Research Paper > Starbucks’ Strategy: Organizational Culture that Contributes to its Success in a Gl

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Starbucks’ Strategy

Saleta D. Bynum Assignment 1: Starbucks’ Strategy Professor Ronnie Holmes MGT 500 October 23, 2016

The key elements of Starbucks’ organizational culture that contributes to its success in a global economy are servant leadership, relationship-driven approach, collaboration and communication, openness, and inclusion and diversity.

Servant leadership is a way to support the employees. Starbucks’ managers make sure that their employees know and understand that they are cared for very much. This in turn will ensure that the employees show the customers that they care and appreciate their patronage.

Relationship-driven approach is a part of their organizational culture that supports warm and friendly relationships. Starbucks’ baristas, people who job involves preparing and serving different types of coffee, always exhibit warm friendly bonds with each other while at work.

They also extend this warmth to the customers. The relationships between the baristas and the consumers drives the demand for their specialty coffee.

The collaboration and communication element is how well the baristas work together to fulfill orders in a timely manner. Edward Ferguson wrote in his article, Starbucks Coffee Company’s Organizational Culture, “Starbucks’ organizational culture supports efficiency in business processes, which contributes to quality of service, customer, experience, and business cost-effectiveness” (Ferguson, 2015). Starbucks’ openness element has empowered employees and facilitated innovation. They have done this by having open forum where the employees can speak about any concerns or issues without fear of being reprimanded.

The last key element of Starbucks’ organizational culture is inclusion and diversity. Mr. Ferguson also stated, “Through this feature of the organizational culture, Starbucks facilitates sharing and rapport among employees, as well as innovation based on diverse ideas” (Ferguson, 2015). By having this inclusion and diversity element, Starbucks know how to make all of their customers feel welcome.

Starbucks’ management team has a role in creating and sustaining the organizational culture. Let me start by saying that their organizational culture is one of their most distinct characteristic. It widely influences the employees and business performance. The management team plays a role by not just saying what they expect of the employees, but by doing so themselves. The managers enable, energizes, and enhances it employees in everything that they do. The managers demonstrate positive urgency. They also set the behaviors that they want the company to adopt as a whole and lead by example.

The effectiveness of Starbucks’ management decisions in providing innovative offerings for its customers in order to achieve its current competitive marketplace advantage was an example of the value chain model. “A value chain is a series of activities or processes which aims at creating and adding value to an article (product) at every step during the production process” (Bajpai, 2014). As more value is created, it is passed on to the customers which further helps the competitive edge. According to Mr. Bajpai, “Starbucks mission is, per its website, to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time” (Bajpai, 2014).

The green or unroasted beans are procured directly from the farm. Once they are roasted at the storage site, they are packaged and shipped to the distribution centers. The customers receive a unique Starbucks’ experience because they are buying the finest quality coffee.

Providing WiFi to their customers was a genius move. Customers were able to use Starbucks’ as a make shift office. They either did work on their own or used it as a meeting place. Therefore, their sales rose giving them a competitive edge on the other coffee retailers.

One key management competency that a successful manager at Starbucks is likely to have is the ability to partner development and team building. It is a great fit for the

organizational cultural because this competency allows the manager to provide the employees with coaching, feedback, and developmental opportunities and building effective teams.

Partner development and team building is comprised of many skills. They regularly conduct performance assessments, provide feedback, and set challenging goals. They challenge and inspire partners and employees to achieve business results. Maintains positive relationships by understanding and addressing individual motivation, needs, and concerns. The managers ensure that partners and employees adhere to legal and operational compliance requirements.

They find new, creative and effective methods of recognition for a job well done. Managers strive to create and maintain a successful store whereas employees are valued and respected.

Starbucks would not have had the ability to achieve long-term sustainability as a global leader in the coffee industry without the organization’s CEO, Howard Schultz. There are so many reasons why. I’ll start by telling you that he first joined the Starbucks family in 1982 as the director of operations and marketing. He left Starbucks for a short period of time. During this time, he opened his own coffee store, II Giornale because he wanted to create a place for human connection and conversation. His coffee house fostered a sense of community and was like a third place between work and home. He returned to Starbucks in August 1987 as CEO after purchasing it with the help of local investors.

Howard Schultz has made many changes since taking over as CEO at Starbucks. Mr. Schultz’s key ingredient to success are the people that works behind the counter. They are not just employees, but are considered to be partners in the company. He strives on ensuring that his partners are happy and enjoy working there. The happiness from the partners pour over to the customers which keeps them coming back.

Mr. Schultz has four (4) ways that he keeps his employees first. One is doing the ring thing for your people and the communities your serve. The second way is investing in the employees’ education. He believes that the employees and the company will benefit from higher education. The third way is to go above and beyond the status quo. Doing this will help when trying to build a long-term, enduring business. The last, but not certainly not least way, is having the courage and conviction to make big bets. Mr. Schultz is always searching for new products to surprise and delight his customers.

