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Starbucks Risk management
Starbucks Risk management
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Achievement of worldwide competitive advantage is what every business aims at, however there are risks associated with it. Starbuck enjoys global flexibility that enables it to manage her risks particularly risks associated with global supply project. The global supply has really complicated the supply chain especially due to the current economic condition. This has led to high coffee prices although the increase in prices has not largely affected the demand for coffee because the industry enjoys large consumer base. This writing analyses some of the risks, and risk management strategies employed by Starbuck due to adoption of global supply by Starbuck.
Starbucks have always considered the nature of demand of their coffee thus using this as the base of selecting the best suppliers as a way of minimizing global supply risk. As much it may be hard to engage international supply because of many risks associated with the transaction, Starbuck went ahead and realized that risk and return are allied and therefore the more risky the business is, the higher the returns (Katrinli, Gunay & Biresselioglu, 2011). Starbuck is committed in her strong values of ensuring equal treatment of individuals both with respect and high degree of dignity as well as conservation of the environment and this applies to their supply chain. Supplier Code of conduct created by the company was driven by the need for their suppliers to embrace Starbuck’s values. This helps in reducing a lot of risks associated with global supply. Unless a global supplier adopts and strictly follows the Starbuck’s Coffee Sourcing Guidelines, they may not qualify as the preferred suppliers for the company (Berman, Christner & Bell, 2010).
Starbuck normally communicates to her suppliers and letting them know about their Supplier Code of Conduct. a supplier must always show commitment to the welfare, economic sustainability, measuring, reporting and verify compliance to the Supplier code of conduct. Also, suppliers must adhere to the local laws and international labor and human rights standard as well as good businesses strategies that enhance environmental protection. The company may carry out an independent audit or just random audit to verify supplier’s compliance (Trent & Llewellyn, 2010). Relationship between Starbuck and her global suppliers of green coffee is so much established in such a manner that the risk of non-delivery on purchases is minimal. As a way of ensuring continuous production of high quality green coffee and leadership sustainability Starbucks empowers her international coffee producers. Furthermore, Starbuck purchases coffee either through the fixed price or price to be fixed purchase commitments dependent on the market conditions (Katrinli, Gunay & Biresselioglu, 2011).
Global supply chain is exposed to risks compared to local supply chains because they are longer and complex. In that regard, there is probability of experiencing more uncertainties and challenges thus making information technology very relevant and useful for Starbuck. Information regarding risks such as legal setbacks, custom fees, taxes, political conflicts and cultural differences may be gotten from the newspapers, the internet and other media or through whistleblowing. Thorough coordination and understanding of suppliers’ information is very useful. Such kind of information sources may reflect political turmoil and perhaps currency depreciation and other activities showing that the company is not doing very well (Trent & Llewellyn, 2010).
Financial statements of a particular supplier may also be used by Starbucks to assess the level of risk associated with dealing with the company in question. Also, Starbuck may hear from the public opinion or media various serious allegations such as poor environmental dealings and unfriendly labor laws practiced by their suppliers. This is enough information to reflect the activities and the supplier’s attributes. Furthermore, Starbuck may engage auditors to verify level of risk associated with supplier and the supplier’s compliance to the supplier’s code of conduct (Berman, Christner & Bell, 2010).
Management should always prepare a document that may help in foreseeing risks, approximating the consequences and defining the best responses to issues. Because of the inherent nature of risk with almost any project, it remains important for the Starbuck to continually assess the global supply risks and further create plans to curb them. Risk management plan serves well in documenting a specific risk of a project (Berman, Christner & Bell, 2010).
Risk register is nicely applicable in documenting the risks and primarily used in reporting to the Starbuck management. Also, there are project management professionals and event chain methodologies that may be applied in risk management documentation. Event chain methodology concentrates in identifying and management of issues that affect global supply chain project in Starbuck. It is suitable because global supply chain may be affected by external events and is only applicable when the supplies occur. The Starbuck may also decide to use Risk Management professional in documenting risks that may occur during the global supply chain. RMP tends to identify distinctive skill, competency and focusses mostly on opportunities (Katrinli, Gunay & Biresselioglu, 2011).
