Organizational Culture and the of Starbucks International - Case Study Example

Organizational Culture in Business - The Case of Starbucks International - Total Number of Words: 1,391 Abstract Strengthening Starbucks’ organizational culture is important in terms of making its going global projects successful. In line with this, Starbucks should be able to develop organizational culture that accepts not only the importance of work diversity but also organizational change. By entering into a business partnership a foreign-based company, Starbucks will be able to easily understand the business and social culture of countries in Asia-Pacific. Introduction There are a lot of factors that contributes to Starbucks’ competitive success in the United States. In line with this, Howard Schultz firm decision to dominate the entire U.S. coffee retailing market through the implementation of a massive expansion of Starbucks’ coffee outlets attracts the attention of local investors nationwide. As a result of saturating the local market, Starbucks is left with no other choice but to expand the business in different countries worldwide. Starbucks is experiencing a lot of business challenges caused by the practice of western culture in business. Even though Starbucks managed to be successful in countries that practice strong western culture, the business strategy used by the giant coffee retail company may not be as equally effective in other countries that practice a totally different business culture other than the western-based. After discussing the importance of organizational culture, the business status of Starbucks in Asia-Pacific countries will be identified. In line with this, the social culture in China and Japan together with the business strategies used in addressing the real-life business experiences of Starbucks will be tackled in details. Importance of Organizational Culture Organizational culture is referring to “a set of norms, beliefs, principles and behaviour that gives the organization a unique character” (Brown, 1995). In line with this, David (1999, p. 143) defined organizational culture as “a pattern of behaviour developed by an organization necessary to help them cope with business problems related to external adaptation and internal integration aside from enabling the employees to feel and think positively”. Culture is a paradigm developed by individuals within the organization which over time forms a strong pattern of behaviour and belief that could significantly affect the employees’ perception towards the organizational goals and success (Willcoxson & Millett, 2000). Since it is the attitude and standards of behaviour of the leaders that shapes the organizational culture (Aspinwall & Staudinger, 2003, p. 156), a good leader plays an important role in shaping the culture which is designed to promote the loyalty of its employees and persuade them to participate in supporting the attainability of the organizational goal within the heirarchy (DuBrin, 2002, p. 298; Hellreigel et al., 2001). Organization culture is believed to influence not only the present performance but also the success of its future goals (DuBrin, 2002). Therefore, developing organizational culture is important in terms of enabling employees to promote diversity within the workplace. As part of acknowledging the importance of diversity at work and in business practices, organizational culture that is open to organizational change could prevent a lot of internal and business conflicts which could negatively affect the business performance of a company. Business Status of Starbuck’s in Asia-Pacific Countries Particularly the Chinese culture, Starbucks had to struggle to change the tea drinking culture with coffee. So far, the global strategy of Starbucks Coffee has been successful in terms of penetrating the Asia-Pacific regions and Japan. Over the past decades, Starbucks was able to successfully establish its stores in Australia, China, Hawaii, Hong Kong, Indonesia, Japan, Malaysia, Philippines, Singapore, South Korea, Taiwan and Thailand (Hwang, 2005). As of 2006, Starbucks was able to open a total of 190 store outlets throughout 19 cities in China (Delaney & Chan, 2006). Japan was the first non-American country where Starbucks managed to successfully establish its coffee retail stores. Starbucks entered into a joint-venture with Tokyo-based Sazaby Inc. as a way of penetrating the Japanese market (Business Wire, 2004). As a typical strategy used by Starbucks coffee, the company hired a consulting firm prior to establishing its first retail store in Japan. In the process of dealing with the business consultant, Starbucks management was guided on how the company could start with the business. In line with this, the Japanese consultants suggest that Starbucks should build the shop with smoking area in order to cater the potential buyers who are smokers. Allowing the customers to smoke within Starbucks coffee retail stores totally violates the organizational norm and culture the company has successfully established in the United States. By standing strong with the company’s organizational culture and norms, Starbucks coffee retail stores in Japan managed to successfully position the business as one of the few non-smoking coffee shops in the country. One of the main challenges that Starbucks would face in establishing its presence in the Asia-Pacific regions and Japan is the question on how the company could successfully