MGT 500: Modern Management

Suggest the key elements of Starbucks Organizational Culture that contribute to its
success in a global economy. Indicate managements role with creating and
sustaining the organizational culture.
Organizational culture has a significant impact on the overall performance of a
company. Organizational culture is the set of shared, taken-for-granted implicit
assumptions that a group holds and that determines how it perceives, thinks about,
and reacts to its various environments (Barney, 1986). In this paper, I will examine
the elements of Starbucks organizational culture that contributed to its success in a
global economy, assess the effectiveness of its management decisions in providing
innovative offerings for its customers, determine one key management
competency, and speculate on whether the company would achieve long-term
sustainability as a global leader in the coffee industry without the organizations
CEO, Howard Shultz.
In the case of the success of Starbucks, its organizational culture has been driven
and empowered by the founder and CEO, Howard Schultz. Howard wanted to
expand the company and when he visited Italy prior to the overhaul of the original
Starbucks he wanted to mirror the concepts of the coffeehouses in Italy. The key
aspect to realize here is that organizational culture affects performance. Howard
Schultz became the CEO of Starbucks in 1987. As an entrepreneur, he was
influential in convincing investors to believe in his vision. The next ten years he
worked with his team of experienced managers and built Starbucks from 6 stores
and a small amount of employees, to a large national business with more than
1,300 stores and 25,000 employees.
Howards Shultzs belief is in treating its employees with respect and dignity.
Starbucks business model is conceptualized through a humanistic approach.
Human skill is the managers ability to work with and through other people and to
work effectively as a group member. (Daft, 2012) As the top level manager of the
company Howard Shultz has been known for his excellent conceptual skills, as he is
able to see the organizational as a whole and be able to develop relationships.
The key elements of its organizational culture has derived from the managerial
approach and concepts of Howard Schultz in making the company appeal as a
global entity, while holding true to its values and mission statement. The Starbucks
Mission statement is to inspire and nurture the human spirit- one person one cup,
and one neighborhood at a time. The companys approach is to provide quality
coffee, embrace diversity, connect with customers, improve their stores, be good
neighbors, and reward their shareholders. (Starbucks Coffee Company, 2013)
Howard Shultzs business model has been maintained in its values. These values are
visible in every corner of the organization and extend outside of the organization
through communities. Internally, Starbucks has always believed in empowering its
employees to share ideas and knowledge to management. They have always taken
an effort to train their employees with the best knowledge and competency in its
product in order to provide excellent customer service. The company extends its
reach to local communities by taking a stand on environmental sustainability with
partnerships such as Conservation International, The Earthwatch Institute, Save the
Children, Mercy Corps, the African Wildlife Foundation, and Planet Green.
Management overall sets the precedence on an organizations culture in creating,
sustaining, and maintaining these concepts to its employees. A pyramid business
model could be followed in the case of Starbucks, whereby you have the CEO,
Howard Schultz who is the top manager, and middle managers, and lastly first line
managers. The mission statement and vision is created by the CEO and
communicated to its middle managers down to its first line managers. Starbucks
has upheld its values through its strong relationships with its managers and
employees. Overall management has an influential role in an organizations culture.
Assess the effectiveness of Starbucks management decisions in providing
innovative offerings for its customer (e.g., Wi-Fi, style of coffee, etc.) in order to
achieve its current competitive marketplace advantage. Provide support for your
rationale.
Starbucks has over 20,000 coffeehouses that are spread over 60 various countries
all over the world, while building a very profitable coffee empire. They offer a
unique atmosphere that has tried to mirror coffeehouses in Europe. Starbucks
original goal was to make a coffeehouse that created a warm friendly atmosphere
where customers can enjoy their cup of coffee and socialize with other people. The
concept has materialized as technology and people are more crucial with there time
than ever before. Wireless Internet is offered at every single Starbucks as a
convenience to customers and drive thru help to save time on the consumer fast
paced lifestyle. Also with the introduction of the smartphone in the past several
years, it is easier now to locate and find your nearest Starbucks while also utilizing a
rewards and gift card right on your smartphone. As Starbucks has expanded globally
these offerings are provided to each and every store in order to compete with other
coffeehouses.
Starbucks does not spend money on television advertising, but rather rely heavily
on word of mouth marketing. Word of mouth marketing has given the company a
strong brand identity and strong customer base through its effective innovative
offerings. Customers can come into a Starbucks and socialize with others either on
the World Wide Web or in a nice seating setting.
As technology and the social media age begin to continue to improve, more and
more of these innovative offerings will become assets and value to customers that
visit Starbucks coffeehouses in the near future.
Other competitors have tried to mirror the innovativeness of Starbucks and some
have worked, but the growth and strategic placement of the companys coffee
houses have overwhelmed competitors. The company has also collaborated with
retail stores such as Target in order to build on its current market place advantage.
Determine one (1) key management competency that a successful manager at
Starbucks is likely to have. Indicate one (1) way in which this particular competency
is a good fit for the organizational culture.
A key management competency that a successful manager at Starbucks the human
skill in which he or she is likely to have is the ability to interact with other people
and work effectively in a group.
This type of skill is important when working in a guest service setting. Employees
working for Starbucks have been trained to ensure that the customer gets what
they want in their order, while delivering fast, efficient, and effective customer
service.
Starbucks could not expand globally without this competency, as it has to build
relationships with its foreign partners across the world.
The quality of its coffee is another competent in which middle managers must be
able to work with local roasters internationally and ensure that standards are
emplaced, while developing relationships.
One way in which this particular competency is a good fit for the organizational
culture is because building relationships is a key component in its values. Starbucks
embraces diversity and it is the way the organization does business.
Speculate on whether Starbucks would achieve long-term sustainability as a good
leader in the coffee industry without the organizations CEO, Howard Shultz.
Howard Schultz has been the driving force in Starbucks overall success as early on
in his career with the company he was already aware of the full potential of
expanding into the global market. Starbucks main goal is to establish Starbucks as
the premier purveyor of the finest coffee in the world while maintaining
uncompromising principles as [they] grow (Company Factsheet, 2008).
Without the keen leadership and management decisions that Howard Schultz made
during the early years of Starbucks in the late 1980s, I do not believe that the
company could achieve long-term sustainability as a good leader in the coffee
industry. Howard had made risky unknown decisions that transformed the way
Americans in the 1980s could get a cup of coffee. He pioneered the first American
coffee house with an atmosphere that mirrored Italy coffee houses. He helped build
relationships with the roasters in South America by ensuring that Starbucks had the
best quality type of coffee. Howard also helped make the company appeal to variety
of demographics.
All in all Starbucks could not have globally expanded without the vision, values, and
decisions of its CEO. The company would have been unable to capture the coffee
industry market as it has done to this present day with its successful consumer base
and appeal.
Sources
Barney, J. B. (1986). Organizational culture: can it be a source of sustained
competitive advantage?. Academy of management review, 11(3), 656-665
Company Factsheet. (2008, February). Retrieved October 26, 2013, from
http://www.foothillfalcons.org/ourpages/auto/2011/3/1/51708962/Starbucks
%20Company_Factsheet.pdf
Starbucks Coffee Company (2013). Retrieved October 26, 2013 from
http://www.starbucks.com/about-us/company-information
Schultz, H., & Jones Yang, D. (1997). Pour your heart into it: How Starbucks built a
company one cup at a time. Hyperion Books.