Appendix Q Part 1 8/21/2011

Starbucks Company is an organization that one can appreciate and admire for its organizational culture. Starbucks is a company that employs most of the seven primary characteristics of organizational culture. The seven characteristics of organizational culture are Innovation/Risk Taking, Attention to Detail, Outcome Orientation, People Orientation, Team Orientation, Aggressiveness, and Stability. Before discussing Starbucks strengths in culture, I will identify some of its weaknesses. Stability can be a subjective term depending on who his judging what stability is. I believe that Starbucks threatens stability of its organization because of its rapid growth during the last 20 years. Rapid growth or aggressiveness is viewed as necessary by many companies to maintain growth and revenues. Starbucks has increased its storefront presence to over 13,600 stores in 40+ countries (Perera, et. al, 2009). This expansion can destabilize a company because it has to deal with vast organizational issues when managing a multinational company and 145,000 employees (Perera, et. al, 2009). During the beginning phases of expansion, Starbucks made an organizational decision to not franchise its stores and built a headquarters. Starbucks used this headquarters as a central location for all decision making. This helped to maintain the Starbucks brand integrity and to keep control of the company tightly within a command structure. Starbucks as maintained an innovative approach to its stores to and employees. They improved employee perception by offering benefits for all workers, even temporary. Starbucks continues the innovation by partnering with companies like Apple to play music in its stores and then make that music available on ITunes. Starbucks also created a system that creates daily reports of all its activities which allows Starbucks to manage situations quickly. This also shows a tendency towards outcome based results. Starbucks would not have continued its expansion if Starbucks maintains its branding and reputation by using attention to detail. By keeping the stores non-franchised, a level of

consistency can be achieved and maintained throughout all of its stores. This keeps customers happy by offering the same menu and expectations to be met as well as allowing employees to change geography and locations. Starbucks was founded on the principles of offering premium/exotic coffee to discerning individuals who wanted more than gas station coffee and generic home brews. To serve this principle, Starbucks has had to become customer-responsive. In the beginning, Starbucks offered a unique product that customers craved for. This meant there was little need for customer-responsiveness because the product sold itself. In 2005, the founder and CEO Howard Schulz stepped down and then returned three years later to find his company facing tough decisions. One of the deficiencies he sought out to fix was customer-responsiveness. According to David In March of 2008, Starbucks unveiled My Starbucks Idea which became a virtual complaint/suggestion box of sorts (2009). This forum has allowed Starbucks to respond to customers needs quickly if there is enough demand. Some improvements that were made due to this program which received more than 70,000 ideas were free Wi-Fi and a free cup of coffee on your birthday (David, 2009). Users who have participated in this program feel vindicated when changes are made that they want. This keeps customers coming back and connected to Starbucks. This also feeds a strong culture. People love a good cup of coffee. There is vast competition to Starbucks today, even McDonalds has run advertisement against companies like Starbucks. I believe that because of Starbucks partnerships and central-decision making headquarter, coupled with its new emphasis on customer-responsiveness they will be able to stay at the top of the fine coffee shop business.

References

David, K. (2009). Inpulse Traps: How Starbucks Got the Message. Retrieved August 21, 2008 from http://www.aircheese.com/article/intpulse-traps-how-starbucks-got-the-message Perera, L., Kerr, R., Kimura, H., & Lima, F. (2009). CASE STUDY: STARBUCKS- ADDING VALUE TO BRAND EQUITY THROUGH AN INNOVATIVE BRAND IMAGE. Journal of the Academy of Business & Economics, 9(4), 174-185. Retrieved from EBSCOhost.