I.

Introduction Background of the Company

Starbucks has always been a place where you can find the worlds best coffees. But in 1971, you would have had to travel all the way to our only store in Seattles historic Pike Place Market. 1970s The first Starbucks opens. The name comes from Herman Melvilles Moby Dick, a classic American novel about the 19th century whaling industry. The seafaring name seems appropriate for a store that imports the worlds finest coffees to the cold, thirsty people of Seattle. 1980s Howard Schultz joins Starbucks in 1982. While on a business trip in Italy, he visits Milans famous espresso bars. Impressed with their popularity and culture, he sees their potential in Seattle. Hes right after trying lattes and mochas, Seattle quickly becomes coffeecrazy. 1990s Starbucks expands beyond Seattle, first to the rest of the United States, then the entire world. After becoming one of the first companies to offer stock options to its part-time employees, Starbucks becomes a publicly traded company. 2000s The Starbucks phenomenon continues. As of this writing, Starbucks has more than 15,000 locations in over 40 countries. In addition to our excellent coffees and espresso drinks, people now enjoy for Tazo tea and Frappuccino blended beverages.

Basic Structure The structure of the Starbucks Corporation is not an uncommon one. Starbucks executives oversee the company from its headquarters in the city of its birth, Seattle, Washington. Around the country, district managers oversee regional groupings of stores. These district managers report directly to the Starbucks Corporation. At each store, a store manager acts as the chief. Under this store manager are a collection of shift supervisors who act as managers on duty when the store manager is out. Below the shift supervisors are the rest of the employees, referred to as baristas. Licensed Stores Starbucks does not operate under a franchise system; however, they do license storefronts. Licensed stores are common in grocery stores, bookstores or any other site where the Starbucks is not a stand-alone building. These licensed stores are still controlled by Starbucks Corporation and must adhere to the same stringent guidelines. All items sold at licensed stores, including foods, must be approved by Starbucks corporate offices. Starbucks maintains this control in an attempt to protect the company name and ensure that it remains one that is associated with quality. Partners From the individual who makes your decaf cappuccino to the person to whom you hand your money and exchange a smile, all Starbucks workers are partners in the company. While Starbucks workers also have more specific titles, including barista and shift supervisor, the Starbucks Corporation has long referred to their workers as "partners." This term is intended to make clear how integral Starbucks employees, no matter how low on the chain, are to the company's success.

II.

Issues As a global company with revenues well over $6 billion, Starbucks executives recognize they must be aware of the impact the environment has on their decisions and actions. It recently began lobbying legislators in Washington , D.C., on issues including lowering trade barriers, health care costs and tax breaks. Its something that Schultz didnt really want to do, but he recognizes that such efforts could be important to the companys future/ Global challenges Starbucks does business in 36 countries outside of the united states (as of May 2006), even though about 85 percent of Starbucks revenues come from the U.S. market. Much of the companys future has targeted four markets for major global expansions: China, Brazils, India, and Russia. As Starbucks continues its global push, it not only has to be concerned with the product, but it also must address staffing issues as well. The president of Starbucks Coffee international says, these emerging market have a great deal to offer. They are rich in culture heritage, and untapped resources, possessing, in many cases an eager workforce keen to be better their lives, which in turn improves the social and economic situation in their respective country. Starbucks entered the Chinese market in 1999 and currently has 140 stores there, which it feels as an accomplishment given the fact that this is a country of tea drinkers. However, Starbucks feels there are untapped opportunities as China becomes stronger economic force and as young newly affluent urban Chinese workers embrace drinking quality coffee products. One of the major problems that Starbucks encountered in China an imitator by the name Shanghai Xing Ba Ke Coffee shops (loosely translated as Shanghai Starbucks) that were creating customers confusion- has been resolved. A Chinese court ordered the imitator to pay Starbucks rmb500,000 ( approximately $62,000) for copying the Starbucks name and logo. This trade mark protection victory was an important one for Starbucks.

III.

