#Starbucks Case Study: #America Thrives Because of Them

[Contributing Editor]

It’s an uphill battle in today’s world of uncertainty to sustain longevity in any line of business. Starbucks proved itself worthy of success by concentrating on their core principles by putting people first and showing concern for the customer. With a documented history of stability since the mid-1980s until now, Starbucks continues to be innovative across-the-board keeping up with overnight trend-changing.


Overview

Starbucks started as a one store operation in Seattle, Washington in 1971, according to Starbucks company timeline. They started from humble beginnings in Seattle before Howard Schultz, a new graduate of Northern Michigan University, discovered the newly launched coffee store. After having his first cup of coffee from Starbucks, he grew interest in the company thinking of ways to positively impact the business after joining as an employee.



Schultz also hails from Breukelan projects in Canarsie Brooklyn and knows what it's like to be "working poor."



Related: Howard Schultz Transformation from Brooklyn, N.Y. to Starbucks CEO


While thinking of ways to help the company grow from inception into a global business giant, he gained valuable experience as a Starbucks employee in 1982. It was only 3 years after becoming a Starbucks employee that he took his entrepreneurial vision to the next level through acquiring the company in 1985. Since 1985 until today, Schultz, CEO of Starbucks, has a proven track record of financial stability through his famous coffee brand, offering a unique combination of quality products, consumer satisfaction, and delving into Starbucks affiliated brands. Starbucks couldn’t have come this far today without the long-term vision of the visionary entrepreneur and creative business-marketing consultants.

The History of Starbucks

Something admirable about Starbucks is putting customers first. A Forbes article written by Micah Solomon mentions “By and large, and in the long run, companies that treat employees well are the same companies that treat their customers well. Look at any list of “best companies to work for” and compare with “best companies to buy from.” They’re pretty similar lists.” Successful companies never make customers feel as if they’re being put on the “back burner,” as customers quietly take account how employees act in “any business.”

'Number on List'

According to Forbes on Starbucks and where they rank, they scored number 171 for fiscal year 2015. They have a virtual market cap of $70.9 billion, according to the Forbes ranks list. Market Realist shared an interesting summary of Starbucks’ quarterly earnings since 2013. In a published article they mention “In the fourth quarter of 2014, Starbucks (SBUX) reported a net income of $587 million compared to a net loss of $1.232 billion in the fourth quarter a year ago. The growth in net income was due to higher same-store sales and unit growth, as we saw earlier in this series. Starbucks’ net profit margins were also up to 14% compared to 12.3% in the second quarter and 11% in the first quarter of 2014. The company had a litigation charge of $2.742 billion in the fiscal year ended 2013,”

They prospered in economical downturn by staying ahead through OD “organizational development” consulting. They believe external consulting is one of many ways the company can use ideas from others that delivers sustainable results. These results possibly include saving money on employee benefits, saving money on purchasing Coffee in bulk, seeking creative ways to best serve customers, and using means to keep consumers satisfied to earn repeat business such as offering free Wi-fi, lowering the price of Coffee and other products in times of heavy unemployment, and being charitable toward the community.


Staying on Their A+ Game

Starbucks keeps a watchful eye on competitive pricing. Some people want to be loyal customers to Starbucks, refusing due to Starbucks’ current price of coffee and related goods. America understands Starbucks is a luxury brand that charges luxury prices. Alternative and spontaneous pricing of Starbucks goods will potentially increase quarterly and annual profits, additionally to making some people feel they’re not “filtered out.” Some folk feel filtered out, as their current budget doesn’t have room for embracing Starbucks products.

Why change is needed? Change is always good for business. It leaves of fresh imprint in the minds of consumers knowing Starbucks is dedicated to serving their immediate needs. Something Starbucks should also take into consideration is mildly shifting focus by marketing products and services with a lower price to middle-class people. People that feel “filtered out” are possibly those that come from middle-class communities and lower income neighborhoods. Starbucks would benefit greatly from profit increases if they consider installing locations in middle-class communities and strip malls nearby low income communities, though some people living in lower income communities may not think of purchasing Starbucks products. It’ll be good for some people to know there’s a Starbucks “in the hood.”

