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JoAnn HrabouskyBA 1154/29/11Business Journal Starbucks Coffee Company Starbucks Coffee Company is a publicly held for-profit international coffee and coffeehouse chain based in Seattle, Washington. It is the largest coffeehouse company in the world. The products offered are drip brewed and espresso based hot drinks, coffee beans, as well as salads and sandwiches. Coffee making accessories are also available, such as mugs, tumblers, and coffeemakers. Three partners founded Starbucks on March 30, 1971. Jerry Baldwin, Zev Siegl and Gordon Bowker started the business as a local coffee bean roaster and retailer. All three men were inspired by entrepreneur Alfred Peet’s business in selling high quality coffee beans and equipment.Now there are more than 7,500 stores across the globe under the brand of Starbucks Coffee Houses, serving more than 22 million guests annually. The world famous logo represents the environment with which the company was established in the lakes area of Seattle. In addition, the logo depicting the lady and the water dates back to the old sailor tradition of transporting coffee and the coffee trade. The Starbucks name was taken from the first mate on the Pequod ship in the novel Moby Dick.Entrepreneur Howard Shultz joined the company in 1982 as Director of Retail Operations and Marketing and advised the company should sell coffee and espresso drinks as well as beans. Starbucks has had various issues with labor relations regarding retaliation against employees trying to incorporate a union. Also, certain locations have attempted to open without planning for permission to use the premises as a restaurant. This was later rectified and the use of tables and chairs for customers was added throughout the chain. Another challenge that Starbucks is dealing with is competitors. There are numerous coffee shops all over the world and being able to stand out to generate customers is important. Their main competitors are Dunkin Donuts, McDonald’s, and Nestle. Overall, Starbucks deals with challenges and has a reputation of being able to maintain their high quality standards in a productive manner. Since Starbucks first opened their first store in 1971 they have aspired in being responsible in doing things for the planet and each other. They are finding ways to minimize their environmental footprint by recycling and promoting a ‘green’ business. Ten years ago they joined a small but growing number of companies openly assessing their corporate citizenship efforts by publishing their first annual report on these areas. With this simple step they have acknowledged their responsibilities to lead by example and put into place measures to ensure transparency and accountability for their progress and performance on community and environmental impacts of company business. Their dedication to wellness means supporting policies and efforts to improve the health of their communities in addition to offering balanced food and beverage options to customers. The coffee company also has an environmental policy regarding recycling and reducing waste. Reducing the impact of cups has reduced favorably due to the development of reusable and greener cups and encouraging customers to use their own tumblers or mugs. Every paper cup saved will help keep our forests intact. Composting is being promoted and Starbucks has introduced the campaign Grounds for your Garden in 1995, which offers customers complimentary five-pound bags of used coffee grounds to enrich garden soil. Where commercial composting is available, many stores are able to divert food waste and coffee grounds from the landfill as well. On a personal issue, ethics are derived from following the ‘Golden Rule’. If you wouldn’t want something done to yourself, then you don’t do it to someone else. I also believe that if you’re in a workplace and you do something that you don’t want anyone to know about, it’s probably an unethical deed. If companies were committing various misdeeds then it would seem reasonable that they wouldn’t want an ethics policy. It would be easy to think that your business wasn’t doing anything wrong if you didn’t have to see a policy dictating otherwise. I have had dealings with online companies that offer product trials that are nearly impossible to return an item or my credit card is automatically billed without my authorization. Customer service is non-existent and it was very difficult getting refunded. These days it pays to research an online business prior to ordering any merchandise. The most recent environmental issue in the Portland metropolitan area is the use of plastic grocery bags. They are not biodegradable and pose a threat to wild life. The proposed ban has yet to be implemented due to various controversies. Environmental disasters have forced business owners to develop a disaster plan so the functions of the company will be available to stakeholders if a catastrophe should occur. These activities may include system backups, project management, employee trees, and help desk services. These activities need to be performed daily to maintain service, consistency, and recoverability. Guidelines and procedures are needed to ensure a firm can continue without stoppage despite the circumstances or events.Today Starbucks has about 12,000 stores, almost 4,000 of which are in 36 countries outside the U.S. The company tries