Discuss about the Management Principles for Starbucks Case.
Management is an art of getting work done through others. Principle of management is thereby a task of a manager to achieve the individual and group goals further it denotes planning, organizing and controlling the basic elements (man, material, machine etc) by directing and coordinating the efforts and achieving the goals of the organization (Koontz and Weihrich, 2015).The comprehensive theory of management principles is given by Henry Fayol in his 14 principles of management.
Overview of Starbucks
Starbucks organization is a worldwide renowned coffee house which started its operation in 1971 in Seattle, Washington. Today it has more than 24000 stores which are operating in 70 countries (Starbucks Coffee International, 2016).Starbucks serves variety of coffee and stand out to be one of the trusted brands internationally. Starbucks is a global recognized brand and serves more than 30 blends with customized preference.
Analysis of Case Study
Since 1987 Starbucks is evolving and making its presence visible worldwide. The founder and the global strategist Howard Schultz has remarkably made this brand renowned in almost each part of the world. Starbucks has made its presence locally and internationally through three business strategies which is through joint ventures, licensing and setting up its own stores (Loeb, 2013). Starbucks is exploring the opportunity of strategic partnership globally and ensures that it adapts the local needs .it is very much particular about the local market, cultural needs and creates a more adaptable environment. There strategy being consumer centric looks forward to give a life time experience which distinguishes it from their competitive brands (White, 2014). There marketing mix strategies and promotional techniques are one of the best.
Like other organization, Starbucks is also facing issues while enforcing their strategies. Starbucks has a positive global image worldwide and is still upholding the major purpose as thought by Howard Schultz. In case of Starbucks where there main motive is to satisfy the customer and to build a good public image (Michael and Larkin, 2008). Firstly instead of focusing on one core product coffee Starbuck is diversifying its menu which is diluting its core strength this may cause uncertainty in mind of investors. Secondly, it employees training process that is not comprehensive which again makes it difficult in terms of quality mark.
Another issue is to choose the global partner to collaborate can be a risky task. To find someone with same standards and needs can be a herculean task where at times the reputation of the brand is at stake while meeting the same standards. Starbuck has a big brand name and has a good market standing when compared with other brands. (Gilbert, 2008)
Management Issues and Applicability:
Issues can only be resolved if there are applicable remedies. Starbucks has its global policies of expansion which makes it different from the other competitive brand .starbuck need to follow and abide by the comprehensive planning and implementation strategies (Burks, 2009). Due to its presence worldwide it makes it more difficult to manage it all together .it need to enforce a structured model in order to retrieve the best out of all available resources .choosing partner while expanding is a very crucial tool which can only be resolved through practice of concentrating and exploring the market . The management responsibility is to prioritize the issue and to pay proper attention towards the loopholes.
Case Study Solutions:
Porter Competitive Strategy:
Porter three face model is an important tool to implement strategies in a long run. Porter model depicts the general strategies which an organization uses to build a cutting edge against others. Porter has mentioned the generic strategies as follows: Cost Leadership, Differentiation and focus (Porter et al, 2014). Further he has divided the focus strategy into cost focus and differentiation focus. Howard Schultz being the global strategist has focused on making Starbucks a world recognized brand. There distinguished business strategies and creativity make them one of the renowned market name. In recent years Starbucks has shown a tremendous growth in terms of its presence and has Claim huge recognition.
Starbuck generic porter strategy is differentiation. The major goal of Starbuck is to mark its global presence which differentiates it from its other competitor. Where one brand hesitates to expand Starbucks is setting a benchmark. There is no other competitor at present which could compete with Starbucks (Margretta, 2013).it offer specialty café which makes them different from its other competitor. For instance it has collaborated under its global strategies like entering into a joint venture, licensing .it has ventured in with PepsiCo, Dryer ice cream in order to supply the best. Currently it has opened many mini Starbucks to serve its customers. (Thomson and Fuller, 2010). The major strategy being followed by Starbucks is to serve the consumer interest and to bring in the innovation.