Risk management is very important in project planning process because it eliminates or rather minimizes dangers that may accrue in the project’s future. It will also help in preparedness for the risk thus providing the best alternatives for approaching the risk. Risk management minimizes sudden shocks and undesirable surprises, efficiency in resource utilization, decreased waste and fraud as well as efficiency in project accomplishment. Moreover, risk management reduces management time and improves better management of contingent and other activities (Katrinli, Gunay & Biresselioglu, 2011).
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Starbuck faces several risks both domestically and globally. For instance, domestically, the company is faced with market saturation due to the rapid rise of their outlets. The company is also experiencing risk of losing customers due to minimal alternatives offered and another uncertainty that arises with global expansion. There are several political and economic conditions affecting Starbuck in her international operations. Furthermore, there are personnel risks which actually possess as one of the most potential crisis area (Trent & Llewellyn, 2010). There are several vulnerability in the personnel that include workplace violence, health safety, employee fraud, hiring practices, labor disputes and sexual harassment. Starbuck also experiences potential crisis in competitor and consumer where issues such as biasness, customer satisfaction, regulatory, ethics, facility management and product pricing makes the company very much vulnerable (Trent & Llewellyn, 2010).
Additionally, there are issues of supplies and marketing that challenge smooth operation of Starbuck. Starbucks’ supply chain is faced by numerous risks including environmental, defects and recalls, government interventions, outsourcing, supplier relations and boycott. Operating with local partners in the international markets greatly decreases Starbucks share of profit which lowers the profit margin (Katrinli, Gunay & Biresselioglu, 2011). There are also cultural differences experienced in the international markets which saw Starbucks closing down its outlet in Beijing’s Forbidden City. A project risk which includes management, political and relationship between customers and suppliers is the most risky are in Starbuck. Risk breakdown structure outlining the organizational risk categories for Starbuck is as follows.
RBS Level 0 RBS Level 1 RBS Level 2
Project Risk 1.Project management/ Organizational Risks 1.1.Management
1.2. Contract relationships with customers and suppliers
1.3. Business
1.4 Political
1.5 Cost Estimates
1.6 Schedule estimates
1.7 Communication
2. Technical risks/ Production risks
3. Support risks
4. External risks
5. Material availability/ lead times/ Quality 2.1 Technical processes
2.2 Technology
2.3 Performance
2.4 Manufacturing Concerns
2.5 Logistics
3.1 Maintainability
3.2 Warranty
3.3 Safety
3.4 Security
3.5 Test and acceptance
4.1 Procurement
4.2 Legislation
4.3 Exchange rates
4.4 Site/facilities and environment
4.5Social/demographic factors
4.6 pressure groups
5.1 Market
The Risk Breakdown Structure has actually identified and assessed risks in an order that can be managed efficiently. The risks have been characterized by their probability of manifestation as well as the consequences on the objectives. Risks with higher probability of occurring include organizational risk, technical risks, support risks, external risks and eventually risks associated with procurement.
References
Berman, S. J., Christner, R., & Bell, R. (2010). Actions to implement three potent post-crisis strategies. Strategy & Leadership, 38(5), 26-32. doi:http://dx.doi.org/10.1108/10878571011072057
Katrinli, A., Gunay, G., & Biresselioglu, M. E. (2011). The convergence of corporate social responsibility and corporate sustainability: Starbucks corporation’s practises. The Business Review, Cambridge, 17(1), 164-171. Retrieved from http://search.proquest.com/docview/871194102?accountid=45049
Trent, R. J., & Llewellyn, R. (2010). Managing global supply and risk: Best practices, concepts, and strategies. Fort Lauderdale, FL: J. Ross Pub.