to change as little as possible in each new global market they enter.The CEO of Starbucks, Jim Donald states, “On a country-by-country basis, the largest hurdle we had to overcome was thinking we had to be different. There are regional differences in every market, but the main reason we are successful in the US is the same as why we are successful internationally.”Localization isn’t easy and less is usually more. Of course, the magic comes from deciding what needs to be localized – and how best to do it. They rely heavily on what their regional partners advise. For example, the peak time in China isn’t 7-10 in the morning; it’s 4-6 in the afternoon. Breakfast sandwiches in Germany are served cold with local meats and vegetables.There is also a new global store design strategy that has just been announced. Inspired by Starbucks Shared Planet, the company’s ongoing commitment to ethical sourcing, environmental stewardship, and community involvement, the new designs will reflect the character of each store’s surrounding neighborhood and help to reduce environmental impacts.The president of Starbucks Global Development, Arthur Rubinfeld states, “Our new design approach will allow customers to feel truly at home when visiting their local store and give them opportunities for discovery at our other locations around the world.” I would consider doing business overseas in a large country such as China because of the potential customer base and wide profit margin. Although, I would have to totally trust my translator not only in language barrier aspects but cultural issues as well. There would be no tolerance for cultural incompetence.Starbucks has an extensive website with numerous avenues to explore and shop. I don’t believe they have missed any opportunities considering the enormity of the company outside of e-commerce.Starbucks has also introduced two new applications for the iPhone and iPod touch that will allow users to order and pay for coffee beverages directly from the device.The app allows you to customize your favorite drink, remember friends’ or coworkers’ preferred drinks and locate nearby Starbucks stores to order them. The app allows you to share your concoction with others.The other app, the Starbucks card mobile app, is in a limited run and will allow people in select West Coast stores to pay for beverages using a bar code on a phone’s screen.The app is essentially a digitized Starbucks card: you buy credit, and then use it against purchases. The store can scan the barcode and the dollar value of the drink will be subtracted from your credit repository.Is the barcode the wave of the future? It’s unclear. But either way, it’s the easiest method invented to date on spending $5 on a cup of coffee.The positives of electronic businesses would be that you could create a world of opportunity with a potential new customer base and exposure to other businesses that might want to purchase some of your product for their own businesses. Some disadvantages would be dealing with shipping issues, high competition, and mostly, loosing the human connection with a customer.The convenience of online shopping has been the most beneficial aspect for me. It’s quick, easy and affordable. My idea of a perfect online business would be home-based service, perhaps a third party type operation where you weren’t dealing with product issues. A referral agency or floral business would be a good example.There are three primary forms of business ownership – sole proprietorship, partnership, and corporation.There are many advantages of sole proprietorship. Some of which are; ease and cost of formation, secrecy, distribution and use of profits, and only paying one income tax. Some disadvantages are unlimited liability, limited source of fund, and limited skills.The second form is partnership. Some advantages of this form are availability of capital and credit, combined knowledge of skills, and assistance in decision-making. Disadvantages include unlimited liability, distribution of profits, and limited sources of funds.The third form is corporation. Since a corporation is its own separate legal entity, there are many advantages in creating this form of business. Some are as follows: limited liability, perpetual life, external sources of funds and expansion potential. Disadvantages include double taxation, disclosure of information and employee-owner separation.Other types of ownership are available, such as joint ventures, S corporations and Limited Liability Companies (LLC).Mergers and acquisitions can be positive and negative to companies. A beneficial aspect would be improving your company’s profitability. A merger can create expansion and improve profit by reaching new groups of customers and selling new products in different geographic areas. It can also be lucrative to acquire a company by purchasing most of its stock. Although, the takeover may be hostile when the second company does not want to be taken over. The gov’t may also scrutinize against certain mergers and acquisitions in an attempt to protect customers from monopolistic practices. Starbucks Coffee Company is a publicly held corporation, traded on NASDAQ with the symbol SBUX. Howard Shultz, Chairman of Starbucks, owns 17,739,597 shares.My thought as to why this company chose a corporate form a business would be due to its sheer enormity and liability concerns. Their choices influence my opinions