Starbucks Control Mechanisms Essay

Starbucks Control Mechanisms Essay.

Control systems are developed and implemented as a means to control resources and to ensure that employees act in a manner that is beneficial to their organizational goals. Starbucks was started in 1971 in Seattle, Washington with a goal to imports the world’s finest coffees to the cold, thirsty people of Seattle. Starbucks has since become a worldwide phenomenon with more than 16,000 stores in 48 countries. Starbucks, like most major corporations have many control methods.

This paper will discuss hierarchy control, regulative control, financial control, and clan ontrol and how they are used within the Starbucks Organization.

Regulative controls are described as coming from standing policies and standard operating procedures (Encyclopedia of Management, nd.

). In today’s corporate society, many companies have started using a more decentralized and flat organizational structure. Because of this, their boundaries blur, and include “suppliers in inventory management and customers in new product development, forging cooperative alliance with competitors, and developing virtual organizations in which employees are geographically dispersed and may meet only a few times each year” Encyclopedia of Management, nd. ).

In some instances, it is possible that regulative controls could actually prevent companies from obtaining goals. Financial controls can include budgets, balance sheets, and profit and loss statements (Bateman & Snell, 2009). According to B Corporation, they “are the means by which an organization’s resources are directed, monitored, and measured. ” These controls hold managers responsible in an effort to secure profits for companies (Encyclopedia of Management, nd. ) and place limits on spending.

Financial controls are important ways of protecting resources and making sure that a company’s account records and reporting are accurate. Hierarchy control basically says that all decisions need to be made by those in higher positions. In a traditional hierarchy control, power, and authority flows down from the top. This form of bureaucratic control has been around for centuries, and usually has formal rules and standards in place. Control systems of this type are typically designed “to measure progress toward set performance goals” (Bateman & Snell, 2009).

While this approach is still found in companies today, many are choosing to modify their structures to allow for a more employee friendly approach, such as the clan control. Clan controls are “based on the norms, values, shared goals, and trust among group members” (Bateman & Snell, 2009). Today, more than ever, many companies hold their employees to high standards and expect integrity of them. Because of this, employees strive for effective controls on their own. Companies have turned to clan controls, encouraging employees to take responsibility of their own actions.

Employees are given guidelines under which they are to work, and are expected to make good judgments. Employees have common goals and trust one another, and formal controls may be less necessary (Bateman & Snell, 2009). When using these control mechanisms as a resource to implement the standards of the goals of the business, it is vital to know the positive and negative aspects. Utilizing these controls could be beneficial to the business but they can also cause detrimental damage to it if they are not managed or implicated properly.

Because Starbucks is one of, if not, the only largest coffee brewer in the world today, they should ensure all necessary control mechanisms into their daily routine in order to maintain their effective customer service. Because a hierarchy describes the structure of the management from the top of the company, which is the managing director, in this case would be Howard Schultz, the positive aspects of it would be that according to the Starbucks case study, he indicated that he wanted to include people in the decision making process and that he would be open and honest with them (Schultz, 2010).

This shows the confidence he has in his team and in the people he chose to build the organization with. The negative impact hierchy control may have on this organization is that although everyone’s opinion matters to the upper division, it is most likely that the final decision will impact not the benefits of the employees but the benefits of the organization. Most employees will have to sacrifice in order to try to accomplish the goals of the business and help gain its revenue.

The key in terms of management control is matching regulative controls such as policies and procedures with organizational goals such as customer satisfaction. (Droege, 2011) Starbucks standing policies and operating procedures are affected by the quality of their teas, coffees and merchandises sold to their customers to maintain the upscale customer satisfaction. By implementing the usage of this control, it will provide some positive reactions towards the organization by relying on their regulatory agencies to determine what products are safe for human consumption.

In regards to this, the negative reaction may stem from the financial impact related to the costly supplies that have to be purchased in order to obey their regulatory decisions. For example, providing rBST-free milk available to U. S customers upon request. (June, 2001)This control mechanism coincides with the next control that Starbucks tends to bump into very often. This control is financial control. Financial control is the foundation of any procedure of a business.

Because Starbucks profit is the key essential to their future and success, without financial control the company can enter major negativity by going into bankruptcy or losing their dedicated employees. However, maintaining financial control can help the organization sustain their revenue or increase it by motivating their employees to sale more coffees. Lastly, clan control relies on values, beliefs, corporate culture, shared norms, and informal relationships to regulate employee behaviors and facilitate the reaching of organizational goals of Starbucks.

