Company Analysis Report

Submitted by
KOLLEPARA HARSHA
A13559016028
MBA-CPM, SECTION-C
MANAGERIAL SCIENCE FOR BUILT ENVIRONMENT

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Table of contents

Company overview ------------------------------------------------------------------ 3

Founding And Top Management -------------------------------------------------4

Financial health -----------------------------------------------------------------------5

Organizational structure------------------------------------------------------------6

Organizational culture---------------------------------------------------------------8

SWOT analysis ------------------------------------------------------------------------10

PESTEL analysis -----------------------------------------------------------------------11

Stakeholder And Their Impact ---------------------------------------------------13

Strategies ------------------------------------------------------------------------------15

References ----------------------------------------------------------------------------16

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Company overview
The original Starbucks opened its doors in 1971 in Seattle Washington. Chairman and CEO
Howard Schultz joined the company in 1982 as director of retail operations and marketing. After
leaving the company to start his Italian inspired Giolmale Coffee, he returned to Starbucks in 1987
backed by investors able to purchase the company. Starbucks began opening stores outside of
Washington with its first remote locations in Chicago and Vancouver, B.C. In 1996, Starbucks went
public with an initial public offering (IPO) on the NASDAQ exchange.

Mission
to inspire and nurture the human spirit one person, one cup and one
neighborhood at a time

Ethics
Starbucks believes that conducting business ethically and striving to do the right
thing are vital to our success.
Business Ethics and Compliance is a program that supports Our Starbucks
Mission and helps protect our culture and our reputation by providing resources that help
partners make ethical decisions at work.

Products/ services offering

Coffee products, beverages and food

Geographical reach
Starbucks grew to over 23,768 stores in 73 countries as of November 2016, and is
known as the world's premier roaster and retailer of specialty coffee.

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Founding and history
The first Starbucks opened in Seattle, Washington, on March 31, 1971, by three
partners who met while they were students at the University of San Francisco: English
teacher Jerry Baldwin, history teacher Zev Siegl, and writer Gordon Bowker were inspired
to sell high-quality coffee beans and equipment by coffee roasting entrepreneur Alfred
Peet after he taught them his style of roasting beans.
The first Starbucks store was located in Seattle at 2000 Western Avenue from 1971
1976.

Top Management

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Financial health of the company

Financial status with its competitors

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Starbucks Coffees Organizational Structure
The companys organizational structure influences management and leadership,
communication, change, and other variables critical to business success. Starbucks has
evolved to have an organizational structure that matches current business needs. This
organizational structure is unique to Starbucks, although it can be characterized based on a
conventional typology of organizational structures. Starbucks succeeds because its
organizational structure grows with the business, enabling the company to optimize
processes and the quality of its goods and services
Starbucks Coffees organizational structure evolves to serve the needs of the business. This
structure supports the companys aims in global expansion and diversification.
Features of starbucks coffees organizational structure
Starbucks has a matrix organizational structure, which is a hybrid mixture of different features
from the basic types of organizational structure. The following are the main features of
Starbucks Coffees organizational structure:
1. Functional structure
2. Geographic divisions
3. Product-based divisions
4. Teams
Functional Structure. The functional structure feature of Starbucks Coffees organizational
structure refers to grouping based on business function. For example, the company has an HR
department, a finance department and a marketing department. These departments are
most pronounced at the top levels of Starbucks Coffees organizational structure, such as at
the corporate headquarters. This feature relates with hierarchy in the organizational
structure of Starbucks. For instance, the corporate HR department implements policies
applicable to all Starbucks cafs. The functional structure feature of the firms organizational
structure facilitates top-down monitoring and control, with the CEO at the top.
Geographic Divisions. Starbucks Coffees organizational structure also involves geographic
divisions. At present, the company has three regional divisions for the global market: (a) China
and Asia-Pacific, (b) Americas, and (c) Europe, Middle East, Russia and Africa. Also, in the U.S.
market, Starbucks Coffees organizational structure involves further geographic divisions: (a)
Western, (b) Northwest, (c) Southeast, and (d) Northeast. Each geographic division has a
senior vice president. In this way, each Starbucks manager reports to two superiors: the
geographic head (e.g. President of U.S. Operations) and the functional head (e.g. Corporate
HR Manager). This feature of Starbucks Coffees organizational structure supports closer
managerial support for geographic needs. Each division head is given a high degree of
flexibility in adjusting strategies and policies to suit specific market conditions.

