Starbucks Organizational Analysis

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Business Strategy

Organizational Analysis

Starbucks Coffee Company


Table of Contents

Executive Summary3
Company History4
Organizational marketing strategies4
Starbucks as a Private Company (1987–92)4
Starbucks as a corporation (1993-2010)6
Organizational design and effectiveness7
Starbucks Organizational Structure9
External environment9
Internal environment11
International environment13
Product and Service14
Information technology and control systems15
Organization size, life cycle, and possible decline16
Organizational Culture16
Ethical value18
Innovation and change18
Store Environmental Design19
Sensory Innovation19
Service Innovation19
Consumer Education20
Environment Impact20
Fair Trade21
Decision making processes21
Conflict, power and politics22
Summary of key finding22
Starbucks Structure27
Starbucks’ logo (1971~2011)28
Store layout and design29

Executive Summary

With its green logo, a “twin-tailed mermaid”, Starbucks is an international coffee and the largest coffeehouse company in the world. More than 15,000 stores in 50 countries sell Starbucks coffee to their customers every day. The enterprise began coffee business in Seattle, Washington, in 1971. In 1982, Howard Schultz joined the company. After a trip to Milan, Italy, he advised that the company should sell coffee and espresso drinks to create “community gathering places”. The idea was not accepted until 1987, when Schultz successfully took over coffee house and served more than million customers every day. Their coffee stores provided different kinds of coffee and used the best quality coffee beans to cook for their customers. The stores also offered delicious pastries and fresh food. Therefore, customers could order a cup of coffee and pastries and enjoyed wonderful time in the store. Customers really liked this kind of feeling, so drinking coffee in the Starbucks became fashion in the State.

In order to gain more profit for their company, Starbucks started to develop overseas business. Japan was their first overseas market and they opened the store in Tokyo in 1996. By the year 2000, the company has successfully opened stores in Australia, Bahrain, Hong Kong, Qatar, Saudi Arabia and United Arab Emirates, with the total stores over 3500. In addition, Starbucks purchased Seattle’s Best Coffee and Torrefazione Italia in 2003 bringing the total stores over 6400 worldwide. At the time, coffee already became a king coffee of world and nobody could break this record. Although Starbucks suffered economic crisis in the end of 2008, they closed down many stores in overseas markets. After economic crisis, Starbucks still continued to open new stores in European market in order to recapture market share which it has lost. It is obvious to see that Starbucks wanted to maintain their status of coffee kingdom.

Starbucks adopted unique methods to operate their business. Howard Schultz thought that operating coffee business should focus on persist of product quality and emphasize to respect for customers and employees. Starbucks provided the best services and products with a comfortable place and put their customers in the priority. Therefore, their customers have strong brand royalty. In addition, Starbucks was the first company to provide full health insurance for all employees including part-time employees. Schultz believed that employees were company’s important asset, and the company needed to take care to them. In this method, Starbucks had low employee turnover rates than other companies, and their employees would like to put efforts to their works. Whole company’ employee had the same goal and they should provide the best services to their customers. Therefore, Starbucks Coffee business became a global leading specialty coffee brand, and some scholars admired Starbucks as the Kingdom of coffee industry.

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