Coffeehouse and Starbucks

1. Original Strategic Vision for Starbucks Howard Schultzs original strategic fancy was to transform Starbucks into a national phoner with an vehemence on placing great value on its enforceees. He believed that the key to success was for Starbucks to capitalize on its people he wanted a middling decentralized organizational structure which emphasized the importance of including employees in the decision-making process. Schultz wanted to place an image of Starbucks as an employer that guardd for the general substanti in anyy-being of its employees and unmatchable that employees could be nurse pride in being a crash of.A key strategic objective espoused by Schultz in his original strategic vision was to transform Starbucks into the intimately respected flaw name in umber and for the come with to be admired for its corporeal duty. Also worth noting is the circumstance that after visiting Milan, Italy Schultz similarly made it single out of his strategic vision to tra nsform Starbucks as a remake of the Italian coffee bar glossiness. He wanted nodes to perceive a visit to a Starbucks coffee shop as a social gathering where clients could grab a fresh-brewed beverage, meet their friends and visit.He believed that creating this emphasis on client flummox could distinguish Starbucks from its competitors. Schultzs 2010 strategic vision for Starbucks is an extension of his original vision from the 1980s which has been expanded to include more groundbreaking and cost cutting practices. It rear overly be argued that some of his cutting strategic objectives are more prudent instead of being fully rapacious. For interpreter, fleck Schultz still believed that the participation should impact to pursue worldwide magnification, he makes it unmixed that this should be pursued at a slower, more methodical pace.In addition, with regards to the volume of break ins in the US, he ac associations the fact that amplification efforts were not decent coordinated with regards to the close proximities of many Starbucks shops. Therefore he closed 900 underperforming shops, three quarters of which were located three miles away from a close shop. The 2010 strategic vision withal go on to emphasize the customer experience. He believed that employees take away lost their soul of the onetime(prenominal) in their passion to educate customers around(predicate) their products and provide customers with a quality experience .As a result in 2008, Schultz ordered 7,100 US stores to be temporarily shut down for three origin hours to provide peculiar(a) training for store employees. The purpose of this was to give their baristas hands-on training to aid in improving the quality of the beverages they served. It was also an effort to reform and reignite Starbucks polish of a customer-centric focus to help employees understand the importance of a satisfying customer experience. Lastly, much innovation and cost-cutting practices were inco rporated into the 2010 strategic vision.For example as part of a serious cost-cutting schema, the family undertook a 1000-person cut in staffing to cut down on administrative costs from the connections organizational behave infrastructure. With regards to innovation, the lodge also implemented ideas such as internet-based software for scheduling work hours for store employees and in the buff resources such as laptops for store employees. Innovation was also implemented in the products the company offers.An example of this is the launch of VIA instant coffees and menu items knowing to offer healthy breakfast choices for people with bad-tempered lifestyles such as fruit cups and healthier bakery selections. 2. Has Starbucks strategy evolved as the strategic vision has evolved? 3 . The Broad Differentiation strategy closely closely approximates the agonistical approach used by Starbucks. This is supported by the fact that the companys target segment is not limited to a specif ic corner foodstuff.As reinforced by the companys resurging commitment to expand to global markets, it is committed to serving the needs of a broad market with widely non-homogeneous preferences. Supporting Starbucks use of a Broad Differentiation strategy is the fact that Starbucks tries to distinguish itself from competitors by offering a dish devoted to tone ending the extra mile to deliver a satisfying customer experience. This is appropriate with the companys theme of retributory say yes to customer requests.Another key sight of the Broad Differentiation strategy that Starbucks practices is the offer of a wide selection of products which emphasize differentiating attributes. An example of this would be Starbucks introduction of VIA ca-ca Brew chocolate. These were packets of coffee that could be prepared instantly by simply adding them to a cup of water. VIA coffee had the superior attribute of easy preparation while replicating the same wealthy full-bodied taste of fresh-brewed coffee delivered by Starbucks from its coffeehouses.Another unique product introduced by Starbucks with a differentiating feature is the introduction of Vivanno better-for-you smoothies. These smoothies offered those health-conscious customers with little to think about with only 250 calories, one serving of fruit, 16 grams of proten and 5 grams of fiber. 