BUSS150 - Starbucks Coffee Case Study - Management Assessment Answer

BUSS150: Starbucks Coffee Case Study Management Assessment Answer

Assessment Task:

STARBUCKS COFFEE

To inspire and nurture the human spirit – one person, one cup and one neighborhood at a time. (mission statement) With 9 Seattle stores in 1987, Starbucks chairman and chief global strategist, Howard Schultz, has dramatically expanded the company’s cafes throughout the US and internationally. Service is anything but fast, and the coffee is expensive, but each week millions of customers around the globe hit Starbucks to sip skinny lattes or no-whip mochas. Since it made its first acquisition in 1994, buying the Coffee Connection Inc., a 23 store Boston rival, Starbucks has pursued rapid expansion. Schultz has grown his enterprise from 400 stores in the US in 1994 to a global enterprise with 17,651 locations in 60 markets outside of North America, including Australia, New Zealand, China, Hong Kong, Taiwan, Singapore, The Philippines, and India. Starbucks teamed up with foreign partners to open its first international coffeehouse in 1996 in Tokyo. Since then, Peter Maslin, president of Starbucks Coffee International, has ‘been amazed by the global acceptance and visibility of Starbucks brand in all our international markets’. Starbucks adapts its development strategy to different markets by addressing local needs and requirements. It currently uses three business strategies in developing its international operations: joint ventures, licenses and company-owned operations. Starbucks views its international partners as critical to its global success. Partners are carefully chosen for their shared values and corporate culture, strong multiunit retail/restaurant experience, dedicated human resources, commitment to customer service, quality image, creative ability, local knowledge, and brand building skills, as well as for their strong financial resources. In 1994, some analysts thought Schultz’s strategies were risky, but Starbucks has
proved it had the flexibility and management strength to succeed. For Schultz, a man who has already changed people’s coffee-drinking habits around the world, the challenge is ‘to become a great enduring company with the most recognized and respected brand in the world’. A challenge Starbucks is rapidly achieving through skillful strategic management. Starbucks Corporation’s organizational culture is one of the most distinct characteristics of the firm. In Starbucks Coffee’s case, the organizational culture permeates all aspects of the business, including the operations of franchisees and licensees. However, company-owned stores are where Starbucks Coffee’s organizational culture is most easily observable. The way café employees work with each other and how they interact with customers are indicators of the
company’s corporate culture. The warm and friendly ambiance in these coffee shops is part of the company’s cultural distinction from competitors, which include Dunkin’ Donuts and McDonald’s McCafé. Starbucks has an organizational culture that relates to the company’s strategies for successful brand development and the global growth of the franchise and licensing network, despite challenges tied to economic fluctuations and industry-specific trends. Starbucks Coffee’s organizational culture is a culture of belonging, inclusion, and diversity. The combination of the company’s key cultural characteristics is unique and specific to the nature of its coffeehouse chain business.

The main features of Starbucks’ corporate culture are:
1. Servant leadership (“employees first”)
2. Relationship-driven approach
3. Collaboration and communication
4. Openness
5. Inclusion and diversity

According to Howard Behar, the ex-President, at the heart of the business, Starbucks seeks to inspire and nurture the human spirit - understanding that each person brings a distinct life experience to the table. Our partners are diverse not only in gender, race, ethnicity, sexual orientation, disability, religion, and age, but also in cultural backgrounds, life experiences, thoughts and ideas. Starbucks Embraces diversity to enhance the work culture. It is the inclusion of these diverse experiences and perspectives that create a culture of empowerment, one that fosters innovation, economic growth and new ideas. Starbucks has gone through significant changes in its organizational culture. As a way of enhancing business performance, Starbucks instituted reforms in its corporate culture. Today, the company’s organizational culture is a distinct characteristic that builds competitive advantage and develops a consumer population of loyal Starbucks fans from which the business derives stable financial performance. The main corporate strategic management challenge lies in the effective implementation of this culture in the human resources of franchisees and licensees, as these business partners arguably have their own approaches to human resource management and associated organizational culture development.

