Human Resources to Implement Strategy at Starbucks - Case Study Example

Case for Critical Analysis: Starbucks Coffee Student’s Name Institutional Affiliation Course Name Date of Submission Case for Critical Analysis: Starbucks Coffee Introduction Starbucks is an American multinational coffee maker and provider. The restaurant was founded in 1987 and has since grown to become a global brand (Starbucks, 2016). The company’s headquarters are based in Seattle, Washington DC and currently operates more than 4,700 coffee stores globally (Samson and Daft, 2012). Starbucks has registered success despite the stiff competition it faces from other reputed brands, such as McDonald’s, Wendy’s, Taco Bell and Burger King among others (Starbucks, 2016). However, the success of Starbucks is largely attributed to effective strategies that the firm has adopted spurred by effective leadership of Schultz and his successors. This report begins by describing Porter’s competitive strategies that Starbucks uses based on the case study. The report proceeds to discuss how Schultz uses leadership, structure, information and control systems and human resources to implement Starbucks strategy. Lastly, the report international market expansion strategies that Schultz adopts based on the case study. Porter’s Competitive Strategies that Starbucks is Using In 1985, Michael Porter came up with a set of generic strategies that a company can pursue to gain a competitive advantage over rivals in the market (Porter, 2008). The generic strategies include cost leadership, differentiation and focus (fig. 1). Fig. 1 Porter’s Generic Strategies of Competitive Advantage Source: Porter (2008) Cost leadership is a strategy that involves a company choosing to become the lowest cost producer in a market (Eldring, 2008). By being a low cost producer, a company is able to charge relatively lower prices than competitors, which enables such firms to attract many customers, including the cost conscious customers, thereby resulting in increased sales and profits. Differentiation strategy is a strategy that involves a firm trying to make its products and services distinct from those of competitors in an industry. By making products unique and desirable to customers, a firm is able to differentiate from rivals, thereby resulting in a competitive advantage. Focus is a generic strategy that involves a company segmenting its market and offering products or services that suits the need of that niche market in the best way possible. Focus strategy can be either differentiation focus or cost focus. From the case analysis, it becomes apparent that Starbucks has been using differentiation strategy to gain a competitive advantage over its rivals. The case indicates that Starbucks is working very hard to distinguish its services and products from those of its rivals in the market. It does thing by trying to make its coffee unique and more appealing to customers. Additionally, the company is also working hard towards maintaining control over its coffee’s quality and establishing a good corporate image that customers in all its market would want to associate with. In fact, the case indicates that, despite the high prices that Starbucks charge for its cup of coffee, customers are always willing to pay this extra price because Starbucks provide quality coffee that no competitor can match and the fact that Starbucks has managed to create a good corporate image that customers are willing to associate with. Besides, Starbucks exceptionally high quality services, strong marketing strategies and prestige to attract and retain customers. Ways in Which Schultz Uses Leadership, Structure, Information and Control Systems and Human Resources to Implement Strategy at Starbucks Leadership The case indicates that the success of Starbucks is largely attributed to effective leadership provided by Schultz. Schein (2010) defines leadership as the ability to manage and exert positive influence on the followers. Therefore, to ensure effective implementation of Starbucks strategy, Schultz has adopted effective leadership styles. Firstly, Schultz believes that the best way to promote the success of Starbucks is to hire top-notch-talents that are smarter than him. After hiring talented employees, he empowers them by giving them the autonomy to perform their job in the way they deem fit. This way, it emergence that Schultz adopts a laissez-fair leadership style of managing its people are he gives them the space to work without interference (Sadler, 2003). Schultz also adopts transformational leadership style in influencing his subordinates to work towards the realization of Starbucks strategy. In this respect, the leader has created Starbucks vision that he has made his employees aware of and inspires them to work hard to ensure the achievement of the company vision (Giuliani and Kurson, 2003). Besides, Schultz leads his followers by motivating them to ensure that they increase their commitment level and increase their efforts to ensure effective implementation of Starbucks strategy. Structure Lafley and Martin (2013) argue that the structure of an organization has a huge impact on implementation of strategy. From the case study, it becomes apparent that Schultz adopted organic and loose organizational strategy to ensure ease of implementation of Starbucks strategy. Schultz understands that having tighter controls and procedures would obstruct service delivery, as well as destroy Starbucks creative feel. As such, Schultz created the right organizational structure that allowed its talented workforce to work freely and cope up with the managerial issues associated with growth note Samson and Daft (2012). Human Resource Human resource management is critical to strategy implementation. Human resource management ensures that a firm has the right talents that are highly motivated to