Business and administration Assignment
Introduction: As instructed by my tutor Aidan Brehony I will conduct an assignment on the organization known as Starbucks. Starbucks is an American coffee company and coffeehouse chain famous for producing high-end coffee around the world. My aim for this assignment is to find about the history of and Structure of Starbucks and different types of organizational structures like external and internal. And also examine their quality control human resources. And finally, conclude my assignment with a pest SWOT analysis on the organization of Starbucks. I hope to find what makes Starbucks so popular and successful. My research methods will mainly utilize the internet and class notes.
History of Starbucks: Starbucks was established in 1971 in Seattle Washington. And the service is to offer is serve hot and cold drinks and whole-bean coffee. Set up by three partners Gordon Bowker, Jerry Baldwin and Zev Sigel who met at a university in San Francisco. They were all inspired to sell high-quality coffee bean and equipment by fellow entrepreneur Alfred Peet after he taught them his style of roasting beans.
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Starbucks opened its first store in 1971 across the street from the historic Pike Place Market in Seattle. In the 1980s Starbucks had four stores in Seattle and stood out from its competitors The three partners named Starbucks after the first mate in Herman Melville’s classic novel Moby Dick. The logo was designed to reflect the seductive imagery of the sea. And has gone through many changes over the years. In 1981 Zev Siegel left to pursue other interests leaving Baldwin as president. By 1981 a sales representative of Swedish company Howard Schultz took notice and was wanted by part of Starbucks and joined as head of marketing and had a vision for Starbucks when visiting Italy was impressed with its cafe and wanted to implement that into Starbucks in the US. Baldwin and Bowker wanted the company to remain as a coffee and equipment seller and not turn into a cafe that served espressos and cappuccinos. Schultz left in 1985 to peruse own company but in 1987 when Baldwin and Bowker decided to sell Schultz was first in line to buy the company and implemented his vision committed to the cafe concept for the business company expanded greatly under the vision of Schultz In today climate Starbucks has a foothold in many countries and has 29,000 stores worldwide has 277,000 employees worldwide and committed employee minority groups.
Ownership:
The owner of Starbucks has been Howard Schultz since 1987 when he purchased Starbucks. Recently stepped down as CEO and Kevin Johnson filled that role in 2017; Howard Schultz is now Chairman Emeritus.
Starbucks has been a publicly traded company since 1992, Starbucks answers to shareholders and the board of directors which Howard Schultz is the major shareholder. Starbucks has a lot of board of directors like Kevin Johnson CEO, and Howard Schultz Chairman Emeritus now retired, Rosalind brewer chief operating officer.
When the founders of Starbucks announced they were selling looking for a price of 4 million, Howard Schultz went to the creditors of his current coffee company at the time persuading them to give him a loan and It is interesting to know that one of the investors at the time included bill gates Microsoft founder and Schultz bought Starbucks became the owner and the rest you could say is history. Starbucks prides itself on offering the best insurance when its comes to working in coffee shops its offers life insurance, disability coverage, vacation, tuition reimbursement, employee assistance, commuter benefits, adoption assistance, and more. And when come to finances Starbucks has consistently boosted profit aside from the financial crash in posting a cash flow of 11.94 Billion the revenue has consistently grown too over the years with growth in 2017 Revenue stood at 22.39 Billon.
Structure of the Starbucks organization (Via essaywritesystem.com)
Starbucks utilizes a matrix hierarchy chart for organizing staff.
This chart shows that Starbucks is a Flat organization shaped structure run by one leader the CEO for many years Howard Schultz by now by Kevin Johnson after Schultz's retirement.
Starbucks has several features like functional organization, geographic divisions, teams and product-based divisions.
- Functional structure: this structure of Starbucks hierarchy shows the CEO placed on top followed by different departments like Marketing, Human resources and supply and chain.
- Geographic division: this chart shows the company has many geographic divisions which is vital for the company to explore differently. Starbucks has 3 main locations they operate in (1) the Americas,(2) China and Asia pacific and (3) Europe, the middle east, and Africa. each of these divisions has vice president shoe company serious when come to expanding going different markets. This also means the managers’ report to the Geographical head and functional head makes viable for extra support if needed to Geographic divisions.
- Product-based divisions: Another vital part of the structure is product-based divisions which focus on products like coffee, baked goods and essential equipment. This chart makes it important that is proper focus and detail on the products.
- Staff Teams: the number of teams in the Starbucks organization that are the lowest on the organizational hierarchy chart. For example, in each cafe around the world, the company has a team organized to deliver and serve their consumer.
