Leadership and Operation Management Analysis: The Starbucks Case

This report provides a comprehensive analysis of leadership and operation management practices at Starbucks. It delves into the roles of managers and leaders, exploring how they contribute to the company's success. The report examines various leadership styles, including situational leadership, and their application within Starbucks. It also discusses different approaches to operation management, such as Total Quality Management (TQM), and their strengths and weaknesses in the context of Starbucks. Furthermore, the report highlights the factors affecting operation management and the importance of effective leadership in driving operational excellence, customer satisfaction, and brand image. The study provides insights into Starbucks' strategies for continuous improvement, employee training and development, and the integration of information systems to optimize operations. The report concludes by summarizing the key findings and emphasizing the significance of leadership in shaping the company's operational effectiveness and overall performance.

MANAGEMENT
AND
OPERATION

Table of Contents
INTRODUCTION...........................................................................................................................1
P1 Role of manager and leader...................................................................................................1
P2 Role of leader operation management...................................................................................3
P3. Situation leadership approach...............................................................................................4
P4 different approaches of operation management....................................................................6
P5. Importance of Operation management..................................................................................7
P6 Factor affecting operation management ................................................................................9
CONCLUSION..............................................................................................................................11
REFERENCES .............................................................................................................................12

INTRODUCTION
Operation management is play a critical role in organisation success as it help an
organisation in different ways, like reduce cost, waste, high productivity, desired quality. Earlier
operation management understood as managerial function in production context, but its role has
been changed with time, now this process become more focused on customer satisfaction
Organisation now prefer proactive improvement action rather than reactive one. This study
describes various factor affecting production decision of Starbucks manager and leadership style
choose by Starbucks as per differ situation demand. Study gives knowledge about star buck's
operation management practices, leader's role in develop the operation planning culture in
organisation which help firm in earning the goodwill which it has. Starbucks is leading
American coffee making company founded in 1971, company offer variety of coffee like green,
Diedrich Coffee, flavoured syrups. It has 238,000+ employees, so operation management study
of this firm gives idea about how an organisation can get differentiate brand image in less time.
P1 Role of manager and leader
Manager is a person who is responsible to manage organisation's physical and human
capital. Manager put his effort to reach organisational objective by its day to day managerial
work . Manager is responsible of planning, directing and controlling the organisational resources
and people. Management activities keep focused on reaching the objective of various
organisational activities. For instance Starbucks UK’s manager’s main duties are organising staff
to achieve its ultimate goal of customer satisfaction, manager look upon the activities which
insure the quality of product, make financial reports, arrange T&D session for employees, insure
physical safety of customer and staff in store etc (Goetsch. and Davis, 2014).
Management by objective theory practice by Starbucks manager can be seen as manager
takes suggestion of store employee to formulate T&D objective and process. Standard training
process followed step by step.
Behavioural theory of management assume that manager know the human aspect of its
employee, according he provides some privilege to them so that employee feel valued. For this
Star Buck manager give autonomy to employee to correct defect and make service improvement
efforts for customer, by themselves without asking for permission.(Hitt, Xu. and Carnes, 2016)
1

Leader is the person who takes initiative in making changes in production and process,
leader influence employee not by his order , but by his actions. Leader is the person who make
vision statement and long term policy and objectives of organisation.
Characteristic of leader:
 Leader always have positive attitude for changes and risk. Leader never fear from
external and internal business environment changes.
 Leader has ability to inspire other, an ideal leader never use motivation to employee , he
set the extraordinary example which gives inspiration to employees.
 Leader has sound and effective communication skills because he has to communicate his
vision and mission to various stakeholder.
 Enthusiasm ,Passion and self learning is the main behavioural attribute of a leader, he
does not need outer motivation for his work.
 Leader also has sting interpersonal skills which help him to make collaboration and good
industrial relation.
 Innovation are always welcome by a good leader because he knows the value of
innovation in organisation growth and development.
Role of leader in organisation:
 Leader is responsible to set vision ,mission , objective, ethical practices and acceptable
standard of product and quality in star bucks.
 He insures the integrity in organisation activities and in employees behaviour.
 Leader induces encourage and motivation in employee , when employee feel low and
their morale get weaken.
 Leaders responsible to make an effective team.
 Shared ownership, innovation, value creation, are some major role play by leader.
Role of manager:
 Manager is responsible for manage the daily operation of organisation such as inventory
management, evlation and control the various organisation process and activities.
 Manager communicates with employee under him about different objective set by higher
authority, where he also has to give report to higher authority about performance .
 Training and development as per individual learning need are designed by manager.
2

