Balancing Culture and Growth at Starbucks Essays

For my ethnography project, I decided to observe the Starbucks on Rockside Road in Independence, Ohio. My plan was to observe the subculture of Starbucks’ customers. A subculture is defined as a “structured social inequality or, more specifically, systematic inequalities between groups of people that arise as intended or unintended consequences of social processes and relationships.” My question was twofold. Does Starbucks appeal to certain social statuses? And if so, does Starbucks serve as another example of social inequality?

Starbucks was bought out by current CEO Howard Schultz in 1987. Since then, Andrew Harrer (2012) reports the company has grown to operate over “17,244 stores worldwide” (para. 1). Fortune (n.d.) reports in its yearly 100 Best Companies to Work for that Starbucks employs “some 95,000 employees”. From only a handful of stores in 1987 to a billion dollar franchise today, the success of Starbucks is due in great deal to their corporate culture, specifically how employees, or as Starbucks calls them, partners are treated. Joseph Michelli (2007) echoes this sentiment, “A great cup of coffee is only part of the Starbucks success equation” (p. 767).

1. In the beginning, how was Starbucks different from other coffee options for coffee drinkers in the United States? What activities and assets did Starbucks leverage to differentiate itself from competitors?

The extraordinary success Starbucks experienced during the early 1990s resulted from Howard Schultz’s passion and vision to create a coffee culture in the United States similar to the coffee culture he experienced while traveling to Italy. Schultz’s vision of the Starbucks brand evolved around providing a quality product while delivering exceptional customer service in an inviting atmosphere. Starbucks’ success can be attributable to the following factors:

First of all, Howard Schultz had a clear vision about his company. It is important for a great leader to have a clear vision about what to achieve. The emphasis on importance of employees is the outstanding point in his vision. This is why Starbucks has been investing in their

Starbucks advertises two essential mission statements. First and foremost, it strives to “establish [ourselves] as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while [we] grow(s).” (Starbucks) Reflective of its mission, Starbucks bases its strategic campaign and communications on six indispensable philosophies; structuring a pleasant work environment in which employees are treated with “respect and dignity,” incorporating diversity in all business aspects, purchasing, roasting and delivering fresh coffee, retaining satisfied customers, giving back to the community and environment, and developing

1. Starbucks Corporation's rise seems to be out of a storybook for Howard Schultz. Starbucks began selling whole bean coffee in 1971 under Jerry Baldwin, Zev Siegl, and Gordon Bowker. Business grew at a slow and steady pace until Schulz joined the company as manager of retail sales and marketing. After a visit to Milan, Italy, Schultz was inspired by a vision. He saw how important coffee was to the romantic culture of Italy. He believed that if Americans had such places to socialize over a cup of coffee, espresso, cappuccino, etc., that they would pay good money for his quality product. The owners of the Starbucks Corporation were not as excited and did not want to operate in the restaurant business. Schultz filmed these coffee bars and

1. Suggest the key elements of Starbucks’ organizational culture that contributes to its success in a global economy. Indicate management’s role with creating and sustaining the organizational culture.

The success of Starbucks is hinged on five business principles involving all levels of both management and employees as expressed in the book, “The Starbucks Experience”. These five principles are taught to and upheld by each and member of the company. As each employee holds shares to the company, they are held to a standard which requires them to go above and beyond to please the customers (Michelli, 2007). Starbucks maintains that if management treats its employees with a higher level of respect and with higher regards than the average company, then they will then treat their customers with a higher consideration as well (Michelli, 2007). Each new shareholder is given a small booklet of instructions on how to conduct themselves called

Starbuck’s strategy focused on three components; high-quality coffee, intimate service, and ambient atmosphere. Starbucks worked closely with growers in Africa, South and Central America, and Asia-Pacific regions to insure the quality of its product. Starbucks called all employees' "partners" and worked hard to train them with the skills necessary to best serve the customer. The atmosphere at Starbucks was crafted after the European-style espresso bar. The company goal was to create ambience through the Starbucks "experience" and by making the area comfortable, yet upscale.

The company has also developed a structure and control system. With the realization that human capital holds a vital role in the development and sustainability of any institution, that of Starbucks included, it has taken to task to protect the same. To develop this, the company has an elaborate system that ensures the production levels of the company are met with pride. This like other leaders in the same has entailed ensuring they have an empowering corporate culture, topped by ensuring their employees enjoy competitive benefits.

Starbucks is and will continue to be one of the largest distributers of a cup of coffee today and into the future.  The Starbucks mission to “inspire and nurture the human spirit – one person, one cup and one neighborhood at a time” directly correlates with the experience a customer has in each store. They have many ways to differentiate in comparison to competitors because they provide an experience while shopping for a coffee allowing them to charge a premium price.

The CEO (Chief Executive Officer), Howard Schultz pointed that the main reason from the decline of “Starbucks Experience” was that the number of Starbucks shops increased sharply from only 1,000 to 13,000 within ten years. Other people considered their brand has been commercialized, and the customers hadn’t had enough enthusiasms to appreciate every moment of their coffee any longer. He suggested that Starbucks should re-find its origin. Nevertheless, his advice apparently was opposite to the

1. What factors in the global environment provide opportunities or threats for Starbucks? How do Starbuck’s strengths and weaknesses match up to its opportunities and threats?

Corporate culture is a key component to the success of Starbucks. When looking at the seven dimensions of corporate culture (fn textbook pg 338) Starbucks emphasizes Team and People Orientation along with Innovation and Risk-Taking and pose less emphasis on a competitive environment or an outcome oriented approach. (see appendix c) In order to ensure a strong corporate culture Starbucks utilizes innovative and simple ways to ensure the key values are deeply held and widely shared. (fn) By visiting up to 40 stores weekly by the CEO Richard Schultz, creation of Starbucks Broadcast News to convey company news, or administering an “attitude survey” every 18 months to all employees they ensure the company and its partners (employees) are connected. (fn textbook)