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starbucks_finall_submit.docxRunning Head: Starbucks Strategies 17
Starbucks Strategies
Aeshah Abdullah
The American University of Kuwait
Author Note
This paper was prepared for MGMT 304, Section 2, taught by Professor Eleswed.
Table of Contents
History and Background 3-4
Corporate Business strategy 4-5
Corporate structure…………………………………………………………………………. 5
Corporate stakeholders 6
Corporate identity, image and reputation 6-7
Internal communication strategies 8
Corporate social responsibility strategies 8-9
Starbucks advertising strategy 9-10
Media relations strategies…………………………………………………………………...10
Corporation investors’ relations…………………………………………………………….10-11
Government relations strategies…………………………………………………………….11-12
Crisis Communication strategies……………………………………………………………12
Recommendation…………………………………………………………………………….12-13
References……………………………………………………………………………………14-15
History and Background:
According to Gregory that Starbucks began from a little coffee shop in Pike Place market in Seattle Washington. The organization's main goal and objectives have permitted it to prevail in a quick pace world, and Starbuck's steadfast clients have stuck by their most loved brand through it all. The Starbucks experience is one of a kind from all others because it helps the customers feel comfortable and relaxed as they were in their second home. The history and advance of the organization have added to the Starbucks way of life we know today.
The original founders of Starbucks were Jerry Baldwin, Zev Siegel and Gordon Bowker. The first two were teachers and the third was a writer. The three partners had established their first Starbucks Store in Seattle’s Pike Place Market in 1971, as soon as the three gathered 8000$ and borrowed loans as their capital. The credit of course goes their friend Alfred Peet who is the owner of Peet’s Coffee and Tea. He Gave Baldwin, Siegel and Bowker inspiration to open their first coffee shop which is Starbucks to sell high quality coffee. Peet even helped them by supplying them with his fresh green coffee beans to begin their projects. In 1980, Starbucks had become a huge success and opened six other stores in Washington. However, Zev Siegel decided that he wants to walk on to his own path to start other business and left Starbucks. Later, Howard Schultz who was a salesperson for Hammerplast company had become interested in Starbucks business after he noticed that Starbucks was buying a large quantity of plastic brewing thermoses from Hammerplast. After that, “Baldwin hired Schultz as the head of marketing” in 1982. As soon as Schultz joined, he went abroad to attend an international houseware in Italy. During Schultz trip he was fascinated with the of the coffee shops in Italy because he saw many people gather together to drink espresso in a cup for many hours and as if the coffee shops created their own community. Not only the customers enjoyed their time sipping coffee, but also they enjoyed the modern style inside the coffee shops. Schultz thought it would be a good idea if he brought the community and coffee shops together in America. After, Schultz informed Baldwin by his new idea but, Baldwin disliked Schultz idea because Baldwin’s main target was to sell fresh made coffee beans. Nevertheless, Baldwin let Schultz to test his idea to bring people and coffee into the Starbucks by putting espresso bar in one of the six stores.
Howard Schultz saw his idea which is bringing people and coffee together was successful, he decided to leave Starbucks in 1985 to start by his own coffee shop called Il Giornale. Schultz had bought Starbucks from Baldwin Gordon Bowker for 3.7 million$ after he raised enough money from his shop called Il Giornale and with the help of local investors. Bill Gates who is the owner of Microsoft company was one of the local investors. In 1997 Starbucks made to the top and opened more stores as a result of their success. (gourmet-coffee-zone.com.) Today Starbucks have more than 24,000 Stores in 70 countries around the globe.
Corporate Business strategy:
Starbucks vision is “to establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow.”
Starbucks mission Statement is “To inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.”
Starbucks goals are the following:
1) “Making coffee the world’s first sustainable product by doing our part to improve the lives of at least One Million people in coffee communities around the world”
2) “building and operating the world’s largest green retail business”
3) “creating pathways to employment for 1 million people”
4) “strengthening communities by welcoming all and creating impact on issues that matter” (https://www.starbucks.com/responsibility/global-report)
Starbucks objectives:
1) “Is to Grow by making employees feel valued”
2) “Is to Recognize that every dollar earned passes through employees hands”
3) “Use the pays, benefits and opportunities for personal development to help gain employee loyalty and become difficult to imitate.” (https://www.scribd.com/doc/48355880/Starbucks-Case-Study)
Corporate structure:
This chart is from this source (Communication in the team: Leader’s job and Business Structure.)
