Starbucks and Delivering on Customer Service

The development of humanity has led to major changes in all spheres of human life, including economics, psychology, social interactions and personal relations. It has also provided numerous new possibilities for adventurous, persistent and purposeful business people to develop their business initiatives and create companies, which offer a wide variety of different products and services. The Starbucks Corporation represents an example of how a group of resourceful and intelligent businessmen can build their business from scratch and achieve worldwide success. It is essential to analyze the full spectrum of external environment features that contribute to business success, in order to understand the principles of efficient management implemented by Starbucks. Such aspects include goals of the company, demands and expectations of society, interactions between the company and society etc. Therefore, it is essential to review how all these aspects work in the modern world and contribute to business success in order to understand what is required for efficient management. It is also important to understand how company’s internal relations affect its stakeholders, contributing to overall company success. Therefore, reviewing the example of Starbucks will provide solutions to the issues of effective management.

The technological progress of humanity has seriously contributed to the development of human society, its economic condition and manufacturing capabilities. It has provided multiple new means and opportunities for developing business initiatives. The technical progress has provided new means of storing goods, transportation and communication, that are especially important for any business. Modern cars, trains and airplanes allow carrying large amounts of goods for long distances in a short time. They also give people the ability to move from one country to another in a matter of hours. It is especially important for businessmen, who need to develop business relations with their international partners and look for new opportunities abroad. The development of information technology has resulted in creation of radio, television and the Internet. The invention of radio and television has allowed media influencing human society by translating news, music, movies, different informational programs and, especially, advertisements. The appearance of the Internet has enabled storing and accessing huge volumes of information online and sharing it with people all around the world. Business companies take full advantage of such situation, paying media to show certain advertisements that affect public opinion and inspire people to buy certain products. Such practice gives companies the ability to gain maximum financial profit and provides new perspectives for international expansion. All of these factors are especially topical for Starbucks Corporation that has achieved success by influencing public opinion and promoting certain social tendencies and demands.

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It is essential to analyze the example of Starbucks from historical perspective in order to understand what external environment issues have stood in front of the company and what were the solutions to these situations. This story started in 1971, when three tree resourceful businessmen – Gerald Baldwin, Gordon Bowker and Ziev Siegl – founded the company and opened their first coffee shop in Seattle (Starbucks Corporation, 2015). By 1982 the firm had five coffee stores, its coffee roasting facility and a wholesale business that sold coffee mostly to local restaurants (Gulati, Huffman and Neilson, 2002). In order to research new business perspectives and expand its operations, Starbucks hired Howard Schultz as a company manager. In 1983 Shultz took a business trip to Italy in order to research its coffee culture and find a way to adopt its elements for Starbucks in America. This example shows how new means of fast transportation contribute to developing efficient management strategies. There he developed his own vision on coffee industry, prepared a business plan and decided to leave Starbucks in order to start his coffee company. In 1986 Shultz received investments from Starbucks and opened his first store in Columbia Seafirst Center, where he implemented his innovative vision of coffee industry (Starbucks Corporation, 2015). A little later, he opened two more stores in Seattle and Vancouver. In 1987 Schultz’s business was rapidly developing while Starbucks faced serious financial problems due to major drawbacks of its wholesale policy (Starbucks Corporation, 2015). This case relates to management principle of customer policy, highlighting that choosing wrong target group for sales can result in drastic consequences. Because of this situation Schultz proposed his colleagues to sell Starbucks to him for $4 million and received a positive response. After buying the company, he combined it with his own business and named it Starbucks Corporation. Schultz implemented a new business policy for his firm that concentrated on selling high-quality premium coffee to well-off white collars and positioned Starbucks as a trendy place for meetings (Starbucks Corporation, 2015). This strategy has proven to be highly effective because everyone wanted to join such successful social group and become a part of fashionable trend. This case relates to the issues of customer policy and social advertising. It shows that choosing a suitable customer target group can bring both financial profit and public interest.

