Starucks Case Resolution, Exercises of Principles of Marketing

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Continuing Case – Starbucks Kimberly A. Marks Centenary College September 3, 2016

Discussion Questions P1-1. What management skills do you think would be most important for Howard Schultz to have? Why? What skills do you think would be most important for a Starbucks store manager to have? Why? I think it would be important for Howard Schultz to have conceptual, human and technical skills. In order to understand his customers and subordinates, Howard has to have human or interpersonal skills. He must effectively communicate the company’s goals, standards, and practices so that the message can be relayed throughout the hierarchy, down to the store associates. In order to handle the abstract and complex situations revolving around being a CEO and running a successful business, Howard must possess conceptual and technical skills. Howard has to have knowledge regarding the coffee industry, what customers want, and how to run and maintain a business and all of the associates. For a Starbucks store manager, it is most important to have interpersonal skills. Store managers not only handle employees, but customers as well. They must be able to communicate and listen. In addition, store managers need to have conceptual skills in order to oversee a store, its employees, its customers, and any problems that arise from them. As chairman and chief global strategist of Starbucks Corporation, Howard Schultz needs to have strong skills in each of the areas identified by Robert L. Katz: technical skills, human skills, and conceptual skills. Conceptual skills are especially important for Schultz to effectively lead his company. These skills enable him to make strategic plans that guide the global growth of Starbucks, predict future product trends, and take advantage of opportunities in the external environment. To manage an individual Starbucks location successfully, each Starbucks store manager, as well as the top manager of Starbucks Corporation, needs to possess the skills identified by Katz. Your students should recognize that the most important skills in this level of management would likely be related to human skills. This particular skill category equips a store manager to effectively utilize his/her most valuable resource - the employees, or "partners" - to achieve the goals and objectives of the individual store as well as the corporation as a whole. P1-2. How might the following management theories/approaches be useful to Starbucks: scientific management, organizational behavior, quantitative approach, systems approach? Scientific management, according to the text, is the use of scientific methods to define the “one best way” for a job to be done. Scientific management would be useful to Starbucks because it defines clear guidelines for improving production efficiency. In a business like Starbucks, production efficiency is important. Starbucks needs to fill positions with the best qualified candidates for that specific job function. This would be an example of how Starbucks could use the scientific management theory. Organizational behavior, as defined in our textbook, is the study of the actions of people at work. Starbucks could utilize this theory throughout all levels of the company hierarchy. The theory of organizational behavior revolves around the relationship between management and team members. Motivation, leadership, group behavior and development are considered to be

executives (middle managers included) have the ability to train and educated the potential future leaders of the company.

3. Diversity: Another current issue or trend managers face is workforce diversity. Again, this may not be a negative impact. As Starbucks is a globally owned company, it is imperative that the company have some sort of workplace diversity program. This includes race, gender, religion, languages spoken, people with disabilities, etc. By offering equal opportunity employment, Starbucks sets the standards for the coffee industry. This impacts all levels of management. If the first-line managers are responsible for hiring, they should be educated on the need for diversity. P1-4. Give examples of how Howard Schultz might perform the interpersonal roles, the informational role, and the decisional roles. To answer this question, I will use the same example for each, found in the textbook. Interpersonal roles: Howard Schultz performed interpersonal roles when he wrote the memo, “espresso shot heard round the world.” In this memo, he reached out to his top managers, effectively communicating his concerns. Informational role: The “espresso shot heard round the world” memo could also be used to show how Howard Schultz performed the information role. The informational role consists of collecting, receiving, and disseminating information. When Schultz collected and received data showing that customer traffic had begun to fall, he disseminated that information to the top managers. Decisional role: Decisional roles entail making decisions/choices. Howard performed this role when he decided to return to Starbucks as the CEO. After seeing the negative changes that occurred when he stepped down as CEO, he found it best to return to rectify the situation. P1-5. Look at Howard Schultz’s philosophy of Starbucks. How will this affect the way the company is managed? “We aren’t in the coffee business, serving people. We’re in the people business, serving coffee.” This affects the way the company is managed greatly. The goal of the organization is not to serve coffee and simply make a profit. It is much more than that. They are in the customer service industry. The goal of the organization is to provide a great experience unlike any other similar establishment. The main goal is great customer service, the second goal is great coffee! P1-6. Go to the company’s Web site [www.Starbucks.com], and find the list of senior officers. Pick one of those positions and describe what you think that job might involve. Try to envision what types of planning, organizing, leading, and controlling this person would have to do.

