Starbucks

Starbucks Corporation is a transnational coffeehouse company, founded in Seattle in 1971.1

Though their core product is coffee, their product-portfolio includes various foods and
beverages (F&B). Their high-quality coffee has created a strong brand image and loyalty,
aiding to their success worldwide.
Change refers to the modification or adaptation of businesses’ activity to internal and
external influences in the business environment.
Culture refers to norms, beliefs, customs, behavior and ideology of an organization, country
or other social grouping which shapes its business activity.

Change
Due to the continuous changing external and internal factors, change should be managed
within businesses if they are to move forward and remain competitive. These factors come
from various backgrounds. Those include the population change, culture change, objectives,
change and etc. The importance of these factors determines whether the change should take
place or not. Sometimes, changes are made, However, not all changes favour the businesses,
but also give negative impacts on the business as the changes made do not always guarantee
for the business profit. Hence, the businesses should be aware of the surrounding changes in
the external environment and need to adapt to the new situation quickly not to be left behind
in the business world.
Culture
Although Starbucks is a franchise and has to follow a core menu set by the franchiser, it also
has to adjust its products to the country it is located in and its culture. The products it sells has
to appeal to the market and their local culture. Since there are many people living in Malaysia
who are Muslims, in order for Starbucks to maximise sales it would have to convert into selling
Halal products to allow them to attract a wider target audience. By selling Halal products,
Starbucks may be one of the few large franchise chains that provide Halal products, allowing
them to stand out from competitors. This may increase customer loyalty and sales as
consumers repeat their purchases from Starbucks.
The price of Starbucks products would also be influenced by the cultures in the differing
countries. Germany is considered a MEDC that is developed and relatively economically
stable, compared to parts of Malaysia which may still be seen as developing. Due to
Germany's consistent high quality of life, many people drink coffee and dine at cafes as it has
become a lifestyle and social norm. Coffee is seen as a staple in Western culture, and the
majority of people in Germany grab a coffee on the way to work. This allows Starbucks to set
the prices of its products relatively high as there is a high demand for coffee products. Malaysia
on the other hand, has many competing local drinks such as Bubble Tea or Teh Tarik therefore
there is a lesser demand for coffee drinks as it is also more commonly seen in Western
cultures. Starbucks would be able to break even if they used competitive pricing and priced
products at slightly lower than competitors to increase sales. However, Malaysia is becoming
more modern and also attracts tourists therefore Starbucks may still survive if their products
match competitor's prices, especially since Starbucks is a well-known and established brand.
Ethics
Starbucks uses cocoa beans obtained only from workers who are paid at least the minimum
wage and are not children. They promote this on all of their products to maintain a socially
responsible brand image.
Globalisation
Starbucks targeted the niche in the market which allowed it to easily globalise and spread its
risks. There are downsides with globalisation as well, such as different economic situations in
different countries, making decision tougher.
Innovation
Innovation is an organisations process for introducing new ideas, workflows, methodologies,
services or products due to the sophisticated market demand. It includes researching on
possible beneficial product and developing the modern, reasonable, efficient products to gain
the competitive advantage over the businesses rivals, contributing the key element in
providing aggressive top-line growth. For example, innovation has created new leading
industry such as Smartphones. However, sometimes it can turn the business into the great
loss. The causes of loss can be from internal or external. From internal, the factors may range
from poor time management to poor creativities of the developers. For external, the factors
may range from government policies to cultural background depending on the location. So,
innovation is the important strategy for the business success.
Strategy
Starbucks has a history of effective marketing strategies. Since McDonalds and Dunkin
Donuts entered the coffee industry, there has been an increased competition between them.
Starbucks has found more success advertising on a local level rather than to the nation as a
whole. The Company advertises a lot through print mediums, as Starbucks’ target market
tends to be educated people who do more reading than the average person
Change: Change signifies the driving forces and restraining forces that help a business to
move forward and remain competitive.
-Culture: The background or morals that an organization, society, or country have. Culture is
what shapes people’s interactions, values and customs.
-Globalization: Globalization is a worldwide movement that helps with the modernization of
the world. It helps with economic, financial, trade, and communication integration-Innovation:
Generally referred to as the creation of something new or bettering something old. Usually
the driving force to make a business successful.-
Strategy: Plans and tactics that help an organization achieve its long-
Ethics: A collective understanding of principles that are based off of rules for what is wrong
or right. Ethics help people with decision making, to make sure they are doing something
socially accepted term goals and continue successful.

