Leadership Style at Starbucks Coffee Company - Research Paper Example

Starbucks Coffee Company  Starbucks Coffee Company Headquartered in Seattle, Starbucks Coffee Company is a leading roaster and retailer of specialty coffees in North America. The company operates more than 9,400 retail shops that are located in over ten countries and operates approximately 8,650 units mainly in airports and shopping centers around the globe (Starbucks Corporation, 2014). Starbucks goal is to establish itself as the most respected and recognized coffee brands in the world while maintaining its unbending principles, as it expands. To achieve this goal, Starbuck continues to spread out its retail operations and also nurtures its brand through the advancement in new distribution channels and the introduction of innovative products. Starbucks considers six guiding principles in accomplishing its mission. These principles include providing an idyllic work atmosphere and equal opportunities to workers. In addition, Starbucks embraces diversity as a way to do business, applying maximum standards to sourcing, roasting, and unsullied delivery of coffee to its consumers. Moreover, Starbucks aims at, “developing enthusiastically satisfied consumers, contributing positively to the communities and also recognizing that success is necessary for profitability” (Starbucks Global Responsibility Report, 2013). Starbucks has evolved in its commitment and has grown to promote environmentally and socially dependable practices that have resulted to its success. Starbucks considers social and environmental responsibility as an essential part of neighborhoods, as well as, business. Starbucks grant loans to people in need and also lengthens its emphasis on a range of programs that sustain and support cultural diversity. Starbucks is committed to preventing workplace injuries through rules placed to ensure safety of its workers and consumers; for instance, the introduction of digital brewing equipment such as espresso machines at Starbucks has reduced burns in workers (Starbucks Global Responsibility Report, 2013). Employees and customers are one of the most essential resources to Starbucks. All employees at Starbucks are eligible for Starbucks benefits and health care package, on top of a preliminary wage which is over the minimum wage. Moreover, the company endeavors to tender environmentally-safe products. Starbucks makes noteworthy contributions to the environment, charities, and the homeless and supports AIDS research. Financially, Starbucks has had solid returns and earnings. The Company has managed to maintain healthy operations whilst generating sufficient public funds for its expansion. The company is rapidly expanding to other places overseas and plans to open coffee bars all over the world. Leadership style at Starbucks Howard Schultz’s leadership as Starbuck’s CEO has indeed accomplished a remarkable milestone. In the past, Starbucks has faced consumer demand instability, economy volatility and the U.S. recession that have affected the market. However, despite all this drawbacks, Starbucks has embraced resistance and has continued to provide high-quality coffee all over the world. The leadership style pursued by Starbucks is democratic. Democratic leadership has benefited the company through augmented morale levels in workers because they have a “say” in various decision-making processes. The employees feel more loyal and committed to Starbucks; hence, work efficiently and better. Howard Schultz is both a charismatic and transformational leader. Charismatic leadership approach is a process of generating ideas and relentless evaluation of the surroundings, matching vision through motivation, structuring commitment and faith, and attaining the vision through empowering employees (Conger, 1989). Howard Schultz provides employees in his business with a better working environment and involves them in decision-making. Transformational leaders motivate their followers or employees to do better (Bass, 1985). Schultz being the boss attracts and motivates his employees. Employees in business, seek for leaders with a passion, a vision and a leader that engages them in team-building and decision-making processes. Howard Schultz being a transformational leader treats his employees well and provides them with different benefits and assistance to all kinds of problems; however, Schultz does not acknowledge the need of a trade union in his business; thus, this demonstrates that he is a democratic leader. Schultz’s leadership has led to the company succeeding well in the 21st century. Ethics and corporate social responsibility at Starbucks Social responsibility can be more than mere charity. Milton Friedman states that, "social responsibility in any trade is to augment its profits" (Friedman, 1970). Social responsibility may involve attempts to recognize social needs as the foundation for gainful activities. Social responsibility is one of the major interests in any corporation and many benefits ensue to social responsibility; these include more supportive