Starbucks Analysis

Introduction

Starbucks is a global coffeehouse chain headquartered in Washington. The coffee company, which was founded in 1971, is currently the biggest coffee company worldwide having opened more than 21,000 stores in 63 countries (Smith 27). The company which started with selling whole roasted coffee beans has since expanded to include a wider variety of products which are mainly provided seasonally. The company currently offers whole-bean coffee, tea, instant coffee, snacks, pastries and beverages including marketing music, films and books. This shows that the company has grown and transformed over the years. However, times have changed and so has the business environment. As much as Starbucks stands as the world’s leading coffeehouse, it needs to lay out strategies to remain competitive in the world markets. The current state of affairs also makes it necessary for the company to observe the demands of business ethics and social responsibility. This paper uses Starbucks as an example to examine the concepts of competition in the world’s markets, business ethics and social responsibility as well as forms of business ownership and organization.

Competing In World Markets

Time and again, it has been mentioned that Starbucks is the leading coffeehouse in the world. Whereas world markets have been characterized by stiff competition, the company has fared quite well managing to expand to 63 countries (Smith 28). Starbucks has been competitive enough to withstand competition from the competitors of Costa Coffee from the United Kingdom.

Coffee industry is a market that is usually characterized by strong competition and therefore Starbucks has experienced a fair share of challenges over the years dealing with this competition. The company particularly registered slow growth rates during the period preceding 1992, a year that is considered a turning point for the company. This year Starbucks was made public and soon afterwards its fortunes changed. For instance, the number of the company’s stores increased from 48 to 3,500. However, it is the period after 2000 that the company registered a breakthrough, opening over 13,500 new stores (Smith 32).

The success that Starbucks has enjoyed in the world markets over the years can be attributed to the strategies that the company has put in place. One of the major strategies that has propelled Starbucks to the top, is the company’s consistency in ensuring convenience (Hill 48). The company continues to attract large numbers of customers because of quick service provided for customers. The employees at Starbucks stores always work very quickly to ensure that queues move fast enough. As such, customers find it more convenient because they can drop by Starbucks shops for quick drinks and/or snacks even when they have tight schedules. The cashless ordering process introduced in some of Starbucks stores has also helped to ensure convenience in service delivery. Consistency in service delivery in Starbucks outlets has gone a long way towards attracting customers and retaining them.

Ambiance is yet another factor that has helped Starbucks to attract many customers no matter where they are located. The architectural designs of Starbucks stores create attractive exteriors and interiors. Excellent service, coffee, other beverages and snacks coupled with the warm environment create comforting environment for the customers (Hill 74). Although some of the customers have complained on the prices charged at Starbucks stores, they still get attracted by the welcoming environment and a wide variety of products for customers to choose from. Although Starbucks outlets are spread in many countries, their architectural designs do not differ a lot. Despite the stores’ locations, customers always expect to find cool music, the unique furnishings with organic approach and the theme created by the colors used to paint the outlets. Although the cost of the fine finishing may be transferred to the customer through higher prices, the effect it comes with in attracting customers is a big gain for Starbucks Company.

Business Ethics and Social Responsibility

Starbucks outlets also operate in environments where business ethics apply. As such, the set professional ethics that have been put in place to address various ethical and/or moral issues faced in the environment affect the company just as other similar or different businesses (Boone and Kurtz 52). As far as the matters of business ethics are concerned, Starbucks stands among the leading companies in observing ethical standards. The company does it sticking closely to its values and mission statement. The core values of Starbucks make it necessary for each of the company’s stores to be compliant with the law of the specific country they operate in. The core values of Starbucks are guided by the belief that taking the right actions and engaging in ethical business activities contribute to the company’s success (Argenti 93).

In a bid to abide by business ethics, Starbucks has the compliance program (Argenti 98). This program has been instrumental in helping the company to maintain its culture and to protect the reputation it has built over the years. Through the business ethics and compliance program, Starbucks comes up with business ethics related materials and disseminates them to the concerned parties (GreenBiz Staff). The materials developed through the program are used in various areas including training on business ethics related issues, setting business conduct standards and assessing business environment to identify potential areas of conflict (Griseri and Seppala 25). Apart from being used in the mentioned areas, the materials also provide an avenue for all stakeholders to communicate their concerns (Boone and Kurtz 53). Through the program, the stakeholders are provided with the resources to use while making ethical decisions. The program has also enabled the company to set business conduct standards that have gone a long way in supporting its reputation.

The Standards of business ethics conduct guide the company’s partners in decision-making. As such, it gives directions and instructions on how all the partners and employees should conduct business. According to the standards of business ethics, all the partners and employees of Starbucks are expected to abide by the company’s values and mission in conducting business (Argenti 102). For instance, the company ensures that there are equal opportunities when it comes to hiring. The working environment has also been structured in a way that the partners’ safety is guaranteed. Furthermore, the partners’ physical and mental development is taken into consideration. Apart from taking care of its employees, Starbucks also puts in a lot of efforts to protect the customers’ interests (GreenBiz Staff). This is achieved by ensuring the stores serve quality products. As such, the company follows proper procedures in preparing and storing its products.