Starbucks United Kingdom Marketing Plan
Starbucks Marketing Plan
Contents
TOC o “1-3” h z u The External Environment PAGEREF _Toc376343801 h 1Political, Legal, and Regulatory Issues PAGEREF _Toc376343802 h 2The Customer Environment PAGEREF _Toc376343803 h 2SWOT Analysis PAGEREF _Toc376343804 h 3F. Matching, Converting, Minimizing, and Avoiding Strategies PAGEREF _Toc376343805 h 53. Marketing goals PAGEREF _Toc376343806 h 5Marketing Strategies PAGEREF _Toc376343807 h 6References PAGEREF _Toc376343808 h 8
Situation Analysis
The External Environment
Competitive Pressures
The UK market has a highly competitive retail space for hot drinks making it difficult for new entrants to penetrate. Nestle controls the largest market share for instant coffee and has a better understanding of the local consumers.
Economic Growth and Stability
The UK market has experienced difficult financial times since 2009. The Euro crisis too has been reduced consumer purchasing power. These difficulties make it reasonable for consumers to spend on necessities first, and less on discretionary items such as instant coffee.
Political, Legal, and Regulatory Issues
The UK market has stringent regulatory issues compared to the U.S. market. Starbucks has suffered a tainted image after revelations that the company has been evading tax since 1998. According to the company statement released in 2012, the company has only paid corporation tax worth 8.5 million pounds since its entry into the U.K market in 1998.
Changes in Technology
Starbucks’ competitors deliver coffee to the customer within the shortest time possible. This requires new machines and expertise. Technology helps beverage companies to advertise, deliver, and process payment for their products especially using information systems and social media.
Social Cultural Factors
The UK culture is conservative when compared to American culture. The American style of making coffee is still unpopular in the UK. UK customers prefer personalized services and courtesy-filled service delivery.
The Customer Environment
The UK market for hot drinks is an espresso zone. Customers have refined tastes for good coffee that has been brewed using traditional British, Italian and French styles. To penetrate and gain acceptance in the UK, producers must understand these tastes. Traditionally, UK customers prefer a strongly brewed coffee compared to Americans, and also like a variety of coffee (Hot Drinks Industry Profile: Europe 2012). Most customers have also complained that Starbucks coffee is very light and does not have adequate milk. The UK consumer is more sensitive to pricing and location of the coffee houses after the economic downturn.
Internal Environment
Starbucks entered the UK using a profit-oriented model as opposed to a customer-oriented strategy. Most of its service delivery methods were not in line with consumer tastes, and so it has taken the company almost a decade before it started making profits. In the recent days however, Starbucks has shifted to a customer-oriented strategy that has resulted into changes in its management, restaurant settings, design, and locations as well as on products.
The internal structure of Starbucks is still American-based. For instance, the design of cafés and top leadership followed the American style. As a result, Starbucks has been perceived as pushing its American business model, as opposed to understanding the UK market. The company is closing stores in expensive locations and moving to areas that are accessible to customers especially the working class.
SWOT AnalysisStrengths
International Operations With Huge Revenue Base
Starbucks has about 2,000 international operations and 3,200 licensed stores that generate a lot of revenue. This revenue can be used to enhance its competiveness in struggling markets such as the UK. For instance, the company has planned to spend a percentage of its revenue in marketing in the UK through revamping stores and loyalty programs.
Product Quality and Brand Equity
Starbucks is a premium brand that is easily acceptable all over the world due its high quality drinks (Starbucks Corporation SWOT Analysis 2012, p.4). The Starbuck’s brand has been built through quality products.
Research and Development
Starbucks is known for its ability to develop new food and beverage products for potential markets such as the UK. For instance, the company recently launched instant coffee Starbucks VIA Ready Brew that will maintain its freshness for a long time.
Strong Distribution and Marketing Channel
The company has leveraged on technology to get its products to consumers easily. In addition to its four distribution channels –retail stores, company stores, foodservice and consumer packaged goods (Alderman 2012), the company has also introduced mobile applications to enable the customer to access its gifts, machines and other products easily.
Weaknesses
Taxation and legal Suit
Starbucks reputation suffered from the tax evasion allegations and ongoing lawsuit where the company had not updated its tax records for a number of years. This may affect its brand image in the UK.