Corporate stakeholders:
According to Thompson that Starbucks keeps on enhancing its corporate social duty practices to address the worries of its various stakeholders. The following are the stakeholders in Starbucks Coffee's business:
Corporate identity, image and reputation:
Starbucks had announced to hire 10,000 refugees around the glob “the day after Trump implemented his initial refugee travel ban.” YouGov which a company that keep up with customer perception with a certain brand shown a research that the decision of hiring refugees had “damaged the brand -- causing its brand perception to fall by two-thirds.” Starbucks stated that their brand perception hadn’t any negative impact. Moreover, Howard Schultz the CEO of Starbucks clarified that the announcement of hiring refugees did not harm Starbucks operations. On the contrary, it “made our partners and our customers proud of the compassion of the company." (Wattles, J., & Harlow, P. (2017, March 22). Starbucks to add 240,000 jobs worldwide by 2021. Retrieved April 17, 2017, from http://money.cnn.com/2017/03/22/news/companies/starbucks-howard-schultz-donald-trump/
© 2017 Cable News Network CCN Money the wesite)
Starbucks have been ranked as “the third most admired company in the world, according to Fortune magazine’s latest research, and is the number one company worldwide in the food service industry.” Furthermore, Starbucks is” ranked number one in the areas of innovation, people management, use of corporate assets, social responsibility, quality of management, financial soundness, long-term investment, and quality of products and services.”
Internal communication strategies:
Starbucks Social Media Team communicates with employees through social media platforms like Twitter, Instagram and Facebook. Starbucks made connections with employees through various social media platforms to be close to their employees as friends, but not to strictly monitor their actions. According to Amy Alcala, who is the vice president of Starbucks Partner Communications and Engagement, Starbucks uses social media platforms for two reasons to get to know more about their employees and make changes to the way the company communicates. The idea of implementing the social media platforms began in 2011. On March 2011, an earthquake and tsunami had accrued in Japan. So, “Alcala and her team in the Seattle headquarters” wanted to communicate with their employees in Japan. To communicate with their employees, the Social Media Team created an account on Instagram to send “encouraging messages to partners in Japan.” “Using the hashtag #SupportJapanPartners, the social channel became a place for partners around the world to show concern for those who were devastated by the disaster” (Partner (Employee) Experience, 2014). (Sharing (Some) Secrets of the Starbucks Partner Social Media Team. (2014, May 23). Retrieved April 20, 2017, from https://news.starbucks.com/news/sharing-some-secrets-of-the-starbucks-partner-social-media-team)
Corporate social responsibility strategies:
Starbucks has “more than 25,000 stores in over 75 countries, so too has our commitment to create global social impact.” Starbucks has four social responsibilities strategies which are the following: Source ethically and sustainably, create opportunities, lead in green retail and strengthen communities. First, sources ethically and sustainably means that Starbucks buy high quality products and from a good source. Behind Starbucks success are the “farmers and suppliers who grow and produce” their product. Furthermore, Starbucks helps “people thrive helps ensure the long-term sustainability of the premium products” they provide. “Whether it’s Arabica coffee, tea, cocoa or manufactured goods”, Starbucks sworn to purchase and source from high quality products. For example, With the help of Starbucks customers, Starbucks is “donating millions of disease-resistant trees to help farmers fight threats like coffee leaf rust.” (https://www.starbucks.com/responsibility)
Second, creating opportunities means that Starbucks is proving for people education and job opportunities to change their lives. Moreover, Starbucks always find a way to balance between making profit and helping the community. For example, people between the age of 16 and 24 that are unemployed and not receiving education called “Opportunity Youth”. Starbucks wants to help them someway overcome obstacles in their lives. So, Starbucks had sworn in 2015 that they will employ “10,000 Opportunity Youth by 2018 because they represent our future workforce as well as our future customers.” Third, lead in green retail means that Starbucks is willing to make our planet greener and help decline environmental issues. For example, Starbucks “reduced water use by 26.5% through retrofits to plumbing, water systems and enhancements to new store design.” In 2015. (https://www.starbucks.com/responsibility) Finally, strengthening communities means that Starbucks encourages people from various countries to make their community a better place. For example, Starbucks created Global Month and Service to promote people to help their community. So Starbucks gathered “60,000 volunteers from 30 countries and four continents” Moreover, “Volunteers contributed more than 150,000 hours of service during the month, transforming communities in need by participating in projects ranging from gardening and painting to refurbishing schools and renovating parks.” (https://www.starbucks.com/responsibility/global-report/community-involvement/community-service)
Starbucks advertising strategy:
Starbucks seven successful marketing strategies are following:
1) “Perfect Cup of Coffee”- “Starbucks history has shown that they place a huge emphasis on product quality.” Although their coffee is a little expensive, still their coffee had led to please Starbucks customers “with its rich, delicious taste and aroma.”
