Competitive Strategy of Starbucks Corporation

Starbucks is a leading company in coffee chain business. The company is growing at an immense rate. The company is known for its tasty coffee and value not forgetting excellent customer service. The company has aligned itself strategically to ensure that it makes progressive steps towards being on the competitive edge. The mission, vision, and goals of Starbucks reinforce the company`s culture. Essentially, Starbucks utilizes its employees to build a reputation and culture for the company.  Starbucks` operation in the beverage industry is not limited to competition. The company has dominated the beverage industry due to its uniqueness. Other than just providing plain coffee, the company has iced coffee, energy coffee drinks and bottled coffee drinks containing Frappuccino. The company utilizes the differentiation strategy in providing its products in the bid to take the lead in a highly competitive industry. The company`s financial performance up to date reflects a growing organization. Starbucks profits are gradually increasing with time. The company has experienced moderate competition as there are Starbucks favors inclusion and diversity at the place of work. As such, the company`s human resource team is vibrant. The company has a human resource program that keeps Starbuck prepared on matters of supply of labor in the business. The company takes a keen interest in the recruitment of its employees since talented employees are of more value to the company. The company can use a range of proposed the metrics to determine the effectiveness of the human resource initiatives.

Human Resources Measurement Plan for Starbucks

Organizational Overview

Starbucks Corporation is a company based in the United States with its headquarters in Seattle, Washington. The company was established in the early 70s, and it currently operates on coffeehouses chains. The founders of the company include Gordon Bowker, Jerry Baldwin, and Zev Siegl. Currently, the corporation operates in nearly 30, 000 locations globally (Harper, 2018).

Mission, Vision, and Values

Mission Statement

Starbuck`s Mission states that the company is devoted towards inspiring and nurturing the human spirit that includes a single individual, one cup and a neighborhood at a time (Starbucks, 2018).

Vision Statement

Starbucks vision statement, although not explicit, is to establish the Starbucks Coffee Corporation as the best purveyor of the most exceptional coffee in the world while maintaining the company`s adamant principles (Starbucks, 2018).

Starbucks Values

The company is dedicated to several values that help to keep the company moving forward. The values hold together the Starbucks fraternity assisting the corporation to grow as a team. The company`s values are shared across its partners, the customers, and the company itself. The values include:

Ø Establishing a warm culture where every stakeholder feels welcome and a sense of belonging.

Ø The company also values boldness in the bid to knock out the status quo in the bid to find new workable means to grow not only the corporation but each at a personal level.

Ø The company values immediacy while ensuring the transparency, dignity, and respect are upheld.

Ø Starbucks also treasures good results, and the company is dedicated to delivering the best in what they do while not forgetting that the corporation is accountable for its actions.

Ø Finally, the company offers assurance about its drive for performance while ensuring humanity in achievement.

Corporate Strategy

The corporate strategy can be analyzed through the application of the generic strategy approach that entails cost leadership, focus, and differentiation strategies.

Figure 1: The corporate strategy adopted by Starbucks Corporation (Lee & Kim, 2018).

The Starbucks Corporation has adopted the differentiation strategy since the company offers uniqueness to its valued customers. Their product is different from that of competitors considering that Starbucks coffee provides taste and value. For instance, coffee at Starbucks is served with ice cream, and the pastries are unique (Lee & Kim, 2018). The company reaches out for the differentiation strategy uniquely, and it is evident from every step of the operation. Starbucks is usually concerned with the suitable coffee bean to use in their coffee. That being the case, the company sources its raw materials of coffee beans from East Africa, South East Asia and Latin America (Nenonen & Storbacka, 2018).

So far, Starbucks has managed to stand in the competition differently.  The company has changed coffee, one of the oldest commodities in the world to a lasting, valuable and differentiated brand. Starbucks utilization of the differentiation corporate strategy over the low-cost strategy has enabled the company to be on the competitive edge. As such, the company is unlikely to be affected by the changes in the external market. Starbucks has a positive reputation, characterized by its high quality services, customer experience, and innovativeness (Lee & Kim, 2018).

Competitive Strategy

Analysis of Starbucks Competitive Strategy

Over the years, Starbucks has maintained a competitive lead in the beverage industry. Using Porter’s five forces analysis of Starbucks, it is evident that the threat of new entrants in the market is moderate.  Companies such as The Third Place are among the new entrants in the coffee chain business. The barriers to entry have been high, thus limiting the number of new competitors willing to enter the market. However, the threat of substitutes is high considering that the beverage industry has a wide range of products ranging from tea, water, fruit juices, energy drinks, and sodas. Consumers are also not restricted from making their coffee back at homes.

 Figure 2: Porter`s Five Forces Analysis for the competitive strategy at Starbucks (Harper, 2018).