Business Model
Starbucks business model in the UK is weak in management and strategy formulation. For instance, Liu and Herbst (2009) shows that the company located its stores in expensive locations that were not frequented by customers occasioning losses due to high rent expenses.
Heavy Restructuring
Starbucks has been through several restructuring processes in various market segments including the UK (Liu & Herbst 2009). Restructuring comes with heavy capital outlay and heavy marketing campaigns to bring customers on board.
Opportunities
Instant Coffee Segment
Starbucks has made significant developments in the instant coffee segment. Unlike competing products that use by-products and other chemicals, the invention of Starbucks VIA Ready Brew has enabled the company to serve customers with natural roasted coffee without preservatives.
Demographic Factors
Demographic factors are in favor of Starbucks growth in the European market. There is increase in working population and demand for eating-out joints that will boost its sales. The younger generation is more receptive to Starbucks products and their mode of preparation.
Revamping U.K. stores
Starbucks is changing everything in Europe from management and food and drinks that they serve to location of stores. This revamp will restore customer confidence, attract more customers and take advantage of existing opportunities such as continental tastes.
Threats
Economic Conditions
The economic downturn, the slow economic recovery and looming euro crisis have lowered consumer’s purchasing power and ability to have discretionary expenditure (Starbucks Corporation SWOT Analysis 2012, p.7). The company is also facing currency risk.
Health Consciousness
Most consumers are increasingly aware of health problems posed by fast food, snacks and large intakes of coffee. As a result, they are making more health conscious diet decision that may negatively affect the company sales.
Competition
In the foods section, the company is competing against well-established French pastries that have won customer loyalty over the years (Alderman 2012). There are more than 50,000 traditional French coffee outlets and almost the same number for Italian coffee (Jargon & Stevens, 2012).
E. SWOT Matrix
Strengths:
International operations with huge revenue base
Product quality and brand equity
Research and development
Strong distribution and marketing channels
Opportunities:
Instant coffee segment
Demographic factors
Revamping U.K. stores
Weaknesses:
Taxation and legal suit
Business model
Heavy restructuring Threats:
Economic conditions
Competition
Health consciousness
F. Matching, Converting, Minimizing, and Avoiding StrategiesThe company has generated revenue from other operations, which can be pumped into the UK market through marketing. The revenue can be used to increase market share through strategic alliances, marketing campaigns and promoting the brand.
Starbucks is known for its efficient and functional distribution strategy in U.S. and china. The same can be extended to the U.K. to take advantage of the demographic factors such as the younger generation that can be a target for mobile applications and loyalty programs. To compete with Nestle in the instant coffee segment, the company can use its strength in research and development to develop fine and quality products.
The company can take advantage of its robust business model to formulate a strategy that is more acceptable to the UK market. However, brand reputation will remain a big challenge for Starbucks in UK. The company must update its taxation payment and come up with campaigns to redeem its image. The company can use corporate social responsibility to build its brand reputation.
Economic conditions will also remain a challenge for the company. However, it is important for the company to readdress its pricing strategy to attract customers with low discretionary income.
3. Marketing goals
Marketing Goals and Objectives
Marketing Goal
To increase market share by around 10% by 2014 and improve the brand image os Starbucks in the European market
To increase sales revenue by 30% by 2014
Marketing StrategiesPrimary Target and Marketing Mix
Starbucks Europe has been struggling to increase its market share in Europe, and have only managed to increase its sales by measly margins. This can be attributed to intense competition from European players as well lack of acceptability.
Target Market
The target market for the product will be men and women between 20 and 50 years. The target group is divided into young professionals and middle-class professionals. These target customers hold business meetings regularly in luxury coffee shops over evening, mornings, and lunch times. They also have discretionary income to spend on coffee. They are also like eating out and can tag their families and friends. They are tech-savvy and become a target for mobile applications distribution. The segment can be easily targeted to change the culture of having breakfast by promoting take-away or delivery in offices.