Internal Structure
SWOT Analysis
- Strengths: Starbucks has great brand recognition and great customer service credentials, Starbucks is a money making machine with posting profits and high revenue returns compared to any of its competitors Starbucks uses its profit to invest in straight the business in developing new locations and products. Starbucks is known for treating staff management or baristas well, with numerous benefits and perks and having higher pay rates compared to rivals. in recent years Starbucks has increased food servicing which boost its attractiveness for breakfast, lunch and snacks just not coffee
- Weakness: Some weaknesses I found are pricing is very high compared to its rivals for a comparable product may seem price for students or working-class people, and Recently company come under threat for its procurement practices of coffee beans from impoverished third-world farmers. Also accused of violating the fair coffee trade agreement put in place a couple of years ago. And being accused of being more thoughtful in corporate and social responsibility including poor treatment of some suppliers from emerging countries.
- Opportunities: This multinational coffee brand has opportunities for future growth and expansion. Like global expansion Starbucks does have a footprint in major markets like Us and Europe put if to remind the number coffee brand and company must look to the future with a growing economy in major markets like India, China and some areas of Africa.
Starbucks also has the opportunity to expand its product servicing to compete with restaurant contemporaries burgers and Mcdonald's by selling more food offerings. New way of distribution Starbucks recently created new way of a delivery system called mobile pour opportunity to improve their distribution system and drive more revenue. Starbucks could also license its name with other retailers of other products like pod coffee maker. Starbucks could extend its supplier network which could lead to better of raw materials like coffee beans could lead to control over raw materials and stop supply disruption.
- Threats: some threats facing the number one coffee companies are Starbucks facing fiery competition from McDonald's and Dunkin Donuts who look the same products and sell with a fraction of price that Starbucks does. And could shrink their market share. Starbucks' profitability could be threatened by the economic downturn which could to consumers not have the free cash spend on Starbucks products or could go to a competitor which charges less. If bigger brands like Mcdonalds decide to copy Starbucks' strategy and introduce the same product could harm Starbucks. And there has been talking of an increase in the price of coffee beans, if that happens the pricey Starbucks coffee will get pricier which would harm the company massively.
Employee’s benefits
Employees at Starbucks enjoy good benefits. Starbucks offers its staff Comprehensive health coverage for medical, dental and vision. Staff is offered education benefits, tuition assistance and free coffee, opportunities to connect around similar interests, paid vacation, and more. Starbucks Vacation benefit is based on the employee’s position length of service and work location staff are paid 1½ times their base hourly rate of pay for any work on major holidays like in the US New Year’s Day, Martin Luther King Jr. Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. full-time staff are eligible for sick pay of 40 hours a year
Staff scheduling
Starbucks' scheduling is micro-managed to the minute. Store managers run the scheduling Starbucks and must take in account the availability of part workers and full-time works, vacation time requested If they desperately need cover outside of your availability, they will ask before scheduling you.
Starbucks uses staff scheduling software that makes it viable track peak working hours and project shifts based how much floor staff is needed in peak hours. The software also gives you suggested labor hours for the whole store daily and weekly. Scheduling nowadays in big companies is arranged up three weeks in advance leaving time for emergency changes .some laws around the globe state nonsalary employees take 30 min break. Shifts in Starbucks sally last 5-6 hours and requires a break and the shift lead may ask you to stay longer or send you home earlier. Starbucks' staffing philosophy is to get as much labor for as little hours as possible,
Communication system
The way Starbucks communicates with its internal organization staff it uses many methods like an assimilation meeting is 1-hour staff meeting in which staff are introduced to a new manager or new employee has started. Open-based discussion between staff and new manager in this meeting staff can ask questions to new manger Starbucks uses this method to facilitate process that accelerates learning, it breeds trust between manager and his or her staff. The Human Resource are present at assimilation to make sure everything runs smoothly and makes sure is no problems between new manager and its staff
Another communication device is skipped level meeting which happens once year between the non-managerial team and upper management .these meetings bring key three questions about what want us to continue doing. What you like see stop happening in the workplace and finally what do you want start see? These questions are specific to a team manager .upper management answers any queries employees might have going forward. These answers are feedback anonymously to the manager by the HR department in an open cooperative fashion.
