These outrageous success was due to its well-developed strategy vision which lay out the company’s strategic course in developing and strengthening its business. Starbucks is a global corporation that sells authentic coffee in 30 countries, reporting revenues of nearly $5. 1 billion in 2006. The main goal of Starbucks is to embrace diversity by applying the highest standards of excellence.
Starbucks strives to perfect the relationship with the working class by making the service as fast as possible because they believe that every customer has their own personal rate. One of the main reasons Starbucks is so successful in this flattening global economy is because they focus on quality and experience rather than the price. Starbucks image is one of the key elements to their success. By focusing on plenty of comfortable seating, customer feel welcome to stay longer than planned.
Starbucks hopes to create a “third place” between home and work for their customers. The key marketing strategy Starbucks chose was promoting its product through environmental friendly campaign. The Porter’s competitive strategies that Starbucks used include the board differentiation strategy where they strive to build customer loyalty by differentiating one’s product offerings from rivals’ products. Also, the focus strategy based on differentiation by offering niche members a product or service customized to their needs.
Following these differentiation strategies, Starbucks seeks to offer unique products that are widely valued by customers. Howard Schultz wasn’t the first person to be carried away by the aroma of a well-roasted coffee bean. But he was undoubtly the first to turn that reverie into a billion dollar retail operation. with Schultz’s dedication and determination, Starbucks experienced astronomical expansion during the 90s and growing at a rate of 25-30 percent a year. Therefore, I would give Howard Schultz an “A-” for the job he has done as CEO and chairman of Starbucks.
The reason for the “A-” instead of an “A” is because I believe there are more that Schultz could have done to promote and expand Starbucks. Indeed, Starbucks has enjoyed tremendous success in the US but they have less than six percent market share of coffee consumption. Starbucks is only in their infant stages of the growth of the business even in America. And now seeing what Starbucks have done internationally, I believe Howard Schultz should have some strategic plan to shock people in terms of what Starbucks is going to be in the near future.
Vision is the core of leadership and is at the heart of a strategy. The leader’s job is to create the vision for the enterprise in a way that will engage both the imagination and the energies of its people. As CEO of Starbucks, Howard Schultz has developed and promoted a strategic vision from the beginning: to make Starbucks “the most respected brand name in coffee and for the company to be admired for its corporate responsibility. ” Two key values that supported this vision were “to build a company with a soul” and to pursue “the perfect cup of coffee.
However, in a turn of the century, Howard Schultz’s vision/mission has evolved during the 1990s . In the early 1990s, Schultz and the senior executive team of Starbucks drafted a new vision/mission statement, which is to establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining their uncompromising principles as they grow. Its main focus is to provide a great work environment and treat each other with respect and dignity, as well as, applying the highest standards of excellence to the purchasing, roasting and fresh delivery of their coffee.
Now after 13 years as chairman, removal from Starbucks’ day-to-day management, Howard Schultz has returned to his former role as CEO with another impassionated mission, which is to reinvigorate what he calls the “romance and theatre” of coffee making that have been damaged in the retailer’s meteoric global expansion. Indeed, I believe Schultz’s strategic vision for Starbucks would most likely to undergo further evolution in the near future. As Starbucks’ strategic vision evolved over the years, so did its strategy.
Starbucks current strategy in comparison to its original competitive strategy are: to continue the focus on growth; to establish a leadership with company owned stores in key markets such as USA, Japan, Australia, and UK; to pre-emptively enter and aggressively grow in all targeted markets; to leverage the brand into new product categories and channels; to continue operations improvement; to growth through innovation; to develop and maintain leadership talent; and to maintain their values, culture, and guiding principles.
The key elements of Starbucks current strategy is to expand Starbucks globally, and to further develop its internet business. The strategy has changed over time as the business has grown exceptionally well in North America, and now they want to take that success over sea. Howard Schultz said that he wanted to build a company with soul, which led to a series of practice that were unprecedented in retail. Schultz insisted that all employees working at least 20 hours a week get comprehensive health coverage, including coverage for domestic partners.
Then he introduced an employee stock-option plan that eventually help boosted loyalty and led to extremely low worker turnover, even though employee salaries were fairly low. One of the key policies of Starbucks is their approach to being seen as “the third place” for their customers after their home and their workplace. To achieve this, Starbucks design their stores with stuffed chairs and tables. Most of the stores also provide free electricity and wireless internet access to customers.
Starbucks is also noted for its non-smoking policy at almost all of its stores, despite predictions that this would never succeed in markets such as Germany, which used to have few restrictions on smoking. According to the company, the smoking ban is to ensure that the coffee aroma is not adulterated. In addition, Starbucks also asks its employees to refrain from wearing strong perfumes for similar reasons. Starbucks generally does not prohibit smoking in outside seating areas, unless required by local codes.
Howard Schultz has once said “we’re in the business of human connection and humanity, creating communities in a third place between home and work. ” A company cannot function privately forever, it has to be a part of the world, and it has to plan for a better future in the world. For Starbucks, that means respecting their employees, contributing to their communities, and planning for increased sustainability and progressive economic, social, and environmental working conditions for farmers.
