times. Retrieved November 14, 2008 http://seattletimes.nwsource.com/html/businesstechnology/2008028854_starbucks02.html
ASB. (2010). Marketing lessons: Whatever happened to Starbucks? Knowledge @ Australian School of Business. Retrieved November 14, 2011 from http://knowledge.asb.unsw.edu.au/article.cfm?articleid=1192
Jargon, J. (2011). Latest Starbucks concoction: Juice. Wall Street Journal. Retrieved November 14, 2011 from http://online.wsj.com/article/SB10001424052970204358004577030112155716538.html
Starbucks Case Analysis
What factors accounted for the extraordinary success of Starbucks in the early 1990s? What was so compelling about the Starbucks value proposition? What brand image did Starbucks develop during this period?
Many factors accounted for the extra-ordinary success of the Starbucks in the early 1990's. The Starbucks nearly wanted to be the leading branding company for the coffee all through the world. For sure they nearly owned one-third of the America's coffee bars given that they had the highest quality product that was widely recognized. The Starbucks Company never spent its money in advertisements however the product was recognized through the word of mouth. The other factor that made the company to be more successful is the way they were selling their coffee to many people as well as, making the company to be public. There are many factors that also contributed to the success of the…
Grigoroudis, E., & Siskos, Y. (2010). Customer satisfaction evaluation methods for measuring and implementing service quality. New York: Springer.
Herlpern, D. (2004). Customer Satisfaction: 3 Steps to Increase Customer Satisfaction. Online Marketing Strategy -- Social Triggers. Retrieved August 10, 2012 from http://socialtriggers.com/increase-customer-satisfaction/
Reh, F.J. (2009). Customer Satisfaction Survey. About Management - business management - people management - and more. Retrieved August 10, 2012 from http://management.about.com/od/competitiveinfo/a/CustomerSatSurv.htm
Starbucks has built its business on a number of key success factors. The first is that the company has built its brand on delivering a consistent customer experience that consumers value. The company developed a formula for what a successful coffee shop would be, and followed that formula every time it entered a new market. The company's franchise outlets also must follow this formula. The Starbucks Experience itself is something that the company seeks to utilize to bring in customers, by providing a relaxing "third place" for people to meet or relax (Michelli, 2006). The company's ability to deliver this experience consistently despite rapid growth around the world, and to have the same consistency in the quality of its coffee, is something that has allowed Starbucks to spread so rapidly, to charge premium prices, and to extend its brand into bottled drinks and other products (AMI, 2011).
hile consistency has…
AMI. (2011). What Starbucks taught us about branding. Athena Marketing International Retrieved November 28, 2012 from http://www.athenaintl.com/news/articles/what-starbucks-taught-us-about-branding.html
Fox, E. (2012). Teavana up 50% on Starbucks acquisition. CNN Money. Retrieved November 28, 2012 from
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…
The partnership is known as Create Jobs for USA.
With this and other community and environmental projects, the company is focused on being a "catalyst for positive change" (Starbucks, 2012). In addition to the employment program, the company is also focused, as mentioned above, on ethical sourcing for its coffee beans. The program created with this purpose is known as C.A.F.E. Practices and is in its eighth year. Specifically, what this means is that nearly 86% of the company's coffee beans are sourced in a way that promotes the improvement of quality, productive, environmental impact, and transparency.
This also relates to the company's commitment to environmental stewardship. As such, the company has been a leader in efforts such as green building. Starbucks joined the USGBC in 2000. Today, 75% of Starbucks stores are built according to the LEED standard. In 2011, the company worked actively with community members, leaders, and…
Starbucks Case Study
In responding questions, refer case study "Starbucks U.S.: Too Much Coffee Spilling All Over?" 1. Based information provided case, view Starbucks' business model (i.e. feel sound business fundamentals)? Substantiate response referencing (4) examples, ideally case, relevant business concepts.
Starbucks in U.S.: Too much coffee spilling all over?
Starbucks' business model
Starbucks' business model is to offer higher-than-average quality coffee at a relatively high price point. Its coffee is an 'affordable luxury.' It is not the cheapest coffee on the market or the most expensive but is positioned so that middle and upper middle-class consumers feel comfortable making frequent purchases. It offers a 'home away from home' to consumers who want to relax, do some work, and get away from the stresses of the office and home in a relaxed atmosphere (Jain 2009: 3-4). This social aspect of Starbucks was why it focused upon word-of-mouth advertising and used…
Jain, S. (2009). Starbucks in U.S.: Too much coffee spilling all over. IBS-CDC.
Starbucks Brand Name SWOT
Develop information explains Strengths / Weaknesses Starbucks brandname Opportunities / Threats financial future product. For information promotional activities product, find places product promoted (retail stores, magazines, TV shows, .
The success of any company's brand largely depends on the marketing strategy adopted to ensure its sales are increased. However, it is imperative that a company analyses the strengths, weaknesses, opportunities and threats of their promotional means to provide sustainability Charlesworth, 2009.
The use of appropriate promotional means will ensure that all the target customers are reached and provided with pertinent information that will enable them make informed decisions. Since Starbucks operates in the highly competitive beverage industry and has more expansion plans, the company management has the obligation of ensuring that the target market is acquainted with information and that the promotional channel used is convenient for the company.
Starbucks has widely employed the use…
Charlesworth, A. (2009). Internet marketing: a practical approach. Amsterdam: Butterworth-Heinemann.
Corporate Social Responsibility; Starbucks Coffee. (2006) Retrieved December 2006, from http://www.starbucks.com
Moon, Y., & Quelch., J. (2003). Starbucks: Delivering Customer Service. Harvard College. Boston: Harvard Business School.
SWOT Analysis Starbucks. (2006) Retrieved December, 2006, from http://www.marketingteacher.com
Starbucks: Performance Measures
Starbucks is indeed a ubiquitous part of modern society. However, Starbucks did not always possess this all-pervasive presence. There was a time, just a couple decades ago when Starbucks was not on every corner and not everyone knew about or frequented the coffee chain.
One of the fundamental elements which makes the balance scorecard of Starbucks so positive and the history of the company so compelling, is that it really is steeped in humanity. The founder and CEO of the company, Howard Schulz, explains this in copious examples in his book, "Onward: How Starbucks Fought for Its Life without Losing Its Soul." Schulz gives countless examples of the genuine attempts of Starbucks to funnel money and time to help support "local needs in the communities it serves, promoting sustainable farming communities and ethically sourcing coffee, and packaging and transporting its products with sensitivity to their…
Schulz, H. (2011). Onward: How Starbucks Fought for Its Life without Losing Its Soul. New York: Rodale Books.
Schwartz, T. (2011, April 4). Why I Appreciate Starbucks. Retrieved from hbr.org: http://blogs.hbr.org/schwartz/2011/04/why-i-appreciate-starbucks.html
Starbucks. (2008). Financial Release. Retrieved from corporate-ir.net: http://phx.corporate-ir.net/phoenix.zhtml?c=99518&p=irol-newsArticle&ID=1181488&highlight=
Economic indicators inform companies about the broader trends in the economy. Most companies are well aware of their own internal performance, but economic indicators can provide additional information. For example, if the economy is slumping, then a slight downturn in a company's revenues might be expected. If the economy is booming, however, then that same downturn would be a red flag. So economic indicators can sometimes serve as a benchmark against which firm performance can be evaluated, or at the very least can be a frame for understanding firm performance. This makes sense -- managers often consider the influence of the external environment when making strategy and the economy is definitely an important part of that environment. A second use of economic indicators is to help give the firm a sense of economic trends. These can help the organization set future strategy, by extrapolating the past trends over the…
BEA. (2013). National income and product accounts. Bureau of Economic Analysis. Retrieved January 23, 2014 from http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm
BLS. (2014). Consumer price index summary. Bureau of Labor Statistics. Retrieved January 23, 2014 from http://www.bls.gov/news.release/cpi.nr0.htm
Jacobsen, B. (2013). Consumer price index: Low inflation shows the Fed should try a different tool. Forbes. Retrieved January 23, 2014 from http://www.forbes.com/sites/brianjacobsen/2013/12/17/consumer-price-index-low-inflation-shows-the-fed-should-try-a-different-tool/
MSN Moneycentral. (2014). Starbucks. Retrieved January 23, 2014 from http://investing.money.msn.com/investments/stock-price?symbol=SBUX&ocid=qbes
Neither McDonalds nor Dunkin Donuts has a product quite like this one. In order to further beat the competition, this product should be manufactured as soon as possible. Though some customers may be tempted to choose a Dunkin Donuts or McDonalds coffee over Starbucks by their proximity to the competitors' restaurants, one whiff of the air freshener will change their minds and have them driving back to Starbucks.
