A process map is a description of an audit-sensitive process. The description usually contains the process objectives, activities, data streams, and auditing or accounting impact. It aids the auditor in understanding the process and setting materiality levels. The materiality level will depend on the level of risk posed and the variability of the process. The Starbucks Process Map is based on its primary value chain activities. Each process is analyzed in detail, focusing on the accounting and hence audit significance. The primary activities are operations, inbound logistics, outbound logistics, and marketing. They are all critical to the achievement of business goals hence pose increased audit risk.
Inbound logistics
These activities are concerned with the acquisition of coffee for processing. Ineffectiveness in this part will spill over to the next part. To avoid this, Starbucks has several process objectives. They include creating and maintaining good relationships with coffee farmers, purchasing quality coffee at the lowest possible prices, creating and maintaining good working relationships with coffee exporters, and ensuring timely delivery of coffee beans to all Starbucks outlets.
The process objectives dictate the process activities. Inbound logistics in Starbucks involves activities such as identifying prospective exporters, comparing various prices, meeting exporters, and transporting coffee from the factory to stores. The data streams are information sources for the process in question. Inbound logistics has several data streams including supplier price lists, requisition forms from Starbucks outlets, and Freight insurance contracts.
Purchasing and transporting coffee beans are routine transactions in inbound logistics. Meeting with prospective suppliers in a bid to create relationships costs money. However, it is not a routine transaction. Non-routine transactions result in accounting estimates, which increase audit risk. An example of an accounting estimate in inbound logistics is the administrative cost of purchasing.
Operations
Starbucks operations are conducted in the factories where coffee beans are roasted and blended. The process objectives are such as to ensure coffee quality is maintained, to minimize the number of defects during coffee roasting, to ensure manufacturing is done at minimal cost, and to utilize technology in manufacturing.
The activities involved in achieving these objectives are roasting coffee, coffee blending, and packaging coffee. The data streams for these activities are quality reports, job order forms, manufacturing budgets, and standard and variance costing reports.
The accounting impact of operations transactions is classified into routine and non-routine transactions. Routine transactions occur repetitively and their cost can be predicted with reasonable accuracy. Examples are materials requisition, replacing worn-out machinery, labor costs, and the cost of new machinery. Non-routine costs include the cost of repairing machines that have broken down and idle-time costs. The accounting estimate that poses the greatest audit risk is depreciation. This is because it greatly affects the cost of assets on the Statement of Financial Position.
Outbound Logistics
The process objectives are to make deliveries on time, to ensure all retail coffee shops are managed efficiently, and to increase online sales. These objectives are achieved through the process activities of distribution to wholesalers, distribution to lone internet buyers, and distribution to Starbucks stores. All these activities are concerned with getting the product to the customer.
The information feeds for outbound logistics include customer orders, receipts, invoices, delivery notes, and promissory notes. The routine transactions with accounting impact are the sale of coffee in Starbucks outlets, sales to wholesalers and airlines, and payment of utility bills in outlets. The major accounting estimate in outbound logistics is the cost of bad and doubtful debts. It presents an opportunity for window dressing and should be dealt with carefully.
Marketing and sales
The process objectives of sales and marketing are:
To inform prospective customers of Starbucks products
To remind current customers to keep purchasing Starbucks coffee
To respond to customer complaints
To recruit and maintain highly talented salespeople and marketers
To determine customer needs and trends in the market so the company can take advantage of these
To maintain the Starbucks brand awareness
These objectives are achieved through carrying out advertising campaigns, public relations exercises, issuing free samples, and handling customer complaints. The process data streams are sales budgets and targets, customer feedback forms, and market surveys. Routine transactions include payment of salaries for sales staff and payment for billboards. Significant accounting estimates are made in calculating the cost of refunds. This room for subjective decision-making presents opportunities for manipulation.
Starbucks Corporation is a public company that is based in the United States. It deals with the sale of coffee. The company has more than 21,000 stores in over 60 countries. The stock of the company trades on NASDAQ with the ticker symbol SBUX. Over the past three years, total revenue for the company rose from $13,300million in 2012 to $16,448million in 2014 (Starbucks Corporation, 2014). Thus, the total growth rate during the three years was 23.66%. The sales growth rate in 2012 was 13.67%. The growth rate dropped to 11.98% in 2013 and further to 10.45% in 2014. A review of the income statement shows that the cost of revenue grew from $5,813m in 2012 to $6,859m in 2014. The total growth is equivalent to 17.99%. Further, the total operating expenses rose from $5,700m in 2012 to $6,508m in 2014 (Starbucks Corporation, 2014). The growth rate is equivalent to 14.71%. Finally, the net income dropped from $1,384m in 2012 to $8m in 2013, a decrease of 99.42%. The value rose to $2,068m in 2014, an equivalent of 257.5% (Morningstar, Inc., 2015). Thus, it can be noted that sales are growing at a higher rate than the cost of sales and operating expenses. Further, the growth rate of net income is more volatile than the growth rate of the other items. The volatility is caused by non-operating activities.
In 2011, the economic growth rate in the US was 1.6%. In 2012, the growth rate was 2.3%, while in 2013 the value was 2.2%. In 2014, the growth rate rose to 2.4% (Mitchell, 2015). Dunkin Brands Group, Inc., McDonalds corporation and Nestle S.A. The growth for the companies during the past five years is 18.38%, 3.76%, and 14. 13%, respectively (Yahoo Finance, 2015). However, the growth rate for Starbucks Corporation for the past five years is 20.20%. Thus, it can be observed that Starbuck had a higher growth rate than competitors in the industry. When preparing the budget, various items will grow at a different rate. Further, the economic growth rate will be taken into account. The interest rate for 2014 was 3.02%. The tax expense for the year 2012 amounted to $674.4m. The value dropped to ($238.7m) in 2013 (Starbucks Corporation, 2014). However, in 2014, the tax expense rose to $1,092m. Interest income and expense will remain constant while provision for income tax will be made at 34.55%.
In the case of a flexible budget, once it is prepared, it is adjusted according to the actual results. For instance, the budget is adjusted on a quarterly basis with the actual results. In the case of a statistic budget, it is prepared once for a whole year. At the end of the year, the actual results are compared with the budget. The budget acts as a control tool because it ensures that the actual activities of an entity do not significantly diverge from the planned activities. Thus, budgets ensure that resources are allocated to the planned activities. As a planning tool, a budget brings together the various units in an organization. It synchronizes the personnel, management, structure, goals, and activities to be done to achieve the objectives. Therefore, from a planning perspective, a budget converts a strategic plan of an entity into a period-based guide to the organizations activities. A budget helps in performance evaluation because the management of an entity will be able to establish whether there are variances or not by comparing the results at the end of the period with the budget.
Flexible budget
In this section, a flexible budget for Starbucks corporation will be prepared for the year 2015. The three different growth rates that will be used for sales are 18%, 14%, and 8%. The costs will grow at a rate of 14%, 10%, and 6% for high, average, and low respectively. These rates are arrived at after taking into account the economic growth rate, industry, and company growth rates. The flexible budget will focus on budgeted revenue and costs. The table presented below shows a summary of the estimation of sales and production.
2014
2015
High
Average
Low
Amount in USDm
18%
14%
8%
Sales
16,448.00
19,408.64
22,125.85
23,895.92
Ending inventory
1,091.00
1,243.74
1,368.11
1,450.20
Total available
20,499.64
23,369.59
25,264.03
Opening stock
1,091.00
1,243.74
1,368.11
Production
19,561.38
22,250.22
23,978.00
Selling price per unit
3.7
3.79
3.88
3.97
Variable cost per unit
1.48
1.52
1.55
1.59
Therefore, the flexible budget will be prepared based on the estimates presented in the table above.
The article, titled An Open Letter from Howard Schultz, CEO of Starbucks Coffee Company , is nested on appealing to customers to desist from bringing firearms into Starbucks stores and outdoor seating areas irrespective of the current laws adopted by individual states regarding the issue of owning guns in the public, commonly known as open carry laws (Schultz para. 1-4). As demonstrated by the author, the issue of having guns in the public is going against the companys vision and values, not mentioning that it is sucking Starbucks partners (employees) into a debate that should be rightfully addressed by the government and law enforcement agencies.
