Custom «Starbuck Corporation: Creating Customer Value and Profitability» Essay Paper

Introduction

Starbucks Corporation is a coffeehouse chain with a business-network spread in 55 countries across the world. Starbuck trades in a wide range of products which include drip-brewed coffee, coffee beans, hot and cold drinks, bottled water, teas snacks and also coffee-related items and equipment such as mugs and tumblers. it extensively undertake its business in United Kingdom, Canada and United States where it has over 700,  1000 and 11000 stores respectively while more than 17, 000 stores are spread  in more than 55 countries. However, most of its products are seasonal and designed to these local stores. Starbucks also extends its services to transport industry where it provides ice cream at grocery stores and coffee on the airplane. In addition it sells books, music, and film through the Starbucks Entertainment division and Hear Music brand.

Starbucks Corporation was started by three partners Jerry Baldwin, Zev Sigel and Gordon Bower in 1971 while basing their operations in Seattle, Washington.  Starbucks has steadily grown to be one of the world’s biggest retailer and specialty in coffee. It has received recognition and awards from different bodies’ world over. This paper centers its discussion on how learning and growth, competency development, corporate culture, leadership development, and measurement and appraisal drive performance and contribute to creating customer value and profitability in Starbucks Corporation.

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Learning and Growth

Learning and growth is a business strategy used to improve quality of services and products offered hence improved performance of a business in its market base. It is a component of balanced scorecard approach used in performance measurement in business. Learning and growthcreate better customer-designed products which increase the profitability of the business. This balanced scorecard approach majors in three distinct areas of business performance; improving employee capabilities, enhancing information systems capabilities and motivation, empowerment, and alignment of factors of production. This aims to satisfy present customers as they are retained, attracting more customers and improving employees’ productivity in the business.

Starbucks Corporation has employed learning and growth techniques in enhancing its customer value and profitability in different ways. Its leadership recognized the role of learning and growth in providing better modeled products and services to its customers thus trained its employers while providing ample environment for growth. More services were designed as people not only bought coffee as a drink but also got good environment to enjoy their coffee and socially interact without time limit. The business also incorporated changes in both local and global business environment to have a competitive edge against its competitors in the beverage market. The expansion of services and products in Starbuck in 2002 resulted into expansion of its market-base as more customers were attracted and retained in the business. These additional services and products also improved the quality of services and products offered hence increased profitability.

Moreover learning and growth helps business to improve in services rendering which enables it to compete favorably in its market. This would result into greater volume in its sales and thereby increasing its profitability. Starbucks management used this principle as employees were trained on both “hard skills” and “soft skills” as part of its strategy. Employees were trained on eye contact, smiling and greeting regular clients with their first names. This created a friendly environment which attracted more customers as they felt special in the business.

Starbucks enhanced employees’ productivity in their learning and growth strategy by providing development programs which equip employees to become store managers or district managers. This motivated and empowered its employees to provide satisfying products and services to its customers. These development programs also helped the business to retain its employees for a long period of time hence long-term investments could be done without loss of human skills and personnel. Such retention results into increased profitability of the business since production costs are minimized as much as possible. 

Competency Development

The success of business depends on the competency of its employees. This enables the business to achieve higher productivity hence increased profitability. The competency of employees cushions business against its competitors in the market. Competency development entails acquisition of required skills by the employees in the business for their maximum productivity and empowerment. The management also should be competent as it is charged with selection of employees in the business and their development. Competency development in business can be categorized into four classes; key or all employees, team, functional and leadership-management. Key or all employees’ competency development involves programs which help all employees to improve on their performance in the business. Employees become equipped to handle customers in their daily transactions hence better selling of business name

Starbucks Corporation undertakes competency development through their programs which enable employees to rise to a Shift Supervisor and a Retail Manager in Training Store and even further in their profession. In addition, Starbucks provide development programs for its employees to rise to the position of stores manager and district manager.

Leadership Development

At Starbucks, leadership development is a vital part of the business process because it ensures that every CEO successor will maintain the organizational culture. An organization need to develop and maintain a highly successful leadership development initiative. Leadership is any influence relationship that brings about change. Commitment is required in building and developing productive leaders. Leadership development enhances the success of an organization in the following way; the first one is employee productivity. Well trained leaders knows secretes of motivating employees. They are able to create a conducive atmosphere that makes the employees to work extra hard. When employees work harder the organization achieves greater success. The next point is inspiring leadership. Inspiration creates an ego on employees which boost their capacity to produce. When an employee feels motivated and inspired he will love the work that he is doing hence increasing quality production and innovation. Increased research and innovation creates opportunity for new ideas hence the success of the venture.

