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Case study: Leadership and management of Starbucks

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  1. How would you summarize the Starbucks organizational context?
  2. How does Starbucks structure itself to be effective?
  3. How does Starbucks ensure that its decisions allow it to achieve its organizational outcome?
  4. How does Starbucks develop when it comes to its employees to ensure that there are no gaps between performance and development?
  5. Given the current situation of the MNC, what is Starbucks doing well in and what is it doing poorly in?
  6. What has made Starbucks an industrial leader in the world of 'coffee'?
  7. What is Starbucks involvement in corporate social responsibility?
  8. Why is the US model becoming so popular all over the world, even in countries where coffee has always had an historical legacy?

Starbucks' CEO, Orin Smith, and the Board of directors play a central role in the organizational context of the company since they can arbitrate between the internal and external constraints and thus decide what organizational structures and policies have to be implemented.

Mission and goals: Starbucks' CEO and the board of directors demand mission statements to convey a strong sense of organizational purpose and to articulate the company's fundamental beliefs and guiding principles. They also pay attention to employees' and customers' concerns to help the mission statements evolve. Indeed, these mission statements are based on several principles that consider the interests of customers, communities, employees, shareholders, and ecological considerations in all aspects of their operations.

Structure: Starbucks has an organizational structure that is not hierarchical but plane and flexible, rather decentralized and federated around teams, so that the company is more capable to facilitate exchanges and transversal communication. Thus, Starbucks has no formal organizational chart. Last but not least, it has both product based and functional divisions.

Rewards and incentives: Starbucks strongly encourages its employees to make initiatives. In fact, it is due to the corporate culture of the company which includes the main components concerning the employees: empowerment, exceptional benefits and stock ownership programs. For instance, employees are important for the company since success depends on the capacity of the employees to generate a very positive experience for the customers in the stores. Therefore, it is required to hire store employees who are knowledgeable about the company's products, who are conscientious, who can manage to communicate the company's passion for coffee, and who have the skills and the personality to provide customer services constantly.
Starbucks' corporate culture and employees' benefits are designed to attract, motivate, reward employees and make Starbucks a company that people would want to work for.

Starbucks' corporate culture and policies has also allowed in generating and fostering trust between the management and the company's workforce. Support functions: One of the main systems that permit supporting the operations of the firm is the training program for the employees, and also the marketing and the use of all the financial resources of the company are, of course, designed to do so.

Relationships: As described before, the corporate culture towards employees is supportive. Employees are empowered by the management to make decisions without management referral and are encouraged to consider themselves as part of the business. So, the emphasis is put on the employees themselves. But to be successful, this policy implies that managers are in the heart of the organization. For instance, their role is capital since it consists in ensuring the adequacy between the vision of the leaders and the reality lived and felt by the employees. In this context, it is required, on one hand, to encourage the personal visions and the communication while guaranteeing a commonly shared vision, and on the other hand, to support the collaborators thoughts, remarks and their perception of problems.

External environment: There are plenty of factors that influence Starbucks' organization through laws and regulations. Among them, there are the customers, the communities and associations (e.g. Global Exchange), the stockholders and the donors, the suppliers, the State and the international institutions.

Tags: Starbucks, international institutions, training program, customer services, organizational structure, transversal communication.

[...] Employees' empowerment: Employees are empowered by the management to make decisions without management referral and are encouraged to consider themselves as part of the business. This point is emphasized by the company's corporate culture and such a work environment always has positive results on employees' motivation. For instance, this principle increases the involvement and the commitment of each employee and makes them feel that they are necessary for the company. This high level of autonomy allows workers to be more innovative and to take more initiatives. [...]


[...] the stores near the Forbidden (Starbucks is also often known as City in China) public's educator on Expresso' and Starbucks is the only player in the coffee market that has a recognized brand image.) Quality products (It only provides premium quality beans as well as high quality coffee products and it is the same for all the other types of products it proposes, since it is one of the key issues of its business and corporate culture.) Huge range of products (It has also increased its range of products to adapt to the demand (e.g. [...]


[...] Before Starbucks came up in the business, the main actors of the coffee market were brands belonging to important actors of the food and drug industry (e.g. Maxwell House that belongs to Kraft Foods) that totally inundated the market. Their products were in fact very hard to differentiate. And differentiation constituted one of the main strategies that Starbucks used and one of its main competitive advantages. For instance, Schultz managed to make the company remarkable through different strategies (that have been already discussed in the previous question). [...]

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