Starbucks
Starbucks Corporation, doing business as Starbucks Coffee, is an American coffee company
and coffeehouse chain based in Seattle, Washington. Starbucks was founded in 1971 by Jerry
Baldwin, Zev Siegl and Gordon Bowker in Seattle: and, since then it has been expanding
rapidly to the global scale. Starbucks is now the largest coffeehouse company in the world
with 22,766 stores in 65 countries and territories. Starbucks offers the varieties of coffee and
beverages in every coffeehouse: moreover, through the Starbucks Entertainment division and
Hear Music brand, the company also markets books, music, and film.
Innovation
Innovation is an organization's process for introducing new ideas, workflows, methodologies,
services or products due to the sophisticated market demand. It includes researching on
possible beneficial product and developing the modern, reasonable, efficient products to
gain the competitive advantage over the business’s rivals, contributing the key element in
providing aggressive top-line growth. For example, innovation has created new leading
industry such as Smartphone. However, sometimes it can turn the business into the great
loss. The causes of loss can be from internal or external. From internal, the factors may
range from poor time management to poor creativities of the developers. For external, the
factors may range from government policies to cultural background depending on the
location. So, innovation is the important strategy for the business success and failure.
tarbucks is a recognized chain of coffee stores established in Seattle in 1971. Besides
coffee, Starbucks offers hot and icy beverages which can be made to custom request, for
example, the trademarked Frappuccino drinks with various flavors and syrups. Starbucks
brands itself as an extremely hip and exceptionally cutting edge coffee store. It is extremely
mark cognizant, with a web-based social networking nearness that traverses the web.