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Product-based Divisions. Starbucks also uses product-based divisions in its organizational
structure. These divisions address product lines. For example, Starbucks has a division for
coffee and related products, another division for baked goods, and another division for
merchandise like mugs. This feature of the firms organizational structure enables focus on
certain product lines. In this way, Starbucks effectively develops and innovates its products
with support from its organizational structure.
Teams. Teams are used in different parts of Starbucks Coffees organizational structure.
However, teams are most notable at the lowest organizational levels, particularly the
Starbucks cafs. In each caf, the firm has teams organized to deliver goods and service to
customers. This feature of Starbucks Coffees organizational structure enables the company
to provide effective and efficient service to consumers.

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Starbucks coffees organizational culture
A companys organizational culture widely influences employees and business performance.
In Starbucks Coffees case, the companys organizational culture permeates all aspects of its
business. However, Starbucks cafs are where the companys organizational culture is most
easily observable. The way caf employees work with each other and how they interact with
customers are indicators of Starbucks Coffees organizational culture. The warm and friendly
ambiance in these cafs is part of the companys distinction from competitors. Starbucks has
an organizational culture that relates with the companys strategies for successful brand
development and global expansion.
Starbucks Coffees organizational culture is a key success factor in the business. The company
uses its organizational culture as a distinction against competitors.
Features of Starbucks Coffees Organizational Culture
Starbucks Coffees organizational culture has a number of key characteristics. The
combination of these characteristics is unique to the firm. The company describes its
organizational culture as a culture of belonging, inclusion and diversity. In this regard, the
main features of Starbucks organizational culture are:
1. Servant Leadership (employees first)
2. Relationship-driven approach
3. Collaboration and communication
4. Openness
5. Inclusion and diversity
Servant Leadership. Starbucks has a servant leadership approach, which significantly
characterizes the companys organizational culture. In this approach, leaders, managers and
supervisors emphasize support for subordinates to ensure that everyone grows in the
company. This feature of Starbucks organizational culture translates to the employees-
first approach. The company highlights the importance of caring for employees. Former
Starbucks President Howard Behar developed this feature of the firms organizational culture
because he believed that employees who are cared for are the ones who care about
customers.
Relationship-driven Approach. Starbucks also has an organizational culture that supports
warm and friendly relationships. For instance, at Starbucks cafs, baristas exhibit warm
friendly bonds with each other. This feature of the companys organizational culture extends
to customers, who are also treated with warmth. Through emphasis on relationships,
Starbucks develops the coffee culture that drives consumer demand for the companys
specialty coffee products.

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Collaboration and Communication. The organizational culture of Starbucks encourages
collaborative efforts through effective communication. At the cafs, baristas clearly
communicate with each other to fulfill orders. Also, they collaborate as teams to make the
order fulfillment process efficient. Thus, Starbucks organizational culture supports efficiency
in business processes, which contributes to quality of service, customer experience, and
business cost-effectiveness.
Openness. Openness is another major characteristic of Starbucks Coffees organizational
culture. Initially, employees had a culture of fear to speak up to their superiors. To address
this issue, former Starbucks President Behar introduced open forums to encourage
employees to ask questions and communicate with superiors. A culture of openness
developed. Through this feature of its organizational culture, Starbucks empowers employees
and facilitates innovation.
Inclusion and Diversity. Starbucks has an anti-discrimination policy that shapes its
organizational culture. This policy prohibits any form of discrimination based on gender, race,
ethnicity, sexual orientation, religion, age, cultural backgrounds, life experiences, thoughts
and ideas. Through this feature of the organizational culture, Starbucks facilitates sharing and
rapport among employees, as well as innovation based on diverse ideas. This aspect of the
companys organizational culture also makes customers feel welcome at Starbucks cafs.