Since 1971, Starbucks has made an amazing climb up the ladder of corporate America. The first international store was started in 2001, and in 2008, one can barely walk down the streets of London or Paris without seeing Starbucks galore. Though competitors are beginning to catch up with Starbucks in terms of its cultural icon, Starbucks can keep growing and continue to leave their competitors in the dust. By adopting the coffee cup shaped, drink scented air freshener, Starbucks will be on…
African Origins." Coffee. 2008. National Geographic Society. 25 May 2008. http://www.nationalgeographic.com/coffee/ax/frame.html .
The History of Branding." History of Starbucks. 2007. History of Branding. 25 May 2008. http://www.historyofbranding.com/starbucks.html .
Indicators of the Coffee Industry in Brazil." Statistics. 2008. Cafeicultura. 25 May 2008. http://www.revistacafeicultura.com.br/index.php?tipo=ler&mat=15755 .
International Coffee Organization. n.d. International Coffee Organization. 25 May 2008. http://www.ico.org/index.asp .
For all of its corporate proliferation, Starbucks also takes pride in social responsibility through charitable participation. The corporation gives back to the community through partnering with local organizations such as Make Your Mark, Product Red and UNICEF. hile the fulfillment of such public generosity shows the corporation's social consciousness, taking part in such acts of charity garner Starbucks favorable publicity along with visibility thus making Starbucks a trendsetter of civil service as well. Starbucks began as a chain of stand-alone coffeehouses but has since transformed to become a staple amenity with locations in airports, hotels and even on cruise ships. The risk of expansion came with a price, but the innovative step taken to expand its product has helped to keep Starbucks ahead of its competitors. As explained by Peter Skarzynski and Jorge Rufat-Latre in their article, "Lessons to Jumpstart Disruptive Innovation," while Starbucks has taken financial hits with the…
Gaudio, R.P. (2003). Coffeetalk: Starbucks ™ and the Commercialization of Casual Conversation.
Language in Society. 32(5), pp. 659-691
Skarzynski, P., Rufat-Latre, J. Lessons to jumpstart disruptive innovation.
Strategy & Leadership, 39(1), 5-10. Retrieved January 21, 2011
Drinking coffee is a social event, not the Starbucks idea of 'coffee to go'.
This is the same case in Italy, where there are literally dozens of traditional ways of making coffee. It is difficult to impose on such mature markets that have developed, during history, their own ways of attending to the coffee drinking phenomenon. It is by no surprise that the only place in Europe where Starbucks truly caught on was Great Britain, another traditionally tea-drinking country.
If we look at these risks, we can draw the conclusion that this rate of expansion on markets which are not as absorbent as others can have dramatic consequences for Starbucks. Any financial losses that might occur in these markets will have to be multiplied with the total number of stores that were actually opened. In this sense, a more cautious approach is much more recommended, with simple experimental store openings…
The company also has an interest in hiring internally. Staffing is a challenge for Starbucks, however, because of the company's growth rate and the need to maintain high standards of customer service (eber, 2005). This is why the company emphasizes training to the extent it does, because training and enculturation is needed to support the staffing policy.
Employee Training and Development
Starbucks has an extensive training program in order to ensure that high customer service standards are met. Although Starbucks does not disclose specific figures, it spends more on training than it does on advertising, such is the value it puts on building a quality workforce (eber, 2005). The training program includes both task elements of the job and enculturation, the latter being a critical component in the training program. Customer service standards are emphasized, and the training program includes situations on dealing with customers, as well as leadership and…
Allison, M. (2008). Starbucks closing 5% of U.S. stores. Seattle Times. Retrieved November 30, 2010 from http://seattletimes.nwsource.com/html/businesstechnology/2008028854_starbucks02.html
AW Page Society. (no date). Starbucks Corporation: Can customers breastfeed in a coffee shop? AW Page Society. Retrieved November 30, 2010 from http://www.awpagesociety.com/images/uploads/Starbucks_Case.pdf
China Business Daily. (2010). Starbucks brews up Yunnan flavor. China Business News. Retrieved November 30, 2010 from http://cnbusinessnews.com/starbucks-brews-up-yunnan-flavor/
Fujimura, N. & Firn, M. (2010). Starbucks says VIA sales may pass $1 billion globally. Business Week. Retrieved November 30, 2010 from http://www.businessweek.com/news/2010-04-13/starbucks-says-via-sales-may-pass-1-billion-globally-correct-.html
Thus, achieving market saturation in Asia will give Starbucks a sustainable competitive advantage in those markets.
To implement the recommendation, Starbucks should invest more of its money into the partnerships that are running the Starbucks franchises overseas. These firms need to be compelled to expand more rapidly and Starbucks should be willing to provide financial and logistical assistance if necessary.
The firm should double the pace of new store openings in Japan, China and the United Arab Emirates. They should also investigate other large markets, such as India. India has many of the same market characteristics of China. It has a large middle class in the hundreds of millions. India's cities are densely packed, necessitating the need for a "third place." The nation's middle class looks to the est for cultural guidance, as do the Japanese. And while India is a tea-drinking nation, so are China and Japan. Thus,…
Linn, Allison. (2008). Starbucks to Close 600 Stores in the U.S. MSNBC. Retrieved February 28, 2009 at http://www.msnbc.msn.com/id/25482250/
McCall, Todd. (2009). Starbucks Store Closing List Not Released, but 300 Stores on Chopping Block. Associated Content. Retrieved February 28, 2009 at http://www.associatedcontent.com/article/1429221/starbucks_store_closing_list_not_released.html?cat=3
No author. (2009). Starbucks' Green Tea Success with Japanese Consumers Leads to Worldwide Opportunity. JETRO. Retrieved February 28, 2009 at
Starbucks - Questions
hy has Starbucks been so concerned with social responsibility in its overall corporate strategy? In the Corporate and Social Responsibility section of its website Starbucks promises to return back to society money for schools, roads, health centers and other needs. hy? "Because we've always believed that businesses can -- and should -- have a positive impact on the communities they serve" (Starbucks.com). It has been the Starbucks commitment to "…strike a balance between profitability and social conscience," the website explains. The "ultimate way to scale the power of a brand is to share the good we do," Starbucks explains. And by letting people know that the company is generous, everyone "we touch" knows the company is different from typical corporate entities that think profit only.
In the book Business Ethics: Ethical Decision Making and Cases, the authors explain that Howard Schultz, founder and CEO of Starbucks, had…
CNN Money. (2012). 100 Best Companies to Work For. Retrieved February 2, 2013, from http://money.cnn.com .
Starbucks. (2012). Being a Responsible Company. Retrieved February 2, 2013, from
Starbucks' Reputational Risk in Italy
Starbucks has built one of the most respected and well-known consumer brands globally through consistently high standards of execution, a focus one exceptional customer experiences, and a belief that consumers needed a third place, away from work and home to relax. These insights and more from the article Grounds Zero: A Starbucks-ree Italy (aris, 2012) is the basis of this analysis. Starbucks' many challenges in addressing their reputational risk in Italy, the breadth and diversity of competitors, the drastic differences in coffee taste preferences present formidable challenges for their growth in this nation. Ironically it was in Milan, Italy where Starbucks CEO originally got the idea for the Starbucks experience of being in a cafe, not a traditional American coffee shop (aris, 2012). To succeed in this market however Starbucks will need to be more effective at managing their competitive threats, capturing opportunities, and managing…
For Starbucks to excel in the Italian market, it will need to concentrate on creating a highly effective in-store experience that aligns with the existing expectations of the Italian consumer. It will also need to move away from being so focused on Arabica beans, as the consumers there don't like the tastes of that type of bean and coffee it produces. Starbucks will also need to concentrate on creating a shared store layout that allows for the experiential aspects of their store in addition to the typical pattern that Italian coffee stores have. The cultural changes will be significant for Starbucks, and they need to re-consider if it makes sense to enter the market. At the present time they are better off spending time on higher growth markets including India and China.
