Starbucks

Introduction Companies today face a great deal of pressure from factors beyond their influence, and thus always strive to find new ways of coping with internal and external factors in order to stay ahead of the game. Starbucks is a very good example of a company that uses many factors to stay on top of the market, and illustrates how a company can stay at the forefront in its prolonged effort to be a leader in the coffee business. Starbucks was founded in 1971, and in 1987 had 17 stores, but by the end of 2006, Starbucks had12, 440 stores world-wide. Their total net revenue for 2006 was $7.8 billion (starbucks.com/about us, 2008). By examining Starbucks’ rate of progress, one can see they must be doing something right. Innovation, diversity and ethics are three main factors that Starbucks Corporation uses to excel in the market, be it national or global. By examining how Starbucks uses these factors in their management, it becomes clear how they have achieved such lasting success. Planning Planning is the first step a company takes towards achieving set goals. During the planning process, internal and external factors are considered in order to accomplish the company’s goals. The impact of innovation during the planning process would be shown by making sure to always have new ideas, which puts the company ahead of the competition and makes useful changes beneficial to customers, employees and stakeholders. Starbucks found during their pursuit for making affordable healthcare available for employees, they need to be among other things, more innovative. According to Starbucks’ official website, diversity is their core value, which means that in the planning stage it was a leading factor for the way business should be done. Diversity in a company can occur in their human resources and products. When making diversity part of a company’s core values as Starbucks did, whatever is included in the planning process must include diversity. In their “Corporate Social Responsibility Annual Report” for the fiscal year 2006, Starbucks states: “Not only must Starbucks actively prepare to embrace and navigate diversity across the globe, we must tailor our efforts to each unique area of the world.” (starbucks.com/Board of Directors, 2006) Finally, ethics hold a very special and important place within Starbucks. In order to reinforce already existing ethical values in their company, Starbucks formulated a booklet called “Business Ethics and Compliance.” This shows that they incorporated ethics early in the planning process. They not only planned to have the booklet, but also to be actively involved in many issues concerning ethics in their company and the environment. Apart from having various hotlines for complaints, they also participate in world-concerning issues such as the “African Wildlife Fund,” “Save the Children,” and “MercyCorp” (starbucks.com/corporate responsibility, 2006). Organizing Starbucks mission statement is “to establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow” (starbucks.com/mission statement, 2008). This is what their plan is - their goal is right on their mission statement. To be able to accomplish this, Howard Schultz, Starbucks CEO, knew that he had to figure out an outstanding organizational method. He knew he had to build a dynamic organization, and he did. First, he began by attracting employees who shared his vision. He also considered ethics, diversity and innovation during this process. The first factor that Starbucks management considered was ethics, because ethics is one of the most important parts of any business. When gathering their partners (this is what they call all their employees), they had to ensure that all their partners were willing to “commit themselves to ethical servicing practices” (starbucks.com, 2008). When they purchase products such as cocoa, they purchase from sellers with the “commitment that it [cocoa] has been produced and traded in an ethical, transparent and sustainable manner,” and they take steps to ensure that their supply chain is compatible with their company values (starbucks.com/cocoa, 2008). When it comes to innovation, Starbucks came up with a plan that no other small coffee retailer had thought about at that time. They attracted employees by providing them with healthcare and stock options. Starbucks was also innovative in the way they chose to buy and sell products. All the products that they sell and purchase are environmentally friendly. They have created what they call an “Environmental Footprint Team” which guides the company’s approach toward the environment and makes sure that it minimizes the company’s impact on the planet. Not only is Starbucks innovative but they are also diverse. The most obvious place where one would notice Starbucks’ diversity is by walking into a coffee shop, where one immediately notices a great deal of diversity in the partners working there. The company purposefully hires a diverse employee-base to make sure that everyone feels welcome at any Starbucks store. Another place where diversity is readily apparent is in the way Starbucks conducts their business with their providers and sellers. This is also in their mission statement, “Embrace diversity as an essential component in the way we do business.” (starbucks.com/mission statement, 2008). They seek companies that share their vision and values and they just discuss diversity, they act on it. And by acting on these factors, Starbucks has achieved recognizable success in today’s business world. According to Forbes, “Starbucks Company is the leading retailer roaster and brand of specialty coffee in the world” (Forbes500, 2006). Leadership Starbucks has been leading the nation towards a different way of doing business. Once Starbucks opened their doors and took hold of its patrons with their kinder, gentler approach to selling coffee, the nation took notice and other companies are starting to follow Starbucks’ example. The public loves them and their outrageously priced coffee, and with good reason. Starbucks was recognized as one of the top 50 companies for Diversity in 2006 by Diversity Inc. (Starbucks Corporation, 2006). One example of the company’s diversity can be seen in a predominantly Hispanic city, where five different Starbucks stores all showed an ethically-diverse employee presence. As for Starbucks leading