Contemporary People management Starbucks

Starbucks

Executive Summary

When we talk about business, then there is a number of things that should be kept in mind that are considered to be mandatory for the success. The major parts of the successful business are the organization itself and the second one is the environment. When we talk about the environment that does not relate to the cold or hot, however, it means that the market and the internal state of the organization. If someone thinks that the business will be successful without anyone of the aforementioned elements, then he must be mistaken. The business can never be successful with either of these elements. It can be said that the individual and the environment are the basic elements for the success of the business. Now while talking about the business environment of the organization, it is basically divided into two categories that are: the internal environment and the external environment. It is seen that most of the business owners are quite keen about getting to know about changes taking place in the internal or external environment of the organization so that they can take quick actions in order to face the upcoming thread. So it is very important for every organization to keep a track of the changes that are taking place in the internal and external environment of the organization. If these changes are left unnoticed, then they can cause a major threat to the business. In this report, we will be discussing the different kinds of the environment of the business organization, and what factors can be there that is a threat to them.  In this report, we will be discussing the organization of our own choice that is Starbucks. The report will first describe the history of the organization and how it has been so successful over the last 35 years. In the next section, the report will focus on the internal and external environment of the organization. This will reveal that what changes are taking place in the environment. Once the changes that are existing in the organization will be analyzed for their impact on the Starbucks business. Starbucks has been one of the most successful coffee business changes, however, it does not mean that the organization will keep on moving towards its success without bringing any changes in it that are required according to time. The report will show the different analysis about the organization that will bring forth the changes in the environment of the organization. Once the reason for changes that are taking place in the environment of the organization is identified it is easy to eradicate from the organization so that the organization can move forward.

1.  Introduction

The foundation of Starbucks Coffee was put back in 1971 with only one shop in Seattle’s historic Pike Place Market. The journey of the success of the organization started from there that has now become the best Coffee business in different parts of the world especially in the UK. In this report, our focus will be on the Starbucks in the UK. It is important to mention here that Starbucks is not a UK based organization, however, it is Seattle based organization. The organization has a chain of stores around the globe with successful business strategy and attracting more and more customers. There is a number of things that have been the reason behind the success of Starbucks. One of those main reasons is the customer experience that people enjoy at Starbucks. Another reason that the people who have become an addict of the Starbucks are the quality of their products. Starbucks has put its best efforts in order to capture the market of Coffee by using the best quality coffee bean for its different flavors of Coffee.

As we dig deeper into the success story of Starbucks, we come to know that Starbucks success journey did not start in the last decade, however, it reveals that the organization started making success right after the 16 years of its starts. The success rate can be identified by knowing that back in 1987, Starbucks started opening 2 stores every day in the United States. Another report reveals that Starbucks has almost 20891 stores all over the world in 61 countries. This makes it a very large chain business in the world. If we only look at the United States, then there are 13279 stores. By looking at the statistics of the stores in different countries of the world we come to know that the following countries have more number of stores: UK, Canada, Japan, China, South Korea, Taiwan, Philippines, and Germany. On the other hand, Starbucks has been generating huge revenue. In 1992, Starbucks generate the revenue of total US$ 3.3 billion. Since then till 2002, there was an increase of 20% in the growth of revenue. The growth in the revenue generation of the organization gave a boost to the stock of Starbucks to 2200%.

It can be said that the main product of Starbucks is Coffee only, however, there is a number of different products as well that Starbucks is offering to its loyal and valued customers. Here is the list of the products that are presented to the customers.

  • Coffee
  • Handcrafted Beverages
  • Merchandise
  • Consumer Products
    • Coffee and Tea
    • Ready to Drink
    • Ice Cream

The organization has also awarded in the world market of the business.

  • 1 Best Coffee 2009-2011
  • “No. 1 Most Popular Quick Refreshment Chain” 2009-2011
  • One of “The 100 Best Companies to Work For” 1998-2000, 2002-2012
  • One of the “Most Admired Companies in America” 2003-2012

Going through the history and the development of the organization, the next step is to focus on the environment of the organization. The internal and external environment of the organization will be identified and then the changes that are happening are to be identified. Once the changes are identified, it is very important to know the reason for those changes as well. If the reason for the changes is not known to the organization, the organization will never be able to overcome the threats that can lead the organization towards disaster. For this purpose, we will be using different analysis practices to find out the changes and the reasons for those changes. Moreover, the impact of those changes on the business of the organization will also be identified. Once all these things threats, their impact is identified it will be easy for the organization to face those problems and find an appropriate solution for them.