penetrate the rich and diverse culture in each of its target countries. For Starbucks to be able to learn more about the cultural background of people in each of its target countries, establishing a strong partnership with a potential business partner is essential since it could minimize and lessen the risk of cultural misalignment with the different product lines of Starbucks Coffee. In line with this, Starbucks decided to develop a joint venture relationship with each of its selected local business partners in order to help Starbucks recruit highly competent and talented individuals to become a part of the Starbucks business group aside from assisting the company in setting up a network of potential suppliers (Hwang, 2005). Building the Starbucks brand in an entirely new environment is one of the most important stages in expanding the business in the Asia-Pacific regions and in Japan. This entry stage is crucial since it will determine the success or failure of Starbucks in each of its target countries (Kurtenback, 2005). In the case of Japan, the success of Starbucks was reflected by the fact that the business operations with Sazaby enabled Starbucks to become profitable two years ahead from its projected profitability schedule (Moscato, 2005; Business Wire, 2004). As soon as a few Starbucks outlets reflected a positive sign of consumers’ acceptance, Starbucks and its partner would start expanding the business within the different geographical regions in each country. Discussion In general, people in each county have been trained to adopt certain way of thinking and values based on their cultural background (Lewis, 1999, p. 9). For this reason, the cultural values of Starbucks’ target market should be considered prior to expanding its business in a foreign country (Jacobsen, 2003). In general, the study of culture can either be within the national or international context (Vecchi & Brennan, 2009; Lewis, 1999, p. 11). When studying culture within the national level, it is necessary to consider ‘individual, group, organization, and society as whole’ whereas there is a need to compare the national culture of a country with another when studying cross-culture. In relation to the Chinese drinking tea culture, Starbucks can make use of advertisements that can make Chinese people become more open to drinking coffee rather than tea. In line with this, Starbucks can make use of influential Chinese personalities to market Starbucks coffee in China. Conclusion There is a significant difference between the Asian and Western way of running a business. With this issue alone, the joint-venture partners of Starbucks with a foreign business owner is expected to narrow down the gap by enabling Starbucks to understand the culture and market conditions in each respective Asia-Pacific country. As a result of entering a joint-venture partners in each of the Starbuck’s target country, the top management and its partners work together in order to achieve the following: (1) develop a shared attributes with regards to an integrated corporate values and culture; (2) a better and stronger retailing experience; (3) establishing a network of dedicated human resources; (4) developing the teams’ commitment towards rendering a high quality customer service; (5) establishing a stronger financial resources; and (6) the application of individual creativeness and integration of general knowledge in building a Western brand awareness in each country (Hwang, 2005). In the absence of Starbucks’ partners in different countries, the company will have a difficult time trying to analyzing the cultural, political, social and business aspects in each country. As a result, it is possible for Starbucks not to reach the success the company is experiencing in some countries today. *** End *** References Aspinwall, L., & Staudinger, U. (2003). Psychology of Human Strengths: Fundamental Questions and Future Directions for a Positive Psychology. Washington: American Psychological Association. Brown, A. (1995). Organizational Culture. London: Pitman Publishing. Business Wire. (2004, May 21). Retrieved December 2, 2009, from Starbucks Coffee Japan Returns To Profitability: http://www.allbusiness.com/company-activities-management/product-management-branding/5609778-1.html David, F. (1999). Strategic Management: Concepts. 7th Edition. New Jersey: Prentice-Hall. Delaney, R., & Chan, C. (2006, October 25). Retrieved December 2, 2009, from Starbucks Buys Outlest in China: http://www.iht.com/articles/2006/10/24/bloomberg/sxstarbucks.php DuBrin, A. (2002). Fundamentals of Organizational Behaviour. USA: Thomson Learning. Hellreigel, D., Jackson, S., Slocum, J., Straude, G., & Associates. (2001). Management. Oxford University Press. Hwang, J.-L. (2005). Coffee Goes to China: An Examination of Starbucks Market Entry Strategy. Journal of Undergraduate Research , 6(8). Jacobsen, L. F. (2003, April 30 - May 2). Global Entrepreneurship 604: Managing Across Cultures. Retrieved December 2, 2009, from A paper submitted for The Fourteenth International Conference - The Academy of Entrepreneurial Finance. DePaul University. Chicago, Illinois: http://www.aoef.org/papers/2003/jacobsen.pdf Kurtenback, E. (2005). Starbucks Marches Into China. In Hwang J.L. (eds) Coffee Goes to China: An Examination of Starbucks Market Entry Strategy. Journal of Undergraduate Research , 6(8)-July/August. Lewis, R. D. 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