The company’s turnover was rapidly growing and by 1992 Starbucks had 140 stores and was successfully competing against other coffee chains in America (Gulati, Huffman and Neilson, 2002). The same year the company decided to go public, allowing its employees to become shareholders (Starbucks Corporation, 2015). It also implemented health programs for both full-time and part-time employees. These steps have resulted in major increase of employees’ working conditions, making them highly satisfied with company’s policy and contributed to a very low turnover of workers (Larimore, 2013). Therefore, the majority of employees were very well trained and highly loyal to the corporation. This is an example of efficient management concerning the issues of employees’ satisfaction and internal relations. It highlights that keeping employees satisfied contributes to positive development of the company. In 1995 it started selling a frozen coffee drink named Frapuccino and struck a deal with Pepsi and United Airlines on selling its goods. Starbucks also launched a line of music CDs that are sold at coffehouses (Starbucks Corporation, 2015). These were wise marketing decisions that have seriously contributed to promotion of Starbucks trademark. Such marketing strategy simultaneously targeted such social groups like business people, families and youth. This case relates to such management principles like efficient advertising and productive relations with business partners. It highlights that choosing suitable partners from external environment can bring great profit to the company. As a result, the social demand for Starbucks products was rapidly growing and the company began its expansion strategy, placing coffeehouses almost on every corner in American cities. In 1998 Starbucks launched a website, that was offering a full spectrum of its goods for customers online (Starbucks Corporation, 2015). This shows how informational technologies contribute to possibilities of business development and offer new management tools. By 2002 Starbucks became the most dominant coffee brand in America and decided to spread its services worldwide. It began the expansion to Europe and Japan. Schultz stepped down as CEO, but remained a chairman and the main global strategist of the company, and Orin Smith became the CEO of Starbucks and took over day-to-day operations (Starbucks Corporation, 2015).

Nowadays Starbucks is the most well-known coffee brand in the world. It deals with a number of internal and external environment features. Starbucks constantly faces a number of external issues such as high competition, meeting social demands, collaborating with suppliers and protecting the environment. There are many other coffee companies in the market, offering similar services to their customers. In order to deal with the competition and meet social demands, Starbucks conducts advertising through media and especially through the Internet. The development of social networks, where people share views, tastes and opinions, has given the company the ability to influence public opinion and persuade people to buy its products through advertising and efforts of content managers. This case relates to the issue of advertising, showing how to influence public opinion with the help of modern information technology. Starbucks deals with the issue of collaboration with suppliers through offering investments and partnership to coffee farmers (Global responsibility report 2014, 2015). This policy makes farmers completely loyal to the company. This case addresses the issue of leadership and efficient cooperation in management, showing how to achieve mutual understanding with business partners. In order to avoid negative effects on environment and global climate change, Starbucks also participates in water conservation and alternative energy sources programs. It buys energy from renewable sources like wind energy, being one of the top purchasers of the US Environmental Protection Agency (Global responsibility report 2014, 2015). The company also incorporates environmental design into its processing facilities and implements special discount programs that make customers more socially aware of environment protection issues (Global responsibility report 2014, 2015). This example relates to the management principle of social responsibility. It highlights some of the issues connected to social awareness and offers solutions to such problems. All these examples from Starbucks operations illustrate efficient means of achieving business success.

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The most important stakeholder for Starbucks are its employees. Its attitude towards workers is closely connected to the company’s stakeholder policy. Starbucks is a public company that actively persuades its employees to become stakeholders and promotes the idea of becoming not just an employee, but the company’s “partner”. The corporation offers medical insurance, great working conditions and decent salary to both full-time and part-time employees (Larimore, 2013). Starbucks also offers special education benefits to its workers, allowing them to complete their degrees (Global responsibility report 2014, 2015). This creates an atmosphere of loyalty and dedication to the company and its policies that relates to the issue of loyalty in management. As a result, the employee turnover of the company is the lowest in the sphere of coffee industry (Geereddy, 2013). Such policy also concerns such external feature like attracting new highly motivated and educated workers. The system of employee promotion is also one of the most important factors that contribute to the development of Starbucks. According to the company policy, the majority of local managers are ex-baristas and the majority of high management is former local managers (Geereddy, 2013). This case relates to the issues of teamwork and leadership, highlighting the aspects that are essential for creating an efficient company structure.  Such factors are very important for the company’s stakeholder structure because Starbucks emphasizes that its employees are the most important stakeholders. In my opinion, it is an effective management solution because it involves long-term perspective, preparing management personnel for further development of the company. Therefore, employee stakeholders may be the most important ones for Starbucks, because they truly contribute to the company’s development and success through dedicated work.

In conclusion, it can be stated that Starbucks has effectively dealt with all external environment issues concerning management and customer service through its historical development. The company has produced effective solutions to all problematic issues concerning its perspectives and development, like employee loyalty, customer demand, stakeholder structure, and public relations through reasonable company policies. These solutions also address topical issues from management theory and practice like social responsibility, advertising and cooperation with business partners. Therefore, Starbucks can be perceived as an example of a successful business company with efficient management policies.

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