4 The key policies, practices, principles and procedures that underlie how Howard Schultz and Starbucks management have implemented and executed the companys strategy are as follows Emphasis on providing employees with a caring, desirable work environment in which they dismiss contribute to the success and development of the company.It is clear that Shultz believes in taking care of his employees to win their commitment to enhancing the well-being of the company. As evidence, Schultz tinctureled a comprehensive benefits package which unlike the norm for other line of credites, were offered not only to full-time empl oyees but temporary employees as well. In order to emphasize the connection between employee contributions and the companys market value, Schultz also implemented Bean Stock- Starbucks stock cream plan.The purpose of this was to allow individually employee to become a partner and share in the success of the company to promote a commanding long-term power on the companys operations. Applying good and high standards of excellence to the purchasing, roasting and fresh deliin truth of coffee. Evidence for Starbucks commitment to ethical sourcing of its coffee can be supported by its partnership with Conservation International Center to develop Coffee and Farmer Equity (C. A. F. E. ) Practices. Such practices were designed to help farmers prove coffee in ways that prevented harm to the planet.These practices were designed to c everyplace safe and clement working conditions (ensuring congruence with minimum wage requirements as well as child labor provisions), and making sure that the prices Starbucks paid were sufficient to allow farmers to cover their production costs and provide for their families. In addition, the companys firmness of purpose to provide excellent standards in the roasting and serving of coffee is supported by Starbucks rigorous training program for all its partners/baristas.The program includes a minimum of 24 hours of training in the first two to four weeks of training and involves classes in coffee history, drink preparation, coffee knowledge and customer service. The animated development of satisfied customers all of the time. It is clear that Schultz is adamant about ensuring that customers are provided with the best experience every time they visit a Starbucks coffee shop. This meant stipendiary careful attention to what pleases their customers.The company employs a customer-centric culture where they are trained to take extra measures to ensure that the customer was fully satisfied, and to employ a just say yes theme to customer requests. Make a positive contribution to the communities in which we operate our cable. In order to give affirm to the communities in which their many shops reside, the company participates in many philanthropic events which are coordinated by the Starbucks Foundation. Some of their activities include participation in local kind-hearted projects as well as community development activities.Recognition of profitability as essential to our success. Starbucks is aware that in being able to deliver in all of the aforementioned areas, that it pass on be able to enjoy the success that its shareholders desire. As a result, the company believes that it is fully accountable to performing well in each of these areas so that Starbucks and its various stakeholders can continue to endure and thrive. 5. What values does Starbucks have? How well do they connect to the strategy and the way the company conducts its business? 6. brotherly Responsibility * C. A. F.E Coffee and Farmer Equity- Partnership in which Starbucks sought to develop practices to help farmers grow high-quality coffees in ways that were good for the planet. This covered practices such as safe and humane working conditions including compliance with minimum wage requirements and child labor provisions) and environmental responsibility P359 * Definition for social responsibility- Wikipedia Starbucks corporate culture involves the clean binding of partners to break away the companys operations with consideration of the well-being of others around them.Ie the company purchases a growing percentage of coffees that Starbucks purchases are grown organically without the use of chemic fertiliziers, pesticides and herbicides. This supports the companys devotion to socially responsible practices. Such efforts helps in maintaining the cleanliness of groundwater and prevents degradation of environmental ecosystems nearby. embrace As indicated by its unfathomable efforts to manage business in a way that promo tes social and environmental concern, Starbucks has very strong dedication to its corporate social responsibility.Not only has this effort to cast a company with soul has also been ingrained in the companys mission statement, Starbucks has also received wide recognition for its efforts in this area. In fact in 2010, the company was named to Corporate Responsibilitys list of The 100 Best Corporate Citizens for the 10th time. In addition the company has received over 25 awards for its efforts in the areas of philanthropic, community service and environmental activities.As one of its most noteworthy efforts, in 1997 the company established The Starbucks Foundation to invent the companys philanthropic undertakings. Under the