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ASSIGNMENT 1:
STARBUCKS CASE STUDY

The history of Starbucks starts in Seattle in 1971. Three friends, Jerry Baldwin, Zev Siegl, and
Gordon Bowker, who all had a passion for fresh coffee, opened a small shop and began selling
fresh-roasted, gourmet coffee beans and brewing and roasting accessories.

In 1981 Howard Schultz first walked into Starbucks as a sales representative for a Swedish
kitchen manufacturer. He immediately wanted to work for the company as he got so inspired
by Starbucks but it took him a year to finally persuade the owners to hire him. The owners were
reluctant initially to hire Schultz because they thought his style and high energy might not blend
with the existing culture of the company.

However in 1982 Starbucks hired Schultz as the new head of retail operations and marketing
and shortly thereafter was sent to Milan to attend an international housewares show in Italy.
When he arrived, Schultz found himself infatuated with the exciting coffee culture of Italy.
Schultz went to Verona and had his first caffe latte. But he observed something more important
than the coffee. The cafe customers were chatting and enjoying themselves while sipping their
coffees in the elegant surroundings. That͛s when Schultz was struck with an inspirational idea.

"Why not create community gathering places like the great coffee house of Italy in the United
States?"

However, Schultz's idea did not go down well with Baldwin. Baldwin was not ready to get into
the restaurant business nor to have anything distract him from his original plan of selling whole
beans.

Schultz, however, branched out on his own and opened a coffee house named after Italy's
largest newspaper, The Daily, or Il Giornale. Two months later, the new store was serving more
than 700 customers a day, and it was selling 300 percent more than the Starbucks locations.

In 1987 the owners of Starbucks Coffee Company decided to sell their coffee business, along
with the name for $3.8 million. Schultz raised the money by convincing local investors of his
vision.

Now with over 11,000 outlets in more than 36 countries, Starbucks is the world͛s number one
specialty coffee retailer. Schultz philosophy: ͞We aren͛t in the coffee business, serving people.
We͛re in the people business, serving coffee͟ has shaped and continues to shape the company.

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Conceptual Skill would be the most important skill for Howard Schultz to have and as we can
see Schultz already had those skills. When he went to Italy and saw espresso bar it was his
conceptual skills that led him to the idea of introducing coffee bars in America. It was his
conceptual skills that led him to identify the opportunity. And it is the conceptual skills that lead
managers to take advantage of opportunities and oppose threats as well as make good business
decisions and lead him to innovation.

Human and Technical Skills would be the most important for a store manager because he is in
direct contact with employees. By Human skills he is able to work well with other people
individually and in a group and by technical skills he can guide people under his supervision to
efficiently perform specific tasks.

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SCIENTIFIC MANAGEMENT: It is concerned with improving the performance of individual

worker and finding the best way to do particular task.

Starbucks coffee producing department is the place where scientific management theory can
be applicable where they can divide and distribute jobs and find out the best way of performing
tasks in order to improve production efficiency.

ORGANIZATIONAL BEHAVIOUR: It is the field of study concerned with the actions or behavior of
people at work.

Organizational Behavior theory can be useful for Starbucks in the following ways:

1) Quality Service: For any retail store or operation requires high quality employees, since the
employees are in direct link to the customers and latter personifies the brand. Hence using
organizational behavior approach Starbucks can improve the quality and efficiency of their
employees.

2) Lower Turnover: Starbucks thorough unique and flexible working environment is probably
faced with lower turnover rates.

3) Flexible Work Environment: The apparently flexible work environment for Starbucks
encourages employees to be innovative, creative and to take chance.
SYSTEM APPROACH: System can be defined as a set of interrelated components with clearly
define boundaries working together to achieve an objective by performing three main functions
such as input, processing and output.

Using the system approach it is important for Starbucks departments to work together as one
unit. For example if the marketing and production department don͛t work in collaboration with
each other Starbucks as a whole organization would suffer.

Also using the system approach Starbucks must be aware of the environment its working in. For
example if the company opens an outlet in another country it must be aware of the
government rules and regulations and also the taste and trends of society there.

QUANTATIVE APPROACH: It involves applications of statistics, optimization models, information

models and computer simulations to management activities.

Quantative approach can be useful in the following ways:

1) Price: Starbucks can judge the amount of price to be charged on a product if the price is high
then no one will buy the product and if it͛s low then the business won͛t be able to maximize its
profits.

2) Customer Preferences: It can conduct and analyze surveys about customer͛s likes and
dislikes. This will help the business in improving their product, services and surrounding
atmosphere.

