STARBUCKS MANEGERIAL FUNCTION PRACTICES OFSTARBUCKS Principle of Management ALD 1102 Submitted By Name Roll Marks Md. Rabiul Alam Redoy 2025171024 Moshiuzzaman Chayon 2025171004 Farhan Faysal 2025171100 Nayeem Hossain 2025171002 Shawrea Reme 2025171070 Md, Abu Bakar Siddque Tanvir 19251026 Batch: 2020 Section: B Semester: 1" Supervisor Takrima Jannat Lecturer Department of Business Administration in Marketing Faculty of Business Studies (FBS) Bangladesh University of Professionals Mirpur Cantonment, Dhaka-1216 Date of Submission: 10 June 2020LETTER OF TRANSMITTAL Date: 10 June 2020 The Course Instructor Principle of Management Faculty of Business Studies (FBS) Bangladesh University of Professionals Mirpur Cantonment, Dhaka-1216 Subject: Term Paper on Analyzing the ¥ rial Function Practices. Dear Faculty, We, the students of the faculty of Business Studies, Department of Marketing, are pleased to conclude this report on “Analyzing the Managerial Functions Practices of Starbucks’. This letter marks the submission of our term paper. We ensure you that we have put all of our collective efforts to ensure our work isof a superior quality. We hope you acknowledge the dedication and the devotion we have shown towards this paper. However, we understand that our work is not perfect, and thus we welcome any and. all the criticism you have of our work. Sincerely, Md. Rabiul Alam Redoy (Team Leader) On behalf of all the members of the team (Puppet Masters) Department of Business Administration in Marketing Faculty of Business Studies (FBS) Bangladesh University of Professionals Mirpur Cantonment, Dhaka-1216ACKNOWLEDGEMENT Firstly, we would like to thank the almighty for blessing us with the ability to suecessfully complete the dedicated task. Secondly, this research paper is made possible through the help and support from everyone, including parents, teachers, family and friends, Lastly, we would like to thank our instructor for her most support and encouragement for giving us this research, This gives us the experience on how to cooperate and engage ourselves in a serious project, We would like to thank her for granting us this opportunity to go deep within a company and conduct the survey-based on which this report exists.DECLARATION re that the report titled “Managerial Function Practiced by is.a product of our collective efforts under the guidance of the course Teacher, Takrima Jannat. The report has been submitted to the faculty of Business Studies, Department of Marketing, at Bangladesh University of Professionals. This report is a particular fulfillment of the 1" semester Final 2020 for the course Principle of Management (Course code: ALD We further declare that the work projected in this report has not been previously submitted in this or any other Institute. Place: Mirpur Cantonment, Dhaka. Date: 10/06/2020 Signature of The Team LeaderSUPERVISOR’S CERTIFICATE It is Certified that the work incorporated in the report titled “Managerial Function Practiced by STARBUCKS” submitted by Md, Rabiul Alam Redoy (Leader), Moshiuzzaman Chayon, Farhan Faysal, Nayeem Hossain, Shawrea Reme and Md. Abu Bakar Siddque Tanvir is an academie work consisting of authentic and rational data carried out by the students under my super guidance at Bangladesh University of Professionals, Mirpur Cantonment, Dhaka-1216, No part of this report has been formed on the basis of the research of any other Institute. | further certify that the materials obtained from other secondary sources have been duly acknowledged in this report Takrima Jannat Lecturer Department of Business Administration in Marketing Faculty of Business Studies (FBS) Bangladesh University of Professionals Mirpur Cantonment, Dhaka-1216 BangladeshEXECUTIVE SUMMARY ‘This paper was prepared in order to illustrate the analysis of the managerial function practiced in any renowned organization. The organization which is focused in this paper is STARBUCKS. The paper was created by analyzing various information, data, graph, charts and researches. The collected information was then analyzed and illustrated using tabulations and graphical representation This report aims to strategically based evaluate Starbucks past and current situation and future position of this largely successful company. Starbucks is a global company operating in the coffee retail market since 1972. The company, which has positioned itself as a seller of premium coffee products, has greatly expanded its market position and presence in the past two decades. ‘The internal position of Starbucks is strong, indicating that the company excels in utilizing strengths to create competitive advantages. Core strengths of the company are its excellent brand image, customer service, supply chain management, and financial position. With the help of the latter capabilities, Starbucks is able to retain its market leadership position, improve the ability to open new stores at top-sites, and mitigate volatilities in global coffee ‘The internal position of Starfucks is strong, indicating that the company excels in utilizing strengths to create competitive advantages, Core strengths of the company are its excellent brand image, customer service, supply chain management, and financial position, With the help of the latter capabilities, Starbucks is able to retain its market leadership position, improve the ability to open new stores at top-sites, and mitigate volatilities in global coffee bean prices. Starbucks apparently undisputed market leadership position can be eredited to the company’s clever product diversification and an acquisitions and alliances expansion strategy. In response to changing consumer needs and demand, Starbucks has evolved from a mere seller of coffee products to full-fledged chain “restaurant”, offering not only coffee products but also other beverages, foods, and merchandise. Starbucks adopted the generic strategy of differentiation, the goal is to make the company dissimilar from other competitors, emphasizing on the Starbucks Experience and premium coffees Despite of the positive market position, the company faces challenges in the short and medium terms, Those challenges emanate from the very way of growth of the company and its competitors around the world, The analysis also shows that Starbucks is well-positioned to confront expected changes in the industry. The company is advised to continue key strategies ‘on corporate level: aggressive expansion strategy through acquisition and alliance primarily, product development/positioning strategies for niche markets and retrenchment strategies for unprofitable product lines.5 6. TABLE OF CONTENTS, Introduction 1.1. Statement of The Problem 1.2. Origin of The Study 41.3, Objective of The Study 1.4. Scope of The Study 1.5. Limitation of The Study Organization Profile 2.1. Background of The Organization 2.2. Corporate information 2.3. Organizational Structure 2.4. Branch Hierarchy 25. Products of Starbucks Planning 3.1. Vision and Mission 3.2. Strategizing 3.2.1.Global Strategy 3.2.2. Competitive Strategy 3.2.3. Quality Strategy 3.2.4.Process Strategy 3.2.5. Layout Strategy 3.2.6.inventory Strategy 3.3. Goals and Objectives Organizing 4.1. Importance 4.2. Designing Jobs 4,3. Grouping of Work 4,4. Establish Hierarchy 45, Culture 4.6. Social Network leading 5.1. Leadership 5.2. Decision Made 5.3. Communications 5.4. Group/Teams 5.5. Motivation Control 6.1. Systen/Pracess of Starbucks 6.2. Performance Standard 6.3. Corrections Made 6.4. Strategic Human Resource Data Analysis and Findings 7.1. Data Analysis 7.2. Major Findings Recommendation & Conclusion 8.1. Recommendation 8.2. Conclusion ReferencesChapter 1: Introduction LL, Statement of the Problem The area of the concem was the Manogerial functions such as Planning, Organizing, Leading and Controlling of any renowned national and international organization, The foundation of the study was based on the evaluation of a survey related to the role and engagement of CEO, Managers and staff of the selected organization Different organizations possess different approach towards the factors concerning Planning, Organizing. Leading and Conirolling. This factors play a strong pivotal role, as this are the backbone of an organization, The practice of P-O-L4C framework can be traced back thousands of years, The Egyptian constructed the Pyramid, Alexander the Great employed to coordinate activities during his military campaign etc. An organization which holds the P-O-L-C framework are likely to suceged in the market. Planning involves setting objectives anc determining a course of action for achieving objectives. Organizing involves developing an organizational structure aand allocating ituman resourees to ensure the accomplishment of objectives. Leading involves the growth of an organization, And Controlling involves ensuring that performance does not deviate from standards, Organization lacking in any of the principle of P-O-L-C framework will face challenges in maintaining effective work flow and the organization will fail with time. 1.2, Origin of the Study The team was assigned the task to analyze the managerial function practices of any renowned national or international organizations. The student was instructed to include planning, organizing, leadership style and controlling of the selected organization. The study includes information regarding the planning, organizing, leadership style and the controlling process of that Organization 1.3. Objective of the Study The study of the paper consists of three part: Introduction & information of the organization, P-O-L-C of the organization and analyzing the organizations data reflecting the managerial functions. ¥ Understanding the importance of