Starbucks Organizational Culture - Case Study Example

of --------- Technology Extended Campus Paper project undertaken in partial fulfillment of the requirements for the Degree in ----------------- Starbucks – Organizational Culture ----------------- Supervisor: ---------------- Project unit: -------------- April 2008 Plagiarism Declaration I confirm that the enclosed written work on Starbucks – Organizational Culture , is entirely my own except where explicitly stated otherwise. I declare that wherever I used copying, paraphrasing, summarizations or other appropriate mechanism related to the use of another authors work it has been properly acknowledged in accordance with normal scholarly conventions. I understand that wherever 6 or more consecutive words are extracted from a source they must be acknowledged and 10 consecutive words that are unacknowledged will be regarded as proof of plagiarism. Signed __________________________________ Date ___________ Acknowledgments Special thanks and gratitude is given to ---- who helped me with his valuable guidance. My thanks will be extended also to my family including Dad, Mom and -----, my youngest brother for their kind and invaluable support during the whole project. INTRODUCTION – STARBUCKS The company was founded in 1971 in Seattle’s Pike Place Market and was named after the first mate in Herman Melville’s Moby Dick. It is the largest coffee house group in the world, and has more than 15,000 coffee outlets in more than 45 countries. The main products that are sold by the company are drip brewed coffee, espresso-based hot drinks, other hot and cold drinks, refreshments, ice creams and items such as coffee cups and beans. The international range of products offered by Starbucks are Starbucks Frappucino, Starbucks Discoveries, Starbucks Double Shot espresso, Starbucks Iced Coffee, Starbucks Coffee Liqueurs and a line of super premium ice creams. With the help of its Entertainment division - Starbucks Entertainment division and Hear Music brand, the company has promoted a number of books, music albums and films. More than 1/3rd of the Starbucks stores are now located outside the United States and Canada. As on October 2007, the company managed 15000 outlets around the globe, out of which, 6,800 of them are located in the U.S. alone. Starbucks can be easily found in any popular store across the stores in U.S. and Canada and lately achieved the 15th rank on the U.S. Environmental Protection Agencys list of Top 25 Green Power Partners for purchases of renewable energy. The mission statement for the company is to establish itself as the leading supplier of the best coffee and coffee products around the world without compromising on its principles. The guiding principles that steer the company management are offering a healthy work environment to its employees, and at the same time clinching on to the diversity that ranges amongst its customers. As the management is aware of the fact that profit is essential to the success of the company, it also lays stress over the satisfaction of the clients, and maintaining the highest standards possible to the final delivery of their products. Motivational Strategies employed by Starbucks As a face to face fast moving organization, Starbucks lays a large amount of importance on the skill, capability and motivation of its staff. Every Starbuck outlet works independently and manages its human resources, materials, and training and client relations individually. A middle sized Starbuck outlet employees over 35 staff members who contribute to the effective running of the organization. The management has prized the significance a talented workforce. The company has established a “service strategy” which works to provide the customers a great experience with as much on the swiftness and sociability of staff. In order to motivate the workforce at Starbucks, the management offers a training program which offers the employees to progress to a senior position through a number of appraisals. As a proof almost 50% of the senior level executives working in Starbucks started their careers as crew members in various outlets. Starbucks offers a number of HRM strategies for the process of recruiting, preserving and inspiring its employees at all levels. “People’s Strategy” is another HRM policy adopted by Starbuck management to motivate its employees to perform better. This includes development of the diverse work force at every possible level since the diversity and variety of the work force provides the main competitive advantage to the company operating in all parts of the globe. The company also offers exciting global career opportunities to its employees who develop to their maximum potential and at the same time offers remuneration packages in view of individual performance. The company trains about 900 employees every year and the initial crew training program teaches the employees various skills that are also transferable to other hospitality sectors. These new trainees learn to manage the outlets and other tasks that vary from the counter area to the kitchen. The management development program helps to nurture the potential leaders for the management and provides the opportunity to learn global guidance, administration and verbal skills. The management at Starbucks believes that it offers people careers and not jobs. The practices and the HR model followed in the company distribute support and practice to promote and sustain worker characteristic, diversity and potency. Promising to an optimistic and powerful Human Resource Management (HRM) strategy is significant to Starbuck. Successful HRM or employee’s administration asks for to guarantee that a company has the right staff, with the appropriate ability and approach, at the correct time. While Starbuck is in fact an international brand it functions as a local company employer. Starbuck’s Human Resource Management absolutely demonstrates how severe worldwide principles are effectively delivered at the lowest possible levels in a company. Starbuck offers its employees Pay and Benefit compositions that are above the normal industry standards. Official performance evaluation of every rank of employee is considered to remunerate employee features, competencies and the accomplishment of established business associated objectives. The past and present role performances of every employer is studied and analyzed for further promotion – this strategy is called – targeted selection which is coupled with suitable benefit packages as well. Change Management in Starbucks The restaurant sector is an important part of the hospitality industry which is highly affected by the changes brought in the industry environment. The management of Starbucks had laid out an effective Change management strategy in order to remain competitive, and flexible in the changing times. The company undertakes close interactions between its staff and the clients and this relationship tends to get affected when any kind of internal or external changes takes place. It is often seen that the employees resist any kind of change within the existing system. In any hotel industry, change affects the clients, and the employees at all levels. The clients are referred to as the external environment and the employees as the internal environment subjected to any kind of change. The main objective of including any kind of change management within a company is to attract more clientage while preserving the older ones and maintaining the profits. Starbucks lays down policies to deal effectively at the individual (employee) and organizational level. The policy includes three aspects - becoming accustomed to change, controlling the amount of change, and implementation of the change. In case of Starbucks, the change management works to deal with the changes