Mission, Vision, and Stakeholders
Starbucks is one of those legendary companies, which have its own set of core competencies. Starbucks focuses on outstanding customer service, quality, continuous expansion of the coffeehouse chain, and continuous product improvement. Quality became an essential part of the company’s performance long ago. It finds itself in all processes within the company’s activity. Starbucks is the company, which takes care of providing its customers with appropriate attention from the side of every employee working for meeting needs of the most demanding customer. Starbucks’ mission statement penetrates its performance in every aspect. According to the company’s official website, the company performs “to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time” (Starbucks, n.d.). Among the diversity of objectives, there is the most outstanding one, which supports every process running in the company. The company’s objective and aspiration are to maintain the position of one of the most recognizable and respected brands around the world. Global market is one of the targets of the company’s performance.
Five Forces of the Competition
Customers of Starbucks have their own peculiarities and obtain an essential amount of bargaining power due to a minimal switching cost for customers. Moreover, there is an abundance of offers available for customers. In addition, customers formulate a significant element of stakeholders affecting profitability of Starbucks. Loyal customers represent a vast part of stakeholders, which is enormous enough to promote further success of the company. The threat of substitute products represents another part of elements influencing the company’s performance. The list of substitutes is big enough to motivate the company to produce unique products and services. It includes soft drinks, tea, energy drinks, juices, and water, whereas pubs and bars become substitute places of distribution offering customers a diversity of products equal to the products of the company. Suppliers of Starbucks get a high bargaining power because of the coffee demand that is high enough at the global level. Besides, there is a need to find appropriate suppliers of coffee in specific geographical areas with appropriate climatic conditions. In addition, problems concerning African coffee producers related to unfair trade applied by multinational companies on the global level are resolved with the help of actions of some non-government organizations. All these factors help to increase nature of the bargaining power of suppliers. Nevertheless, the threat of new entrants is not high because the market has a high level of penetration of companies with similar profiles. It is hard to enter the market without a significant amount of financial resources and other features aimed at creating a required set of buildings and properties able to bring the company to the top list of the most successful corporations.
According to the SWOT based on the performance of Starbucks, the main strength of the company is the leading position in the segment of coffeehouses. Weaknesses include high product pricing, which has a direct connection to the price of coffee beans. In addition, Starbucks has a diversity of opportunities aimed at expanding the list of suppliers and increase a product line with other unique items (Blumenthal, 2008). However, Starbucks still faces a few threats, which include rising prices of raw materials provided by suppliers and tough competition with other coffeehouse chains.
Strategy to Increase Strengths and Opportunities and to Minimize Weaknesses and Threats
Evolution of Starbucks, which is always accompanied by its strategic and tactic planning, depends on systematic and frequent evaluation of the company’s opportunities. SWOT analysis is an essential instrument, which is important in creating an effective strategic plan, taking into account both strong and weak elements of the company’s activity. The most crucial areas in the performance of Starbucks evaluated with the help of SWOT analysis include international markets, extension, raw materials, product line, distribution of products, and suppliers. All these elements lead to the formulation of long-term success in case of appropriate regulation by the company’s management. In-depth analysis of Starbucks is a proof that the company has high penetration of stores within the territory of the USA. If Starbucks is willing to continue its rapid development, it is necessary to focus on international mergers in the process of implementation of both tactic and strategic plans. International markets do not have a high percentage of Starbucks coffee stores and there are many opportunities to improve it by including stores of the legendary corporation. Promotion of the company’s success relates to segments responsible for the development and evolution of the company’s products. The set of such elements, including new markets, raw materials from appropriate suppliers, reliable partners, and new distribution points all over the world is an essential part of the strategic plan of Starbucks. In addition, development of the company shows a high dependency on the diversity of products, raw materials, and international recognition among the company’s long list of stakeholders. Nowadays, the company represents an international corporation; however, it operates in mainly within the Americas segment. Starbucks has a strong need to extend a product line, which will become a major attraction to new customers. Distributors, in turn, will become an effective instrument aimed at minimizing the threat of competitors. The list of new suppliers will help Starbucks to solve the problem of costs, which the company spends on shipment of beans and delivery of other raw materials. Finally, mergers and acquisitions with international markets based on the company’s performance will help to expand the territory of the company and let it grow and increase the share of the market on a global level thanks to the extension of boundaries.
Strategies to Maximize Competitiveness
Starbucks has a wide range of problems relating to its activity along with a rapid extension of the territory. Starbucks has a large share of the market of coffeehouses within the Americas segment. According to the size of the company and the pace of its development, it is obvious that it is challenging to control every store. However, the company should realize that one customer can have an essential influence on the organizational behavior of the whole corporation at all levels. Customer’s level of satisfaction has a direct connection with the following points in the performance of the company: high prices, a credit card payment system, problems with Square app, low customer service in specific stores, and crowded stores regardless of the daytime.
Starbucks is the company, which manages all available resources and processes within given boundaries in order to produce a high quality product based on the quality of processes. The pricing policy of Starbucks covers costs faced in the company’s daily performance. However, customers are willing to receive a high quality product at the most available price offered in the market both nationally and internationally. Primarily, the company should focus its activity on a strategy aimed at introduction of a flexible system of discounts and bonuses, which will make products available to the broader segment of customers in different parts of the world. It will become a strategy helping to attract more customers. It will become an encouraging element, motivating customers to purchase coffee drinks with confidence of receiving a discount or a bonus in the form of an extra drink. Furthermore, Starbucks should be a company working on the continuous launch of seasonal promotions. Customers should know that they are always in a positive territory, which will benefit them (Caudwell, 2011). Moreover, customers should be sure that they pay for a high quality product and service.