the way in innovation, it’s safe to say that few other places exist where customers would be willing to pay five dollars for a cup of coffee. So why do the masses flock to the local Starbucks each day as part of their routine' Because Starbucks used a different approach: Starbucks’ mission statement is a refreshing approach to marketing an age old product in a new way and with unprecedented success. Starbucks also has an environmental mission statement (starbucks.com/mission statement, 2008). It’s no mistake that the Starbuck’s logo is green. The company is a model for taking a responsible, ethical approach to doing business. Controls Diversity is so important to Starbucks that they have chosen to include the principle as part of their mission statement (starbucks.com/mission statement, 2008). In order to ensure that the company lives up to their Mission Statement on an ongoing basis, Starbucks has initiated several checks and controls. One of the most prominent ways that Starbucks shows commitment to promoting diversity is their policy regarding product suppliers. They have initiated a “Diverse Supplier Program,” which requires that all members meet the following two criteria: the companies must be “51% women or minority-owned, or socially or economically disadvantaged as determined by the U.S. Small Business Association, and certified by one of the following agencies: National Minority Supplier Development Council (NMSDC) or regional affiliate, National Women Business Owners Corporation (NWBOC), Women’s Business Enterprise National Council (WBENC), Small Business Administration (SBA) or other government or public agency” (starbucks.com/supplier diversity, 2008). By monitoring their suppliers to ensure that they meet these criteria, and by instigating these criteria in the first place as a way to make sure that the company’s outcomes regarding diversity are consistent with the goals put forth in their Mission Statement, Starbucks is doing a good job regarding the fourth function of management – controls (Bateman & Snell, 2007). One of the reasons for Starbuck’s success is their willingness to test new waters as a company and their ability to respond quickly to changes in the marketplace, which are also examples of using controls as a function of management. In the early 1980s, Starbucks’ now-CEO, Howard Schultz realized that the four Seattle-based Starbuck’s stores seemed to be filling a customer need which had previously not existed – providing specialty coffee. By looking ahead, and predicting that the success of these four stores could be expanded upon, Schultz purchased Starbucks, and under his innovative leadership the company became the first specialty coffee company to go public in June of 1992 (starbucks.com/press release, 2006). In addition to looking ahead to both create and fill a new market need, Starbucks was also innovative in the treatment of their employees. In the spirit of staying true to the first principle of the Starbucks’ Mission Statement, “Provide a great work environment and treat each other with respect and dignity.” (starbucks.com/mission statement, 2008), the company also became one of the first companies of the period to offer both full- and part-time employees healthcare benefits and stock options. Starbucks has continually looked for ways to make the company more compatible with the ethical principles that it was founded upon, and over the past 20 years has branched out into several areas of increased environmental responsibility, on a worldwide basis. The company even went so far as to create a second, Environmental Mission Statement, in addition to the original company Mission Statement, in order to emphasize their dedication to an ecologically- and environmentally-sustainable organization (starbucks.com/environmental mission statement, 1992). In addition to purchasing “Fair Trade Certified” coffee from farmers to help promote a viable and sustainable agricultural community for coffee bean farmers, Starbucks also has an internal program that monitors the individual performance of each store’s efforts to reduce waste and water consumption. In these ways, Starbucks shows an understanding for what it will take to sustain their successes over the long haul, and they continually look for new ways to make less of an impact on the environment, in an endeavor to hold true to their founding environmental ethics principles (starbucks.com/environmental affairs, 2008). Conclusion Ethics, innovation, and diversity are just three internal/external factors that companies have to face and deal with in today’s business world, and Starbucks is no exception. The unique and successful way that the company uses these factors in their planning, organizing, leading, and controlling functions to their advantage keeps them at the forefront of the retail coffee industry and ahead of all their competition. References Bateman, T. S., & Snell, S. A. (2007). Management: Leading and Collaborating in a Competitive World, 7th Ed. The McGraw-Hill Companies, Inc. Retrieved January 7th, 2008, from rEsource online database. Board of Directors Starbucks. (2006). Corporate Social Responsibility Annual Report. Seattle : Starbucks. Forbes 500. (2006). Lead 411/Starbucks Corportation. Retrieved January 11, 2008, from Forbes500.com: www.lead411.com/topcompanyample.taf Starbucks Board of Directors. (2008). Retrieved 11 2008, January, from Starbucks.com: www.starbucks.com/aboutus/environment.asp Starbucks Board of Directors. (2008). Cocoa Purchasing. Retrieved January 11, 2008, from Starbucks.com: www.starbucks.com/aboutus/cocoa.asp Starbucks Corporation. (2006). Starbucks Corporation Corporate Social Responsibility/ 2006 Annual Report. Retrieved January 12, 2008, from www.starbucks.com: http://www.starbucks.com/aboutus/csrreport/csr.htm Starbucks Corporation. (2008). Mission Statement. Retrieved January 12, 2008 from http://www.starbucks.com/aboutus/environment.asp. Starbucks Corporation. (2006). Press Release. Retrieved January 12, 2008 from http://www.starbucks.com/aboutus/pressdesc.asp. Starbucks Corporation. (2008). Supplier Diversity Program Requirements. Retrieved January 12, 2008, from http://www.starbucks.com/aboutus/sup_div.asp. Starbucks Corporation. (2008). Conservation Coffee Program. Retrieved January 12, 2008, from http://www.starbucks.com/aboutus/conscoffee.asp