 Budgeting making, project management, human resource and information management
is done by manager on daily basis.
Difference between leader and manager
Leader Manager
Leader facilitates innovative idea. He is
responsible to create vision, mission and
objective of organisation. For instance
estabish star buck as premium brand was the
idea given by its leader
Manager is responsible to make policies and
action so that organisation objective, vision
and mission can be achieve. For instance
manager make different effort so that
premium experience can be given to its
customer . He decorates its store with luxury
feeling.
Leader creates the right things. As ethics and
culture is formulated by leader.
Manager does the things right by its
evaluation and controlling efforts.
Leader love to take risk. Manager tries to avoid risk as much as they
can.
Leader want achievement for instance
Starbucks earn global recognition now, it is
an achievement by form by leadership efforts
Manager wants result only. For instance
manager evaluate outcome of short term
growth plan like sales increase or not in the
ratio of increased investment on marketing.
P2 Role of leader operation management
Operation management comprises all the traditional managerial function practice for
context of manufacturing, production. Starbucks operation management activities include
designing of good and service, process and capacity and process design, location strategy, job
design and human resources, layout design and strategy, inventory management, supply chain
management, Maintenance and secluding(Goetsch. And Davis, 2014). Leader of star buck
company responsible to identifies and taking corrective action whenever required, following are
roles played by star bucks' leader in developing stage of new product and maintaining the
existing organisation environment. Leader decided to adopt different leadership style which is
given below:
Role of leader and manager in operation management
3

 Leader creates proactive quality improvement environment rather than reactive
one. Star buck's check all quality standard before making coffee rather than defect
found after coffee deliverer to customer.
 Leader create culture of improvement through continuous motivation giving to
employee.
 Directive Leadership help in continuous improvement which is essential element
of TQM by provide guidance, experience, tools and technique, knowledge of
acceptable quality standard. For instance manger give all the information to
employee about Starbucks standard of quality so that employee can evaluate it by
themselves without asking again and again to supervisor.
 Supportive and liberal leadership encourage individual learning, creativity,
freedom, open communication, employee engagement so that operation efficiency
practice become easy and smooth. (Donate. and de Pablo, 2015.)
 Leader and manager put their effort for develop responsibility, accountability,
team sprite, in employees which automatically help in attainment operation
quality.
 Leader take risk which are required for improvement. For instance star buck
faced issue in supply chain and logistics, which is now removed by its leader by
taking outsourcing decision.
 Leader makes strategic plan and objective of operation management activities
which are aligned to organisation vision and mission. For instance provide the
best coffee is Starbucks vision and leader try to reach the objective by pre
production quality activities such as beans check.(Luthra, Garg. and Haleem,
2015)
 Training and development program are designed by leader and manager
accordance with individual leaning need and as per set quality standard of
company. Star buck have different training program for each level employees
like Barista Basic Training program, Shift Supervisor Training Program and
Retail Management Training Program, District Manager Program
 Leader choose integration information system in organisation so that all the
department can have information about their improvement need on time. For
4

instance production department got the information from marketing department
that customer’s preference changed from traditional coffee to sugar less and
healthy coffee. Production department make required changes in ingredients of
coffee by themselves(Haimes,2015)
P3. Situation leadership approach
Leader and manager have to work in dynamic working condition. It is impossible for any
organisation to adopt a single leadership and managerial style that can solve the entire problem.
Leadership and managerial style and function are changed with nature of work, situation and
characteristic of employees. Starbucks adopt situational leadership model and system leadership
approach, which is given below:
The Hershey- Blanchard Situational Leadership model take various dimension into
consideration before finalise leadership style for particular situation, these dimensions are nature
of work, employees competency, behavioural aspect of employee. Model combine leadership
style with these dimension.(Schönsleben, 2016.)
Category of Leader:
S1: Leader gives order and direction about work but less support.
S2: Leader gives direction and support equally.
S3: Leader practices more support and less direction.
S4: Leader gives less direction and less support.
Maturity of employee:
M1: Employees of M1 category have less knowledge, experience of work. They are not
self motivated and initiator.
M2: Employees of these categories are highly self motivated but less ability and
knowledge.
M3: Employees have strong knowledge and experience but no self motivation.
M4: wide knowledge and experience as well as high willingness to complete the work.
Application of the Hershey- Blanchard Situational Leadership model in Starbucks:
Telling leadership (S1M1) instance autocratic leadership is given to employee who
recently joins his new job at start buck store . For instance employee who recently appointed as
5