One of the largest differences between Starbucks and other coffee companies is the level of expertise demonstrated every day, in every store, by every barista. In order to maintain this level of service, Starbucks invest in employee benefits, from health insurance for part-time employees to stock options, flexible hours, additional training, and competitive wages. Starbucks has a diverse workplace that encourages mutual respect and solicits the input of all their employees in continuing their mission to brew the best coffee on earth.
What does Starbucks really care about? They want to cover the uninsured week, where Howard Schultz is committed to medical industry to come together to find a good solution to this growing problem. Starbucks is also proud to have invested in Ethos water, the first bottled water company to fund water development projects around the world. In addition to all these, Starbucks has also established the Starbucks foundations, which is dedicated to creating hope, discovery, and opportunity in communities where Starbucks lives and works.
Starbucks is committed to community development through socially responsible investing. With its well-stated company values, Starbucks has truly demonstrated its ability to implement and executed its company’s strategy and become one of the successful coffee retailer in the nation. With its dedication to each and every employee’s concerns and success as well as providing a comfort environment and good cup of coffee for its customers, Starbucks has proven to create a positive environment for its workers, customers, and communities.
Starbucks articulates its values all over the place including its website, its recuiting and promotional materials, and the backs of employees’ business cards. Through a process called mission review, which encourage employee, called “partners” to voice concerns to company leaders about whether or not company practices are consistent with Starbucks’ mission statement, the company strives to ensure that it never strays too far from its principles. In addition to having a reputation for treating employees well, Starbucks is also known for its outreach programs into communities both where stores operate and where its coffee is grown.
I highly doubt that Starbucks’ shown social responsiblity is just something the company does and talk about just to create a good public image. I think Howard Schultz has done a tremendous job in trying to making Starbucks a great place to work by providing extensive training and health benefits to its employees because a majority of the companies does not provide health benefits to its part-time employees. If I have to give Howard Schultz a grade for this tremendous job, I would give him an “A” on his dedication and consideration toward his fellow employees.
Personally, I think Starbucks’ social responsibility has pay off in the most effective ways. Starbucks has shown to have an extensive portfolio of social responsibility initiatives. It has proven to be the best work place that stands for something beyond profitability. Starbucks financial success and rapid domestic and international growth has assisted them well in achieving their goal of becoming one of the most recognized and respected brands in the world.
From 2000, when Howard Schultz stepped down as CEO, Starbucks has experienced a rapid growth from 3,501 stores at the end of fiscal year to 10,241 stores at the end of 2005 fiscal year. Many investors say rapid growth is to blame for Starbucks foundering financial performance and stock price during the last couple years. Starbucks’ performance in some ways indicate that their strategy to aggressively grow in target markets and focus on growth has succeed, yet they have failed in their customer relationship aspects.
Starbucks has went overboard with its expansion and could lose control of the company if they don’t make big changes, including ending a “growth at any cost” strategy. They need to work on renewing their relationship with customers instead of mainly focusing on growth because without customers, their growth would be pointless. Based on that, I don’t think Starbucks have a “winning strategy” because they didn’t meet all three of the stated criterias. Indeed, Starbucks did meet the performance test with its rapid growth boosting the company’s performance.
In fact, Starbucks also meet the competitive advantage test with its numerous stores available at almost every corner of the street. However, Starbucks didn’t meet the goodness of fit test because as a leading coffee retailer, its main focus should be providing a great cup of coffee, as well as, providing “the third place” to its customers especially since customers loyalty is the key element to their success. Therefore, Starbucks should focus to retaining this customer relationship instead of worrying about growth. With a good customer relationship, it would eventually lead to rapid growth.
Throughout the years, Starbucks has encounter and dealt with many issues including expansion, leveraging the Starbucks brand, the music and publishing businesses, the soaring cost of employee health benefits, brand equity, customer equity, as well as, brand positioning. Starbucks deals with brand equity by always taking the future into account. They switched from selling coffee beans and equipment to being a coffeehouse which got everything stated. Starbucks is always focusing strictly on the customer and their point of views by getting customer feedbacks and reactions so they know if certain trends are dying off or coming about.
Starbucks deals with customer equity by having highly trained as well as skilled employees. By having well-trained and skilled employees, they will know how to do their job in a fast and efficient manner impressing customers who go there for the convenience, and they will also be able to get on a more personal and friendly level with the customers. In addition, Starbucks deals with the brand positioning issue by continuing to focus on the customer and his/her point of views. They position themselves by appealing to adults of all ages.
With Starbucks’ rapid growth and strong financial performance, I believed its CEO, Howard Schultz, has indeed experienced every possible strategies and actions needed to making Starbucks the best coffee retailer. The few recommendations I would make to Howard Schultz is to focus more on on its customer relationship, its quality and product, and the cost of its products. With so many coffee competitors nowadays, in order to succeed, Starbucks have to regain many of its customers back by lowering their price.
With the raising in price and the status of current financial market, customers are given more choices and substitute products at lower price. Although Starbucks might have better quality in their products and better environment, but as a consumer myself, I believe many would rather choose price over quality and environment. As proven in the news, Starbucks has closed hundreds or even thousand of stores in the last year or so.