Scott Maw – executive vice president, chief financial officer As a chief financial officer, Scott is most likely responsible for all financial report, including financial risks, financial planning, and financial status. He is most likely responsible for forecasting the company’s finances and strategizing future financial decisions. Planning – a chief financial officer may be responsible for the strategic planning of the company’s finances and future financial decisions Organizing- a chief financial officer must have organized records of past and present financial standings Leading- a chief financial officer may be responsible for relaying the financial information to the CEO and the individual owners, making recommendations on how best to achieve the company’s future goals Controlling- a chief financial officer usually oversees an accounting department. A chief financial officer must ensure that the department is accurately reporting all financial information. P1-7. Look up the company’s mission and guiding principles at the company’s Web site. What do you think of the mission and guiding principles? Describe how these would influence how a barista at a local Starbucks store does his or her job. Describe how these would influence how one of the company’s top executives does his or her job. “Our Mission: To inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.” “Our Values: With our partners, our coffee and our customers at our core, we live these values: Creating a culture of warmth and belonging, where everyone is welcome. Acting with courage, challenging the status quo and finding new ways to grow our company and each other. Being present, connecting with transparency, dignity, and respect. Delivering our best in all we do, holding ourselves accountable for results. We are performance driven, through the lens of humanity.” I think that the mission statement and the company’s core values are what sets them apart from other coffee shops. They make it clear that the customer is their number one priority. These core values would influence a barista at a local Starbucks store to do his or her job with the customer in mind. They must be possess the proper interpersonal skills to ensure that the customer leaves the store happy. The mission statement and core values would influence the CEO to be aware of what happens on all levels of the organization, keeping these values in mind. When Howard saw that these values had slowly faded, he decided to return as CEO.

Biases and errors might affect the decision making done by Starbucks executives, managers, and partners in a negative way. For example, an overconfident executive may want to implement a program on the store level that they feel is beneficial to the company. When they implement this program, confident in their decision, and the program turns out to be unsuccessful, the store managers are left to deal with the consequences of the executives actions. Moreover, the partners of Starbucks may suffer when their profits decrease. P1-12. How might design thinking be important to a company like Starbucks? Do you see any indication that Starbucks uses design thinking? Explain. Design thinking is approaching management problems as designers approach design problems. Design thinking influences how a manager identifies a problem and evaluates the alternative. Design thinking is crucial to a company like Starbucks. I have seen indications that Starbucks uses design thinking. For example, a Barnes & Noble book store in my area had a small satellite Starbucks. This location had approximately 3 small, round tables with barstool chairs. Upon opening, this small satellite store was packed with customers drinking coffee, reading books, and typing papers on their laptops. Unfortunately, due to the lack of seating, customers began to sit on the floor. In addition, there were no outlets to charge their devices, so customers made their way through the Barnes & Noble store to find a power source. Shortly after, a simple solution was found to help alleviate this problem. Starbucks rearranged the seating, added a few more chairs and tables, and extension cords to allow for more charging capabilities. Customers instantly took notice and flocked to this location.

References Robbins, S.P., & Coutler, M. (2013). Management (13th^ ed.). Upper Saddle River, NJ: Pearson Prentice Hall. ISBN-10: 0133910296 ISBN-13: 978- Lukac, M. (n.d.). The 5 Most Prominent Management Trends of the 21st century. Retrieved September 03, 2016, from http://www.ibtimes.com/5-most-prominent-management-trends-21st- century- Starbucks – The Best Coffee and Espresso Drinks. (n.d.). Retrieved September 03, 2016, from http://www.starbucks.com/