Leadership development creates effectiveness. Leadership effectiveness creates fewer problems and more achievements. Through innovation the employees are able to come up with better methods of solving problems and conflict within and without the business.  When leaders know the direction they need to take it enable them to help others hence the success of the business. Leadership development also creates profitability. Well trained leaders relate well with the employees. Good relations enhance profitability. On the other hand good relations enhance employee engagement and commitment. Leadership developments enhance customer satisfaction. This increases the demand of the products therefore high yield and profit. Leaders should be well trained to have a proper plan which can enhance their productivity. Leaders should also be devoted for continuous improvement.

Corporate Culture

Businesses strive for high level of productivity and profitability. Corporate culture is one of the measures to put in place. Corporate culture is a collective way of doing things which makes the whole difference with other business organization. Culture is what defines an organization. Culture does not work in isolation; it contains values, norms, working language, systems and symbols, beliefs and habits. In Starbuck Corporation, the employees are referred to as partners. This creates a sense of ownership and inspires performance within the organization. All employees, regardless of their position or responsibility, refer to each other as partners. Starbucks’ organizational culture promoted its set core of values with six guiding principles. These principles helped them to measure their appropriate decisions.

• “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.
• Develop enthusiastically satisfied customers all of the time.
• Contribute positively to our communities and our environment.
• Recognize that profitability is essential to our future success.”

Starbuck’s cultural values offer employees a sense of connotation to their work even if it is only floor sweeping. Another important aspect of corporate culture which is evident in Starbuck is that all partners (including part-time employees) are entitled to be given health care, be part of the Bean Stock program, as well as have a free pound of coffee every week. The Bean Stock program offers employees stock below the fair market value at intervals in one year. Moreover, Starbucks' employees are eligible for the 401(k) profit sharing plan. The Fortune Magazine rated Starbuck as one of the best corporation to work for because of strong corporate culture. Strong and adaptive culture has given Starbuck a strong competitive image. An organization with strong and adaptive culture fosters effective succession in the leadership ranks. Leadership should provide exemplary values to be followed by junior staff. They should uphold purposeful value in business and visions. These values and codes should be connected with their relevant areas so as not to loss meaning. An organization should invest in culture. This will create an image that new employees will try to fit in for proper continuation. This enhances great employer and customer loyalty. Strong culture attracts quality employees who are able to provide quality output. Good quality product attracts customers. This increases the demand of the product. Increase in demand lift the percentage of the profits up. On the other hand firing of customers is provided for by the business culture especially when the customers abuse the employees. Sometimes the customers may pose unrealistic demand on the employees which may facilitate them being fired.

The brand name of the company where baristas work for and the training that they receive all makes baristas be proud of. In Starbucks, upper management is more various than most of other large companies in the US. All of these factors have built the company’s reputation and contributed for their being progressive. 

Social responsibility is also an important part of Starbucks approach, which is emphasized as “the way we do business” as much as financial results.  This factor is expressed in various socially responsible actions at the community level where the stores are located, for example support for charitable organizations such as the YWCA and AIDS.  Starbucks has also enrolled in environmental awareness and “fair trade” programs in order “to help promote a sustainable social, ecological, and economic model for the production and trade of coffee”. (Starbucks Corporate Social Responsibility, www.starbucks.com.my/en-US/_Social+Responsibility/)

Starbucks also promoted corporate citizenship by developing the Share Planet Project that reflects its desire to conduct business in responsible manner (Starbucks shared planet, www.starbucks.com/responsibility/learn-more/starbucks-shared-planet)

“Long-term plans include improving corporate ethics by 2025 by: ethical sourcing, environmental stewardship, community involvement. Created International Youth Foundation, Give2Asia, China Education project” (Starbucks Corporation FISCAL 2006 Annual Report). With Starbucks’ unique culture has grown, the leadership has been carefully maintained and helped to grow the company’s culture more in the future.

Measurement and Appraisal Drive Performances Contribute To Creating Customer Value and Profitability

At Starbuck, employees are considered to be the most valuable resources of the company. This principle is inscribed in the mission statement which states that the Company seeks to provide great working environment as well as treat each employee with respect and dignity. The performance of any company is dependent on the conditions of work and the human resources. The management of Starbuck Company understands that the growth of the company is pegged on employees. It is worth noting that one of the major objectives of Starbuck Company is grow by making employees feel valued.

