Starbucks Coffee Company grew from a small, regional business into the undisputed leader in the specialty coffee industry by buying only the best quality coffee and providing an unmatched store experience. It was on new fad for specialty coffee, building for long-term success by acting on human-oriented principles that build a company “with soul”. In fact, the number one guiding principle in Starbucks’ mission statement was to “provide a great work environment and treat each other with respect and dignity. ” and put “people first and profits last.
Starbucks paid more than the going wage in the restaurant and retail industries, granted stock options to both full and part-time partners in proportion to their level of base pay, and offers health coverage to all employees who worked at least 20 hours per week in 1988. Starbucks maintained the atmosphere of the Italian coffee bar as much as possible; it gave American customers’ requests for in-store comfy seating and for non-fat milk in their lattes and cappuccinos. It had a bottom of the pyramid business strategy that reduced poverty and created fortunes.
Starbucks sourced coffee directly from farmers, which enabled the company to provide coffee farmers with reasonable standard of living and company with a respectable profit. The reality of our world today and our aspirations for a better world tomorrow that gave arise to the need for societies to select leaders who can articulate a meaningful vision and guide them toward its realization. Treating partners (Starbucks employees), customers, and suppliers with dignity and respect was essential to the company.
Failure by Overgrown Business While the shares fell by 43 percent and 8 percent closures in 2008 , Starbucks admitted the streamlining that enabled the chain to grow to 13,000 units had “watered down” the brand. It had an expansion schedule of one new store per day has come to be sipping such a bitter brew ignoring all the things that made customers loyal to the brand. It failed to remember the interaction that takes place between customers with the “Experience” and the “Soul of the past”.
Starbucks not only forgot to understand its audience but also the local customs and its target market, instead trying to impose its cookie-cutter American business model on all around the world business. It made a dire mistake and “assumed” it would always be on a high velocity growth curve. The alarming issue is that the events that triggered this change didn’t show up immediately in the financial results. And, by the time they did it was already too late to do anything about it as a trend had already developed that will have long-term financial implications. Antidotes After Starbucks has been going through these significant changes.
It saw the renewed focus on the basics that made Starbucks a household name and the essence of a relationship of trust and confidence a company has with its customers and employees. Starbucks committed to reinvent and reinvest in training the employees who the experience they create for customer. It has now done very well and focused in international markets where there has not traditionally been a coffee drinking culture such as Japan and China.
Conclusion Human-Oriented Principles Leadership is vital and inevitable in running business. Communication and building relationship resumed has saved the coffee giant from catastrophe. By now Starbucks made the U. S. operating margin increased 17. 1 percent and international operating margin more than doubled to 9. 8 percent . It is always true of the concept it has, Starbucks is not in the coffee business serving people – it’s in the people business, serving coffee.