Issues and obstacles faced by Starbucks corporation

In 1971, four people fill with enthusiasm of coffee open up their first espresso retail store-Starbucks in Seattle, Washington. By 1981, the company had 4 shops, which were sale complete bean caffeine. Howard Schultz, who is the chairman and CEO of Starbucks, was employed and join the marketing team in 1982. In those days, Schultz wanted to create an idea that Starbucks become Us citizens "third place" to look, which really is a place people can enjoy, relax themselves rather than a long way away from work or home. Hence, Schultz advised company set up an espresso club in the retail, hence, the theory was allow to test in the 6th store in 1983. From then on, the development of company more than doubled. Few years later, Schultz bought Starbuck. After Schultz took over the company, Starbucks turn into high-speed expansion stage. By 1992, Starbucks already had 140 stores, which serviced espresso, beverage, cake and some stores even sold jazz CDs (Tuck business institution, 2002). Now, Starbucks is worldwide company with 17, 800 stores in 49 countries including more than 10000 stores in US, 1000 in Canada and 800 in UK (google map, 2010)


Data collection methods


As customers of Group 8 (ASB 4431 Organisations & People Task Teams 2010-11) perusing a Masters level in Bangor University, have done a report on Starbucks critically evaluating the organisation's framework, strategy, culture, and management/authority style.

Data collection method

The research strategy that the study used is the explanatory or Analytical research methodology. As this research is based on our analysis of Starbucks, framework, culture, leadership and other issues would be explored; questions will need answering therefore a need to comprehend the phenomena. The usage of a Qualitative data evaluation will be employed since the data we use will all be non-numeric data. Saunders et al, (2009)

Source of data

Secondary data was extracted from already existing data mainly from Starbucks website, other Internet options, journals and books.

Issues and challenges

There are three issues considered in this survey, first is the learning resource constrains, almost all of the articles we found are available online, however not absolutely all of them are free to assess, specifically for those authoritative articles that always need to pay to determine, for example, the reserve called Pour Your Heart INVOLVED WITH IT: How Starbucks Built a Company One Cup at the same time, which written by Starbucks' CEO Howard Schultz is an excellent reference point for our survey, however, we can not assess it without buying it. Second issues is having less critical review for Starbucks, most paper we found was respect Starbucks as the positive example in explaining organisational behaviour, there is no question that Starbucks doing a great job in rewarding their employees, however it brings troubles to be critical inside our report. The final issues is the moral and legalities, as all the article we found can shared publicly, and we all using appropriate reference, as a result, there is absolutely no ethical and legal issues to consider for our statement.


In this study, qualitative data research has been conducted to judge the organisational feature of Starbucks Organization somewhat than using quantitative analysis such as statistical research. In order to gather the info, distant data collection, such as Search on the internet and books review about has been mainly conducted. The purpose of this study is to critically evaluate the organisation composition, strategy, culture and management or command applications of Starbucks Firm, therefore all information are collected by search on the internet and literature review. To be able to analyse collected data to judge feature of Starbucks Organization, observed data analysis method has been used. Comprehensive seek out several facts related to structure, strategy, culture and management/authority applications of Starbucks, has been performed by using Search on the internet and literature review. Afterwards, critical evaluation has been conducted to link all information naturally. Finally, all analysis results were included and final final result has been created.


Overview of corporate and business strategy & business goals

Mission statement

A mission affirmation is a brief description associated with an organisation's fundamental goal, which is steered in outlining the existence of the organisation; this is to permit people of the organisation to understand the company's goal as well as the general public. (David, 2009)

A mission statement should be a short and short declaration of goals and targets. The primary goal of any business is to maximize stakeholder worth, which include shareholders of the business, business employees and clients or customers who purchase business goods and services. (David, 2009; Abell, 1980)

Diverse works have layed out what should be covered in a quest statement (Abell, 1980; Pearce and David, 1987). It is not this content of the mission statement that really matters but rather the process used to get ready the report and the rules employed to fulfil the ready file (Mullane, 2002).

