Discuss about the Management Accounting for Reporting & Analysis.
Starbucks is a pioneer roaster, marketer, as well as retailer of coffee specialist in the world and operates in more than 68 countries. High quality of roasted coffee is purchased and even handcrafted coffee, other beverages. The company sells many variety of coffee; tea products and the trademark are licensed. The flagship store consists of Starbucks Coffee brand and various other goods and services are also sold under various brands such as Teevana, Evolution fresh, Ethos, etc. The main aim is to provide stability to the brand and make it one of the respected in the world (Starbucks, 2016). The traditional store model concept is being used by the company to cement its place in the market.
The mission statement of Starbucks reflects what the company strives to attain in the future. The mission statement indicates that customers can gain advantage from the company. The mission statement is to inspire, as well as nurture the spirit of human that is one person, one cup and a neighborhood at one particular time. (Starbucks, 2016)
The Vision statement projects what the company can achieve in the near future. The vision statements of the company are to develop Starbucks as a pioneer of the finest coffee in the world by maintaining strong principles (Starbucks, 2016).
The organizational structure of Starbucks Coffee Company adjusts according to the business needs in order to support the company in achieving success. With the help of this structure, the company can expand its business worldwide.
The organizational structure of Starbucks Coffee Company is matrix in nature that is, it contains a set of conditions that enables the company to grow and develop systematically. It is an admixture of various hybrid attributes from the primary organizational structures. The main features of this organizational structure are:
The organizational structure of Starbucks Coffee Company involves geographic divisions and in relation to the present scenario, there are three regional divisions of the company in the international market. The first division consists of Asia-Pacific and China, the second division involves America while the third division comprises Russia, Africa, Europe and Middle-East. Also, in association with the US markets, the company has further geographic divisions that include South East, Western, North East and North West. There is a senior vice-president for each of these geographic divisions and in this way, every manager of the Starbucks Company is bound to report to two superiors that is the Geographic Head as well as the Functional Head. The Geographic Head involves the President of U.S Operations while the Functional Head involves the Corporate Human Resource Manager. Because of these features of the organizational structure, the company gains a lot of advantages as it gets closer managerial support for every geographic need (McShane & Mary, 2010). Even each of the divisions is governed by highly flexible superiors that are very much capable in shaping the policies and procedures of the company according to the market conditions.
Starbucks also pursues product-based divisions in its organizational structure that are very beneficial in addressing the product lines of the company. For instance, Starbucks has a product division of coffee and other related products, it’s another division comprise of products like mugs etc while it’s another division is for baked goods. With the help of product-based divisions, Starbucks has been able to focus on its specific product lines and it has developed innovative methods of developing the products so that it can bring more enhancements in the profits of the business.
The feature of functional structure of Starbucks Coffee Company implies grouping on the basis of functions of business. Starbucks has a marketing department, finance department and a HR department respectively. These departments functions more effectively at the superior level of the organizational structure of the company like the corporate headquarters. It can be observed that this feature is closely linked with the hierarchy of the organizational structure of the company. For instance, when the strategies and policies are framed by the Corporate HR department, it is bound to be applicable in every café’s of the company and with the support of functional structure; the top-to-bottom levels of the company can be monitored and controlled with the Chief Executive Officer at the top (Starbucks, 2016).
Teams are required in every companies and not just Starbucks Coffee Company as with the help of teams, much of the time can be saved and more effective services can be provided. However, teams are most efficient in the subordinate levels of Starbucks, especially in the café’s. Teams help to deliver speedy and effective goods and services to the customers and providing efficiency in the services can in turn bring several advantages for the company.