Faris, S. (2012, Feb 13). Grounds zero: A starbucks-free Italy. Business Week,, 1. Retrieved from http://www.businessweek.com/magazine/grounds-zero-a-starbucksfree-italy-02092012.html
Over the past 20 years, Starbucks has experienced both periods of strong growth, and periods of retraction, most notably during the Great Recession. The company’s investment strategies should have reflected its strategic priorities during this period, and an analysis of the company’s financials over this time should illustrate that. Starbucks’ growth since 1998 has mainly been in overseas markets, but the company has also branched out into other business lines, in an attempt to diversify its income streams. Today, Starbucks appears to have settled into more of a “cash cow” state, where the company is earning healthy returns from its businesses, and focused on growth mainly in some of the overseas markets where the coffee market is maybe a bit more nascent, in other words where there remains high growth potential going forward.
Starbucks Income Statement
Starbucks has been a strong growth story for most of this period. According…
Starbucks Corporation was established in 1971 and it is headquartered in Seattle, Washington. The company specializes in roasting, marketing, and retailing specialty coffee all over the world and accounts for about 3% of coffee sourcing globally. Serving 78 unique markets, the company is one of the biggest coffee roasters in the world and serves millions of patrons every day from its 30,000 plus stores around the globe. This article looks at how Starbucks has approached and operationalized the concept of sustainability.
In 2016, Starbucks floated a sustainability bond with the goal of financing coffee growing projects in various regions so as to promote environmental sustainability and socio-economic growth. Starbucks Corporation followed the guidelines presented by the Green Bond Principles 2016 in issuing its Starbucks Corporation Sustainability Bond Framework - also referred to simply as the “Framework”. The proceeds of the bond were directed at financing and refinancing…
Starbucks is based in Seattle, where it was founded. The original Starbucks coffee shop was founded in 1971 in Pike Place Market. Howard Schultz joined the company in 1982, and began to expand its operational scope at that point in time. In 1983, after a trip to Italy, he begins to develop the concept for Starbucks, based on what he saw in the espresso bars in Milan. In 1987, the company came under Schultz's ownership with a group of investors. It began to expand, to Vancouver and Chicago. There were 17 stores in total at this time (Starbucks.com, 2018). Since that point, Starbucks has grown to become the world's largest coffee chain. According to the latest annual report, there are 27,339 stores worldwide, 13,275 being company-owned stores. Starbucks operates in 75 countries in total (Starbucks 2017 Form 10-K).
Mission & Leadership
Schultz is the executive chairman of Starbucks.…
QSR (2016) The QSR 50. QSR Magazine. Retrieved January 26, 2018 from https://www.qsrmagazine.com/content/qsr50-2017-top-50-chart
Starbucks 2017 Form 10-K. Retrieved January 26, 2017 from Starbucks.com (2018). Company information. Starbucks Corporation. Retrieved January 26, 2018 from https://www.starbucks.com/about-us/company-information
Starbucks.com (2018) Creating a culture of belonging, inclusion and diversity. Starbucks Corporation. Retrieved January 26, 2018 from https://www.starbucks.com/responsibility/community/diversity-and-inclusion
Starbucks.com (2018) Starbucks company timeline. Starbucks Corporation. Retrieved January 26, 2018 from https://www.starbucks.com/about-us/company-information/starbucks-company-timeline
IV. Decision Making
There are potential business ethics and regulatory issues that could impact Starbucks by affecting the corporate strategy, brand development, and decision-making processes. One of the issues is diversity issues. Starbucks could also face ethical and regulatory issues in terms of integrity and trust. Regulatory issues that the company could also face are compliance and governance issues. Based on the prospective business ethics and regulatory issues aforementioned, there are business decisions that Starbucks will need to make. In addition, there are processes and practices that will be employed to make these decisions. To begin with, in order to ensure that legal and regulatory aspects are adhered to, Starbucks will need to instigate a code of ethics that will be adhered to by all stakeholders (Mamic, 2017). Businesses and companies have to conduct their operations within government, state, and local regulations and guiding principle. Taking this into…
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Mamic, I. (2017). Implementing Codes of Conduct: How Businesses Manage Social Performance in Global Supply Chains. Routledge.
Matten, D., & Crane, A. (2005). Corporate citizenship: Toward an extended theoretical conceptualization. Academy of Management review, 30(1), 166-179.
In this world of technological advancement, companies are trying to gain competitive advantage through using unique ways of reaching out to the customers. Since wireless technology is everywhere, many companies have commercialized and expanded their business through it. Starbucks is one such company.
Starbuck uses GPS (Global Positioning System) in its Application to know the location of the customer on the basis of which it sends notification and music information to help select the customer their taste of music as this system provides accurate position, time and speed information through satellite.[footnoteRef:1] This has increased customer engagement and brand loyalty as the App offers other unique features too but the tracking of location and giving out customized packages within the area of the customer has made it more successful in attracting the customers towards them. Also due to its built-in GPS system in the user Application, it can suggest a nearby…
Autonomous Control of Starbucks
Do you think the administrative law judge and the National Labor Relations Board (NLRB) went too far in overruling Starbucks? Why or why not?
It definitely appears that the administrative law judge and the National Labor Relations Board (NLRB) went too far in overruling Starbucks. The main reason is that Starbucks had initially made an effort to accommodate the NLRB. The former permitted its employees to wear a button denoting partisanship with that particular organization (DeMaria, 2009). Deciding how many buttons an employee could wear, or even deciding how Starbucks could determine its own policy about the appearance of its employees, is not within the scope of the NLRB. The NLRB and the aforementioned judge overstepped their boundaries by overruling Starbucks.
How much leeway should an employer have in setting standards for conduct, customer interaction, and attire in the workplace?
Employers should have a fair amount…
DeMaria, A.T. (2009). Judge says Starbucks violated workers’ rights at NYC stores. Management Report.
DeMaria, A.T. (2010). NLRB orders Starbucks to reinstate two workers, but not a third. Management Report.
Moran, C. (2012). Court sides with Starbucks in dispute over labor union pins. https://consumerist.com Retrieved from
Only a year after taking the helm at Starbucks, CEO Kevin Johnson faced a major ethical challenge. The store manager at a Philadelphia Starbucks had called the police on two African American men who were waiting for their colleagues to arrive. Other customers captured the arrest on smartphone video, which went viral, creating a potential public relations disaster for the company. Johnson swiftly responded to the incident to clarify the ethical outlook, mission, and values of Starbucks. After immediately firing the Philadelphia manager who called the police on the two men, the CEO made public statements indicating that the manager’s actions were “wrong,” signifying a deontological approach (Tangdall 1). However, Johnson also exhibits utilitarian ethics in his public statements and subsequent actions related to the event, saying, “Creating an environment that is both safe and welcoming for everyone is paramount for every store,” (1). Yet Starbucks also traditionally utilized…
Gourguechon, Prudy. “The Psychology of Apology.” Forbes. 6 May, 2018. https://www.forbes.com/sites/prudygourguechon/2018/05/06/the-psychology-of-apology-how-did-starbucks-ceo-kevin-johnson-do/#6487c2c4ac8d
Sampaio da Silva, R. “Moral Motivation and Judgment in Virtue Ethics.” Philonsorbonne. https://journals.openedition.org/philonsorbonne/993
Tangdall, Sara. “The CEO of Starbucks and the practice of ethical leadership.” Markkula Center for Applied Ethics. https://www.scu.edu/ethics/focus-areas/leadership-ethics/resources/the-ceo-of-starbucks-and-the-practice-of-ethical-leadership/
Visconti, Luke. “Starbucks: Don’t close the stores, close corporate headquarters.” DiversityInc. 2018. https://www.diversityinc.com/Ask-the-CEO/starbucks-racism
STARBUCK'S STRATEGY AND INTERNAL INITIATIVES FOR PROFITABLE GROWTH
Stabuck's Stategy and Intenal Initiatives to Retun to Pofitable Gowth
Stabuck's Stategy and Intenal Initiatives to Retun to Pofitable Gowth
Michael Pote's 5 Foces Model
Theat of New Entants
Buye's Bagaining Powe
Bagaining Powe of Supplies
Fomulate Stategic Maketing
Impove Standing of Stock Maket
Stabuck's Stategy and Intenal Initiatives to Retun to Pofitable Gowth
As Stabucks was expanding, anothe emphasis was set on hiing talented leadeship in managing the huge momentum of the oganization. Significant amount of esouces was geaed towads developing an oganizational infastuctue, which would satisfactoy suppot the expected pospective size of Stabucks. Schultz accepted that numeous business visionaies failed by not making the coect systems and pocesses to guaantee a suitable establishment fo thei entepeneuial divisions to be actualized. Togethe with his patnes, he made the planning, legal logistics, accounting and financial impotant…
references are continually evolving. Subsequently economic situations likewise change. In this setting, Starbucks neglected to stay abreast of the changing market positions and consumer behavior. In the most recent months, Starbucks' performance is going on a downtrend. It is essential that the explanations for this downtrend must be recognized, and remedies must be invested. The remedies also need to be permanent and not just short-term.
