Leadership within the Context of a Globalized Environment, Leadership Style of Howard Schultz - Coursework Example

Leadership within the context of a globalized environment Student: Institutional Affiliation: Date of Submission: Leadership within the context of a globalized environment As the world becomes more connected through globalization, leaders in economic, social or political circles, cannot ignore the influence of global issues such as changing trade patterns, global politics, terrorism, cultural interactions, Internet and computing (Friedman, 2007). According to Friedman, a leader in the 21st must be dynamic and flexible enough to blend the traditional kind of leadership and new revolutionary skills, knowledge and global mindset. Sheppard, Sarros, & Santora (2013) further emphasize that business leaders need to focus attention on globalization and its effect on the business environment. Business environment is being radically transformed by emergence of new challenges due to factors such as shifts in global power, accelerated growth of emerging economies, growth in global networks, cultural conflicts and technological advancement (Sheppard et al, 2013). These views, add weight to the argument that, leadership within the context of a globalised environment can only be effective, if leaders are flexible enough to adapt their leadership styles and organisational strategies a rapidly changing environment (Cohen, 2010). In light of this understanding, this paper will analyse the leadership style of Howard Schultz, the CEO and chairman of Starbucks coffeehouse chain. Starbucks coffeehouse has more than 20,000 stores in 65 countries employing approximately 160,000 employees. Howard Schultz leadership Howard Schultz was employed director of marketing at. He later bought the company from its original owners after quitting and starting his own coffee outlets. Starbucks was initially roasting and selling high-quality coffee to its customers. Schultz had suggested the idea of opening coffee outlets to serve traditional espresso beverages. The management refused implement Schultz cafe idea prompting his decision to quit employment and experiment with his idea. Schultz was able to mobilise finance to expand Starbucks outlets in America and major cities in the world. He also established Starbucks as valuable brand in the restaurant business (CNBC, 2014). Today, Starbucks operates in more than 65 countries with assets valued at $11.6 billion (Starbucks, 2014). Schultz is credited with transforming and growing Starbucks into a leading retailer of specialty coffee products. Schultz observed a coffeehouse culture while on a trip in Italy and wanted to replicate the same in America. He not only introduced the Italian coffee culture in America but also packaged it for mass consumption (Starbucks, 2014). Schultz could not have singlehandedly achieved the phenomenal growth at Starbucks. He had to lead a group of employees into believing in a vision he had for the future Starbucks. Leadership is the ability of an individual to motivate and inspire his/her followers towards the attainment of set goal (Schein E. M., 2004). The leader is a visionary who focuses on the goals and strategic orientation of his organisation. A leader mobilizes resources and people to help him achieve his goals and objectives. Expectedly, leadership is bound to encounter opposition and challenges along the way. Challenges and setbacks define the real character and intelligence of a leader (Robinson & Harvey, 2008). There are also different theories that define the concept of leadership. One such theory is the Great Man theory which postulates that a leader is born, not made. This is in the view that leaders have some inborn intuition that is not present in the ordinary mortals. This makes them naturally adapted to leadership roles (Schein E. M., 2004). This, of course, challenges the notion that leaders are shaped by their immediate environment and the experiences they go through. Despite the different viewpoints regarding the concept of leadership, it is undeniable that leadership is an essential ingredient to the success of any organisation. Visionary leadership is the differentiating factor between successful organisations and failed ones (Robinson & Harvey, 2008). Every leader has a unique leadership style that may be influenced by the character and personality of the leader or the environment within which the leader is leading the group (Schein E. M., 2004). Howard Schultz’s style of leadership is that of a charismatic and transformational leader. He inspires the people around him to believe in his dream of a successful Starbucks built on high-quality service and offering. Schultz is very determined at motivating his workforce to perform beyond expectations. Schultz as the CEO and chairman of Starbucks has ensured that every employee is in a health insurance plan (CNBC, 2014). Schultz is a typical entrepreneurial leader who spots an opportunity and focuses his team towards successful exploitation of the opportunity. Entrepreneurial leaders, usually, disregard conventional management styles and policies to motivate teams and achieve their personal goals. Schultz ensures that all Starbucks stores serve quality food and beverages by putting together an experienced and efficient management team. I have chosen to focus specifically on the leadership of Howard Schultz as he is an example of how transformational leadership that focuses on building self-sustaining systems clan be established. Schultz has been able to establish a successful brand in the restaurant and food service industry. He has achieved this by adopting a coffeehouse culture from Italy and packaging it for mass consumption all over the world. To manage such success, Schultz had to build effective systems and put together a strong management team and employees who believe in his dream and vision. It is challenging to have more than 20,000 Starbucks stores promising to offer a standardised quality of coffee and service. Poor quality of food or beverages in a few stores may dent the reputation of the Starbucks brand thus reducing the profitability of the venture. It is, therefore, a major achievement for Schultz to put together a strong management team and efficient systems that ensure Starbucks stores offer a standardized products and service to millions of Starbucks customers. At a personal level, Schultz success in business is a story by itself. Schultz was born in a poor family that lived in the Bayview housing project in Brooklyn, New