Planning, Organizing, Leading and Controlling ¥ Learning the process of how to rebuild a business if fails. ¥ Analyzing the managerial process, finding major worries and give recommendations.1.4. Scope of the Study Afier a thorough analysis of the collected information, we can find out the Managerial function and strategies of STARBUCKS. After tabulating and graphing, the answers will be easily comparable, We ean also get an idea about the corporate structure and branch hicrarehy of the organization and their working ethies, 1.5, Limitation of the Study Several limitations were encountered during the preparation of the entire paper. For much more accurate result we could have surveyed local customers and Baristas. But we weren't able to do so as Starbucks is not present in Bangladesh and it’s hard to find real customers.Chapter 2: ORGANIZATIONAL PROFILE 2.1. Background of The Organization Starbucks, American company that is the largest coffeehouse chain in the world. Its headquarters are in Seattle, Washington ‘The first Starbucks coffee shop: 1971— Starbucks opens first store in Seattle's Pike Place Market: (7 Roe ee ad Starbucks was founded by Jerry Baldwin, Gordon Bowker, and Zev ve Sicgl, opening its first store in 1971 near the historic Pike Place Market in Seattle, The three Starbucks founders had two things in ‘common: they were all coming from academia, and they all loved coffe and tea. They invested and borrowed some money ta open the first store in Seattle and named it*“Starbucks” afte mate in Herman Melville's classic novel Moby Dick. Alfred Peet, a coffee-roasting entrepreneur, was a major inspiration to the founders of Starbucks. Peet was a Dutch immigrant who had begun importing fine AIRIBIGR coffees into the United States during the 1950s. In 1966 he opened a small store, Peet’s Coffee and Tea, in Berkeley, California, that specialized in importing first-rate coffees and teas. Peet's success encouraged the Starbucks founders to base their business model on selling high- quality coffee beans and equipment, and Peet's became the initial supplier of green coflee beans Lo Starbucks, The pariners then purchased a used roaster from Holland, and Baldwin sind Bowker experimented with Alfied Peet's roasting techniques to ereate their awn blends and flavors.Howard Schultz and Starbucks: In 1981 Howard Schultz, a sales representative for Hammar-plast, 9 Swedish company that made kitchen equipment and housewares from which Starbucks bought drip-coffee makers, noticed how large the company’s orders were, which prompted him to pay it a visit. Schultz was so impressed that he decided to pursue a career at and he was hired as the head of marketing in 1982. Schultz noticed that first-time customers sometimes felt uneasy in the stores because of thei lack of knowledge about fine coffees, so he worked with store employees on developing friendly s: ‘kills and produced brochures that made it easy for customers to lear about the company’s products, Schultz's biggest idea for the future of Starbucks came during the spring of 1983 when the company sent him to Milan to attend an international housewares show. While in Haly, he Was impressed with the country’s cafés, and he thought of doing something similar in Starbucks, However, Baldwin and Bowker were not enthusiastic about Schultz's idea, as they did not want Starbucks to deviate much from its traditional model of business. They wanted Starbucks to remain strictly a coffee and equipment seller and not tum into a café that served cespressos and cappuccinos. AWWISH Sceing that he would not be able to persuade Baldwin, nd Bowker to embrace the café idea, Schuliz left Starbucks in 1985 nd started his awn coffee chain called Il Giornale, which was an immediate success, quickly expanding into multiple In March 1987 Baldwin and Bowker decided to sell Starbucks, and Schultz was quick to purchase the company. He combined all his operations under the Starbucks brand and committed to the café concept for the business, with additional sales of beans, equipment, and other items in Starbucks stores. The company entered into a meteorie period of expansion that continued after the company went public in 1992, In 1996 it began opening stores outside North America, and Starbucks soon beeame the largest coffee-house chain in the world. By the early 21st century, Starbueks had a presence in dozens: of countries around the globe Co operated over 30,000 stores. W began selling food Jerry Baldwin, Gordon Bowker, and Zev Siegl2.2. Corporate Information: Wake up and smell the coffee — Starbueks is everywhere, The world's #1 specialty coffee retailer, Starbucks has more than 29,300 coffee shops in $0 countries. The shops offer coffee drinks and food items, as well as roasted beans, coffee accessories, and teas. Starbucks operates more than 15,300 of its own shops, which are located mostly in the US, while licensees and franchisees aperate roughly 14,000 units worldwide (including many locations in shopping centers and airports), [n addition, Starbucks markets its coffee through grocery stores, food service customers, and licenses its brand for other food and beverage products. The US accounts for the majority of Starbucks’ revenue. 2.3. Organizational Structure: Starbucks is one of the largest coffee shop chains in the world and one of the main reasons for its success is its wonderful organization structure. It is a company organization structure which determines is management, leadership, communication and of caurse suceess and Functional Structure The company has a matrix organizational . structure which is a mix of several features Geographic which are funetional organization, Division Product Based Decision geographic divisions, teams and product Functional structure: This structure of Starbucks organization or hierarehy is a structure which indicates to a grouping based on the business function, According to this structure, the CEO is placed at the top followed by different departments performing different tasks. Some of the maindepartments in the company are the HR department, the finance department, the marketing department and others. Geographic division: ‘The organizational structure of the company also includes the geographic divisions. At the moment, the company has three main geographic divisions for the global market and the; China and Asia Pacific, Americas and Europe, Middle East, Russia and Africa, Each of the geographic divisions in the company has a Vice President and this means that the managers’ report to two of their superiors who are the geographic head and the functional head. ‘This very feature makes way for closer managerial support for geographic needs Product based di Another division in the organization structure is the product based division, ‘This is the division which addresses product lines, For example, the company is divided into various product parts like the coffee and related products, baked goods and other merchandise like mugs. This structure ensures that there is a proper focus on each of the products and things remain streamlined. ‘eamst There are various teams used in different parts of Starbucks coffee’s organization structure. This is the lowest level of hierarchy in Starbucks since most teams work at lower levels. Every firm has teams which are organized to serve the purpose of delivering goods as welll as services to the customers, This structural arrangement ensures that the company is always capable to provide effective and efficient service to its clients and customers, 2.4. Branch Hierarchy: Today Starbucks is the largest . coffechouse Starbucks Hierarchy company in the Chart world, with Len 30,626 retails or also known as Branches, There isa general Hierarchy designed for this Branches to control and manage the branches easily.2.5. Products of Starbucks: In 1994, Starbucks bought The Coffee Connection, and sell the "Frappuccino” beverage. The beverage was introduced under the Starbucks name in 1995 and as of 2012, Starbucks had annual Frappaceinos sales of over $2 billion, The company began a skinny” line of drinks in 2008, offering lower-calorie and sugar-free versions of the company's offered drinks that use skim milk, and can be sweetened by a choice of natural sweeteners artificial swveeteners or one of the company's sugar-free syrup flavors. ing the rights to use, make, market, Other Popular Drinks of Starbucks are given below: teed Caramel Cloud Blonde Roast Caffe Latte Grande Macchiavo Mediutn Roast Feed Peach Green Tea | Caramél Plain Latte Venti Café Mocha: Lemonade Niiro Cold Brew with ‘Feavana Oprah Cinnamon Mocha Frappuceine Salted Money Cold Foam | Grande Chai Tea Latte Tatl Strawberry Acai Came Americano Calle Mocha Venti ‘Teavana Oprah Cinnamon Suurbucks Refresters Chai Tea Latte Grande Vanilla Bean Créme White Chocolate Mocha Pink Drink Prappuceing Tall Teavana Oprah Cinnamon Chai Tea Latte Venti Strawberry Frappuceino | Flat Whit White Chocolate Mocha Grande lat White Tall feed White Chocolate | leedd Coconut Milk Latte Mocha Wiite Chocolate Mocha | Skinny Peppermint Mocha Mango Dragon frutt ecat i Starbucks Cold Brew | Starbucks Refreshers Freshly Brewed Coffse | Skinny Peppermim Macha Niteo Cold Brew teed! Golden Ginger Drink | yp re Cota row sith Samed [Haney Crus Mint Tea | Frey trewedCottce | Skinny Peppermint Mocha Cream Cold Foam ademas dene we Jee! Caramel Macehita mae 6 iced Cocoa Cloud redhly Brewed Coffee | Pumpkin Spice Laste Mocha Cookie Crumble | Macehints Ve (Limited Time} Tall Frappuceine Dispel Cinnamon Dolce Laite | Pumpkin Spice Late Coane Feoppuccine Tall (Linnited Tinie) Grande Chai Lame leed Guava White Tea Cinnamon Dolce Late | Pumpkin Spice Latte Nitro Cold Brew with | Grande (Limited Time) Venti Coppuccine Sweet Cream Cinnamon Dolee Latte Almondmilk Honey Fiat | Caramel Ribbon Crunch | Venti White Frappuceino Caramel Machin Tall Dark Roast teed Pineapple MatchaToasted Graham Laite (Limited Time) Tall Toasted Graham Latte (Limited Time) Grande Toasted Graham Latte (Limited ic) Vent Frappuceino, Refreshers & Iced Coffee eed Coffee (with or without Milk), eed Cafes (with or without eed Coffee (with or without Milk) Ven eed Coffee (with or without Milk) Trenta Caramel Frappuceino Grade ‘Caramel Frappoesino Venti Salted Caramel Mocha Frappuceine ( Vent wal Lime or Very Berry antbucks Refieshers Tall ‘Coal Lime or Very Berry Starbucks Reffeshers Grande ‘Coal Lime ar Very Berry Starbucks: ‘Green Tea Lemonade Venti Teavana Shaken feed Tea Pech reen Tea Lemonade Trent Teavang Shaken Teed Blaek Tea Teavana Shaken Iced Black Tea Lemonade Grande ‘Teavuna Shaken teed Blick Tea Lemonade Venti Teavana Shaken teed Black Tea Evolution Fresh Grande Hakery Ham & Cheese Savory Foldover Wheat Spinach Savury Foldover epperoni & Tomato Savory Foldover Cheese Danish Butter Croissant ‘Chocolate Croissant Blucberry Seone Banana Nut Bread Iced Lemon Pound Cake Morning Bun ‘Chocolate Chip Cookie Double Chocolate Chunk Brownie Puinpkin Seone (Limited Tine) Pumpkin Cream Cheese Muftin, (Limited Time) Washington Apple Pound Cake (Limited Time) All Day Breakfast Hearty Blueberry Ouaineat Bacon & Gouda Breakfast Sandwich Sausage & Cheddar Breakfast Shndwich Spi Reduced Fat Turkey ‘Breakfast Sandwich Stow Roasted Hann & Sos on Croissant Bun ‘9 Croissait Bun (Limited Time) Lunch & Anytime Snacks Protein Bistro Box Cheese &Fruit Bistro Box Oniega-3 Bistra Hox PRA on Wheat Bistro Box Turkey Rustico Panini Turkey Pesto Panini Ham & Swiss Pan (Chicken Sania Fe Flathread Chicken BLT Salud Deli Sandwich Roasted Tomato & Mozzarelia Panini ‘Chieken Artichoke Panini (Limited Time) Old Fashioned Grilled Cheese Edamame Hummus Wrap (Limited Time) Thai Style Peanut Chicken Wrap (Limited Time) Salted Caramel or Birthday Cake Pop Salted CaramelChapter 3: Planning ision and Mission: Starbucks Vision: “Treat people like family, and they will be loyal and give their all.” ‘The vision statement is articulated around the concept of family, loyalty, and generosity. ‘What it means from the business standpoint is that Starbucks is a place where people spend a lot of time. Therefore, ithas to feel like a second home, Starbucks Mission; “To inspire and nurture the human spirit —one person, one cup and one neighborhood at a time.” is annual report its mission is to provide the so-called Starbucks Expericnce, as well as clean and which they operate, ‘well-maintained stores that reflect the personal thereby building a high degree of customer loyalty. Starbucks has almost fourteen thousand licensed stores and over fifteen thousand eompany- ‘operated stores, In 2018, 80% of its revenues came from the company-operated stores3.2. Strategizing Strategizing involves being aware of and analyzing what competitors are doing; thinking about how changes in the extemal environment, such as changes in technology or government regulations, impact the organization Retail formula of Starbucks is same in all over the world. There is no change in retail system and operates in same way throughout the world where Starbucks have its businesses, Advertisement of Starbucks product play very important role and have strong instrument in the success of business, The important thing of advertisement of Starbucks is that that advertisement changes by country to country according to their trend, culture, customs ete, means there is no standardization of advertisement so in this way Starbucks Advertisement is more effective. 3.2.2. Competitive Strategy: Starbucks needs no formal introduction as itis the largest coffee company in the whole world, Starbucks seeks to provide a connected customer experience to build and maintain a Jong term relationship. Starbucks was ranked! 7th in Fortune's annual list of 100 Best Companies to Work for" in 2008, A decade later in 2018, it is still listed as one of the best places to work for. Starbucks also introduced the Starbucks Rewards Card that provides a hest of benefits. This entices customers returning to make purchases, building loyalty.Starbucks’ uses the finest beans for its coffee. Company personnel oftén travel frequesitly in search of suppliers that meet its standards. In addition, Starbucks also purchased Certified Organic eaffee and Fair Trade certified coffe. 3.2.3, Quality Strategy: At the eore of Starbucks’ business strategy is quality, It is a premium brand that sells only premium quality products. It is int of differentiation that the brand has ‘The Arabica coffee that the company sources is different from the normal Arabica and Starbucks is also very picky about its beans. Experts taste thousands of cups dail censure maximum flavor and highest satisfaction from coffee. 3.24, Process Strategy: Modules combined for many output options (many cup types & same cap type) Repetitive operations Just-in-Time inventory Fixed, well-known costs, due to experience Specialized equipment (coffee machines, customized blenders, ete.) Well-trained staff (Starbucks’ policy to train coffee specialists) vvvv 3.2.5, Layout Strategy: ‘The layout of branches is also very important strategy for Starbucks. ‘Sarnuca Hen frunamsh Store Lryout42,8, Inventory Strategy: The techniques that Starbucks company use it to manage their inventory are 1) JIT 2)MRP (CérpSFETWYEE Reduce their price by producing a new product of coffee using cheaper beans oF may come out with special discounts promotions to increase the sales. BisingSELEEL Starbucks can effectively pursue Focus-Based Strategy in conjunction with differentiation or cost leadership based strategy. Fungiional LEVEl! Advertisement can develop through internet that services convinced for the bruchures, do road shows, so that public come te know mare about Starbucks dewils. 43. Goals and Objectives: Starbucks’ objective is to nm Ibranels in the world ‘To achieve this goal: iain themselves as one of the most recognized and respected > Disciplined in the expansion of the retail store base, primarily foeused on growth in countries outside of the US. > Leveraging the experi¢nee gained through the traditional store model, by offering consumers new coffee produets in multiple forms, across new categories, aitd through diverse channels,Chapter 4; Organizing 4.1. Importance Organizing is the process of defining and grouping activities, and establishing authority relationships among them to attain organizational objectives. Organizing eteates the framework needed to reach a company’s objectives and goals, Each ‘organization has its own extemal and intemal environments that define the nature of the relationships according to its specific needs. Organiing is the function that managers undertake to design. structure, and arrange the components of an organization’s internal environment to facilitate attainment of organizational goals. ese4.2. Designing Job Job design involves the conscious efforts to organize tasks, duties and responsi unit of work to achieve certain objectives. ities into a Starbucks is one of the largest coffee shop chains in the world and one of the main reasons for its success is its wonderful organization structure, It is a company organization structure which sletermines is management, leadership, communication and of course success and Starbucks is a good example of how divisions and responsibilities must be separated and placed within a company. ‘The job design or Organization Job Chart of Starbucks is shown below. eo eo oe Board & Advisors desman Concer semavermciton ry4.3. Grouping of work i's not very easy to control a huge organization like Starbucks and groups are made to accomplish those individual tasks. On December 1, 2016 a new format of Starbucks organizational structure was announced according to which Kevin Johnson, president and COO and member of the Starbucks Board of Directors, would expand hi responsibilities and assume the role and responsibilities of president and chief executive officer, effective April 3, 2017 ‘The grouping of work has been done in Starbucks by Three steps. One is controlling the head office, second is Regional controlling and third is Branch controlli Howard Schultz | | Executive Chairman Kevin Johnson | President & CEO | 3S Senior | [42 Executive! | 2Group| | 3 ‘OSmrbwcky [CkOstarbuets) | ceo, | | CEO. Vice Vice [President President] | toon tina | [Siboas) Fern President | ) presidents a 4.4, Establish Hierarchy The hierarchy of the corporate structure facilitates top-down monitoring and control, with the CEO at the top, ‘The hierarchy feature of Starbucks Coffee's organizational structure refers to grouping based ‘on business function, For example, the company has an HR department, a finance department and a marketing department, These depariments are most pronounced at the top levels of Starbucks’s corporate structure, such as at the corporate headquarters, This characteristic is hierarchical.Hierarchy of Organizations organizing Team is Given: Functional Hierarehy of Starbucks: Functional Struc Taree ese as4.5. Culture Upon hearing the word Starbucks, an image of their logo easily comes to mind. The Starbucks Logo is widely known throughout the world and represents a twinstailed merm: known as Siren in Greek mythology. The Starbucks logo is so well known that the company removed the company’s name from around the logo and people can still easily recognize logo as Starbucks brand, Also notige that the logo is green. To me this represents Starbucks commitnient to the environment and reducing waste. ‘The organizational culture of Starbueks is well-known for its role in reeyeing. The compan is committed to reducing waste and shrinking its environmental footprint, therefore images associated with recycling also represent the culture of Starbucks. As seen in the "Anatomy ofa Cup" photo on the right, Starbucks paper cups are made of 10% post-consumer recycled content, ‘The photo of the napkin shows that Starbucks napkins are made of reeyeled cups, and even enicourages customers to recyele. 