Organization Analysis of Gusto Cafe and Starbucks Business Enterprises - Case Study Example

Organization Analysis of Gusto Café and Starbucks Business Enterprises Institution Course Professor Date Table of Contents Executive Summary …………………………………………………………....03 Introduction …………………………………………………………………….03 Organizations in Context………………………….……………………………04 Organizational Communication………………………….…………………….05 Organizational Culture……………...………………………………………….07 Organizational Power…………………………………………………………..08 Gusto café as a Preferred Choice to be a Customer…………………………..10 Starbucks as a Preferred Choice to be an Employee………………………....10 Conclusion ……………………………………………….……………………..12 Recommendations for Improvements................................................................13 Gusto Café…………………………………………………….………………..13 Starbucks ……………………………………………………………………….13 References ………………………………………………………………………14 Executive Summary The common phenomenon that transcends in all business organizations is that they used resources in achieving performance. The basic kinds of resources that are used by organizations are human, financial, technological and informational (Griffin & Van Fleet 2014, p. 09). Gusto café and Starbucks employ different sets and number of employees depending on the expertise needed and the company services being offered. Gusto café is a small business having a branch at Clock Street while Starbucks is a multinational company having many branches across the world. Starbucks is the ‘best’ place to work as the organization involves its employees in decision making. In this way, employees feel part of the organization and their inputs and values are respected. The owner Howard Schulz bought the company and indicated that he wanted to form a company that value and respect people. However, Starbucks should improve its customer service by promptly obliging to customers requests on the shortest time possible. Gusto café can be a great place to have a cup of coffee due to its convenient location and exceptional customer service. Employees are trained on how to make coffee the Gusto way. In addition, each employee has clear functions and responsibility. For example, the manager of the Clock Street café is responsible for personnel matters. However, the company should involve its employees more often in making its business decisions especially the big decisions such as expanding the business. Introduction In any organization whether small or big and regardless of the type of business it undertakes, the four management functions of planning, controlling, leading and organizing are crucial to the business success. Planning is a function that deals with selection of organizational goals and ways of attaining them whereas controlling involves monitoring of activities and making corrections (Daft 2014, p. 07). Organizing entails assigning of responsibility for purposes of accomplishing certain tasks in the business. On the other hand, leading is using influence in motivating employees. Gusto café and Starbucks management undertakes all these functions in order to attain the organizational goals and objectives. Gusto café is small business that serves branded coffee- at least at the beginning but they now make food in its premises. In contrast, Starbucks is a large multinational company selling coffee to numerous of its customers. This report compares and contrast Gusto café and Starbucks Company in respect of the following four topics: organization in context; organization communication; organization culture; and organization power. It concludes by providing recommendations that can be adopted by each company in improving its services. Organizations in Context Organizational context is the specific setting that human behaviour that has been developed in an organization is manifested. Quick and Nelson (2012, p. 06) assert that organizations are open systems composed of interacting elements that include people, tasks, structure and technology. This assertion is true to both Gusto café and Starbucks organizations. Gusto café is composed of people that are working in satisfying the customers’ needs. Owners, managers and employees of the café all perform their duties according to their ethos. Managers’ responsibility pertains to personnel matters that include conducting staff rotas and ensuring there is enough stock. Organizational tasks are mission, goal and purpose that organizations exist to achieve while people are human resources. Gusto café mission is ‘keeping it simple’ by cooking food on its premises and then served them according to their tastes. On the other hand, Starbucks mission was to build a company that is respected for its coffee brand name. Additionally, the company was to organized in a way that it values, respects, inspire and share its success with all those people that contribute to its success (Thompson, Hawk, & Shah 2004). Organizations operate in certain environments that are used in describing the kind of context that an organization operates. The organizational setting can somehow be understood as a sort of social institution although not universal (Lune 2010, p. 05). Gusto café operates in London and the environment attracts tourists making it an ideal place to have coffee for tourists and students in this area. Starbucks owns multiple chains of stores that are spread all over the world with customer focus and selling of the company brand top of priority in all the branches. Organization context can be internal and external. The internal organizational context of Starbucks focuses on building