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The Yarn of Starbucks

Question:

Describe the corporate strategy of Starbucks.
 

Background of the Company:

The yarn of Starbucks began in the year 1971 and since then the company commenced its journey to get connected with the millions of consumers every day thereby rendering them with the intense feeling of beginning afresh. The major motive of the company always remained to inspire and uplift the souls of the customers with the help of their products. The company pledges to provide the customers with the best coffee, by collecting the coffee beans from the farms in Asia, Latin America, Asia and Africa. Starbucks has become one of the giant companies in this specific field and has expanded its business interests in almost all the countries across the world having approximately 23000 stores.

Besides coffee, Starbucks has excelled in providing its customers who form the major factor of the company’s growth, with a wide range of products and services. Fresh-brewed coffee, hot and iced espresso beverages, Frappuccino coffee and non blended beverages, more than 30 blends of coffee and premium coffees, baked pastries, smoothies, sandwiches, salads, yogurt parfaits and fruits and many more form the exclusive products served by the company. Consumer goods such as the Coffee K-Cup pods, Starbucks and Teavana , Whole bean and ground and ready to drink Starbucks Iced Coffee, Starbucks Discoveries, Energy Coffee Drinks, bottled iced and juiced teas and others.

Being such a well established and intensely determined organization, Starbucks maintains the policies of sustainability. The strong belief in the involvement of the community right from the people who grow the coffee beans and the consumers to whom the processed products are sold all together form the community and being a socially responsible establishment. Starbucks engages in ethical sourcing of the raw materials and thus maintains the balance between its revenue based concern and the social scruples.

Starbucks Concern with Social Responsibility in its Overall Corporate Strategy:

Since its very initiation, Starbucks has always taken innumerable steps in developing and retaining its reputation and standing in the global market zone. Starbucks had formed a separate department known as the Global Responsibility formerly known as the Corporate Social Responsibility that analyses, updates the company about all the required information regarding its performance every year, and thereby informs about the relationship of the company with its stakeholders. The company remains excessively alarmed about the environment, suppliers, and customers, the workforce and the entire community together. The social responsibility of the company is based upon the three major focal points, namely the community, fair sourcing and the environment.

With regard to the environment, Starbucks follows the strategies of protecting the environment in such a manner, that it can be very easily presumed that the planet earth is the most important factor of production or rather the most vital business associate for the organization. The establishment of the LEED certified stores that contribute in preserving the water and energy and also in dealing with the changes in the climatic conditions. Starbucks strive hard in order to serve the customers in the best possible eco friendly manner. During the year, 1992, Star bucks that clearly stated the environmental aims and objectives of the company had developed an environmental mission. The Shared Planet website of Starbucks makes the stakeholders of the company aware about the growth of the company in terms of the environmental aspects. The organization proceeds according to the principles or the strategies set forth by the Environmental Starbucks Coffee Company Affairs Team while dealing with the wastes and their recycling, conservation of energy and many other initiatives that are required to conserve the environment and the planet. The Cup Summit organized by Starbucks made a new approach by making the people think about the various ways of producing the disposable cups that are easily biodegradable. It also took an attempt to sell cups for $1 for recommended 30 uses. The firm has adopted this way in order to reduce the effect caused to the environment by the excessive deposition of non-biodegradable cups.

Products and Services

Howard Schultz has very prudently followed the steps that are required for the satisfaction of the employees who form one of the major factors of production. The most commendable and praiseworthy fact about Schultz, the CEO of the company is that he pays similar importance to the employees as it is paid to the customers. He had laid a great importance in making the employees feel that they are the priority of the organization by giving the employees the privilege to secure a four-year degree at reasonable cost; this will automatically make the employees provide loyalty towards the company. This education and up gradation of the employees of the firm will ultimately empower the workforce to produce better quality of products and innovations in the industry. Howard having seen his own father’s life being ruined by an unsympathetic employer, he strongly advocates the creation of a good working environment. The “Thrive Wellness” is the program launched by the company to assist the workforce in enriching their lives via varied programs that are offered by the company. To keep the welfare of the employees at the foremost position rather than the profit portrays the value it places upon the employees (Park et al. 2014).