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SWOT analysis
In SWOT analysis, business strengths are evaluated to determine the ability to address
weaknesses, opportunities and threats.
Starbucks Coffees SWOT analysis shows that the companys strengths far outweigh its
weaknesses. However, this SWOT analysis also points to major threats that could prevent the
success of new Starbucks cafs in markets outside the United States.
Starbucks Coffees Strengths (Internal Strategic Factors)
This component of the SWOT analysis model deals with the internal factor of business or
organizational strengths. Starbucks Coffees main strengths are:
1. Strong brand image
2. Extensive global supply chain
3. Diversified business through subsidiaries
Starbucks Coffees Weaknesses (Internal Strategic Factors)
This dimension of the SWOT analysis model indicates internal factors like inadequacies that
present challenges to business development. Starbucks Coffees main weaknesses are:
1. Higher price points
2. Generalized standards for most products
3. Imitable products
Opportunities for Starbucks (External Strategic Factors)
This component of the SWOT analysis model focuses on external factors that a firm can use
to grow its business. Starbucks Coffees main opportunities are:
1. Expansion in Asia, the Middle East, and Africa
2. Diversification of product mix
3. Partnerships or alliances with other firms
Threats Facing Starbucks (External Strategic Factors)
In this aspect of the SWOT analysis model, the focus is on external factors that could reduce
business performance. The main threats to Starbucks Coffees business are:
1. Competition from low-cost coffee sellers
2. Imitation & independent coffee moments

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PESTEL analysis
The PESTEL/PESTLE analysis framework indicates the most significant influences on Starbucks
based on characteristics of the remote or macro-environment. Despite its current industry
leadership, Starbucks must continue monitoring its remote or macro-environment. The
PESTEL/PESTLE analysis model can be used to satisfy this need. Through continued
effectiveness in addressing the external factors identified in the PESTEL/PESTLE analysis of its
remote/macro-environment, Starbucks Coffee can continue to succeed despite the negative
forces impacting its business.
Starbucks Coffees industry leadership is linked to the companys effectiveness in addressing
external factors identified in this PESTEL/PESTLE analysis. The PESTEL/PESTLE analysis model
is used to determine the most important issues that Starbucks must address in its business
strategies.
Political Factors Affecting Starbucks Coffees Business
This part of the PESTEL/PESTLE analysis framework identifies the impact of governments on
business. Starbucks experiences the following political external factors in its remote/macro-
environment:
1. Regional integration of markets (opportunity)
2. Improving governmental support for infrastructure (opportunity)
3. Bureaucratic red tape in developing countries (threat)
Economic Factors Important to Starbucks Coffee
This component of the PESTEL/PESTLE analysis model refers to the economic conditions and
changes significant to business. Starbucks faces the following economic external factors in its
remote or macro-environment:
1. High growth of developing countries (opportunity)
2. Declining unemployment rates (opportunity)
3. Rising labor cost in suppliers countries (threat)

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Social/Sociocultural Factors Influencing Starbucks Coffees External Environment
This aspect of the PESTEL/PESTLE analysis framework shows the social conditions and trends
influencing consumers and business. Starbucks must address the following
social/sociocultural external factors in its remote/macro-environment:
1. Growing coffee culture (opportunity)
2. Increasing health consciousness (opportunity)
3. Growing middle class (opportunity)
Technological Factors in Starbucks Coffees Business
In this part of the PESTEL/PESTLE analysis model, technologies and related trends are
identified. Starbucks experiences the following technological external factors in its
remote/macro-environment:
1. Rising mobile purchases (opportunity)
2. Technology transfers to coffee farmers (opportunity)
3. Rising availability of specialty coffee machines for home use (threat)
Ecological/Environmental Factors
This component of the PESTEL/PESTLE analysis model identifies the effects of ecological or
environmental conditions and changes on business. Starbucks faces the following
ecological/environmental external factors in its remote or macro-environment:
1. Business sustainability trend (opportunity)
2. Growing popular support for responsible sourcing (opportunity)
3. Growing popular support for environmentally friendly products (opportunity)
Legal Factors
The legal factors in the PESTEL/PESTLE analysis model are the laws and regulations on
business. Starbucks must address the following legal external factors in its remote/macro-
environment:
1. Product safety regulations (opportunity)
2. GMO regulations outside the United States (opportunity)
3. Increasing employment regulation (threat)