a fruitful relationship between management and employees. On the external context, Starbucks aims at listening to the customers by giving them the best coffee by using strict procedures and ingredients. Gusto café does not involve its employees in its major decisions which are the preserve of Fiona and Henry. On its external front, they started to accommodate customers by serving drinks on different sizes rather than by having one size only. Organizational Communication Organizational communications in a business setup are important as it plays a vital role in achievement of business goals and objectives. Locker and Kienzler (2008) explain that communication is a way whereby meaningful information is exchanged by people. Typically, it involves exchange of information, messages and thoughts. Organizations used the set organizational channels in communicating its goals and objectives to its members. In essence, both multinational enterprises and small businesses needs effective communication system that enables it to function and prosper. Organizational communication is a means by which employees’ sense of commitment and belonging are promoted (Chaturvedi 2011, p. 28). It is also a way by which employees are informed and convinced about certain decisions taken by the business and the reasons why they were taken. Schulz convene a meeting after buying Starbucks in order to communicate to them about his vision for the company and waste no time in letting them know that they were important in decision-making process. The power of effective communication in organizations can be illustrated very well by the Starbucks case. In 1987, Starbucks employees began to buy into Schultz changes and trust between employees and management started to be built. This trust is best evident when in 1992, Starbucks employees voted in favour of giving up all union membership (Thompson, Hawk, & Shah 2004, p. ). In general, the communication is transactional, on-going process that produces meaning between individuals or organizations. Management and employees of Starbucks came to an agreement by carrying out communication between them. Organizational management is an organized, cooperative and unified system that commits to achieving common goals. Communication has persuasive power and this is used by managers in creating the desired relationship with employees. This is especially important today where business environment changes rapidly because of globalization and multinational competition. A small business such as Gusto café needs to have clear communication systems that all members can understand each other for purposes of fighting competition and survival especially from multinationals such as Starbucks. Harris and Nelson (2008, p. 18) points out that most organizations today refer their employees as consultants, partners, team members and associates as a step of making employees feel part of the organization. The staffs of Gusto café are regularly shown how coffee is made the Gusto way by Ed and James who are the managers. In this way, management and employees are able to bond. Gusto café employees regularly are informed about how coffee is made which helps them feel involved in running of the business. Fiona and Henry feel that by communicating with staff and including them in what transpires in the business constitutes part of natural leadership skills. The main difference about organizational communication between Gusto café and Starbucks is that Gusto café does not involve its employees in making bigger business decisions such as expanding the business. This is the privilege of Henry and Fiona alone, the business owners. On the other hand, Starbucks involve its employees in all its major decisions by communicating to them the benefits that will be accrued from the projects or actions to be undertaken. Organizational Culture In every organization, it exist some element of organizational culture. Culture is important to any organization because of its benefits. It can play an important role in creating organizational climate in which innovative and learning responses to new opportunities, competitive threats and challenges are enabled (Daft 2012, p. 405). In essence, a strong culture encourages change and adaptation that enhanced performance of organization by motivating employees. It also unifies them around shared goals as well as shaping and guiding their behaviours in order for their action to be aligned to organizational strategic priorities. Gusto café and Starbucks have their own set of unique organizational culture. At Starbucks, employees are trained to have ability of satisfying customers fully and the theme that transcends in the organization is that of ‘just say yes’ to all customers’ requests (Thompson, Hawk, & Shah 2004). There is a view by management that every store acts as an advertisement entity for the whole company which in turn contributes to the entire organizational image. Smoking by employees is banned at Starbucks as well as wearing of colognes or perfumes that could interfere with the coffee aromas. Organizational culture theories emphasize the manner in which people are able to create an organizational reality. Organizational culture studies way of life of an organization by looking at the values and meanings of the members (Littlejohn & Foss 2008, p. 268). It examines the manner in which individuals make use of symbols, rituals, stories in order to produce certain type of understanding in the organization. Gusto café has a culture of holding meetings weekly composed of all