The company is determined in developing positive relationship with the coffee growing communities. Starbucks is involved in the organization of number projects that ensure the benefits of the coffee growing communities; it invests in the development of health clinics, schools and colleges and along with paying the coffee growing farmers premium prices that would help in supporting their families and gaining profits. It also makes investments in the projects like the clean water systems, literacy efforts, health and sanitation training. In the year 1991, the company had begun contributing to a worldwide relief and development foundation named CARE in order to give remain associated it the coffee growing countries. In the year 2013, the company bought a farm in Costa Rica that had provided employment to nearly 70 employees. The farmer support centers of Starbucks enable the company in providing loans to the farmers; it has spent nearly $70 million for the upliftment of the farmers. The company also follows very diligently the guidelines of C.A.F.E or the Starbucks Coffee and Farmer Equity practices which helps in assuring better provisions for the coffee growing community or the major suppliers of Starbucks.

The company remains very much concerned with the environment that it provides to its consumers at the stores, the way in which the satisfaction of the workforce is vital for the company for its growth, the customers and their satisfaction and their loyalty also matter a lot for the progress of the company. More emphasis is placed upon the atmosphere of the coffee shops and the entire experience of the consumers, by making the people enjoy their time at the stores and along with the free wireless internet access at all the U.S. stores that enables the people to spend a good time at the coffee shops of the Starbucks. The company right after the global economic crisis became determined to renew its strategy for up grading the provisions that are provided to the consumers. It introduces new consumer products and even new merchandise items such as the coffee brewing machines in order to attract the consumers, especially the health conscious and budget conscious consumers. A wide range of products are produced and sold by the company.

Sustainability: The Core Value of Starbucks

To pose a constructive image and effect upon the communities, the company has developed several community stores at various localities and these community stores remain engaged with some of the nonprofit agencies. Thus, these community stores with the non-profit agencies of the localities aim at providing the best services to the community. Starbucks has also decided to bring diversity in its organization with the inclusion of the veterans and retired military personnel from in the workforce. The Starbucks foundation that has been established by the company is helping in strengthening the communities by organizing various training programs, which will educate the communities who are involved with the business interests of the company. The Starbucks coffee shops try to draw the people to those shops, which in turn create the community spirit. The company has helped in enhancing employment and decreasing the unemployment rate in America. It merged with the Opportunity Finance Network and established the Create Jobs program for USA. The company via this initiative has raise funds that are donated by the company to the community development financial institutions that in turn finance the small businesses, community centers and housing projects, which in turn give employment to the individuals in USA. The company in making this initiative a success has donated about $5million. The very mission of Starbucks to nurture and inspire the human spirit is accomplished by the company by providing grants to the nonprofit literacy groups, sponsors young writers that help in the preparation of the children in their preschool years (McDonald 2014). The store managers of the coffee shops are instructed to donate towards the local causes. The company has made such donations many a times for the purpose of developing the literacy among the underprivileged children. Thu, it becomes quite evident how much the company considers the development and involvement of the community through varied means an integral part for the progress of an organization. 

