Starbucks Organizational Analysis: A Comprehensive Report

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REPORT
STARBUCKS
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Table of Contents
1. Introduction............................................................................................................................3
2. Discussion..............................................................................................................................3
3. SWOT Analysis.....................................................................................................................5
4. Conclusion..............................................................................................................................7
References..................................................................................................................................7
Appendices.................................................................................................................................8
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1. Introduction
The current report is based on the organizational analysis of a famous international coffee
brand which is Starbucks. Starbucks is related to the café and coffee sector. The company
Starbucks is one of the most famous and renowned brands which sells coffee all over the world and
have several retail coffee shops in different parts of the world. It is a purchaser as well as a roaster for
high-quality coffee beans and supplies them to the market. It also serves freshly brewed delicious
coffee beverages, various drinks mostly Italian, few food items, tea and other hot or cold beverages
especially related to coffee in its retail stores. It operated mostly through its own retail outlets.
Starbucks started with a small shop in Seattle in 1970 and within two decades it grew to become one
of the largest coffee brands internationally. Starbucks follows a strong mission statement which is “To
inspire and nurture the human spirit- one person, one cup and one neighbourhood at a time.”
(Starbucks Coffee Company, 2019). It aims to establish itself as a premier brand to produce the
finest quality coffee all over the world and follow principles that are uncompromising, while it grows.
The mission statement of Starbucks emphasizes on developing the firm culturally through
innovations, high-quality performances and by maintaining accountability. The company believes that
only through accepting challenges, growth can be possible personally and that would help the
company to grow. Its acceptance helps the company to adapt to diversify policies and access
smoothly. It also values the factors that are required to emerge as an environmental leader. It analysis
the environmental issues and share all the necessary information to the concerned partners. Its goals
are to develop ideas that are innovation and solutions that are flexible and can adapt to the changes.
Since Starbucks does not compromise with its premium price, it tends to attract customers whose
disposable income is high. Also as the customer pay high prices for its products based on the brand’s
goodwill they expect high-quality items. The customers not only want to just buy a cup of coffee from
a place but rather want to experiences a cup of coffee while consuming it in a coffee shop. Consumers
demand transparency and want to have value. The customers expect the firms to have corporate social
responsibility so that their activities do not negatively impact the environment.
2. Discussion
For the success of any organization the role of the employees is important. Hence the impacts
the employees have on the Starbucks and how the process of training and development is
followed by Starbucks is discussed here.
Role of Employees
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The employees are the faces that meet the public or customers for the firm. The employees
agree to the goals and missions of the company that has helped Starbucks to grow over the
years. The employees can make or break a firm and this hiring a suitable person for a
particular job is important to work. The employees of Starbucks have positive interactions
with customers. The staffs aim at providing a customer experience that is unforgettable
(Engen and Magnusson, 2015). The staffs are trained in a way that they are able to identify
the needs of the consumers, acknowledge them and then provide solutions to it. The
employees put efforts to connect with the consumers so that loyalty of the consumers is
secured and they get personalized experiences. The employees try to interact with the
customers, ask for their feedback and create a friendly atmosphere for them.
Need for Training and Development
Training and Development are essential for the company’s growth. The new employees who
are hired might have the requisite knowledge but training would help them to understand the
aims and mission of Starbucks and work productively towards the company’s growth. The
training is provided with the help of simple tools. On-job training as well as delivering one-
to-one are the two ways to training that is usually followed by Starbucks. The training
process also appears to be the learning process and helps in increasing the confidence and
capabilities of the employees. Training improves the desired skills of the employees and also
helps in identifying the capabilities of them so that job reallocation can be done for the
company’s development. Training and development activities whelp to increase the
customers’ experiences and maximize the profit of Starbucks. It helps the employees to
improve in areas where they lack and indulge a sense of competitiveness among the
employees along with motivating them. Training also increases job performances and reduce
employee turnover (Abdel-Basset et al. 2018). It helps the employees to have better attitudes,
incorporate leadership techniques, increase loyalty and become a successful and important
member of the organization.
One important role in Starbucks Company is the job of the managers. The store managers or
supervisors appear to the team leaders in the retail outlets and they are provided leadership
training. The managers’ tasks are very important as the success and consumer experiences of
a particular store appear to be the responsibility of the manager. The managers need to
perform a variety of duties such as overseeing the other staffs and have communication with
the regional corporate offices. The workplace may consist of people from various
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communities and interaction with all the staffs is important (Roby, 2011). The managers
along with analyzing the performance of other employees need to look on the business results
achieved on a weekly basis. The managers evaluate the preferences of the local people of a
store and analysis the scope of opportunities of the local store. Weekly schedules need to be
prepared, set goals for the teammates and also looks after the possibility of development
plans with other local partners. The accuracy of inventories needs to be checked by the
managers. Planning, reviewing and promoting the products of a particular store is the
responsibility of that manager which has to be done regularly.
The managers need to have requisite skills and knowledge to carry out their work efficiently.
The managers shall have leadership qualities. Feedback from all the employees may be
collected about the performance of the managers so that after analysis training for
improvement can be provided to them. Along with graduation in education, managers require
experiences related to work. The manager is required to have the business knowledge and
shall have complete research of the products of Starbucks. The store managers are required to
be trained with detailed knowledge about the goals and missions of Starbucks through
training activities. They need to stay focus even if the working environment is distracting and
have the capability to provide solutions to the confused staffs of the stores working with him.
Along with the ability to supervises strongly training shall be imparted regarding the changes
incorporated by the company (Haskova, 2015). The managers need to be trained in a way that
they are able to understand the perspective of other employees and understand the market
competitiveness in the area of this firm. Self-reflection and acknowledging other employees
are areas where managers need to be trained.
