Starbucks Case Study Answers
Answer ALL the Four Questions
**Please read the case study below to answer question 1, 2 and 3
Community. Connection. Caring. Committed. Coffee. Five Cs that describe the essence of Starbucks Corporation— what it stands for and what it wants to be as a business. With more than 19,000 stores in 62 countries, Starbucks is the world’s number one specialty coffee retailer. The company also owns Seattle’s Best Coffee, Teavana, Tazo, Starbucks VIA, Starbucks Refreshers, Evolution Fresh, LaBoulange, and Verismo brands. It’s a company that truly epitomizes the challenges facing managers in today’s globally competitive environment.
- Starbucks’ main product is coffee—more than 30 blends and single-origin coffees. In addition to fresh-brewed coffee, here’s a sampling of other products the company also offers:
- Handcrafted beverages: Hot and iced espresso beverages, coffee and non-coffee blended beverages, Tazo® teas, and smoothies
- Merchandise: Home espresso machines, coffee brewers and grinders, premium chocolates, coffee mugs, and coffee accessories, compact discs, and other assorted items
- Fresh food: Baked pastries, sandwiches, salads, hot breakfast items, and yogurt parfaits
- Global consumer products: Starbucks Frappuccino® coffee drinks, Starbucks Iced Coffee drinks, Starbucks
- Liqueurs, and a line of super-premium ice creams
- Starbucks Card and My Starbucks Rewards® program: A reloadable stored-value card and a consumer rewards program
- Brand portfolio: Starbucks Entertainment, Ethos™ Water, Seattle’s Best Coffee, and Tazo® Tea At the end of 2013, the company had more than 200,000 full- and part-time partners (employees) around the world. Howard Schultz is the chairman, president, and CEO of Starbucks. Some of the other “interesting” executive positions include chief operating officer; global chief marketing officer; chief creative officer; executive vice president of partner resources and chief community officer; executive
Leading at Starbucks
Once people are hired or brought into organizations, managers must oversee and coordinate their work so that organizational goals can be pursued and achieved. This is the leading function of management. And it’s an important one! However, it also can be quite challenging. Managing people successfully means understanding their attitudes, behaviors, personalities, individual and teamwork efforts, motivation, conflicts, and so forth. That’s not an easy thing to do. In fact, understanding how people behave and why they do the things they do is downright difficult at times. Starbucks has worked hard to create a workplace environment in which employees (partners) are encouraged to and want to put forth their best efforts. Howard Schultz says he believes that people everywhere have the same desire—to be respected, valued, and appreciated.
Even with some 200,000 full- and part-time partners around the world, one thing that’s been important to Howard Schultz from day one is the relationship he has with employees. Schultz is an ardent proponent of a people-first approach and recognizes that the success of Starbucks is due to its partners (employees). And one way Starbucks demonstrates the concern it has for the relationship with its partners is through an attitude survey that gives partners an opportunity to voice their opinions about their experiences. It also measures overall satisfaction and engagement—the degree to which partners are connected to the company. It’s been an effective way for Starbucks to show that it cares about what its employees think.
Responses to questions about partner satisfaction and partner engagement were extremely positive: 87 percent of partners said they were satisfied or very satisfied, and 73 percent said they were engaged with the company. (The numbers in 2003 were 82 percent satisfied and 73 percent engaged.) In addition, partners specifically said they “Know what is expected of them at work; believe someone at work cares about them; and work for managers who promote work/life balance.” But partners also identified some areas where they felt improvements were needed. These included “Celebrate successes more; provide more effective coaching and feedback; and improve communication with partners” (Corporate Social Responsibility, Starbucks Fiscal 2005 Annual Report, “Beyond the Cup,” p. 65 [http://globalassets.starbucks.com/assets/64d30f4e24 724986a9e9823901567867.pdf]). And Starbucks’ managers try to address any concerns raised in these surveys or concerns expressed in other ways. In another review published by Glassdoor.com, Starbucks employees gave the company 3.7 stars out of 5 and 88 percent approved of CEO Howard Schultz
Not surprisingly, Howard Schultz has some definite views about leading and leadership. He says being a great leader involves finding a balance between celebrating what’s made a company successful in the past and knowing when to not continue following the status quo. He also said being a great leader means identifying a path your organization needs to follow and then creating enough confidence in your people so they follow that path and don’t “veer off course because it’s an easier route to go” (W. Meyers, “Conscience In a Cup of Coffee,” US News & WorldReport, October 31, 2005, pp. 48–50). He also said leaders, particularly of growing companies, need to stay true to those values and principles that have guided how their business is done and not let those values be compromised by ambitions of growth. Since 1982, Howard Schultz has led Starbucks in a way that has allowed the company to successfully grow and meet and exceed its goals and to do so ethically and responsibly.