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Strengths · Properly located shops with portfolio of products that cater to the customer needs. · Striving to attain vision and mission through strong marketing like website uniqueness and facebook pages. · Facilities like in house wifi makes it more attractive |
Weakness The manner of adaption is weak and unique feature is missing at each store making. Attainment of goals becomes difficult as no unique feature in each store. |
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Opportunities · Expansion as people is becoming health conscious. · Strong environmental concerns project a better future. |
Threats · Population are aging · Economic crisis |
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Political |
Coffee beans are mostly grown in developing countries. The work condition, inclusion of child labor makes it questionable. Moreover, taxes and tariffs comes into picture |
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Economic |
Consumers are concerned regarding the money they spend. Personal debt and high unemployment throws a big question. |
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Social |
People spend money on coffee not because they want to drink coffee but to relax and enjoy |
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Technological |
Coffee machines of cheaper range are available for home purpose |
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Environment |
This industry needs to take care of the ways, the beans are produced, the design, the preparation and the sale of the products. |
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Legal |
The safety regulations off the product, the increment in the employment regulation, etc. |
Design of Goods and Services
Starbucks gives due importance on the superior quality and design of its goods and services. This superior or premium character of the goods and services is closely associated with the high pricing strategy and extensive differentiation general strategy of the company. In the designing of Starbucks products like the Starbucks Mugs, other manufacturing firms are also involved (Kerin, 2012). With an effective design and quality of goods and services, Starbucks aims to enhance its goodwill in the international markets.
Starbucks also ensures in a quality management by providing a premium quality of goods and services. For example, the coffee beans used in the making of coffee is carefully selected by the company from only those farmers who are able to comply with the quality standards of the company. Even the purchasing of coffee is done specifically from those farmers that are certified under the CAFÉ program that is Coffee and Farmer Equity Program of Starbucks. The company implements this superior quality management so that it can align with the superior brand image of the company and this can be possible through a friendly environment and a servant leadership.
The location strategy of Starbucks mainly focuses on the urban center that is the upper class and high middle class populations. This is the reason why most of the café’s of Starbucks are located in heavily populated areas. On occasions, the company congregates its café’s in the same geographic region in order to throw away its competitors and gain the market share. This decision of the company sheds light on the fact that there are customers who are willing to pay a heavy price for the company’s products (Koichi, 2014).
The efficiency of process and capacity also plays a major role in determining the success of Starbucks. These processes are not only efficient but they are designed in such a way so that it can optimize the capacity design to meet the variations in demand. For instance, the processes of the café’s are designed in such a way so that the personnel’s can adjust with the increasing demand in the peak hours. This proves that Starbucks purposes to enhance its cost-effectiveness through its processes and capacity design.
The layout and design strategy of the company supports a friendly environment in order to align it with the organizational cultures. The layout strategy of the company does not focus on the maximum utilization of seats as it aims in premium experience of customers. This shows that in the area of operations management, Starbucks aims to choose customer experience over space utilization (Kotler, 2012).
It is seen that the products of Starbucks are highly priced due to the superior quality and service provided by the company. It can also be assumed that due to the enhanced brand name of the company, they have increased the prices. With due course of time, the company has been successful in maintaining its superior quality and by charging higher prices for the same. The company offers unlimited refills for the coffee that is costlier than the other strategies of other companies but because of the high quality, this service is never neglected by customers. It even implemented value strategies that focus on creating coffee which is not expensive and can also attract customers easily (Kotler, 2012). It introduced breakfast pairings that was not very costly and it accommodated a delicious breakfast with a brewed coffee.
The prices are set according to the quality and ambiance provided by the company to its customers. The prices vary from different products like hot coffee, double-shot drink, brewed coffee etc. There are several choices for the customers and the prices are different for all of them. Even the commercials are done on the basis of the popularity of the product and its level of customer satisfaction. This ensures the customers about the proper pricing of the products and thus according to the brand image of the company and its quality, the pricing strategy is well-established (Gordon, 2011).
It can be observed that the pricing strategy of the company has enabled it to hold a firm position in the market and survive competition with all the competitors. It is one of the essential components of market mix and is followed with the policies and strategies of the rival firms. Because of this strategy, significant developments can be made in the goods and services of the company that has made the company boast for their standards and achieve success globally.
The penetration and scope of products can be determined by the efficiency in product placement strategies as it is a very important factor for contributing success of a business. In association with Starbucks Coffee Company, it can be seen that it has employed several promotional activities in order to reach a wide range of customers and build a brand image in the market. Placement of products is important because it helps in placing the products to their end users by promoting the same. But for this purpose, the company has followed some rules like it has invested a huge amount of money in the new ventures in order to cater to the requirements of customers in important locations so that they can enjoy the products. The company has also engraved its logo on its merchandise so that customers can get a good notice of the authenticity of the products. Even the products are steeled and licensed in order to make it free from any problems and hence keeping them safe.