CSR: STARBUCKS AND SOCIAL IMPACT
What is the role and responsibility of a for-profit, public company? Starbucks has always believed they can – and should – have a positive social impact on the communities they serve. One person, one cup and one neighborhood at a time. As they have grown to more than 28,000 stores in more than 75 countries, so too has their commitment to creating a positive global social impact. Their CSR platform includes the following values:

• SOURCING ETHICALLY & SUSTAINABLY: We are committed to offering high-quality, ethically purchased and responsibly produced products.

• CREATING OPPORTUNITIES: We are committed to investing in paths to opportunity through education, training, and employment.

• LEAD IN GREEN RETAIL: We are committed to minimizing our environmental footprint and inspiring others to do the same.

• STRENGTHEN COMMUNITIES: We are committed to offering Starbucks as a place for public conversation and elevating civic engagement through service.

LEADERSHIP
Howard Behar believes there are six key (and often rare) principles for better leadership and a better life. These are also the foundations of his servant-leadership style.

1. Give your people room to make mistakes. Behar is talking about giving a person in a specific role or function full authority, responsibility, and accountability to
do their work. It is also about giving all workers “voice”.

2. Remove fear with trust.
The freedom for employees to make mistakes can only occur with a strong foundation of trust in place. That's where "people can begin to use their creativity because they lose that fear of being judged. In trustworthy settings, you'll naturally find that people genuinely care about and encourage one another. But it starts with leaders setting the stage -- giving their people responsibility and accountability" says Behar.

3. Serve one another.

4. Set expectations and get agreement. Behar believes that open and honest communication--lots of it--is critical for success. But it's not just communicating. It's setting clear expectations and getting agreement on those expectations that gets the employee's full attention. It's a feeling people get when they are trusted with responsibility and accountability.

5. Treat people more like human beings, less like mere employees. Behar was asked what people really lack and long for at work. He says, "Being treated with respect and dignity. Being dealt with as a human being and not an employee." In workplaces where people model and share common values like respect and dignity, there's acceptance of one another: "People are allowed to be themselves at work, whatever that is -- within the context of achieving the goals of the organization," says Behar. Leaders who respect and treat people with dignity also support their development as human beings.

6. Discover the truth of who you are.
As a servant-leader, the question of "who am I?" has been a lifelong journey of self-discovery for Behar. He says that he is still figuring out his mission and how he's going to live his life. "It's constantly in my head. I'm always trying to deal with, 'Who am I?'" says Behar.

After completing your revision, answer the following questions.

1. Explain the concept of competitive advantage and why it is important to a firm.

2. What are the general and task forces in Thompson’s model?

3. How does understanding the external environment help business?

4. What might happen in a business fails to scan the external environment?

5. What are the 3 elements to consider when considering the degree of uncertainty?

6. What two general forces create a “threat” to Starbucks? Explain

7. What two specific forces (stakeholders) create a “threat” to Starbucks? Explain

8. What two general forces create an “opportunity” for Starbucks? Explain

9. What two specific forces (stakeholders) create an “opportunity” for Starbucks? Explain

10. Is Starbucks operating in low or high uncertainty? Explain

11. Using Schein’s 3 layers of culture, describe the business culture of Starbucks

12. What is an adaptive culture?

13. Why are adaptive cultures so important in the business environment?

14. Do you think Starbucks’ has an adaptive culture? Explain your response, by providing examples from the case study.

15. What are the causes of resistance to change in business?

16. Discuss ways a manager can reduce resistance

17. Define the following terms:

•  Ethics
•  CSR
•  Sustainability

18. Describe the 4 approaches to ethical dilemmas

19. Explain Starbucks’ global social impact goals and philosophy

20. How would you describe the Starbucks approach to ethical dilemmas?

21. How would you describe the Starbucks approach to CSR?

22. Discuss the benefits to Starbucks’ of business ethics, and benefits of exercising CSR & sustainability

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