Foundation, many of its coffee shops participated in regular charity events and community improvement initiatives. Starbucks social responsibility is also reflected in its beneficence towards worthy causes. For example, in 2005 the company made a $5 million, five year commitment to aid in the relief and recovery of victims of Hurricanes Katrina and Rita.More recently in 2010, the company also donated funding worth $1 million to support the American Red Cross efforts to provide relief for those who survived the earthquake in Haiti. In view of such devout efforts to these environment and humanitarian concerns, it can definitely be argued that Starbucks social responsibility strategy is genuine. The companys past and keep devotion to such undertakings support this conjecture, making it evident that Starbucks is true to its cause and is not only publicizing its social responsibility strategy to instil a positive image in its takeholders. 7. Assessment of Starbucks financial performance during 2005-2009? 8. Assessment of Schultzs Transformation Agenda for Starbucks during 2008-2010? (C-363-C-363) Has he done a good job since his return as Starbucks CEO? Why or why not? While Howard Schultz has managed to instil a very strong corporate culture based on delivering the best customer experience possible during his tenure at Starbucks, it seems that the guidance of the company under Jim Donald as CEO get-go in 2006 has brought on cultural change.The introduction of Donald as the new CEO has brought on two factors of cultural change as indicated in protrude 1 below shifting internal conditions (brought on by Donalds assumption of role as Starbucks CEO) and rapid developing of the firm through and through his introduction of an aggressive corporate culture that pursued rapid store expansion at the expense of the long-established commitment to customer service.This new focus on aggressive exploitation with less emphasis on maintaining customer relationships spurred uneasiness amongst member of Starbucks board and eroded customer traffic in US stores starting in 2007. Investors became distressed about the companys steadily declining stock price. As a result, in January of 2008, Starbucks asked Howard Schultz to overtake his original position as CEO. Thus he proposed to fix the inefficiencies that impaired Starbucks original customer-centric culture.This initiative was set out in a very well-developed set of directives which came to be know as Schultzs 2008-2010 transformation agenda. By analyzing the various steps necessary in trying to implement change in a problem culture (shown in Figure 2 below), one can see that Schultzs actions and numerous objectives as set out in his agenda are congruent with those outlined in these steps.Step1 Identify facets of the present culture that are conducive to good strategy act and those that are not In his letter to in all Starbucks Partners written in February 2008, Schultz makes it clear what he believes is necessary to return Starbucks at its original competitive position. Of the utmost importance is Howard Schultzs address of the wane of Starbucks emphasis on providing a distinct quality customer experience. He indicates has concern by saying We are in the pe ople business and always have beenIt means you make the difference.We succeed in the marketplaceby embracing the values, guiding principles and culture of our company and bringing it to life one customer at a time. As a result, in his letter Schultz affirms his goal to reintroduce a renewed clarity of purpose devoted to a laser-focused customer experience. Another of these beliefs is his continued persistence to include all employees as partners in the effort to move the company to success. Schultz continues to encourage employees to voice their opinions on how to improve the companys operations.This makes evident Schultz s belief in holding serious esteem of the opinions of employees. Such a practice is conductive to good strategy execution as he states thank you for your ideas and suggestionskeep them coming. No one knows our business and our customers better than you. Step 2 Specify what new actions, behaviors and work practices should be bombastic in the new culture With rega rds to revitalizing the companys original customer-centric focus, Schultz clearly states we are not going to embrace the status quo.Instead we exit be curious, bold and innovative in our actions and, in doing so, we will exceed the expectation of our customers. In addition Schultz outlines several new objectives in his transformation agenda which establishes the new culture. By analyzing some of these, it becomes evident that much prudence was taken in developing these objectives to correct some of Schultzs own past inefficiencies.For example, instead of move an aggressive expansion policy, the agenda sets out to slow the pace of new store openings in the US, as well as closing 900 underperforming company-operated stores in the US, which were in close propinquity of an existing Starbucks store and cannibalizing on its customer base. Step 3 Talk openly about the problems of the present culture and how new behaviors will improve company performance 9. Issues that confront the compa ny as of mid 2010? What should management be worried about? 