Whilst transient activities are required to address strategic progressions, it is more imperative to set a strategic objective, or if fundamental, reform the present strategic objective to fit in with to the conditions in today's business environment and the future business. Hence, it was suggested that Starbucks might also concentrate on marketing while upgrading its operational adequacy. Marketing has been the missing segment in the Starbucks practice as of late. It is consequently imperative to emphasize on this area.
Thompson, A. & Shah, A. (2010). Starbuck's strategy and internal initiative to return to profitable growth. Mu-nchen: GRIN Verlag GmbH.
It is recommended that Starbucks acquires Caribou Coffee (CBOU). Caribou is a direct competitor to Starbucks, which is the appeal. Caribou's existing locations can be either closed out or converted to Starbucks locations. Caribou is a strong regional brand with 541 coffeehouses (MSN Moneycentral, 2012). The company has a very similar business model to Starbucks, but with less size and arguably less business sophistication. Caribou is, nonetheless, a successful company that is now turning a profit ($35.22 million in FY2011) after many years of losses.
Caribou stock is currently trading at $16.93 per share, giving the company a market capitalization of $352.96 million. The offer for Caribou will need to be higher. An acquisition premium of 10% is reasonable (McClure, 2012), however, because there is only limited opportunity for synergies to add value to Caribou, and because Caribou stock is already trading near its all-time high. A 10% premium…
McClure, B. (2012). The basics of mergers and acquisitions. Investopedia. Retrieved March 18, 2012 from http://www.investopedia.com/university/mergers/mergers2.asp#axzz1pI61aUrV
MSN Moneycentral. (2012). Caribou Coffee. MSN Moneycentral. Retrieved March 18, 2012 from http://investing.money.msn.com/investments/company-report?symbol=CBOU
MSN Moneycentral. (2012). Starbucks. MSN Moneycentral Retrieved March 18, 2012 from http://investing.money.msn.com/investments/company-report?symbol=SBUX
Starbucks and Peet's have similar gross margins. Dunkin' Brands has a much better gross margin at 78.9%, while McDonalds has a lower gross margin at 39.6%. Starbucks' gross margin might put it in the middle of the pack for quick service, but it is still a healthy margin. The company is profitable, something most of the firms in the industry are. Interesting, Dunkin is the least profitable of these four companies, and McDonalds has a high net margin. This is reflected is an ROE for that company of just 5%, compared with Starbucks' ROE of 27.69% and McDonalds' 39.8%. For the equity investor, Starbucks again has a strong ROE but not the strongest in its industry.
Starbucks continues to have premium positioning in the industry. This should allow the company to earn higher margins and returns. hile this is not necessarily the case, the strategic moves that Starbucks has made…
MSN Moneycentral (2011): Starbucks. Retrieved November 14, 2011 from http://moneycentral.msn.com/investor/charts/chartdl.aspx?PT=8&compsyms=&D4=1&DD=1&D5=0&DCS=2&MA0=0&MA1=0&C5=1&C5D=1&C6=&C7=1&C7D=1&C8=&C9=-1&CF=0&D7=&D6=&showtablbt=View+price+history+with+dividends%2Fsplits&symbol=sbux&nocookie=1&SZ=
MSN Moneycentral: McDonalds Corp. (2011). Retrieved November 18, 2011 from http://moneycentral.msn.com/investor/invsub/results/compare.asp?Page=InvestmentReturns&symbol=MCD
MSN Moneycentral: Dunkin' Brands. (2011). Retrieved November 18, 2011 from http://moneycentral.msn.com/investor/invsub/results/compare.asp?Page=InvestmentReturns&symbol=DNKN
The class text (on page 338) describes that a big part of this is giving promising employees tasks and assignments that stretch their boundaries and horizons as this helps them grow and, as mentioned before, incentivizes them to do more (Thompson, 2012).
In short, Starbucks has had its challenges and has things it needs to address. The stock crashing in 2008/2009 was not a good time but it was absolutely at least part of the shared pain that the entire stock market underwent during the "Great ecession." As long as Starbucks follows the strategy execution steps listed in the Thompson text, they'll be fine. However, keeping all relevant parties happy, especially when it comes to things like depressed wages and health care, can be rather hard to tamp down (Thompson, 2012).
Appendix I -- Key Statistics
Source: Yahoo Finance - http://finance.yahoo.com/q/ks?s=SBUX+Key+Statistics
Appendix II -- Competitor Info
Source: Yahoo -…
Bogardus, a.M. (2009). PHR/SPHR: Professional in Human Resources certification study guide (3rd ed.). Indianapolis, Ind.: Wiley Pub..
NYTimes. (2012, December 5). Analysis Tools - Historical Chart - NYTimes.com. Markets Overview - NYTimes.com. Retrieved December 5, 2012, from http://markets.on.nytimes.com/research/stocks/tools/analysis_tools.asp?symbol=SBUX
PFANNER, E. (2012, December 5). Starbucks Corporation News - the New York Times. Times Topics - the New York Times. Retrieved December 5, 2012, from http://topics.nytimes.com/top/news/business/companies/starbucks_corporation/index.html
Starbucks. (2012, December 5). Starbucks Coffee Company. Starbucks Coffee Company. Retrieved December 5, 2012, from
A fourth foundational element is the strength of the Starbucks brand itself and is ubiquity globally. As a result of rapid and well-defined strategies for opening up retail stores, Starbucks is now considered one of the most preeminent and strongest brands globally.
Starbucks has generated the strength of their brand through combining high-quality coffee and tea beverages with the third-place concept to generate customer loyalty and world-of-mouth among customers and their friends. It is common to hear students mention they will have a team meeting at the local Starbucks, for studying or completing projects.
In summary the Starbucks model is strengthened by the company's coffee expertise, impressive new product development record, and the development of Starbucks locations as "third places" where friends can meet and enjoy coffee and pastries. Underscoring all these points is the strength of the Starbucks brand.
What were the key issues and the decision by Starbucks…
Patrick Burnson (2002, December). Amsterdam's key role in Starbucks' global strategy. World Trade, 15(12), 40-41. Retrieved December 7, 2007, from ABI/INFORM Global database. (Document ID: 241805271).
Deutsche Bank (2006) - Starbucks Overview. Deutsche Bank Securities Research. New York, NY. 10 July 2006.
Geoffrey a. Fowler (2003, July 14). Starbucks' Road to China; Prime Locations Are the Key, but So Is Using Snob Appeal to Lure Nation of Tea Drinkers. Wall Street Journal (Eastern Edition), p. B.1. Retrieved December 7, 2007, from ABI/INFORM Global database. (Document ID: 369860271).
Jeffrey S. Harrison, Eun-Young Chang, Carina Gauthier, Todd Joerchel, et al. (2005). Exporting a North American Concept to Asia: Starbucks in China. Cornell Hotel and Restaurant Administration Quarterly, 46(2), 275-283. Retrieved December 7, 2007, from ABI/INFORM Global database. (Document ID: 832085141).
