Capability Analysis Report: Starbucks Company - Case Study Example

Capability Analysis Report: Starbucks Company Name Institution Affiliation Capability Analysis Report: Starbucks Company Executive Summary Starbucks is an American-based restaurant and that offers a variety of services. The firm has been at its best in trying to penetrate the market through its strategic capabilities. The strategic management concept provides a clear understanding of how Loretta has been using its resources and organizational capabilities to attain its competitive advantage. It is because of its unique operational and managerial techniques that it has been growing gradually until it reached where it is. Introduction The benefits of strategic management cannot be gainsaid. In fact, it has emerged to be an important tool in gaining not only competitive advantage for an organization, but also in creating value for customers. The most important aspect of strategic management is the resource-based theory, which measures organization's capabilities on the basis of resources that it possesses. It is worth of note that the amount of resources only does not guarantee business success unless it meets certain features. The organizational resources must be valuable, rare, non-substitutable and imperfectly imitable. That said, an organization is able to meet its strategic capability if the earlier mentioned features are met, and can also use it to achieve a competitive advantage. In this report, we conduct an analysis of Loretta's capability. Starbucks is a renowned organization that provides standard coffee products. Its strategic management has enabled the company to not only grow by size and number of stores that it has opened, but also by the market it serves. Precisely, the resources and strategic capabilities have been at the core to the success of Starbuck. Capability Analysis A Strong Quality Assurance System Starbucks produces high quality products due to its unique product differentiation technique. The most important yet difficult part of enhancing brand promotion and creating customer value is the product differentiation process. Many companies have found it very difficult to strategically adopt certain business models that suit their operations. As a result, the brands of such companies end up failing in the market due to inappropriate differentiation mythologies. It should be understood that there exists a direct relationship between the quality of products and market size (Berry & Waldfogel, 2010). Therefore, the tremendous growth of many businesses could be linked to its quality products. Starbucks has a strong quality control system that ensures quality output is achieved even where large volumes of units are produced. The quality control system uses the cupping approach to meet organizational and production standards. A team of dedicated members comprising of both genders with outstanding experience in quality assurance evaluate quality control standards. Further, the quality is monitored from the beginning of the production of to the end of the product. It cannot go without being said the centralized system of logistics has also played a vital role in harnessing quality. Starbucks’ supply chain and management system is centralized and this ensures that quality is uniform across various branches and franchises. Therefore, quality control is at the heart of Starbucks' operation. Using its strategy of the "last line of defense", the company ensures that even when pre-evaluation procedures fail there is a working contingency plan to meet quality needs of their products. A Team of Dedicated Workers The strength of the human resource that is available in organization is very crucial. Traditionally, laborers were considered to be slaves and only those were closer to those in authority would benefit in capitalist nations. Contemporarily, the organizational behavior is shifting towards an employee-based paradigm that focuses on capitalizing on the employees so as to achieve organizational goals and objectives. Building a teamwork culture is crucial but requires an exceptional good leadership. Unlike many companies, Starbucks invests in its employees to ensure that its knowledge management is efficient in meeting the information needs of the organization. The employees who work at Starbucks are usually undertaken through the training process and subjected to promotional programs. The net impact of such practices within an organization context is that it minimizes the cost of staff turnover. In addition, many employees are retained and this helps to protect the organization from losing its important aspect of knowledge management system. It should be noted that Starbucks' competitors are usually very keen in understanding its resource-capability. Since employees have the knowledge regarding the success of the company, they may end up being hired by other competitors if Starbucks loses them. The most important feature in the company’s maintenance of its competitive advantage is knowledge integration. The company has used this method to reduce the risk of knowledge transfer from firm to firm. Knowledge integration is a source of competitive advantage (Grant, 1996). The high level of motivation is at the core of the strong leadership and quality production and customer services. On this note, apart from achieving quality through very high standardized producers, the staff motivational programs play a significant role also. In fact, Starbucks' employees are not driven by financial motivation but by friendly environment that the organization provides. For instance, employees have the freedom to associate with even the top managers, are treated with dignity and are allowed to make their own contributions. Most employees find intrinsic motivation as more important than extrinsic ones (Kaufmann, Schulze & Veit, 2011; Cerasoli, Nicklin & Ford, 2014). Therefore, having a strong workforce and a well-protected knowledge management system have helped Starbucks to remain competitive. Good Leadership The leadership of Starbucks is transformational and servant-based. Unlike many companies whose focus is to increase the transactions of the firm through their leadership, the CEO of Starbucks, adopts a transformational and servant leadership strategy where he integrates his leadership style with the needs of employees. However, the latter style of leadership is not dominant but one must admit that the quality of governance is very high. Transformational leadership requires managerial-based and transitional-based competencies (Menguc, Auh & Shih, 2007). The employees are very responsive to organizational changes due to the impact that the top managers have made in them. The gap between the employees and the management is not wide, that is in terms of respect, trust and confidence at work. In fact, employees feel safe while working with Starbucks. Furthermore, the team work has been harnessed and the management supports the ideas developed by employees. Interestingly, they are taken through simulation challenges whereby the management set up assignments and challenge staff to solve them. In case the problems are not solved, employees are directed on how they can be creative in solving situational problems within the organization. Another important fact is that the employees are heard by the top leaders and this makes it an exciting experience for them. Whatever they contribute or even ask for is taken into consideration. Moreover, the acceptance of cultural diversity put Starbucks leadership above its competitors. There are many employees who suffer discrimination in other companies because of their race, gender and status. However, the leadership of this restaurant allows cultural diversity. The different cultures of the various employees are considered and treated with their preferences and tastes while at job. The source of competitive advantage for Starbucks centers around the above three internal environment. Firstly, the quality assurance system is imitable due to its casual ambiguity. There are many concepts that surrounds the entire quality control system that cannot be easily understood by the competitors. Besides, the system is also expensive and it may be very difficult to create customer value if one does not understand the actual requirement and the cost-effect and how to recover such costs. Secondly, the nature of human resource management is very diverse and unique. It entails some HRM practices that are very difficult to achieve especially in organizations that are affected by discrimination of all kinds. Importantly, the employee-centered model that operates started in the early years of its establishment, hence its costs are historical and now it is cheap for the company to carryout out certain HRM practices without incurring huge costs. T Conclusion The strategic capability of Starbucks has improved its competitiveness in the past years. From a resource-based perspective, the company has a strong workforce that works under motivation. Furthermore, the financial resource is abundant and that is why it capable of investing in a strong quality assurance system. Another important fact is that Starbucks employees are very innovative and skilled due to the availability of a training and development system and a strong relationship between the employees and the management. The nature of leadership has also contributed greatly to its competitiveness. References Berry, S., & Waldfogel, J. (2010). Product quality and market size. The Journal of Industrial Economics, 58(1), 1-31. Cerasoli, C. P., Nicklin, J. M., & Ford, M. T. (2014). Intrinsic motivation and extrinsic incentives jointly predict performance: A 40-year meta-analysis. Psychological bulletin, 140(4), 980. Grant, R. M. (1996). Prospering in dynamically-competitive environments: Organizational capability as knowledge integration. Organization science, 7(4), 375-387. Kaufmann, N., Schulze, T., & Veit, D. (2011, August). More than fun and money. Worker Motivation in Crowdsourcing-A Study on Mechanical Turk. In AMCIS (Vol. 11, No. 2011, pp. 1-11). Menguc, B., Auh, S., & Shih, E. (2007). Transformational leadership and market orientation: Implications for the implementation of competitive strategies and business unit performance. Journal of Business Research, 60(4), 314-321. Read More