front officer required more guidance as he is unaware about Starbucks operation and
organisational culture.
Coaching leadership (S2M2)adopt by star buck based upon behavioural assisment. Star
buck found that marketing team has enough marketing knowledge and skill but team never take
initiative for marketing efforts. (Donate. and de Pablo, 2015.).
Supporting leadership(S3M3) is designed for workers who have capability for work but
they feel unconfident for their actions. Starbucks production supervisor has enough knowledge
and experience . But supervisor feel low confidence, so star buck leader give him support by
encourage him and remove fear and axnity.
Delegating leadership(S4M4) high creative people and people with low acceptance of
control are facilitated with delegating leadership style . Leader inter fair only when guidance is
demanded by team and employee. For instance Starbucks give full authority to worker having
beauty full performance record of at least 5 year.
Contingency theory of leadership: contingency theory of leadership emphasis on use
suitable leadership style based upon existing situation and leader's personality. Ac coding to this
leadership theory there are three factors which affect the leadership decision I.e Leader-member
relation managed by star buck leader by using HRM practices enhancing interpersonal relation
with employee. It increases the trust , confidence and loyalty between leader and employee.
(Schönsleben, 2016.)
P4 different approaches of operation management
TQM: total quality management is long termed approach focused on customer
satisfaction. Employee of each department and each level contributes in improvement in product,
process and service offer by star bucks. Company take regular feedback from customer. Eco Sure
is quality check program of star buck , which check the required qualification of all the stores in
every six month. Employee evaluate pounds of bean in cupping accompany give assistance,
Fund to coffee making farmer through Farmer Support Centres in coffee producing nations. To
improve supply changing organisation made outsourcing agreements for transportation, third
party logistic and contract for manufacturing.(Luthra, Garg. and Haleem, 2015)
Strength of TQM
TQM is a holistic approach of improvement, it does not focus only on one area of
improvement, it emphasis on correct the root so that improvement can be automatically achieve
6

without many efforts, this holistic approach help star buck to focus on all the area which are
important for customer satisfaction . As all employee contribute in improvement process, it will
create helping, sharing and caring environment in star buck internal activities.
Weakness of TQM
Whole TQM activity get affected in case of failure in one parameter for instance training
and development can increase frustration among employee in case improper evaluation process
and lack of measurement tools.
Six sigma approach: six sigma approach of quality improvement focus on eliminating
the defect in product and process. Six sigma of Star buck is:
Define: star buck customer have to wait for long to collect their order, which reduces the
customer satisfaction.
Measure: star buck collected feedback given by customer and make report which shows
the dissatisfaction of customer on scale.
Analyse: Firm analyse the root cause of the problem, and it finds that store do not the
latest technology as self check out facility and lack of the latest payment options.
Improve: star buck high authority orders to IT department to develop apps and install the
latest AI machine which reduces the customer retention time in store.
Control: after implement the six sigma, manager evaluate the satisfaction level and time
spend by customer in store by feedback and direct interview. If problem not been solved than
manager tries to implement another tools for improvement
weakness of six sigma:
Financial capacity of organisation can affect the six sigma adoption decision. For
instance star bucks have enough financial resources so that it can take help of expensive
measure. Overlook of customer satisfaction can grab the focus on internal problem which an
organisation currently facing. For instance Starbucks ignored the problem in supply chain
management for sometime because it put all the effort to please customers only.
Strength of six sigmas: six sigma definitely bring the customer stratification because it
takes proactive action rather than reactive action. For instance star buck check beans quality
before put it into production, it gives cent percent quality assurance and customer stratification.
7