Starbucks utilizes this control by creating a “customization” beverage from employees to create their own individual drinks that can be sold. Starbucks implemented this exciting and adventurous idea so that they can promote dedication, and discover individual recognition from their staff and also discover different personality types within the business. Starbucks has also successfully structured their clan control to maximize their employees by providing them with major benefits such as medial coverage and discounts towards beverage purchases.

As much as clan controls can be beneficial to both the production of the business and its employees, it can be detrimental to the business as well in some ways. Implementing too much clan control within the business can cause lack of standard management which can lead to problems in the business such as, employees may slack, take advantage, or shrug responsibility without guidelines. (Ganly, 2010) All of these control mechanisms are related to the four functions of management. In order to create and implement the effectiveness of a controlled environment, a manager of any organization would have to plan out the necessary objectives.

Planning the hierchy of a business by hiring those who are ahead in the decision making process is vital. Organizing the products within an organization to ensure a better future does regulating and maintaining policy procedures to implement great service. To manage financial control, it is vital to implement a controlling function that involves monitoring of all financial resources, such as sales increase and the hourly salaries of every employee. When it comes to clan control, using the management function of leading is ideal.

In order to control a clan, there has to be a leader to motivate their people’s desires to help achieve the goals of the organization and also increase the knowledge that they retain towards the business. Starbucks is a truly authentic, interesting, and one-of-a-kind cafe and these controls, for the most part, have enabled Starbucks to fulfill its organizational goals. These controls have created a culture within the organization the enables top management to plan, lead, organize, and control in positive way.

Starbucks Control Mechanisms Essay

Starbucks Logistics Essay

Starbucks Logistics Essay.

To help Starbucks on its way to successfully reach the supply chain goals they redefined and changed their distribution and warehousing strategy too.

In March 2011 Starbucks signed the agreement with Green Mountain Coffee Roasters to distribute Starbucks coffee and teas for Keurig single-serving systems (2) Green Mountain Coffee Roasters owns the biggest distribution network for the single-serving systems in North America and Starbucks was able to increase their stock prices significantly after singing this deal. Also, leaving out the old partner Kraft Foods out of the distribution of its coffee in supermarkets and grocery shops Starbucks can generate some surplus income and invest it into business (3).

Another example of changes in distribution is the intention of Starbucks to capitalize the distribution channels of Tevanna and continue to open more stores in malls tweaking the model (4).

The relationship with their long-standing 3 PL partner company OHL has been redefined after Mr.Schultz returned as chief executive and have been improved enormously implementing day-today and peer-to-peer relationship instead of having a relationship ‘within arm reach’ as per Greg Javor, Vce President of Global Logistics for Starbucks Coffee Company (1).

The relationships were leveraged to the key levels between the partners and allowed OHL to react quickly and in a more effective way to a changing and Starbucks strategy. Also, the improved communication helped to introduce more innovation into the business and now Starbucks and OHL use voice picking technologies, finger scanning technology and introduced the EDI labeling in their warehousing system.

All this definitely allow Starbuck to secure a reliable supply of high-quality products and reduce the cost using all the opportunities, technologies and re-defining their distribution and warehousing objectives. Doing it in a smart way and using effectively integration of various activities for reaching the goals the company not only solves the current problems while recovering after the recession hit but builds a new capabilities and opportunities for expanding business for the future.

(1) http://www.youtube.com/watch?v=aa_C7-W_r18

(2) http://www.nytimes.com/2011/03/13/business/13coffee.html?pagewanted=1&_r=0&ref=starbuckscorporation

(3) http://www.gezabottlik.com/310/07_Project20120Report_billyjun_Starbucks20Coffee20Report.pdf

(4) http://dealbook.nytimes.com/2012/11/14/starbucks-to-buy-teavana-for-620-million/?ref=starbuckscorporation

Starbucks Logistics Essay

Foreign Direct Investment – Political Ideologies Essay

Foreign Direct Investment – Political Ideologies Essay.

As we have seen from the case study, Starbucks prefers not to just franchise and license its format when it tries to expand overseas, but as in the case of Japan and China, the firm prefers utilising joint-venture arrangements, mergers and acquisitions and horizontal FDI to exercise control and ensure standards are at a certain level for all foreign stores (they trained the local workers to emulate the original standards set in the US).

Only after Starbucks are convinced the country can properly deliver the “Starbucks experience” will they think about giving the host country stores more autonomy and license the brand over there.