The Product
The main product on offer will be premium coffee. The product offers varied choices for the customer, where the customer can choose between traditional coffee and instant coffee. Coffee will be served in serene environment. For instance, within the restaurant, there will be availability of internet and teleconferencing devices. There will be downloadable materials such as games and music accessible within the café. In addition, the product will be tailored to give a mix of UK and American culture.
Pricing
Coffee is generally cheaper in the UK than in the US. Customers have previously complained about high prices of Starbucks coffee. The premium coffee segment will strike a balance between luxury and reasonable prices. The target market has discretionary income, but is also price-conscious. Premium coffee will be priced at £ 3. Coffee ranges between £1.7 and £3.5 in most parts of UK. Offering premium coffee at £3 will be acceptable to middle-class customers for all sizes and varieties.
The company expects that by offering all coffee varieties and sizes for £3 will be a way of promoting sales and consumption in large quantities. The quality of the coffee will be similar to the product sold in the luxury segment. The pricing is meant to provide discount, given the quality of tea and packaging, while making customers recognize the power and quality of brand they are consuming. The pricing strategy is also geared towards encouraging a culture of high-volume coffee consumption. Corporate clients will get a 10% discount.
Distribution
The new product will not increase its intermediaries. However, the company will increase its strategic alliances to ensure that the product can reach the consumers wherever they are and in good time. In addition to retail service and food stores, there will also be collaboration with airlines and vendors that can easily access the middle class segment. Starbucks will also move a number of stores to business districts frequented by young professionals and close to offices.
The product will be distributed through Starbucks-operated stores, retail stores, consumer packaged goods and food service. The company will capitalize on the use of mobile applications to ease delivery and payment of goods and services. The company will partner with service providers such as PayPal or iPhone to reach a wider customer base. Loyal customers will also be rewarded through free delivery to offices, and so the company will collaborate with different firms to increase sales.
Promotion
The company plans to spend about 20 per cent of sales revenue on promotion. Promotion strategies include;
Loyalty Program
Instead of giving away free coffee, the company will introduce a loyalty program to encourage customers to come back, and with more customers. In the program, customers will get a card that will earn points every time they visit a coffee store or any other outlet to purchase Starbucks ’ product. Customers will gain points by increasing theirs pending on premium coffee, and move from one level to another as they buy more Starbucks products.
Social Media Advertising
The company will use social media platforms such as Facebook, twitter, MySpace, Piniterest among other platforms. Apart from promotion and encouraging customer feedback, they will be used to reinforce the loyalty program by encouraging registration.
Celebrity Advertising and Brand Ambassadors
The company will make use of fashion, music and sports celebrities to market the product among its fans. This will also include sponsorship for games that are favored by young and middle-class professionals.
Re-branding
The products will be re-branded to adapt a European face, and served in restaurants that accommodate European culture. This will include packaging and inclusion of more continental tastes to appeal to customers that are keen on authentic European tastes.
ReferencesAlderman, L, 2012, ‘Europe Remains a Challenge for Starbucks ’, The New York times, accessed 8 September 2013. http://www.nytimes.com/2012/03/31/business/Starbucks -tailors-its-experience-to-fit-to-european-tastes.html?adxnnl=1&pagewanted=all&adxnnlx=1378558930-u1dskMazAu2BorTIRO/XSA&_r=1&’Hot Drinks Industry Profile: Europe’ 2012, Hot Drinks Industry Profile: Europe, pp. 1-36, Business Source Complete, EBSCOhost, viewed 8 September 2013.
Jargon, J, & Stevens, L 2012, ‘Starbucks Jolts Europe’, Wall Street Journal – Eastern Edition, 28 December, Academic Search Premier, EBSCOhost, viewed 8 September 2013.
Liu, L, & Herbst, M 2009, ‘Europe’s New McCafé Culture’, Businessweek, 4149, p. 70, Business Source Complete, EBSCOhost, viewed 8 September 2013.
‘Starbucks Corporation SWOT Analysis’ 2012, Starbucks Corporation SWOT Analysis, pp. 1-11, Business Source Complete, EBSCOhost, viewed 8 September 2013.