The bargaining power of buyers at Starbucks ranges from moderate and low. The reason is that Starbucks offers a wide range of products and it has the advantage that it has a broad customer base. However, Starbucks rivalry ranges from high to moderate. Starbucks has the most significant market share in the beverage industry (Lee & Kim, 2018). 

Financial/Organizational Performance to Date

The financial measures of Starbucks are reflected in the company annual report to its shareholders. Between 2005 and 2017, the company has grown tremendously. After adding seven stores a day back in the year 2007, the company recorded massive growth. The net sales of the company in the 2017 financial year were $ 22.40 billion. In the 2016 fiscal year, the company`s revenue was at $21.31 billion thus recording a percentage increase in sales by 5.11% (Nangoy, 2018). The consolidated statement is illustrated in the appendix.

Current Goals and Objectives

The current goals and objectives of Starbucks are;

Ø Starbucks is working towards increasing its penetration into a more extensive market share.

Ø The company is devoted to inclusion and diversity in the workplace.

Ø Starbucks is also dedicated to increasing its profit margin.

Ø The company has also settled on offering products of high quality.

 Human Resources Programs Overview

The Starbucks Corporation is committed to its human resource that includes employees. The company has accommodated inclusion in its critical human resource functions in that the current workforce at Starbuck is drawn from people of different origin in the bid to encourage diversity in the workplace (Porter & Norris, 2012). The corporation`s employees are vital to its current and future growth. Among the human resource programs, that Starbucks has adopted is the group interview model. In conducting its interviews, Starbucks has used the model to get to learn the qualities and capabilities of its employees.

Proposed Human Resources Measures

Human resource measures are expected to create value in the organization. The metrics used are also supposed to determine the effectiveness of the HR initiatives. Many organizations measure their human resource performance to gauge where the company`s employee lie in light of the overgrowing competition of businesses in the 21st century. Various specific measures can be utilized in the assessment of financial and strategic value in the drive towards the initiation of new initiatives.

Staff Turnover

Staff turnover falls under the strategic value measure. The human resource must always seek to know the labor supply and demand required by the organization. A ratio of the turnover rate of employees finds out to what percentage rate employees are leaving the organization to go and join competitors. Some level of staff turnover is crucial in a company so that new ideas and new tactics of carrying out the business activities can be developed through a new workforce. On the other hand, a high turnover ratio can hamper the process of growth in a corporation (Kavanagh & Johnson, 2017). In recent years, Starbuck has not suffered by employee turnover. However, in other organizations that operates in the same product line as Starbucks have been profoundly hit with a range of between 140% to 410% turnover rate. Starbucks turnover rate ranges at 66%, although the rate should not stop a measure from taking place. Among the key implementations that Starbuck utilized to avoid employee turnover include offering of competitive rewards to employees and engagement of the workforce in critical operations of the company (Lee & Kim, 2018).

A plan for measuring of employee turnover at Starbucks, therefore, involves identifying the percentage number of employees who quit the company over the last year and compare the number with the percentage number of the previous year. After identifying, the next thing should be to sort the number of people who left to analyze the unwanted staff turnover rate. A breakdown of the list should provide employees who left a gap after leaving and those the company did not mind losing (Dulebohn & Johnson, 2013).

Staff Engagement

Staff engagement can also be used to gauge the strategic and financial value of current key human relations initiatives. An organization with a strong culture has the advantage that its employees are usually engaged in the decision-making process. As such, it is vital to measure staff engagement to drive initiatives that can support the overall strategy of the organization. Hence, a survey can be used to find out the level at which employees feel entirely involved in business decision making (Rojas, 2018).

Average Time for Recruitment

The average time for recruitment is a strategic measure that determines the time that an organization spends looking for new employees to fill vacant positions. An organization that works with an inadequate number of employees cannot realize its strategic goals and objectives. A measure that can be implemented in the case where an organization needs to recruit employees is to ensure that the human resource managers hire employees when they find competent individuals (Lussier & Hendon, 2018).

Interviewing Leaving Employees

The exit words between human resource managers and the employees quitting the organization can be used to measure the financial and strategic value of key HR initiatives. The individuals can provide the reasons for leaving. Furthermore, one of the best ways a company can know about employee`s perception of the organization is by listening to employees who are already exiting the organization. Interviewing leaving employees is a return on investments measure. First, when an organization invests in recruiting employees, it expects to earn some profits from their output before they leave the company (Kavanagh & Johnson, 2017).

Independent exit interviewing of employees can be used to measure whether the business needs to change the current initiatives. Employees leaving the company can provide a range of feedback from feelings about management, roles and pay. Such responses can be collated through trend analysis to come up with improvement scores that will be used in new initiatives in the long run (Dulebon & Johnson, 2013).