4.6. Social Network 1 would be an understatement to say that Starbucks is killing it on social media, The iconic is one of the most engaging brands online, Look ata few of the eye-papping 1.9 mi n Twitter followers 16 million Instagram fans 153K YouTube subscribers Facebook Starbucks added 710,000 new Facebook followers in comparison to $3,300 fins that the average Restaurant & Cafe Page from North America gained. Quite interestingly, Starbucks posted only 158 times on Facebook during the time period, i.e. 3 times a week on average. So, how do they manage fo engage their audience with their “less is more’ strategy? ‘The answer being = they know what thir customers want, From Zomibie Frappuiccinos to Pumpkin Spice Latte, Starbucks has managed to create a cult following for their various offerings. Even though the brand does not post that often, whenever they do, there is a frenzyaround it, The brand posted more photos than any other type of content and they had the highest engagement as well ‘The photo content mostly involved updates about their latest products, Some of Starbucks? popular drinks are seasonal and the beverage’s periodic recurrence generates major buzz on their social media. These posts are bright, colorful and quirky, an image that the brand maintains throughout its Facebook page. The 84 photo posts generated more than 4.2 million likes and $47K shares, Twitter Starbucks definitely understands the importance of engaging on Twitter. Not just the fact that they have nearly 12 million followers, they ‘get’ social media. Twitter has become an ‘extremely convenient platform for customer service, Starbucks mainly uses Twitter to engage with their audience, They tweeted 57,000 times and added 134,000 new followers. On average they sent 155 tweets per day with 99% of their tweets being replies, which gives an indication of what they value the platform for. ‘The proactive tweets by the brand showeased their products, predominantly through fan- submitted images. But, they used different content for Twitter, avoiding cross-posting on multiple channels, They also effectively used different types of media, like photo collages with witty headlines, videos and gi Instagram ‘The tables have tured for social media, as brands like Starbucks are making products specifically designed for Instagram. Their photogenic, vibrant, Instagramefriendly Unicom Frappuccino was an instant hit on the platform, In 2017, Starbucks enjoyed a 26% growth in followers as it gained nearly 3.3M new followers. They posted 240 posts of which more than 77% were photos. Starbucks regularly posts pictures of its products, but usually in unique and attractive settings. Colorful lifestyle posts that capture the essence of cofive culture, along with witty captions and artsy stop- motion videos of its products, creates a consistent imagery for the brand. Their product= centered posts are one of the most engaging types of content on Instagram, as detailed in our latest study.Chapter 5: Leading Leading is the third step that is accomplished by communicating, motivating, inspiring, and encouraging employees towards a higher level of productivity, Controlling is the final function of management in which the manager, once a plan has been carried out, evaluates the results against the goals 5.1. Starbucks’ Leadership Development Starbucks Coffee Company has an issue in leadership development, Le a very important issuc in all the organization. Starbucks is an Amer company, On 30 March 1971, three pariners that are Jerry Baldwin, Zev Siew Bowker are the first Starbucks opened in Seattle, Washington ership development an global coffe and Gordon In 1982, Howard Schultz was joins the Starbucks. He was visits Milan’s famous espresso bars when he on a business trip in Italy. Their popularity and culture were impressed by Howard Schuiltz and he sees their poten Seattle, Starbucks expand beyond Seattle in 1990s. Starbucks Cofize Company now is the largest coffeehouse in the world. They are began selling fresh roasting, high-quality coffee bean and roasting accessories. Starbucks is hav’ their store in 61 countries including the W country and Asian country. (Starbucks Coffee ‘Company, 2009) Starbucks apply the drive in the early leadership theory. Leaders of Starbucks are set out a high effort level in their organization, Their leaders have self-confidence so that many followers look to them for an absence of self-doubt, Howard Schultz is an intelligence leader in Starbucks, He was intelligence to gather, synthesize, and a lot of information to solve problem and make a correct decision, Starbucks also apply a Path-Goal Theory Starbucks mission is to inspire and nurture the human spirit. They always provide a good quality of their coffee. For their partner, they always respect and dignity to other to that standard. They also always full of humanity’ in their stores even j moment so that their customers are enjoy. They are takes their responsibility to be a good neighbors and enjoy the sticcess that rewards their shareholders. (Starbucks Coffee Compa 2009) Build a Starbucks as the most recognized and respected brand in the world is the company’s objective. Starbucks Coffee Company is plans to continue rapidly spread their retail operations and its manager's executive teams will hire exceptional people who willing to work for excellent results, meanwhile reward and promote those individuals who are commit to move our company forward. Starbucks Corporation will always increase their specialtysales and other operations, introduce of new products for Starbucks brand and development of new distribution channels to achieve their goals. Leadership principle apply in Starbucks Company: Howard Mark Schultz (boin July 19, 1953) is an American businessman and writer. H best known as the chairman and CEO of Starbucks who creates the Starbucks concept. The Starbucks name is now synonymous with coffee, It had been developed in various ways Where the name itself stands out by its own. Brands and trademarks are gained by the quality of services and contribution given by the committees to build a great company. Transform a small coffee shop to what itis today would not have been possible without its strong operations management and innovations. Howard is an entrepreneur who believes in strong operations management and having a central focus for everyone in the compaity to follow. Howard is well aware that develop a business suecessfully involves nat only make use of impactful marketing strategy but also emphasis on manage an efficient operation management system as well, This is Howard fong-term vision and he aims to ead a small coffee shop to walk toward around the world, It shows Howard possesses the drive traits is.a leader who has a relatively hi desire for achievement attitude in leading his business. Based on the efficiency business plan and usefiel organization functional plan, it helps Starbuc j¢ a nearly monopoly in the coffe industry. First, set objective and charting the organization path is an extremely ess primary step to achieve organization objective. Starbucks mission statement state “Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles While we grow.” This mission statement creates a complete and obvious organi zai objective that helps executive management and Starbucks” partners to maintain the highest service quality and well-known name of the company with respect to the operation process. It also allows Starbucks to adapt in today’s new market trends and new regulation. The | market share is clearly evidence of an overall operating system that is performing by Starbucks ar its highly efficient rate Implement those objectives by Starbucks means the organization should focus on sustaining the energy level need to maintain the business strategy as well as its everyday operations. ‘These everyday operations can range from top executives creating financial reports for decision-making purposes to the frontline employee who is preparing one of Starbucks many drinks, Howard and his top executives provide a clear picture on Starbucks organization objective, itis easy understand and manipulate by employees, then all the employees ean be getting tasks done effectively and efficiently throughout the daily operation pracess, Howardand his partner apply path-goal theory in manage employees which means the effective leader clarify the path to help their followers get from where they are to the achievement of their work goals and make the journey along the path easier by reduce roadblock and pi Starbucks executive management is to make sure most routine operation activities such as taking orders and doing monetary transactions are running competently and guide these employees step by step to make sure organization daily operation is going smoothly. This highly efficiency service performance tends to retain highly satisfy and trusting customer to Starbucks, A content workforee maintains by Starbucks lead to fewer partners leave the corporation. Howard is a leader has a democratic style which involves their employees in decision making, always encourages employee's participation in deciding work methods and goals. It means, employees at different department are allows to have a say in