Case study regarding starbucks.
The differentiation strategy adopted by Starbuck is broad and targets a wider segment of the market. The market targeted by Starbucks is driven by the coffee drinkers and lovers. Starbuck has positioned itself within the customers as an organization that customizes the needs and requirements of the customers regardless of the fact how detailed is the order placed. Starbucks has engineered the art of making coffee and has built stringent guidelines to be concurred by the baristas across its outlets (HASKOVA, 2015).
Starbucks has achieved a competitive advantage on the foundation of its unique and diversified offerings. Starbucks provides the buyer with the options that the customers value and has been successful in building a demand at a suitable price. The successful implementation of this strategy indicates in the fact that Starbucks provides a distinctive quality of coffee and the services related to it and the coffee shop industry while diversifying the offerings. Starbucks has able to compelled the buyers with the high quality of products and services to buy items with the label of Starbucks like bottle coffees available at the grocery stores or liqueur with the brand of Starbucks available at the liquor store (Latif et al., 2014).
The target market of Starbucks continuously offers the potential to grow and provide attractive profits. Starbucks has conveniently positioned themselves in the market along with an ample amount of stores that are easy to access (Reinhard, 2015). Starbucks has created an impact on the effort, time and financial resources that have been invested in the employees rather partners as Starbucks has intentionally eliminated the term employee from their dictionary. The strategy implemented by Starbucks with the combination of uncompromising attitude towards the quality of the product and customer service in any circumstances and has to lead the company to become the leader of the niche market and has positioned well to remain profitable (Specht, 2013).
The organizational structure of Starbucks follows the flatter structure which indicates that there are fewer levels in the hierarchical levels within the organization in comparison to many organizations that have a complex style of hierarchical system. The executives who sit at the headquarters in Seattle oversee the company. The district managers are responsible for the monitoring of the regional stores across the country and they are to report directly to Starbucks Corporation. The store managers are the chief of the individual stores. Under the jurisdiction of the store manager comes the shift supervisor who are eligible of acting as the manger on duty when the store manager is not available. Rest of the employees comes under these shift supervisors and is called the baristas.
Howard Schultz is a dynamic leader who realizes the importance of the incorporation of the good people in the company and then gives them the autonomy so that they would be able to perform their duty as they see it suitable. Howard inspires his workers to believe in the vision he has propagated that Starbucks is the most happening place and his workers give their best to visualize the vision. The leadership style adopted by Howard is a balanced mix of transformational and democratic style of leadership. Democratic leader is defined as the exchange of free opinion and inputs of the employees to the leader but the ultimate decision making power rests with the better judgment of the leader. Transformational leadership is defined as the practice that is driven by the advancement of the higher level of moral and motivation were the employees align with vision of the leader. Howard believes in motivating and inspiring his employees or partners as they call it in starbucks. Howard encourages feedback and ideas and opinions from employees through personal calls and emails to achieve the completion of the cycle of feedback. Empowerment and entrepreneurship directly converts to good quality and service and enhances the quality of decision making within the employees and also increases flexibility of the choice of the preferred working of the employees. Howards approach towards the betterment of the working environment for the employees and keeping sync with his ideals and goals of the organization has been instrumental to the success of the leadership style.
Information and control system forms the major part of the of Howard’s expansion plans. Starbucks has affiliated with Square that provides the merchant services and mobile payments since 2012. Starbucks has been using the Square’s point of sale system in more than 7000 outlets in the US. Square helps the organization to operate traditionally as well as allows the customers to avail transaction through mobile devices through the use of Android or iPhone or iPad (Ståhlberg & Maila, 2012). Besides the mobile payment system, Starbucks has partnered with MICROS, to spread the use of MICROS Simphony POS in their store across the globe. MICROS Simphony is a premier enterprise that provides smooth system operation and allows Starbucks to be capable of performing daily operations with efficiency and links the system of the workstation that is spread over many locations (Pastoll et al., 2014). This enable headquarter to locate any regional trend that are hindering the operations and rectify them accordingly through making the required changes in the operation process or the product or any other aspect.