The pertinent theme in this article, it seems, is that the open possession of guns by customers in Starbucks stores is creating an unsettling and upsetting environment for many of the companys customers who normally visit the stores to enjoy the peace and pleasure of coffee and community (Schultz para. 2). Additionally, the management has noted a situation whereby pro-gun activists continue to use the companys stores for media events that deceptively portray it as a champion of the open carry law, while anti-gun activists take advantage of the situation by soliciting and confronting the companys customers and employees (Schultz para. 5).
It is my view that the reasons behind Schultz attempt to respectively request that customers no longer bring guns into Starbucks stores or outdoor seating areas are valid and justifiable, particularly upon the consideration that the stores exist to provide every customer with a safe and comfortable respite from the concerns of daily life (Schultz para. 2). However, the request is not grounded in law as some states in the United States permit the possession of guns in the public (Korwin 8-10), hence pro-gun activists and customers are likely to ignore the request or even switch their loyalty to other coffee stores.
The company, in my view, can handle the situation better by rolling out awareness campaigns on gun exposure by customers while in Starbucks stores and the importance of desisting from progressing pro-gun or anti-gun debates while in open spaces. Many customers are mature and willing to listen to the concerns raised by Starbucks management on the gun debate, hence the issue of requiring customers to disarm or leave the companys stores as suggested by Schultz should not arise.
To conclude, it is important to note that security concerns are fundamental for any enterprise to flourish in an extremely competitive business arena. However, the importance of customers should not be taken for granted, hence Schultz should consider using other means to drive his point home other than requesting customers to disarm or leave the companys premises. A good starting point would be to conduct awareness campaigns to reinforce the prudence use and exposure of firearms by customers.
Starbucks prides itself as the largest coffeehouse in the world. As a matter of fact, the company has more than 17800 stores. In this case, it has operations in more than 49 countries (Starbucks 18). Most of the companys stores are located in the United States of America. The company offers a wide range of coffee products. These include; deep brewed coffee, cold and hot drinks, salads and other drinks.
The company has an entertainment division that markets music, books and films. In this case, most of the companys products are meant to suit a particular market depending on the prevailing season at that particular time. In addition, these products are developed according to the needs of that locality. As a matter of fact, it offers branded ice cream and coffee (Starbucks 38). The company has been expanding rapidly since it was formed.
A lot of expansion was witnessed in the 1990s where the company opened a new store in every single working day. After opening its first store in Canada (outside USA), it has continued to open other stores in different countries. As a matter of fact, its overseas stores constitute a third of the companys operational activities. It should be known that the company had planed to open 900 new stores in 2009 (Starbucks 21). These stores were to be located outside USA in a bid to consolidate its market and operations.
On the other hand, the company had announced that it will be closing more than 900 stores in USA. Therefore, it should be known that the company has been subject to a number of protests (Starbucks 27). This has been in relation to issues that revolve around anti-competitive practices, labor relations, fair trade policies and environmental impact.
This paper will try to look at the successful execution of human resource management practices and processes at Starbucks. In this case, the paper will try to evaluate how these processes have enabled the company to achieve its goals. This is because human resource plays and important role in ensuring that a company achieves its goals and objectives.
Starbucks has been having a good human resource strategy to enhance its operations. As a matter of fact, the company has a recruitment department that ensures that it attracts the best talent in the market. Starbuck has a coffee master course that is supposed to be taken by all employees. All employees who have undergone this course wear black aprons. The company has also come up with a good mentoring program to ensure that senior and more experienced employees are able to mentor their juniors.
Discussion
Recruiting/selection
Recruitment revolves around attracting, screening and finally selecting the best individuals for a specific job in an organization. This process can be done by the firms professional recruiters or it can still be outsourced to other recruitment organizations (Legge 12). As a matter of fact, there are many stages that are involved in the recruitment process. Every firm or organization has its own ways of recruiting people or individuals.
Starbucks has continually recruited people to join its operations. Because the company has operations in more than 39 countries, it has been forced to ensure that it attracts the best talent to enhance its operations. In this case, the company manages a full cycle recruitment process. This means that candidates end up having a positive experience in the recruitment and selection process. As a matter of fact, the company has a recruitment department that ensures that it attracts the best talent in the market (Starbucks 17). The company has come up with an open recruitment process to avoid any complaints from different and diverse candidates.
Recruitment is a good topic that is supposed to be effectively addressed by all organizations (Ulrich 9). Therefore, there are many benefits that an organization can get by ensuring that it has an effective recruitment and selection process. When an organization effectively addresses this issue, it will save on time and ensure that its operations are not interrupted.
This process is very important because it speaks a lot about the organization and its activities. In this case, it will be a true reflection of the companys professionalism and validity (Legge 14). This therefore explains why Starbuck has continually enhanced its recruitment process to build on its existing professionalism. A good recruitment process enables the company to hire the right people. These people are supposed to have the necessary skills and talent to undertake their duties and responsibilities.
Starbuck has settled on an internal recruitment process because it saves on costs. In this case, it has been able to save on time and thereby enhance its operations as time goes by. There are various problems that can arise from a recruitment and selection process (Legge 6). In this case, various candidates that were supposed to be recruited can experience issues and delays as far as the recruitment process is concerned.
In extreme cases, organizations might have problems in ensuring that their recruitment process is well organized. This means that they will be having a long recruitment process. In this case, an organization might end up with the wrong person for a given job (Ulrich 14). This means that all organizations should have a fairly efficient recruitment process. It should be known that delays can lead to various technical problems that can end up affecting the whole recruitment process.
Because the recruitment and selection process is an important aspect that relates to the general well being of the organization, managers are supposed to ensure that it is well addressed for sustainability.
Starbuck has put in place the right mechanisms to enhance its recruitment process by welcoming suggestions on how it can improve its recruitment activities and processes (Starbucks 15). Managers should ensure that the organizations recruitment process is open enough to attract the best talent. This will encourage various professionals to participate in the recruitment and selection process.
Training
Training is the acquisition of knowledge, competencies and skills that relate to a specific job or responsibility. It is an essential activity for organizations because it provides them with enough skills and knowledge. This ensures that an individual has the right skills to undertake a specific job or responsibility. Training provides the necessary and specific useful competencies that employees need to undertake their tasks (Legge 34). In this case, it provides the backbone of the content that is needed for sustainability.
Current business trends require people to continually undergo training beyond their initial qualifications. This enables them to maintain, upgrade and update their skills as time goes by (Ulrich 11). As a matter of fact, training can also be referred to as professional development. This is because it improves employee performance after they have acquired the necessary skills.
Starbuck has a coffee master course that is supposed to be taken by all employees. All employees who have undergone this course wear black aprons. As a matter of act, this training educates them on coffee growing regions, coffee tasting, purchasing and roasting (Starbucks 25). The company therefore has its own training policies that are supposed to be strictly adhered to by all employees in the organization.
To accommodate fast growth, the company trains baristas and store managers on the best practices. This has enabled the company to build its image and thereby enhance its operations as time goes by (Starbucks 18). Training is a very important aspect that relates to human resource development. This is because it enhances and improves employee commitment in the organization.
Training keeps employees motivated to continue working for the organization. The business world is continually changing and organizations need to train employees throughout their career. This will enable them to stay ahead of competition as they will be motivated to face various challenges. New skills and knowledge can help employees to reduce boredom (Legge 24). As a matter of fact, it increases their confidence in the organization.
An organization should continually invest in training programs for sustainability. This increases the morale of employees because they will feel that they are very valuable for the organization to invest in them. In a broad perspective, training can be used to create positive attitudes (Ulrich 13). This is done through the clarification of attitudes and behaviors that are expected in the organization.
The most outstanding benefit of training is that it is very cost effective. This is because it is cheaper to train existing employees in relation to specific industry requirements than to hire new ones (Legge 45). Hiring new employees is very costly as they have to be integrated into the organization for sustainability. There are various problems that can arise from employee training. For instance, it is difficult to handle diverse and distinct employee attitude problems.
