Starbucks: Managing the Company

Brief overview

The Starbucks Company started in the year 1971 at Pike Place Market in Washington, United States of America. It was started by entrepreneurs Jerry Baldwin, Zev Siegel, and Gordon Bowker. Their business idea was an inspiration from a businessman Alfred Peet who used to sell good quality coffee beans and equipment. The entrepreneurs initially started by buying green coffee beans from their mentor for the first year before they started buying from the farmers directly. In 1982, the company employed Howard Schultz to head the department of retail operations and marketing as the director. In 1984, the company purchased Peet’s business and they incorporated it into their business. In 1987, Starbucks Company started to expand very quickly.

The company is one of the largest companies in the world in terms of scope and capital base. It opened a branch outside Seattle, British Columbia, and Chicago. Currently, the company has a network of branches and retail stores in more than 40 countries (Pressler & Margaret p. H1).

Chief Executive Officer

The Starbucks Company is headed by the Chief Executive Officer, Howard Schultz. The Chief Executive Officer has a bachelor’s degree in communications. From school, he worked as a salesman for Xerox Company where he rose to become the vice president of the organization. In 1981 he noticed a retail store in Seattle that was buying drip coffee makers in large numbers. He got interested to know more about the company and visited the Starbucks Company. He got attracted to the company’s dedication in its bid to provide high-quality coffee beans to its customers and applied for a job as the director for retail operations and marketing (Frank & Stephen p. C1).

While on official duty in Milan, Italy, he learned of the coffee bar scenario. Back in the United States, he advised Starbucks to emulate and start one coffee bar as an experiment. He resigned from Starbucks the following year and started his coffee bar. In 1987, he had raised enough capital such that he bought two founding members of Starbucks. They merged the two firms and the joint venture was named Starbucks Corporation.

Howard Schultz became its Chief Executive Officer. By that time, the company had 17 outlets in Seattle and manpower of 100 employees (Theodore & Sarah pp. 60-62).

Through good and wise steering of the company’s Chief Executive Officer Howard Schultz, the company has experienced steady growth to assume one of the largest companies in the world. The chief executive officer has for the years struggled to retain the company’s culture and goals by simplifying the leadership of the company to appear like a small company (Ordonez & Jennifer p.B3).

Product range

Starbucks Company was started to deal with the business of buying whole bean coffee directly from the farmers, roasting them, and eventually selling them through their network of outlet branches all over the world. However in 1984, upon the employment of Howard Schultz to head the marketing department, He advised the owners on the need to diversify their products. The company then introduced a variety of products which include brewed coffee, Italian beverages, and a variety of pastries and confections besides selling beverage-related equipment. Currently, it also produces beverages that are ready to drink. They include bottled beverages, chilled coffee, and ice cream. The company has over 40,000 suppliers. Its yearly revenue is over $ 4.1 billion. Due to this, it was rated 425th out of the first 500 companies with the highest revenue. Due to good human management, it was ranked 34th in the first fortune100 best companies employees would wish to work (Schultz p. C 2).

Organization

The leader should be able to create a good and conducive working environment. Proper management of human resources ensures both intrinsic and extrinsic motivation. He can monitor business situations by gathering all necessary information whether internal or external that is important to the organization’s growth. The leaders should ensure that the organization has in place a good mechanism that enables it to have and uphold a chain link of external contacts through which it gathers information. The leader is the spokesperson of the organization. He or she is mandated to communicate on behalf of the organization on matters concerning its operational performance and strategies so that all its associates can accurately assess the performance of the organization. He or she should establish links with other organizations and individuals who matter to the business so that it can have a good ground for negotiations (Weiss & Naomi p.8).

The leader should be able to design and instigate the required change to the organization’s structures to accommodate changes beneficial to the organization. This means that the leader should have entrepreneurial skills. Leaders have a role in directing and controlling how the organization’s resources are used through developing an efficient and proper resource allocation mechanism. Leaders should ensure that there is efficient communication through the good flow of information and instructions either vertically or horizontally within the organization. He or she should ensure that facts and valuable information reach the subordinate staff in time. The leader should lay down proper mechanisms on how to deal with unexpected occurrences and breakdowns that can cause unnecessary delays in the progress of the operations. He or she should be able to handle all disturbances whether internal or external that can affect the flow of activities. Being the senior-most employee of any organization, the leader has a role to represent and perform ceremonial duties on behalf of the organization (Abramovitch pp 25-26).

Being the senior-most employee of the Starbucks Company, Howard Schultz was earning a monthly salary of $1.2 million and in the year 2008. However, his compensation value for the year was $9.7 million excluding the bonus. He received a further $7.8 million as perks for personal security, retirement plan contributions, and life insurance benefits. Today Starbucks Company has over 74000 employees. Its headquarters are located in the Seattle United States of America. It has more than 3,800 retail outlets in over 40 countries. The management of the company’s human resources is directed by its mission statement that stresses commitment to human resource development. The management provides a good working environment where respect and dignity of the employees are highly maintained (Schultz p. C1).

The chief executive officer plays a major role in motivating the employees and making them feel a part of the organization. The management ensures that the company adopts the latest technology in its operations. It now uses new technology, the radio frequency identification technology to improve its efficiency in meeting its customers’ needs as well as cutting down on operational costs. Due to this technology, the company has developed a system to monitor all its raw materials and finished products in transit. With its many varieties of products and wide geographical coverage, the company has succeeded in global enterprise due to its good marketing strategies. It has made a great impact as one of the most respected companies in the world. Its major outlets are located in Japan, New Zealand, Australia, Thailand, Germany, South Korea, Taiwan, Philippines, Canada, United Kingdom, and Mexico (Strauss & Karyn p 163).

Stock value

Starbucks Company focuses much of its attention and growth on profitable areas. It aggressively concentrates its stores in areas of the world with fast-growing economies such as Russia, Brazil, China, and India. Starbucks Company has a stock value ranging between $20.68 in the year 2008 and $9.12 this year per share with over 18 million shares traded in a stock exchange. However, the company has an asset base of over more than $600 billion.

Conclusion

Starbucks Company has a system of introducing its various products in phases. It concentrates on products that are fast-moving within that country. It has segmented its market based on taste and preference. It sells coffee, tea, and juices in 25 retail stores, whole coffee beans, and coffee-related equipment are sold through other 11 outlets. This is in a bid to diversify the market for greater returns. Starbucks Company is and will remain one of the leading global enterprises in the world (Daniels & Cora p.139).

Works cited

Abramovitch, “Miracles of Marketing: How to Reinvent Your Product,” Success, 1993.

Daniels & Cora, “Mr. Coffee,” Fortune, 2003.

Frank & Stephen, “Starbucks Brews Strong Results Analysts Like,” Wall Street Journal, 1994.

Ordonez & Jennifer, “Starbucks’ Schultz to Leave Top Post, Lead Global Effort,” Wall Street Journal, 2000.

Pressler & Margaret, “The Brain Behind the Beans,” Washington Post, 1997.

Schultz, “By Way of Canarsie, One Large Hot Cup of Business Strategy,” New York Times, 1994.

Strauss & Karyn, “Howard Schultz,” Nation’s Restaurant News, 2000.

Theodore & Sarah, “Expanding the Coffee Experience,” Beverage Industry, 2002.

Weiss & Naomi, “How Starbucks Impassions Workers to Drive Growth,” Workforce, 1998.