Starbucks coming to the hood presents an image to America that Starbucks doesn’t engage in “neighborhood discrimination.” By Starbucks changing the game up spontaneously in terms of pricing, installing new locations in certain neighborhoods, and charity toward the community, they’ll benefit from a positive business reputation of being a wholehearted organization towards the enrichment of others.

From Visually.

'Implementation Plan for Change'

As nothing remains the same in today’s world, change is always necessary in any organization to stay relevant. A firm and successful implementation plan is formed by first understanding your competitor. Respecting your competitors should immediately follow first priority


A successful implementation plan consists of:

Analyzing how your competition operates in regards to customer service, increasing profit potential, marketing, and how they operate on social networks.

Enforcing employee morale such as adhering and sticking to Starbucks’ core values, cleanliness, concern for customers, punctuality, and “service with a smile.”

Randomly send “mystery shoppers” to competitors’ stores in efforts of analyzing how they operate and serve their clientele.

Spontaneous bonuses and additional incentives to employees who have a proven track record of going above and beyond for customers and striving for excellence to keep the company in a positive light.

Tracking of what works and what doesn’t with Starbucks products and services “before and after external consultation recommendations of how things should be done.”



'Intervention'

A few things will contribute to the effectiveness of change management:

Encourage ideas from everyone “lower level employees and higher up management”: this includes Starbucks cashiers, advice from change management groups and hiring multiple consulting firms and compare ideas to implement change.

Reward people financially other than external consultants for contributing their ideas for change (even if idea is not put to use).

Conduct experiments through consumer pricing of certain products to see how customers react and use consumer behavior as a means of implementing change.

Give every experiment conducted time to prove itself whether it be good or bad and use the experimentation experience as a means of improving employee performance, community relations, increased profitability, and ways employees respond to consumers when serving.

Related: Coffee on the Train


Activities contributing to effective change management:

Conducting employee surveys and using feedback for new business solutions.

Discover unique ways to work with competitors “when applicable” to benefit from new clientele in something what’s called “customer referrals.” Other words, what one competitor doesn’t serve or have in an existing product they will refer to their competitor for what’s called an “affiliate fee.” A good ploy used for business in going forward and competitors working hand-in-hand for increased profitability.

Increase community relations and sponsor college scholarships for financially underprivileged kids in low income areas.

Reporting of Starbucks’ good deeds in the community for middle-class and underprivileged people on Bloomberg, CNBC, Forbes, and Reuters. (Good way of keeping the company in the American public eye without spending on advertising, relevant, and spreading the good word-of-mouth about good deeds of Starbucks).

Rewarding customers for increased business on the spot.

Using social media and YouTube as a means of gaining “untapped clientele” without advertising spend on Google AdWords-Microsoft Bing, and e-mail capture systems to build a “permission-based e-mail list,” as a unique and free marketing ploy for gaining leverage over competitors and changing-increasing long-term profit potential.

Conclusion

Companies refusing to change with the times hurt themselves in the long run. Every company needs a consultant in efforts to helping them stay innovative and ahead of competition with marketing ideas. Most importantly, it’s crucial for companies to keep a happy employee base as employees are the life and blood of every business. Happy employees and happy customers equal healthy long-term profits and increased return on investment for investors, additionally to positive spotlight from financial news reporting agencies such as Bloomberg, CNBC, Forbes, and the street by Jim Cramer.

Starbucks understands the importance of treating customers and employees with care-respect. Not only is it essential for keeping the famous coffee business model going forward, but also a character builder for the world’s largest coffee shop giant. It keeps people coming back for more on random days when they don’t feel like spending money. Starbucks stays successful not just because of their famous name, but because they make change when needed while putting people first.

Works Cited

Forbes - Starbucks Rank and Profits. (n.d.). Retrieved from Forbes

Jones, A. (n.d.). Welcome to Market Realist. Retrieved from MarketRealist

Solomon, M. (December 31, 2013). Consulting Starbucks: How To Set Your 2014 Customer Experience And Corporate Culture Goals. Retrieved from Forbes

Starbucks Company Timeline. (n.d.). Retrieved from Starbucks