3) Sales Analysis: Starbucks can conduct sales analysis which can help them in forecasting future
sales and allocate required resources and also help them in budgeting.

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The three trends and issues are as follows:

ENTREPRENEURSHIP: Nowadays, businesses have become more competitive. So in order to

survive in this competitive environment, the manager should have entrepreneurship skills.

These skills includes

i)? Looking for Opportunities

ii)? Innovation
 iii)? Growth

Due to these skills, Starbucks has excelled and reached to the height of success. Starbucks
focused on growth i.e the reason they have been able to expand to 11,000 outlets in 36
countries. They also introduced many innovations in their product line. It is mostly implicated
on top line managers as they are the ones who make major business decisions.

WORKFORCE DIVERSITY: A workforce that͛s heterogeneous in terms of gender, race , ethnicity,

age and other characteristics that reflects differences.

Starbucks operates in many countries; therefore it consists of diverse workforce. So as a

manager it is necessary to be well-acquainted with the diverse backgrounds of individuals in
order to manage its workforce effectively. It is most applicable for the first line managers
because they are the ones who are in direct contact with employees.

LEARNING ORGANIZATIONS: Learning organizations that has developed the capacity to

continuously learn adapt and change.

In Starbucks black apron displaying the little "coffee master" are worn by employees who have
completed the coffee master course, which shows that Starbucks conducts many programs to
enhance the knowledge of workers. This implies mostly to middle level managers as they are
ones who are responsible for meeting the goals set by top level managers by managing the
workforce which includes enhancing their learning and knowledge.

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INTERPERSONAL ROLES: ?Involves people and other duties that are symbolic in nature.?

Schultz, as a figurehead, can be the greeting visitor, signing legal documents. He would attend
ribbon cutting ceremonies for new plants. He could be a leader responsible for motivating
subordinates and staffing, training. He could also coordinate activities of various project works.

INFORMATIONAL ROLES: Schultz can perform this role by monitoring reports, holding
informational meetings, making phone calls to rely information, holding board meetings, giving
information to media

DECISIONAL ROLES: Roles that revolve around making decisions and choices.
Schultz could organize strategies and review sessions to develop new programs. Develop new
ideas for innovation. He could be responsible for representing the organization on major
negotiations. Be involved in allocation of resources of all kinds.

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The Schultz philosophy for Starbucks; "We aren't in the coffee business serving people. We are
in people business serving coffee.͟

At first businesses used to focus on products. But with the passage of time businesses have
realized that their main purpose is serving the people. Schultz philosophy has shaped and
continues to shape the company. The company is now more focused on the five C͛s:
community, connection, caring, committed and coffee. Now the company doesn͛t only focus on
producing coffee rather all its activities are now driven to provide customer satisfaction by
giving them quality service and understand and meeting their needs, tastes and preferences.
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We as managers can learn the following from the Starbucks case study.

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Businesses traditionally used to mainly focus on their products. Their prime objective was to
manufacture mass products at low cost and hence make more profits. But now businesses have
grown smart, they realize the importance of people in their business. Now companies strive to
build better and long term relations with their customers by providing them with top notch
services and quality products. And that is exactly what Howard Schultz philosophy reflected:

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It is this philosophy of Schultz that has taken Starbucks to new heights. We as managers of
today need to realize this and shift our focus on our customers by providing them with best
quality service and products which is the key for businesses to survive in today͛s very
competitive world and also for the company to benefit in the long run.

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Entrepreneurship has three main themes: V .

When Schultz walked into an espresso bar he quickly saw the opportunity because such a
concept did not exist in America and if applied in America could be very successful. We can say
that Schultz was 




. We as managers need to be more
open to ideas and not get stuck just on routine day to day task. We need to think out of the box
and grasp on opportunities out there. If we won͛t our competitors will and we can be left
behind in the race.

Starbucks did not get stuck with just producing simple coffee. It got 
and launched
various other products such as hot and iced espresso beverages, coffee and noncoffee blended
beverages, Tazo teas, home espresso machines, premium chocolates, baked pasties,
sandwiches etc.

Thus we learn it͛s important to be innovative and meet the changing trends in customer͛s taste
and preferences otherwise business can become stagnant.
Schultz started with a small chain of espresso bars but he didn͛t stop there. He always looked
for
 and that is the reason why Starbucks today has over 11,000 outlets in
36 countries. As managers we always need to strive for growth and expansion. Grow and
expand to reach new marketplaces and new customers that will in return result in more
revenue and profits for the company.