10. Recommendations to Schultz to sustain the companys growth and support continued strong financial performance?Coffeehouse and Starbucks1. Original Strategic Vision for Starbucks Howard Schultzs original strategic vision was to transform Starbucks into a national company with an emphasis on placing great value on its employees. He believed that the key to success was for Starbucks to capitalize on its people he wanted a somewhat decentralized organizational structure which emphasized the importance of including employees in the decision-making process. Schultz wanted to place an image of Starbucks as an employer that cared for the general well-being of its employees and one that employees could be take pride in being a part of.A key strategic objective espoused by Schultz in his original strategic vision was to transform Starbucks into the most respected brand name in coffee and for the company to be admired for its corpo rate responsibility. Also worth noting is the fact that after visiting Milan, Italy Schultz also made it part of his strategic vision to transform Starbucks as a remake of the Italian coffee bar culture. He wanted customers to perceive a visit to a Starbucks coffee shop as a social gathering where customers could grab a fresh-brewed beverage, meet their friends and visit.He believed that creating this emphasis on customer experience could distinguish Starbucks from its competitors. Schultzs 2010 strategic vision for Starbucks is an extension of his original vision from the 1980s which has been expanded to include more innovative and cost cutting practices. It can also be argued that some of his new strategic objectives are more prudent instead of being fully aggressive. For example, while Schultz still believed that the company should continue to pursue international expansion, he makes it evident that this should be pursued at a slower, more methodical pace.In addition, with regar ds to the volume of stores in the US, he acknowledges the fact that expansion efforts were not properly coordinated with regards to the close proximities of many Starbucks shops. Therefore he closed 900 underperforming shops, three quarters of which were located three miles away from a nearby shop. The 2010 strategic vision also continued to emphasize the customer experience. He believed that employees have lost their soul of the past in their passion to educate customers about their products and provide customers with a quality experience .As a result in 2008, Schultz ordered 7,100 US stores to be temporarily shut down for three business hours to provide special training for store employees. The purpose of this was to give their baristas hands-on training to aid in improving the quality of the beverages they served. It was also an effort to renew and reignite Starbucks culture of a customer-centric focus to help employees understand the importance of a satisfying customer experienc e. Lastly, much innovation and cost-cutting practices were incorporated into the 2010 strategic vision.For example as part of a serious cost-cutting strategy, the company undertook a 1000-person cut in staffing to cut down on administrative costs from the companys organizational support infrastructure. With regards to innovation, the company also implemented ideas such as internet-based software for scheduling work hours for store employees and new resources such as laptops for store employees. Innovation was also implemented in the products the company offers.An example of this is the launch of VIA instant coffees and menu items designed to offer healthy breakfast choices for people with busy lifestyles such as fruit cups and healthier bakery selections. 2. Has Starbucks strategy evolved as the strategic vision has evolved? 3 . The Broad Differentiation strategy most closely approximates the competitive approach used by Starbucks. This is supported by the fact that the companys tar get segment is not limited to a specific niche market.As reinforced by the companys resurging commitment to expand to global markets, it is committed to serving the needs of a broad market with widely diverse preferences. Supporting Starbucks use of a Broad Differentiation strategy is the fact that Starbucks tries to distinguish itself from competitors by offering a service devoted to going the extra mile to deliver a satisfying customer experience. This is congruent with the companys theme of just say yes to customer requests.Another key aspect of the Broad Differentiation strategy that Starbucks practices is the offer of a wide selection of products which emphasize differentiating attributes. An example of this would be Starbucks introduction of VIA Ready Brew Coffee. These were packets of coffee that could be prepared instantly by simply adding them to a cup of water. VIA coffee had the superior attribute of easy preparation while replicating the same rich full-bodied taste of fr esh-brewed coffee delivered by Starbucks from its coffeehouses.Another unique product introduced by Starbucks with a differentiating feature is the introduction of Vivanno better-for-you smoothies. These smoothies offered those health-conscious customers with little to think about with only 250 calories, one serving of fruit, 16 grams of proten and 5 grams of fiber. 