Starbucks Company Analysis
Starbucks Company Analysis
Contents
TOC o “1-3” h z u Starbucks Coffee Company PAGEREF _Toc378092795 h 1Introduction/Background PAGEREF _Toc378092796 h 1Starbucks Environment PAGEREF _Toc378092797 h 2Furniture/Decoration inside Starbucks PAGEREF _Toc378092798 h 2Music of Starbucks PAGEREF _Toc378092799 h 2Marketing PAGEREF _Toc378092800 h 3Advertisement PAGEREF _Toc378092801 h 3Starbucks’ Gift Cards/E-Cards PAGEREF _Toc378092802 h 4Technology of Starbucks PAGEREF _Toc378092803 h 4Social responsibility: PAGEREF _Toc378092804 h 5Global Responsibility PAGEREF _Toc378092805 h 5Community PAGEREF _Toc378092806 h 6Environment PAGEREF _Toc378092807 h 7Conclusion PAGEREF _Toc378092808 h 7Works Cited PAGEREF _Toc378092809 h 8
Introduction/BackgroundStarbucks Coffee Company is the largest retailer and roaster of specialty coffee in the world. It was established in 1971 by three partners in the US and has since then spread its operations in over 50 countries globally (Seaford & Brooks, 2012). It expanded tremendously and tripled its stores between 2002 and 2007 from 5,886 to 15,011 respectively. However, its rapid expansion was altered by the recent economic crisis that peaked in 2008. Despite this, the company continued to focus on its expansion goal into the international market. Strong and persistent focus on international sales led to significant growth and expansion of this company during the subsequent years. During the second quarter of 2010, for instance, Starbucks’ profits increased eightfold to $217.3 million. Currently, this company has more than 1700 stores in various locations in the world. It distributes its products in terms of stores and does not sell franchises (Gossage, 2011). Apart from specialty coffee, this company owns other two brands, namely, Tazo Tea and Seattle’s Best Coffee. The company has also invested in the music industry and has been offering various music products and services to customers. This paper presents an analysis of Starbucks through the following topics:
Starbucks environment
Furniture/Decoration inside the company,
Music of Starbucks (background music and how they market the music)
Marketing strategies
Advertisement strategies
Use of Gift Cards/E-Cards
The company’s Technology)
Social responsibility
Global Responsibility,
Community
Environment
Starbucks EnvironmentFurniture/Decoration inside StarbucksStarbucks’ stores have small, circular chairs and tables that are designed to occupy minimum space. This makes it appear as if there are no empty seats and customers dining alone do not feel or appear lonely. As Simmons (2012) explains, round tables are more informal and comfortable for customers. According to Simmons (2012), Starbucks decorates store interiors to reflect appearance of surrounding neighborhoods. Depending on the character of the surrounding neighborhood, Starbucks selects themes for decoration from: heritage (factory-inspired lighting, metal stools, tile floors or stained concrete and worn wood); artisan (hand-polished woodwork, factory casement glass, masonry walls and exposed steel beams); and regional modern (culturally relevant fabrics and bright, light-filled spaces) (Simmons, 2012).
Music of Starbucks
Starbucks uses music to create an environment that entertains customers. As Simmons, (2012) explains, the company believes that listening to great background music while sipping coffee heightens customer’s enjoyments. The company has invested heavily in entertainment and has even established a music division called Starbucks Entertainment. Starbucks has also been selling compact discs since 1995 (Hajdu, 2006). The company expanded its investments in the music industry in 1999 after acquiring a music company called Hear Music. Today, Hear Music is the sound of the company. Hear Music has bee partnering with famous and emerging artists to provide variety of music to Starbuck’s customers. Hear Music’s compilations and hand-selected CDs are featured in the company’s cafes around the world, at the four Starbucks Hear Music Coffeehouses and online. In 2006, Starbucks teamed up with Apple Inc. and established Starbuck’s section of Apple’s iTunes, offering video downloads and music. The company has also established wireless communication between some of its stores and Apple through AT & T Wi-Fi technology. This implies that customers with computers can download music while listening in the Starbucks stores (Simmons, 2012). Generally, music is one of the key entertainments that coffee lovers enjoy at Starbucks.