Strategies

As managers manage, they must be aware of the terrain or broad environment within they plan, organize, lead and control. The characteristics and nature of this terrain will influence what managers and other employee do and how they do it. And more importantly, it will affect how efficiently and effectively managers do their hob coordinating and overseeing the work of other people so that goals- organizational and work-level or work unit- can be accomplished. What does Starbucks terrain look like and how is the adapting to that terrain? Starbucks Culture and Environment An organizations culture is a mix of written and unwritten values, belief, and codes of behavior that influence the way work gets done and the way that people behave in organizations. And the distinct flavor of Starbucks culture can be traced to the original founders philosophies and Howard Schultzs unique beliefs about how a company should be run. The three friends ( Jerry Baldwin, Gordon Bowker, and Zev Siegl) who founded Starbucks in 1971 as a store in Seattles historic Pike Place Market district did so far one reason: they loved coffee and tea and wanted Seattle to have access to the best. They had no intention of building a business empire. Their business philosophy, although never written down, was simple: Every company must stand for or what they think they want; and assume that your customers are intelligent and seekers of knowledge. The original Starbucks was a company passionately committed to world class coffee and dedicated to educating its customer, one on one, about what great coffee can be. It was these qualities that ignited Howard Schultz continues to have that passion what Starbucks could become. Schultz continues to have that passion for his business- he is the visionary and soul behind Starbucks. He visits at least 30 to 40 stores a week, talking to partners (employees) and to customers. His ideas for running a business have been called unconventional, but Schultz doesnt care. He says, we can be truly be extremely profitable and competitive, with a highly regarded brand and also respected for treating our people well. One member of the companys board of directors says about him, Howard is consumed with vision of Starbuck. That means showing the good that a corporation can do for its workers, shareholders, and customers.

The companys mission is as follows: To establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles as we grow. What are those principles that guide the decisions and actions of company partners from top to bottom? Provide a great work environment and treat each other with respect and dignity Embrace diversity as an essential component in the way we do business Apply the highest standards of excellence to the purchasing, roasting, and fresh delivery of our coffee Developed enthusiastically satisfied customers all of the time Contribute positively to our communities and our environment Recognize that profitability is essential to our future success

Starbucks culture emphasizes keeping employees motivated and content. One using thats been important he has with his employees. He treasures those relationships and feels that theyre critically important to the way the company develops its relationships with its customers and the way it is viewed by the public. He says, We know that our people are the heart and soul of our success. Starbucks 115,000 -plus employees worldwide serve millions of customers each week. Thats a lot of opportunities to either satisfy or disappoint the customers. The experiences customers have in the stores ultimately affect the companys relationships with the customers. Thats why Starbucks has created a unique relationship with its employees. Starbucks provides all employees who work more than 20 hours a week health care benefits and stock options. Schultz says, The most important thing I ever did was give our partners (employees) bean stock (options to buy the companys stock). Thats what sets us apart and give us a higher quality employee, an employee that cares more.And Starbucks does care about its employees. For instance, when three Starbucks employees were murdered in a botched robbery attempt in Washington D.C., Schultz immediately flew there to handle the situation. In addition, he decided that all future profits from that store would go to organizations working victims rights and violence prevention. It probably shouldnt come as surprise that Starbucks has lowest level f employee attrition (leaving) of any national retailer.

IV.

Conclusion.

Case Study Guide Questions 1. What do you think of the companys guiding principles? Describe how the companys guiding principles would influence how a barista at a local Starbucks store does his or her job. Describe how these principles would influence how one of the companys top executives does his or her job. 2. Do you think Howard Schultz views his role more from the omnipotent or from the symbolic perspective? Explain. 3. What has made Starbucks culture what it is? How is that culture maintained? 4. Does Starbucks encourage a customer responsive culture? An ethical culture? Explain. 5. Describe some of the specific and general environmental components that are likely to impact Starbucks. 6. How would you classify the uncertainty of the environment in which Starbucks operates? Explain. 7. What stakeholders do you think Starbucks might be most concerned with? Why? What issue(s) might each of these stakeholders want Starbucks to address? 8. Why do you think Howard Schultz is uncomfortable with the idea of legislative lobbying? Do you think his discomfort is appropriate? Why or why not? 9. What types of global economic and legal political issues might Starbucks face? 10. Youre responsible for developing a global cultural awareness program for Starbucks executives who are leading the companys international expansion efforts. Describe what you think will be important for these executives to know. 11. Go to the companys Web site (www.starbucks.com) and find the latest Corporate Social Responsibility Annual Report. Choose one of the key areas in the report (or your professor may assign one of these areas). Describe and evaluate what the company has done in this key area. 12. What do you think the companys use of the term partners instead of employees implies? Whats your reaction to this? Do you think it matters what companies

call their employees? (for instance, Wal-mart calls its employees associates.) Why or why not? 13. What does Starbucks terrain look like and how is the company adapting to that terrain? 14. How effective is Starbucks at recognizing and managing its terrain? Explain.