In the objective assertion of Starbucks which discusses uplifting and nurturing the real human spirit - one individual, one cup and one neighbourhood with principles to reside in out every day as an company to fulfil their quest statement.

The principles here are what Starbucks utilize in achieving their mission affirmation;

Our Coffee; It has always been, and will continually be, about quality. We're passionate about ethically sourcing the finest coffees, roasting them meticulously, and bettering the lives of folks who grow them. We care deeply about all this; our work is never done.

Our Associates; We're called lovers, because it isn't only a job, it's our passion. Together, we adopt diversity to make a place where each folks can be ourselves. We always treat each other with value and dignity. And we keep each other to that standard.

Our Customers; When we are fully engaged, we hook up with, giggle with, and uplift the lives in our customers - even if just for minutes. Sure, it starts with the promise of a flawlessly made drink, but our work moves very good beyond that. It's really about individual connection.

Our Stores; When our customers feel this sense of belonging, our stores become a haven, a rest from the problems outside, a place where you can talk with friends. It's about excitement at the speed of life - sometimes sluggish and savored, sometimes faster. Always packed with humanity.

Our Neighbourhood; Every store is part of your community, and we take our responsibility to be good neighbours seriously. We want to be invited in wherever we do business. We can be a power for positive action - combining our lovers, customers, and the city to contribute every day. Now we see our responsibility - and our potential for good - is even greater. The entire world is seeking to Starbucks to set the new standard, yet again. We will lead.

Our Shareholders; We realize that as we deliver in each one of these areas, we enjoy the kind of success that rewards our shareholders. Our company is fully responsible to get each of these elements right so that Starbucks - and everyone it touches - can withstand and prosper.

Environmental Mission Declaration; Starbucks is committed to a role of environmental command in all facets of our business

Our Starbucks Mission Statement; Our objective: to motivate and nurture the human spirit - one individual, one cup and one neighbourhood at the same time.

(Starbucks: Our Mission Statements)

Business strategy

To understand and analyse corporate and business strategy and business goal of Starbucks, we first of all need to have a hint of what commercial strategy is. By Johnson and Scholes, corporate strategy is defined as:

"Strategy is the course and scope of a business in the long-term: which achieves benefits for the business through its construction of resources within the challenging environment, to meet up with the needs of market segments also to fulfil stakeholder goals. "

In the situation of Starbucks, the business is employing Porter's Differentiation Emphasis Strategy. "This plan provides a service or product to a particular market area of interest and differentiates from competition in specific areas". (Rebecca Larson, 2009) Starbucks does not are present as a low-cost company to the opponents. It targets the specialized options, provides specially customized lines of caffeine and tea related products for reduced price.

Starbucks does not promote itself by using traditional means; they often concentrate on high-level marketing and branding by "word-of-mouth", as well as alliances and partnerships. They do not promote the business, however automatically they are simply promoted by providing customer care and also their excellent works where up to now has becoming a successful strategy.

By the company's hard work, concentrating on details and honest decision-making, customers have observed an excellent service, because of this, the company slowly but surely built up its reputation and becoming "one of the most valuable global brands". (Theodore, 2002, p. 62) It really is incredible that Starbucks's success with very few commercials, ads or any other kind of marketing means.

Starbucks cannot become a coffee-related products gigantic retailer and remain long-term success only by reselling coffee on its own. One important part of the company's strategy is "strategic alliances", which could also be called "joint venture approach". This strategy leads the globalization of the business with higher acceptance and trustworthiness of the brand also exposing the brand to other potential clients. The variety of company's products is relatively being extended demographically and geographically.

For example, in order to advance cultural and economic equality, the company allied with NAACP, the company donated and as well as NAACP organized events for communal equality has learning to be a great success. It revealed that Starbucks is no more a simple business firm, it also is accessible as a charity which brings the company higher reputation. In addition they "partnered with Barnes and Noble bookstores to be the in-house coffee shop in 1993", (Isidro, 2004) co-produce coffee-related drinks such as Starbucks Frappuccino with PepsiCo from 1996, "formed alliances with ice-cream companies and hotel chains to offer Starbucks brand and flavored ice-creams and Starbucks coffees within the hotels" (Rebecca Larson, 2009).