York. Schultz earned an athletic scholarship to Northern Michigan University where he pursued a business degree. After college, Schultz was employed as a salesman and later a sales representative for Xerox Corporation. He later worked for Hammerplast USA as the general manager. While selling hammerplast’s drip coffee machines, Schultz got curious about a client, Starbucks coffee that was ordering very many plastic cone filters. He got interested in the coffee business from there on and later worked for Starbucks as director of marketing (CNBC, 2014). Schultz identified a need in the American market for excellent meeting places that offered high-quality espresso just like its done in Italy. He thought it could be a great business opportunity and went ahead to implement it (Starbucks, 2014). It is admirable how through hard work and courage, Schultz was able to build a globally represented coffeehouse with nothing but ambition and vision. Schultz employed his persuasion skills to mobilise funds and people around his vision to make it a success. It’s also admirable how customers have regarded Starbucks as high premium brand that they are willing to pay a higher price for. This is a true example of transformational and visionary leadership which has also been exhibited by Ray Kroc of McDonalds who also bought a little-known fast-food joint and made it global brand. Transformational leaders have an idea of where they want to take their organisation. They lay down a plan to their followers and motivate them step-by-step towards the ultimate goal (Robinson & Harvey, 2008). This is what Schultz has achieved with Starbucks Globalization and Starbucks Starbucks is a coffeehouse chain based in Seattle, Washington. Starbucks has more than 20,000 stores all over the world but mostly in the United States. Starbucks offers hot and cold beverages at its stores. Coffee is the main drink on offer at all Starbucks stores. Apart from beverages, Starbucks offers snacks and a serene environment for people to meet and chat. Coffeehouse culture is indeed a part of Starbucks brand. Starbucks has grown rapidly after Schultz bought it from its original owners in 1987 (Starbucks, 2014). In its expansion plans, Starbucks has experienced the good and bad of globalisation. Globalization in the 21st century has resulted in integration of communities all over the world through fast and reliable communication. Efficient transport systems, exchange of cultures, ideas, and opening up of economies to global players. Countries in the world have economies and societies that are more interconnected and interdependent than ever before (Friedman, 2007). For Starbucks, friendly investment policies and an almost homogeneous global culture have enabled Starbucks to open retail outlets in different parts of the world. This has, of course, made Starbucks the strong and profitable organisation it is today. Starbucks has however come face to face with some of the global challenges such as intense competition and consumer indifference in various countries. Starbucks has had to close several stores in countries including Australia and Israel. Starbucks employed strategies that have been successful mainly in America in Australia and Israeli markets. The strategies did not achieve success in these markets partly due to a discrepancy between product design and consumer preference (Emerson & Tibbitts, 2008). Strategy formulation and implementation is a major challenge for a firm expanding at the global level (Millls et al, 2006). Global politics and economic slowdown have also affected Starbucks directly in some international markets. Starbucks has received hostile reception particularly Middle East and northern Africa. This is due to Schultz’s alleged funding of the Israeli military. Some activists in the Middle East and northern Africa have in the recent past demonstrated outside Starbucks stores and forced closure of some stores due to allegations of Schultz’s funding of the Israeli military (Starbucks, 2010). Global economic challenges such as the Euro-zone crisis affected Starbucks business in European markets forcing it to close some stores in 2012 (Emerson & Tibbitts, 2008). The global debate on climate change has also impacted on Starbucks operations. In 2008, the Telegraph accused Starbucks of wasting more than 24 million litres of water by leaving water taps running constantly for rinsing utensils. This concern and the public debate it elicited forced Starbucks to implement water-saving plans that saved at least 150 litres of water per store (Simpson, 2008). Culture according to Schein (1985) is a people’s way of life. Culture dictates what people value and the behaviours they should depict and how they expect others to treat them (Hofstede, 1991). Every society believes that their culture is superior and should be treated as such. In the workplace, this more often results in conflicts where some employees feel their culture is not valued by others resulting in lack of organisational cohesion (Millls, Bratton, & Forshaw, 2006). As the world becomes more flat, people merge cultures but do not completely disown their individual culture .they seek to advance their beliefs and ways of life in different contexts of engagement with others (Friedman, 2007). This has resulted in a situation where heterogeneity of global cultures is more evident especially in major global business cities. Today’s workplace has people from different ethnic backgrounds, race and religion. Organisations have to come up with diversity and inclusivity policies that address disparities in gender, racial and culturally diverse groups (Schein E. H., 1985). Organisational leaders are presented with a challenge of putting together an effective and culturally diverse workforce that understands the vision and mission of the business. Schein (2004) it is important for organisations to devise a policy that will feel more inclusive of all cultures. The policies should be evident in the hiring process, treatment to employees, provision of development opportunities and recognition of cultural differences. Starbucks has committed itself to building a diverse workforce, increasing cultural competency and developing a diverse network of suppliers. Through the diversity program, Starbucks hopes to empower the communities it operates in (Starbucks, 2014). Howard Schultz’s Adjustment to Globalization Howard Schultz has been able to position Starbucks strategically to take advantage of changing business environment due to globalization. Starbucks has an elaborate