To provide its employees with the best possible working environment and all other facilities that can help in the enrichment of the work culture in the company formed one of the core motives of the company. The final statement of the company has always been “people first and profits last” and this vision of the company has ruled it for all these years (Huang 2013). It is due to the virtue of such a work culture that pays intense importance to the welfare of the employees that Starbucks has ranked 73rd out of the 100 best companies. The manner in which the company has taken care of the health care costs of its employees even when it was facing recession is really praiseworthy (Karakowsky and Guriel 2015). This is the reason that the company had been voted as the “World’s Most Ethical Company” in the Ethisphere ranking for the seventh consecutive year. Starbucks truly attempts to prove itself unique in terms of the privileges it offers to its employees, the company provides the stock options and medical, dental and vision care to its employees who work for around 20 hours per week. Having been grown up in a poor family and by seeing his father being unethically exploited by his employer and totally devoid of any health benefits, had made Howard Schultz, the CEO of Starbucks to consider the workforce of a company and the working atmosphere of a firm.  The most significant factors for a company are to perform ethically and thrive gradually along with achieving its business interests. He always retains faith upon the ability of the workforce without whom the success of affirm becomes impossible. Therefore, he suggests that each firm company should value its workers t a considerable extent. This kind of approach of Howard has consequently resulted in providing its working staff with the best possible working atmosphere, one of the best health care programs in the coffee shop industry. The opportunities that his father was denied by his unsympathetic employer are being provided by Schultz to his workforce as according to him the authorities of a company should share the common the common vision with the employees and communication among the entire working staff and the leadership is the major factor that is needed for running abusiness smoothly. Therefore, the mission of the company always focused upon serving the people, be it customers or the employees. It is natural that it is not possible to provide same kind and standards of facilities to the employees by the company each time as it takes a toll on the employer. However, the Starbucks has proved its virtue by dealing with the health issues of the workforce and providing them with all the required facilities by developing a well organized program known as “Thrive Wellness”. This offers certain resources to the employees that help in the cessation of smoking, weight loss and provides an overall strategy to sustain good health (Christensen et al. 2014).

Global Responsibility

Schulz and Starbucks did not only kept the welfare of the employees a mission statement or just an aim that they should aspire to reach, they have transformed the words into real practice, and today the employees working at Starbucks feel positive vibe and are possess the organizational commitment. Schulz’s aim to motivate and attract the individuals to be a part of the Starbucks has been achieved largely; the employees feel the urge to work for such a company as they get the entire positive from their company. Thus, the performance levels of the employees automatically increase. Innumerous attempts have been taken by the leadership of Starbucks to establish a strong and deeply felt relationship with the workforce of the company. The company has also commenced various programs that in order to provide education to the employees, the company offer even a four year degree course to the employees at a very low cost and this enables the employees to work and learn together. Starbucks makes investment very often in certain training programs for providing better career opportunities for the employees (Cha et al. 2015). The organization gives special privileges to the workers by addressing them as partners. Some of the education programs such as Coffee education programs are organized to give an in-depth knowledge about the chief product (Zikmund et al. 2012).

The equal treatment of all the employees and treating each other with dignity and respect. The workers are regarded as the partners of the company and therefore the opinions of the other stakeholders and the workers are always referred to by Starbucks in its decision making process. The feedback of the partners on various aspects of the company’s business is regarded as of utmost importance. Starbucks is expanding internationally largely and thus, the company indulges in the incorporation of the diversity in the company (Karakowsky and Guriel 2015). The company provides recognition to all the individual employees irrespective of the differences in their race, age, sex, color, religion or any kind of physical or mental disability. The organization has a number of policies and varied job opportunities to the individuals that comprise of around more than 20 % of minorities and 60 % women. The company organizes workshops at regular intervals to make the partners or the workforce aware about their individual roles, and the needs of the entire organization (Asgary and Li 2014). Thus, in this way the firm aims to create indulgence, reverence and determination in the entire organization. 

Starbucks’ intense ability to earn customer satisfaction and loyalty as well as to prove as an extremely socially responsible brand, are the most important reasons behind its success. The brand has almost brought a revolution in the world of beverages by its ability to provide the most high-end coffee to its customers and by ensuring sustainable levels of success for its stakeholders. Starbucks’ excessive concern for its employees and their welfare worked as one of the major factors that enhanced the rapid success of the company throughout the century. It has expanded very briskly to nearly 63 countries across the world and now is engaged in providing the customers with an exclusive range of products.  This includes not only beverages but also coffee accessories, muffins, teas of various kinds, CDs, drinking water and some other food items that serve a major portion of the company’s revenue (Bowen and Sisson 2013).