Some organizations might lack the necessary communication skills that are needed for effective training. Starbuck has come up with performance improvement discussions to enhance its training activities as time goes by. Productivity can be affected if various attitude problems are not dealt with as expected (Ulrich 23). There might be cases where supervisors do not have the necessary skills to carry out training activities in their respective portfolios and departments.
To enhance training programs, managers need to come up with the best and acceptable practices that will make the organization more competitive in the market place. In this case, they should be able to understand the most common causes of attitude problems in the organization (Legge 41). To address this topic effectively, they should enhance team work in the organization and encourage cooperation among employees.
This will enable them to come up with better ways of enhancing their work. As a matter of fact, a manager should undergo management training programs to remain competitive. This will increase confidence and the comfort level that mangers need to deal with various problems.
Mentoring
Mentoring is an important personal development and empowerment tool that all organizations are supposed to have for their own sustainability. This is because it encourages and supports people/ individuals and employees to maximize their potential (Legge 14). This is normally done to develop their skills and enhance their individual performance. Effective mentoring can enable employees to become what they want to be as far as their duties and responsibilities are concerned.
As a matter of fact, mentoring can help employees to progress with their careers. In this case, it is a partnership between two people who might be working in the same field (Ulrich 13). In a broad perspective, these employees might be sharing the same experiences. Mentoring should help employees to boost their confidence and morale to continue working for the organization.
Starbuck has come up with a good mentoring program to ensure that senior and more experienced employees are able to mentor their juniors (Starbucks 24). In this case, mentors rely upon their past experiences to gain a good empathy and understanding on different issues. This is because employees are supposed to be encouraged to undergo different trying moments in the course of undertaking their duties and responsibilities.
This has allowed the companys employees to explore new ideas with confidence. In the process, they have become creative in coming up with better ways of enhancing the companys operations (Starbucks 15). Through mentoring, employees have been able to identify new opportunities that the company can explore to its own advantage.
There are many benefits that come out of mentoring programs in an organization. Mentoring programs enable employees to do the right thing thereby encouraging them to perform their duties more effectively. In this case, it speeds up the process of redeploying employees to new places within the organization (Legge 19). Mentoring has also been known to enhance employee satisfaction. This is because employees who participate in mentoring programs end up with a high job satisfaction.
Another benefit of addressing employee satisfaction can be seen in employee productivity. This is because they will have a good mechanism of getting the right answers at the right time. As a matter of fact, employees can be able to rediscover and reinvent good solutions to different problems (Armstrong 27). Mentoring programs enhance career growth and succession planning. In this case, an organization can be able to grow its employees into senior positions without hiring new ones at high costs.
Mentoring gives employees synergy while reducing the levels of frustration. This is because employees who do not know how to go about their jobs and can end up being frustrated. Frustrations affect employee turnover by bringing about morale problems (Armstrong 21). This topic is very important because it is directly linked to the quality of work. There are various problems that can arise from a mentoring program.
Organizations might find it difficult to establish a good mentoring relationship between employees. This can be as a result of different rules and regulations that guide a given organization. Conflicts at work can hinder the accomplishment of a mentoring program (Armstrong 18). It might also be difficult to establish a mentoring agenda that will suit an organizations needs.
To establish an effective mentoring program, managers need to come up with a good curriculum for mentor development in the organization. This will enable them to deal with various issues and challenges that might arise as far as mentoring is concerned (Pfeffer 16). Managers should know the value of mentoring programs in their organizations as time goes by for sustainability. This will enable them to remain competitive in the ever changing business world.
Workplace violence
Workplace violence is the violence that is witnessed in different firms and organizations. As a matter of fact, it originates from various employees and employers. It should be known that workplace violence can end up threatening employees as far as their work is concerned (Pfeffer 16). This can end up affecting employee morale and productivity in the organization. In extreme cases, employees can suffer or end up being exposed to violent scenarios.
It has been known that an unpleasant work environment can increase the probability of work place violence in an organization. Employees can be stressed up as time goes by because of a poor working environment (Armstrong 27). Starbuck has been enhancing employee relationships to reduce incidences of work place violence (Starbucks 16). In this case, they are always reminded that their security is the organizations priority.
Communication and training has been occasionally done to ensure that employees are comfortable as far as their jobs are concerned. As a mater of fact, the staff at Starbuck undertakes periodic work place violence awareness programs (Starbucks 9). This enables them to be informed of the current work place violence issues. In this case, employees should be aware of all issues that relate to work place violence.
Training employees on workplace violence can save lives. This is because some of these activities can end up being fatal if they are not properly dealt with. Employees can also benefit by coming up with a good conflict management system that will end up enhancing an organizations activities (Pfeffer 20). As a matter of fact, employees will be in a better position to understand each other well. This enables an organization to create a good working environment for its employees.
There are various problems that can come out as a result of work place violence. In this case, it might be difficult to understand different employee attitudes (Armstrong 17). This is because work place violence is brought about by employee misunderstanding in the course of carrying out their duties and responsibilities.
Current managers are supposed to address this problem because it affects employee productivity and morale. In this case, they are supposed to come up with good training programs to educate employees on work related issues. This should be done by educating them to treat each other with respect. In the long run, they will have a good working relationship that will increase their own productivity.
Disciplinary procedures
Employers are supposed to use disciplinary procedures at work to tell employees that their behavior or code of conduct is not in line with the organizations expected ethics (Armstrong 23). As a matter of act, disciplinary procedures can be used to encourage improvements in productivity. It should be known that a disciplinary procedure can be used to tell an employee that something is certainly wrong as far as his duties and responsibilities are concerned.
Starbucks has different supplier social responsibility standards that it expects from its employees. In this case, suppliers are supposed to implement and come up with reasonable procedures of disciplining various employees. As a matter of fact, Starbucks uses monetary fines for its disciplinary practices (Starbucks 11). This is done to ensure employees are able to comply with the companys expectations as far as their work is concerned.
The company encourages its employees to continue being disciplined. This has ensured that they perform their duties within the companys expected code of conduct. Discipline procedures at work enable organizations to set good standards of conduct at the work place (Pfeffer 18). In a broad perspective, they ensure that an organization has fair and consistent mechanisms of treating employees.
Employers will be able to deal with various problems that relate to their employees code of conduct in the organization. As a matter of fact, an organization will be able to deal with various problems that relate to employee productivity (Legge 16). There might be problems in dealing with a given organizations disciplinary procedures. This might be seen in documenting good procedures to deal with disciplinary problems.
Overlapping grievances can also come up as a problem in executing disciplinary procedures. Problems can also arise from contractual policies that a given organization might be having as far as employment issues are concerned (Armstrong 27). This is because every organization has its own way of undertaking employment issues.
Managers should effectively understand disciplinary procedures because they have an impact on employee productivity and morale. Good disciplinary procedures will enable them to deal with distinct and emerging employee related issues.
Conclusion
I think that the company has a good approach to human resource management. This is because it has not had any human resource problems in its operations. As a matter of fact, the company has a very high rate of employee productivity. In this case, I will continually support the company as it enhances its operations in the ever changing and competitive market.
Starbuck has continued to have good human resource practices for its own sustainability. In this case, it has always reviewed its human resource practices in relation to existing industry standards and expectations. This is because it has operations in more than 49 countries.
As a matter of fact, the company has a recruitment department that ensures that it attracts the best talent in the market. The company has come up with an open recruitment process to avoid any complaints from different and diverse candidates. The process of recruitment and selection is very important because it speaks a lot about the organization and its activities.
In this case, it will be a true reflection of the companys professionalism and validity. This therefore explains why Starbuck has continually enhanced its recruitment process to build on its existing professionalism. A good recruitment process enables the company to hire the right people. These people are supposed to have the necessary skills and talent to undertake their duties and responsibilities.
Works Cited
Armstrong, Michael. A Handbook of Human Resource Management Practice. London: Kogan Page, 2006. Print.
Legge, Karen. Human Resource Management: Rhetorics and Realities. Basingstoke: Palgrave Macmillan, 2004. Print.
Pfeffer, Jeffrey. Competitive advantage through people. Harvard: Harvard Business School Press, 1994. Print.