2.  Discussion and Analysis

In this section, we will be discussing the environmental analysis of the Starbucks that includes the internal and the external environment. In order to carry out the environmental analysis, there are some of the techniques that we will be using in case of analysis. In simple words, it can be said the environmental analysis of the organization means that present and past trends in the economy also the current position of the organization in the market. It also involves the competition of the organization with other competitors in the market. This environmental analysis of the organization will help in the identification of the factors that are affecting the performance of the organization internally and externally. First, we will be focusing on the internal environmental analysis of the organization. When we talk about the internal environment of the organization, then the internal resources of the organization make up the internal environment. It is the duty of every organization to identify its resources that are part of the internal environment.  The main purpose of identifying the internal resources of the organization is to identify their competencies and their capabilities. The resources can be considered as a business resource that can either be tangible or intangible. It is very easy to identify the tangible resource in case of Starbucks we can find out the tangible business resources that are Cash, Coffee Beans, Production Equipment, store machine etc. On the other hand, the intangible resources of Starbucks are Human Resource Management, effective leadership of the business owner, Real Estate Management, Marketing Management, IT management and Finance Management.

Internal Environment Analysis

In order to find out the strengths and the weakness of the Starbucks, it is important to conduct a test of the organization. To conduct the internal environment analysis, we have conducted the SWOT analysis. Here are the following details that the SWOT analysis has shown about the organization.

2.1.    SWOT Analysis

In SWOT analysis about Starbucks, the following are strengths, Weaknesses, Opportunities, and threats.

2.1.1.Strengths

One of the greatest strength of Starbucks is its well-established brand name that people can trust and rely on over the quality of the products they are offering. Starbucks has put a huge effort in attracting millions of customers and provide them with quality.  On the other hand, Starbucks has opened thousands of stores at the ideal location that people find it very easy to buy a coffee on their home or office. It is said that most of the customer come twice a day, once on their way to the office and the second in their break time. The company has stores around the different corners of the world that help in generating more and more revenue. The company has been successful in maintaining the quality of the coffee only because of its good relationships with their suppliers who have been providing the company the desired quality of being that is the real essences of the organization.  The organization is widespread and the customers are also loyal to the organization because of the services, environment and the quality of their products.

2.1.2.   Weaknesses

On the other side, the SWOT analysis of Starbucks also identify the weaknesses of the organization. One of the greatest weakness of the organization is its size. The organization has been opening a lot of store in a different location that has been alarming in different ways. The organization is focusing more on the expansion which is causing a lack of internal focus. Another weakness of the organization is pricing. The products of Starbucks are expensive as compare to the other products in the market.

2.1.3.   Opportunities

Looking at the recent position of Starbucks in the market, they have more expansion opportunities in terms of opening new stores in different countries that can provide more revenue. It also calls for the introduction of the new products in the market. Starbucks can also deploy the technological advancements.

2.1.4.Threats

There are number threats to the organization as well. One of the major threat to the Starbucks is the other competitor in the market who have also a great number of loyal customers and selling their products at a lower price. On the other hand, when it comes to the stores of Starbucks in the foreign countries, there are also cultural and political issues.

External Environment Analysis

The external environment of the organization is further divided into two different categories that are the general environment and the other one is the competitive environment. The general environment of the organization is sociocultural, demographic, economic, technological and political/legal. On the other hand in the competitive environment, there are customers, suppliers, unions, associations, new entrants’ interest groups, subtitles, competitors, and creditors. Here we will conduct PESTEL Analysis of Starbucks to find out the factors that may affect the external environment.

3.1. PESTEL Analysis

PESTEL Analysis of Starbucks reveals the following points.

3.1.1. Political/Legal

The challenges that Starbucks face in the external environment is the political and the legal problem. The reason is that there may be issues related to the tougher customers and the consumption of caffeine. The other important factor is the existence of the political system stability where the Starbucks Store is located.

3.1.2. Economic

When we talk about the external environment of the organization then the currency rates are very important. The currency rates vary in different countries and buying the power of the consumers as well.

3.1.3. Sociocultural/Environmental

Starbucks may face some difficulties if the coffee producing beans are hit by the environmental disaster. Moreover, the changing patterns of the customers can also be another threat to Starbucks.

The internal environment of the organization matters a lot when it comes to the progress of the organization. The internal environment of the organization involves the human resources that will be working for the organization. When it comes to Starbucks, same applies to it as well. There is need to focus on the human resource of every organization as it is the most important asset that any organization may own. The Human resource is the driving force for every organization especially when it comes to managing the customers face to face. The Human Resource Management of the Starbucks is responsible for managing employee relations and benefits so that the employees can give their best to their job. If the employees are not treated well in the organization, then they will not be able to perform well and it may be a drawback for Starbucks as well because the behavior of the employees may disappoint the customer and the reputation of the organization will be at stake. The legal framework for the employees has been implemented in Starbucks so that the employees are given their rights as well. It will definitely disturb the internal environment of the organization that may disturb the performance of the organization overall. It is the responsibility of the human resource department to manage the employee relations and keep the employees motivated by offering them different benefits.