The companys guiding principles are geared towards establishing a relationship between Starbucks and the community (mainly its customers) through quality coffee, while still maintaining reasonable profit. These principles encourage baristas to be competitive in their work, developing their own touch to the coffee they make which in turn makes for a different taste and experience with each Starbucks branch. The top executives on the other hand, are constantly reminded to give back to the community while maintaining good profit. Howard Schultz definitely views his role from the symbolic view. It has to be the symbolic view because the coffee-community business is easily affected by external factors, especially the economy, market and culture. The quality of Starbucks organization also depends on the performance of the employees; the managers are not directly responsible for its success or failure. The current Starbucks culture was based from two different places; the original Starbucks from Pike Place market and the experience Schultz had in an espresso bar in Milan. Schultz incorporated these two cultures into one and introduced it in America. Its not a challenge to maintain since Starbucks is all about coffee and good atmosphere. Whether the branch is in Asia or Europe the employees just need to serve good coffee and create a relaxing atmosphere. Starbucks puts emphasis on social skill when hiring its employees. They want you to feel like youre talking to a friend rather than a store clerk, thats why your coffee has your name written on it instead of an order

number with a receipt. Starbucks is also open to comments and suggestions.

Since its a community based organization, an ethical culture is a must, a Code of Ethics is signed by top-level managers to protect and preserve the stakeholders interests. All store employees have resources to help them in doing their jobs ethically. And the company created a process for employees to raise complaints and concerns they may have over questionable accounting and internal accounting controls. One general environmental component that could affect Starbucks is the socio-culture of Asian countries. China, for example, would be harder to branch out because its population is more accustomed to tea rather than coffee. A specific environmental component that will affect Starbucks is supply. If either Mexico or northwest Guatemala is hit by calamities then their coffee bean supply would be crippled. The environment which Starbucks operates can be classified with the white rapids metaphor, especially within the Asian branches. Starbucks relies heavily on local trends to reel in new customers and seasonal changes, like summer, could drastically affect sales. Stakeholders are the top-level managers who have financial responsibilities. These might be former employees that are able to buy stock from the organization, thats why they might see the stock from a subordinates viewpoint. These stakeholders might want to address issues that differ in each branch, or the branch which they personally hold. Starbucks already faced imitators in China and could possibly face more competitors that have the same type of culture but with only a different kind of beverage.

Like any other global organization, Starbucks will also face depression or any type of economic collapse.

Since Starbucks culture emphasizes on keeping the employees motivated and content, these executives should know the wants and needs of specific kind of employees in foreign countries. All to maintain the drive and effort which Starbucks employees are known for. They were able to prioritize recycling by making their paper and plastic cups broadly recyclable. They continue to expand their front-of-house recycling with programs in 18 markets, helping them toward their goal to provide all of their customers access to cup recycling by 2015. The use of the term partner will boost the morale of its employees. Starbucks views his employees as contributors to the company's success. We can base this on Maslow's hierarchy of needs; his employees have met their Physiological needs through their salary. The second stage of the safety needs is also attained by giving his employees health security. By calling his employees as partners, he was able to attain the third stage of his employees needs, the need to feel belonged. The original founder of Starbucks doesnt want to build a business empire. But on Schultz's vision, Starbucks can be a huge company rather than an ordinary coffee shop. He was able to adopt in the current economic situation by evaluating each branch performance. He was also able to adopt on globalization by innovating their products. There is no doubt that Starbucks is effective at managing and recognizing its environment. He was able to make his partners feel content and motivated and in turn his partners were able to give the customers what

they asked for.