work towards strategy implementation. According to the case study, Schultz made good use of HR to ensure effective implementation of Starbucks strategy. Firstly, the case study shows that Schultz preferred hiring employees with experience from some of the reputable firms. For instance, to implement an effective computer network that links Starbucks Empire, Schultz hired an IT specialist from McDonald’s that enabled Starbuck create a point-of-sale system that enabled Schultz and other Starbucks managers to track sales easily (Samson and Daft, 2012). Secondly, Schultz believed that, to get the best from its workforce, they must be equipped with the right talents. As such, Schultz invested heavily on training and development of its workforce to ensure that they acquire the right skills needed to enable them deliver quality products and services. Additionally, Schultz hired well-trained and talented baristas to ensure that Starbucks coffee is made following the culture and tradition of Starbucks that focuses on quality coffee (Samson and Daft, 2012). Information & Control Systems Information and control systems are critical to effective implementation of strategy. In this case study, effective management of information and control system is credited for the successful implementation of Starbucks strategy. The first thing that Schultz did was to transfer manager for IT and control department. The company also created a point-of-sales system that allowed the company to monitor its operations and sales in all the stores across the globe (Samson and Daft, 2012). This way, Starbucks was able to focus more on customer behaviors and make follow-ups to ensure that the customer get quality services and products. Strategies that Schultz used in Expanding Starbucks Internationally Starbucks was started with a single store in Seattle in 1987. However, the coffee giant has expanded to become a global brand. According to the case, by 1994, Starbucks had grown from a single store in 1987 to 400 stores in the United States (Samson and Daft, 2012). Today, Starbucks operates more than 4700 stores in different markets across the globe. Multinational companies use different strategies to expand their market reach internationally. The most common form of market expansion strategies used by multinational companies include exporting, licensing, franchising, strategic alliance, and foreign direct investments (Tielmann, 2010). Tielmann (2010) argues that because these market expansion strategies have their benefits and shortcomings, multinational companies must choose the expansion strategies careful to ensure that the best strategy is adopted when expanding to the international market. From the case study, it becomes apparent that Schultz used different strategies in expanding Starbucks into the overseas markets. The first strategy highlighted in the case study is strategic alliance (Samson and Daft, 2012). Strategies alliance is a market entry strategy in which a multinational firm form a partnership deal with a firm in the host country (Welsh, Raven and Al‐Mutair, 1998). The firms pull up resources, expertise and share management. Strategic alliance was the first strategy that Schultz used to expand its coffee stores in the international market as was the case in 1996, when Starbucks formed a joint venture partnership deal with a Japanese firm to open a coffeehouse in Tokyo (Samson and Daft, 2012). Secondly, the case shows that Starbucks uses licensing as an international market expansion strategy (Samson and Daft, 2012). Licensing is a market entry strategy in which the licensor provides the licensee with its intangible property rights for use within a specified time period. The intangible rights include technology, trademark and trade name among others for use. Starbucks use this strategy to by allowing the firms with large market share in the overseas market that it intends to enter to use its intangible rights. Lastly, Schultz uses foreign direct investment (FDI) to expand its market reach into the international market (Samson and Daft, 2012). According to the case study, Starbucks has entered quite a number of overseas markets through company-owned operations. Conclusion Starbucks is the world’s coffee provider. The company was founded in 1987 to become a global brand. As described above, Starbucks has adopted differentiation strategy as it generic strategy for gaining a competitive advantage over rivals in the market. Additionally, the report has indicated that the successful implementation of Starbucks strategies is attributed to the fact that Schultz effectively used leadership, structure, information and control systems and human resources. However, as described in the report, Schultz adopted three market expansion strategies in expanding Starbucks into the overseas market, namely strategic alliance, licensing and FDI. References Eldring, J. (2008). Porter ́s (1980) Generic strategies, performance and risk: An empirical investigation with German data. Berlin: diplom.de. Giuliani, R. W., & Kurson, K. (2003). Leadership. New York, NY: Hyperion. Lafley, A. G., & Martin, R. L. (2013). Playing to win: How strategy really works. Boston, MA: Harvard Business Press. Porter, M. E. (2008). Competitive strategy: Techniques for analyzing industries and competitors. New York, NY: Simon and Schuster. Sadler, P. (2003). Leadership. London: Kogan Page Publishers. Samson, D., & Daft, R. L. (2012). Management. Mason, OH: Cengage Learning. Schein, E. H. (2010). Organizational culture and leadership. Hoboken, NJ: John Wiley & Sons. Tielmann, V. (2010). Market entry strategies. Berlin: GRIN Verlag. Starbucks. (2016). Starbucks coffee company. Retrieved from http://www.starbucks.ph/ Welsh, D. H. B., Raven, P., & Al‐Mutair, N. (1998). Starbucks International enters Kuwait. Journal of Consumer Marketing, 15(2), 191 – 197. Read More