employees. They discuss the business matters and it also acts a way of relaxing and having drinks together. In this way, members of the organization are able to bond together and discuss issues that bother them. Furthermore, new staffs are introduced into some kind of informal training programme where they learn how to make ciabattas and cake the Gusto way. Music is also played at Gusto café and it has become the way of life as customers have come to identify mixture of music played with the café food. There is the culture of playing background music at both Starbucks and Gusto Café as a way of soothing customers while they take their food. However, there is strict culture of doing things at Starbucks than in Gusto Café. For example, smoking and wearing of colognes or perfumes are banned at Starbucks. Organizational Power Many organization theorists that have studied power in organizations are in agreement that power pervades every aspect of organizing. For example, Karl Marx found out that using hierarchical power as a way of dominating invites resistance and produce endless conflict; while Max Weber assumed that owners and managers legitimate hierarchical power offer them right of controlling both means of production as well as labourers employing those means of production. Taylor, on the other hand, saw prospect of control as justification for rationality and efficiency (Hatch 2012, p. 229). Early proponents belonging to modern perspective of organizational power such as Weber, by large, though, assumed that using managerial power in controlling workers was something expected and accepted. Power is important in understanding dynamics of organization as well as it is also confusing. Gusto café is managed by two managers, Ed who is the owners’ son and James the manager of College street café. Although both these managers responsibility pertains to personnel matters, the owners, Fiona and Henry issue them with instructions to give to employees. It seems that it is a wise decision so that it does not seem that owners are interfering or directly giving instructions to the employees but in essence they are the one having power and are exercising them. Fiona and Henry may be taking the traditional approach of organizational power that sees it as impacting outcomes performance and job satisfaction. Coleman (2009, p. 134) view power as abstract, pervasive, and ambiguous being affected and affects virtually all things in the organization. In fact, power affects the direction of the business as the individual(s) holding power in organization determines what to be done, when, how and by whom. Henry and Fiona hold the absolute organizational power of the Gusto café seen by the decision they made in 2010 of expanding college street café without consulting the managers or anyone else. The power that Henry and Fiona of Gusto café and Howard Schulz of Starbucks exercise comes from various sources. Miller (2012, p. 103) explains formal authority, control of decision processes, and the power an individual already has as some of the sources of power in organizations. Starbucks owner Schulz already got the power when he bought the company. He exercises his power by outlining to other organizational members his vision, principles and values for the company. In this way, he has control of the decision processes as well as the formal authority of the company just like Henry and Fiona of Gusto café. Schulz oversees all the company affairs, communicates to other members his strategic vision for the company and expansion decisions. In this way, Schulz shares some organizational power with other members. And as Littlejohn and Foss (2008, p. 272) asserts, establishment of power in organization is by one ideology dominating others. This is true in case of Starbucks and Gusto café as owners’ ideology about the respective businesses prevails over other members’ ideologies. Gusto café as a Preferred Choice to be a Customer The buying behaviour that involves relatively expensive and technologically complex product and buying behaviour of inexpensive or more affordable product do vary. A complex search together with an evaluation process is usually done prior to making a purchase involving relatively expensive product (Proctor 2008, p. 148). Buying coffee at a place like Gusto café may not be a complex process. Nevertheless, consumers always consider various factors before making their choices of whether to be regular customers of Gusto café. Consumers can purchase a product because of habit such as regularly buying items in a supermarket or because the price of a product is relatively substantial in comparison to the purchasers resources. I prefer to be a customer of Gusto café because of some reasons. First, Gusto café take care of its customers requests. They started offering a large size drink in order to accommodate customers without hesitation and this shows that they care about its diverse customers. Pride and Ferrell (2010, p. 239) explain interpersonal and individuals factors as some of factors influencing buying decisions of people. Individuals factors such as personality and age is what drives me to choose to be a Gusto café over Starbucks. The place is convenient and its coffee is made in a certain way that is characteristic of the premises. Starbucks as a Choice to be an Employee There are key reasons why some individuals choose to be an employee of a certain organization. In strict sense, these reasons may not be the same as those compelling a person to stay with an employer. Organizations having clearly