Explanation of organisational structure

Board Committee group structure of Starbucks

The structure of Starbucks Company is shown in Physique 1. As stated by Starbucks Company Fiscal Annual Survey (2009), as group member of the Mother board of Directors, Howard Schultz was appointed to Company's chairman and chief executive. Barbara Bass, William W. Bradley, Mellody Hobson, Olden Lee, Wayne G. Shennan, Javier G. Teruel, Myron E. Ullman and Graig E. Weatherup were appointed to director singularly. Kevin R. Johnson and Sheryl Sandberg were appointed to Key Operating Officer individually. Additional, Starbuck Firm consisted of 38 participants of Senior Officers. Board Committees are composed of Audit and Conformity Committee, Corporation Compensation and Management Development Committee, Nominating and Corporate Governance Committee.

The Panel of Director inclusive twelve participants, independence of each member are requested to meet of the NASDAQ Stock Market efficiently. When Mother board getting path about suggestion of the Nominating and Corporate Governance Committee, the Panel of Directors will appoint a new member in case of there's a vacancy occupation take place on the Board. The Board of Directors of Starbucks Company are accountable for monitoring company capabilities and ensuring that the business business meet goals which is requested by shareholders. The Table have responsibility to choose nominees for the Table of Directors who have appropriate requirements and diversity of backgrounds activities. And in addition, it is in charge of appointing chief working officer. (Starbucks Corporation Fiscal Annual Record, 2009)

The Audit and Conformity Committee are in charge of financial reporting and interior, external audit techniques. The Committee facilitates the Plank of Director looking at financial issue.

The Committee was appointed from the Mother board of Directors. The Committee have three people at least and all of them shall match The NASDAQ CURRENCY MARKETS requirements independence. The Committee be advised by the organization Governance Committee, and lastly appointed by the Plank of Director. The Committee has power to investigate any financial activity and free access to customers of management. It is retain independent lawyer. All employees have responsibility to supporting people of the Committee analysis (Starbucks Firm Audit And Compliance Committee Charter, 2010)

The Compensation and Management Development Committee has responsible for dealing with management to determine appropriate compensation routines for the Company. You can find deciding the huge benefits and compensations for mature officers of the Company. The Committee includes three people at lease, which one member be required come from Panel of Director. The associates of Committee will be directed from Board as well. The Committee conducts an gross annual review of company's payment for Senior Official instead of president and chairman. Together with the Chairman of the organization Governance Committee, the Chair of the Committee shall each year review the performance of the president and chief functioning officer and meet with them to talk about the findings of such review when after talking about with the person in impartial directors of the Mother board (Starbucks Corporation Payment and Management Development Committee Charter, 2010).

The Corporate Nominating and Corporate Governance Committee is in charge of developing and implementing policies and techniques of the Table of Directors. They are really intended to constitute and coordinate correctly to meet its responsibilities to Starbucks Company and its shareholders. The Committee will be comprised of at least three members, most of whom have to meet up with the freedom requirements of the NASDAQ Stock Market, LLC as well as. Under Table of Directors way, members of the Committee and a Chair of the Committee shall be appointed. The Mother board of Directors shall appoint a new member or users, which really is a vacancy on the Committee. The Committee have professional capability to assist Board determining candidates personality. Reviewing the Company's Commercial Governance Concepts and Practices each year relating to changing shareholders' pursuits and suggesting appropriate adjustments to the Panel of Directors. And evaluate the overall effectiveness of the business of the Plank Committees performance.

