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Corporate Business Relationship: Starbucks

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Corporate Business Relationship: Starbucks

The world-famous Starbucks Company was founded in Seattle in 1971. Jerry Baldwin, Zev Siegl, and Gordon Bowker pondered opening a coffee shop with the dark-roasted coffee in Seattle (Seaford, Culp, and Brooks 40). The supplier company “Hammarplast” showed more interest when Starbucks’ orders started to increase; Howard Schultz, the vice president of Hammarplast, visited Seattle in 1981, only to become the director of marketing and operations of the company one year later (Seaford, Culp, and Brooks 41). However, Schultz, inspired by the coffee shops he had seen in Italy, founded Il Giornale Coffee Company (Seaford, Culp, and Brooks 42). Later the brands blended, and the Starbucks as we know it now began to take its shape.

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The atmosphere in Starbucks aims to be relaxing and pleasant. This is how Schultz competed with other fast food restaurants that were more interested in maximizing the number of customers; according to Schultz, customers should have perceived Starbucks as an alternative to home or work, a so-called Third Place (Seaford, Culp, and Brooks 43). Starbucks’ mission stated clearly on its web page: “Our mission to inspire and nurture the human spirit – one person, one cup, and one neighborhood at a time.” As their website explains, the aim of the Starbucks Company is to become a part of the everyday life so it is mandatory for Starbucks not only to serve a high-quality coffee but also to provide the customers with a place where they will feel almost at home (Aiello and Dickinson 316). Besides, “Schultz’s vision and mission leadership guidance were to encourage employees and investors to drive Starbucks in a healthy financial avenue and to continue growing its venture capital investment overseas” (Lemus, von Feigenblatt, Orta, and Rivero 26). These goals determine Starbucks’ customers’ and employees’ policy.

Starbucks’ relationship with the stakeholders is operated by the corporate social responsibility (or CSR). There are at least six groups of stakeholders in the business of the company: employees, customers, suppliers, environment, investors, and governments (Thompson 1). Starbucks is known for its “employee-first attitude”; the employees are guaranteed to receive a wage higher than a minimum wage, and the spirituality of the teamwork increases motivation and productivity of the employees (Lemus et al. 28). The customers are always to greet with a warm smile to create a friendly atmosphere; this approach to customers, as well as the quality of the beverages Starbucks serves, is the key to its popularity.

The image of the company is of utter importance, especially because it has become an international brand. In the analysis of Starbucks’ capabilities, Geereddy lists such features of the company: they reflect the characters of the neighborhoods in which are they located; the company is ranked 91st in the 100 best places to work; the stores are perceived as a community for the consumers; plus, for some of them, the company has a cult status (10). Starbucks also cultivates ethics in its business to improve the company’s image.

Starbucks’ reputation resides not only on its service, but also, as mentioned above, on in internal communication strategy. Its human resource management is of high quality: the company provides employees with stock options and retirement accounts; Starbucks tries to maintain a healthy culture among the workers (Geereddy 5). The company’s application system is also a special feature of the employment process: the future employees are instructed on the company’s culture, needed skills for the job, and the company mission (Lemus et al. 33). A part of the training includes employees’ communication with the customer while the employee helps the customer choose a product he or she likes, thus improving both the service and the customer’s impression of it (Lemus et al. 33). Starbucks’ mission is to treat employees like partners so that they “feel they are valued assets” (Lemus et al. 33). This program of communication and training of employees helps Starbucks remain one of the companies with the best human resource management.

With the company this big, one could assume that the advertising management of Starbucks has to be very carefully planned and sponsored. Nevertheless, studies showed that Starbucks had not invested much in marketing activities because the reputation of its products and services apparently has already brought enough customers (Geereddy 12). Due to the hundreds of coffee shops located all over the globe, Starbucks relies on the recognition of its brand rather than on advertising. However, the company is still at risk of losing customers because the aggressive forms of advertising are preferred by rivals in the industry.

Starbucks may not invest much in its ads, but it certainly is interested in developing virtual communications with customers. The company has a website that is divided into several blogs; plus, the company actively exploits such social media as Facebook, YouTube, Twitter, Tumblr, and others; there is also a community called “MyStarbucksidea,” and links to IOS, Android, and Blackberry apps (Cabiddu, Castriotta, Guardo and Pettinao 4). The community “MyStarbucksidea” attracts new customers or gives the fans an opportunity to become a part of the company. The community is moderated by the employees who build project teams and work with and on ideas customers have sent (Cabiddu et al. 5). Starbucks’ strong presence in the internet media helps it connect with internet users and strengthens its position in the virtual market.

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Starbucks’ financial performance was impressive from the beginning of the company’s history; but now, as it has expanded, investors’ expectations are becoming higher because of Starbucks’ growing presence in the United States and Europe. Starbucks’ clear business plan, audition of the vision statement, special organizational structures, as well as its perfect leadership, image in the market, and various international joint venture channels attract investors all over the world.

To be successful in the global market, the company has to cooperate with different governments and interests. Thompson argues that although Starbucks does not violate rules and regulations, it was criticized for paying very low taxes in the United Kingdom, and developing a network of locations to receive tax advantages (1). But considering Starbucks’ cooperation with and investment in suppliers and therefore local agriculture, it is possible to assume governments are interested in working with a market leader this strong.

To handle possible crises, Starbucks’ Crisis Team has created different strategies. Although they all vary and depend on the situation, general steps of the company include evaluation of damage, determination of actions that will resolve the crisis, and instructions of members and the public (Lemus et al. 29). Howard Schulz, the CEO and the head of the company, is the one who makes decisions in most cases, but other experts may be involved as well.

Several recommendations can be considered: Starbucks’ presence in different countries is not equal, some markets are occupied more than others. Starbucks should also consider bringing local motives and products into the shops to attract more customers and integrate into the market (Geereddy 7). The company should invest more in advertising to compete with the other brands in the industry; the price policy should also be reviewed to avoid loss of customers during financial crises.

References

Aiello, Giorgia and Greg Dickinson. “Beyond Authenticity: a Visual-material Analysis of Locality in the Global Redesign of Starbucks Stores.” Visual Communication. 13.3 (2014):303-321.

Cabiddu, Francesca, Manuel Castriotta, Maria Guardo and Daniela Pettinao. “Combining Exploitation and Exploration Through Crowdsourcing: The Case of Starbucks.” Information Systems: Crossroads for Organization, Management, Accounting and Engineering. Ed. Marco De Marco, Dov Te’eni, Valentina Albano and Stefano Za. Heidelberg: Physica-Verlag, 2012. 359-366. Print.

Geereddy, Nithin. Strategic Analysis of Starbucks Corporation Web.

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Lemus, Edel, Otto von Feigenblatt, Miguel Orta and Orlando Rivero. “Starbucks Corporation: Leading Innovation in the 21st Century.” Journal of Alternative Perspectives in the Social Sciences. 7.1 (2015):23-38.

Seaford, Bryan, Robert Culp and Bradley W. Brooks. “Starbucks: Maintaining a Clear Position.” Journal of the International Academy for Case Studies. 18.3 (2012):39.

Thompson, Andrew. Starbucks Coffee’s Stakeholders: A CSR Analysis. Web.

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