concerning ownership forms by reminding me of the vastness of such an entity large corporations really are. It also gives me hope in being successful by knowing that a huge conglomerate such as Starbucks started out small and was able to grow into the ‘household’ name it is today.There are three leadership styles predominate in business today. Autocratic leaders make all the decisions and then tell employees what must be done and how to do it. Democratic leaders involve their employees in decisions. Free-rein leaders let their employees work without much interference.Starbucks leaders create a unique culture for employees in which empowerment; entrepreneurship, quality, and service define the values. As an example of this leadership style, when employees brought up the lack of paid leave for adoptive parents, Starbucks responded by providing this parent group a two-week benefit.There are three levels of management. Top management is responsible for the whole organization and focuses primarily on strategic planning. Middle management develops plans for specific operating areas and carries out the general guidelines set by top management. First-line, or supervisory, management supervises the workers and day-to-day operations. Managers can also be categorized as to their area of responsibility: finance, production, and operations, human resources, marketing, or administration.Management is a process designed to achieve an organization’s objectives by using its resources effectively and efficiently in a changing environment. Management is crucial to a business being successful. Managers need to be able to harmonize the use of resources so that the business can develop, produce, and sell products, managers engage in a series of activities: planning, organizing, staffing, directing, and controlling.Free-rein leadership is the style that I respond to. If co-employees are competent and motivated, then mangers don’t need to interfere with day-to-day operations. I appreciate that demonstration of trust and confidence because that is the type of employee that I am.Most of the employers that I have dealt in the nursing field are a mix between autocratic and free rein. Objectives are mandated and for the most part, because the nurses are working as professionals, staff is able to work on their own as long as they follow protocols and procedures within company policy. Starbucks widely believes that their company’s success and rapid growth could be attributed largely to its committed and motivated workforce. Their human resource management policies and work culture have been noted to be one of the few companies in the retail sector to provide generous benefits to both full time workers as well as part timers.This ensured that employees remained motivated, and Starbucks had a relatively low employee turnover.Starbucks hires people for qualities like adaptability, dependability and the ability to work in a team. The company often stated the qualities that it looked for in employees upfront in its job postings, which allowed prospective employees to self-select themselves to a certain extent.Having selected the right kind of people, Starbucks invested in training them in the skills they would require to perform their jobs efficiently. Starbucks was one of the few retail companies to invest considerably in employees training and provide comprehensive training to all classes of employees, including part-timers.Primary posted jobs are focused on baristas and managers with projections to increase as the company grows.A supervisor position would be my idea of a dream job (with a talented barista background) that deals with employees that are team oriented, efficient, and that take pride in their work. The job description would encompass excellent managerial skills and a desire to work with people. Ability to multi-task under pressure and to have fun would be crucial. Compensation would be more than comparable to other coffee chains. If my store were gaining profit the most efficient and effective way possible, then I would be an asset to the company and would be worth every penny. Starbucks is the leading specialty coffee retailer in the nation, with over 5,000 locations in 22 international markets. Starbucks positions their products on a relatively simple plane. They focus on quality and experience, rather than price. A comparison of specialty drinks with its competitors reveals very minor differences. Starbucks' image is one of the key elements to their success. The company has realized that people don't only come for the coffee; they come for the atmosphere. People socialize, read, study, or just enjoy the music while drinking their coffee. Knowing this, Coffee shops try to make their stores unique in some way or another that will create an appealing atmosphere. Starbucks has less of a distinct setting for their locations; instead, they focus on having plenty of comfortable seating so that people feel welcome to stay longer than they might have planned. Starbucks also positions each store individually according to the specific location it is in. This flexibility has attributed to the great success of the Company in the past decade. Another important part of Starbucks' positioning is that they are environmentally friendly. While other retailers position themselves in similar ways, no one focuses to the extent that Starbucks has. Consumers seem to respond to environmentally friendly companies who seem to truly care about the future of the world. Advertising strategies used by Starbucks has also been a key success factor. 