Evaluation of the organisation structure of Starbucks

According to SeaZone (2009), company framework of Starbucks Company is "Matrix structure". This is one kind of organisation structures that is offered by Gareth Morgan. The organisation structure is quite important to control organisation, it performs important role for organisation's activities. In addition, the organisation composition relates to its business goal and aims. (Mullins, 2005) Matrix structure is the company composition that has both of vertical structure and strong horizontal structure. It requires employees to have two reporting interactions concurrently. In this framework, employees work in provisional group constituted by employees from different function. You will discover two lines of expert in this composition and employees have two bosses in their team namely boss for their project and supervisor for his or her function. (Mullins, 2005)

Specific future of matrix structure

Matrix framework provides organisation overall flexibility, and contributes to keep security and control of job information. Moreover, organisation can have a likelihood to develop stuff well. (Mullins, 2005) However, there are a few disadvantages of matrix framework. At first, there is limitation of variety of employees who are accountable to the project director directly, because almost all of all stuffs are designated from department managers. This example may lead uncertainty in company and employees may be unwilling to simply accept that their situation is transformed constantly and eager that they build in their practical group. Next, matrix structure has a likelihood that organisation make more technical. Finally, extension of the authority of administrator to the products coming from other sections can be considered a span of problem in company. Finally, it is expected that functional group might not exactly focus on their normal responsibilities and role. (Mullins, 2005)

What is required in matrix framework?

Matrix structure firmly deeply rely on teamwork spirits, it demand culture of co-operation. In this structure, managers are essential high level of behavioural and management capacity and organisation needs culture of cooperation. It's important to educate employees to aid other stuffs and to create the teamwork spirits. Additionally, stuffs will need to have a particular competence to resolve the conflict in their team in the matrix-structured company.

How organisation composition works in Starbucks

There are some cons in matrix composition as stated before, however, Starbucks, especially Howard Schultz, CEO of Starbucks Company, may have grasped these problems. Therefore he provided special declaration to employees when he widened Starbucks' structure to reinforce their interior and external communication in 2008. He has discussed the difficulties to do business in situation in those times and immensely important change of not only framework but also employees to be able to enhancing the customer experience. For the reason that subject matter, he also mentioned that structure of Starbucks Company experienced the innovative change, nonetheless it was necessary to improve customers' and things' activities and recapture the vigour and benefits in the company. As he discussed in that message, he accepted or realised that structural modification was hard for some stuffs due to increase and complicated of their tasks, however he also detailed that he made this decision understanding these kinds of issues. He explained that he previously made the decision this numerous change of composition with speculation and he respected for stuffs worried. (Starbucks, 2008)

Analysis of organisational culture

With the introduction of economy, the competitions between companies not only aim at the merchandise they offered but also their internal organisation culture. Offer and Kennedy explored company culture for 15 years plus they found that company with weak culture always beaten by organisation with strong culture (1999). Edgar Schein who's generally consider the father of corporation culture defined that "corporation is a design of basic assumptions - created, discovered, or produced by a given group as it discovers to handle its problems of external adaptation and inside integration - that has worked sufficiently to be considered valid and, therefore, to be taught to new associates as the correct way to perceive, think, and feel with regards to those problem' (1985). Organization ethnicities pay attentions to individuals in a group that it build an appropriate program make individual join in the organization quickly and help people work together toward the same organization goals. In addition, group culture help employee enhance their personal ability and knowledge to maximum. In the meantime, organisation culture forms the external performance and reputation, which are essential to decision making during purchasing

Starbucks is one of the successful string coffee stores. For the reason that it has a distinctive organisation culture. To be able to understand inside culture in Starbucks, we use the Great Holsfedes cultural platform. Holsfedes used different five aspects to judge culture, which can be electricity distance, individualism, masculinity, uncertainty avoidance, long-term orientation (Holsfedes, 1991). . Foundation upon this model, it can reveal that Starbucks have long ability distance, because every staff in Starbucks have the same basic protection under the law no special treatment. Furthermore, for the gander concern, Starbucks view all the employees the same no matter their gender, thus, Starbucks has high masculinity and femininity. Looked after has low doubt avoidance; due to it have a multitude of brunch stores overseas, Starbucks must take huge risk for that. In conditions of collectivistic, Starbucks belongs to high collectivistic, though it have branch store everywhere you go, but there is a primary team to execute the whole company. Starbuck still pay attention to environment and other charity event, so Starbucks is long-term oriented.