communities, better motivated employees and also more loyal customers. Starbucks may be making significant strides towards social responsibility. The Company makes donations to local charities focusing on the environment, children and research in AIDS. Starbucks contributes materials to various schools and childrens organizations, in addition to, beach clean-ups, Special Olympics and charity organizations that support AIDS research. Moreover, Starbucks makes coffee contributions to the destitute in each State that has its retail stores. Starbucks also devotes its support to the arts and is engaged in several events such as the Chicago Jazz Festival and the International Film Festivals in Washington D.C. As Starbucks expands to new markets, it commits itself to being a strong supporter of community events and non-profit making organizations. In 1995, Starbucks concluded a “code of conduct” to do business in foreign countries, thus becoming the first importer of agricultural commodities in the U.S. that tried to improve working conditions in coffee-growing countries. Starbucks code of conduct was as a result of thwarting grassroots protests in 1994, in Guatemala. In addition, the company pledged to limit child labor and also supported the access to healthy workplaces and safe housing for workers. Starbucks code of conduct states that "the company believes in the significance of conservation efforts and progressive environmental," and also "the benefit and wage levels ought to address the fundamental needs of workers and their relatives," (Starbucks “Framework” for a code of conduct, 1995). Other social responsibilities include; promoting sustainable agricultural environments in Indonesia and also the company plans to support the restoration of coffee growing areas in Northwestern Ethiopia. Starbucks’s SWOT Analysis One technique that can help a business in developing a success plan is through the use of SWOT analysis that can be used to aid faculty in instigating meaningful alterations, in a program for improvement (Orr, 2013). To begin with, every business wants to capitalize on its strength, and a company like Starbucks is one that undeniably has strengths. When it comes to coffee, and its consumers, Starbucks is preferred as one of the best companies in the world, in making coffee. They not only serve coffee at their different locations but also serve other snack items such as Danishes and pastries for people to enjoy. One feature that puts them apart from the rest of the competitors is the reason that they have locations far and wide. It is certainly impossible to go somewhere and not find a Starbucks coffee retail shop; this provides a great opportunity for Starbucks to execute new products across the world at a rapid rate. Starbucks is not only international, but has departmental stores such as Target, Noble and Barnes making it cheaper and accessible for people to have a “one-stop shop.” Finally, Starbucks offers a great ambiance with the sumptuousness of Wi-Fi so that customers can relax, imbibe their coffee and potentially get their work done, all in one place; this provides Starbucks an advantage over its competitors. On the other hand, weaknesses are part of every business; however, no company admits that they have weaknesses that their consumers may not like. The number one complaint in Starbucks can be attributed to prices on their coffee; though, Starbucks may seem to be a luxury coffee palace, it is contemptible to pay a huge amount of money for an undemanding cup of coffee. Another weakness that Starbucks needs to work on is an international market; since, other chain markets such as McDonalds and Dunkin Donut may already be well-established in foreign markets. Starbucks does not appear to have many weaknesses; although, it has some weaknesses that may be harmful, these weaknesses have caused some enormous opportunities for the business. One such great opportunity that Starbucks has taken is acquiring companies such as Tazo Tea and Seattle’s Best. Starbucks has also expanded to other areas that have brought many profitable opportunities for the business. Starbucks is also expanding internationally and this gives the company an opportunity to improve its products globally. In 2005, Starbucks publicized the first tread into spreading out its consumer products in the South Pacific area through launching its Frappuccino line in Taiwan and Japan” (Shah, Hawk, Thompson, 2006). More than ten billion in annual sales can be generated from these opportunities. Starbucks may try to make it convenient for consumers to purchase their products from different locations worldwide. Finally, threats are part of the SWOT analysis since they always exist no matter the business. There are lots of threats and competition in Starbucks since its main focus is coffee. There are countless companies that sell coffee and which offer it at lower price than that of Starbucks. Companies that had established themselves earlier, provide competition to Starbucks. There is a threat of other companies offering coffee with a longer shelf-life; therefore, customers