Aimee Groth from Business Insider wrote an article titled, 19 Amazing Ways CEO Howard Schultz Saved Starbucks. Those 19 ways are, “In February 2008, Starbucks closed 7,100 U.S. stores for 3 ½ hours to retrain its baristas on how to make the perfect espresso; Upon taking the post, Schultz invited people to email him directly – no sooner did he receive 5,000 emails; For the first time in company history, Schultz looked to outside consultants for ideas on how to revive the company; Also for the first time ever, Starbucks invested in a major national advertising campaign, employing BBDO; He appointed a chief technology officer, Chris Bruzzo from Amazon.com; Starbucks introduced Pike Place roast to show it was serious about coffee; Schultz made the executive decision to nix heated breakfast sandwiches from the menu; The company replaced all of its outdated cash registers and computers; In January 2008, Starbucks closed 600 stores – or 7 percent of its global workforce – cutting $850 million in costs; Starbucks replaced all of its espresso machines with the Mastrena, a sophisticated Swiss-made machine; Schultz also completely reorganized supply chain operations – getting products to stores more efficiently and improving inventory; Costco’s CEO once said that losing customers in a down economy is much more expensive than investing in them. Taking this advice, Schultz created a customer rewards card; Starbucks overhauled the entertainment division, scaling back on all the

CDs and books that had started to overpower the stores; Schultz decided to continue offering health insurance to his employees – in order to stay aligned with the company’s guiding principles; Schultz shook up senior management, and later added members of tech companies to its board of directors, including Google’s COO Sheryl Sandberg; Starbucks rolled out new design for all of its stores; in June 2009, Schultz announced that he would increase partners’ salaries according to merit. Schultz took a chance on instant coffee with VIA. It turned out to be a hit and got tons of media attention; The company committed to doubling its annual purchase of fair-trade certified coffee to 40 million pounds in 2009; and Howard Schultz studied other corporate turnarounds in order to pull off his own” (Groth, 2011).

I think that Howard Schultz is a good fit for Starbucks.

Works Cited Bajpai, P. C. (2014, October 31). Starbucks As An Example of the Value Chain Model. Retrieved from Investopedia: www.investopedia.com/articles/investing/103114/starbucks-examplevalue-chain-model.asp Brancaccio, D. (2014, July 25). 4 Ways Starbucks CEO Howard Schultz Puts Employees 1st.

Retrieved from Marketplace: www.marketplace.org/2014/07/25/business Duduvsldy, J. (2012, July 4). Starbucks Critical Success Factors. Retrieved from Research Methodology: www.research-methodology.net/starbucks-critical-success-factors/ Ferguson, E. (2015, September 13). Starbucks Coffee Company's Organizational Culture.

Retrieved from Business Management: www.panmore.com/starbucks-coffeeorganizational-culture Fuller, J. N., & Green, J. C. (2010, August). The Leader's Role in Strategy. Retrieved from Pepperdine University/Graziadio Business Review: www.gbr.pepperdine.edu/2010/08/the-leaders-role-in-strategy/ Groth, A. (2011, June 19). 19 Amazing Ways CEO Howard Schultz Saved Starbucks. Retrieved from Business Insider: www.businessinsider.com/howard-schultz-turned-starbucksaround-2011-6# Gulati, R., Huffman, S., & Neilson, G. L. (2002, July 17). The Barista Principle - Starbucks and the Rise of Relational Capital. Retrieved from Strategy & Business: www.strategybusiness.com/article/20534?gko=582b3 Hennessey, R. (2012, August 6). 3 Reasons Why Starbucks Still Shines, Despite Marketing Shortcomings. Retrieved from Style & Design: www.forbes.com/sites/rachelhennessey/2012/08/06/3-reasons-why-starbucks-still-shinesdespite-market-shortcomings/#6f1f3020d4fb Palermo, E. (2014, February 10). Leading the Starbucks Way: 5 Principles for Connecting with Your Customers. Retrieved from Business News Daily: www.businessnewsdaily.com/5897-starbucks-winning-brew-coffee-tea-and-love.html Selko, A. (2012, May 21). Starbucks Says it's Proud to be Creating American Jobs. Retrieved from Industry Week: www.industryweek.com/global-economy/starbucks-says-its-proudbe-creating-american-jobs Stevenson, A. (2015, March 9). Howard Schultz; Key Ingredient to Starbucks' Success.

Retrieved from CNBC: www.cnbc.com/2015/03/09/howard-schultz-key-ingredient-tostarbucks-success.html Strategy: The Starbucks Way: Rediscovering Your Mission. (n.d.). Retrieved from New Directions Consulting: www.newdirectionsconsulting.com/leadership-engagement-thestarbucks-way-rediscovering-your-mission-purpose-value-in-a-bad-economy-2/