On the other hand, we have seen in the internal environment analysis, then we realize that the organization is focusing more on the expansion of Starbucks than to focus on the internal relation that is also creating different groups in the organization that may create a disturbance in the organization. The power management of the organization is related to the internal environment and the external environment of the organization. They are directly affecting the organization in form of the low performance of the employees.

4.  Conclusion

The environment changes of the organization can bring about serious damages to the organization as all the tangible and intangible assets of the organization can be affected directly or indirectly. The human resource management who are involved in bringing the employees to the job and analyzing their capabilities and experience related to the job. It is the human resource department that is responsible for managing the employee’s relations and power management as well. The managers are often found practicing of power transferring to the other employees to enable them to handle the situations and handle the politics in the organization as well. The environmental changes in the organization either they are the internal environment changes or the external environmental changes, they all affect the organization. The best thing that can be done in order to manage those changes so they cannot affect the organization is to perform regular checks to find out the changes that can affect the organization like the internal resources, market finance, and target marketing so that more and more such issues can be fixed within time.

 5.  References:

Baertlein, L., 2013. Starbucks changes course, asks U.S. patrons to leave guns at home. [Online]
Available at: http://www.reuters.com/article/2013/09/18/usa-starbucks-guns-idUSL2N0HD25J20130918
[Accessed 13 2 2014].

Bernard, 2011. Internal Environment of Starbucks. [Online]
Available at: http://essaylive.com/essay-internal-environment-of-starbucks/
[Accessed 13 2 2014].

Deuches, 2011. Analysis of Starbucks and its International Strategy (2011). [Online]
Available at: http://www.scribd.com/doc/50040066/Analysis-of-Starbucks-and-its-International-Strategy-2011
[Accessed 13 2 2014].

Isidore, C., 2013. Starbucks CEO Schultz has another grande plan. [Online]
Available at: http://money.cnn.com/2013/10/18/news/companies/starbucks-schultz-dc-change/
[Accessed 13 2 2014].

Jennings, L., 2012. Starbucks makes major management changes. [Online]
Available at: http://nrn.com/latest-headlines/starbucks-makes-major-management-changes
[Accessed 13 2 2014].

Laoutaris, N., n.d. Starbucks Issues Management Plan. [Online]
Available at: http://nicolelaoutaris.com/?page_id=322
[Accessed 13 2 2014].

Liz, 2013. lhuangxiaoli. [Online]
Available at: http://lhuangxiaoli.wordpress.com/2013/05/12/starbucks-external-environment-analysis/
[Accessed 13 2 2014].

MILLER, C. C., 2011. A Changed Starbucks. A Changed C.E.O.. [Online]
Available at: http://www.nytimes.com/2011/03/13/business/13coffee.html?pagewanted=all&_r=1&
[Accessed 13 2 2014].

Morganteen, J., 2014. Starbucks’ Schultz: There’s a ‘sea change’ happening in retail. [Online]
Available at: http://www.cnbc.com/id/101359770
[Accessed 13 2 2014].

Noman, M., 2011. Strategic Knowledge Management. [Online]
Available at: http://www.slideshare.net/maronoman/starbucks-strateic-knowledge-management
[Accessed 13 2 2014].

Par, T., 2011. Etudier. [Online]
Available at: http://www.etudier.com/dissertations/Starbucks-Case-Internal-Environment-Analysis/185506.html
[Accessed 14 2 2014].

Post, N., 2013. Starbucks makes management changes. [Online]
Available at: http://nypost.com/2013/05/02/starbucks-makes-management-changes/
[Accessed 13 2 2014].

Research, Z. E., 2012. Starbucks Makes Management Changes. [Online]
Available at: http://www.zacks.com/stock/news/75458/Starbucks-Makes-Management-Changes
[Accessed 13 2 2014].

Reuters, 2012. Starbucks makes management changes to accelerate growth. [Online]
Available at: http://www.reuters.com/article/2012/05/17/us-starbucks-idUSBRE84G02H20120517
[Accessed 13 2 2014].

Schreiner, M., n.d. Starbucks. [Online]
Available at: https://sites.google.com/site/starbucksmacro/financial-information
[Accessed 13 2 2014].

 

Header Image Source

About the Author:

Leave A Comment