External organizations
Starbucks like many businesses faced the of the financial recession of 2008 in many ways. Internal many staff lost their jobs mainly barista. With the decrease of coffee being bought by customers at the time. Consumers seemed to lose their appetite for coffee. Starbucks was forced to shut down 600 coffee shops that were not making profits. By march of 2008 Starbucks' profits had fallen by 28% compared to 2007. And it did get better in 2009 it closed 300 stores and lay off 6,700 staff. At the time Starbucks CEO Howard Schultz asked the board to cut his salary to save money and their share dropped 2.5% at New York stock exchange at the time. And plans of further expansion across the globe were scaled back until the economy improved.
Recent political decisions affecting Starbucks business: Starbucks can be affected by political events like trade relationships with coffee-producing countries and exporting countries. And Starbucks has look at countries its trades with in terms of labor and raw material. Starbucks might find it hard to expand its trade partnerships in developing countries.
Marketing and advertising
Starbucks, as a brand has high reputation for its product and unequal customer service vital ingredient into its success, has been its marketing and advertising to grow its brand and increase sale of coffee through many markets. Starbucks has always invested in marketing and advertising 387.7 million plus for last few years one of the ways Starbucks markets itself is through social media especially YouTube posting over 500 video featuring products, the supply chain and various other aspects of its business operations. Also, it launched animated series called ‘first and main show what it's like working in Starbucks. Another way it markets it throw Twitter boosting a following of 11.4 million showing off new products and promoting upcoming flavors. Starbucks as a brand show it’s important you must invest in their customers. and Starbucks has been very aware of brand merchandising vital component in any brand's success. Starbucks logo is printed on every brand merchandise. Pretty merchandise are always pleasant and adds value to its product. And Starbucks often says “A perfect cup of coffee cannot be perfect if the cup is imperfect. This strategy is very customer driven. One main they gain exposure is threw advertising and the heads of Starbucks have in invested 230 million plus and see advertising as a vital tool for selling its product. Its TV commercial shows the hottest new flavors available at the Starbucks stores
Pest analysis
Political factors
Play major role in the working of Starbucks corporation growth in certain markets and countries. Starbucks has been operating in the Specialty Eateries industry and deals with many different political climates in many countries. Are many factors that affect or impact the business of Starbucks. The political stability of the country's government is vital for Starbucks is terms of supply and chain. Political disruption can result in disruption of supply and chain can impact day to day of Starbucks and can affect sales and profits. Trade requirements and tariffs related to service can impact the business. The more stable the political system can relate to the economy Starbucks has a global brand has many suppliers are located all over the globe it has to deal with different political pressure and conditions of each country. Starbucks has dealt with different pay structures in each country like minimum wage. Starbucks deals with different tax laws in each country it operates in.
Economic factors
Starbucks operating as the number 1 coffee brand across the globe must look at different economic systems and how stable the economy is in each country is in a recession or it flourishing. Another factor unemployment rate of each country it operates in, and how well some countries dealt with the 2008 financial crisis. A healthy Economy can also affect the cost of raw materials. how well the exchange rates are and the healthy of the currency great example was the pound when the united kingdom announced the pound dropped massively. Better the economy means more sales for Starbucks and better job opportunities in different markets.
Social factors
Society culture can play a massive role in a business's ability to flourish and generate revenue.
A Factor Starbucks must contend with is the demographic of the population of the area business and the class structure of the population Starbucks is operating. Professionals and the working class make a good portion of Starbucks' segment. Starbucks can offer cheaper alternatives without sacrificing the quality of coffee which works a certain base of society. Starbucks has kept updated on trends and changes in society. Changes in consumer preferences can affect sales. Priority of Starbucks would focus on the millennial generation and their preference and create a marketing campaign around that millennial generation whole are likely to socialize in coffee shops around the world
Technology
[bookmark: _vw1mw69beqt6]In the last thirty technology has expanded massively and are a key factor for any business, especially one as global as Starbucks. Many technological advances have affected many areas of business like marketing, finance, and human resources. Starbucks has made good use of technology like being focused on digital innovation to drive business like creating a mobile order and pay feature on its app also has partnerships with Apple, Spotify and the New York Times And also introduced Wi-Fi capabilities across its coffee shops so the customer can surface the web while enjoying a cup of coffee. Starbucks' embrace of technology has helped the recruitment process with abilities to apply for job online through its app to find be employees
Human resource
Starbucks has been known to have great management and staff because it has been its priority to have a great working environment and follow the policy of respect and dignity. One main when talking about human resource employees
- Employees: One main principle when hiring Starbucks follows is any new employee must receive twenty-four of training in a span of two weeks. For an employee to learn Starbucks' culture and how it operates. How to learn core technical skills for becoming a successful barista. Starbucks also offers a range of management development opportunities and design special programs.