Starbuck Company stands out in their ability to identify market trends which enables them to adjust appropriately. A good example is their forecasting just before the economic downtown. Noticing that there would a decrease in traffic, they continued with their expansion strategy and launched numerous adjustments so as to keep up with their plans. As a result, their customer base was least affected and their profit margin was not affected.

Starbuck believes that the welfare of plants, people, and products are directly. Therefore, they endeavor to produce environmentally safe products. They also offer significant contributions to charities that emphasizes on the less fortunate, the AIDs victims, and children. They achieve this by developing innovative flexible measures that brings about positive change to all stakeholders. Starbuck also embraces the importance of fiscal responsibility in ensuring a friendly environment for the future.

The organizational culture of Starbuck is based on creativity and innovation. This is made possible through continuous development of new and exciting products that add customer value and at the same time ensure that the company remains profitable.   Starbucks believes that the reason their customers come back is the quality of the coffee and the quality of the experience. With the passion for the product, the company conducted a good and competitive strategy that created all this experience comes to life. As a result, a great success of the brand has been created by good leadership and management with a clear vision of core competence. Recently, the company development two new products which have worked in increasing the customer base as well as boosting the profit margin. These products are; new 4-cup thermal coffeemaker which was introduced to the market recently and the Starbucks 'DoubleShot' Espresso beverage.

At the close of 2001, the company developed Starbuck Card which is important gifts to the customers since it enables to reduce the time spent at the cash register. This in turn has enhanced the customer’s experience. As a matter of fact, the customers have relayed a positive response to the introduction of Starbuck Card. Starbucks believed that return for the customers’ money and loyalty is one of the ways to obtain customer satisfaction. Through innovation and creativity, Starbuck Corporation seeks to introduce new products as well as fresh distribution channels that will help in providing recognized and respected brands all over the world. With research and development, Starbuck Corporation has continued to climb up the ladder among the fastest growing companies in US. In 1987, the corporation began with only 17shops but now they have over 5000 shops spread both locally and internationally. The corporation has a strategy of opening 10000+ shops worldwide.

Financial and accounting: Starbuck Corporation has had a stable earnings and returns since their inception in the market. Despite having face growth challenges, the company has been able to maintain healthy operations while at the same time funding its expansion projects. This implies that the profitability of the company is not compromised at the advantage of expansion. For example, the first quarter of 2011 fiscal year, the company recorded a 21 percent increase (from $ 667 million to $ 805 million) in revenues and earnings. They aim at ending each fiscal year with virtually no debts at all.

Starbuck offers coffee and beverages which are of high quality since their employees are competent. Even though many of its competitors often price their products slightly below Starbuck prices, they still cannot outwit Starbuck based on quality. This has assured a constant customer base for the Starbuck products. Many supermarkets demand to stock products from Starbuck.

Starbuck Company a three-strategy model which is responsible for its success in the market. Outstanding quality, excellent services in stores and increased expansion to new markets both locally and globally. With these three strategies, the company has been able to accrue revenues and earnings without compromising on customer satisfaction. In the overall Starbucks experience, the human touch and customer intimacy is a critical factor because they helped to make each client feel special and well looked after. This point help Starbucks to create relationships and retain the personal bonds with their clients which in turn creates customer loyalty

Conclusion

Overall, Starbuck Company stands out as a strong, well established and rounded company. Contrary to their competitors, Starbuck Company has built a very strong brand image across the globe which enables them to control a greater share of the market. The ability to foresee changes in the market trends as well as consumer behaviors has enabled them to adjust appropriately so as to increase their profit margin. The corporate culture coupled with a focus on employee competence in Starbuck Company paves way for high levels of productivity. Despite its rapid and continuous growth strategies, Starbuck has remained financially stable. In addition, the company has built strong relationships with its suppliers which have helped to maintain quality services to the customers. ‘Starbuck everywhere’ approach has increased foot traffic for all the stores in US. As a result customers are able to get Starbuck in various places within the town.

The behavior of a customer can help a company in having more innovations, getting more market penetration, attracting customer value, and maintaining sustainability. The products and services that Apple offers have a collection of values and benefits to consumers. Therefore, to contribute to customer value and profitability, the company has to satisfy their consumers. This can involve processes and benefits that are accompanied by the products for the consumers. The behavior of the customers plays a great part in developing products that satisfy the needs and patterns of the consumers. The feelings, thoughts, consumption values, and personal values have to be considered. This is because with the technology world things are evolving and changing continuously. The activities of the customers should be studied and understood to know their needs and expectations.