2010 MOST ETHICAL RESTAURANT
Starbucks Coffee Company was chosen Most Ethical Restaurant for 2010, according to strict screening methods and criteria (Ethisphere, 2010). These criteria were corporate citizenship and responsibility, corporate governance, innovation in public well-being, industry leadership, executive leadership, regulatory and reputation track record and internal systems and ethics or compliance program. Starbucks is the lone recipient of the award in the restaurant and cafe category (Ethisphere).
Starbucks Coffee Company started as a single an narrow store at the Pike Place Market in Seattle in 1971 (Starbucks, 2010). Its name was inspired from the novel, "Moby Dick," which describes the romance of the high seas and the traditions of the early coffee traders. From the start, the company offered and served some of the world's finest fresh-roasted whole bean coffees. Current chairman, president chief executive officer Howard Schultz first entered a Starbucks store in 1981 and…
CRO Corporation LLC (2009). Corporate responsibility. Corporate Responsibility
Magazine: Shared Expertise Media LLC. Retrieved on October 16, 2010 from http://www.thecro.com/?qnode
DeLoitte Consulting LLP (2009). Organizing for corporate responsibility and sustainability. Case Study- Starbucks. DeLoitte Development LLC. Retrieved on October 15, 2010 from http://www.chicagolandchamber.org/YourChamber/greenbusforum/Documents/DeloitteCorpResponsibility.pdf
Ethispere (2010). 2010 world's most ethical companies. Ethisphere Magazine. Retrieved on October 16, 2010 from http://ethisphere.com/wme2010
The company operates high volume retail outlets and has adopted a saturation strategy. Yet, inventories at the retail level are kept low in order to control costs. This is facilitated by strong logistics. Deficiencies in logistics would hamper growth prospects and compromise the Starbucks Experience. Moreover, the firm's ability to translate this competency into international markets will go a long way to determining how successful the company can be in those markets, in particular with regards to the revisiting the same saturation strategy they have employed in North America.
The final core competency that helps to distinguish Starbucks is its human resources. This supports the Starbucks Experience, in that the company is consistently able to identify and train candidates to fill strict criteria within the framework of a low-paying food service job. The corporate culture and benefits package contribute to this competency, indicating that a substantial amount of thought has…
Starbucks 2008 Annual Report. Retrieved June 20, 2009 from http://media.corporate-ir.net/media_files/irol/99/99518/AR2008.pdf
Some financial data from MSN Moneycentral. Retrieved June 20, 2009 from http://moneycentral.msn.com/investor/invsub/results/hilite.asp?Symbol=SBUX
No author. (2007). New Issue -- Starbucks Sells $550 mln in 10-year notes. Reuters. Retrieved June 20, 2009 from http://www.reuters.com/article/bondsNews/idUSN2131222520070821
Allison, Melissa. (2009). Moody's Downgrades Starbucks Bond Rating. Seattle Post-Intelligencer. Retrieved June 20, 2009 from http://seattletimes.nwsource.com/html/businesstechnology/2009217122_webstarbucks13.html
Imagine studying about Starbucks. They are known for their coffee that they import from other parts of the world. Since they are a multinational enterprise, they have stores all over the world, which brings in for them a number of customers who come and enjoy their products on a regular basis. This organization started back in the 1970s and has grown immensely since then. The business has high ethical standards and codes of conduct for the employees to adhere to when working for them. By examining Starbucks further, one is able to grasp how they function internally and externally.
Starbucks mission is to "inspire and nurture the human spirit-one person, one cup and one neighborhood at a time" (Starbucks, 2011a). Their vision is to have the best coffee available for consumers by having it done through the highest quality possible, while maintaining ethics within the company (Starbucks, 2011a). However,…
Manize, N. (2011). Starbucks SWOT analysis and strategy-tactics . Retrieved June 13, 2011, from Real SWOT analysis: http://realswotanalysis.blogspot.com/2011/02/starbucks-SWOT-analysis-and-strategy.html.
Starbucks. (2011a). Starbucks company profile. Retrieved June 13, 2011, from Starbucks: http://assets.starbucks.com/assets/aboutuscompanyprofileq12011final13111.pdf .
Starbucks. (2011b). Our Starbucks mission statement. Retrieved June 13, 2011, from Starbucks:
Starbucks struggled in the late 00s as a result of increased competition and the economic slowdown. However, the company has since righted its ship and now has a bright future. The firm has addressed its economic and competitive threats, and improved its internal performance. As a result, it is now well-positioned to take advantage of its opportunities, and faces few serious threats to its business. Starbucks is positioned to drive growth in three ways -- geographic diversification, consumer products and the juice business. It has a broad appeal among adults 18-40, and this demographic has ample disposable income. Thus, Starbucks has tremendous opportunities in marketing with its core audience and should be successful in the coming years as a result.
Starbucks is a quick service food chain that specializes in coffee and snacks. The company is the fifth-largest firm in the industry and the largest with a coffee focus…
Adamy, J. (2009). Starbucks plays common Joe. Wall Street Journal. Retrieved November 25, 2011 from http://online.wsj.com/article/SB123413848760761577.html
Adhiambo, M. (2011). Climate change could drive spread of major coffee pest. The Guardian. Retrieved November 25, 2011 from http://www.guardian.co.uk/environment/2011/oct/13/climate-change-coffee-pest
Allison, M. (2008). Starbucks closing 5% of U.S. stores. Seattle Times. Retrieved November 25, 2011 from http://seattletimes.nwsource.com/html/businesstechnology/2008028854_starbucks02.html
Interbrand/Business Week. (2006). The world's best brands. Business Week. Retrieved November 25, 2011 from http://www.businessweek.com/magazine/toc/06_32/B399606globalbrands.htm
In this, Krispy Kreme's strategy appears to be more focused upon monetary profit than risk-taking strategies for the sake of long-term customer relations. The company's franchising practices for example show that monetary strategy takes precedence over long-term quality assurance, whereas tarbucks' focus is upon using the company's inherent strengths to ensure the company's future growth.
In general, both Krispy Kreme and tarbucks show favorable outcomes as a result of their new management strategies. Krispy Kreme's most successful strategy is its individual focus on the customer's culinary experience. Customer responses to this testify to the excellence of the company's product, and the fact that these doughnuts are practically irresistible. It is interesting to note that the rise of health consciousness over the past decades have not influenced the company's sales significantly. While the company has added beverages to their menu, the main attraction of Krispy Kreme is its doughnuts.…
Krispy Kreme, Inc.;
Starbucks in 2004: Driving for Global Dominance in Thompson, a.A., Strickland, a.J. & Gamble, J. (2004). Crafting and executing strategy: The quest for competitive advantage: Concepts and cases, (14th ed.). New York: Irwin/McGraw Hill.
Starbucks coffee company is a leading roaster and retailer of specialty coffees. It has its base in Seattle and has many stores within the U.S. And internationally. The objective of starbucks is the establishment of Starbucks as the most recognized and respected brand of coffee in the world. For this goal to be achieved, starbucks continues to expand its retail operations by selectively pursuing other opportunities so that they can leverage and grow the company's brand by the introduction of a variety of new products (Balaban, s & Kieta, C., 2008).
Starbucks aims at entering more and more foreign countries. Among countries that Starbucks may consider venturing into is Italy. The initial idea to set up starbucks was from the Italian coffee tradition which was infused with the leisure approach found in Seattle. Despite the fact that the idea came from Italy, Italy has been considered a mountain that starbucks…
Alini, E. (2012). Italy Meets Starbucks. Retrieved November 9, 2012 from http://www2.macleans.ca/2010/10/28/italy-meets-starbucks/
Innovation Zen, (2006). Why Starbucks is not Present in Italy. Retrieved November 9, 2012 from http://innovationzen.com/blog/2007/01/15/why-starbucks-is-not-present-in-italy/
Faris, S., (2012). Grounds Zero: A Starbucks-Free Italy. Retrieved November 9, 2012 from http://www.businessweek.com/magazine/grounds-zero-a-starbucksfree-italy-02092012.html
Balaban & Kieta, C. (2008). Starbucks Coffee Company. Retrieved November 9, 2012 from http://cobweb2.louisville.edu/faculty/regbruce/bruce//cases/starbucks/starbucks.htm
tarbucks in India
Identifying Global Opportunities
Global Business Opportunities
tarbucks is a global retailer of coffee, and is seeking new growth markets, since its largest markets (U.., Canada, UK) are all mature. The company has nearly 20,000 stores (2011 Annual Report). The company has premium positioning in the market with its brand, logo and patents providing key intellectual property to expand globally.
