Starbucks Control Mechanisms
Introduction Business control systems, although sometimes complex in practice, are quite straightforward in concept. Control systems are designed and implemented as a means to control resources and to ensure that employees act in a manner that is beneficial to their organization. Effective managers can use control systems as a tool to make sure activities are carrying on as planned. Starbucks is a nationwide coffee house specializing in variations of coffee. Starbucks implements control functions like budgetary, financial, market, and clan.
Control Mechanisms Starbucks, like most major corporations have many control methods, one method sed which is typical with almost every company is hierarchy control. With many levels of management, the most secretive is the undercover manager, which Starbucks calls secret shopper or snapshot. Another type of control is a regulative control- which stems from standing policies and standard operating procedures. Starbucks’ third principle is applying the highest standards of excellence to the purchasing, roasting and fresh delivery of our coffee (Starbucks, 2006).
The third type of control is Starbucks financial control, and Starbucks recognizes that profitability is essential to their future and success. The final form of control is the clan control, relationships are enhanced by introducing a cooperative and goal oriented organizational structure with effective operational processes and international expansion strategies. Employees are referred to as “partners” with both part and full time staff treated equally by offering both stock options and full medical coverage (Schultz, 1997). Compare and contrast these control mechanisms.
These control mechanisms are intertwined to the success of Starbucks, together and individually the controls test policies and principles for effectiveness and quality. Hierarchy like clan control deal with employment and managerial structure at Starbucks, as with many corporations authority has many levels, but every employee is treated as partners. Regulative and financial controls are applied to the product development, quality control, and revenue. The success of Starbucks is dependant on the products it sells and has very high standards for the materials and ingredients used in their products.
In result Starbucks sold nearly 10 billion dollars worth of coffee and products in 2009 (Marketwatch, 2009). Effectiveness When a company such as Starbucks becomes the chain phenomenon that it is oday, there has to be an obvious effectiveness to the way they have decided to run things. Starbucks has put into effect the hierarchy control which allows for managers to play the part of customers. The employees would have no idea that they are anything other than the normal customer, and this would give the company a clear idea of exactly the way the customer service end of the business is run.
This method treated by the Starbuck employees is being witnessed on a first hand basis. As for the product that one receives from any Starbucks restaurant, there is a standard in hich that product is delivered, prepared and served. This is all controlled and monitored with Starbuck’s regulative control system. This system allows Starbuck’s to precisely regulate the purchasing, roasting and selling of the coffee. In order for Starbucks to properly succeed and grow there must always be a form of profit being made at all of their locations worldwide.
If a profit isn’t being made, then there will never be the option for growth. If the company is not able to grow and profit, eventually it will no longer exist. These profits and such are monitored under the financial control system. This control system allows for all of the money that is being made to be properly monitored and distributed as needed. Starbucks being an equal opportunity employment venture offers many things to its employees such as stock options and medical insurance.
Starbucks clan control ensures that all of it employees or partners are treated properly and given the option of internal growth. Having these types of career option and incentives will make way for more valuable dedicated employees. Positive and Negative reactions It would be extremely hard for one to find any negative reactions with how Starbucks conducts business based on the level of success had by the coffee chain. Pricing seems to be the biggest complaint according to Lee (2007). Many people feel that the extra cost versus what the competition offers is not worth it.
One such example that is shared by Lee’s survey (2007), “face it, Starbucks is expensive. With so many other options available to me, it is not always worth the added expense,” and another reaction is “if prices go up again, I’m out. ” The negative reaction is from the financial control that deals with the pricing. Customers always look for a cheaper upplier and Starbucks may suffer as a result. Now that we have looked at the negative there are many positive reactions to the way Starbucks conducts business. Starbucks seemingly swept the nation overnight with their business strategy.
With the control that allows managers to play the part of customers service is likely to have been of higher quality because the employees would always be on top of their game. Control over the quality of their product is seemingly very well handled as there are millions of customers who prefer Starbucks brand over other coffee brands. Lastly, the offering of stock options and the attitude of treating employees as partners is also a positive and makes the employees feel they are valued and will continue to give service of a high quality to go along with the quality coffee.
Controls affects and the 4 Functions of Management Starbucks uses these types of controls to represent the four functions of management consist of planning, organizing, leading, and controlling. Financial control aides in the planning process by publicly reporting how the organization is achieving their goals on a yearly basis. This allows the investors and partners to know hat is happening in terms of financial situations, and how the company is moving performance, we aim to inform, inspire, and engage our partners, customers, and other stakeholders.
In addition, this exercise gives us the opportunity to measure our progress and refine our strategy for the future” (Starbucks, 2009, Para. 3). The hierarchy control that Starbucks uses aides in the leading principal of management. From the top of the company down, this control is shaped by the Starbucks mission statement “to inspire and nurture the human spirit – one person, one cup, and one eighborhood at a time”(Starbucks, 2010, p. 1). There is also a Standards of Business Conduct that is issued to all partners within the Starbucks Corporation.
These standards allow the top executives to check the state of the employees, and create an example of leadership for their managers. According to CEO Howard Schultz, “the standards will help ensure that our values continue to be reflected in each Starbucks store, and business activity; a commitment to integrity, acting honestly and ethically, and complying with the letter and intent of the law are critical to our continued uccess” (Starbucks, 2010, p. 2). The Regulative form of control is linked to the organizational aspect of management.
This includes the operational controls and also the products that Starbucks sells. All Starbucks stores are owned by the parent company, or licensed from them, making organization a key component to Starbucks vision. Knowing that all Starbucks stores have the same vision keeps the standards in place and the company moving forward. Starbucks is committed to only selling the finest coffee beans and drinks. Organization of suppliers is crucial for Starbucks to aintain their integrity, and company policy.
Regulating the products Starbucks receives from their suppliers enhances the Starbucks philosophy. The clan control that Starbucks employs deals with the controlling function of management. Starbucks uses this type of control to aide in the controlling aspect regarding their employees. A type of control commonly used to achieve this is feedback. All employees at Starbucks are asked to fill out a form called the Partner View Survey every 18-24 months. These surveys act as a guide for the company to know what is happening within the workforce.
Another critical form of control is the training of Starbucks employees. Each new member of the Starbucks team must commit to and receive at least 24 hours of training before being released into the work environment. Starbucks is committed to having a helpful and knowledgeable workforce. Conclusion Starbucks is a chain that is known for the largest variations of coffee. Growing to be a successful business took a large amount of managerial wisdom. As the planning, organizing, leading and controlling aspects are taken into account, the last one can be the most tasking.