However, in terms of pinpointing countries in which to invest in, political ideologies of the host countries needed to be considered. Different countries may have different stances towards FDI, and it depends on the country’s political ideology. There are 3 main types of ideologies: Radical view, pragmatic nationalism and free market.

This view, traditionally backed by highly nationalistic, socialist or communist countries, was inspired by Marxist political and economic theory, and claims that FDI is a means to “imperialist domination”, whereby the capitalist “home” countries are able to exploit the “host” country (usually a developing, or less developed country) by utilising the resources but taking all the profits back to the home country, and not leaving anything extra for the host country.

They also argue that the MNC’s allocate the top level jobs to their own home-nationals as well as monopolise control of major technology, and not to the locals, thus in effect going round in a circle and keeping the status quo of developing countries needing developed countries to support them with investment, jobs and technology.

This view is on the other end of the scale compared to the radical view; originating from Adam Smith and David Ricardo’s work on international trade theory, it advocates the belief that international production should be distributed based on comparative advantage, where countries produce the goods/services that they can produce most efficiently. Through FDI, Multinationals decide to produce in the most efficient locations from around the world, and therefore increases the overall efficiency of the world economy.

Many countries do not adopt either of the 2 extremes of the political spectrum, but rather fall somewhere in between and so would fall under this category. What a country would do is weigh up the pros and cons of accepting FDI, and if the pros are more prevalent, then FDI would be allowed or vice versa. Potential negatives to FDI for host countries include circular flow of income withdrawals (i. e. profit going back to the home country), potential downsides to the balance of payment account (i. . if the firm decides to import components rather than utilise domestic ones), exploitation of the workforce etc. Conversely, countries can take into account positive aspects such as transfer of resources which the host country may otherwise have found difficult to obtain, employment of local workforce, and a positive effect on the balance of payments if the production is used as a substitute for imports, or even if the firm exports from the host country.

These are just some examples of potential costs and benefits that may arise from FDI (especially for the host country) that may be taken into account. Some countries, if they see that FDI is required, may aggressively try promoting their country and make it more appealing to MNC’s by offering tax breaks and other incentives. Starbucks would only target countries that are free market, or at least use pragmatic nationalism.

Obviously radical view following countries would not entertain the thought of allowing Starbucks to invest in the country in the first place and therefore automatically rules out these countries. However, some countries have changed their ideologies, such as China which was a follower of the radical view until sometime in the 1980s, and are now more inclined to free market and is now a massive potential market for Starbucks and is potentially the largest single market opportunity outside of the US.

Foreign Direct Investment – Political Ideologies Essay

Starbucks Negative Points Essay

Starbucks Negative Points Essay.

Starbucks is Hypocritical about community service. Although they supposedly pride themselves on being involved with projects that help improve the community, recycling and “making a difference in the world , In actual this is not the case . The Plastic cups which they use are not recyclable, and even if they were, many Starbucks stores do not have recycling bins. Starbucks bought 2. 5 billion cups for stores in North America in 2007.

The 10% recycled paper cups used by Starbucks are not recyclable, because the plastic coating that prevents the cup from leaking also prevents it from being recycled.

The plastic cups used for cold drinks are also non-recyclable in most regions. Starbucks cups were originally made using plastic #1 (polyethylene terephthalate, PETE) but were changed to plastic #5 (polypropylene, PP). The former type of plastic can be recycled in most regions of the U. S, whereas the latter cannot.

Starbucks is considering using biodegradable material instead of plastic to line the cups, and is testing composting of the existing cups.

It does not track recycling at licensed locations in airports, grocery stores and elsewhere. Environmentalists are not happy with Starbucks’ environmental record. They are concerned about everything from new plastic stoppers for coffee lids to Starbucks’ bottled water brand, Ethos. The Starbucks does not use recycled plastic in Ethos bottles, but the product is manufactured by PepsiCo, which uses recycled plastic in its own bottles.

Off Late Starbucks gives customers a 10-cent discount when they bring their own reusable cup, and it now uses corrugated cup sleeves made from 60 percent post-consumer recycled fiber. But the same is still not propagated in all the regions Also there are various complaints from the customers about the rude behavior of Starbucks Staff and poor customer service from the Staff. Although this may vary from region to region and store to store the baseline is being such a big name in the Industry Starbucks needs to concentrate more on Staff training on Hospitality and customer handling

Starbucks Negative Points Essay

Starbucks SWOT Analysis Essay

Starbucks SWOT Analysis Essay.

