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Starbucks is regarded as one of the most successful beverage companies globally. Its success is attributed to the ability to implement strategic decision making procedures in operations management processes. Starbucks has been in operation since 1980s and has experienced significant prosperity in both the United States and other countries where it operates. In spite of the emergence of competitor companies in the beverage production, it has remained competitive and effective in achieving constant financial returns on its operations. This paper examines the strategy used by Starbucks to remain competitive by focusing on the aspects of organizational culture, market analysis of customers and competitors, operational management strategy, and how the issues of human resource and management affect its performance.
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Impact of Organizational Culture on Success of Starbucks
Starbucks has promoted the culture of providing customized products and services in which they make their own products according to customer needs and ensuring the changes in customer preferences are incorporated in the new product developments. The corporate culture at Starbucks has been that which promotes partnership with employees by encouraging them to be major participants in the activities of the company and contribute their individual views for the purpose of achieving improved product provision (Leinwand & Davidson, 2016). Managers at Starbucks play a major role in promoting the company’s culture to the employees. According to the view of Howard Schultz who founded Starbucks, the major objective of the company to provide services to the people who need beverages and snacks before proceeding with their business activities or other personal objectives. The employees are trained to develop a culture of being welcoming and genuine in their approach towards addressing the needs of customers. They provide customers with the latest information about their favorite drinks and listen actively to customer concerns in order to respond to any changes customer preferences. The company has also formulated the culture of being considerate by apply policies that promote environmental friendliness such as the use of wind energy so that they contribute least to environmental pollution. The culture of cleanliness in the nature of products and services of Starbucks is part of the company’s culture (Woolf, 2014). The restrooms and the environment where customers are provided with services have been kept clean to promote the comfort of customers and there has been greater focus on promoting a standardized packaging that uses recyclable paper and other materials that cannot contribute to environmental impact. Furthermore, Starbucks applies the culture of embracing diversity among its workforce by encouraging employees of different age groups, ethnicities, and nationalities to become part of its workforce. Its Human Resource practices have implemented the practice of promoting cultural diversity during recruitment and training programs.
Market Analysis: Competitors and Customers
There are a number of competitors that provide similar products as those produced by Starbucks. They include Costa Coffee, McDonald’s McCafe, Dunkin Donuts, Café Coffee Day, and indirect coffee distributors such as bakeries and fast food chains located in the environs near its outlets. In order to cope with competitors, Starbucks promotes the strategy of product innovation by producing new packages of coffee products that makes it distinct from competitors (Woolf, 2014). It has also capitalized on the changes in customer preferences by introducing stores that provide alternative products such as almond milk products, and operating stores in economically disadvantaged regions as a means of accessing new markets while contributing to the country’s economic development. The company has also used the strategy of diversifying its services to the production of food products rather than specializing in beverages. Customer management has been achieved by meeting customers individually by finding spaces or platforms where they can be engaged such as Facebook pages, Twitter, and Instagram (Woolf, 2014). The strategy of mobile app has been used in customer management at Starbucks by allocating more time connecting to them via phones and other technologies, thus contributing to the improvement of their experience. Furthermore, Starbucks operates with the understanding that provision of customer experience is as important as the provision of product itself. This has been achieved by ensuring the locations where it operates have similar look and personalized customer service is provided.
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Operational Management Strategy
The suppliers of Starbucks are companies and individuals that supply materials for coffee making and provide lease of facilities where it operates. The suppliers are majorly distributors of beverages which are bought by Starbucks for preparation of drinks. Suppliers also include the providers of property that are used by Starbucks in its operations (Wills, 2016). They include; First Capital reality, Inc, that leases grocery stores, banking halls, and restaurant services; Inventure Foods, Inc that conducts marketing for frozen coffee blends produced by Starbucks; and Dean Foods Company that supplies milk that is free of bovine growth hormone rBGH, milk, and bottled water. Demand forecast is conducted at Starbucks as a means of preparing for the customer demands in a particular period of operation such as a year or a month (Aithal & Kumar, 2015). The forecast enable understanding the number of customers who are likely to visit Starbucks stores in search of coffee and other beverages that are popular among customers in a particular region. The operational processes, workforce assignment, and the quantity of beverages to be produced are determined depending on the findings from the demand forecasts.
Management Issues Affecting Starbucks
The Human Resource (HR) functions that are likely to affect the performance of Starbucks include; recruitment, training, retention, and remuneration. The company must conduct quality recruitment of the most qualified or competent employees who are also able to understand the culture of the organization and put them into practice (Rothaermel, 2015). Failure to conduct effective training has an impact of promoting lack of quality customer services or relations with suppliers and vendors which can affect the company’s operational efficiency and profitability. Starbucks also must ensure the employees’ welfare is addressed adequately through fair compensation and remuneration framework that motivates them to perform their roles according to the objectives of the company. If the company does not address employee welfare adequately, low staff morale is likely to be encountered and the success of the company can be negatively affected. The employee performance can also be affected if the HR function of workplace management is ineffective such as when their health and safety needs are not adequately addressed.
Another issue that has an impact on the performance of Starbucks is marketing strategy. According to Laxton (2017), strategic marketing at Starbucks has been achieved by implementing a technique of marketing where information is delivered in a timely manner to the targeted customers while new operational points are identified to improve its market coverage. If the company does not conduct continuous marketing, there is likelihood of failure to achieve competitiveness or growth because of reduction of its market growth compared with competitors who might be involved in intensive marketing campaign.
This paper examines the strategic processes through which Starbucks has achieved competitiveness in the provision of beverages to its customers. The culture that has enabled its success includes; focus on customer experience, greater corporate social responsibility, and the culture of product innovation. The effective management of suppliers and operations has enabled it to promote constant delivery of resources for the production of beverage products. The availability of effective HR and marketing strategy has contributed to empowerment of workforce and improved market coverage respectively.
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- Laxton, D. M. (2017). Creating a Competitive Advantage through Strategic Thinking. Journal of Research in Business, Economics and Management, 8(6), 1596-1604.
- Leinwand, V., & Davidson, V., (2016). How Starbucks’s Cultue brings Its Strategy to Life, Business Review,
- Rothaermel, F. T. (2015). Strategic management. McGraw-Hill Education.
- Wills, J., (2016). Starbucks Stock: Analyzing 5 key Suppliers (SBUX)
- Woolf, N., (2014). Starbucks faces growing rivals as coffee wars reach boiling point. The Guardian Weekly