Coffee and Starbucks - Part 2
1 - Coffee and Starbucks introduction. What was Howard Schultz’s original strategic vision for Starbucks? Is his 2010 strategic vision for Starbucks. Has Starbuck’s strategy evolved as the strategic vision has evolved? Howard Schultz’s first strategic vision for Starbucks was the fortunate result of a company trip to Milan, Italy to attend an international housewares show. On this trip, he visited various espresso bars and was able to recognize how the customers in these bars were usually enjoying the ambiance and atmosphere of the bar with a freshly-brewed espresso, latte, or another delectable coffee treat, in hand, that was sold from the bar.
Howard felt Starbucks should align their initial business model with that of the numerous espresso bars he visited while in Malian-through transforming Starbucks from an exclusive retailer of its coffee products, to providing and serving their coffee products in-house to their consumers with an expanded product line (lattes, espresso’s, etc. ) in tow.
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In addition to the espresso bar vision for Starbucks, during his interview process with Starbucks, Howard expressed to the three original owners of Starbucks that he felt Starbucks has the potential to successfully expand beyond the metropolitan area of Seattle, a vision not seen nor shared by the owners at the time. As assumed, the current vision set in place for Starbucks has changed since the original one was envisioned in the spring of 1983.
The current strategy for Starbucks no longer concerns adding simply a new service within their stores but revolves around increasing their sustainability, increasing corporate responsibility, being the undisputed coffee leader in the worldwide marketplace, expanding their global presence, and creating innovative growth platforms, just to name a few of the more recent visions for Starbucks.
As with any great leader who sets in place a vision for their company, Howard Schultz’s vision for Starbucks is truly dynamic, and will be manipulated whenever conditions in the marketplace (i. e. economic, consumer demands, business opportunities etc. ) dictate the vision to be altered for the success and better of the company. 5. What “values” does Starbucks have? How well do they connect to the strategy and to the manner in which the company conducts its business?
On their supplier-side, too many businesses today are focused on procuring the lowest priced goods for increasing their profit margins. Starbucks would rather ensure their coffee growers are being compensated fairly and well enough to support their families in their trade. Starbucks also assists their suppliers (“coffee-growers) in being able to grow high quality coffee beans, and ensure their coffee growers are consistently meeting the company’s stringent environmental responsibility. What drives Starbucks to do that?
Starbucks possesses a number of values (beliefs) that demand fair-compensation for their coffee-growers (either through Starbucks directly or through an intermediate), a belief that all their consumers should have their demands met (through Starbucks “Just Say Yes” policy”), and trait of managing their growth (as opposed to an almost unmanaged and aggressive growth strategy executed under Starbuck’s former CEO, Jim Donald). The aforementioned values for their coffee-growers complements Starbucks current corporate and social responsibilities as a whole for ensuring the livelihood of their suppliers (the coffee-growers).
In addition, with the current push by Starbucks to increase their number of LEED stores in the United States, their vision of becoming more sustainable and environmentally conscious is being realized with each and every LEED-certified store opening. In terms of the manner Starbucks practices their business, their business practices and visions do not fall in line with the more common United States business practices and visions currently seen in the marketplace (such as the push to become the “Low Cost Provider” for consumers).
As demonstrated and stated, Starbucks practices their business differently than most global businesses do, through ensuring supplier financial sustainability (for their coffee-growers) coupled with unrivaled purchasing standards for their coffee beans, to also ensuring customer satisfaction remains high by consistently adding new features and benefits for their consumers to benefit from and increase their value derived from being a consumer with Starbucks. Recent benefits Starbucks has given to their customers are as follows: -Free Wi-Fi usage in all their United States location. Discounts on coffee products for providing your own coffee cup to the barista (thus being more mutually environmental conscious and responsible) .
– Providing various “paid” websites to their customers free of charge on Starbucks Wi-Fi network; such as access to WSJ. com, the website for the Wall Street Journal, and also other exclusive content Starbucks Chairman Howard Shultz talks to the … Starbucks Chairman Howard Shultz talks to the media at the Vancouver Waterfront Station location, celebrating 20 years of Starbucks in British Columbia. Photo credit: Wikipedia) 7. What is your assessment of Starbucks? I feel Starbucks possesses a great moral compass in the field of business and excels at creating and executing strategic plans for their business that are dynamic, relevant, and complements their core values–thus I would rate Starbucks highly in my assessment. Starbucks, as mentioned before, is one of the few companies to ensure their suppliers (“coffee-growers) are receiving fair compensation.
Furthermore, Starbucks has effectively taken on various corporate and environmental responsibilities at once through striving vigorously to purchase only ethically sourced coffee beans by 2015 for their coffee beans supply, and investing $20 million towards farmer loan commitments that will ultimately promote coffee grower’s crop yield, quality, and environmental standards, thus a mutual benefit to be had by both parties. In terms of a financial assessment, from 2009 Fiscal Year’s net profit of $390. 8 million to the $1,383. 80 net income earned in Fiscal Year 2012 (growth of over 350%! .
It is safe to say, Starbucks financial strategy of increasing bottom line production through increasing the value of their products and services offered and sustained to their customers worked out perfectly for them. Starbucks has also decreased their debt to asset ratio by 11% from Fiscal Year ending 2010 to 2012 (. 424 to . 378 respectively). Clearly, a focus to clean one’s balance sheet with less debt and more activity is a strategy many businesses share in wishing they could accomplish but few truly accomplish it; with ease, Starbucks was able to do so effectively and considerably.
All and all, as stated within this assessment and numerous times within this blog, Starbucks is a company to be hailed for due to their passion and determination to become even more sustainable with each passing day, being excellent corporate citizens, setting in place various plans that will extensively benefit their stakeholders in a sustainable manner, and promoting their financial and environmental position through creating a coffee “utopia” for the world to benefit from.