what is improper for their business practice and tend to suggest other effective method to improve current situation. This leading concept tend to increase manager stability which enables the store to do a much better job of recognize the managerial problem, meanwhile uses those unexpected situation as an opportunity to coach employees Since, Starbuck Company has coffee shops in every state of America and in 36 countries around the globe. Therefore, Starbucks leader need to have specific job-relevant knowledge in manage the global corporate, As an effective leader, Howard and his top executives needs to have a high degree of knowledge about the company culture, industry, employee’s characteristics and technical matters because those in depth knowledge allows leaders to make well-inform decisions and to understand the implication of those decision. (Robbins, Decenzo, &Coulter, M.2012) It isa crucial step for Howard and his partners in manage a firm by understands organizational culture in different retail outlets and listening to their employees who may have different background and different perspective toward their job. Starbucks stores which can retain the same managerial employee and non-managerial employees have the ability to offer a more personalize service to regular customers and willl be more familiar with the appropriate procedures to create the drinks request. Besides that, Howard is not only emphasis in train employees with the “hard skills” of make the various coffee drinks, but also highlight the “soft skills” involve in how to interact with customers, It could be a simple action as creating eye contact or smile. This is how Howard led Starbucks by use minimum amount of organization input to gain a maximum amount of organization output, In onder to maximize profit and maintain Starbucks market place in coffee industry, Howard and his partners need to understand how to make something as fast as possible while minimizing errors in management process. This has permit Starbucks to stay ahead of other competitors and let Starbucks endure a large market share in the coffee industry for the longest time. Afier we complete Starbucks Coffee Company research, we have leamed a lot of theories about the leadership. That is the early leadership theories, democratic style, Fiedler contingency model, situational leadership theory and path-goal theory. From those theories, we are learning how to become an effective leader in the organization. Besides that, we alsolearn about the ways to lead all the employees and manage the whole organization well by using all the theories we are study. Starbucks Coffee Company now is already predominating the leadership theary very well their organization. Starbucks apply many types of theories of leadership in their organization. The leaders of Starbucks are leads their employees in a good environment and respect to cach other's. The employees are doing their work probably and always follow the instruction by the leaders. Thus, the organization’s operation system will become more completely and smoothly 5.2 Decision Made: Starbucks Coffee Company's business success is linked to the proper applic decisions of operations management (OM). These [0 decisions refer to the different areas of operations where the firm's management must address specific business objectives. As a global business, Starbucks addresses these 10 decisions of operations management through different approaches and policies. For instance, the company applies its Coffee and Farmer Equity program in supply chain management. Starbucks eafs also exhibit the firm’s organizational cullure as a way of optimizing quality of service, Thus, Starbucks hias integrated strategies for streamlining the 10 decisions of operations management. A. Design of Goods and Services: Starbucks emphasizes premium dl services. The premium character is linked to the company’s broad differentiation generic strategy, along with its premium pricing strategy. Other firms, such as manufacturers, are also involved in the design of some goods like Starbucks mugs. In this decision area of operations management, Starbucks ensures that its goods and services reflect the firm's high end brand image. lunder the Starbucks Coffee and Famer Equity (CAFE) program, Premium quality service is ensured through servant leadership and a warm friendly culture, In this decision area of operations management, Starbucks implements high quality to align with the firm’s premium brand image B. Quality Management: Starbucks also uses the premium character in quality management. For instance, the company carefully sources its coffee beans from coffee farmers who comply With Starbucks quality standards, The firm also prefers to buy coffee from farmers certified under the Starbucks Coffee and Farmer Equity (CAFE) program, Premium quality serviee is ‘enstired through servant leadership and a warm friendly culture, In this decision arca ofoperations management, Starbucks implements high quality to align with the firm's premium brand image. C. Process and Capacity Design; Process and capacity efficiency is one of the contributors to Starbucks” success. The company’s processes are highly efficient, as observable in its cafés, Also, Starbucks optimizes capacity and capacity utilization by designing processes to meet fluctuations in demand. For example, processes at the firm’s cafés are flexible to adjust personnel to a sudden increase in demand during peak hours. In this decision area of ‘operations management, Starbucks aims to maximize cost-effectiveness though efficiency of workflows and processes. D. Location Strategy: Starbucks* location strategy focuses on urban centers, especially those with large middle and upper class populations, Most of its cafés are in densely populated areas, Also, Starbucks occasionally uses strategic clustering of cafés in the same geographic area to gain market share and drive competitors away, This decision area of operations management shows that Starbucks emphasizes areas with affluent consumers who could afford its premium priced products. E, Layout Design and Strategy: The layout design of Starbucks cafés maximizes workflow efficiency, It also supports a warm and friendly ambiance to match the company’s organizational culture, This layout strategy does not maximize space utilization for tables and seats because Starbueks’ focus is on premium customer experience, which invalves higher prices for more leg space in the cafés. In this decision area of operations management, Starbucks prioritizes customer experience over space utilization F. Job Design and Human Resources: Starbucks’ human resource management integrates organizational culture in all areas of the business, This organizational culture involves the employees-first attitude that cares for Starbucks workers. Also, at the cafés, the company uses work teams of baristas. In other parts of the organization, Starbucks uses functional positions, such as HRM positions and inventory management positions, with less emphasis on work teams. In this decision area of operations management, the focus is on ensuring that the Starbucks culture is woven into every job, while satisfying basics on technical specifies of tasks, G, Supply Chain Management: Starbucks Coffee's supply chain is global, although majority of the company’s coffee beans come from farmers in developing countries, The company’s strategy for its supply chain involves diversification of suppliers to ensure stability of supply. Starbucks also uses its Coffee and Farmer Equity (CAFE) program to select and prioritize suppliers. This program uses criterta for ethical practices, including emphasis on sustainability. Thus, in this decision area of operations management, Starbucks integrates ethics and corporate social responsibility with supply chain efficiency. H. Inventory Management: Inventory management at Starbucks is linked with the firm's supply chain and various facilities. At the cafés, inventory management involves office automation and manual monitoring. In Starbucks" supply hubs, automation is more comprehensively used. The company aims to minimize stock out and ensure continuous supply of coffee beans to its cafés. Starbucks addresses this decision area of operations management by focusing on supply adequacy and automation,I. Scheduling, Starbucks uses automated and manual scheduling approaches for its various ‘The company also applies flexible schedules for management personnel, jon area of operations management relates with Starbucks in terms of the firm's objective of streamlining processes, while allowing some degree of flexibility among management positions in the organization, J. Maintenance, Starbucks maintains its physical assets through dedicated teams of employees trained for maintaining facilities and equipment, as well as third parties that offer maintenance services. These third parties include local businesses that provide equipment tune-ups for Starbucks cafés. In addition, the company maintains its human resource eapacity through training and retention strategies that include relatively high compensation. Thus, Starbucks addresses this decision area of operations management through the involvement of café personnel, dedicated maintenance teams, and third-party service providers. 