Ulrich, Dave. Human Resource Champions: The next agenda for adding value and delivering results. Boston, Mass: Harvard Business School Press, 1996. Print.
Low morale and absenteeism are serious problems of Starbucks that cut across the industry. Starbucks could not deal properly with the aspect of motivation. On a distinctive day between 2 and 4% of employees at Starbucks fail to show up for work, which does not sound like a high rate of absence, but more time is lost for the reason of low morale and absenteeism than through strikes and lockouts. The yearly costs of low morale and absenteeism in the United States are estimated to be $29 billion and a change of 4.99% in the national absence rate changes the gross national product by $10 billion. (London, 2003) A great number of studies are done to identify the determinants of low morale and absenteeism. Many variables are found to be considerably related to indices of absence, the results appear to be unstable across situations and time.
The Way Incentives Work
Every incentive program is based on a formula for enhancing motivation that engages four fundamental variables: effort, performance, outcomes, and satisfaction. The logic behind these programs goes something like this: employees at Starbucks will put in the accurate quantity of effort to meet performance hopes if these part-time employees at Starbucks obtain the types of outcomes that include pay raises and promotions which will provide part-time employees satisfaction. In simpler words, Starbucks should provide its employees what they want, and employees will work hard to get it.
Effort => Performance => Outcomes=> Satisfaction
Conversely, the problem with most incentive programs like Starbucks is that they center exclusively on the submission of outcomes and overlook the three beliefs that are the key to making the motivation solution work:
Can one do it?
Will outcomes are tied to ones performance?
Will outcomes are satisfying to one?
The first conviction compacts with the relationship between employee effort and performance. The second compacts with the relationship between performance and outcomes. And the third compacts with the relationship between outcomes and satisfaction. These three beliefs form the basis of the belief system of motivation and performance.
Accepting that these beliefs are decisive preconditions for motivation helps to explain why incentive programs generally yield such lackluster results like in the case of Starbucks Since employees do not always hold these beliefs to be true, attempts to improve motivation by using incentives cannot make the grade, even when the incentives are highly desirable ones.
Types of Motivation Problems
One cannot do it
Motivation problem:
Lack of confidence
Associated feelings:
Self-doubt
Anxiety
Frustration
Outcomes are not tied to ones performance
Motivation problem:
Lack of trust
Associated feelings:
Skepticism
Disbelief
Mistrust
Outcomes will not be satisfying to one
Motivation problem:
Lack of satisfaction
Associated feelings:
Anger
Rebelliousness
Low Morale and Absenteeism
At Starbucks, a major transformation attempt only makes difficult the situation. If any of the three beliefs are shaky, to begin with, organizational change at Starbucks can weaken them even further. The result is often serious motivation and performance problems, at a time when organizations can least afford them, and a resultant surge in the negative emotions associated with change.
When an employee believes one cannot do it, for example, one may develop a lack of self-confidence and begin to experience many of the unpleasant feelings that go along with it: self-doubt, anxiety, and frustration. About a year into the change effort, one manager portrayed the inner turmoil one went through by comparing the restructuring to building a ship at the same time one is trying to sail it. (Mele, 2003)
Worker beliefs that outcomes are not tied to ones performance can also escort to noteworthy motivation problems, especially lack of trust. This is normally accompanied by feelings of skepticism or disbelief; precisely the emotions that another manager felt when one was told early on change effort that power would be allocated differently.
Employee beliefs that outcomes will not be satisfying to one often escort to a third major problem, chronic dissatisfaction, and feelings of anger, rebelliousness, low morale, and absenteeism. (Miner, 2002)
Like as the negative emotions allied with change can often go undetected, the motivation and performance problems that cause them frequently remain hidden and unresolved. Due to this, managers who lead change are sometimes frustrated in their efforts. They fail to realize that it is not enough to appeal to the intellect of their workers. So managers must also win employees hearts in order to implement change successfully.
Change Management
Managing Resistance to Change
One of the greatest obstacles to organizational change is resistance. Resistance usually comes from within Starbucks. Resistance could come from either the employees or top management itself. Resistance seldom comes from the customer since they usually are the beneficiary of modern-day organizational changes. Todays business environment provided competitive prices and benefits to most consumers. Employees usually have developed attachments to their Starbucks, workgroup, and way of working. The ability to adapt to changing work conditions is significant for individual and organizational survival. The change will be present and learning to manage and lead change includes not only understanding human factors but also skill to manage and lead change effectively.
Developing a Vision for Change
Vision and leadership drive successful change. As the change agent, first, you must create a vision of the future that is capable of focusing the groups energy. The vision should distinguish what is with what can be and it must be complete enough to direct awareness at how to bridge the hole to the future. Change must become a main organizational worth using customer feedback, internally developed organizational improvements, and other external feedback. Change initiatives should also be associated with efforts to improve overall performance and profitability. Support from senior management at the earliest stages of the change process is necessary for change to be successful. Furthermore, managing change successfully needs an understanding of the unknown at play, and adequate time must be allowed for implementation.
Communicating Change to the Employees
Employees also view the organizational change process differently. They often view change as troublesome. A successful change program requires that employees appreciate why the need for change is necessary. Employees must be persuaded to support the change program. Employees commitments must be associated with the companys change outcomes. During the change process, employees often wonder about how the change will be advantageous or disadvantageous to them. People require more information during the change process. They want to know how changes will affect them and how to prepare. By providing specific information to everyone at the same time, rumors can be minimized.
As the business has continued to globalize or migration of many companies to other economies, one of the most challenging aspects has focused on how Starbucks manages its human resources to sustain a competitive advantage. Scholars from several disciplines are addressing these issues-coming from the perspective of strategy, cross-cultural management, international business, organizational theory, sociology, and personnel management. It appears that the traditional boundaries between academic disciplines and functional areas are becoming more highly integrated and that the globalization of business is having a significant impact on human resource management and organizational performance. The world of work and organization has become increasingly demanding and turbulent.
There are eight major challenges currently facing Starbucks. These are: globalization, migration of many companies to other economies, increasing revenue and decreasing costs, building organizational capability, change and transformation, implementing technology, attracting and developing human capital, and ensuring fundamental and long-lasting change. Thus, levels of competition among organizations have increased.
In the present period of the migration of many companies to other economies, Starbucks can replicate the technology, manufacturing processes, products, and strategy. On the other hand, personnel management practices and organization are difficult to reproduce, in this manner representing an exceptional competitive advantage. To be successful in the future, Starbucks will have to build organizational capability. Personnel management professionals and personnel management practices will be required to create value by increasing organizational competitiveness.
How does Starbucks create a strategy that adds value to investors, customers, and employees? Organizational capability is the key and both personnel management professionals and line managers need to work together to achieve this. Burke and Cooper (2004) articulate the reasons why a people-based strategy pays dividends. High-performance management practices that are selective hiring, extensive training, sharing of information, etc. lead to performance results like innovation, productivity while being hard to copy; in the long run, profitability is maintained.
Personnel management practices influence employee skills through the acquisition and development of human capital. Effective recruitment and selection practices can provide the company with highly qualified applicants. Training and development opportunities contribute to increasing human capital. Personnel management practices can also influence levels of motivation through the use of performance appraisals, pay-for-performance incentives, and internal promotions systems based on merit. Personnel management practices can also influence the design of work so that highly motivated and skilled employees can use what they know in performing their jobs.
The past decade has produced research evidence supporting the critical role personnel management plays in the success of Starbucks. This evidence has been generated in a variety of different types of Starbucks including manufacturing, professional services, and health care.
References
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Brown, M.P., Sturman, M.C., and Simmering, M.J. (2003) Compensation policy and organizational performance: The efficiency, operational and financial implications of pays levels and pay structure. Academy of Management Journal, 46, 752-762.
Burke, R.J. and Cooper, C.L. (2004) Leading in Turbulent Times. Oxford: Blackwell Publishers Inc.
Butkus T. Raymond, Thad B. Green, (1999), Motivation, Beliefs and Organisational Transformation. Quorum Books. Westport, CT.
Cameron Judy, Pierce W. David, (2002), Pay and Motivation: Resolving the Controversy. Bergin & Garvey. Westport, CT.