When looking for potential markets, tarbucks seeks the opportunity to license or to form joint ventures with established food service companies. This allows tarbucks to leverage its brand in new markets, while gaining local market expertise. The company has demonstrated in the past that it is skilled at adapting to changing times and new technology, but at its core is a great coffee business.
Business Opportunity Analysis
Looking at new market opportunities, tarbucks has already identified China as a major area for growth (Loeb, 2013). However,…
The company will compile its information on a daily, weekly, monthly and quarterly basis and then communicate this back to Seattle head office, while Tata head office in Mumbai will also receive the information. Most of the decision-making for the business is between the Starbucks manager there and the Tata partner manager. They make joint decisions, and typically rely on information from the joint venture. Only performance measures are communicated back to head office, so there is not much need for a global MIS. However, by linking the Indian operation in with the pre-existing global Starbucks MIS the company will achieve its objectives of being fully connected.
Technology for Managing Information
One of the important considerations here is that Starbucks relies on global MIS. It does not need to create it so much as integrate it with the existing systems. This means expending on infrastructure in India in order to support the company's rapid growth in that country. For Starbucks, being prepared from an information systems perspective for rapid growth is an essential component of the market entry strategy. The company will utilize the Internet, cloud-based computing, and will also use traditional Internet networks and storage, communicating with email and instant message.
Module 9: Identifying human resources for global business activities
Starbucks has recently shown profound growth that is tempered by concerns over stores in foreign markets and the rise of a tea culture in the United States. In the past year, Starbuck's revenues have soared, and the number of stores has increased dramatically. On potential cause for concern is a new focus on opening stores in rural and low-income areas, as opposed to the well-established success for high income, urban areas. In the global market, cultural differences have impacted Starbuck's potential success, especially in Japan. The strong coffee culture that played a role in Starbuck's success in America is not necessarily present worldwide. In the U.S. The potential growth of a tea culture may damage Starbuck's hold on the beverage market, especially given that the company faces stiff competition from competitors who may better embody the values of the tea culture.
ecent news shows Starbucks performing well. evenue…
Chou, Hsio-Ching. What's brewing with tea? Seattle Post-Intelligencer, Wednesday, May 12,
2004. 11 November 2004. http://seattlepi.nwsource.com/food/172841_innovation12.html
Ik-jae, Choi. Starbucks here tops Starbucks there: Team from Japan advised to do more image marketing. JoongAng Daily Business Finance, 2003.07.09. 11 November 2004.
There are other coffee chains in the country, but none of them are American, so Starbucks has an edge there. However, in more fashionable areas of Beijing there are Chinese coffee shops that offer their own take on a relaxing coffee shop experience. Starbucks must position not only against foreign competition and traditional Chinese tea culture, but against the inevitability of a Chinese-grown competitor. As CEO, I would recommend that Starbucks double down on the American-ness of its experience. This gives the company an edge that cannot be easily matched. However, the company must also work with its local franchisees to ensure that it leads trends, rather than follows them, as Chinese competitors emerge. Many of the new competitors will emulate the more successful aspects of Starbucks' business model, so branding and brand protection are going to be critical elements of the company's expansion strategy going forward. Starbucks must enter…
Baertlein, L. & Jones, T. (2012). Lingering customers just one hurdle for Starbucks China growth. Reuters. Retrieved October 31, 2012 from http://www.reuters.com/article/2012/04/18/us-starbucks-china-idUSBRE83H0ET20120418
Doherty, D. (2012). Nestle to battle Starbucks in Chinese premium coffee market. Bloomberg. Retrieved October 31, 2012 from http://www.bloomberg.com/news/2012-10-16/nestle-to-battle-starbucks-over-chinese-portioned-coffee-market.html
Oches, S. (2012). The QSR 50. QSR Magazine. Retrieved October 31, 2012 f rom http://www.qsrmagazine.com/reports/qsr50-2012-top-50-chart
Starbucks 2011 Annual Report. In possession of the author
Starbuck Corporation: Analysis of its past and future
Today, the name of the Starbucks Corporation is synonymous with a rather corporate version of overpriced coffee. But the company originated with the intention of bringing a customized European coffeehouse experience to the United States. Starbucks began as a small chain of four coffeehouses in Seattle. The business partners asked Howard Shultz to assume the helm of the company as head of marketing as they prepared for expansion. "Schultz was struck by the business philosophy of the two partners. It was clear from their discussions that Starbucks stood not just for good coffee, but rather for the dark-roasted flavor profiles that the founders were passionate about. Top-quality, fresh-roasted, whole-bean coffee was the company's differentiating feature and a bedrock value" (Thompson & Hill 1998: 1). Starbucks focused on offering Americans a high-quality European coffee house experience they had previously been…
Allison, Melissa. (2012). Starbucks maps future of venti-sized global expansion. Seattle Times.
Allison, Melissa. (2008). Starbucks stores to shut 3 hours on Feb. 26 for retraining baristas.
This is a managerial accounting paper
Starbucks accounting questions
From the case in 2004, explain the logic for a price increase from Starbuck's perspective.
In 2004, Starbucks was facing rising costs for its input goods such as milk and coffee beans. In 2004, Starbucks announced that the "price for a tall coffee is going up by 10 cents. A 12 ounce coffee used to cost $1.55 without tax but it will now cost $1.65" (Wirth 2004). Consumers were understandably annoyed by the price increases, and groused about how already expensive coffee was getting more expensive. However, Starbuck's decision seemed to be wise in the short-term. Customers who are price-sensitive to a 10 cent increase in the price of beverages are unlikely to be regular patrons at Starbucks. According to one Starbucks coffee buyer: "Because it's only 10 cents it won't make that much of a difference to me,…
Champions of breakfast? (2009). ABC News. Retrieved:
Operating leverage. (2012). Investopedia. Retrieved:
Starbucks as a Morally esponsible Company:
Starbucks Coffee Company is an American coffee firm that operates globally and headquartered in Seattle, Washington. Currently, Starbucks Coffee Company is the largest coffeehouse firm across the globe with over 20,000 chain stores in more than 60 countries. Generally, the company serves various brands of hot and cold beverages across its stores such as microground instant coffee, pastries, whole-bean coffee, and full-leaf teas. The success and productivity of the Starbucks in its global operations is attributed to the fact that it has remained committed to ethically sourcing and roasting the highest quality of Arabica coffee since its inception. The ethical commitment is evident in the fact that it behaves morally responsible toward consumers, the environment, and employees. As a result, Starbucks Coffee Company was recognized as one of the most ethical companies as listed in Etisphere website. The recognition is based on acknowledging companies…
"Corporate Ethics and its Role in Consumer Perceptions and Behavior." (n.d.). Full Thesis
Honors Program. Retrieved from University of Florida website: http://www.honors.ufl.edu/apps/Thesis.aspx/Download/1518
"Global Human Rights Statement." (n.d.). Starbucks Coffee. Retrieved November 25, 2013, from
The United Kingdom is one of the largest markets in the world for Starbucks, with over 700 stores, by far the largest in Europe. The company ran into a scandal, however, when it was revealed that the company was not paying taxes in the UK, but was rather paying the taxes in the Netherlands and Switzerland, which has a much lower tax rate. Some politicians decided to make a name for themselves by attacking the foreign company (Starbucks' major competitors in the UK are local chains Costa and Caffe Nero, both domestic companies). The ensuing negative publicity hurt Starbucks' sales, which fell below ?400 million for the first time since 1998 (Campbell, 2014).
At issue is the fact that the UK signed into membership with the European Union. The EU established rules that allowed companies to headquarter in one European country and operate subsidiaries in another…
Bergin, T. (2012) How Starbucks avoids UK taxes. Reuters Retrieved December 18, 2014 from http://uk.reuters.com/article/2012/10/15/us-britain-starbucks-tax-idUKBRE89E0EX20121015
Burnett, J. (1999). A strategic approach to managing crisis Public Relations Review. Vol. 24 (4) 475-488.
