1. Evaluate the role played by Howard Schultz in the growth and success of Starb
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Question
1. Evaluate the role played by Howard Schultz in the growth and success of Starbucks. Is the company in danger of relying too heavily on Mr. Schultz?
2. Discuss the business engineering processes used by Starbucks to stay competitive. How does the company track performance and use its control systems?
3. What is the compensation strategy that the company has used to motivate its employees to focus on the company’s strategy and its execution?
4. How would you describe Starbucks’ corporate culture? What is the relevance of corporate culture for Starbucks’ future growth and success?
5. Assess the company’s strategy to expand its product offering and enter new market segments. What factors may affect the ability of the firm to succeed in this strategy?
Explanation / Answer
Starbucks coffee company is one of the largest coffee store chains in the world. Lets start with the background of its initial evolution.
Starbucks is founded by three people who met in the college and later became the partners. These guys adorned coffee and decided to make their passion a business. But, the business didnot last longer and they decided to sell it off. Howard Schultz, at that point of time making some bucks with his newly opened coffee store "iI Giornale" in seattle. Howard Schultz immediately brought the stores and roasting factory for $4 million.
1) Howard Schultz played a major role in the growth and success of the starbucks. Howard Schultz choose to change the selling and marketing strategies according to the tastes and preferences of its customers. He gave his customers the freedom of choice. His marketing focussed and attracted on all kinds of crowds. The marketing team in the starbucks constantly tagged Americans saying, drinking a true coffee at Starbucks is romantic. Howard not only increased the starbucks presence by opening more than 125 stores in Unites States in 5 years but also increased the number of items it should sell in the stores. Like earlier it sold only coffee, later they even introduced hamburgers, different varieties of the coffee etc.
Company is not at all in the danger untill it is in the hands of Howard Schultz. Howard is a visionery. Company's growth is mainly attributed to the Howard's vision and hardwork. I firmly believe howard must have already planned of who should take over the business when he retires. He mush have already a strong contingency plans and strategies for the betterment of the company.
2) To stay competitive, Starbucks strengthned up three things. Quality, Quantity and Publicity. The advertising slogans were easy to remember and causing a smile and bringing the thought of having a cup of coffee. And he made sure that the slogans and advertisement is no different than the reality.
Howard worked on the principle of self service. where a customer has the freedom of choice in chosing upon the type of drink, size of cup and type of milk(regular or fat). This approach made customers to make the drinks of their own choice. The fact that starbucks works on self service princle didnot scare its customers. Here one person takes the order and other person delivers the order. It made the system quite fast.
Howard made sure that there is a bar counter in every single store where the professional baristas were grounding coffee beans, brewing and serving fresh coffee.
To cut the averahe store opening costs, company standardized the buying to centralized buying, developed standard contracts and fixed fees on certain items and gave contracts and work to the contractors who displayed good cost control practises.
The retail operations team outlined exactly how much equipment the store needs so that the standard items can be brought in huge volumes to cut the cost. The layout for the new and remodeled stores were made on computer, where the software enables to estimate the costs involved in the project.
3) Some of the compensation strategies the company used for its employees to their motivation are - health care coverage for all the employees full time or part time. Starbucks paid 75% of the health care premium while the employees paid only 25%. health care coverage was given to unmarried partners who were engaged or in a committed relationship. company also presented stock option plan for all its employees, aiming at making all the employees its partners and giving them a change to become a part of company's success story.
starbucks work place is good for the emloyees. there was a lot of employee empowerment. its competitive payscales and health schemes made the best workplace for the people to work in.
4)The company's success mainly depended on its employees who had a very positive experience in their stores. All the store employees were well versed and knowledgeble with all the products, who paid attention in minute details while making a drink and also communicated the company's passion in coffee. The top executives were very adamant about the quality they deliver. They rigidly opposed to the artificial coffee or beans. Howard Schultz's goal was to build a company with soul. the team introduced innovative ways to reduce, reuse and recycle the waste.
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