Starbucks Business Philosophy - Case Study Example

The Starbucks Experience BY YOU YOUR SCHOOL INFO HERE HERE The Starbucks Experience Make it Your Own Starbucks has developed a total business philosophy that includes five distinct principles that drive its business success or force the company to learn from its failures. The first principle is “Make it Your Own” which involves getting everyone within the company and its partners actively involved in the creative process and be highly motivated toward meeting Starbucks’ mission and values. Starbucks calls this the “Five Ways of Being” which includes welcoming, genuineness, consideration, being knowledgeable, and being involved. Welcoming involves not only greeting the customer with enthusiasm and excitement, it is about making a special effort to remember new customers so that they want to become loyal Starbucks consumers. Because people in society want to be a part of the community and feel like they belong, Starbucks goes the extra mile in emphasizing community values and establishing a sense of affiliation with its customers and with its employees. As far as being genuine is concerned, it is about listening to what customers are saying and trying to make a rememberable connection with their emotions and needs. It is about providing excellent customer service, looking to discover the special needs of each customer, helping them to gain awareness of needs customers did not even know they had (Michelli, 2007, p.28). Being considerate means thinking of the long-term needs of various stakeholders and partners, such as identifying renewable energy options to help the future environmental conditions. It is also about paying attention to supplier needs to build better relationships. Being knowledgeable is about taking an active leadership role within the company and sharing learned passions about Starbucks products and philosophies with others as part of knowledge exchange to gain their commitment to the same values. Sometimes this is an emphasis on providing quality training to employees. Being involved is empowering employees and partners to come up with creative solutions and excel at providing quality customer service. Through brainstorming partners assist in proactive innovations to better enhance the Starbucks image and product offerings. Starbucks also applauds community involvement by employees through volunteerism programs. The first principle of “Make it Your Own” really is about empowering employees to become active contributors to the Starbucks model with ample decision-making power. It is a motivational strategy to gain employee commitment and long-term loyalty while also projecting an image of gratuity and community to customers and other stakeholders. Since Starbucks relies on a higher-than-industry-norm pricing structure, price competition would lose some of the brand’s status symbol effects (Aronin, Fetterman, Liu & Peng, 2004). The concept of “Make it Your Own” brings Starbucks competitive advantage through human capital development. Everything Matters The second principle, “Everything Matters”, starts with the idea that customers tend to notice everything: everything about the store that is good and everything that is bad. It is about ensuring cleanliness within the sales environment, not pressuring customers to buy supplementary merchandise, and developing a quality control system to identify any potential failures related to store design, layout, and general store ambiance. It really is a simple philosophy of just paying attention to detail from the view of the customer’s own eye. Surprise and Delight The third principle, “Surprise and Delight”, is about innovating current Starbucks service delivery and product offerings in a way that keeps customers smiling for its uniqueness and dedication to fulfilling their needs of every variety. “Even satisfied customers are looking for their purchases to offer more pleasure, joy, or play” (Michelli, p.83). This principle is about giving customers an exceptional experience as a means to gain their loyalty over the long-term. The needs of customers are compared to the Cracker Jack product and their joy of the purchase not for its popcorn and nuts, but for the extra prize that is included inside. Starbucks runs its business model with spontaneous free sampling or other incentives to create this surprise. For example, the business launched a program called Coffee Master for employees, a course that taught employees how to recognize subtle foreign flavors in coffee blends through a cupping ceremony (Helm, 2007). The knowledge of baristas about flavors serves to delight customers by helping them decide which flavors they might enjoy most; a competitive advantage over other coffee houses. Embrace Resistance The principle of “Embrace Resistance” is about listening to feedback whether critical or positive and learning from it. It is about listening to customer and partner complaints and then responding to them rather than dismissing them. Through this process of responding and also searching proactively for potential resistance sources internally and externally, relationships are built and loyalty established by suppliers, customers and employees. For example, consider this criticism from someone not impressed with Starbucks’ products or decor: “(I) relax in this armchair under a ghastly mass-produced daub that looks like an enlarged detail of a Matisse…the blond-wood school of pseudo-caring capitalism” (Self, 2009, p.48). By monitoring customer responses, décor changes can occur or even service delivery change. Starbucks remembers in this that everything matters. Leave Your Mark The final principle, “Leave Your Mark”, is mostly about corporate social responsibility and how CSR practices enhance the lives of employees, suppliers and other stakeholders. Starbucks belongs to many social responsibility and sustainability organizations such as the Center for Corporate Citizenship at Boston College, National Coffee Association of U.S.A., United Nations Global Compact, and Sustainability Engaging Stakeholders (Starbucks, 2007). Further, the company pays higher prices for its coffee than most competition. This premium price allows supplier farmers across the world to have more financial revenue to buy land, increase laborer salaries, and even invest in equipment for more sustainable or productive farming techniques (Michelli, p.160). “Leave Your Mark” is about environmental and social leadership to help suppliers and other stakeholders domestic and foreign to gain a better quality of life because of Starbucks and its many sustainability programs. It is about fiscal responsibility, sharing the Starbucks mission with customers, and promoting responsible change through innovation and flexible solutions to the current business model. It is about taking a visible leadership role in all areas of the value chain such as loan generation to coffee farmers overseas or taking Starbucks research and development teams into these regions to help farmers become more productive in their supply efforts. Through this, the company builds lasting relationships with stakeholders that only helps its reputation and long-term revenue capabilities. References Aronin, B., Fetterman, A., Liu, X. & Peng, J. (2004). Rustic Coffee: A Strategy for Challenging Starbucks, p.3. Retrieved October 22, 2011 from http://www.mcafee.cc/classes/BEM106/papers/2004/starbucks.pdf Helm, Burt. (2007). Chairman Howard Schultz is on a Mission to take his Company back to its Roots, Business Week, Iss. 4029, April 9, p.56. Michelli, Joseph A. (2007). The Starbucks Experience: 5 Principles for Turning Ordinary into Extraordinary. McGraw-Hill. Self, Will. (2009). A Double-Shot of Sanctimony, New Statesman, 138(4975), p.48. Starbucks. (2007). Starbucks Corporate Fiscal 2007 Corporate Social Responsibility Annual Report. Retrieved October 22, 2011 at http://www.starbucks.com/assets/starbucks-csr-fy2007.pdf Read More