2) “Third Place”- “From the very beginning, the Starbucks marketing strategy has focused on creating the “third place” for everyone to go to between home and work. Creating this unique and relaxing “experience” and “atmosphere” for people has been very important for the company as they have realized that this is one of the strongest concepts attached to the company, to which customers have been strongly attracted.”
3) “Customer Satisfaction”- Customers comfort in Starbucks store is very significant for Starbucks company. “From entrance to the store to the very last drop of their coffees, it is a must that customers feel the uniqueness of enjoying their Starbucks coffee experience.”
4) “Creating a Starbucks Community”- on Starbucks official website Starbucks promote customers to talk about their experiences in Starbucks stores. Moreover, Starbucks engage with the customer’s discussion.
5) “Smart Partnerships”- “Starbucks Coffee Company has been known to create strategic partnerships that demonstrate the fact that another way to grow your business is to partner smart.”
6) “Innovation”- Starbucks thinks of new ways to “to add to their products or services.” Starbucks add new flavors for their coffee, “more food on their menu, and even became one of the firsts to offer internet capability in their stores.”
7) “Brand Marketing”- “The Starbucks marketing strategy has always focused on “word-of-mouth” advertising and letting the high quality of their products and services speak for themselves.” (http://www.voteforus.com/starbucksmarketingstrategy.html)
Media relations strategies:
“Starbucks Coffee literally takes a “newsroom approach” to its media relations across its global network, which includes well-trained in-house teams and public relations agency support.” “Starbucks communication team” make sure that Starbucks new announcement are posted on a “editorial calendar.” Moreover, “Starbucks communications team” uses 3 types pf media which are “mix of traditional, hybrid, social and owned media” First, the mix of traditional and hybrid means that “ Starbucks in- house communications teams structures itself to reflect the different media “beats” from national business to consumer lifestyle to ethical and environmental news. Moreover, “Starbucks in- house communications teams” make sure that they put Starbucks announcements on the “editorial calendar.” “Content pushed through the Media Clover Leaf comes in all forms, including photos, video, infographics and by-lined articles.” Second, Starbucks is using the social media approach to engage with different individuals by using four social media platforms. For example, Starbucks uses Facebook to combine “opportunities to share content alongside impactful offers and promotions which rewarded the online community and encouraged more brand interaction” Also, Starbucks had “over 34 million fans on Facebook” Another example, Starbucks had “3.5 million on Twitter, which has led it to be ranked as one of the top Twitter brands behind Samsung, ITunes and Nasa.” Final example, Starbucks uses YouTube and Instagram to encourage different individuals to express their opinion about Starbucks. Third, an example for owned media is that Starbucks created a account in twitter which is “@StarbucksNews” to announce their news and make updates for the media. “https://books.google.com.kw/books?id=OmHABgAAQBAJ&pg=PA94&lpg=PA94&dq=starbucks+media+relations&source=bl&ots=ShGsKnw9kP&sig=k551GWOzvAB3aSfuOVyp63tJ5UU&hl=en&sa=X&ved=0ahUKEwiF6vaSmPHTAhUlCcAKHVdPAikQ6AEIVTAK#v=onepage&q=starbucks%20media%20relations&f=false”
Investors relations strategies:
Starbucks have six Investor relations strategies are the following:
1) “Financial Highlights, Achievements”- “Starbucks highlighted the interdependence of business success with driving social impact at scale and cited Starbucks returns over the past five years” For example, Starbucks gave back 10 billion dollars for the shareholders “via dividends and share repurchases, with an average growth rate of 23% over that period.”