Employees: The Priority

Thus, Starbucks’ extraneous quality to keep itself up to date with the changing needs of the customers made it more successful in the recent years. Besides serving its consumers with the premium coffee beverages, it has now recognized the other needs of the consumers, thereby offering them a total package of food and beverages as well as even the merchandise good are being offered by its retail stores. The company and its administration recognizes the value of the customers’ experience which is why the Starbucks coffee shops replaced the obsolete espresso machines with the new ones and some of the stores started using the Clover Brand single-cup brewing machines. In order to make the ensure that the brew prepared by them becomes much more appealing to the customers, the company joined the Conservation International so that they can remain assured that the coffee beans are successfully harvested. Thus, it becomes evident that the company pays considerable importance to the customers and their reviews.

In addition to the ability of the company in the successful attainment of the consumer satisfaction and loyalty, Starbucks has triumphantly faced the challenges coming on the way of its success and emerged unbeaten (Mahobia and Jain 2015). The company had to face recession in the year 2008, it was the global recession that had had affected it sales revenue, as all the expensive coffee beverages suffered a huge set back. However, Starbucks did not lose hope; instead it focused much more upon gaining the consumer loyalty and for time being slowed down its expansion internationally. The company had been also accused of not undertaking fair trade, thus, in order to prove such criticisms wrong Starbucks, since the year 202 had begun offering the Fair Trade Certified coffee. Thus, the challenges that came up in various forms could hardly undermine the spirit of the company in serving the best (Blackburn 2014).

With regard to the maintenance of social responsibility, Starbucks has proven itself to be the unique one. The ways in which the company takes care of the welfare of its workforce and invests upon their health, satisfies the needs of the consumers at every step via its varied products and services. It ensures the well being and promotion of the stakeholders of the company through certain programs organized from enhancing their income and profits; Starbucks has got no parallel in the industry. 

Conclusion:

Thus, it can be easily inferred from the above analysis and discussion that Starbucks is creating a milestone in the industry by providing the best and unique service not in terms of its business but also in the matters that define the well being of the community or the society as a whole.  

References:

Asgary, N. and Li, G., 2014. Corporate Social Responsibility: Its Economic Impact and Link to the Bullwhip Effect. Journal of Business Ethics, pp.1-17.

Blackburn, W., 2014. Blackburn's The Sustainability Handbook: The Complete Management Guide To Achieving Social, Economic and Environmental Responsibility: The Complete Management Guide To Achieving Social, Economic and Environmental Responsibility. West Academic.

Bowen, S.A. and Sisson, D.C., 2013, March. Starbucks, Reputation Management, and Authenticity: A Case Study of Starbucks’ United Kingdom Tax Crisis & “# SpreadTheCheer” Campaign. In 16TH INTERNATIONAL PUBLIC RELATIONS RESEARCH CONFERENCE (p. 110).

Cha, M.K., Yi, Y. and Bagozzi, R.P., 2015. Effects of Customer Participation in Corporate Social Responsibility (CSR) Programs on the CSR-Brand Fit and Brand Loyalty. Cornell Hospitality Quarterly, p.1938965515620679.

Christensen, L.J., Mackey, A. and Whetten, D., 2014. Taking responsibility for corporate social responsibility: The role of leaders in creating, implementing, sustaining, or avoiding socially responsible firm behaviors. The Academy of Management Perspectives, 28(2), pp.164-178

Enquist, B., Petros Sebhatu, S. and Johnson, M., 2015. Transcendence for business logics in value networks for sustainable service business. Journal of Service Theory and Practice, 25(2), pp.181-197.

Green, T. and Peloza, J., 2014. How do consumers infer corporate social responsibility? The role of organisation size. Journal of Consumer Behaviour, 13(4), pp.282-293.

Huang, P.H., 2013. Exploring the strategy for balancing market change and service quality–A case of Starbucks in Taiwan.

Karakowsky, L. and Guriel, N., 2015. The Context of Business: Understanding the Canadian Business Environment.

Korschun, D., Bhattacharya, C.B. and Swain, S.D., 2014. Corporate social responsibility, customer orientation, and the job performance of frontline employees. Journal of Marketing, 78(3), pp.20-37.

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