The strong electricity of Starbucks' company culture appeals a great number of people, including both consumer and potential worker. Great quality of coffee and well service make Starbucks become a global company with a huge selection of chain stores. Its organisation present a great service, consumer continually be likely to be confronted with enthusiastic well trained employees with a great number of caffeine knowledge and their service always bottom on consumers need.

Starbuck also charm people due to its values. Even as spoken above, Starbucks support many organisations in a long term, such as Conservation International, The Earthwatch Institute, Save the Children, Mercy Corps, the African Wildlife Foundation, and World Green. Starbucks express a message that organizations need to concern about the society and environment around them. And, Starbucks establish diversity internal working environment in order to satisfy the entire consumer.

The strong organisational culture in Starbucks also embodied in the manner they treat their workers. Starbucks hold employment fairs annually in several places, and there are also some recommendations for director to interview the candidates and test whether they have full understanding of the business's product, and who are adaptable, dependable and keen in getting together with customers. Starbucks also have to package with hundred of a large number of online applications using software developed by Taleo, this software help display out the candidates by answer the essential information and skills-based questions (Weber G. 2005). After hiring people, Starbucks will also offer a day of trainings with their employees, and understand how to utilize espresso machines, how to interact with the customers, the procedure and creation of coffees. Through the training, employees also have to understand the company's mission affirmation, and bring company culture with their customers (Cesario Small, Jr. 2009), Starbucks spends more on recruitment and development than on advertising which in 2004 is $68. 3 million (Weber. G. 2005), the mangers and assistance mangers likewise have trainings in computer, control and coffee knowledge. As Starbucks offers both product and services, people become a significant factor in maintaining the product quality, Starbucks treat their employees as companions by connecting their contribution to company's market value, and present the possibility to show the success in the company, their workers are highly involved in company's activity by reporting their concerns to company's Objective review team, each staff will receive a comment cards when they newly hired, and they can jot down some advice, advice or disagreement in general management decisions, the professionals will response and sign for all the comment cards within a fortnight, and their CEO Howard Schultz also review all the responses on a monthly basis(Cesario Small, Jr. 2009), the high involvement also improve the level of responsibility to the business.

Starbucks also popular in retaining and rewarding their workers by good salary, stock options and health cares, according to Thompson & Strickland (1999), the store employees were paid $6 to $8 each hour that is above the common minimum wages, their employees can also paying the initial year's price and obtaining the current year's price by cashing in one-fifth of the stocks awarded each succeeding 12 months. Part-time staffs is the major labor force in Starbucks, plus they receive the same health insurance as full-time employees, the insurance including preventive care, turmoil counselling, dental hygiene, eye care, mental healthcare and treatment for chemical dependency. Howard Schultz been asked to white house and talk with president Clinton to brief the Starbucks healthcare program in 1994. Starbucks have a member of family low turnover trend compare with the other companies, the turnover rage for Starbucks was about 65% compare with 150% to 400% for other sellers and fast-food chains, and the turnover rate for store administrator was much lower, which is 25% compared with 50% in other retailers.

Starbucks's company culture, especially the strong spiritual culture appealing tons potential employees, employees not only seduced by the salary, stock plans and healthcare, they wish to help Starbucks because the trust, ability and autonomy distributed by the organisation, Starbuck's advertising for reasonable trade and environmental efforts also bring positive image and reputations.

