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STARBUSK CASE PART 2 http://www.scribd.com/doc/29588537/Starbucks-Defining-the-Terrain-Case-Study http://www.scribd.com/doc/99285000/Starbucks-Case-Study Discussion Questions 1. What do you think of the company's guiding principles?

Describe how the company's guiding principles would influence how a barista at a local Starbucks store does his or her job. Describe how these principles would influence how one of the company's top executives does his or her job. 2. Do you think Howard Schultz views his role more from the omnipotent or from the symbolic perspective? Explain. 3. What has made Starbucks' culture what it is? How is that culture maintained? 4. Does Starbucks encourage a customer responsive culture? An ethical culture? Explain. 5. Describe some of the specific and general environmental components that are likely to impact Starbucks. 6. How would you classify the uncertainty of the environment in which Starbucks operates? Explain. 7. What stakeholders do you think Starbucks might be most concerned with? Why? What issue(s) might each of these stakeholders want Starbucks to address? 8. Why do you think Howard Schultz is uncomfortable with the idea of legislative lobbying? Do you think his discomfort is appropriate? Why or why not? 9. What types of global economic and legal-political issues might Starbucks face? 10. You're responsible for developing a global cultural awareness program for Starbucks' executives who are leading the company's international expansion efforts. Describe what you think will be important for these executives to know. 11. Go to the company's Web site (www.starbucks.com) and find the latest Corporate Social Responsibility Annual Report. Choose one of the key areas in the report (or your professor may assign one of these areas). Describe and evaluate what the company has done in this key area. 12. What do you think the company's use of the term partners instead of employees implies? Whats your reaction to this? Do you think it matters what companies call their employees? (For instance, WalMart calls its employees associates.) Why or why not? 13. What does Starbucks' terrain look like and how is the company adapting to that terrain? 14. How effective is Starbucks at recognizing and managing its terrain? Explain.

Starbucks-Defining the Terrain As managers manage, they must be aware of the terrain or broad environment within which they plan, organize, lead, and control. The characteristics and nature of this "terrain" will influence what managers and other employees do and how they do it. And more importantly, it will affect how efficiently and effectively managers do their job of coordinating and overseeing the work of other people so that goalsorganizational and work-level or work unitcan be accomplished. What does Starbucks terrain look like and how is the company adapting to that terrain?

Starbucks Culture and Environment An orgahizati0ns culture is a mix of written and unwritten values, beliefs, and codes of behavior that influence the way work gets done and the way that people behave in organizations. And the distinct flavor of Starbucks culture can be traced to the original founders philosophies and Howard Schultz's unique beliefs about how a company should be run. The three friends (Jerry Baldwin, Gordon Bowker and Zev Siegl) who founded Starbucks in 1971 as a store in Seattle's historic Pike Place Market district did so for one reason: They loved coffee and tea and wanted Seattle to have access to the best. They had no intention of building a business empire. Their business philosophy, although never written down, was simple: "Every company must stand for something; don't just give customers what they ask for or what they think they want; and assume that your customers are intelligent and seekers of knowledge." The original Starbucks was a company passionately committed to world-class coffee and dedicated to educating its customers, one on one, about what great coffee can be. It was these qualities that ignited Howard Schultz's passion for the coffee business and inspired him to envision what Starbucks could become. Schultz continues to have that passion for his business he is the visionary and soul behind Starbucks. He visits at least 30 to 40 stores a week, talking to partners (employees) and to customers. His ideas for running a business have been called "unconventional," but Schultz doesn't care. He says, "We can be extremely profitable and competitive, with a highly regarded brand, and also be respected for treating our people well." One member of the company's board of directors says about him, "Howard is consumed with his vision of Starbucks. That means showing the good that a corporation can do for its workers, shareholders and customers."

The companys mission is as follows: "To establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles as we grow." What are those principles that guide the decisions and actions of company partners from top to bottom?

"Provide a great work environment and treat each other with respect and dignity. Embrace diversity as an essential component in the way we do business.

Apply the highest standards of excellence to the purchasing, roasting, and fresh delivery of our coffee. Develop enthusiastically satisfied customers all of the time. Contribute positively to our communities and our environment. Recognize that profitability is essential to our future success."