One of the key methods of placing strategies also includes a good ambiance facility to the customers. In relation to Starbucks, the company has itself provided a well-structured ambiance facility with good furniture in the coffee shops in order to gain more customers. It has even provided free Wi-Fi facilities along with children corners to attract and retain more customers. For an efficient placement, the company has managed to place several boards that show the suppliers of Starbucks together with other boards that shows the suppliers of coffee beans (Boston.com, 2015). Outlets are available in high street areas where lots of people can be seen so that it leads to an effective promotion that can attract more customers. As discussed earlier, the accommodation of café’s at heavily populated areas makes it easy for the customers to trace the product and enjoy the beverages indeed. Thus, it can be considered that product placement is a very dynamic strategy that helps in attracting more customers. Starbucks is thus using these strategies to gain customers by accommodating itself in densely populated areas etc. It is also found in locations where people like to hear music and it is observed that the outlets of the company are being tested with the names of the streets where they are located. In other words, the company is striving to localize its stores with the name of the streets that is there will be no engraved logo of the company on its products and instead the products will accommodate a particular street address that will be used as the brand name.
Thus it can be viewed that placement mix plays a very important role in attracting several new customers in the market and thus supporting the companies to hold a firm position in the market. Starbucks has been benefitted by this strategy as it has maintained its brand image in the market by driving out other bigger competitors from the market. This has also generated a cut throat competition between many rivals such as Costa (Boston.com, 2015).
The organizational culture of Starbucks has various features that are unique. Such a combination enables to drive the business. The organizational culture is defined as a culture of belonging, inclusion, as well as diversity. In the overall organization employees are provided the initial preference, driven-approach of the link, collaboration, as well as communication, etc. Starbucks has a servant leadership approach that stresses on the organizational culture. This provides employees-first approach. Moreover, it even promotes healthy relationship. When it comes to Starbucks, the main stress is to create uplifting moments in the applicant lives and partners. The leadership is seen in the activity of HR as they are not only involved in uplifting moments but also entrusted with the task of finding right talent. Every decision on the leadership aspect is filtered through the concept of humanity (Levine & Prietula, 2013). The management system dwells on the concept of teach management that helps in availing opportunities and refreshing the ability. Moreover, leadership has also established voluntary track of skills mastery that is tagged as Coffee Master and Coffee Ambassador program.
References
Albrecht, W., Stice, E. and Stice, J 2011, Financial accounting. Mason, OH: Thomson/South-Western.
Boston.com 2015, Split country: Dunkin’ vs. Starbucks, Viewed 25 May 2016, https://www.boston.com/yourtown/specials/starbucks_vs_dunkin_donuts/
Brealey, R., Myers, S. and Allen, F 2011, Principles of corporate finance, New York: McGraw-Hill/Irwin.
Brigs, A 2013, Financial reporting & analysis, Mason, Ohio: South-Western.
Davies, T. and Crawford, I 2012, Financial accounting, Harlow, England: Pearson.
Gibson, C 2012, Financial statement analysis, Mason, Ohio: South-Western.
Gordon, R 2011, ‘Critical social marketing: definition, application and domain’, Journal of Social Marketing, vol. 1, no.2, pp.82-99.
Kerin, R A 2012, Marketing: The Core, McGraw-Hill Ryerson.
Koichi, S 2014, Advertising Theory and Strategies, Souseisha Book Company: Japan
Kotler, P 2012, Marketing Management, Pearson Education.
Levine, S. S., & Prietula, M. J 2013, Open Collaboration for Innovation: Principles and Performance, Organization Science, Harvard Press
McShane, S.L, and Mary, G 2010, Organizational Behavior: Emerging Knowledge and Practice for the Real World. Boston: McGraw-Hill Irwin
Starbucks 2016, Say yes to Summer adventure, viewed 26 May 2016, https://www.starbucks.in/
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