Social responsibility is yet another area of concern as far as Starbucks is concerned. As it has been mentioned herein, Starbucks has opened stores in 63 different countries making it the biggest coffeehouse globally. This growth is attributed to the loyalty the company has enjoyed from different parts of the world. As a way of demonstrating gratitude, Starbucks has found it necessary to be socially responsible. This is evident through Starbuck’s Environmental Mission Statement. The company demonstrates its commitment to protect the environment to make it more habitable (Boone and Kurtz 79). Starbucks’ activities confirm that the company recognizes the fact that it has a responsibility to protect the environment. First, the company ensures that it deals in products that are environmentally friendly. The company also makes efforts to develop understanding of the environment and communicate the same information to all its partners. The company goes ahead to come up with solutions to different environmental problems faced in different parts of the world where it opened stores.

In line with the global push to protect the environment, Starbucks works on streamlining its activities to ensure that they promote environmental conservation. For instance, the company has embarked on green building architectural designs. Therefore, all new company’s structures follow newly introduced green building architectural designs. In fact, through this program Starbucks has recently come up with structures that are LEED certified. Starbucks has also cut down its water consumption by about twenty-one percent on average, falling short of its target by only four percent. The company is also keen on preserving the environment through its efforts to recycle materials. Furthermore, the company has made it its business to monitor all the projects it undertakes. It also tries to make all its partners aware of the need to contribute to environmental protection.

In a bid to provide solutions to different problems, Starbucks has started different projects in different parts of the world. The company’s plan to create job opportunities is the step that shows the company’s commitment to social responsibility. Through this project, Starbucks seeks to provide employment for unemployed youth in different regions. The company is working on this project through a corporation dubbed “LeadersUp” (Venkatraman and Nelson 1016). The idea of this project is to make use of community resources to create jobs for the youth and to train leaders as well. Starbucks has registered tremendous success of this project and is intending to apply the results to create educational opportunities as well.

Starbucks’ efforts in the area of social responsibility have also been demonstrated through the way the company handles personal activities of its partners. The company understands its partners’ need to strike a balance between work and personal life. Therefore, it gives the partners time to handle their personal life. Whereas this move may be done with the aim to give its partners freedom, it should be noted that it also contributes to social responsibility in one way or another. For instance, Starbucks has challenged its partners to engage in the activities of the community (GreenBiz Staff). This depicts that Starbucks is mindful of the interests of its partners and the larger community as well. However, Starbucks has been very specific about how partners conduct themselves outside the company. The company always advices the partners to watch their conduct because it, has an impact on the company’s reputation (Venkatraman and Nelson 1012). Therefore, partners in Starbucks do not have the freedom to claim that their opinions represent those of their fellow partners and the company at large.

Forms of Business Ownership and Organization

Starbucks started as a partnership of three people: Gordon Bowker, Jerry Baldwin and Zev Siegl (Smith 38). However, the three partners later sold the business to one of the former employees, Howard Schultz (Smith 18). The company took a turn in 1992 when it was converted into a public corporation (Smith 27). Since that time, shareholders have owned the company. Since the company was converted into a public corporation, it has expanded tremendously. The company has also entered into partnerships with many other different companies. For instance, through the partnership with Apple, Starbucks now sells music alongside other products. The arrangement includes the possibility of customers at Starbucks stores to access and download songs through wireless internet.

In terms of Starbucks’ organization, the company runs coffee shops that are owned by the Starbucks Corporation Chain (Smith 42). With the company expanding to its current size, its corporate structure is different from that of typical coffee shops. At the top of the organization’s structure, are the executives who have the responsibility to oversee all the activities of the company. The company’s executives discharge their duties from the company’s headquarters in Washington, the USA. Below the executives, there are district managers who are in charge of groups of stores in specific regions. Each store has a manager assisted by shift supervisors who can act on behalf of the store manager when he/she is not around. The employees referred to as baristas are below the supervisors. Starbucks operates licensed stores which are required to follow the guidelines of the corporation (Smith 61). This has enabled the corporation to be consistent in providing quality service.

Conclusion

Considering the market share that Starbucks controls, it can be stated that the company is a big coffeehouse business. The coffeehouse, which started as a partnership of three people, has been operating for over four decades, grown in leaps and bounds following years of struggle. The company took a turn in 1992 when it was converted into a public corporation (Griseri and Seppala 59). Since that time, the company has grown very fast despite facing stiff competition from other coffeehouses. Starbucks has survived in the market by capturing large market share despite the fact that customers have raised concerns about the company’s uncompetitive prices. The company has used its unique design to create welcoming environment that helps to attract customers. The company has also been consistent in ensuring convenience in service delivery. This has gone a long way towards creating customers’ loyalty, the factor that has contributed greatly to the company’s success. However, the company’s growth has come with a lot of expectations, especially as far as business ethics and social responsibility are concerned. Again, the company has performed quite well in the two areas.

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