Starbucks has recently been focusing on international business and location expansion.  Focusing on Starbucks plan for international growth, the following is a brief SWOT analysis:

• Strengths: Starbucks uses joint ventures and licensing of other companies to own and operate Starbuck locations as a strategy for international expansion (Jung, 2003). Domestically, Starbuck locations are only company owned. The international infrastructure that Starbucks maintains allows for easy expansion.

• Weaknesses: Decreased control of Starbucks international locations might lead to a change in the overall ‘Starbuck experience’ with joint ventures and other companies operating international locations.

• Opportunities: Coffee lovers are found all over the world. Coffee growers are found all over the world.

• Threats: International economic downturns, War, and anti-American sentiment all pose threats to Starbucks international existence and success.

Overall, Starbucks international business expansion strategy is good and will lead to success.  By forming joint ventures and licensing local companies to own and operate locations, Starbucks is able to reduce the international feeling of corporate colonialism toward the company.

  This strategy allows Starbucks to support local international communities by supporting local businesses with jobs and increased incomes.  Starbucks already has a well developed international infrastructure in place due to the long-standing partnerships with local coffee growers.

Starbucks is able to build and expand on these established partnerships to further provide store-front opportunities in the international setting.  Starbucks does need to be concerned with maintaining the Starbucks atmosphere and experience that has been the basis of success to date.  Otherwise, the strategy of using local businesses to grow international presence is the only way Starbucks will be supported to times of international political unrest.

Starbucks SWOT Analysis Essay

Coffee Shop Business Essay

Coffee Shop Business Essay.

Description of Business Have the highest quality of coffee and follow strict guidelines to prepare it for you, so you will be a happy and returning customer. Each cup of coffee will be done however the customer pleases. We have a multitude of ingredients for individual taste. Each coffee will have the perfect temperature, nothing less, nothing more. If it doesn’t taste right we will make another, no questions asked. There is a pleasant atmosphere where there’s dim lighting, but it’s not dark enough where you can’t read your paper.

Also there is ambient music playing in the coffee shop so you can relax before, or after work. So come on in for one of a kind tasting coffee. We guarantee it’s the best you had in awhile. Mission Statement To serve our community with the most natural, and highest quality coffee ever. We provide the highest standard of customer support that the other big chains don’t offer, to make your life a little more easier.

If anything is wrong, we will take care of it free of charge, but we doubt anything will be wrong. Competitive Analysis

Threat of Existing Competition: What makes The Coffee Shop a different coffee house than others? Well to start off, we use ingredients that the other major companies don’t. From small, local South American farms. Other companies use big manufacturers. Also other companies have a hectic atmosphere which makes it uncomfortable for people to enjoy. The one edge major brands do have though is, that they always release something new every season. The Coffee Shop makes deals and every season release a new type of drink.

That doesn’t stop people from coming in and enjoying our cup of coffee than the competition. Threat of Future Competition: This is where things become tricky. No one really ever knows if they’ll stay in business forever. We just have to hope for the best. We have to market the company enough where people will be loyal and enjoy our coffee over the other guys. Small businesses can be bought out or close down if the bigger companies take away most of the customers in the area. Which would be a major problem. Consumer Buyer Power

The Coffee Shop’s prices are cheaper than the competition and better tasting. The Coffee Shop tends to keep it that way. Other brands eventually raise their prices. The Coffee Shop has a large customer base and is extremely important to them that The Coffee Shop stays in the neighborhood. Supplier Power The supplier will take any opportunity if they have. If they notice you’re only using them as a manufacturer they will charge extra because, you have no other choice to use them until you find someone else.

Sometimes quality will slip if they want more profit and then you’re getting less quality and paying extra. So in the situation you are losing while the supplier is winning. Always keep track of your supplier and work with them so things work out smoothly. If you change suppliers then your product may not be the same. Threat of Substitute Goods and Services If the cost of switching is low, then this poses a serious threat. The price of coffee may rise, so customers may start to buy tea. If the substitutes are similar, it can be viewed in the same light as a new entrant.

Alternative products that provide overall savings to your customers, without impacting the quality of your customer’s products or services are more likely to be viewed favorably for adoption. Supply Chain The supply chain starts out with a farmer in South America who grows and takes care of it. Then workers gather the coffee and it is washed and dried. After it’s sold for 70-90 cents per pound for premium coffee. The exporter then gives it to a roasting company and it is mixed and blended with other coffee. After it is shipped and ready for the consumer to enjoy.

Coffee Shop Business Essay