5.3 communication: Starbucks CEO Howard Schultz taught mea valuable lesson in communication skills—what you stand for is more important than what you make. Let me explain. This month Starbucks celebrates its 40" anniversary. Starbucks opened its first Seattle stare on March 30, 1971, Today the coffee chain has more than 17,000 locations around the world, [interviewed Schultz several years ago fora book about how inspiring leaders communicate their vision to customers and employees, When I look back at the transcript from that interview, I see that Schultz used the word “passion” more often than he said, “coffee,” But isn’t Starbucks a coffee company? According to Schultz, “Starbucks is the quintessential experience brand and the experience comes to life by their people, The only competitive advantage we have is the relationship we have with their people and the relationship they have built with their customers.” Starbucks doesn’t sell coffee, It sells human connection. This makes a big difference in how Schultz articulates the vision behind the brand. Howard Schultz is responsible for tuning Starbucks into the experience we know today. Afiera trip to Italy in the 1980s, he returned to America dedicated to recreating the espresso bar culture, When Schulz pitched the idea to investors, he didn’t say, “We're goingto build a chain of coffee shops that serve great tasting coffee.” Remember, “coffee” isn’t what the business stands for. Instead he said, “We're going to build a third place between work and home.” The latter is a far more interesting and compelling conversation, 5.4 Teams What is work team? A small number of people with complementary skills who hold themselves mutually accountable for pursuing a common purpose, achieving performance goals and improving, interdependent work processes. Starbucks team members are a team because each member is essential for the functions of Starbucks everyday tasks. (McWilliams, A. 2010) ‘Team norms: ‘Team nomms is the standards of behavior which i encourages contribution from all team members, | Tt th Wi Starbucks has the most progressive employees in the world, and they have the “Leave no one behind” policy. Vane Starbucks encourage their workers to contribute by the ) lime they start working, while in the training, they are Fi taught to communicate within the groups, with the people in their teams. This gets effective when Starbucks encourages people to contribute by giving them rewards for being able toWork in a group, people Whe are working full time are rewarded with some extra pray, and other types of reward. By using norms, Starbucks has increased the power within their teams, and are able to create stronger teams, ‘Team selection: Team selection is referring that when people trying te have @ mixture so that are member does not feel isolated. Teams X should be made up of a range of personalities with fy collectivist rather than individualist. To achieving a common 1] e | purpose, Starbucks’s trying to get every “partners” involved. Muking each team member feel like they area part ofa family, and not just a number, ‘Team conflict (cognitive conflict): ‘Team conflict is a discussion of idea; Argue about an idea; Conflict about other member's ideas creates discussion involving all team members. Team suffer from cognitive conflict (whieh means when maployees start to have different ideas and they s.)and conflict. Cognitive conflict can produce improvements in team performance while lual's disagree about each indivi affect afte declines in team performance. And what Starbucks does is that they not just build an conflict (which means employees are-attacking each other.) is associated with agreement, they usually get an agreement. In Starbucks industries, employees are called “particrs” dnd after employees are hited, they are given iare training and knowledge of how to be a part of Starbuck's team: ‘Team size: ‘Team size is pointing out that very small or large teams mary not perform as well as tet with 610 9 members, The principle ofStarbucks is that they try to make a smaller team, they believe in that the smaller team will create-a better work. ‘Team recognition: jeam recognition will occur when people feel guilty if their team is recognized and they have not contributed. Starbucks team members area tear because each member is essential for the functions of Starbucks everyday tasks. Awards are presented to active partners Who reach long time of continuous (uninterrupted) service with Starbucks Coffee Company. 5.5 Motivation Motivation is psychological because employees would like to invest themselves in the company they work so that they can have shares of benefits. For most people, motivation in the job is related with the salary. But not only salary is important but also there are some factors that need to be done within the job environment, Motivation is also based on the happiness to work according to my research shopping. Starbucks is the coffe house and drink sales is also dependent on the staff. If staff'is happy and do customer service efficiently then customer will come back for the next time, Because of that businesses can get more and more loyal customers. Motivated employees think that their work is special and they are-willing to do what managers said and can make more profits for the company. As a manager, they need to know about their staffs and has the ability and skills to manage their staff. They need to make a plan first which is followed by organizing, motivating, measuring the resulls, reviewing and making daily targets. Starbucks know that business is always dependent on the customer requirements and satisfaction as well as staffmotivation, Therefore, Starbucks support their staffs with good atmosphere and some other rewards, such as Bean stock option scheme partner discount pension scheme free products competitive salary voluntary benefits loyal service ZL RKB ‘Valuing employees Oa & OR Starbucks has realized to build trust and respect. The company value its employees by s their goals and interesting atmosphere for them to ig to their success, provi work in and it increase employee motivation.Chapter 6: CONTROL 6.1, System / Process of Starbucks Starbucks Coffee Company first opened in 1971 in Seattle's historic pike place market neighborhood (Starbucks Coffee Company 2012, pl). Their mission is “to inspire and nurture the human spirit- one person, one cup and one neighborhood at a time” (Starbucks Coffee Company, 2012, p1) Starbucks — concept -store Starbueks Mission Statement Coffee — It has always been about high quality. 2. Pariners- Treat each other with respect and dignity, create a place where they can be themselves. 3. Customers- Starbucks Partners connect with, laugh with, and uplift the lives of customers, 4, Stores- Customer feels the sense of belonging to Starbucks. 5, Neighborhood — All pariners will take the responsibility to be good neighborhood around people in Starbucks. 6. Shareholders Enjoy the kind of success that rewards their shareholder as delivering in each of these areas. Internal data External data6.2. Performance Standard Working at big company, such as Starbucks, people some time doesn’t have the idea whether they are making a big effect on the company, or even how are they doing a good job at their workplace, One of the ways of knowing that is to-do a performance appraisal. ‘A performance appraisal is a process of assessing how well employees are doing their jobs. Most employees and managers intensely dislike the performance appraisal process; however it is highly crucial in the workpluce. In human resource planning, performance appraisals are used for career planning and for making termination decisions. Companies with poor performance appraisal systems face tremendous problems. Performance appraisals are used as @ basis for compensation, promotion and training decisions. There-are two stages todo a performance appraisal, First is to measure the job performance, second is to share the feedback with the employees. Here at Starbucks, they use something called the customer comment cand as a way to measure the job performance of their employees. Customer comment card is a survey questions answered by Starbucks customers about their thoughts on both Starbucks employees and services, and the products. This is-a good way to measure the employees" job performance because it is a very objective way. Generally, eustorners don’t know the employees personally. So, when customers share their thoughts about the employees, who the employee is will not matter to their opinion about the job performance, in many Starbucks in Jakarta, managers usually gives bonuses Jo employees that have scored great—more than 70 out of 100 in the customer comment card, Managers and retail employees (baristas and cashiers) are also measuring each other's performances simply by doing an observation of how their workmates are doing at work Starbucks joins a growing trend among major consumer good! are choosing.to innovate on the human capital curve by equal packages before being required by lw, ass the case in Ieeland, Germany and the United Kingdom 1 00% Starbucks's decision to PATER and tech corporations who ig compensation diseussions signals a _ Jarget shift in how major un a corporations in the STS United States can & approach equal pay6.3. Corrections Made While Schultz will remain the Chairman of the Board, this indicates a change of operational focus at Starbucks, Schultz will shift his efforts to the company’s premium segment, Starbucks Reserve Roasters and Starbucks Reserve Retail stores, as the company looks to expand these businesses globally. In 2010, Starbucks reported annual sales revenues $2.6 billion (Starbucks Annual Report, 2011), which was huge tumaver from the past 3years during the crisis. U.S sales increased by 8%, driven by 5% increase in traffic. But the question is how, did this happen? The first step taken by CEO Howard Schultzs was to accept full responsibility of their own mistakes of the leadership team. Schultz believed in “owning reality was critical to expediting change”. He says that once leaders