Campbell, P. (2014). Sales slide as Starbucks feels tax backlash. The Daily Mail. Retrieved December 18, 2014 from http://www.dailymail.co.uk/news/article-2612668/Sales-slide-Starbucks-feels-tax-backlash-Coffee-chain-axes-six-shops-14m-drop-business-past-year.html
Campbell, P. (2014, 2) Anger as Starbucks boss says may not pay UK tax for up to three years. Daily Mail Retrieved December 18, 2014 from http://www.dailymail.co.uk/news/article-2856284/Starbucks-chief-reveals-coffee-giant-not-pay-normal-tax-THREE-YEARS.html
Starbucks Coffee has been faced with a number of challenges in recent years. The company has faced intense competition from McDonald's, Dunkin' Donuts and from a number of imitators in international markets. This has resulted in the company's margins being squeezed in the domestic market (Jargon, 2009) and threatens the company's strong growth trajectory in emerging markets. Starbucks' strategy should focus the company on stabilizing its competitive position as a differentiated player in the domestic market and continuing on a pattern of strong growth in key international markets. The objectives of the strategy should be focused primarily on the financial objectives that appeal to shareholders -- improving profits, growing revenues and increasing both market share and margins. Each of these should come with a specific target figure that represents an improvement over the current position of the company.
The Starbucks plan will require a number of functional tactics…
Jargon, J. (2009). As profit cools, Starbucks plans price campaign. Wall Street Journal. Retrieved June 3, 2011 from http://online.wsj.com/article/SB124103701018769993.html
MSN Moneycentral. (2011). Starbucks. Retrieved June 3, 2011 from http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?lstStatement=Income&symbol=U.S.%3aSBUX&stmtView=Ann
Starbucks offers a 401K program, stock options, tuition reimbursement, adoption assistance and a very liberal free Employee Assistance Program. After 6 months, partners receive paid vacations, discounts on serviced Starbucks has contracted with, and discounts on products to take home.
Of course, the discounts help also to bring more friends and relatives into Starbucks -- certainly, if one serves the coffee at home then that is a great recommendation for the brand. Branding and flexibility with product at Starbucks is impressive, too. Since the 3rd Space concept engenders people coming to Starbucks and spending time, the company has invested in several different types of foodstuffs, not simply the traditional pastries, but breakfast and lunch sandwiches, soups in some locations, and so many different permutations of coffee drinks that everyone can surely find something to drink -- even if they do not care for coffee See: Mann, 2007; Gold, 2008).
Human Resource Strategy - Starbucks also believes in utilizing its own human resources to fill openings within its corporate structure. That may be promotion to managers of local shops, to filling marketing and corporate positions at its Seattle or international offices. This idea of on-the-job training and loyalty is very appealing in that it engenders a two-part loyalty system: Starbucks is loyal to their employees, the employees, in turn, will be more loyal to the company. This is especially important in modern American business culture, since most new employees feel that the next promotion is simply that next job Snyder, 2006).
Starbucks is clearly both pro-customer and pro-employee. The company has an active culture and a vision to make the experience delightful for all involved. Salaries are highly competitive within the retail world, benefits are outstanding, and the desire to change a simple cup of coffee into an "experience" is both appealing and desirous -- if somewhat artificial (Davis, 2008). Despite these tactics, it is also clear that the core value of the customer is in evidence; all the new products and services, and even the new pricing and marketing programs, are specifically designed to also increase customer convenience and satisfaction.
Recent Changes -- Due to the economic downturn, Starbucks has slowed down its aggressive new store openings a bit and, in July 2008, closed 600 under performing company owned stores. It also cut 1,000 non-retail jobs as part of an overall plan to reenergize the company and profit. This effectively ended the company's continual growth cycle that began in the early 1990s (Adamy, 2009). Starbucks has also taken a critical look at its global stores, closing 61 of its 84
These two factors of aspirational value of the brand and customer experience are what also make this factor a very critical opne in the augmented analytical framework.
The growth of coffee retailing continues to be flat, only generating 5% growth on a compound annual basis (Joo, Min, Kwon, Kwon, 490). This is forcing coffee retailers to concentrate on highly differentiated approaches to selling. For Dunkin' Donuts their approach is to branch out into retail channels with their coffee being available in grocery stores. Other competitive strategies include creating satellite locations and smaller airport kiosks, a strategy Caribou Coffee has tried in the northwest U.S..
The rapid pace of disruptive innovation in coffee retailing is increasing, as Starbucks is now challenged by McDonald's entering the high end of the coffee retailing market with their McCafe brand of customized coffee beverages. There is also a shakeout of smaller…
Seong-Jong Joo, Hokey Min, Ik-Whan G. Kwon, and Heboong Kwon. "Comparative efficiencies of specialty coffee retailers from the perspectives of socially responsible global sourcing. " International Journal of Logistics Management 21.3 (2010): 490.
Stanley Slater and Eric Olson. "A fresh look at industry and market analysis. " Business Horizons 45.1 (2002): 15.
he emphasis of Starbucks is to create an employee-centric model since they are ultimately the individuals who define the personality behind Starbucks. herefore each store employee is given authority within their specific limitations of the workplace; they can make decisions on reimbursements, purchases, discounts and a variety of other small details. he strength of Starbuck's management system in this case is that they built it upon a platform of functions. his means that each individual has complete control within the domain of their functionality within the company. his gives employees the feeling of control and freedom, while giving management the ability to have specifically focused and defined goals. he permissive autocratic style of management has been extremely successful and this is reflected in the successful expansion of Starbucks.
here are many conceptual and physical advantages of the Starbucks management system and style. On a conceptual level, it has allowed Starbucks…
The management style of Starbucks is very permissive autocratic. Managers make unilateral decisions at every level of the Starbucks management chain in accordance with their responsibilities. This means that store managers make the ultimate decision on employment, revenue, operations details, and supply-chain. Just as Schultz as unilateral decision making authority on the macro-economic expansion of Starbucks. However, while the chain of command is a very traditional top-down model focused on the function of each specific manager, employees have significant latitude in carrying out their work. The emphasis of Starbucks is to create an employee-centric model since they are ultimately the individuals who define the personality behind Starbucks. Therefore each store employee is given authority within their specific limitations of the workplace; they can make decisions on reimbursements, purchases, discounts and a variety of other small details. The strength of Starbuck's management system in this case is that they built it upon a platform of functions. This means that each individual has complete control within the domain of their functionality within the company. This gives employees the feeling of control and freedom, while giving management the ability to have specifically focused and defined goals. The permissive autocratic style of management has been extremely successful and this is reflected in the successful expansion of Starbucks.
There are many conceptual and physical advantages of the Starbucks management system and style. On a conceptual level, it has allowed Starbucks to maintain a strong vision for expansion, managers on a local level do not have to worry about the overall strategy of Starbucks nor the competitive landscape they occupy. Each level of management only has to worry about their specific niche function within the company and this has done wonders for the overall growth of their brand as well as physical locations. Another important conceptual advantage is that at the micro-economic level Starbucks grants almost complete autonomy to their managers and their employees, thus allowing them to deal with the specifics of their locality and present a very informal and localizing affect for their customers. The actual returns from this practice have been tremendous; Starbucks has grown into one of the foremost admired companies in the world, with the highest overall revenue within the industry. They dwarf their closet competitor by three times their overall revenue stream as well as actual market access. The ability to extend the Starbucks brand on a cross-continental basis has been wholly dependent upon the management style and techniques employed by Schultz. His vision in creating a permissive autocratic management style fits the consumer coffee industry extremely well and has continued to pay dividends for the company.
Schultz, Howard and Dori Jones Yang. Pour Your Heart Into it. How Starbucks Built a Company One Cup at a Time. New York: Hyperion, 1997. [somewhat of an autohagiography, but nonetheless interesting background on Big Green]
Similaly, the eviews tell the management about the benefits and othe insuances that the company offes to the most poductive employees.
In addition, the employees ae encouaged to send thei suggestions though the Web page to impove custome sevice o incease poductivity. These plans and pogams suggested by employees ae evaluated and sceened out and some viable pogams then put to use fo custome impovement.