Change
Due to the continuous changing external and internal factors, change should be managed
within businesses if they are to move forward and remain competitive. These factors come
from various backgrounds. Those include the population change, culture change, objectives
change and etc...The importance of these factors determines whether the change should take
place or not. Sometimes, changes are made. However, not all changes favor the businesses,
but also give negative impacts on the business as the changes made do not always guarantee
for the business profit. Hence, the businesses should be aware of the surrounding changes in
the external environment and need to adapt to the new situation quickly not to be left behind
in the business world.
Changes in internal business organization
Internal business organization refers to the issues and functions within the business which is
controlled by the business. Occasionally, numerous changes are made within the business
which sometimes brings benefits and sometimes negative effects. Of course, managers and
CEO will always try to choose the most beneficial methods and changes even though it is very
risky. One of them is the change in the business ethic.
1. The change in ethical objective
Ethics refer to the moral principles that guide decision making and strategy. Morals are
concerned with what is considered to be right or wrong, from society’s point of view. Business
makes ethical changes within the business by changing the mission and vision statements,
the value of the organization and often these are due to the pressure group, the demand of
the local communities.
2. The change in CSR
By changing in the business ethical behaviors, the business becomes socially responsible
business towards their stakeholders such as employees and the local communities. Those
duties are known as corporate social responsibilities (CSR).
Business objectives
The business objectives simply refer to the short to medium term specific goals of the
organization, based on its aim. Usually, objectives are measurable. There are various
objectives such as ethical objective, tactical objective, and strategic objective.
Analysis
 The innovative ideas are needed in almost every business as innovation brings lots of
benefits to the business. So, these innovative ideas are produced from the developers and
R&D teams of the businesses to get to the objectives of the business. Here, the business may
have the wide range of objectives and some tools have to apply to achieve it. As we described,
SMART analysis has to be used here to assess how innovation will affect on the business
objectives.
From Starbucks, we can see that Starbucks has done innovations on coffee making
and unique services. Starbucks has developed the new different coffee products for different
types of consumers. In 2012, Starbucks has introduced us the new type of coffee which is the
first deliver thirst-quenching refreshment from real fruit juice and a boost of natural energy
from a new source, green coffee extract. The introduction of this product is an evolution of the
coffee market using a new breakthrough coffee experience using green coffee extract,
resulting in delicious, low calorie refreshment with a boost of natural energy from caffeine and
fruit juice. It has given the Starbucks the opportunities for the global coffee market as it
attracted the world coffee consumers and has affected the coffee related businesses as well
as rivals. Through this innovation, Starbucks has gain competitive advantage in market and
has improved in market standing. Hence, some tactical objectives of Starbucks has changed
due to the expansion in the services and function in the business.
In addition, the changes made in Starbucks have affected the whole business
objectives. Since it was founded, the business has strong ethical objectives. Starbucks used
to only purchased the best quality coffee beans from Latin America, Africa and Asia and it
included forest conservation programs and loaning to farmers which have benefited to the
local communities as well as to the business image and to the world climate. Moreover,
Starbucks values the employee as much as customers and given the rank as the business
partners where Starbucks being as a good CSR business. Since then, the simple mission has
never changed and only the additions to the missions are made. Starbucks focus on making
the emotional connections to the coffee and the atmosphere where the consumer can enjoy
a moment without pressure.
As the changes in the external environment were really fast, Starbucks has to cope
with the changes by using different methods. The population increased and the business has
to expand to different parts of the globe, so that Starbucks got more customers as well as
strong competitors across the world. Before expanding, Starbucks had to take cautions in
entering the different cultures based market by adapting to the local business styles and
regulations. So some parts of the main business departments’ objectives have to change to
suit with competitive business world. For example, Starbucks has opened numerous social
foundations and youth centers to get the good business image from the local residents and
pressure groups. It includes the Starbucks foundation and various farming communities.
Although the compliance costs on these social responsibilities are fairly high, the impact on
main stakeholders such as owners and employees were not big enough for them as in return
they enjoy high profile in business standing compared to their rivals.
Summary
From interpreting the analysis and the written information, Starbucks had made
changes and innovations for their better future. These concepts have caused impacts on
business objectives up to some extent and those impacts have been good for the Starbucks.
To sum up, the innovation and changes of Starbucks has shown us that by applying those
skills efficiently results in better future of the business.
Employees. Starbucks prioritizes employees in its corporate social responsibility efforts. As
stakeholders, employees typically demand for better working conditions, job security and
higher wages. Starbucks’ organizational culture emphasizes the employees-first attitude.
Employees are also given wages above the legally mandated minimum wage. In 2014,
Starbucks boosted its CSR performance for this stakeholder group by giving scholarships to
employees based on a partnership with Arizona State University. In this partnership,
Starbucks pays for 56% of tuition fees for employees’ junior and senior years at the
University. However, the company’s performance in addressing employees as stakeholders
has room for improvement. In some countries like New Zealand, Starbucks gives very low
wages to juvenile workers (youth rates). These youth rates are often criticized. The firm can
improve its corporate social responsibility performance by addressing such issue in this
stakeholder group.

Customers. Starbucks considers customers as among its top stakeholders. The interests of
this stakeholder group are high quality service and products, such as coffee and related
beverages. As the world’s most popular specialty coffeehouse chain, Starbucks effectively
addresses this interest. The company also includes customers as major stakeholders by
extending the Starbucks culture to customers at its cafés. For example, warm and friendly
relations are emphasized within the company and in how baristas interact with customers.
Thus, Starbucks Coffee’s corporate social responsibility efforts fulfill the interests of this
stakeholder group.

Suppliers. Starbucks suppliers are composed of wholesale supply firms and coffee farmers.
The main interest of this stakeholder group is compensation and a growing demand from
Starbucks. Farmers aim to increase coffee yield to generate more revenues. Starbucks
addresses the interests of these stakeholders through a number of corporate social
responsibility programs. For example, the firm’s supplier diversity program ensures that
more suppliers from around the world are included in the supply chain. In addition,
Starbucks’ Coffee and Farmer Equity (CAFE) program requires transparency among
wholesale suppliers to ensure that coffee farmers are properly paid. Thus, Starbucks’
corporate social responsibility efforts comprehensively address the interests of this
stakeholder group.