Communication at Starbucks
Keeping organizational communication flowing in all directions is important to Starbucks. And that commitment starts at the top. Howard Schultz tries to visit at least 30 to 40 stores a week. Not only does this give him an upfront view of what’s happening out in the field, but it also gives partners a chance to talk with the top guy in the company. The CEO also likes to “get out in the field” by visiting the stores and roasting facilities. For instance, when Starbucks was first moving into the China market, Schultz spent time in Beijing with more than 1,200 Starbucks partners and their parents and family members. The event recognized the special role Chinese families’ play and highlighted Starbucks’ commitment to its partners. Despite these efforts by the top executives, partners have indicated on past employee surveys that communication needed improvement. Managers listened and made some changes.
An initial endeavor was the creation of an internal video newsletter that conveyed information to partners about company news and announcements. Another change was the implementation of an internal communication audit that asks randomly selected partners for feedback on how to make company communication more effective. In addition, partners can voice concerns about actions or decisions where they believe the company is not operating in a manner consistent with the guiding principles to the
Mission Review team, a group formed in 1991 and consisting of company managers and partners. The concept worked so well in North America that many of Starbucks’ international units have provided similar communication forums to their partners.
One of the best reflections of how Starbucks treats its eligible part- and full-time partners is its Total Pay package, which includes competitive base pay, bonuses, a comprehensive health plan, paid time-off plans, stock options, a savings program, and partner perks (which includes a pound of coffee each week). Although specific benefits differ between regions and countries, all Starbucks international partners share the “Total Pay” philosophy. For instance, in Malaysia and Thailand, partners are provided extensive training opportunities to further their careers in addition to health insurance, paid vacation, sick leave, and other benefits. In Turkey, the “Total Pay” package for Starbucks’ partners includes transportation subsidies and access to a company doctor who provides free treatment.
Partner (employee) recognition is important to Starbucks. The company has several formal recognition programs in place that partners can use as tools to encourage, reward, and inspire one another. These programs range from formal company awards to informal special acknowledgments given by co-workers. One tool—developed in response to suggestions on the partner survey—is an on-the-spot recognition card that celebrates partner and team successes.
In 2013, Starbucks again was named one of Fortune magazine’s 100 Best Companies to Work for—the fifteenth time since 1998 that Starbucks has received this recognition.
Questions1, 2 and 3
- Briefly Describe the leadership in Starbuck in the perspective of leadership dimension, followers’ readiness, and leadership style Using Situational Leadership Theory. (25 marks)
- Applying the Expectancy theory, briefly explain the motivation approach used in Starbuck. (25 marks)
- The Employee survey of Starbuck has indicated that communication needs some improvement. Describe five (5) communication barriers that might have happened in Starbuck and five (5) methods to overcome the communication barriers. (25 marks)
The Deepwater Horizon oil split has been recognized as one of the worst environmental disasters, if not the worst in US History. On April 20, 2010, an offshore oil rig leased by British Petroleum’s (BP) in the Gulf of Mexico exploded in a ball of flames on, killing 11 employees. While much of the nation was riveted by the attempts to cap the mile-deep well, the hidden tragedy was the cloud of tens of millions of barrels oil that was slowly creeping toward land. BP and others worked for over a year to clean up the beaches and wetlands affected by the spilled oil. The impact of this was felt by coastal wildlife and those who made their business working in the Gulf and along the shore.
In the case of the Deepwater Horizon, there were many things that ultimately lead to the failure of the rig and the release of the oil. Discuss the types of control Managers can take to prevent these disasters from occurring, provide examples to support your answer. (25 marks)
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