Q. 3. Thee ae seveal ways in which the Intenet can be used to make Stabucks moe efficient. Fist, it can develop a secued extanet to enable employees to log in fom home to check schedules, access taining manuals, and do issue tacking.
By obtaining such infomation about the pocedues about vacation equests, job pomotions, and tade shows fom a secued web site, Stabucks can tack, monito, and incease the efficiency of esponses.
In addition, Stabucks company can collect seveal types of infomation fom the…
references of customers in coffee, pastries, and other products it sells.
Moreover, Starbucks may use information about customers for statistical, design and operational purposes such as to estimate our audience size, measure aggregate traffic patterns, and understand demographic, customer interest, purchasing and other trends among its guests and customers. This information can also be used for the marketing and/or promotion of products or services that can suit to the largest segments of the markets.
The value breakfasts are a means of competing with McDonalds and other fast food outlets. What happened was that these companies started taking coffee more seriously because they were losing business to Starbucks, where people might eat a pastry or snack. By adding hot meals, Starbucks was not only combatting this new form of competition, but was also taking advantage of an opportunity to meet a customer need and increase the average sale in the morning. The value pricing aspect of hot meals simply reflects the fact that Starbucks is competing against companies offering cut-price breakfast items, and that Starbucks is not attempting to be an actual restaurant, but still just a place for a quick bit.
3. In the long run, Starbucks is more likely to win the coffee wars. McDonalds will always be a successful fast food chain, but coffee is not their specialty. They will never be…
Five Highly Relevant Facts
After showing swift initial growth, Starbucks' share price declined 75% within two years.
The strategy adopted by the CEO to address this problem was to radically cut back the company's U.S. expansion and focus on the quality of Starbucks' coffee and customer service rather than increasing the quantity of new stores.
Although the global recession had an impact on Starbucks' revenue, there were deeper and more long-standing concerns about over-expansion and brand dilution due to excessive store density in urban areas.
This has been created by the 'cluster' strategy of expansion favored earlier in the store's growth history. Starbucks is now expanding more slowly and also focusing on its international strategies country-by-country.
Starbucks is diversifying its in-house coffee offerings and its supermarket coffees (including instant coffee), and expanding into the music market.
Three 'key' Issues
Starbucks is perceived as a 'luxury'…
The short-term liabilities of Starbucks are $2.075 billion. The long-term debt is $549.5 million. Total long-term liabilities -- not the same thing as long-term debt -- are $899.7 million.
The market value of equity of Starbucks (market cap) is $31.17 billion.
The debt ratio of Starbucks is as follows: 2975.5 / 7360.4 = .404
The debt to equity ratio of Starbucks is as follows: 2975.5 / 4384.9 = 0.678
The short-term debt to equity ratio is as follows: 2075.8 / 4384.9 = 0.473
The short-term debt ratio is as follows: 2075.8 / 7360.4 = 0.282
The long-term debt to equity ratio is as follows: 899.7 / 4384.9 = .205
The long-term debt ratios is as follows: 899.7 / 7360.4 = .112
I believe that this debt ratio is healthy. There are two reasons for this. The first is that Starbucks has a low degree of leverage with a debt…
MSN Moneycentral: Dunkin Brands (2011). Retrieved November 28, 2011 from http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?lstStatement=Balance&stmtView=Ann&symbol=DNKN
MSN Moneycentral: McDonalds (2011). Retrieved November 28, 2011 from http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?lstStatement=Balance&stmtView=Ann&symbol=MCD
MSN Moneycentral: Starbucks (2011). Retrieved November 28, 2011 from http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?lstStatement=Balance&stmtView=Ann&symbol=SBUX
Starbucks and the Four Primary Types of Manufacturing Process
ith jobs that don't fit within the scheme of continuous production the drive Starbucks, there is a need to address projects on an individiual basis. However, at this stage in its corporate life, Starbucks approaches projects quite differently than it may have a decade ago. Indeed, on the matter of its food offerings, an article by Kummer (2013) points out that the company has struggled to produce a quality product internally. As to the project of improving these offerings therefore, the resource wealthy company purchased a purveyor with a strong reputation for high quality cafe style food. According to Kummer, "last June, Starbucks paid $100 million for La Boulange, a San Francisco bakery with pastries and food that people definitely find respectable. The goal was nothing less than serving La Boulange-quality croissants and other pastries to Starbucks' 40 million…
Hutson, Z. (2012). Starbucks to Create More than 140 U.S. Manufacturing Jobs at State-of-the-Art Plant in Georgia. Starbucks.com.
Kummer, C. (2013). Can Starbucks Do for the Croissant What it Did For Coffee. Smithsonian.com.
Rebman, C.M. (2009). Types of Supply Chains. University of San Diego.
Do you think that Starbucks has grown rapidly because of its ethical and socially responsible activities or because it provides products and an environment that customers want?
oth have contributed to Starbucks rapid growth. The overall environment and the products that it is providing to customers, helps to cement the one on one experience that someone will feel when they visit any location. This is the first step towards creating a positive and socially welcoming type of atmosphere. After the customer associates this with the brand image, the company then uses the different forms ethical / social responsible activities, to create the image that they are a positive member who is contributing to the community in many different ways. Together, these two elements provide the company with a one -- two combination, for creating a lasting positive image. As a result, consumers are willing to pay more for…
Farrell, O. (2008). Business Ethics: Ethical Decision Making and Cases. Boston, MA: Houghton Mifflin.
Starbucks' 'third place' strategy derived from Howard Schultz' experience in Milan, where he saw how the coffee shop could serve this role, and how the comfortable environment attracted customers. Starbucks decided to cultivate this third place with a number of key policies. The first is that the company needed outlets with ample seating in order to facilitate a large number of customers in the establishment at any given time. The staff needed to be oriented to allowing customers to remain in place for long periods of time as well, so some training was required in order to implement this strategy.
In addition, the design and layout of the stores was important. Starbucks stores need to feel comfortable, so that people are encouraged to linger. This creates an atmosphere that other customers pick up on, and becomes part of the culture of the company's stores. The company has also supported this…
This is the largest chain of specialist coffee shops in India. Other brands, such as Cafe Coffee Day Xpress Kiosks offer takeaway coffee and other hot drinks and are found at busy locations, such as airports and railway stations. Additional competitors, neither of which are as dominant as Cafe Coffee Day include Cafe Mocha and Qwiky's. Cafe Mocha operates 50 upscale locations in major metro areas and caters to the upscale younger workers who have higher-than-country average per capita incomes. Qwiky's operates a smaller chain of outlets called coffee pubs, with the goal of creating ambience and a sense of relaxed atmosphere while selling higher-end coffees and specialty drinks.
The rise in coffee drinking is part of the transition to more branded consumption in India, and is led by the growth of branded coffee cafe chains such as Barista, Cafe Coffee Day and Qwiky's (KPMG 18).
3e. Context (Environmental) Analysis…
Starbucks Supply Chain Needs: Coffee vs. Tea
There is an intrinsic difference in the supply chain needs of Starbucks in regards to its production of coffee (which is largely based on its access to, refinement and transportation of coffee beans) and that of tea (which hinges upon the access to, processing and manufacturing of tea leaves into tea bags). The principle difference in the these needs explicitly related to Starbucks has to do with the quantities involved -- Starbucks is principally a coffee company, and produces considerably more coffee beans than it does tea bags as a result. Therefore, its supply chain needs for tea will always be considerably less so than for coffee, a fact which is most notably underscored by the reality that as of 2010, the organization had five coffee roasting plants owned by the organization in the four corners of the continental U.S. versus a single…
Braga, T., Strebel, Heidi. (2011). "Unilever Tea: revitalizing Lipton's supply chain." www.saiplatform.org. Retrieved from http://www.saiplatform.org/uploads/Modules/Library/unilever-tea-a_revitalizing-liptons-supply-chain.pdf
Cooke, J.A. (2010). "From bean to cup: How Starbucks transformed its supply chain." Supply Chain Quarterly. Retrieved from http://www.supplychainquarterly.com/topics/Procurement/scq201004starbucks/
No author. (2007). "Global value chain of the coffee industry." www.web.duke.edu. Retrieved from https://web.duke.edu/soc142/team8/Supplychainoverview.htm