3. SWOT Analysis
The SWOT Analysis is a framework that helps to identify the company’s strengths and
factors that puts the company at risk. These factors are discussed below:
Strengths
Starbucks has a strong mission with around 16000 retail shops operating in over 35 countries.
Starbuck’s capital and market share amount to £4596.6 million and it has a growth of 20.9 %
in sales (Starbucks Coffee Company, 2019). Starbucks has various direct owned shops as
well as franchise coffee shops across the globe. Starbucks follows environmental ethics and
also have a very well structured and efficient management. Starbucks has the highest market
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share among the other coffee retailers in the world and the coffees produced by it are of the
highest quality. It has a brand value because of its exceptional service. It values the customers
by providing them comfortable ambiance, complimentary items along with delicious coffee
related products and gifts. The opinions of the employees are valued and the management
pays more benefits and higher salaries to its employees as compared to the other rival firm. It
has expanded over the past years and provides an attractive menu to the customers for
breakfast lunch and dinner.
Weaknesses
A major drawback of Starbucks is that its creativity related to coffee items is limited. There
might be consumers who visit the store not for the love of coffee but for its brand value and
they may expect other items that are burger or sandwiches, but due to limited choice might
get disappointed. The market price for its product is on the higher side and hence in a perfect
competition market, many rival firms with a lower price interrupt its sales and affect the
company's profit. The price of Starbucks for a premium product is premium and firms like
McDonald's and other Local Coffee brands sometimes attract local crowds as compared to
Starbucks. The products are limited to coffee related items and hence the growth is limited
for other tradable products (Völckner et al. 2010). Since, Starbucks was first started in the US
most of its companies policy target the US domestic market which affects the profits of its
brand for another market such as the UK. It uses less free trade items and less effort to protect
the environment. The new suppliers of other countries are not treated well and there are also
few cases of tax evasion strategies used by it in other countries.
Opportunities
Starbucks has shops in more than 35 countries and its association with several brands such as
Pepsi & Co. or with some ice cream brand such as Dreyers’ help the company to have
product diversification. This cross-selling of a few retail items has attracted customers whose
love for coffee is limited (Han et al. 2018). Wthe increasing competitiveness Starbucks is
expanding its menu focusing the local customers which serve as an opportunity for growth.
The public relation activities of Starbucks is better than other brand and is also follows trade
policies that a fair and ethical. It has strategically partnered with various restaurants or cafes
in other countries and supermarket which has helped it to introduce its product. Starbucks can
expand its service provider base so that it serves better alternatives on crude materials like
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espresso beans, which could basically enable them to deal with crude materials estimating
and limit the supply interruptions.
Threats
Due to less demand for the coffee product, few shops of Starbucks had to shut down.
Starbucks also needs to increase its social responsibility stances. A consumer whose
disposable income is low does not usually prefer to consume high priced coffee products
from Starbucks. Along with the market exchange rate, the price of raw materials is increasing
which might affect the profit share of Starbucks because in order to increase the profit margin
the company has to increase the product’s price and this will be positively related to the
migration of the customers to other competitive firms. There are also various legal issues
related threats such are the trademark policies or lawsuits which affects its brand image.
Criticizing the company's policy related to the labor issues and environmental issues on
websites or social network sites by people affects the goodwill of the firm which in turn
affects its revenue (David, 2011). Due to perfect competitiveness, new franchises are entering
the market, few of which have already established them as a national brand and this is putting
pressure to Starbucks profit (Cohen, 2017). The market for the coffee-related product is also
getting saturated day by day due to increase in pubs and restaurants or other options available
to the customers.
4. Conclusion
Starbucks is a famous organization, however continuous research and innovation for products
improvement is essential to sustain in this competitive market. New entrants in the markets
and the product offered by these companies are also differentiated in nature that attracts
customers, whose preferences keeps on changing. In order to have sustainable growth, it is
also essential that the company values its employees and provide regular training to them.
The SWOT analysis has identified a few weaknesses and threats, the areas which have to be
improved for the company’s development.
References
Abdel-Basset, M., Mohamed, M. and Smarandache, F. (2018). An extension of neutrosophic
AHP–SWOT analysis for strategic planning and decision-making. Symmetry, 10(4), p.116.
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Cohen, E. (2017). Employee training and development. In CSR for HR (pp. 153-162).
Routledge.
David, F.R. (2011). Strategic management: Concepts and cases. Peaeson/Prentice Hall.
Engen, M. and Magnusson, P. (2015). Exploring the role of front-line employees as
innovators. The Service Industries Journal, 35(6), pp.303-324.
Han, H., Nguyen, H.N., Song, H., Chua, B.L., Lee, S. and Kim, W. (2018). Drivers of brand
loyalty in the chain coffee shop industry. International Journal of Hospitality
Management, 72, pp.86-97.
Haskova, K. (2015). Starbucks Marketing Analysis. CRIS-Bulletin of the Centre for Research
and Interdisciplinary Study, 2015(1), pp.11-29.
Roby, L.R. (2011). An Analysis of Starbucks as a Company and an International Business.
Starbucks Coffee Company. (2019). Starbucks – The Best Coffee and Espresso Drinks.
[online] Available at: https://www.starbucks.com/ [Accessed 26 Apr. 2019].
Völckner, F., Sattler, H., Hennig-Thurau, T. and Ringle, C.M. (2010). The role of parent
brand quality for service brand extension success. Journal of Service Research, 13(4),
pp.379-396.
Appendices
Training and Development Plan
Employee
Name Role Signature Date Issue
Areas of
Improvement
Actions to be Taken Timeframe Documentation Progress
Achieved
Task Management
& Meeting
deadlines
Increased sales on local
event day by 25 %
Immediate to 1
week
Discipline Maintaining consistency
& Work hours
4 weeks All employee in
& out time
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