4 The key policies, practices, principles and procedures that underlie how Howard Schultz and Starbucks management have implemented and executed the companys strategy are as follows Emphasis on providing employees with a caring, desirable work environment in which they can contribute to the success and development of the company.It is clear that Shultz believes in taking care of his employees to win their commitment to enhancing the well-being of the company. As evidence, Schultz instilled a comprehensive benefits package which unlike the norm for other businesses, were offered not only to full-time employees but part-ti me employees as well. In order to emphasize the connection between employee contributions and the companys market value, Schultz also implemented Bean Stock- Starbucks stock option plan.The purpose of this was to allow each employee to become a partner and share in the success of the company to promote a positive long-term effect on the companys operations. Applying ethical and high standards of excellence to the purchasing, roasting and fresh delivery of coffee. Evidence for Starbucks commitment to ethical sourcing of its coffee can be supported by its partnership with Conservation International Center to develop Coffee and Farmer Equity (C. A. F. E. ) Practices. Such practices were designed to help farmers grow coffee in ways that prevented harm to the planet.These practices were designed to cover safe and humane working conditions (ensuring congruence with minimum wage requirements as well as child labor provisions), and making sure that the prices Starbucks paid were sufficient to allow farmers to cover their production costs and provide for their families. In addition, the companys resoluteness to provide excellent standards in the roasting and serving of coffee is supported by Starbucks rigorous training program for all its partners/baristas.The program includes a minimum of 24 hours of training in the first two to four weeks of training and involves classes in coffee history, drink preparation, coffee knowledge and customer service. The enthusiastic development of satisfied customers all of the time. It is clear that Schultz is adamant about ensuring that customers are provided with the best experience every time they visit a Starbucks coffee shop. This meant paying careful attention to what pleases their customers.The company employs a customer-centric culture where they are trained to take extra measures to ensure that the customer was fully satisfied, and to employ a just say yes theme to customer requests. Make a positive contribution to the communi ties in which we operate our business. In order to give back to the communities in which their numerous shops reside, the company participates in many philanthropic events which are coordinated by the Starbucks Foundation. Some of their activities include participation in local charitable projects as well as community development activities.Recognition of profitability as essential to our success. Starbucks is aware that in being able to deliver in all of the aforementioned areas, that it will be able to enjoy the success that its shareholders desire. As a result, the company believes that it is fully accountable to performing well in each of these areas so that Starbucks and its various stakeholders can continue to endure and thrive. 5. What values does Starbucks have? How well do they connect to the strategy and the way the company conducts its business? 6. Social Responsibility * C. A. F.E Coffee and Farmer Equity- Partnership in which Starbucks sought to develop practices to h elp farmers grow high-quality coffees in ways that were good for the planet. This covered practices such as safe and humane working conditions including compliance with minimum wage requirements and child labor provisions) and environmental responsibility P359 * Definition for social responsibility- Wikipedia Starbucks corporate culture involves the moral binding of partners to run the companys operations with consideration of the well-being of others around them.Ie the company purchases a growing percentage of coffees that Starbucks purchases are grown organically without the use of chemical fertiliziers, pesticides and herbicides. This supports the companys devotion to socially responsible practices. Such efforts helps in maintaining the cleanliness of groundwater and prevents degradation of environmental ecosystems nearby. embrace As indicated by its countless efforts to manage business in a way that promotes social and environmental concern, Starbucks has very strong dedication to its corporate social responsibility.Not only has this effort to build a company with soul has also been ingrained in the companys mission statement, Starbucks has also received wide recognition for its efforts in this area. In fact in 2010, the company was named to Corporate Responsibilitys list of The 100 Best Corporate Citizens for the 10th time. In addition the company has received over 25 awards for its efforts in the areas of philanthropic, community service and environmental activities.As one of its most noteworthy efforts, in 1997 the company established The Starbucks Foundation to organize the companys philanthropic undertakings. Under the Foundation, many of its coffee shops participated in regular charity events and