Absenteeism

Absenteeism of employees in the workplace tells more about the relationship of the management with the workforce. When an organization experiences reduced absenteeism, it can be interpreted that the staff is well engaged and motivated to work. Hence, the annual number of absenteeism can be used to foretell if the human resource managers in the organization need to change the current employee staff relationship or not. Moreover, the rate of absenteeism can show the level of personal discipline with the employees (Gatewood et al., 2015).

Implementation Plan

    An implementation plan is necessary as it sets out what should be done to change the current situations. Similarly, Starbucks Corporation will need an intervention plan to finalize the workability of the human resource measures required to be put in place.

Staff turnover rate needs a plan of how it can be mitigated. Managers must ensure that they measure job satisfaction among the employees to build engagement with employees. Supervisors in the organization are the closest to the employees, and therefore it is crucial for them to influence employee attrition (Schaltegger & Burritt, 2018). Conducting stay interviews can help to keep employees in the organization longer. In the stay interviews, the managers and the employees must discuss the things that are working and the things that are not working. At least by addressing the critical issues, the turnover rate can be reduced by 0.01% monthly reduction (Cascio & Aguinis, 2005).  

The managers in the organization of Starbuck can reduce employee absenteeism by creating an employee attendance sheet. The sheet should be filled on a daily basis concerning the arrival and the departure time of the workers. From such information, the managers and supervisors can identify the trend that emerges after observing the attendance for a month. Notably, reviewing the attendance sheet within a month can help in solving real time issues that can be personal or job-related (Itam & Bagali, 2018).  Cases of absenteeism caused by personal issues can be directed to the human resource development department. Thus, the employee in question can be counseled before the situation gets worse. Alternatively, the workers whose absenteeism is caused by personal related problems can be taken through an Employee assistance program. From the same employees` attendance sheet, senior managers can embark on rewarding good attendance of employees to influence motivation in the employees’ fraternity (Bryson, 2018).

Staff engagement is another issue that would require being implemented. Employees that are engaged by their seniors feel recognized, trusted, self-confident and respected. Managers can use questionnaires and surveys to gauge employees’ feelings and emotions. Managers can establish employee engagement programs to share about issues that make the employees uncomfortable in their duties. Such discussion forums can enhance a good working relationship with the company (Jackson et al., 2014).

Closing Note

Starbuck has achieved diversity in the organization. However, there are a lot of other issues that the company is facing concerning its human resource. There is a need for the company to curb some of the challenges it is facing that emanate from employees. As such, the implementation plan is valuable in turning around the relationship between the company and its employees.

References

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Cascio, W. F., & Aguinis, H. (2005). Applied psychology in human resource management.

Dulebohn, J. H., & Johnson, R. D. (2013). Human resource metrics and decision support: A classification framework. Human Resource Management Review, 23(1), 71-83.

Gatewood, R., Feild, H. S., & Barrick, M. (2015). Human resource selection. Nelson Education.

Harper, J. (2018). Catalyst Connects: San Francisco. Catalyst.

Itam, U., & Bagali, M. M. (2018). Diversity and Inclusion Management: A Focus on Employee Engagement. In Management Techniques for a Diverse and Cross-Cultural Workforce (pp. 149-171). IGI Global.

Jackson, S. E., Schuler, R. S., & Jiang, K. (2014). An aspirational framework for strategic human resource management. The Academy of Management Annals, 8(1), 1-56.

Kavanagh, M. J., & Johnson, R. D. (Eds.). (2017). Human resource information systems: Basics, applications, and future directions. Sage Publications.

Lee, J., & Kim, Y. (2018). “A Newcomer” versus ”First Mover”: Retail Location Strategy for Differentiation. The Professional Geographer, 70(1), 22-33.

Lussier, R. N., & Hendon, J. R. (2018). Human resource management: Functions, applications, and skill development. Sage publications.

Nangoy, S. (2018). 21st CENTURY CORPORATE GOVERNANCE: BALANCING SHAREHOLDERS’AND STAKEHOLDERS’INTERESTS. JBE (Journal of Business and Economics), 180-188.

Nenonen, S., & Storbacka, K. (2018). Smash: Using Market Shaping to Design New Strategies for Innovation, Value Creation, and Growth.

Porter, T. H., & Norris, S. E. (2012). Human Resource Metrics. The Encyclopedia of Human Resource Management: Thematic Essays, 129-136.

Rojas, R. R. (2018). Diversity and Workplace Spirituality. In Diversity and Inclusion in the Global Workplace (pp. 81-107). Palgrave Macmillan, Cham.

Schaltegger, S., & Burritt, R. (2018). Business cases and corporate engagement with sustainability: Differentiating ethical motivations. Journal of Business Ethics, 147(2), 241-259.

Starbucks (2018). Retrieved<https://www.starbucks.com/>15.02.2018

Appendix 1

Figure 3: Consolidated Statements of Earnings (Starbucks, 2018).