Caruth L. Donald, Handlogten D. Gail, (2001), Managing Compensation (And Understanding It Too): A Handbook for the Perplexed, Quorum Books.
Cooper, C.L. and Burke, R.J. (2002) The New World of Work. Oxford: Blackwell Publishers Inc.
Gorman Phil, (2003), Motivation and Emotion. Rutledge. New York.
Hanlan Marc, (2004), High Performance Teams: How to Make Them Work, Praeger.
London Manuel, (2003), Job Feedback: Giving, Seeking, and Using Feedback for Performance Improvement, Lawrence Erlbaum Associates.
Mele R. Alfred, (2003), Motivation and Agency, Oxford University Press.
Miner B. John, (2002), Organizational Behaviour: Foundations, Theories, and Analyses, Oxford University Press.
Roe, R.A. and van den Berg, P.T. (2003) Selection in Europe: Context, developments and research agenda. European Journal of Work and Organizational Psychology, 12, 257-287.
Rynes, S.L., Trank, C.Q., Lauson, A.M., and Ilies, R. (2003) Behavioral course work in business education: Growing evidence of a legitimacy crisis. Academy of Management Learning and Education, 2, 269-283.
Thomas Neil, (2004), The Concise Adair on Teambuilding and Motivation, Thorogood.
White Geoff, Druker Janet, (2000), Reward Management: A Critical Text, Rutledge. New York.
Yancey, G., Wagner, S., Baxa, J., Alkouri, K., and Haugen, E. (2003) Is the dissemination of knowledge about industrial-organizational psychology too insulated? Psychological Reports, 92, 723-730.
The most important factors behind Starbucks decline in 2007 and 2008
In 2007, several factors stood behind Starbucks decline, among which one might note a loss of human connection. Schultz observed that the company steadily lost its connection with customers, as fewer and fewer baristas remembered clients names, and massive coffee machines hid the very process of coffee making. For Schultz, the mentioned process was of great significance, as it lay at the core of the companys success. Furthermore, the entrepreneur wanted each store to tell the story of Starbucks, with a wealth of emotional connections. Also, the redesign of outlets led to a dilution that was expressed in the loss of a friendly neighborhood atmosphere. In other words, it decreased the customers loyalty and pinpointed Starbuckss weakness among competitors.
Also, the company was insufficiently equipped within the framework of the newly emerged digital world. Stores were deprived of the opportunity to express their passion for high-quality coffee and service all over the world. In particular, the online space was not presented as a part of the companys arsenal. In this regard, plenty of localized outlets, as well as coffee farmers, could not take part in the online discussion that arose after the memo written by Schultz about the companys weaknesses was posted on the Internet. The above fact illustrated the need to join the global online community to remain successful.
Another factor faced by Starbucks was an overexposure that was seemingly the right course to pursue. However, there was a risk that the company might lose its uniqueness and become just another one of the usual coffee retailers. Although the companys revenue growth was conspicuous, it became difficult to establish appropriate relationships with new partners and stores, as well as to manage the latter.
Finally, increased competition occurred, due to growing demand and Starbucks success. The most notable competitors were Caribou Coffee and Peets Coffee & Tea chains. This situation also caused a proliferation of non-coffee companies, when food and beverage retailers began entering the coffee market. For instance, Dunkin Donuts announced a set of distinctive drinks that included the Mocha, Coolata, and others.
During the crisis, Starbucks also faced competition from McDonalds and other fast-food giants. Customers did not understand why they should buy more expensive coffee. Consequently, Starbucks assets fell significantly, as both Dunkin Donuts and McDonalds offered cheaper alternatives. As per the discussed article, the majority of factors were detected in 2007.
In 2008, Schultz noted that the company offered plenty of food. He did not like that the coffee stores sold a lot of food, as the smell of sandwiches interrupted the coffee aroma. The entrepreneur realized that coffee was what made Starbucks different from the fast-food chains, and thought about how to improve the technology of preparation. At the same time, too many products created a loss of value and confusion in customers. Also, financial metrics sounded alarm bells: The growth in the number of comp-store sales increased by only five percent, and the stock price decreased in 2008.
Speaking of the less obvious factors, it is essential to mention that overexposure was one of them. In the context of increasing revenues, it was difficult to notice the problem. Nevertheless, being an experienced entrepreneur, Schultz detected that something had gone wrong.
Thus, the stated factors impacting the decline of Starbucks showed an urgent need for transformation.
The most important aspects of Starbucks transformation
In his memo, Schultz pinpointed that the company needed to get back to its roots. Since its beginning in the 1970s, Starbucks has positioned itself as the third place, after home and work, where people can pleasurably spend their time. The smell of freshly ground coffee fills the brightly lit stores, where visitors can charge their laptops and phones from conveniently located sockets. In the majority of Starbucks coffee shops in the United States, and several other countries, there is the possibility of wireless Internet access. However, the desire to return to the roots, to some extent, contradicts the stated goal of opening 40,000 coffee stores all over the world.
In this connection, Schultz introduced some vital transformation strategies, including supporting customers loyalty to the brand, increasing the companys competitive advantage in the United States, and enhancing internal issues, such as healthcare benefits and ethical sourcing. Innovation and reinvention became the two central goals to emerge from the basis of transformation aimed at long-term changes.
The first initiative was devoted to the current state of the company in the United States, as the revenues from this part of the business were large. Consequently, Starbucks leadership was tasked to slow the quick pace of operations and close all underperforming stores.
Second, to revitalize intimacy with customers, Schultz tried to enhance the Starbucks Experience at the core of the companys performance. However, the mentioned goal was abstract to some extent. It consisted of baristas attentive relationships with customers, seasonal offerings, and an excellent coffee aroma. Schultz emphasized that Starbucks competitive advantage was in the fact that it amazingly combined standardization, comprised of process, service, location, and branding, with an individual and attractive design. Coming to any coffee store, a person can see recognizable details and compelling solutions adapted for a definite location, while by contrast, the majority of competitors look too standardized.
It should be noted that almost all advertisements concerning Starbucks and presented on social media tend to focus on emotions. Bringing people together, seeking inspiration for new and positive changes, gathering new experiences with old friends, and travelingall this draws people closer to Starbucks. At the same time, the brand engages completely different people, from entrepreneurs drinking espresso on the go to young couples stretching the pleasure of coffee. At Starbucks, there are also active freelancers and bloggers writing their new posts, as the atmosphere of the coffee shops attracts people with laptops.
Third, the organizational structure should be reorganized. For instance, while walking through New York Citys Chelsea neighborhood, Schultz saw a Clover coffee machine. According to Schultz, this was the best coffee he had tasted in 25 years of working for Starbucks. In 2008, Starbucks bought the manufacturer of that brand of coffee machines and began to set Clover in some of its coffee outlets. Also, IT capabilities, supply chain, and other organizational aspects should be reconsidered and adjusted to current requirements.
Trying to win among the new players in the market, Schultz firmly closed non-core divisions that had turned into a kind of flea market. Also, he revised the menu, removing the notorious sandwich with egg, and returned to Mastrena espresso machines that allowed customers to observe the process of coffee making. Schultz organized machines per serving, making the aroma of coffee stronger. The results were impressive. Customers rushed to Starbucks, and the stock rose. Not only trusting customers but also cautious investors believed that the spirit of transparency and open environment reigned at Starbucks for a long time. Thus, Starbucks confidently solved two key challenges: financial stability and understanding its customers.
To save Starbucks, Schultz had to implement several tough decisions. To optimize costs, the company closed 600 stores in 2008, and another 300 in 2009. Schultz aimed all the companys efforts at overcoming the consequences of the crisis and improving service. In 2008, Starbucks launched an interesting project on the Internet, a site that focused on ideas for Starbucks, called ideastorm.com. Any person, whether he is an employee of the company or a client, can share his or her idea about improving a particular store, or the company in general. It was and still is, expected that each idea would be considered, and some might even be implemented. It should be noted that before the ideas reach the company, registered users can vote for each idea.