identify the problem and take responsibility for it, they save time in making up excuses to cover up goof ups and ean take an immediate course of action in turning things around for their business, Another point, to be considered that helped Starbucks was, that leaders of the company should be involved at every level to ensure success. Building a relationship with your employees in the company helps the business prosper, says Bruce and Pepitone (1999). This is exactly what Starbucks did. They spent $30million during the financial hardships and took each and every one of their 10,000 store managers to New Orleans for a conference of the company. Moreover, before the conference, each store in-charge was asked to do 5 hours of community service to show their commitment to customer service by doing it themselves, Starbucks had to rebuild their customer relationships and the trust the customers had in them before the economic erisis. Starbucks now had to ensure and show the world, the consistency and quality would be cared for. Starbucks introduced many ideas like “My Starbucks Idea”, which would ensure a direct relationship with the customer. Starbucks also cut costs, which were approximately $581 million, by improving efficiency, reducing ‘waste etc, which all led to very high levels of satisfaction from customers. But more importantly, Starbucks mai success for their comeback was their need to care for customers and Operating margin (%) 1“ a | 10 | their satisfaction,“ Introducing - various ideas, like the Free Wi-Fi, al carrying outthe = * corporate social 2002 2008 2008 2005 2006 2007 2008 2009 2010 2011 2012 responsibility an advertising helped them "redo the look" of Starbucks. Earning its customers back, became a necessity and Starbucks wasn't compromi6.4. Strategic Human Resource Starbucks realized early on that motivated and committed human resources were the key: to the success of a retail business Therefore the company took great care in selecting the right kind of people and made an effort to retain them, Starbucks relied on its baristas and oiher frontline staff to a great extent in creating the ‘Starbucks Experience’ which differentiated it from competitors Starbucks hired people for qualities like adaptability, dependability and the ability to work in a team, The company often stated the qualities that it looked for in employees upfront in its job postings, which allowed prospective employees to self-sclect themselves toa certain extent. Having selected the right kind of people, Starbucks invested in training them in the skills they would require to perform their jobs efficiently. Starbucks was one of the few retail companies to invest considerably in employee training and provide comprehensive training tall classes of employees, 2 The recruitment motto of Starbucks is “To have the right people hiring the right people.” > Starbucks hire people for qualities like adaptability, dependability and the ability to work in a team. They invest in training employees in the skills they would Fequire 10 perform their jobs efficiently, > Black aprons displaying the title “Coffee Master” are worn by employees who have completed the cofi¢e master course, which educates employees in coffee tasting, growing regions, roasting, and purchasing. % Employees were rigorously trained, completing at least 25 hours of coursework on iaiead topics. Important Things in HRM of Starbucks > Compensation > Wellness > Hiring > Benefits > Performance Manage > Employee Motivation > Organizational > Communication Development > > Safety >Chapter 07: Data Analysis and Findings Data Analysis Financial Results for FY 2017: Starbucks results for fiscal 2017 continued to demonstrate the strength of its global business model, and its ability to successfully make disciplined investments in its business atid partners. Consolidated {ial net revenues increased $% to $22.4 billicn, primarily driven by incremental revenues frort 2,320 net new store openings over the past 12 months anda 3% growth in global comparable store wiles. Consolidated operiting income declined $37 million, or 1%, to $4.1 billion. Operating marin declined 110 basis points to 18.5% primarity due to increased partner investments, largely in the Americas segment Festructuring and impairment charges and the absence of the S3rd week, partially offset by sales leverage, s pet share of $1,97 inereased 4% over the prior year eamings per share of°51.90, Ainericas revenut grew by 6% to $15.7 billion, primarily driven'by incremental revenues from 952 het new store openiigs-aver the last 12 mariths dnd comparable store sales growth of 3%, which was driven by the success of premium food offerings coupled with infovation across coffee and tea beverage platforms. In CI Paoific segment, revenues grew by 10% to $3.2 billion, primarily driven by incremental revenues from the opening of 1,036 net new stores over the past 12 months and a 3% increase in comparable store sales. Starbucks continues to exeeute on its strategy of repositioning the EMEA segment to 2 predominantly licensed . model, As a result of this strategy, iA revenues declined $111 million to $1.0 billion, oF 10%, primarily driven by the absence of revenue related to the sale of Germany retail operations in the third quarter of fiscal 2016 and unfavorable foreign currency traslation, Channel Development segment revenues grew by 4% to $2.0 billion, primarily driven by increased sales through international channels and sales of packaged coflee, foodservite and single-serve products, Graph: Starbucks’ fngineiul perforaance Source: StaPbucks” 10-K, 201Analysis of Starbucks’ Competitors with Key Performance Ratios: FYI7 ch yng Foro) Se» [Avg sales per sqft $639 $773| _$601| $503 Rev 4y CAGR (5.96%) (2.26%)| 6.27%) (3.72%) Income 4y CAGR 2.96% (5.65%) | 8.43% [Epecating rrmargin scl 10.82% IROIC 16.35% ROIC adj WA 10.32% ROE NA 42.52% | 22.96% [Cost of premisesisaies 22.39% 7.3196 | 17.65% (Current ratio 184 194] 062 Inventory days 5.32 4.14) 31.23| 6.27 linventory turnover 68.60 98.24| 11.60 44.12 [Debt to equity NA 2.25) 4.71 NAA [interest coverage adj) | 15.36x| 8.06x| 3.76x| 3.50x| Se4x| 5.89x Table: Key perfarmance ratios far Starbucks and its competitors, FY 201? Source: 10-K's, 2017 In the group of Starbucks’ competitors, five companies were chosen, two of which are a more direct competition (MeDonald’ and Dunkin’ Brands), and three of which are an indirect competition (Chipotle Mexican Grill, Darden, Restaurants and Yum! Brands). Some metrics that were chosen for the analysis are industry specifics, like average sales per square feet of stores, while Some are more generally used, like return on invested capital, It ean be seen from the table that Starbucks has the highest average sales per square fect of stores, highest four year CAGR revenue growth, highest ROIC and ROIC adjusted for operating leases, highest ROE, as well as interest coverage ratio, which shows how many times can the company cover its interest expense with ils operating income, The most important metrics in this analysis are revenue growth and ROIC adjusted, since a company's retum on invested. capital and its revenue growth together determine how reventies are converted to cash flows and camings. That means the amount of value a company creates is governed ultimately by its ROIC, revenue growth, and ability to sustain both over time2, Starbucks has shown it can produce the highest return for its investors among its competitors, as well as sustain a high growth rate despite its size, Also, as will later be shown, weighted average cost of capital for Starbucks was calculated to be about 8%, much lower than ROIC adjusted, meaning that Starbucks is creating value for its ownets above their opportunily cost, increasing its total Value, As was already said, ROIC was adjusted For operating leases, Since company’s don't have to include the value of their operating leases in their assets and liabilities on the balance sheet, leases become a source of off-balance sheet financing, and thus the amount of capital invested in the company is seemingly smaller. This can distort financial ratios of return and debt, making them higher. The process of including the value of operating leases on thebalance shi since most Starbu is off Starbucks’ ba is called capitalization of operating leases and it will be done for Starbucks, s* stores are under operating leases and a huge amount of assets and debt lance sheet Expenses and Cash Flow Projection: Expense and cash flow line items, which include Cost of sales including oveupancy cost, Other operating expenses, Depreciation and amortization, General and administrative expenses and Depreciation and amortization on CFS, were projected as percentage of revenue. Projections were made cither by following an observed trend or by taking the average of historical numbers, Store operating expens projected as operating expenses per company-operated stare, and two cas projection, separate from the growth cases. In the Base case, operating expenses per store follow the observed increasing historical trend, while in the Upside case, this trend reverses to historical average. CAPEX was projected as CAPEX per change in company-operated stores, and two cases similar to cases for store operating expenses were set up. In the Base case, CAPEX per newly opened company-operated store continues to increase, while in the Upside case, it reverts to historical average. The reason for setting these eases for expenses is, as will be shown later, due to huge negative impact on price per share if the increasing trend in expenses and spending per store continues, Detailed assumptions and projections can be found i Appendis. Graph: Total