Starbucks' culture emphasizes keeping employees motivated and content. One thing that's been important to Howard Schultz from day one is the relationship that he has with his employees. He treasures those relationships and feels that they're critically important to the way the company develops its relationships with its customers and the way it is viewed by the public. He says, "We know that our people are the heart and soul of our success." Starbucks' 115,000-plus employees worldwide serve millions of customers each week. That's a lot of opportunities to either satisfy or disappoint the customer. The experiences customers have in the stores ultimately affect the companys relationships with its customers. That's why Starbucks has created a unique relationship with its employees. Starbucks provides all employees who work more than 20 hours a week health care benefits and stock options. Schultz says, "The most important thing l ever did was give our partners (employees) bean stock (options to buy the companys stock). That's what sets us apart and gives us a higher -quality employee, an employee that cares more." And Starbucks does care about its employees. For instance, when three Starbucks' employees were murdered in a botched robbery attempt in Washington, D.C., Schultz immediately flew there to handle the situation. In addition, he decided that all future profits from that store would go to organizations working for victims' rights and violence prevention. It probably shouldn't come as a surprise that Starbucks has the lowest level of employee attrition (leaving) of any national retailer.

As a global company with revenues well over $6 billion, Starbucks' executives recognize they must be aware of the impact the environment has on their decisions and actions. lt recently began lobbying legislators in Washington, D.C., on issues including lowering trade barriers, health care costs, and tax breaks. lt's something that Schultz didnt really want to do, but he recognizes that such efforts could be important to the companys future.

Global Challenges Starbucks does business in 36 countries outside of the United States (as of May 2006), even though about 85 percent of Starbucks' revenues come from the U.S. market. Much of the company's future growth, however, is likely to be global. In fact, the company has targeted four markets for major global expansion: China, Brazil, India, and Russia. As Starbucks continues its global push, it not only has to be concerned with the product, but it also must address staffing issues as well. The president of Starbuck

Coffee International says, "These emerging markets have a great deal to offer. They are rich in culture, heritage and untapped resources, possessing, in many cases, an eager workforce keen to better their lives, which in turn improves the social and economic situation in their respective country. "

Starbucks entered the Chinese market in 1999 and currently has 140 stores there, which it feels is an accomplishment given the fact that this is a country of tea drinkers. However, Starbucks feels there are untapped opportunities as China becomes a stronger economic force and as young newly affluent urban Chinese workers embrace drinking quality coffee products. One of the major problems that Starbucks encountered in Chinaan imitator by the name of Shanghai Xing Ba Ke coffee shops (loosely translated as "Shanghai Starbucks") that was creating customer confusionhas been resolved. A Chinese court ordered the imitator to pay Starbucks rmb 500,000 (approximately $62,000) for copying the Starbucks name and logo. This trademark protection victory was an important one for Starbucks.

Social Responsibility and Ethics Good coffee is important to Starbucks, but equally important is doing good. Starbucks takes that commitment seriously. Its Web site states, "Corporate Social Responsibility. lts the way we do business. Contributing positively to our communities and environment is so important to Starbucks that its a guiding principle of our mission statement. We jointly fulfill this commitment with partners (employees), at all levels of the company, by getting involved together to help build stronger communities and conserve natural resources." Heres a list of some of the things that Starbucks has done in relation to its corporate responsibilities: Requires its stores to donate to local causes and charities Made part-time employees eligible for health and 401(k) benefits Works to protect the rainforest Introduced recycled-content paper cups in early 2006 Introduced a bottled-water product called "Ethos" and will donate 5 cents per bottle sold to boost clean-water supplies in poorer countries Provided assistance to coffee farmers and their families in Southwest Mexico and Northwest Guatemala after Hurricane Stan in October 2005 Launched an international program to offer better pay to coffee farmers who treat their workers and the environment decently

In 2001, the company began issuing an annual corporate social responsibility report, which addresses the company's decisions and actions in relation to its products, society, the environment, and the workplace. These reports aren't simply a way for Starbucks to brag about its socially responsible actions, but are intended to stress the importance of doing business in a responsible way and to hold employees and managers accountable for their actions. Starbucks also takes its ethical commitments seriously. Each top-level manager who has financial responsibilities signs a "Code of Ethics" that affirms his or her commitment to balancing, protecting, and preserving stakeholders' interests. All store employees (partners) have resources ("Standards of Business Conduct," the Partner Guide, the Safety Security and Health Standards Manual) to help them in doing their jobs ethically. And the company created a process for employees to raise complaints and concerns they may have over questionable accounting and internal accounting controls.

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