community improvement initiatives. Starbucks social responsibility is also reflected in its generosity towards worthy causes. For example, in 2005 the company made a $5 million, five year commitment to aid in the relief and recovery of victims of Hurricanes Katrina and Rita.More recently in 2010, the company also donated funding worth $1 million to support the American Red Cross efforts to provide relief for those who survived the earthquake in Haiti. In view of such devout efforts to these environment and humanitarian concerns, it can definitely be argued that Starbucks social responsibility strategy is genuine. The companys past and continued devotion to such undertakings support this conjecture, making it evident that Starbucks is true to its cause and is not only publicizing its social responsibility strategy to instil a positive image in its takeholders. 7. Assessment of Starbucks financial performance during 2005-2009? 8. Assessment of Schultzs Transformation Agenda for Starbucks during 2008-2010? (C-363-C-363) Has he done a good job since his return as Starbucks CEO? Why or why not? While Howard Schultz has managed to instil a very strong corporate culture based on delivering the best customer experience possible during his tenu re at Starbucks, it seems that the guidance of the company under Jim Donald as CEO starting in 2006 has brought on cultural change.The introduction of Donald as the new CEO has brought on two factors of cultural change as indicated in Figure 1 below shifting internal conditions (brought on by Donalds assumption of role as Starbucks CEO) and rapid growth of the firm through his introduction of an aggressive corporate culture that pursued rapid store expansion at the expense of the long-established commitment to customer service.This new focus on aggressive growth with less emphasis on maintaining customer relationships spurred uneasiness amongst member of Starbucks board and eroded customer traffic in US stores starting in 2007. Investors became distressed about the companys steadily declining stock price. As a result, in January of 2008, Starbucks asked Howard Schultz to overtake his original position as CEO. Thus he proposed to fix the inefficiencies that impaired Starbucks origina l customer-centric culture.This initiative was set out in a very well-developed set of directives which came to be known as Schultzs 2008-2010 transformation agenda. By analyzing the various steps necessary in trying to implement change in a problem culture (shown in Figure 2 below), one can see that Schultzs actions and numerous objectives as set out in his agenda are congruent with those outlined in these steps.Step1 Identify facets of the present culture that are conducive to good strategy execution and those that are not In his letter to All Starbucks Partners written in February 2008, Schultz makes it clear what he believes is necessary to return Starbucks at its original competitive position. Of the utmost importance is Howard Schultzs address of the waning of Starbucks emphasis on providing a distinct quality customer experience. He indicates has concern by saying We are in the people business and always have beenIt means you make the difference.We succeed in the marketplaceb y embracing the values, guiding principles and culture of our company and bringing it to life one customer at a time. As a result, in his letter Schultz affirms his goal to reintroduce a renewed clarity of purpose devoted to a laser-focused customer experience. Another of these beliefs is his continued persistence to include all employees as partners in the effort to move the company to success. Schultz continues to encourage employees to voice their opinions on how to improve the companys operations.This makes evident Schultz s belief in holding serious esteem of the opinions of employees. Such a practice is conductive to good strategy execution as he states thank you for your ideas and suggestionskeep them coming. No one knows our business and our customers better than you. Step 2 Specify what new actions, behaviors and work practices should be prominent in the new culture With regards to revitalizing the companys original customer-centric focus, Schultz clearly states we are no t going to embrace the status quo.Instead we will be curious, bold and innovative in our actions and, in doing so, we will exceed the expectation of our customers. In addition Schultz outlines several new objectives in his transformation agenda which establishes the new culture. By analyzing some of these, it becomes evident that much prudence was taken in developing these objectives to correct some of Schultzs own past inefficiencies.For example, instead of continuing an aggressive expansion policy, the agenda sets out to slow the pace of new store openings in the US, as well as closing 900 underperforming company-operated stores in the US, which were in close proximity of an existing Starbucks store and cannibalizing on its customer base. Step 3 Talk openly about the problems of the present culture and how new behaviors will improve company performance 9. Issues that confront the company as of mid 2010? What should management be worried about? 10. Recommendations to Schultz to su stain the companys growth and support continued strong financial performance?