Starbucks: Culture and Environment sample essay
Starbucks is one of the largest coffee retailing companies in the world. It is spread across 42 countries and has 15,000 stores. In North America alone the company has thousands of outlets. Apart from being in the coffee business the company is also sells bottled coffee drinks and a line of super premium ice creams. The company also has a brand portfolio that sells a variety of items. There is a line of premium teas called Tazo Tea. The company also sells compact discs under the name of ‘Hear Music’. The company’s logo is one of the most recognized in America. The company also operates in such a way that the community surrounding it benefits from its operation socially, environmentally and also economically (Starbucks, 2011).
Starbucks is a company that considers it very important to maintain a corporate culture. In 1990 the executive team drafted a mission statement and the first guiding principle in the mission statement was “to provide a great work environment and treat each other with respect and dignity” (Stanley, 2002). There were three things that the company did on order to ensure that this was carried out. First the company handed out a copy of the mission statement and comment cards to all the employees. Secondly while making presentations the executives frequently made references to the guiding principles. Thirdly there was a mission review system which was used by any partner to comment on a decision or action that he felt was inconsistent with the company’s mission statement. Thus there was a continuous emphasis on the company’s mission and resulted in a strong corporate culture in the company (Stanley, 2002). The company is also committed to the environment and the local community.
The company even supported local causes in the communities where Starbucks outlets were located and even in countries where the Starbucks coffee was cultivated. The store managers were granted discretion to donate towards local causes and also provide coffee for events like local fundraisers. There is also a literacy program that is supported by the company. Grants are also provided to nonprofit literacy groups (Stanley, 2002). The company strives very hard to maintain a small company atmosphere despite the fact that the company opens 4 outlets and 200 employees are added to the workforce every day (Weber, 2011). A rather unique fact about the company is the employees are considered as partners and a lot of attention goes into selecting employees.
The company firmly believes that having satisfied employees is what results in satisfied customers and that translates into greater profits. There are comprehensive health benefits that are offered to the employees that even extend to their same-sex or opposite sex partners. In addition to that there is also coverage for dental, vision coverage, tuition reimbursement, stock options, vacation plans and also a 401K plan. Both part time and full time employees are given the same benefits. Howards Schultz even went in record saying that during the course of the next two years the company will spend more on employee health care than what it spends on Coffee (Weber, 2011). The company like any other is also affected by external factors.
Economic factors: Like any other company Starbucks has also been affected by the fluctuations in the world economy. The increasing debt levels, issues arising from adjustable mortgage rates and interest levels will affect the company because these factors will affect discretionary spending. It is expected that since the target customers are of a higher –income target, and because of their habitual nature Starbucks may not be affected very much (Alvarado, Dockett, Romano, & Ferguson, 2007).
Legal/political factors: Political tensions between the US and countries in Middle East and Southeast Asia the world has affected the company. Since the US was close to Israel, Arab students called for a boycott of all American products. When the situation in Iraq got worse it created more problems for the company. Starbucks also has been the company to be boycotted because of Howard Schultz and his alleged closeness to the Jewish Community. There were also two class action suits filed against the company. Carr vs. Starbucks and Sheilds Vs Starbucks are two such cases and even though the company has denied liability in these cases it has agreed to a settlement to avoid the protracted litigation (Khattab, Aziz, & Naguib, n.d)
Socio-cultural factors (changing demographics, shifting consumer buying patterns, recent trends or fads, etc.)
Technological factors: The Company has been quick to adapt to the internet. Its website www.starbucksstore.com enables customers to order the complete line up of their products online and get it delivered to their homes (Starbucks, 2011).
International factors: Starbucks imports all the coffee beans that it needs for its operation. If there is a change in the import laws it could affect the company. Numerous areas of production could be affected because if the coffee costs more it could result in the increase in price of the end product and this might lead to a decline in the consumption of coffee (Khattab, Aziz, & Naguib, n.d).
The chain has competition from several sources. Fast food chains have started to include coffee based drinks on their menus and this include McDonalds and Dunkin Donuts. Dunking Donuts was even labeled as ‘the hottest coffee chain’ according to a survey by ‘Brand Key’, a major marketing firm. With their huge customer base and resources they might prove to be threatening to the survival of Starbucks. There are also other chains that have proven to be competition to the company. They are Caribou Coffee Company Inc, Tim Horton’s Inc, Panera Bread and so on. These are coffee house companies and in the same league as Starbucks. However the two main rivals competing with Starbucks are McDonalds and Dunkin Donuts (Alvarado, Dockett, Romano, & Ferguson, 2007).
Caribou Coffee, Tim Hortons and Panera bread are small proprietary firms that compete with Starbucks. Recently there has been an increase in the number of fast food chains that want to tap into the coffee market as well. McDonalds and Dunkin Donuts have been trying to replicate the coffee experience and combining it with their own fast food culture. McDonalds have been taking steps to implement coffee machines in their outlets. They are also offering premium coffee from roasted Arabica beans that are the same kind used by Starbucks. This strategy is being tested in stores in New York, New Jersey and Michigan (Alvarado, Dockett, Romano, & Ferguson, 2007).
The service staff at McDonald’s are also trained to add the cream and sugar for the customer at his table. In other words, the personalized service that is offered by Starbucks is also being replicated by the fast food chains. Dunkin Donuts is trying to promote a cup of coffee in its own way. Coffee according to Dunkin Donuts is a fuel and not a lifestyle. Drinking coffee is seen as a task that has to be fulfilled. Both these chains are promoting their breakfast meal by adding a cup of coffee to the customer and trying to convince their customers by saying that a cup of coffee would go great with their breakfasts (Alvarado, Dockett, Romano, & Ferguson, 2007).
However it is felt that Starbucks has a vast customer base that is loyal to the experience that the chain offers irrespective of the location of its stores. These are the very same people who were responsible for the rise of the company. One of the main reasons that endeared them to the company was its commitment to promoting coffee drinking as an experience by itself. The reason why they remained loyal to the company was perhaps because they really enjoyed what the company had to offer. It is unlikely that they will opt for other brands of coffee. However what is really felt as a threat is the fact that the company is at the mercy of the fluctuations of international trade. That is a matter of concern for the company.
Alvarado, S., Dockett, M., Romano, M., & Ferguson, W. (2007). Starbucks Corporation.
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