Environment. Starbucks has corporate social responsibility programs for environmentally

sound business. The company’s CAFE program has led to higher biodiversity and shade
quality in certified coffee farms. Currently, 90% of Starbucks’ supply is from CAFE-certified
farms. This significant figure shows that Starbucks is effective in addressing its corporate
social responsibility to this stakeholder group, although there is room for improvement.

Investors. As in any business, Starbucks must address investors as stakeholders. Investors

have interests in high financial performance of the company. Starbucks’ global expansion
and continued dominance in the coffeehouse industry indicates high financial performance.
Even though it suffered considerable decline in 2007, Starbucks has recovered and is on a
growth path once more. Thus, the firm satisfies this stakeholder group’s interests.

Governments. Starbucks must address the interests of numerous governments as

stakeholders, considering the company’s global presence. In general, Starbucks complies
with rules and regulations. However, the company has been criticized for tax evasion in
Europe. Starbucks uses a network of locations in different European countries to exploit tax
advantages. At present, much of this system remains, with Starbucks paying unexpectedly
low taxes in the U.K. Thus, the company’s comprehensive corporate social responsibility
efforts can be improved to address this stakeholder group.

Analysis of Starbucks’ CSR Performance for Stakeholders

Starbucks has high corporate social responsibility performance in addressing the interests of
most of its stakeholders. The company satisfies most of the concerns of stakeholder groups
like customers, employees, suppliers, the environment, and investors. However, Starbucks
needs to improve its CSR performance to reach a 100% CAFE-certified supply chain to
maximize environmental benefits. Starbucks can also improve its CSR performance in
addressing governments around the world by improving its tax compliance. In addition, the
firm can improve youth rates/wages to ensure satisfaction of youth workers in some markets
like New Zealand. These are the three main areas where Starbucks can change to boost its
corporate social responsibility performance to satisfy stakeholders.

Starbucks was one of the first companies to provide comprehensive health benefits and
stock to part-timers. To date, they have realized more than $1 billion worth of financial gains
in the form of stock options. And adding to the recent debate over the minimum wage for
food service workers, the company recently promised pay increases for all baristas and shift
supervisors as well as a boost to the new starting rate for employees.

“We want to redefine the role and responsibility of a public company,” Schultz says. “I think
the price of admission for that is that we have to perform.”

From the café 
to the classroom

In June, Starbucks (SBUX) added a new perk for U.S. employees: a college education. “We
began thinking about what we could do that is highly, highly relevant to our own people,”
says Schultz. The company’s internal research found that over 70% of its workforce had not
finished their bachelor’s degrees. Combined with the rising financial burden for tuition (U.S.
student debt is now over $1 trillion), Schultz says education was the obvious solution.
Starbucks now covers 100% of tuition costs for workers to finish their degrees online through
Arizona State University. More than 1,000 partners have enrolled to date.

Creating new concepts

Known for its in-store innovations, from reverse-French-press Clover coffee to its newest
Fizzio handmade sodas, Starbucks is going beyond its standard café to better serve clients.
It is testing smaller express stores in New York City that would reduce client wait times. The
brand is also pouring efforts into a new high-end roastery that will open this December in
Seattle. The Starbucks Reserve Roastery and Tasting Room is “Niketown meets Apple
meets Starbucks,” says Schultz, and will feature small-batch roasting and coffee education
amid a 15,000-square-foot interactive retail store.

Improving bits and bytes

“Starbucks made tech into an additional -competitive advantage,” says David Palmer, an
analyst with RBC Capital Markets. The -Starbucks Rewards mobile-payment -application
has 12 million active users, -making it the third-most-popular digital-payment app used by
U.S. consumers, according to Comscore, which puts it ahead of iTunes and American
Express Serve. In the Portland area the company is testing a version of the app that allows
customers to order ahead, due later this year. “In the future you can see more partnerships
that try to 
leverage this framework where they are simply a step ahead,” says Palmer.