The described transformation was crucial for Starbucks to survive in the context of a rapidly changing environment. Otherwise, the company could have lost its position in the U.S. market and turned into a typical coffee shop. Schultz used to say that if the barista was just repeating memorized actions without worrying about the taste of the beverage, it meant that Starbucks had lost the purpose for which it was created 40 years agoinspiring people. The companys mission is not to fill stomachs, but to fill souls. Here it is, the secret of Starbucks success.
Speaking of the generalization of these ideas, it should be stressed that each country has its peculiarities that should be taken into account during the expansion. As an example, one might consider Chinas coffee market. It was necessary to save the brand and satisfy the local community, as well. Therefore, the company supported the development of Arabica coffee in the Yunnan Province of China, for example. However, the Chinese needed the kind of place where they could meet with friends and family and have a great time.
This aspect promoted the expansion of Starbucks, as several Chinese partners invested in the company. As a result, Starbucks created the coffeehouse culture in China, due to acquiring and deepening the local customers loyalty. Today, Starbucks mission is not limited to the position of being the leader in the United States. From its beginnings on a national scale, the company is expanding throughout the world and aims at strengthening its position as a major supplier of coffee with the highest level of product quality.
Starbucks is redefining the role of a for-profit company
Schultz stated that Starbucks was redefining the role of a for-profit company (Koehn, McNamara, Khan, & Legris, 2014, p. 36). This statement meant that he wanted to integrate profit stimulus with social consciousness. In other words, the leadership strategy addressed plenty of issues, beginning with the appropriate healthcare services for those employees who worked more than 20 hours per week, up to investment in environmental sustainability.
From the very beginning of his work for Starbucks, Schultz devoted much attention to personnel. There are two things on which he did not scrimp: the quality of coffee, and health insurance for employees. This rule was valid even in times of crisis when the company needed to cut its costs. As in most chain retailers, most of the coffee shop workers are young people, such as students and those who are saving money to continue their education.
Especially for the latter, in 2014, Starbucks formed an association with the University of Arizona so that employees can earn credits from an online college (Perez-Pena, 2014). At the same time, the company will fully cover the costs of those students who have already studied weaned for two years. According to the calculations of The New York Times, this is about 30,000 dollars per student (Perez-Pena, 2014). Any of the 135,000 U.S. Starbucks employees who are working at least 20 hours a week might take part in the program. It should slow down the burnout of employees, increase their productivity, and attract new staff.
As one might note from the above example, Starbucks is seizing a plethora of opportunities in the framework of corporate responsibility. Furthermore, Starbucks pursues a policy of social responsibility in all aspects of its business. This applies to the selection of suppliers of coffee and includes compliance with human rights and labor standards.
For instance, Starbucks supports the Conservation International organization, encouraging sustainable technologies in agriculture and protection of biodiversity through innovative approaches to the production of coffee. The results of the program showed an increase in revenues and the number of coffee plantations located in an area of tropical forests, without damaging biodiversity. Additionally, the coffee chain sells only fair trade coffee. This means that the products sold were made without the use of child labor, and comply with social and health standards.
The bottom line of this is the social protection of employees, partners, and the environment. Thus, the principles formed within the company take into account the product, relationships with employees and customers, the companys interaction with public organizations, participation in the protection of the environment, and profits. The coordination of the two main aspects, in particular, the commitment to high standards and high-scale inner values of the company, contributes to strengthening the position of the brand and corresponds to corporate responsibility.
The company has always believed that Starbucks should and can have a positive impact on society. Therefore, the operation of the company keeps a continuing focus on corporate social responsibility:
Starbucks works with non-profit organizations to assist them in achieving objectives focused on the improvement of education, health, housing, security, and employment;
Starbucks allocates grants for young professionals, attracting thousands of people per year and considering these investments a significant contribution toward changing the world for the betterthe creation of a successful business, as well as social non-profit organizations investing in skills and promoting the improvement of the worlds economy;
Starbucks supports social projects aimed at the development of communities that produce coffee, tea, and cocoa. Projects include improvement of access to education and agricultural training, development and preservation of biodiversity, and enhancement of the level of health standards, health care, food, and water.
Areas covered in the article
The subtitles of the article indicate the content under discussion. Schultzs leadership journey, international expansion, or getting fit for the future are precise and useful subtitles, informing the reader about the core issues. Using subtitles is a good way to break the text into information blocks, as it simplifies the search for information. The additional titles are perfect for larger items, where a large volume of information is presented for one broad question. In this regard, the subtitles in this article serve as useful assistance for the reader.
References
Koehn, N. F., McNamara, K., Khan, N., & Legris, E. (2014). Starbucks Coffee Company: Transformation and Renewal. Harvard Business Review, pp. 1-71.
Financial ratios are used to predict the liquidity, solvency profitability, as well as the performance of a given company within a specified period. Thus, investors and other shareholders need to understand accurately the meaning of each ratio before making any investment related decision (Lewellen, 2004). This paper provides an in-depth financial analysis of Starbuck with more emphasis on the companys liquidity, solvency and profitability ratios. After calculation of each ratio, a short explanation will be given to highlight the revelation brought about by each ratio.
Financial Ratios
Liquidity Ratios
Some of the liquidity ratios, in this case include the quick ratio and current ratio.
Quick Ratio
One can calculate a companys quick ratio by taking into consideration the quick cash of the company expressed over the total current liabilities of the company.
Quick Ratio = [Cash + any investment in the short-run+ total companys receivables]/ Total Current Liabilities.
Starbucks Corporation recorded deterioration in its quick ratio from 2012 to 2013 (1.3 to 0.8), as well as from 2014 to 2015, (1.3 to 0.8) after an improvement from 2013 to 2014, (0.8 to 1.3). A quick ratio is used to examine the extent to which quick assets in a company are used to cover short-term creditors claims. Basing argument on the details above, it is evident that the ability of Starbucks to cover its current liabilities deteriorated from 2012 to 2013 and 2014 to 2015. However, between 2013 and 2014, Starbucks was in a good position to ensure that all its current liabilities are covered to the maximum (Starbucks Corp., 2016).
Current ratio
The current ratio of Starbucks Corporation dropped between 2012 and 2013, as well as between 2014 and 2015. In spite of such a drop, an improvement in the current ratio was recorded in between 2013 and 2014. The current ratio of Starbucks was 1.9, 1.02, 1.37, and 1.19 in 2012, 2013, 2014 and 2015 respectively. This information reveals that the current liabilities of Starbucks were high in 2013 but decreased between 2013 and 2014. In addition, there was an increase in the liabilities in the following year.
According to Lewellen (2004), a high current ratio indicates that the concerned company has the ability to pay reasonably its short-term creditors. For the case of Starbucks, its current ratio fluctuates from one year to the other.
Liquidity ratios are very important in accessing the financial stability of a company. It is important to compare the current and quick ratios before making any conclusion regarding the liquidity of any given company. In a case where the liabilities are very high compared to the companys assets, such a company is on the verge of becoming insolvent. In the case of Starbucks, it is evident that the company is able to pay its debts (Starbucks Corp., 2016). However, the decline in quick and cash ratios from 2014 to 2015 depicts a case of non-liquid inventories that are in excess. For this reason, the company ought to monitor and control its non-liquid inventories.
Solvency Ratios
Debt to assets
The debt to assets of Starbucks improved from 2012 to 2013 (0.38 to 0.61), deteriorated from 2013 to 2014 (0.61 to 0.51), before a slight improvement from 2014 to 2015 (0.51 to 0.53). A debt to assets ratio is used to express the fraction of financing that comes from creditors as opposed what owner-shareholders can contribute. As such, a high debt to assets ratio shows that the given company relies more on creditors than on its assets for its total financing.
Debt to Equity
The debt to equity increased between 2012 and 2013 (0.6 to1.6), registering a significant deterioration between 2013 and 2014, (1.6 to 1.0). However, there was an insignificant improvement between 2014 and 2015, (1.0 to 1.1). Debt to equity ratio expresses the total finance received from creditors in comparison to financing from owner-stockholders.