2) “Innovation in Customer Experience and Partner Benefits”- For example, Starbucks had “Opened in 2014, Starbucks first Roastery located in Seattle is already serving as a foundation for the company’s coffee innovation pipeline, providing a halo to the rest of the business.”
3) “Advancing the Digital Flywheel Globally” - For example, Starbucks offers “the largest and most robust mobile ecosystem of any retailer in the world, with over 13 million Starbucks Rewards members, approximately 9 million mobile paying customers, with one out of three now using Mobile Order & Pay, and more than $6 billion loaded onto prepaid Starbucks Cards in North America during 2016 alone.”
4) “China Experiences Accelerated Growth, Grounded in Starbucks Brand and Innovation”- For example, Starbucks operates “more than 2,600 stores in 127 cities in China and employs nearly 40,000 partners, opening over a store a day – a growth rate that will continue to accelerate well into the future.”
5) “Starbucks Doubles Down on Hiring Commitments”- Starbucks had declared that “plans to create more than 240,000 jobs globally (68,000 in the U.S.)” Moreover, Starbucks plans to expand their chain by opening “12,000 new stores globally and 3,400 new stores in the U.S.”
6) “Starbucks Shareholders Elect New Board Members”- “ The company’s shareholders elected Rosalind Brewer, former President and Chief Executive Officer of Sam's Club; Jørgen Vig Knudstorp, Executive Chairman of the LEGO Brand Group; and Satya Nadella, CEO of Microsoft Corporation, to the Starbucks Board of Directors, among other re-elected directors.” (http://investor.starbucks.com/press-releases/financial-release/2017/Starbucks-Outlines-Strategic-Growth-Agenda-and-Elevated-Social-Impact-Commitments-for-Next-Wave-of-Profitable-Growth-at-25th-Annual-Meeting-of-Shareholders/default.aspx)
Government relations strategies:
Starbucks was the type of company that doesn’t like to engage in political affairs. However, when they nearly lost “a key tax law deduction relating to coffee imports was a profound wake up call” After that, Starbucks learned the importance of engaging in “political culture.” The reason of Starbucks expansion is that the company is operating in different countries around the globe “with different political and governmental structures.” Moreover, Starbucks learned that business and politics are the key to a successful company. “That generally meant local hire, local control, political controls, tariffs, and importing not just intellectual property but specialized products such as trademark coffee into countries that had no legal regime for such importation” Furthermore, overtime Starbucks learned to get help from the U.S government in order to expand globally. (https://books.google.com.kw/books?id=9vMABAAAQBAJ&pg=PA123&lpg=PA123&dq=Starbucks+manages+government+relations&source=bl&ots=YrjSz6zmJt&sig=93E-BtZT2EqfC1XzIwDmqBCjo1M&hl=en&sa=X&ved=0ahUKEwiq0tTZuvjTAhVJL1AKHX--DQwQ6AEISTAI#v=onepage&q=Starbucks%20manages%20government%20relations&f=false) (pg.124)
Crisis Communication strategies:
Three steps that the Starbucks staff and crisis management team go through during the crisis which are the following:
1. “Identify the crisis”- For example, measure the heat of the situation and gather information.
2. “Assess and review crisis”- For example collect the facts of the situation and contact crisis management team though a “conference call, face to face.”