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Stakeholder and their impact
Starbucks is effective in its corporate social responsibility efforts, although more effort is
needed with regard to the stakeholder group of coffee farmers, as well as the issues of youth
rates and tax avoidance in some regions.
Starbucks Coffees Stakeholder Groups
Starbucks continues to improve its corporate social responsibility practices to address the
concerns of different stakeholder groups. The following are the main stakeholders in
Starbucks Coffees business:
1. Employees (baristas, partners)
2. Customers
3. Suppliers (supply firms, coffee farmers)
4. Environment
5. Investors
6. Governments
Employees. Starbucks prioritizes employees in its corporate social responsibility efforts. As
stakeholders, employees typically demand for better working conditions, job security and
higher wages. Starbucks organizational culture emphasizes the employees-first attitude.
Employees are also given wages above the legally mandated minimum wage. The firm can
improve its corporate social responsibility performance by addressing such issue in this
stakeholder group.
Customers. Starbucks considers customers as among its top stakeholders. The interests of
this stakeholder group are high quality service and products, such as coffee and related
beverages. As the worlds most popular specialty coffeehouse chain, Starbucks effectively
addresses this interest. The company also includes customers as major stakeholders by
extending the Starbucks culture to customers at its cafs.
Suppliers. Starbucks suppliers are composed of wholesale supply firms and coffee farmers.
The main interest of this stakeholder group is compensation and a growing demand from
Starbucks. In addition, Starbucks Coffee and Farmer Equity (CAFE) program requires
transparency among wholesale suppliers to ensure that coffee farmers are properly paid.
Thus, Starbucks corporate social responsibility efforts comprehensively address the interests
of this stakeholder group.
Environment. Starbucks has corporate social responsibility programs for environmentally
sound business. The companys CAFE program has led to higher biodiversity and shade quality
in certified coffee farms. Currently, 90% of Starbucks supply is from CAFE-certified farms. This
significant figure shows that Starbucks is effective in addressing its corporate social
responsibility to this stakeholder group, although there is room for improvement.

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Investors. As in any business, Starbucks must address investors as stakeholders. Investors
have interests in high financial performance of the company. Starbucks global expansion and
continued dominance in the coffeehouse industry indicates high financial performance. Even
though it suffered considerable decline in 2007, Starbucks has recovered and is on a growth
path once more. Thus, the firm satisfies this stakeholder groups interests.
Governments. Starbucks must address the interests of numerous governments as
stakeholders, considering the companys global presence. In general, Starbucks complies with
rules and regulations.

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Strategies by Starbucks
Marketing strategies

To be effective, marketing people need to be considered 4 Cs first and then building up of 4

PS requirements.
Fair trade strategie
Paying premium prices stimulates production of high quality coffee.

Allows framers to increase income and reinvest in their farms and plan for the
future.
Promotes steady and sustainable growth in a market price fluctuations
Upholds Starbucks commitment to purchase high quality product in a socially
responsible manner

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References
http://www.hierarchystructure.com/starbucks-company-hierarchy/ (accessed on April 3,
2017)
https://en.wikipedia.org/wiki/Starbucks#Founding (accessed on April 3, 2017)
https://www.slideshare.net/karanbhagatwala/starbucks-case-study-14831192 (accessed on
April 3, 2017)
http://ayucar.com/c3RhcmJ1Y2tzLW9yZ2FuaXphdGlvbmFsLXN0cnVjdHVyZS1jaGFydC0yMDE
z/ (accessed on April 3, 2017)
http://panmore.com/starbucks-coffee-company-organizational-structure (accessed on April
3, 2017)
http://csimarket.com/stocks/competition2.php?&code=SBUX (accessed on April 3, 2017)
http://panmore.com/starbucks-coffee-company-organizational-culture (accessed on April 3,
2017)
http://panmore.com/starbucks-coffee-pestel-pestle-analysis-recommendations (accessed
on April 2, 2017)
http://panmore.com/starbucks-coffee-stakeholders-csr-analysis (accessed on April 3, 2017)
http://panmore.com/starbucks-coffee-swot-analysis (accessed on April 2, 2017)
https://www.starbucks.com/ (accessed on march 30, 2017)

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