Solvency ratios are necessary for ascertaining how much of a companys assets and equity is used in financing its liabilities. In the long-run, debt to equity and debt to assets are often considered to be alternative benchmarks in the measurement of the solvency of a given company. In the case of Starbucks Corporation, it is evident that the company had a relatively low debt to equity ratio in 2012, compared to the other three years (Starbucks Corp., 2016). This shows that Starbucks used a significantly small amount of its total equity in financing debts in 2013 (Latif & Qurat-ul-ain, 2014). In addition, the company has a low debt to assets ratio. The implication is that Starbucks Corporation has a low risk in terms of its cash flows being used in covering the companys debts.
Profitability Ratios
Return on Equity
The Return on Equity of Starbucks Corporation decreased from 2012 to 2013 (27% 2%) but increased considerably for the next three years (2%, 40%, 50%). The Return on Equity of any company is used in the measurement of the amount of revenue that a given company gets after a certain investment.
Return on Assets
There was a decrease in the companys return on assets between 2012 and 2013 (31% to 4%), before an improvement from 2013 to 2015 (4%, 47%, 50%). Investors use companies Return on Assets ratio to ascertain how effective a given company is in the management of its assets in their daily operations to generate profit.
Profitability ratios play a significant role to shareholders, potential and the concerned company. This is attributable to the fact that such ratios express the effectiveness of a company in using shareholders capital, as well as in the generation of profit based on available assets (Wahlen, Baginski, Bradshaw & Stickney, 2011). Often, a decline in the ROA and ROE implies that the concerned company is not using its assets well to generate profit and that it has high interest expenses that lead to high debt. In the case of Starbucks, the ROA and ROE are high except in 2013. The implication is that Starbucks has low debt due to low expenses on interests, and that its assets are used well to generate profit for the company.
From the financial analysis of Starbucks, it was evident that the company is in a stable financial position both in terms of profitability, and solvency. This explains why the company was able to sustain effects of the economic crisis (Latif & Qurat-ul-ain, 2014). Such a position can be attributed to the fact that the company has low debt, implying that little shareholders equity and assets are used in financing debts. However, to remain profitable, the company should ensure that it eliminates debts, works on having low non-liquid inventory, and use its assets effectively in profit generation.
References
Latif, M., & Qurat-ul-ain, H. (2014). Starbucks sustained during economic crisis. International Journal of Accounting and Financial Reporting, 4(1), 1-15.
Lewellen, J. (2004). Predicting returns with financial ratios. Journal of Financial Economics, 74(2), 209-235.
Starbucks is an international company that operates on a global scale. Its organizational culture is influenced by the multinational environment and socio-economic changes. International staffing and development help to organize HR in accordance with the needs of the company. On the other hand, there is a positive impact of this culture on an organization expressed in low diversity levels and homogeneous culture shared by all employees. In spite of great criticism, Thesis Exceptional service and high-quality standards attract millions of customers around the world and help Starbucks create a core of loyal supporters.
Cause: Exceptional service
Exceptional service is the main priority of Starbucks supported by a friendly atmosphere and positive organizational climate. Starbucks gives some thought to how intercultural differences impede or enhance business success. Diversity has a great impact on the decisions of managers and is based on the removal of prejudice from the organization and the individuals it employs (Starbucks Corporation 1999). It has also been acknowledged that the managers of Starbucks have important obligations to a variety of stakeholders and not just the shareholders, and this should be reflected in the organizations statements of purpose, such as mission statements. The keystone value in the effort to build a company with soul was that the company would never stop pursuing the perfect cup of coffee (Starbucks Corporation, 1999). Starbucks follows a conservative Strategy characterized by slow growth and a stable environment. Innovations as a part of organization culture require participative processes and result in the sharing of information across departments, functions, and organizational levels; team decision making; conflict resolution; and deference to the person with the best idea rather than the most senior title. Many people are struggling to determine the shape of the innovative organization (Starbucks Coffee Company, n.d.).
Effect: Unique ideology and philosophy
These policies lead to a unique ideology and philosophy followed by Starbucks for many years. At Starbucks, coffee pricing strategies are perceived in terms of the whole product line rather than in terms of each product. For example, some coffee products (including beverages) are priced to engender prestige for the rest of the line rather than to gain their sales. Other prices (for coffee beans) are set to permit trading up, to establish images, or to meet coffee price lines and price points. At Starbucks, price differentials are subject to administration scrutiny and regulation. They are set based on quantity, distribution level, geo-graphic area, and cash payment. Starbucks proposes distribution discounts instituted on a net or list basis according to distribution levels. Quantity discounts are cumulative or noncumulative and apply to part of a line or a whole line (Dobson and Starkey 22). Basing points, f.o.b. factory, and uniform delivered pricing are issues of geographic differentials. For Starbucks, legal issues, price discrimination can be defended on the basis of meeting competition in good faith, of cost savings in dealing with dissimilar customers, and of promoting and not injuring competition. It is the effect of price discrimination, and not the act itself, that determines legality. Though these legal constraints are significant in establishing price differentials, the realistic guidelines are confusing and the economic consequences are mixed since price favoritism can actually benefit society. In the USA, both the Federal Trade Commission and the Justice Department are interested in pricing practices, particularly in the administration of prices. In the administration of price differentials, marketing managers must be concerned with legal problems of collusion and price discrimination as well as the impact on sales, profits, and competition.
Cause: High-quality standards
High-quality standards create a positive image of the company and allow Starbucks to set a premium price for its products. Coffee pricing strategies consider both cost and demand conditions, and the dynamics of markets, thereby accounting for both internal and external variables. Though the determination of an optimal coffee price is usually impossible, a satisfactory one can be developed by market research. The major pricing decisions at Starbucks include determining prices for each product or service, discount structures, price relationships among coffee lines, and price maintenance levels. Problems encountered in establishing prices recount to the inability to determine costs exactly, the difficulties of dealing with expectations, and the variations in the impact of coffee policies on different products in a companys product line. Marketing aptitude is a critical component of effective price determination (Drejer, p. 98).
Effect: Competitive position on the market
As a result, pricing strategies are adopted that tend to depress or invite competitors, that relate to the payout in research and development, or that generate images of qualities or bargains. Companies can decide to have high, low, or competitive prices. Starbucks followers or leaders use several bases for price variations: geographical coffee price discrimination (single and multiple points, f.o.b. factory, freight payment, and equalization, and zone pricing), discounts and allowances (quantity, seasonal, cash, trade, and advertising discounts), channel and service discounts, guarantees against price, and Starbucks prices over time (Fill, p. 41).
Conclusion
In sum, according to organizational analysis, the remarkable feature of Starbucks is monoculture which affects all spheres of organizational performance and human relations. Starbucks is often criticized for this strategy that threatens individual differences. Exceptional service and high-quality standards attract millions of buyers and create a positive image of the company on a global scale. Starbuckss pricing strategies are reviewed and overhauled, for they tend to become baked in and to mirror traditional approaches, especially in retailing.
Works Cited
Dobson, P., Starkey, K. The Strategic Management: Issues and Cases. Blackwell Publishing, 2004.
Drejer, A. Strategic Management and Core Competencies: Theory and Application. Quorum Books, 2002.
Fill, C. Marketing Communication: Contexts, Contents, and Strategies 2 edn. Upper Saddle River, NJ: Prentice Hall, 1999.
Starbucks Coffee Company. 2005.
Starbucks Corporation. 1999.
Starbucks Human Resource Management Policies and the Growth Challenge. 1999.
Starbucks is a conglomeration of firms that specialize in the production of hot and cold beverages and a variety of snacks. It faces stiff competition from both fast-food restaurants and drinks companies like McDonalds and PepsiCo respectively (Burks 20). Starbucks offers part-time benefits to its employees despite the reluctance of other companies to do so.
Reasons Why Starbucks Offers a Variety of Part-Time Benefits
Starbucks believes that it is better to pay its employees for work done during extra time than hire new ones because its workers have experience and understand its operations better than recruits. (Burks 50). It believes that it is better to source labor from within its staff that is highly experienced and qualified than recruiting new ones. Moreover, it knows that its employees understand the company policies and procedures, and this will eliminate the need to train new employees about its regulations.