in the trade and subsequently profit from the change. It is the responsibility of the management to assess what change should be brought into the system and also estimate the result of bringing about the desired change on every level. The manager should also assess the reaction of the staff towards the implemented change management. In most of the cases, the change management has proved to be beneficial for the company, and in many cases, a certain amount of resistance on the part of the employees has also been noted down. It is the responsibility of the managers to see that the change takes palace smoothly and the employees adapt to the changes in time. An example of change management brought in by Starbucks is the makeover that the company will bring about in some of its outlets. The traditional way at Starbucks which was often supposed to be an uncomfortable furnishings by many clients, will be changed to a softer look. Also, the company wants to raise its prices and not just keep on delivering products at low prices. The change is aimed at luring the customers to use and see Starbucks as a convivial and a sociable place where social relations can be made. However this change management is aimed at customers who do not wish to spend more time and money on a cup of coffee which is easily available at any other outlet than Starbucks. On the other hand, the company will still be offering same old lower prices on some products but with additional facilities salads, first-rate coffee, chaise longue, wireless internet & plasma TVs. Also, to note, this change management is intended to win over other outlets such as McDonalds’ who are going the international way to attract the youngsters. With the help of this new change management policy, Starbucks wants to appeal to every age group and especially to younger people because this is the crowd that Starbucks is deficient. In other terms, they want people to come together at a common place where they can socialize and be at ease. Starbucks - Power and Politics Starbucks functions in the form of 1500 outlets spread all across the world. These outlets work together to compete for the existing set of resources, client and market profit. The truth is that there are limited resources and if one group or organization works more smartly than the other, then the other gets automatically less. Here comes the use of power and politics play into the organization. The conception of organizational political principles can be associated to Harold Lasswells (1947) classification of politics as any individual getting power, the level of power achieved and the time of achieving the power. If in case, power engages the service of amassed manipulations by which procedures, events and attitudes are being influenced, then politics engages the implementation of power to get a work done, and also to improve and defend the vested benefit of persons or groups. Thus, the utilization of organizational politics recommends that political activity is used to overcome confrontation and involve a mindful attempt to categorize action to confront resistance in precedence decision circumstances. The prior dialogue points toward that the theory of power and organizational politics are interrelated. Thus, we can identify organizational politics as the application of power, with power sighted as a cause of potential energy to administer and tale control of relationships. Power and politics allocation tends to pose serious effects on the results of an organization. The issues that get affected by the distribution of power and politics are the attitudes, motivation and retention of the employees. The attitude of a professional tends to change in the wale of power, while he gets motivated to acquire power and influence others. Effective awareness of power and politics help the managers to use the resources for the benefit of the company in an effluent manner. Power is capacity of a professional or an organization to implement influence or manipulate over and beyond the requisite perfunctory observance. The deliberate characteristic sets it distant from influence and authority. Politics are those actions that are taken inside the group to get hold of, expand, and make use of power and other assets to attain ones favorite conclusion in a state of affairs wherever there is indecision of conclusion. Power is strength or a stockpile of political authority in the course of which events can be affected. Politics engages actions and activities through which power is created or amassed and used in any company environment. Mainly the use of power and political activities is carried on to prevail over resistance. According to Farrell and Peterson (Farrell and Peterson, 1982), the successful practice of organizational politics is perceived to lead to a higher level of power, and once a higher level of power is attained, there is more opportunity to engage in political behavior. Organizational Culture Organizational culture, better known as corporate culture, encompasses the approach, skill, thinking and principles of an association. Organizational culture has been described as "the precise compilation of principles and standards that are commonly held by people and crowd in an association and that manage the approach through which they interact with each other and with stakeholders exterior to the group. Organizational principles are values and thoughts with reference to what class of aims, member of a group should follow and thoughts concerning the suitable type or values of behavior the company’s people should use to accomplish these goals. “From organizational values develop organizational norms, guidelines or expectations that prescribe appropriate kinds of behavior by employees in particular situations and control the behavior of organizational members towards one another” Charles W. L. Hill, and Gareth R. Jones, (2001) Normally it is the role of the senior administration to determine the values and beliefs of an organization. They decide on the business values and the required principles of conduct that particularly replicate the aims of the company. Moreover, every company posses an existing work culture, behavioral attitudes and interactive customs which tends to affect the aimed organizational culture. The organizational culture at Starbucks envisages values that include the employees as well as the surrounding environment, people and culture. It is strictly put into belief at Starbucks that if an employee is satisfied with his work, he will perform his client service in an excellent manner. Therefore, the company – Starbucks pays a lot of attention and importance towards the fact that its employees attain self satisfaction. Starbucks at the same time also wishes to uphold its promise to its stakeholders who have invested their faith into the company. The company hopes to serve its employees, stakeholders and the community in the fairest way possible. Moreover, Starbucks has been much more instrumental than in the past to aid and financially support any kind of community and local developmental projects, like school, and other teenage programs. The company has integrated diversity into their trade operations and planning strategies around the globe. REFERENCES 1. Charles W. L. Hill, and Gareth R. Jones, (2001) Strategic Management. 2. Hofstede, H. (1981) Cultures Consequences: International Differences in Work Related Values, Saga Works 3. Deal T. T and Kennedy, H.G. (1986) Corporate Cultures Harmonds Worth, Penguin Books. 4. Handy, C.B. (1985) Understanding Organizations, 3rd Edn, Harmondsworth, Penguin Books 5. Schein, E.H. (1985-2005) Organizational Culture and Leadership, 3rd Ed., Jossey-Bass ISBN 0-7879-7597-4 6. Johnson, J. (1987) "Rethinking Instrumentalism", Strategic Management Journal Vol 9 pp75-91 Read More