According to the customer’s feedback based on the performance of one of the stores, there were some cases when baristas were not polite enough to make the customer satisfied. Customers come to the coffee store confident in getting comfort and satisfaction. The company should pay more attention to the corporate spirit influencing the performance of every employee. It is important to make employees of every store work in a team and cheer each other up. Encouraging employees is a significant step in helping them to cooperate.
Square is a credit card payment system supported by an application allowing customers to make payments via iPhone, Android, or iPad depending on their preference. It is a modern technology implemented by Starbucks, which helps both the company and its customers save time in a queue and get their drinks faster. Many stores have lost customers because of the employee’s non-acquaintance with a new credit card payment system and its basic principles of performance. The solution to the problem is to make sure that employees know how to manage the application.
Many customers complain that employees of the coffee store work slowly. “The crowded experience during an otherwise calm period actually caused people to leave.” (Sozzi). The company can have an easy solution to the problem. It is important to take an option of training employees in order to make a high quality coffee drink as fast as possible.
In order to implement changes in the company, it is important to gain support of all existing and potential stakeholders. Starbucks CEO Howard Shultz should work on the implementation of problems solutions in the company’s tactics and strategies (Zhang, 2011). It is necessary to make every stakeholder interested in making a change in order to obtain respect from customers and partners. It is important to evaluate areas requiring changes and to encourage all members of the company to work on making a change (Keenan & Evans, 2014). In addition, it is essential to convince every employee and manager to work in the same direction. Meetings should focus on the presentation of a detailed plan of action, which will become the main instrument in bringing employees together to work in a team.
In order to make all employees aware of the coming changes the company should take in the direction of improvement, it is necessary to conduct several meetings in every business filial. First, it is necessary to conduct a meeting on the level of top-management and ask the entire administrative staff to inform their subordinates about changes the company is planning to make. In general, it is important to create a plan coordinated with employees, which will fix the set of goals and ideas aimed at improving the company’s performance. Another tool for communication will be a weekly report from all managers, starting from the lowest level of performance at a coffee shop and up to the top management. Reporting will help to regulate implementation of the plan and take appropriate action towards the company’s improvement. In addition, it can help to fix mistakes as soon as they occur. It will help to minimize the negative influence of losses and gaps in the performance.
Corporate Governance Mechanisms
The set of corporate governance mechanisms used by the company focuses on external and internal aspects. Internal mechanisms include independent internal audits, segregation of control, oversight of management, and policy development. Starbucks manages to develop itself in the prospect of internal control, which promotes an overall level of quality. Internal regulation of the performance allows Starbucks to develop an appropriate policy for performance by taking into account gaps and losses evaluated with the help of internal control instruments. In addition to the mentioned corporate governance mechanisms, there is another category of external mechanisms applied by the company to enhance its development. This element includes cooperation with such external organizations as government, external audit agencies, and financial institutions. This element of the company’s performance helps it to make its activity transparent, which makes all stakeholders aware of transactions applied by the company. Reflection of key performance indicators in financial statements helps customers and other stakeholders gain confidence in the company’s future performance and further extension. The company gains additional support of managerial decisions as long as its activity complies with the criteria set by external agencies evaluating the quality of every process and product in the company.
Leadership at Starbucks is one of the most effective management elements helping the company to grow and develop. First, Starbucks offers its employees a diversity of opportunities in the process of career building (Freeburg, 2012). It encourages every initiative taken towards implementation of successful managerial decisions. It is a fact that a barista can walk the way from the lowest level of performance up to the top management if she/he takes appropriate action in the improvement of qualification. Starbucks is a company, which promotes the extension of its boundaries on the global level. It means that the company takes care of supporting the development of its personnel by putting them into courses for additional training and skills improvements. Leadership is a key aspect in team building of the company. Leaders become effective managers when they receive support from the company. However, it is still possible to improve the strategy of leadership encouragement. One of the most effective leadership tools is to create a dashboard reflecting achievements of every segment in sales, customer service, and quality control. Spheres of regulation can be different depending on aspects, which the company is willing to develop in its subordinates. In addition, the company should extend such options as “Employee of the month” and introduce new categories, which will grant employees with honorable ranks. This recommendation will promote the company’s success through the lens of leadership encouragement.
Corporate Social Responsibility (CSR)
Starbucks’ Global Responsibility Report dates back to 2014, showing main features of the company’s progress. The report of the company provides every reader with information regarding Starbucks’s activity in sectors involving a young generation, farming, and environmental issues.
Starbucks is a company, which takes care of the farming sector with the help of increasing loan commitment to $15.9 million with a $1.3 million investment to the Fair-trade Access fund. The company’s goal is to make investments in the amount of $20 million into the farming sector by the end of 2015. Thanks to Starbucks, farmers have gained confidence in achieving financial and technical support from the company and customers, in turn, trust Starbucks by choosing high-quality products and services.
Environment is another point of the company’s CSR program. According to Starbucks’ Global Responsibility Report – Goals and Progress (2012), “Our comprehensive approach to reducing our environmental impact means looking at all aspects of our business, how they intersect, and how we can integrate new solutions to create meaningful and sustained change.” Starbucks is a company, which takes care of conserving energy and water, providing communities with energy-sufficient stores and regulating performance aimed at reduction of ecological footprint in the future.