P5. Importance of Operation management.
Almost every industry and organisation emphasise on efficiency of operation
management activity because of its positive impact on business production, performance and
goodwill of organisation. Operational management seamlessly contribute in success of
Starbucks. Earlier operation management understood as activity to improve production only, but
now operation management role has been changed with time. It gives benefit various tangible
and intangible benefit to star buck which are as follows:
Direct Advantages:
o Operation management approaches like TQM and six sigma approaches help star
buck to maintain productivity by keeping eyes on input and output production
ratio. Starbucks use TQM system software which evaluates the product quality at
each level of production, system deducts any error and variation so that corrective
action can be taken as soon as possible without much money and time wastage.
o Starbucks formulate 10 operation management decisions, as per its customer and
organisation objective. Design of good and service help star buck to create
different brand image and goodwill among customer.(Luthra, Garg. and Haleem,
2015)
o Starbucks use maximum automation in inventory management(RFID) which
provide continuous supply of fresh beans, it helps in fulfil the production
raw ,material demand without delay.
o For scheduling company use automated and manual scheduling approaches
o Layout design of star buck forces on customer experience rather than space
utilization, which help it to attract premium customers. Its help form to achieve is
vision statement to offer premium experience to its customers.
o Starbucks choose store layout location in urban centres like near to dense
populated area which give opportunity to company to grab the competitor
advantage and increase market share. For instance store situated near its
competitor give opportunity to star buck to practice marketing tactics so that it
can beat its competitors. Like if its competitor gave coupons to its customer than
star buck can give discount to its customer to counter competitor strategy, in same
geographical area
8

o Starbuck's coffee must have certificated under Starbucks coffee and Farmer
Equity program (CAFE). Firm successfully earn the customer trust for its product
by showing its concern for customer satisfaction and safety effort.
o Human capital of star buck being maintained through best HRM practices, which
not only insure the operation management but also help in high employee
engagement, low employee turnover ratio(Grosse. And et.al., 2015)
o Starbucks take help of dedicated team and third party who offer the maintenance
service for its physical assets. It gives cost effective advantage to company to
maintain its assets.
o Integrated information system help star buck in quick decisions, accountability,
improve communication among all stakeholders.
Indirect Advantage:
Operation management activities help in increase productivity, reduce wastage and cost.
Starbucks give training to its employee to maintain the operation efficiency, which enhance the
employee motivation and morale. Starbuck's market share and leader image is result of its TQM
efforts. Firm easily attack talent form market as it has good image. Finance department easily
raise fund because of its high sale, which increase its share vale and trust among
financiers .company have high retain earning which help it to make expansion decision. By
practicing operation management activities starbuck successfully establish different brand image
and position in customer’s mind which help it to grab increase its market share. Firm frequently
offer discount and coupons to its customer because of its cost effectiveness which eventually
take competitor advantage to company.(Laudon. and Laudon, 2016)
P6 Factor affecting operation management
Every business has to work in certain condition that affects its decision directly and
indirectly called business environment. Business environment divided into two parts as external
and internal environment. Internal factor have direct effect business decision and they can be
control, where external factor have indirect effect firm, result of changes in external factor
cannot be avoid, it can only be minimise by manager and leader’s insight and forecasting skills.
Internal and external factors which affect the decision making of Star bucks leader and manager
are given below:
Internal factor:
9

Vision mission of Starbucks:
Importance of quality maintenance is given in vision statement of Starbucks company.
Employees perform their function to achieve the vision and objective statement of company.
Production manager and leader changes their decision to achieve this objective whenever is
required. For instance Starbucks vision statement is to establish Premier purveyance, without
compromising principle while doing growth effort, attainment of this vision can be seen check
as manager himself check the quality of coffee which is an effort to give premium quality
product to customer.(Wild, 2017)
Stakeholders expectation:
Starbucks has various stakeholders like supplier, customer, financer, employee and
government. Manager can not practice his monopoly in decision making, he has to insure
protection of interest of these stakeholders because without their support and help it unable to
maintain its position in market. For instance if share holder expect good return from firm because
of favourable economic condition for star bucks, then manager has to make changes in marketing
efforts so that sale can be increase, manager use marketing tactics for this like differentiate
pricing policy and discounts(Hitt, Xu. and Carnes, 2016)
Supplier:
In case of starbuck supplier play a critical role because company known for best coffee
making firm in company. If manager find that supplier fails to meet required raw material
standard than manager can switch from one to another supplier. Manager of Starbucks follow
technology to maintain coffee beans quality as it uses manual checking as well as RFID to evlate
the beans.
Innovation:
Starbucks has innovation organisational culture, which force manager to makes
technological changes in production department to practice innovation. Starbucks make
innovation efforts because of environment changes, legal framework, technical changes and to
grab the opportunity from its competitors. For instance manager decided to develop recycle and
compostable cup(Laudon. and Laudon, 2016)
External factors:
Customers:
10