MANAGEMENT ROLES AND RESPONSIBILITIES

Starbucks: Sustaining Competitive Advantage

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Starbucks is one of the most recognized brands in the world. It is respected for many reasons, and one of them is providing customers with the best coffee experience. It is also a company that values its employees and acknowledges that it could not have achieved the competitive advantage that it currently enjoys without them. Starbucks has consistently been recognized byFortune magazine as one of America's most admired companies and best employers.¹ Starbucks has received this "star status" through caring for people, providing a quality product, and building lasting partnerships.

Company History

Starbucks opened its first location in Seattle's Pike Place Market in 1971. Howard Schultz, owner and chairman, joined the company in the early 1980s and purchased it a few years later. It was during his travels to Italy that Schultz discovered the appeal of the espresso bar. He believed strongly that he could re-create the Italian coffee-bar culture in America.² From its original, single store, Starbucks has emerged as an unparalleled name that is virtually interchangeable with the word coffee.³ Starbucks is now a multinational company with over 12,000 stores worldwide and a goal to reach 40,000.⁴ Schultz says Starbucks is not in the coffee business but, rather, in the people business, and that its success is attributed to the successful creation of an emotional connection with the consumer.⁵

The People Advantage

The commitment of Starbucks to being a people business is evident in their guiding principles that support all of their stakeholders. These guiding principles have been paramount in shaping a corporate culture that has infused loyalty and passion for a product and company that is second to none in the industry.

Employees are recognized and respected for what they contribute to the success of the company. Open communication sessions with management give employees the chance to voice concerns and suggest changes to company programs, policies, and procedures. Bean Stock, the stock option program, gives employees an opportunity to become a partner in the company after just six months of employment. This program also contributes positively to company loyalty, and, most importantly according to Schultz, it allows partners to "speak to customers from the heart."⁶

The "Green Apron Book" governs all store employees. This book invites everyone to become involved in their work and provides guidelines by which they deliver quality service while retaining their individuality. It reflects the core values of the organization and integrates them into the everyday operations of the company.⁷ Partners are invited to utilize the "Five ways of Being" so that they "inspire customers in legendary ways". The "Five ways of Being" are all "Be" statements: Be Welcoming, Be Genuine, Be Considerate, Be Knowledgeable, and Be Involved.⁸

The store managers are encouraged to be involved at the store, business, and community levels.⁹ This means listening to and acting on internal and external feedback that might improve store efficiency, product lines, and community awareness. Managers are also empowered to support community events and to volunteer in community-related activities.¹⁰ One store, located in a predominantly Jewish community, enlisted the help of a Rabbi who identified which Starbuck's products were kosher so that the products could be labeled accordingly. The same store also acted on comments made by customers and removed the Christmas music that was playing in the store.¹¹

Further evidence of the value Starbucks places on relationships with people is the success it has had in creating positive store experiences with its customers and exceeding their expectations.¹² Schultz and the store design teams work closely with individual store leaders and managers to help them create the vision that each store should be "an authentic coffee experience that conveys the artistry of espresso making, a place to think and imagine, a spot where people can gather and talk over a great cup of coffee, a comforting refuge that provides a sense of community, a third place for people to congregate beyond work or the home, a place that welcomes people and rewards them for coming, and a layout that can accommodate both fast service and quiet moments."¹³

The "everything matters" approach

Competitive advantage is undeniably linked to total quality management. Leaders, partners, and customers are all empowered to provide feedback that is used for both continuous improvement to processes and in developing quality standards that serve to eliminate the potential for mistakes. From the development of extensive programs with coffee-growing nations, to the superior partnership training programs that provide opportunities for partners to develop their "passion to become true coffee experts," Starbucks possesses a company-wide commitment to excellence.¹⁴

More than just coffee

Starbucks will, undoubtedly, face many challenges as it continues to focus on its goal of reaching 40,000 stores worldwide.¹⁵ The greatest one will be holding on to the original principle of providing customers with the best coffee experience while continuing to develop the passion, loyalty, and commitment that is Starbucks.

Endnotes

¹Joseph A Michelli,The Starbucks Experience, (New York: McGraw-Hill, 2007), p. 4.

²Howard Schultz and Dori Jones Yang,Pour Your Heart Into It, (New York: Hyperion, 1997), p. 62.

³Michelli, Ibid, p. 4.

⁴ .

⁵ As quoted by Howard Schultz on "The Big Idea", on CNBC, February 7, 2007.

⁶Schultz and Dori Jones Yang, Ibid, p. 4.

⁷Michelli, Ibid, p. 43.

⁸Ibid, pp.20-21.

⁹Ibid, p. 38.

¹⁰Ibid, p. 41.

¹¹Ibid, p.126

¹²Schultz, Howard, "The Big Idea", 2006, CNBC

¹³www.mhhe.com/business/management/Thompson/11e/case/starbucks-2.html

¹⁴Mitchell, Joseph A., "The Starbucks Experience", McGraw-Hill, 2007, p. 35

¹⁵ Canada.com/globaltv/bc/news/story.html

Questions

1. What proof is there that Starbucks has achieved competitive advantage in the industry?
2. Explain how Starbucks is viewed as an upside-down pyramid.
3. Discuss how Starbucks is committed to TQM, specifically addressing the "4 absolutes" of management for total quality control, as identified by consultant Phillip Crosby.