Critical analysis of Management & Leadership practices

CE for business goal

CE for organisational structure

Critical analysis of Management and Leadership practices

As we've described recently, the organisation framework of Starbucks is the matrix framework. This structure influence management style and management style, too. The matrix structure strongly relies on the teamwork and romance between employees and managerial stuffs. Inside the matrix framework, a type of command and survey is complicating and the collection is modified frequently. Therefore, employees are essential more technical work rather than in other company structures. Moreover, organisation must definitely provide employees good education system to produce teamwork spirits in company. Additionally, to be able to lead employees in the matrix framework, strong management and well-organised management style is essential. (Mullins, 2005) It would appear that Starbucks Company could probably overcome with these problems via disadvantage of the matrix structure and achieve to make good working relationship atmosphere. Therefore, they have been awarded a prize of "100 Best Companies to IMPROVE" by Bundle of money during 1998 to 2009, except 2001. (Starbucks 2010)

CE for organisational culture

There are two critical issues to go over in Starbuck's culture, firstly, David A. Tempo, who may have been an Executive Vice Leader of Partner Resources of Starbucks Firm since 2002 said that, 'even company were to hit crisis, the strategy of above-average investment in training and rewarding employees isn't going to change' (Weber G. 2005). Starbucks now is an successful company, and Pace's announcement really help to create a good reputation on taking cultural responsibilities, however, once the company suffer from the turmoil, can they still keep the promise, if indeed they can, it helps to gain more support of their employee, but if they can't, the employees will feel disappoint and could breakdown the reputation.

Secondly corresponding to Weber G. (2005), Howard Schultz, the CEO of Starbucks on Oct advised Business week Online that, for the next two years, Starbucks would spend more on worker healthcare costs than it does on espresso. What Schulze said may have both influences on the employees and customers. Because of their employees, they will feel appreciate and pleased to work for Starbucks, and it may also attract more folks desired to work for Starbucks. For Starbucks customers, some may feel Starbucks is a responsible and honest company and feel comfortable to buy coffee from Starbucks. However, spending less on coffee may misleading other customers that the company will pay more attention on worker health care alternatively than coffee, customers may feels they are not regarded.


Business goal

Organisational structure

As earlier mentioned, Starbucks adopts matrix structure for their company composition. (SeaZone, 2009) Matrix composition has a complex aspect owning to the characteristics of that structure, namely it has both of vertical framework and strong horizontal composition. Matrix framework provides organisation versatility, and contributes to keep security and control of task information. Additionally, company can have a possibility to develop stuff well. (Mullins, 2005) Alternatively, matrix composition has cons, for example, it includes limitation of variety of employee who are accountable to the project director directly, moreover, matrix structure has a opportunity that company make more technical. (Mullins, 2005) However, Starbucks seems to have good relationship and well-organised education system for managerial stuffs to get over with these downside and they appears to convert these cons to benefits of matrix framework. Moreover, Howard Schultz, CEO of Starbucks, has strong management and he's looking to encourage stuffs in order to achieve their business well. (Starbucks, 2008) In reality, the fact that Starbucks have been given a award of "100 Best Companies to Work For" by Bundle of money during 1998 to 2009, except 2001 provides evidence that lots of stuffs who will work for Starbucks satisfy to work in this circumstances. (Starbucks 2010)

Organisational culture

To final result, the In depth and thoughtful company culture is Starbucks key competitive strategy, which isn't only charm potential employees but also the clients. Almost all the clients satisfied Starbucks services because they are treated perfectly. At exactly the same time, they are faced with ardent employees and high quality espresso. For employees, they may have well trained before they participate in the work formally, which permit them to present customer professionally. Furthermore, employees are content with the wage and even part-time employees contain the insurance as well. Opinions makes Starbucks' culture special then their company. Their workers have the privileges to write down their disagreement or suggestion to company.


Business goal

Organisational structure(contained in conclusion)

Organisational culture

As we realize, Starbucks' turnover rate is low, because their rewarding system allures a great number of employees. We recommend company could change its rewarding system to performance platform system, which means employees' rewarding bottom on the personal working performance (e. g. setup best employee of the month/calendar year). In conditions of health care of employees in Starbucks, it is great to treat their workers in such a great way. However, consumers need a graphic that Starbucks devote itself to increase the quality of coffee and develop the surroundings to get. Hence, we recommend Starbucks could increase spending on retail store design and offering more sorts of food.

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