MarketingAdvertisement
Starbucks uses various strategies to advertise its products and services. One of the main marketing strategies used by the company is in-house advertising within the company’s stores. The company has established a unique network that provides unique entertainment and news through its free in-store Wi-Fi service. As well, Starbuck advertises its products and services through the media, mainly through newspapers and televisions. The company has also been advertising its products and services through the internet (Bussing-Burks, 2009). For instance, Starbucks has established a website where they give descriptions of their products and services. The web page is designed in a way that allows visitors to share their experience of Starbucks products and services and to post their own product and service preferences. Starbucks has also been utilizing social media sites such as FaceBook, FunSpace and Twitter to advertise its products and services. For instance, the company has opened a FaceBook account through which they interact with millions of customers who share their experiences of the company’s products and services. The company has also been sending informative messages to consumers through mobile phones and emails (Bussing-Burks, 2009). The main goal of Starbucks in utilizing the above strategies is to gather enough information regarding consumer preferences and to use that information in improving their products and services. Apart from enhancing customer experience, Starbucks focuses on promoting its brand across the globe, to establish binding relationships with customers and to enhance customer loyalty (Bussing-Burks, 2009).
Starbucks’ Gift Cards/E-CardsStarbuck has established a program which allows customers to load money in terms of dollars into Starbuck cards to be used for future purchases (Gordon, 2011). The amount of money loaded into the card is a prepayment for products and services offered Starbucks stores and in other participating stores, such as Tezo, Teavana and Evolution fresh stores. As part of the program, the company has established Starbucks Card eGift which allows customers to buy and send virtual Starbucks Card through email and social sites. Customers can make purchases using Paypal, debit card or credit card account. The cards make it easier and more convenient for customers to purchase Starbucks’ products and services (Gordon, 2011). Starbucks uses this program mainly to enhance customer experience and loyalty.
Technology of StarbucksTechnological advancement has been changing at an average pace in the food and beverage industry. However, for business organizations to achieve success, they need to follow technological trends consistently and exploit any opportunity that may result from any change or advancement in technology. According to Technorati (2011), Starbucks adopted the recently introduced phone payments system which helps to reduce long queues during peak times.
The use of Starbucks Card is another example of how Starbucks has been taking advantage of advancement in technology. Technological advancement has led to a new platform in form of social media where business enterprises relate with consumers and share ideas and experiences with them. Business organizations are now able to acquire useful data such as consumer interests, tastes and preferences and responses to organizational products and services (Gossage, 2011). Starbucks has exploited this opportunity by creating accounts in the social media sites such as FunsPace and FaceBook where it runs forums to discuss important issues with consumers and communities (Technorati, 2011).
Social responsibility:Global Responsibility
Starbucks is one of companies operating in the global market that have been responsible when dealing with all stakeholders. Starbucks’ key stakeholders include customers, employees, suppliers, shareholders and governments. According to Lawrence and Weber (2011), Starbucks has always been committed to provide its customers with quality specialty coffee. They practice fair trade and provide impressive services to customers that give them as a sense of belonging. Employees of this company fully engage with customers to learn and respond to their requests and interests. The company is committed to providing customers with healthy food with low level of calories such as reduced fats breads. They also entice customers by offering them gift cards and other gift items such as mugs and cups with the company’s logo. In response, consumers in many pars of the world have developed loyalty to the product of this company.
Starbucks’ employees are treated well, as partners of the organization. The company has established the Recognition Awards Employee Benefits Package that provides of various gifts for workers in recognition for good performance. They are offered attractive salary and benefits. The company also provides free training to its employees to equip them with valuable skills needed in the cafe industry (Lawrence & Weber, 2011). The coffee master program and the servant leadership workshops are examples of career development programs sponsored by the company to support employee training.