operating expenses and their CAGR per caseStarbucks net revenue: ‘Starbucks Net Revenue 1997-2017 in millions oe This statistic shows the revenue of Starbucks worldwide from 2003 to 2019. In 2019, Starbucks’ revenue amounted to approximately 26,51 billion U.S. dollars, SWOT Analysis of Starbucks: Starbucks is the world’s largest coffeehouse chain, operating over 20,000 locations worldwide. Since the chain's foundation in Seattle in 1971, Starbucks has been serving up hot and cald beverages as well as his stacks. More rece transnational eompany into selling branded products sue! packaged eaftee beans, coffee machines, mugs and other gifts. Analyzing Starbucks with the help of a SWO'F ntattix will show what the ire might have in store for this world-famous corporation.Strengths: + Brand image + Premium quality + Excellent customer service Weaknesses: * High priced products © Imitation by others Opportunities: + Expansion in the emerging markets «Diversification of the product mix + Cobranding or partnership with other brands Threats: + Heavy competition from the rival brands + Consumer trands + Imitation of its premium products 7.2. Major Findings Starbucks’ failure in Australia 2008: Starbucks on Tuesday admitted defeat in the race to win a large slice of the Australian coffee market when the US chain said it would close 61 “underperforming” stores out of its total Australia portfolio of 84. The decision by Starbucks to downsize its Australian business is a setback for the Seattle-based chain’s international ambitions, Starbucks, which operates more than 15,000 coffee shops globally, this month said it would close about 600 stores in the US and cut as many as 12,000 jobs. The coffee chain said at thetime it expected to take pre-tax charges of $328m to $348m related to the US closures, resulting in a net cash outflow after tax benefits of about $140m. ‘The chain has been the victim of an ill-fated push in Australia, a market it only entered in 2000, Starbucks was snubbed by many Australians who have grown up on a diet of quality European- style coffe introduced in the last century to Australia by immigrants, especially from Italy. Howard Schultz, Starbucks chief executive, said on Tuesday that no other international markets need to be addressed in the same manner as Australia, “While this decision represents business challenges unique to the Australian market, it in no way reflects the strong state of Starbucks business in countries outside of the United States.” Although it only arrived in Australia recently, Starbucks expanded quickly there. Australia is of a similar geographic size to the US but the island continent supports less than a tenth of the US's population. Starbucks said it would close most of its country and regional stores and focus on the three large urban centers of Sydney, Melbourne and Brisbane. The closures will result in 685 job losses. “We are well into the implementation phase of transforming Starbucks and we believe that this difficult, yet necessary, decision to close stores in Australia will help support the continued growth of our intemational business,” Mr. Schultz added. Since he this year resumed the role of CEO at the group, he built into a global chain in the 1990s, Mr. Schultz has pledged to reinvigorate Starbucks’ US operations, arguing that a dip in service standards had contributed to declining traffic at a time of slowing consumer demand. It has announced several initiatives aimed at improving customer experience, including a new blended coffee and a loyalty programmed for its Starbucks stored-value cards, Starbucks failed in Isract: In.2001, Starbucks opened its first outlets in Israel. However, just two years later, in 2003, they were nowhere to be found. For most people living in the west, it's hard to even imagine that a huge corporation like Starbucks can faHowever, predictions and reality often don’t maich in the business world, Let’s understand why the international coffee chain was rejected in Israel Y Starbucks Had to Stick to One City ¥ Starbucks’ Coffee, As Well ax Culture, Bidn’t Appeal to the Israeli Customers ¥ Coffee Was Treated Like Oil Proximity to Italy Was an Advantage for Local Cafe Owners ¥ Israel's Market Was Too Small for Starbucks Conetus It’s wise to choose a local partner when you venture into foreign territory. But remember, choose the right local — not just any local who's willing to invest their money into your business, which might seem very tempting at the time, Starbucks should have formed a business alliance with someone who was aware of the Israeli coffee culture and consumer psyche. Long term strategy plans of STARBUCKS: *Starbucks wants to make all its equipment smart and interconnected. It will mean less technical duties for the staff'and more time and focus given to the customers. *The company will increase the number of cashless coffee shops around the world (currently there are only two cashless Starbucks stores - in Seattle and Seoul). *Starbucks plans to hire 25,000 veterans and mili by 2022 in 75 countries. *As part of the Sustainable Coffee Challenge and a commitment to plant ane billion coffee trees, Starbucks will provide farmers with 100 million trees by 2025. wry spouses by 2025, and 10,000 refugees “Starbucks aspires to serve 100% ethically sourced coffee and, by connective work with other companies in the industry, Starbucks hopes for coffee to become the first sustainable agricultural product in the world. “Thanks to scaling the Mercato lunch programmed - the Starbucks food donation initiative ‘operating across America - in the next five years it will be possible to sell or donate 100% of Starbucks food in American stores. “In the next few years, 80% of Starbucks store growth will be drive-through, This will mainly affect the suburbs of middle and South America, The company's drive-through locations already have a 25-30% higher revenue than the typical coffe shops in city centers. “Starbucks” in-app payment system is forecasted to be the leader in the proximity payment platform competition throwgh 2022.Chapter 8: Recommendation & Conclusion 8.1, Recommendation Recommendation: Starbucks needs to bring some improvements and advaneemenis in the company to keep its market position stable anid stron For this, few recommendations are given below: ¥ Imroduce diversification in products and services offerings. This will heip strengthen their position ¥ Bring innovation and technological advancements in the company to deal with the rising competition and imitation. Y Resolve the issues with the social activists that oppose intemational market players, “Reduce prices of the products to attract more customers and increase the affiordabili for all classes of consumers. ¥ Implement creative mark strategies. # Contribute to.community development, participate in Corporate Social Responsibility (CSR), and sustainability practices ng campaigns, promotional activities, and branding Starbucks biggest growth isin its International segment. The emerging markets of Brazil, India, China, South Africa and Mexico with a growing middle-class population continue to nt opportunities to add new stores and serve more customers. At the same time, while presuming its product quality and strong brand, Starbucks should improve its inventory and production steategies to reduce the unit price, in order to reduce the threat from imitation, Last but not the least, Starbucks has grea growth opportunities in Tea ancl Fresh Juice products mix. They should build wp these products along the sane line of their core coffee products. Also as consumer tastes and lifestyle shifl towards more snacks and beverages options. Starbucks should tailor its menu’s and expand to give healthier product offerings in its mix 8.2, Conclusion ‘To sum up, Starbucks is undoubtedly the most successful companies in the world. Their “dignity and respect and a good production of goods and services connected with the ‘treatment of links between workers used a simple strategy.” Important factors t was to bring success to Starbucks to distinguish from others.Starbucks is a pure example of an organization Which achieve its success through maintaining aclean P-O-L-C frame work, The Planning of the organization and the way it organizes its management system is the backbone of Starbucks. It also contains great leaders and leading process to lead the organization upfront as a result controlling becomes easy. Starbucks has the future rapid growth, apparently, Starbucks is to be successful and promising. However, the keys to success in tomorrow's environment and may not apply to the global market. Defense and competitive position grows tight no competitors off fending to keep the internal and external changing strategies unique. valuable and leadership capabilities and resourees, not products or services themselves more proactive response based con the building requires. Starbucks for leadership in domestic and foreign markets despite a tough opponent for the good for granted, it should not, An the future fite of Starbuck will have strategic ability to protect and be strong, standing offset their weaknesses, aceording 10 the need to avoid threats and take advantage of opportunities, Starbucks Wants to define current and future requirements as well as it could remain under the more exciting growth issues and continue to be prosperous Chapter 9: References https://motesmatic.com/2018/1 0/etarbucks-busina leandests a ttps://www.britanniea.com/tapie/Starbucks wits //th mivorg/starhucks https://stories.starbucks,com/ http://panmore.com/starbucks-coffee-generic-strategy-intensive-growth-strategies fiwww. foe ; iM 9/009) 19) swt itv hitps://www.blaomberg.com hittps://www.forbes.com