3. “ Meet and plan crisis response”- for example, “Plan a crisis response strategy and ensure execution”
(https://abigailbrennan.files.wordpress.com/2014/04/starbucks-crisis-management-plan1.pdf)
Recommendation:
a) Internal communication strategies:
· Starbucks should provide face-to-face meetings between employees and managers in every Starbucks store at least one a month to get a clear response
· Starbucks should provide Skype which is an online app that quickly helps contact employees through a video around the globe.
b) Corporate social responsibility strategies:
· Starbucks Should help people of all ages not just the “opportunity Youth” because if they educate and employ the elderly with the youth, they might learn from each other based on their experiences.
· Starbucks should not only reduce water usage, but also provide recycle bins in every Starbucks store around the globe to save the environment.
c) Corporate advertising Strategies:
· Starbucks should use traditional media more like Television, newspaper and magazines to spread their brand.
· Starbucks should provide cheaper types of coffee because some people can’t afford an expensive cup of coffee in Starbucks.
d) Media relations strategies:
· “Starbucks in-house communications teams” should create a Starbucks app to announce the new announcements quickly.
· Starbucks should use Skype app because its free, cheap. Moreover, Starbucks can make a conference call through Skype.
e) Investors relations strategies:
· Starbucks should provide and Email or Skype app to directly contact with the CEO instead of face-to-face meetings.
f) Government relations strategies:
· Starbucks should inform the government before doing any huge projects to make Starbucks relationship with the government stronger.
· Starbucks CEO should engage in political activities in the future to make his company’s chain larger.
g) Crisis communication Strategies:
· Starbucks should contact the crisis management team before they identify the situation to inform them that they are facing a problem.
· After they knowing the heat of the situation, then they put a plan to reduce the danger of the situation.
References:
Gregory, L. (2015). Starbucks Coffee’s Vision Statement & Mission Statement. Retrieved from http://panmore.com/starbucks-coffee-vision-statement-mission-statement
http://gourmet-coffee-zone.com/starbucks-history.html
Communication in the team: Leader’s job and Business Structure. (2013, September 25). Retrieved April 13, 2017, from https://leaderanalysis.wordpress.com/communication-in-the-team-leaders-job-and-business-structure/
Starbucks Coffee Internaional. (n.d.). Retrieved March 10, 2017, from https://www.starbucks.com/business/international-stores (more than 70 stores)
(https://www.starbucks.com/responsibility/global-report)
(https://www.scribd.com/doc/48355880/Starbucks-Case-Study)
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Communication in the team: Leader’s job and Business Structure. (2013, September 25). Retrieved April 13, 2017, from https://leaderanalysis.wordpress.com/communication-in-the-team-leaders-job-and-business-structure/ (chart)
Thompson, A. (2017, January 31). Starbucks Coffee's Stakeholders: A CSR Analysis. Retrieved April 13, 2017, from http://panmore.com/starbucks-coffee-stakeholders-csr-analysis (pulished by panmore Intitute)
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(http://www.abstrategic.com/2009/11/27/corporate-identity-starbucks-changing-better-than-most/)
(http://www.abstrategic.com/2009/11/27/corporate-identity-starbucks-changing-better-than-most/ )
(http://www.abstrategic.com/2009/11/27/corporate-identity-starbucks-changing-better-than-most/)
Wattles, J., & Harlow, P. (2017, March 22). Starbucks to add 240,000 jobs worldwide by 2021. Retrieved April 17, 2017, from http://money.cnn.com/2017/03/22/news/companies/starbucks-howard-schultz-donald-trump/
Fortune Names Starbucks 2017's Third Most Admired Company. (2017, February 16). Retrieved April 15, 2017, from https://news.starbucks.com/news/fortune-most-admired-company-2017 (published by Starbucks Corparation 2017)
https://news.starbucks.com/news/sharing-some-secrets-of-the-starbucks-partner-social-media-team)
(https://www.starbucks.com/responsibility)
(https://www.starbucks.com/responsibility)
(https://www.starbucks.com/responsibility/global-report/community-involvement/community-service)
(http://www.voteforus.com/starbucksmarketingstrategy.html)
(https://abigailbrennan.files.wordpress.com/2014/04/starbucks-crisis-management-plan1.pdf)
Employees
Customers
Suppliers
Evironment
Investors
Government
