Starbucks Corporation Case Analysis Introduction
Starbucks Corporation is a Seattle based multinational coffeehouse chain with presence in fifty countries and about fifteen thousand retail stores. The company is involved in sale of drip brewed coffee; espresso based hot drinks, coffee beans, snacks and more recently Panini and pastry (Starbucks, 2010). In addition the company has established an entertainment division involved in marketing music, books and films (Starbucks, 2010). Starbucks Corporation is a reputable market leader owing to the production of successful innovative products. The coffeehouse chain is also renowned for its strong ethical principles and effective management (Bussing-Bucks, 2009).
The initial companies approach involved creating a personal relationship between its employees who are also referred to as partners. However, in 1995 the company ventured into the international market with its first coffee house store being located in Tokyo, Japan (Bussing-Bucks, 2009). The company had to contend with new challenges arising from rapid expansion of its store network and product line. Starbucks employees (Partners) are well motivated and have developed a culture which is distinct within the organization.
The company has avoided a hierarchical structure but has an executive management and a board. Each store has a manager an assistant manager and an average of fifteen workers (partners). The management has incorporated total quality management and a system similar to the Just in time production method. Starbucks also allows its employees to purchase stocks in the company so that they can have a stake in the company. Any employee who also works for more than twenty hours qualifies for benefits. As a result the company has developed employees who are part of the Starbucks community who treat each other with dignity. The customers also experience pleasant ambience and good service. Starbucks as a multinational company has also experienced numerous challenges from different regions in the globe. As a result the company has been forced severally to defend itself as well as rectify some of its errors from time to time (Bussing-Bucks, 2009).
The company has received criticisms with regard to employment, ethical sourcing of coffee and environmental degradation among others. The leadership at Starbucks has always attempted to react to criticisms early enough. They have also tried to rectify some of the errors or shortcomings that have arisen in the operations of the corporation. The corporate executives have formed an "emerging issues council" that tracks potential problematic areas and tries to get solutions to existing problems. This proactive approach has made it easy for the company to foresee possible future challenges and develop solutions to these challenges before they actually occur.
The Starbucks management has also successfully managed innovation within the corporation such that today innovation is one of the company's biggest assets. The company has constantly developed new products and ideas which have been readily accepted by its target customers. A perfect example is the development of a customer care system whereby customers launch complaints, give complements and ideas to the Starbucks management and employees through their main website (Starbucks, 2010). This idea has enabled the customers become members of the Starbucks community while at the same time enabling the corporation to serve them too. The Starbucks management has managed to listen and respond to emerging issue and respond within a reasonable period to complaints and community issues (Bussing-Bucks 2010).
Starbucks Expansion Challenges
The expansion of Starbucks into the international market has presented various leadership challenges. First the company has to retain its image in the other countries regardless of the situation on the ground (Weihrich, 2008). As a result the company has struggled to operate ethically even in overseas markets. Any unethical activities from its external stores could easily damage the reputation of the entire corporation. Innovation must always be managed in order to remain relevant in the market. Any company that relies on innovation could suffer a lot if the production of innovative products and ideas ceases. Therefore this must always be closely monitored in all the Starbuck stores.
The maintenance of a good working environment in the international market is also a difficult task. This is because Starbucks strives to establish a personal relationship with its employees (Bussing-Bucks, 2010). This practice has yielded good motivation for its employees which has also lead to increased returns. Any mistreatment of a worker at the company is likely to elicit a public outcry. This is because the media has always dramatized and exaggerated issues related to Starbucks partly because the corporation it has defied odds by use of innovative ideas such as use of fair-trade coffee instead of the common ones such as pricing strategy to gain a competitive advantage (Weihrich, 2008).
Competition is one of the biggest challenges for the Starbucks coffee company. Several coffee brewers have attempted to use pricing strategies as away to win customers at the expense of the company. This has prompted the company to lower down the prices of its product in an effort to retain its customers. Despite the use of other strategies to edge out competitors, the Starbucks management must adopt good pricing strategies in future in order to remain competitive.
Case Analysis Conclusion Example
Starbucks coffee company is a reputable market leader in coffee production. The leadership of the company has been instrumental in its rapid expansion and development of its product line. Arguably the corporation success can be attributed to innovation and good business ethics. Companies with a good reputation and business ethics easily win customers in the contemporary world (Weihrich, 2008). Maintenance of these ethical practices is very important if at all the company has to remain competitive in the long run.