The adopted human resource management of starbucks is highly focused on the recruitment of good and trained employees to execute appropriate actions to obtain high level of customer satisfaction. The main criteria of the recruitment process are to find people who can align with the goal of the organization and would be able to deliver the appropriate orders according to customized request of the customers. The company experienced acceleration of growth each day until 2007 when it opened more than 4 new stores with 200 new employees. Starbucks value their employees and believes that the employees are the most important part that is instrumental in triggering the growth of the organization. starbucks has been recognized as an organization who have ethically adopted the measures to procure the coffee from the farmers across the planet and have special focus on the environment sustainability as it uses re-usable or recyclable cups in its stores. They believe that the baristas are the foundation of the operations and the quality of the services that are instrumental in the customer satisfaction. The training of the baristas plays a vital role in maintaining the quality of the product and services of the organization. The training of the employees would ensure that the baristas would have a good knowledge of coffee and expertise in the product and servicing.
Starbucks achieved another level of fame when CEO Howard Schultz implemented a benefit plan for the part-time employees who work for twenty hours and more. The employee would receive a health insurance benefit: the CEO was considerate enough because he saw his father struggled all through his life as he served as the employee of companies that did have the provision of offering such benefits. The strategy aimed to target the employee to keep them happy and increase their sense of job satisfaction through the channel of benefits, compensation and suitable company culture and working environment. The goal of the CEO is to maximize employee retention consequently reducing turnover and training expenses and maximization of revenue generation through increasing customer satisfaction.
Licensing
Licensed stores are the common practice for starbucks in the grocery stores, bookstores or any other site where starbucks is not the only establishment. Starbucks involves in licensing of the storefronts. These licensed stores are controlled by Starbucks Corporation and adhere to the same set of stringent guidelines that the company provides. All the items sold in the stores including food, has to be approved by the starbucks corporate offices. Starbucks maintain this control in attempt to protect the brand name and ensure the maintenance of the quality.
Franchise
Starbucks does not operate under the franchise system.
In 1994, Starbucks started a joint venture with Pepsi-Cola Company (now PepsiCo) to offer a bolted Frappuccino. The product became a hit in the Starbucks outlets. Alone Starbucks that limitations that restricted the success of Frappuccino when launched earlier as the company lacks the capability to develop and mass produce canned or bottled dairy-based coffee drinks and the handling of the distribution channel through supermarket retails (Enterprise, 2015). The agreement signed for this fifty-fifty partnership between PepsiCo and Starbucks was called as North American Coffee Partnership (NACP); this agreement ensured that both the companies would enjoy equal amount profit sharing from the innovative product they have come up (Esterl, 2013).
Starbucks sealed a deal with Hyatt Hotels Corporation in the year 2001which made the coffee offered by Starbucks available at almost 100 Hyatt properties in North America. However after 15 years of partnership Starbucks coffee is available at all the 209 Hyatt hotels and resorts around the planet. The partnership offers an ambitious branding opportunity to the companies and serves the Starbucks effect and experience to millions who visit Hyatt properties for different purposes every year (Brooks, 2012).
References
Brooks, B. W. (2012). Starbucks: maintaining a clear position. Journal of the International Academy for Case Studies, 18(3), 39.
Enterprise, S. (2015). 1.1 Opening Case: How Starbucks is Changing to a Digital and Social Enterprise.
Esterl, M. I. K. E. (2013). Is this the End of the Soft-Drink Era?.
HASKOVA, K. (2015). STARBUCKS MARKETING ANALYSIS. In cris (p. 0002).
Latif, M., Gulzar, H., Bukhari, S. R., & Sameen, S. N. (2014). Starbucks sustained during economic crisis.
Lemus, E., Von Feigenblatt, O. F., Orta, M., & Rivero, O. (2015). Starbucks Corporation: Leading Innovation in the 21st Century.
Logan, N. (2016). The Starbucks Race Together Initiative: Analyzing a public relations campaign with critical race theory. Public Relations Inquiry, 5(1), 93-113.
Pastoll, C., Rochwerg, T., Vlaar, B., & Compeau, D. (2014). Starbucks Canada: The Mobile Payments Decision.
Reinhard, K. (2015). Differentiation as the key to success. A marketing plan for Starbucks.
Specht, S. (2013). Starbucks Brand. GRIN Verlag.
Ståhlberg, M., & Maila, V. (2012). Shopper marketing: How to increase purchase decisions at the point of sale. Kogan Page Publishers.
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