Essay on Understanding Starbucks' Business Performance: Stakeholders, External Factors & Complexities

Introduction

The current world economy is progressively becoming interdependent and integrated; thus, the association between business and society is becoming increasingly complex (Schultz, 2014). This paper shall delve into understanding the nature, structure as well as the external factor that may influence the performance of Starbucks Company. The paper will also go further to interrogate the influence of various stakeholders on the financial performance of the organization and the controversial corporate responsibility concerns that affect the company.

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Nature and Structure of Starbucks

Starbucks coffee company is a multinational chain of various coffeehouses as well as roaster reserves in the United States. Being the largest coffee chain in the world, Starbucks maintains its leadership through the appropriateness of the organizational structure (Schultz, 2014). For instance, the company has a matrix organizational structure that is a hybrid blend of various basic organizational structures. The product-based divisions of the company converge with the different functional groups as well as geographical divisions which then intersects with the other divisions of the organization. The main features of the Starbucks structure include; 1) Functional hierarchy, 2) product-based divisions, 3) geographical divisions, and 4) the teams (Schultz, 2014).

To begin with, the functional hierarchy features of Starbucks Company relates to the various groupings based on the business function. The departments under functional hierarchy include the Human Resource departments and are highly pronounced at the top levels of the company. The departments here are majorly responsible for policy implementation and adopt a top-down approach from monitoring and control-with the CEO being at the top.

The geographical divisions of the organization are based on the regional branches and divisions in the global market. The main regional divisions for Starbucks include; China and the Asia-Pacific, America, Europe, Africa, and the Middle East. Each of the divisions has its senior functional head, which enables closer managerial support for all the geographical divisions (Schultz, 2014).

The product-based divisions are uniquely concerned with addressing the product lines. For instance, some divisions are related to coffee and associated products, while some uniquely focus on merchandise such as mugs (Lin, 2012). As such, the product-based division encourages innovations within particular product lines, thus promoting competitive advantage for the organization.

Teams are used in various parts of the organization structure. Within the company, teams exist at the lowest levels and are responsible for, among other duties, the delivery of goods and services to the customers. The development of the organization immensely depends upon the team-based factors and various human resource management strategies.

Products or Services of Starbucks

Starbucks deals with a wide variety of products and services. For instance, the organization purchases roast and sells high-quality whole bean coffees. It also deals with Italian-style beverages, cold blended beverages, as well as other complementary food items (Schultz, 2014). The company also supplies coffee-related equipment and accessories. It also offers a selection of other food items such as juices, sodas, seasonal novelty items, games, and selection of compact discs. Some of the coffee-making equipment and accessories that are supplied by the company include coffee filters, coffee grinders, storage containers, mugs, and tumblers (Plog, 2005).

Starbucks also deals in food products such as chocolate bloom pancakes, pumpkin scones, and chocolate croissants, among others. It also sells salads such as sandwiches and the Deluxe Fruit blend, among others.

Key Factors in the Starbucks' External Environment That Can Affect Its Success

Several factors in the organization's external environment are likely to affect its success. For instance, the organization faces stiff competition from various coffee shops, doughnut shops, as well as restaurants (Plog, 2005). In almost all the regions where the company is situated, there are numerous dealers in coffee and coffee-related products (Paryani, 2011). The major direct competitors of the company are the supermarkets and the retail stores that deal with whole bean coffees. Other than the Supermarkets, the organization also competes with independent specialty coffees stores and franchise operations in the supply of the whole bean coffee (Lin, 2012). Competition threatens Starbucks operations since it results in the reduction of market share by the low prices at which the other retailers sell their products and services.

The other factor in the external environment that is likely to affect the success of Starbucks is an imitation from other firms. As such, some companies tend to copy the taste, feel, and look of the products sold by Starbucks. The imitations result in the production of closely similar products to those of the organization, which then flood the market. As a result, the market base for the organization is immensely undermined (Schultz, 2014). Another external threat to the organization is the independent coffee house movements. These small movements' independent movements support the local coffee dealers, thus opposing multinational coffeehouse chains across various areas of the world.

Ways in Which the Primary Stakeholders Can Influence Starbucks' Financial Performance.

Starbucks' primary stakeholders include; coffee farmers, local communities, investors, suppliers, customers as well as other shareholders and business partners. All stakeholders can significantly influence the performance of the organization in several ways.

1) The customers-The organization considers the customers as the top primary stakeholders. The customers are primarily interested in high-quality goods and services. As such, when the customers are convinced with the quality of the services, they will tend to increase their purchasing power, thus increasing the financial performance of the organization (Paryani, 2011). On the other hand, inferior quality goods and services accompanied by a lack of warm and friendly relations with the customers may discourage them from purchasing, thus negatively influencing the financial performance of the organization.

2) Suppliers- The suppliers include; coffee farmers and wholesale supply firms whose main interests are compensation and growing demand from the organization. When their interests are not addressed, the suppliers could thwart the financial performance of the company through go-slows and strikes, thereby hindering the supply of products and services to the market (Plog, 2005). As such, Starbucks must comprehensively address the suppliers' interests to improve their financial performance. 3) Employees -The employees influence Starbucks' financial performance through the production of one essential output of the company known as the experience. Employee experience is the source of Starbucks' competitive advantage. Innovations and the quality output produced by the employees correlate with the customer's satisfaction, thus improving their purchasing power and subsequent financial performance of the company. 4) Business partners - Starbucks has several business partners across Asia, as well as local firms in Japan, China, and the United Arab Emirates. The partners in one way or the other improve Starbucks' market base, thus promoting its financial performance through enhanced purchases of goods and services. 5) The Local Communities

The local communities are essential assets to the company, just like the customers. Customers mostly emanate from the local communities, thus rendering them a critical market base for the company. They control the demand for goods and services, thereby influencing the financial performance of the company significantly.

Controversial Corporate Social Responsibility Concern Associated With Starbucks.

Concerning corporate social responsibility, the organization has been reported to have ethical conduct, social responsibility, and good governance. One primary controversial corporate social responsibility concern for the company is environmental stewardship, particularly the recycling and reducing of wastes. The company offers about a 10% discount to customers who carry their mugs with them to reduce the environmental impacts of mugs (Paryani, 2011).

Conclusion

In conclusion, the current world economy is progressively becoming interdependent and integrated; thus, the association between business and society is becoming increasingly complex. This paper has delved into understanding the nature, structure as well as the external factor that may influence the performance of Starbucks.

References

Lin, E. Y. (2012). Starbucks as the third place: Glimpses into Taiwan's consumer culture and lifestyles. Journal of International Consumer Marketing, 24(1-2), 119-128. Retrieved from https://doi.org/10.1080/08961530.2012.650142

Paryani, K. (2011). Product quality, service reliability, and management of operations at Starbucks. International Journal of Engineering, Science and Technology, 3(7), 1-14. Retrieved from https://www.ajol.info/index.php/ijest/article/view/74995

Plog, S. C. (2005). Starbucks: More than a cup of coffee. Cornell Hotel and Restaurant Administration Quarterly, 46(2), 284-287. Retrieved from https://doi.org/10.1177%2F0010880405275535

Schultz, H. (2014). Starbucks coffee company: Transformation and renewal.