A Resource Based Analysis of Starbucks

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A Resource Based Analysis of Starbucks

The current economic situation has required that organizations rethink the way that they do business. With people losing jobs and salaries being cut, people are spending money on essentials and opting less and less to spend on the extras. Groceries, rent, housing, transportation, education are of value while grooming, meals out, movies and cups of coffee or considered frivolous expenses. One organization that banks on Americans need to feed their self focused desires is Starbucks Coffee. Starbucks. Starbuck’s leadership, well aware of the effect that the crisis could have on the company, outlined a plan that included “increased store and operating efficiencies, additional cost reductions and long-term growth” (Starbucks, 2010). As we look well at the assets, skills, capabilities, and intangibles of the company we will develop a better understanding of whether or not their current management and planning approaches are indeed strategic. Starbucks aims to “inspire and nurture the human spirit – one person, one cup, and one neighborhood at a time”. The company’s strategy seems to have this in mind as they move forward in the spirit of innovation and community responsibility. This paper will attempt to look at the organization from a resource based point of view in an attempt to determine whether the practices have served to profit their company through these difficult economic times.

In order to understand the strategies of the company it is important to understand its history. According to the Starbucks website, the first Starbucks store opened in 1971 and was located in Seattle’s Pike Place Market. Starbucks stores offered a choice of regular or decaffeinated coffee beverages, a special coffee of the day, and a broad selection of Italian-style espresso drinks. In addition, customers could choose from a wide selection of fresh-roasted whole-bean coffees (which could be ground on the premises and carried home in unique containers), a selection of fresh pastries and other food items, sodas, juices, teas, and coffee-related hardware and equipment. During those early days the company's retail sales mix was roughly 61 percent coffee beverages, 15 percent whole-bean coffees, 16 percent food items, and 8 percent coffee-related products and equipment. The product mix in each store varied, depending on the size and location of each outlet. Larger stores carried a greater variety of whole coffee beans, gourmet food items, teas, coffee mugs, coffee grinders, coffee-making equipment, filters, storage containers, and other accessories. Smaller stores and kiosks typically sold a full line of coffee beverages, a limited selection of whole-bean coffees, and a few hardware items. In order for Starbucks leadership to discover and devise a plan for successful change that would help them to weather the storm of a financial downturn, it was imperative to identify with what has significance to stakeholders, both internal and external. According to than article from PR Newswire, “creating organizations that are invigorating and meaningful for employees, customers, and other stakeholders offers the only viable formula for long-term business success in the 21stcentury” (“Today’s Most Successful”, 2007). Starbucks understood the need to become a responsive organization, meaning that they understood the need to understand the needs of stakeholders. Starbucks’ moved to open smaller stores and kiosks and their move to offer their products at other retailers, was evidence that a feedback system was in place. Starbucks engaged in Total Quality Management which is defined as “an integrative approach to management that supports the attainment of customer satisfaction through a wide variety of tools and techniques that result in high-quality goods and services” (Organizational Change, 2007, p.10). The expectations of stakeholders became a part of Starbucks’ core belief system and as a...
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