Secondly, Starbucks believes in spending a reasonable amount of resources on its production activities, and that is why it offers part-time benefits to its employees. Most companies lower their operating cost, and this is achieved by paying part-time employees an hourly wage. They can change their work hours as they prefer, and this gives them ample time to access the work done and pay them accordingly (Blumenthal 20). Most companies use the approach of part-time offers to reduce costs associated with permanent employment. This company cuts costs and saves a lot of time by having part-time employees when it is necessary to do so.
Thirdly, Starbucks does not have an all-high demand season for its products and services. It offers part-time benefits to its employees because the nature of its activities does not require urgency. This company specializes in producing products that require training and experience. It cannot just recruit employees and expect them to produce good results. That is why it decides to offer short-term benefits to its existing employees to be sure that they will deliver what the company expects from them. Managers can schedule when work is required, available and urgent to the market. Therefore, this makes various companies adopt this part-time payback approach to fill dusk and weekend hours not done by full members of staff.
Starbucks finds it easy to offer part-time benefits to determine if their employees are suitable for a particular job. Short-term positions offer a way to create a center of attention to capable and know-how workers. Therefore, it offers a diversity of part-time benefits to its staff (Blumenthal 66). It offers short-term benefits to its employees because it wants to motivate them to work hard and earn extra income.
Conclusion
Starbucks, as opposed to other corporations, has offered a variety of part-time benefits to its employees and achieved a lot of benefits. This has improved its operations and helped it in hiring various professionals for short-term and seasonal jobs. It has expanded its operations by recruiting qualified staff and offering incentives to ensure they perform well in their departments.
Works Cited
Blumenthal, Karen. Grande Expectations: A Year in The life of Starbucks Stock. New York: Crown Business, 2008. Print.
Burks, Bussing R. Starbucks Corporations That Changed World. Connecticut: Green Publishing, 2009. Print.
The concept of employee training has become a common subject for researchers and practitioners over the years. The primary principle behind training is providing a workforce with flexibility and freedom in making decisions related to work based on knowledge and skills. This is an anti-thesis of traditional management strategies that place much emphasis on total control, hierarchy and rigidity (Noe et al, 202).
Phillip (42) suggested that the real meaning behind training is related to the concept of skills and knowledge expansion; therefore implying that well trained employees have the capacity to make rational decisions. This becomes more poignant when training on the skills in the application of new office equipment becomes the focus of training needs assessment.
According to Noe et al (2003), the first step towards establishing an effective training regime, which shall link the organizations needs with the training, involves conducting a needs assessment. They define the needs assessment as the process of evaluating the organization, individual employees, and employees tasks to determine what kinds of training, if any, are necessary (Noe et al, 203).
In other quarters, this is referred to as the training needs assessment. The needs assessment is made up of three disparate parts, which include organization, person, and task analysis. Noe et al (204) depict this process as shown in the figure below:
Green (55) asserts the importance of employee training for the enhancement of employee productivity and product quality. He posits that training forms one of the most critical components in an organizations list of priorities. This is because poorly trained and unskilled staff can be very costly to an organization. According to Green (44), poorly trained and unskilled managers can lead to reduced performance and increase in retaliation claims. In addition to the above, necessary skills and knowledge are pointers to profitability and business success.
Purpose of the research
Despite the fact that researchers have studied the role of employee training on new in a wider scope, much of the studies have centred on a limited range of issues that failed to explore various aspects of strategic employee training (Collins and Clark, 745). In fact, todays modern office looks nothing like it did just 20 years ago as it is outfitted with some of the most modern systems and equipment; the office of today is a contemporary and sleek place of business (Boxall and Purcell, 23).
It is important to not only make training an integral part of an organization, but also ensure that it is continuous and sustainable. The purpose of this research will examine effective training of employees of star-bucks coffee employees on the use new equipments aimed at enhancing their knowledge, skills and productivity.
Scope of the research
The research will begin by taking stock of the current status of employee skills and knowledge on the use of new equipments. This will be followed by an analysis of the training gaps that exist within star-bucks employees to effectively use new equipments within the chain of production. This research is expected to provide areas of focus and effective training methods for handling the areas that demand immediate attention.
Limitations of the study
While every effort has been made to in the selection of instruments for this research in order to provide validity and reliability, a number of limitations can nonetheless be deducted. The first is with regards to the instruments of research adopted, that may actually fail to provide for sensitivity between the participants. The second limitation is with regards to the fact that the whole research will be conducted within the set up of a single organization. The final limitation is that because random assignment will not be possible, the use of intact groups will become a necessity.
Data Collection
This investigation will use a descriptive-co-relational research design. The study will be carried out through the use of the quantitative research approach, which is best considered by the researcher during the planning phase of a study. Numerical or statistical data are generated by gathering raw numerical information from reliable sources. Survey questionnaires will deployed to selected employees of Star Bucks.
To ensure validity, the questionnaire will be thoroughly developed to capture all aspects of training and total quality management o yield valid results. Moreover, an expert on this topic will be consulted to further confirm the face and content validity of the survey questionnaire, to increase the likelihood of valid outcomes. The instrument that will be used for primary data gathering is a combination of adapted, standardized questionnaires, and statements which are dovetailed to attain the objectives of the study. The first portion of the instrument inquired about the demographic profile of the respondents, specifically, their gender, age, civil status, tenure, and job level.
The second portion of the questionnaire is meant to ascertain the current training practices which have been experienced by Starbucks employees The Multifactor Training Questionnaire represents novel training framework which encompasses all approaches to training that may be investigated empirically. This research will adopt a semi-structured approach. It consists of a series of close-ended and open-ended questions designed to elicit responses from the participants (Creswell, 203).
With regard to both type of questions, Creswell asserts that close-ended questions provide useful information to support theories and concepts in the literature , while open-ended questions allow participants to provide personal experiences that may be outside or beyond those identified in the close-ended options (p. 205). Therefore, the reason for selecting a semi-structured questions for the present study relates to the fact that this approach has, not only the ability to gather data that can be later compared and contrasted, but also allows participants to describe in depth personal information.
Time Scale
The project should be completed in March, 2012. This must be before submission of the project report at the end of April, 2012. The actions, plan and timing will in followed as indicated in the time frame below. It is expected that the research will follow the time scale as indicated below and the supervisor will have the opportunity to watch the entire development of the progress of the research paper.
September: Start Literature Search.
September to October: Design Research Surveys Questionnaires approved with the Supervisor.
October to January: Collect Data Preparation Framework.
January to March: Data come up with the proposed suggestions of Analysis & Interpretation.
It is expected that the project will be complete by April, 2012.
Request for Proposal
Bringing together all the relevant knowledge, concepts and ideologies acquired in the course of this entire course, the researcher envisages that this research topic will provide a firm foundation for critical thinking and quantitative reasoning not only developing a critical analysis of the training gaps within the institution of choice but also coming up with recommendations that are capable and viable in this challenge. The level of critical thinking will be demonstrated by the manner and approach in which the aspects of this topic will be dissected and presented while at the same taking a keen cognizance of the current training needs.
The theoretical knowledge retrieved from the thesis will be made public and technically used in influencing policies aimed at mitigating the training challenges within organizations. In conclusion, it is expected that this topic will effectively fill in the gaps in implementing effective training approaches in regard to the continuously changing office equipment.
Works Cited
Boxall, Peter and Purcell, James. Strategy and Human Resource Management. Basingstoke: Palgrave Macmillan.2002.
Collins, John & Clark, Dirk. Strategic human resource practices, top management team social networks, and firm performance: The role of human resource practice in creating organisational competitive advantage. Academy of Management Journal. 46(6) pp. 740-751. 2003.
Creswell, J. W. Research design: Qualitative, quantitative, and mixed methods approaches (3rd ed.). Los Angles: Sage. 2009.
Green, Marnie. Internal Human Resources Consulting: Why Doesnt Your Staff Get It? Public Personnel Management, vol.31, no. 1, pp. 44-51. 2002.
Noe, Raymond, Hollenbeck, John, and Gerhart, Barry. Fundamentals of human resource management, New York: McGraw-Hill Companies. 2007.
Philips, Pulliam, Measuring and evaluating training, Virginia, USA: American Society for Training and Development. 2010.