diversity and inclusivity policy. Starbucks diversity policy has been extended to include its suppliers and business partners in all communities where Starbucks is represented. To achieve this, Starbucks is leveraging Starbucks partner network groups. The groups provide Starbucks with insight on product innovation, business solutions, partner development and recruitment of partners. Starbucks empowers seven partner groups, field diversity and inclusion partners and a global council operating in North America. In the future, Starbucks plans to expand its diversity efforts by inviting community organisations to propose ways to engage with Starbucks. This will allow Starbucks to find ways to collaborate and build value for its global communities and the Starbucks brand (Starbucks, 2014). Schultz has been able to make Starbucks a multicultural organisation that focuses on turning globalization cultural challenges into opportunities to grow. Schultz as the C.E.O and chairman of Starbucks decided that Starbucks should not franchise its stores but rather manage the store operations and expansion into global markets (CNBC, 2014). This puts Starbucks at a favourable position to control operational costs by applying proven methods. This makes the stores more profitable to generate expansion and operational funds for the retail chain. Starbucks is also in a better position to manage the quality of the food and beverage on offer at its stores worldwide. These two factors enable Starbucks to compete effectively with other restaurants and coffee chains in the world. Schultz is very keen on the welfare of his employees as he established training programs to groom knowledgeable employees on customer service. Schultz wanted to boost their self-esteem as he also offers a complete healthcare plan for both part-time and full-time employees. Most recently, Schultz promised that his company is willing to sponsor any employee willing to get a college degree. These radical changes have ensured Starbucks has a competent and motivated workforce ready to respond to increased competition from other global coffee chains (CNBC, 2014). Businesses do not exist in isolation. They exist in communities with needs and requirements that need to be met. Organisations have to be concerned about their impact to the environment and also what good can they do to enhance environmental sustainability (Friedman, 2007). Big corporate bodies like Starbucks can no longer make huge profits and continue to expand with little regard to giving back to the society that is the custodian of wealth in world. Authorities may play the role of collecting taxes but they cannot determine what the organisations do with the rest of the money. It is upon the organisation to develop a corporate social responsibility program and policy to address social and development issues of communities they operate in (Cohen, 2010). To respond to corporate social responsibility issue, Schultz has ensured Starbucks has a functional foundation to strengthen the communities it operates in. The Starbucks foundation donated $8.7 million in 2013 to non-profit organisations. Starbucks also extends its commitment to corporate responsibility in helping coffee-growing communities’ access to education and agricultural training (Starbucks, 2014). Starbucks is also committed to reducing its environmental footprint by reducing the amount of water and energy consumed at Starbucks stores. Starbucks stores are energy efficient and where possible renewable energy issued to power lighting in stores (Starbucks, 2014). Schultz has ensured Starbucks has partnered with experts and global advocacy groups in the environmental sustainability. This partnership has led to Starbucks being recognised as a leading player in sustainable use of resources (Starbucks, 2014). Industrialization inspired by technology has been blamed for emission of harmful gases and as such leaders need to look for new ways of doing things and how effects of technology in the environment can be addressed for the benefit of all (Cohen, 2010). This means the traditional idea of the leader knows it all is not practical but rather a new approach where the views of all stakeholders need to be listened to in order to make informed decisions since actions of a single nation or multinational may have huge impact on the global family. Howard Schultz has over the years built a team of strong managers to take care of Starbucks stores all over the world (CNBC, 2014). This has enabled the entities to be more flexible and adaptive to respond to the local challenges facing the company without having to engage the top management directly. Managing a multinational today requires a leader who is influential and only plays a facilitative role to allow his employees to get involved in active running of the businesses. Schultz’s leadership style has been influenced largely by a rapidly changing global environment in terms of politics, technology, and environment and consumer enlightenment. Schultz has had to adopt a more hands-on management style that he has used to communicate his vision for Starbucks. Schultz maintains the position that Starbucks is committed to uplifting the lives of its employees by empowering them. Healthcare programs and college study sponsorship programs have been established under the leadership of Schultz at Starbuck (CBS News, 2014). This sends out a message that the leader is ready to commit resources towards encouraging employees to work hard. As a result employees are more committed to Starbucks and its objectives as an organisation. Conclusion Rapid globalization has increased challenges and threats to businesses and other organisations as well. Globalisation has also increased competition from other countries and increased opportunities in form of markets and unexploited resources. Leadership then has to be well adapted to the changing global environment. Being flexible and knowledgeable will ensure leaders can deal with the new challenges and also take advantage of the new opportunities. This paper analysed the leadership of Howard Schultz at Starbucks. The paper analysed globalisation and its effects on Starbucks as a multinational business. The paper discussed how Schultz’s leadership has transformed to steer Starbucks through rapid globalisation. Starbucks has had to adapt to changing global context by adopting a more flexible entrepreneurial approach towards diversity and inclusivity as well as environmental sustainability. 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