Additionally, Starbuck has always been committed to ensure that they attain a level of success that rewards the shareholders. They allow the shareholders and new investors to purchase and sell shares of Starbucks common stock Dividends (Lawrence & Weber, 2011). They pay shareholders’ dividends on its common stock at specific set rates on quarterly basis. Starbucks also ensures that there is fare trade between them and suppliers. They encourage coffee farmers to adopt measures that help to protect the environment. They also train them to develop business skills by compelling them to be accountable for their business activities. However, suppliers are required to put in place safety measures for workers that will lead to fair and human working conditions. They are also required to protect the rights of workers through addressing child labour and discrimination and complying with minimum wage requirements.
However, Starbucks has in the past been accused of evading paying corporate taxes in various countries in Europe, an issue that could have an adverse effect on its reputation in the European market (Kole, 2011). Recently, this company has bowed to pressure from the UK government authorities to pay taxes from 2013 henceforth. It is vital for Starbucks should be compliant to such government requirements in all countries where it operates to avoid damaging its image.
CommunityStarbucks has enhanced its reputation to the community as a team player. In all places where it does its business, Starbucks has always been striving to make positive contributions to the communities. The company has been contributing by offering employment opportunities to neighboring communities (Ruzich, 2008). Starbuck’s offers a sizeable work force to volunteer in various community services. In 2007, for instance, the company’s workforce, partners and customers in Canada and United States logged 320,000 volunteer hours. The company has plans to increase its contribution to community services. By 2015, Starbucks expects to have capacity contribute more than 1 millions hours of community service annually across the globe. Starbucks has also been providing support to neighboring communities and has been addressing areas such as poverty elimination, literacy and environment (Ruzich, 2008).
EnvironmentEnvironmental sustainability is one of the key objectives of Starbucks. Since 1992, the company has been establishing innovative ways of minimizing waste from their operations. The company has also been recycling waste products, as a way of reducing environmental pollution. They company has also established “green teams” that develop and implement environmental sustainability initiatives (Lawrence & Weber, 2011). However, concerns have been raised since Starbucks customers often leave shops with their cups and dispose them off in the streets, hence creating a lot of waste. As National Coffee Drinking Trends (2011) explains, cups should be made up of material that is as degradable as possible
ConclusionIn conclusion, Starbucks is one of the successful retailers of coffee at global scale. The success of the company stems from its innovative business and marketing strategies that enhance customer experience. Furniture in the company’s store is designed in a way that makes customers feel more comfortable and less lonely. Decorations are mainly designed based on the characters of the neighboring communities. The company uses a combination of strategies to advertise its products to customers. The use of Starbucks Card is one of the innovative marketing strategies used by the company to enhance customer experience and loyalty. The company has been taking advantage of improvement in technology by adopting the latest technology available in the food and beverage industry to enhance customer experience. As noted in the analysis, Starbucks is one of the companies operating at global scale that have been showing responsibility to stakeholders. The company has also been showing responsibility when dealing with neighboring communities and through active involvement in environmental sustainability. However, the company needs to avoid engaging in issues that could damage its reputation, such as tax evasion. Also, the company needs to consider making cups using material that is as degradable as possible.
Works CitedBussing-Burks, Marie. Corporations that changed the world. Carlifornia: ABC
CLIO, 2009
Gordon, Rose. “Bracing pae for Starbuck’s CMO.” Spotlight, 16 March, 2011: 22-23.
Gossage, Bobbie. “Howard Schultz, on Getting a Second Shot.” Inc, 33.3, (2011): 52-54
Hajdu, David. “The Music of Starbucks.” The New Republic, 7 August, 2006: 21-23
Kole, William. J. Go east as European Union. 9 April. 2011. Web. 19 Nov. 2013
<http://community.seattletimes.nwsource.com/archive/?date=20040409&slug=neweurope11>
Lawrence, Anne & Weber, James. Business and Society Stakeholders, Ethics, Public Policy.13th ed. NY: McGraw-Hill, 2011
National Coffee Drinking Trends. National Association of Coffee. Starbucks Coffee
Company. 2013. Web. 19 Nov. 2013. <www.starbucks.com>
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