Differentiation strategy mainly focuses on creating a unique brand which there competitors cannot offer (Harrison, 2009). Starbucks focuses on the international market and make changes into its menu depending upon the local market. It enforces remarkable and suitable business strategies to look after their client needs. Starbucks is highly focused on increasing the customer footfall which is eventually creating a brand loyalty (Starbucks Details Five-Year Plan to Accelerate Profitable Growth at Investor Conference, 2014). Presently it is dominating the industry as the customer tally is going up. It is changing people perception towards a brand.
Schultz Strategy to Success
Three decades ago Howard Schultz entered into the coffee business in order to build a personal relationship with people and their coffee. He has dreamt of establishing a company which creates sense of humanity and dignity (Hedges, 2012). Starbucks believes in promoting the interest of partners (employees) in long run. Howard has been recognized for his passion, his leadership skills, and his efforts to build a strong community. Schultz is a global leader and has turned the history of converting a local brand recognized internationally. Like many other leaders Schultz is an optimistic leader and believes in dreaming big. He is self confident, positive and has a daring approach. No matter his strategies were considered vague and risky but his determination and leadership skills helped him in making the brand recognized worldwide. Where other brands fear to enter international market Starbucks has already created a global presence in almost every part of the world. There corporate value and structure makes them different from rest of competitor and provide it a cutting edge. Its information system is centrally controlled from Seattle, Washington (Behar, 2007). It helps the manager to check the sale. Each day data is being sent to the headquarter, so that a proper trend can be seen. Starbucks considers human resource its major strength. It believes in recruiting the best from the industry. Most of its managers are experienced and are providing quality services .as per Howard human resource is the asset to an organization and recruiting the best would eventually help in growth. They mainly focus on serving community. Starbucks provides a much friendlier environment to make their employees feel comfortable. This unique strategy has helped it in achieving the aspiration of Howard.
Global Expansion Strategy
Starbucks has an increase in customer growth in the fiscal year 2015.It has a major expansion plan to open 1800 stores worldwide in 2016(Team, 2016). It has adopted the strong expansion strategies in order to mark its presence worldwide. Starbucks understand their customer needs and know how to serve them. An in depth research is being conducted by the team before entering into the international market (Lorenzetti, 2016) Menu is customized as per the taste and preference of the customers. It is entering majorly through licensing, joint venture or setting up their own stores. Starbucks has a tie up with many domestic partners in order to serve the local needs. There is again a necessity to improve the global expansion strategy and to look forward the international customer needs. Starbucks is focusing upon the domestic need and requirement and making a change in its menu. It looks after the local market conduct in depth research and makes changes in its menu. No other brand has shown that much courage to mark its global presence and serve the community interest.starbucks has chosen credible partner which is it global market strength.
It has established high parameters for its global partners as well. It considers there partners as an important asset to the organization. It has a strong and recommendable policy regarding choosing the global partner. While partnering with the international brand starbucks follow a strict policy which distinguishes it from rest. Its structured plan is to revolutionize the coffee habits worldwide. It follows a strong ethical behavior in international market .It entered Japan in 1996 under joint venture partnering with Sazaby Inc. , in Malaysia (1996) under licensing policy with Berajaya Group Bhd, (Baertlein, 2014) ( Starbucks Malaysia,2016) etc.
Challenge to Management:
tarbucks has its presence in more than 70 countries which makes it the biggest in industry (Starbucks Coffee International, 2016). Although they have strong outstanding market standing, still they are facing the issues regarding pricing, human resource training and diversified menu. . Starbucks is known for selling the expensive coffee unlike its competitor like McDonalds, Dunkin donut which are known for its low menu pricing. (Michelli, 2007) another major challenge is the diversified market segment which makes it difficult to concentrate .Addition of so many things in the menu distracts the customers. Lastly there training process is not comprehensive which is hampering the overall quality. In the era of monopolistic competition it has become important to build a cutting edge to serve customer needs.
Starbucks has created a competitive advantage over other brands. Today it is one of the leading brands in the world with many loyal customers .In order to avoid its competitor, Starbucks need to focus on its core competence which distinguishes it from rest. More attention need to be given on the pricing policies and training programs. Although there global strategies and marketing mix policy separate it from the rest, still it need to concentrate on the loopholes. Starbucks need to pay more attention towards its expansion and growth policies.
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