established goals as well as holding employees and managers accountable as far as accomplishing results are concern are regarded as better places to work (Mathis, Jackson, & Valentine 2013, p. 168). Retaining the top talent in an organization worries many employers as well as attracting the best talent and performers in the market. The real reason why individuals choose to either stay or leave an organization may vary by industry, geography, job, organizational issues among other factors (Mathis, Jackson, Valentine 2013, p. 168). In the same breadth, there are certain reasons that drive me to prefer working for Starbucks as oppose to Gusto Café. After taking over the management of Starbucks, Schultz indicated that he aspires to build a company that value and respect people as well as include them in the decision-making process. Every employee dreams to work in an organization that respect, value and include their opinions in the decision making process. They want to feel valued and Starbucks with the leadership of Schultz has demonstrated his best intentions to his employees. In return, the employees reciprocated by giving up union membership and the trust started building between management and employees. In choosing an organization to work for, people always look for places that they will most likely have job satisfaction. Singh and Jain (2013, p. 105); and Qasim, Cheema and Syed (2012, p. 33) define job satisfaction as collection of both positive and or negative feelings that a person holds towards the job he or she performs. This satisfaction is further influenced by factors such as remuneration, working conditions, leadership and fairness of treatment (Qasim, Cheema & Syed 2012, p. 34-35). I prefer Starbucks because I will most likely have job satisfaction as the leadership and working conditions in the company are exceptional and up to the required standards. In reality, most organizations do not always give in to employees’ demands or requests. However, at Starbucks, management listen to the employees requests and evaluate their demands. For example, employees of Starbucks requested health care benefits to be extended to part-time employees. Schultz convinced the Board of Directors in 1988 that part-time workers are vital to the organization. The plan was approved and Starbucks started paying 75 per cent of its employees’ health care premium while 25 per cent was paid by the employee (Thompson, Hawk & Shah 2004). The company that value its employees and evaluate their requests by seeing its positive effects endeared me to prefer to work for Starbucks rather than Gusto Café. Conclusion Starbucks and Gusto café are two business enterprises that are particularly known for selling coffee. Gusto café is a small business while Starbucks is a multinational company having branches across the world. The kind of performance that is expected by both organizations after resources are utilised range from attainment of goals to production of goods and services. Moreover, the two organizations also expect some degree of efficiency and effectiveness in the services they provide. Efficiency means that resources are used wisely and in a cost-effective manner (Griffin & Van Fleet 2014, p. 09). In being effective, organizations make right decisions that are implemented successfully. In general, efficient and effective organizations are likely to be successful for a long period of time. Starbucks involve most of its employees in decision making process but has relatively poor customer service while Gusto café has good customer service but does not involve its employees in major business decisions. Both business enterprises can improve their services by adopting some or all of the recommendations below. Recommendations for Improvements Gusto Café Gusto is such an endearing place to be a customer because of its ambience, food and the services provided. However, as an employee, it is not a place that can provide job satisfaction. In order for employees to achieve job satisfaction at Gusto café, there should be some improvements. Employees should be involved in major decisions that the business undertakes for them to feel part of the organization. In 2010, some staffs were unhappy with working until 9.30 in the evening. Although they later accepted it, this situation should have not been allowed to happen by the management. The management should avoid this kind of situation from happening in the future by always consulting its employees before making any business decisions. Starbucks The services offered to customers at Starbucks can be improved. The requests of the customers should never be rejected at face value again like it was done to customers that requested cappuccinos and lattes having skimmed milk in 1989. Customers are the essence why the business operates and when they realise that their demands are not satisfied, they switch to competitors. The company should also deal with the idea that it is avoiding paying taxes in the United Kingdom as this damage its corporate image. Customers would avoid Starbucks if they believe that it is a tax evasion organization. Starbucks should provide comprehensive income statements showing clearly that it is complying with all the rule and regulations governing the business. References Armstrong, M 2007, A handbook of human resource management practice, 10th edn. Kogan Page, London. Chaturvedi, P. D & Chaturvedi, M 2011, Business communication: Concepts, cases and applications. Pearson Education India, New Delhi. 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