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. Starbucks's organizational culture is one of innovation and creativity. This is evident through the continuous developments of new and exciting products. Whether it's the new 4-cup thermal coffeemaker recently introduced to the market, or the Starbucks 'DoubleShot' Espresso beverage, Starbucks seems to be the market leader when it comes to new products and ideas. In November 2001, the Company introduced the 'Starbucks Card', which is a stored-value card that can be loaded and re-loaded in denominations up to $500. The Starbucks Card is a wonderful convenience tool for customers that can serve as great gifts, and reduces time spent at the cash register. This contributes to the overall enhancement of the customer's experience. Starbucks is extremely pleased with the ongoing positive customer response to the Starbucks Card. It is through the introduction of new products and the development of new distribution channels that Starbucks focuses on their Company's goal of becoming the most recognized and respected brand in the world. The Starbucks marketing strategy also incorporates into their logo design. Other than the depicted mermaid and siren, the use of color is utilized in a psychological manor. The colors are a subconscious draw into their stores. The black color suggests authority, power, and boldness and are distinguishing and classic. Green suggests status and wealth. It is also the easiest, calming color on the eye and can improve vision. Finally, the white color suggests devotion and truthfulness. For business it can be sterile and refreshing. These colors in combination tend to target the affluent customers and have been successful for this coffee company.I prefer the type of marketing similar to what Starbucks utilizes. It’s all in making the customer feel as comfortable as possible. The feeling of being ‘home away from home’ by providing comfortable furniture and lighting will keep customers around longer and they will purchase more.Some marketing strategies can be offensive to certain people. For example, if advertising is deemed inappropriate for children to view, then it must be taken into consideration and rectified. It’s all about perception.Despite challenging economic and consumer environments in the U.S. and abroad, Starbucks has seen sales and earnings rise, with key metrics pointing to broad-based improvements in its financial and operating performance and overall fiscal health. The company has reported that comparable store sales trends began to improve in the second half of fiscal 2009, and returned to positive territory in the first quarter of fiscal 2010, an improvement that contributed to the company recently reporting the highest quarterly earnings in its 39-year history.Starbucks also saw record free cash flow in fiscal 2009, and has projected that free cash flow will further increase to one billion dollars in fiscal 2010. Together, these improvements are enabling the company to continue to make key long-term investments in the U.S. and abroad, increase by 15 million the number of shares authorized for repurchase and, for the first time in its history, initiate a cash dividend to shareholders.The company reviews a year of strong financial results and outlines the blueprint for continued success. Starbucks exited fiscal 2010 and entered fiscal 2011 with record-setting financial results driven by the return of top line growth and continued operational efficiencies that resulted in dramatic margin and earnings acceleration throughout the year. This record-setting performance and the underlying health of the business establish a strong foundation from which to pursue multiple avenues of future profitable growth.This information is made available to shareholders quarterly and annually so all of the owners can evaluate and assess how profitable their investments have been. Since Starbucks is a publicly held company (traded on NASDAQ as SBUX) these reports can be viewed via their website for future investment opportunities. I was unable to find any ‘negative’ reports regarding litigations or human resource issues.People can learn to interpret financial reports by either using the Internet to aide in understanding, taking a class in accounting or seeking advice of a professional financial advisor. With all the financial controls and oversight in financial markets, scandals persist due to greed and the misconception that you can outsmart all the security and financial safeguards that a company can implement to protect its assets. Since 1971, when Starbucks opened its first store in Seattle, to today with nearly 17,000 stores around the world, this company has been committed to doing business responsibly and conducting themselves in ways that earn trust and respect from their customers, employees and neighbors. They call their cause, Starbucks Shared Planet and claim it is their commitment in doing business responsibly. They have three areas of focus: ethical sourcing, environmental stewardship and community involvement. In each of these areas goals have been set to remain on course, measure results and to share sustainability progress with the public. ................
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