- Recruitment: the process of developing pool of applicants to until highly skilled employees. Starbucks recruitment could set up two-part section support center and retail. Career opportunities in the support area range from finance, technology, supply chain and marketing. On the other side retail has store managers and assailants operating day to day operating in each area. When interviewing for Starbucks many applicants have said felt welcomed and the interview process is fun. The potential new staff is all also offered a drink when they arrive, this shows Starbucks show incoming staff the Starbucks culture
Starbucks uses internal recruitment methods that are job posting and promotion from within which can lead to career paths to future management opportunities. Starbucks also uses External recruitment methods like walk-ins ‘ where people apply on their own accord, and also utilizes employee referral, which current employees recommended to future staff.
- Selection process: before interviewing for a job at Starbucks applicants get vetted applicant must supply Personal information, work history, and references .after all the information on an applicant is reviewed the hiring will usually contact the applicant by phone . Typically a store manager will conduct the interview, higher positions in the company may need group or panel discussions for usually management jobs. The interview question may vary on the applicant but questions are on the knowledge of the company and interest in the coffee industry and past experience .most questions look to see what applicant's personality and work ethic
- Training and development: the training scheme used in Starbucks is to make sure staff gain and develop the skills need to work in a coffee shop effectively New employees are taught about coffee and how to please the customer. And taught about the three Cs in Starbucks culture which are Coffee, connection, and culture. Also taught how to communicate effectively within the business
Quality control
Their labs in Seattle taste endless amounts of coffee and other products they’re responsible for testing seventy-five percent of five hundred million plus pounds of beans that Starbucks will buy and roast each year, the procedure is long and tedious but there is no shortcut. It needs sipping and brewing carefully and crafted samples collected from shipping containers that arrive to our ports. Starbucks quality control staff test 1000 cups a day, a batch of coffee east three times before it’s approved and shopped around the world.
Starbucks' reputation is built by having a great quality control system. Starbucks' cupping system saves the Company money of having whole coffee beans shipped if there is a faulty sample in testing. the general public expects Starbucks have impeccable QC and QA all of Starbucks' products are subject to health controls that are backed by legislation. the cupping system taught at Starbucks is very particular staff are intensively trained in this area and could be costly if messed up. Starbucks has been ISO 9000 certified and means to .maintain an efficient quality system.
Conclusion
To conclude my thoughts on the organization of Starbucks. Starbucks has built the number one coffee brand in the world through great marketing and advertising and impeccable customer service. Some strength I learned from Starbucks is investing money made in profit and revenue in further developing its brand and growing into new markets. It did a great job in treating staff management or baristas well, with numerous benefits and perks. Some weaknesses I found in the company where pricing is very high compared to its rivals for a comparable product and may put off new customers. Some opportunity for Starbucks is the growth in new markets in India and some parts of Europe. Political factors that affect impact business of Starbucks. The political stability of the country's government is vital for Starbucks in terms of supply and chain also Starbucks changes with the times when comes to technology. Starbucks also was able to bounce back from the 2008 financial crisis after the loss of jobs in that year. And finally, Starbucks will I believe face future threats from big companies like McDonald's and Dunkin donuts. And the conclusion I believe Starbucks will stay at the top as the number one coffee brand due to brilliant organizational structure and functionality with great CEO at the helm
References
- History of Starbucks https://www.starbucks.com/about-us/company-information/starbucks-company-timeline Date accessed 10/01/19
- Ownership and Board of directors information https://www.marketscreener.com/STARBUCKS-CORPORATION-4905/company/ Date accessed 11/01/19
- Organizational structure and chart https://research-methodology.net/starbucks-organizational-structure-a-tall-and-divisional/ Date Accessed 09/01/19
- Employee benefits http://assets.starbucks.com/assets/7343fbbdc87845ff9a000ee009707893.pdf Date accessed 29/12/18
- Staff scheduling https://www.quora.com/How-do-managers-schedule-shifts-at-Starbucks Date accessed 30/12/18
- Marketing and Advertising https://www.cheshnotes.com/2017/01/marketing-strategy-of-starbucks/ Date accessed 5/01/19
- Staff communication types https://smallbusiness.chron.com/skiplevel-manager-37519.html Date accessed 10/01/19
- Human Resources https://starbucksrohan.wordpress.com/human-resources/ Date accessed 10/01/19
- Quality control at Starbucks https://sprudge.com/fast-co-starbucks-cupping-51732.html Date Accessed 10/01/19
- SWOT of Starbucks http://panmore.com/starbucks-coffee-swot-analysis
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