Research Paper: Star Bucks Business Origin and Growth

Pages: 15 (4830 words)  ·  Bibliography Sources: 9  ·  Level: Master's  ·  Topic: Business  ·  Buy This Paper

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[. . .] The company made another store in Beijing, China in 2011 at the Beijing Capital International Airport's Terminal 3, international departures hall, this store made the total number of Starbucks stores in China to be 500. The company has a plan to increase their number of stores in China to approximately 1,500 by the year 2015 (Retail and Consumer, 2011).

In August of 2013 Starbucks was able to open its first shop in Danish Superstore which is the biggest retail company in Denmark. The opening of Starbucks stores in Colombia was announced by the CEO of the company Howard Schultz in 2013. The first store will open in Bogota in 2014 while the company plans to open 50 more stores in all the major cities of Colombia in a period of 5 years (Mallernee, 2010). It was further said by Schultz that Starbucks will be working in collaboration with the Columbian Government as well as USAID in order to "enable the local coffee growers to be able to get better produce by sharing their own knowledge of coffee with the farmers" (Kotler & Armstrong, 2013).

It was in 2003 that all 6 of the stores of Starbucks which were present in Israel were shut down because of the strong competition, difficult business scenario and the continuous operational changes, as stated by the management of Starbucks. In 2007 the Starbucks outlet which was located in previous imperial palace was closed. The main reason behind shutdown was the continuous objection of the Chinese people to the opening of an American store which they believed was affecting their own culture. The company made an announcement to shut-down 600 of company owned stores that weren't performing very well and to cut down the expansion plans as well because of the uncertain economic conditions (Nielsen & Mortensen, 2008).

In July of 2008 approximately 1,000 non-retail jobs were cut down by the company as a part of their plan to boost the profits and bring the energy back to the brand. As a result of these layoffs the expansion and growth period of the company which initially began in the 1990s stopped altogether (Nielsen & Mortensen, 2008).

Marketing Strategy

A few of the methods that have been used by Starbucks to eliminate their competitors and to expand are anti-competitive according to critics. Some of these methods are; deliberately operating at loss, buying the leases of competitors and opening a lot of outlets in small geographical locations. For instance, in the UK market initially Starbucks fast-tracked its expansion by buying out Seattle Coffee Company and then using its influence as well as finance to get prime locations as a result of which, foursome time it was operating at financial loss (Fellner, 2008).

Organizational Structure

Even though most of the coffee houses are run as small independent businesses but this is not the case with Starbucks as, their shops are a part of the elaborate network. The Organizational Structure of Starbucks is a lot different than the other smaller coffee shops, to a certain extent the large size of this organization and the complications associated with running such a huge business are responsible for this difference in organizational structure. (Geereddy, 2012).

Figure: Organizational Structure of Starbucks (Fellner, 2008)

Basic Structure

The company is overseen by the executives from the headquarters located in Seattle, Washington. The regional grouping of the stores is seen by the district managers all over the country and these managers report back to Starbucks Corporation. Every store has a manger and he/she has a number of shift supervisors. After the shift supervisor comes rest of the employees who are called baristas (Fellner, 2008).

Licensed Stores

Starbucks does license storefront but it doesn't give any franchise. The licensed stores are controlled by the company and have to follow the guidelines and principles of the company; in this way Starbucks is able to maintain the quality of products (Fellner, 2008).

Partners

All of the employees from the person who make the coffee to the one who handles the cash and all of the other workers are considered to be partners in the company. The term "partner" is being used by the company since the beginning to make it clear that the role played by these people in the company is very important (Fellner, 2008).

Responsibility

Starbucks Company preserves social responsibility and intends to deal uprightly with their suppliers. They pay the amount which is well suited for the perfect Arabica coffees in which the suppliers put an endless effort for them to grow properly. The company has also started exercising eco-friendly principles in their activities for example; the used coffee grounds during the summer are preserved for the customers instead of wasting, who would want to use them for their soil as acid (Fellner, 2008).

Management Philosophy:

To have and build a staunch and resolute confidence among your employees regarding your company and to convince them in the execution of the vision is the quality which is found among the best corporate leaders. It should be kept in mind that once the vision has been made clear among your employees, it is essential not to complicate the tactics and the policies which have been announced earlier. For instance one of a main strategy is growth (Nielsen & Mortensen, 2008).

It has been the policy of Starbucks from the beginning even when it was not in its prime time that the employees of the Company will be given the benefit of Health insurance and stock-options. These benefits were provided to even the part-time job employees and it was rare in the U.S. At that time as well. This was the reason the company's employees did not leave the company and worked as a team (Nielsen & Mortensen, 2008).

The owner of the Starbuck believed that just like an artist or a businessperson the work of an accountant and the secretary should also make sense to them. In order to make them indulge in their work it's the company's job to love them and build trust so they can start loving their job. Schultz has always followed this principle of managing his company. Even when Schultz was forced to change his policy of providing the benefits when Starbuck was facing the worst crisis he did not bend down. He was facing pressure from Wall Street, the Directors of his Board and his management team was all convincing him to drop the beneficial for a while. Eventually, Schultz was able to manage everything along with the resources for his employees. He believed that it was because of his employee's hard work that the Starbucks regained its position (Nielsen & Mortensen, 2008).

Innovation

After buying the Starbuck Company in 1987, Harold Schultz restructured the store into a company as it subsists today. "Harold's vision was to create a third place -- a place between work and home, where people would meet over coffee and create community." He wanted to give a face to his plan and held a session where he could create what was in his mind. The result of his brainstorming session came out as a vision of his company which was: We want to be the premier purveyor of the finest coffee in the world" (Bussing-Burks, 2009). Along with this vision, came out a number of superintending rules which were advanced and fresh. They were:

To give an exceptional experience for the customers by providing each customer with one cup of coffee at a time.

The environment should be matchless and this will only be possible if the employees will treat each other with esteem and regard.

The quality of our coffee should never lose its superior quality.

As our company will progress we will return the favor to the communities, the favor they are giving by providing the coffee beans.

The environment of Starbucks should be an ideal situation for workers and every manger and employee will be given equal reverence and honor.

The principles were followed diligently and were implicated constantly. They were not just dictated but were followed by every person working in Starbucks (Bussing-Burks, 2009). As they begin to grow, a number of imitators came in the market and Starbucks continued to follow their rules and create the perfect experience for their customers. They considered themselves lucky as the standards of their company were difficult to surpass (Bussing-Burks, 2009). The company then realized the importance of the already set principles as they realized that it was the dedicated employees and the dependable culture that was keeping the experience among the customers.

Culture:

Starbucks has maintained a very principled and strong culture with great customer responses now and then. It has become quite obvious over the years how faithful and content the customers of Starbucks are with their food, service and atmosphere. There is something exceptional about their service and how they treat their customers with extreme care and love (Deresky, 2006). They try their… [END OF PREVIEW]

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Star Bucks Business Origin and Growth.  (2014, August 27).  Retrieved May 24, 2019, from https://www.essaytown.com/subjects/paper/star-bucks-business-origin-growth/815747

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"Star Bucks Business Origin and Growth."  Essaytown.com.  August 27, 2014.  Accessed May 24, 2019.
https://www.essaytown.com/subjects/paper/star-bucks-business-origin-growth/815747.