purchase products from other coffee companies instead of Starbucks. There will continually be an unlimited number of threats for companies; however, the best means of overcoming these obstacles are to put forward the most excellent products to consumers. Starbucks has demonstrated its success and from the SWOT analysis, Starbucks has taken into account threats, opportunities, strengths and weaknesses. Starbucks has used these four items to its advantage and most of its decisions are in the right direction. Starbucks being a chain business; it has cautiously planned out and strategized its accomplishments and goals so as to become a successful business. Starbucks’s future outlook Competition may be intense between coffee stores. Starbucks may be the only company that has a national level of awareness and recognition. Starbucks led the way in up-scale coffee bars and has expanded in cities such as Japan, all over the world. The more people become used to spending three dollars for a cup of coffee, the more Starbucks benefits as the dominant player. National companies give Starbucks competition; however, Starbucks has established a huge presence through word of mouth all over the world. Matthew Patsky the Vice President of an investment company in San Francisco cautions that "the window may be closing;" therefore, the urgency of Starbucks in growing may be at stake (Cuneo, 1994). Nevertheless, Starbucks believes there is a huge prospective in international business. Joint ventures and overseas expansion promise to be the main areas for growth for Starbucks. Howard Schultz calls this test as "the momentum in a wind tunnel, which one has to take, when one is going the wrong way" (Cuneo, 1994). One dilemma that faces Starbucks is whether it ought to develop into other new product areas such as breakfasts, non-coffee drinks and meals, to take on board changing consumer lifestyles and demands. Most brands cannot do both packaged and also retail products. Many extensions may erode Starbucks’s identity. Wall Street believes that Starbucks ought to move onto supermarket shelves on a dual-brand approach; however, Howard Schultz laments that this may never happen since the Starbucks’s brand might eventually suffer (Cuneo, 1994). Moreover, Starbucks’s management believes that, in the future, the companys results of earnings and operations could be impacted considerably by other aspects; such as, increased costs involved in operating and opening retail stores in other markets, increased competition in the coffee industry, the ability to employ, train and maintain qualified personnel, and the companys capability to finance its expansion. Despite these potential problems, Starbucks remains optimistic in relation to the company’s growth and expansion in the future. References Bass, B. (1985). Leadership and Performance Beyond Expectation. New York: Free Press. Burns, J. (1978). Leadership. New York: Harper & Row. Casey, M. (2007). Starbucks Coffee Company: William Blair and Company 27th Annual Growth Stock Conference. Chicago, IL. Starbucks Corporation. Retrieved April 13, 2014; from, http://media.corporate-ir.net/media_files/irol/99/99518/20070621_WmBlair.pdf Conger, J. (1989). The Charismatic Leader. San Francisco: Jossey-Bass. Cuneo, A. (1994). “How Howard Schultz Shaped Starbucks: Starbucks CEO Sees Marketing as Establishing Trust.” adage.com. Retrieved April 13, 2014; from, http://adage.com/article/news/howard-schultz-shaped-starbucks/88189/ Friedman, M. (1970). “The social responsibility of business is to increase its profits.” New York Times Magazine, September 13: 32-33, 122-124. Retrieved April 13, 2014; from, http://www.colorado.edu/studentgroups/libertarians/issues/friedman-soc-resp-business.html Orr, B. (2013). Conducting a SWOT Analysis for Program Improvement. US-China Education Review, Vol. 3, No. 6, 381-384. Retrieved April 13, 2014; from, http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=0CCoQFjAA&url=http%3A%2F%2Fwww.davidpublishing.com%2FDownLoad%2F%3Fid%3D12952&ei=KpBKU-K_JuO60wW-s4CgCQ&usg=AFQjCNHIcfVhKMd-oxtbvRCJv-phE88bkA&sig2=wg36M16oo_9V1sS2Gg2ThA&bvm=bv.64542518,d.d2k&cad=rja Shah, A., Hawk, T., Thompson, A., (2006). “Starbucks’ Global Quest 2006: Is the Best Yet to Come?” Retrieved April 13, 2014; from, http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=5&cad=rja&uact=8&ved=0CEEQFjAE&url=http%3A%2F%2Fcdn.transtutors.com%2FUploadAssignments%2F507150_1_Starbucks2006.02.15.12.mjn.pdf&ei=oqdJU5bIBsSo0AWZjIHQAQ&usg=AFQjCNEb8pKYiUJPoqSqFC24WdeyQC_88w&sig2=uVIV8hMp9Tl5zXJZmOz86w&bvm=bv.64542518,d.d2k Starbucks Corporation. (2014). Vault.com. Retrieved April 13, 2014; from, http://www.vault.com/company-profiles/retail/starbucks-corporation/company-overview.aspx Starbucks “Framework” for a code of conduct - US Labor. (1995). usleap.org. Retrieved April 13, 2014; from, http://www.usleap.org/files/usleap/sbcode.pdf Starbucks Global Responsibility Report. (2013). starbucks.com. Retrieved April 13, 2014; from, http://globalassets.starbucks.com/assets/98e5a8e6c7b1435ab67f2368b1c7447a.pdf Read More