Company Profile
Starbucks Inc. is a famous company that retails coffee in various forms worldwide. The company began with a single retail store in Seattle, Pine Place Market back in 1971 (Starbucks par 10). Today, Starbucks has over 23,500 retail stores in over 70 countries globally. Currently, the coffee company employs nearly 191,000 people who serve and interact with millions of customers daily.
Starbucks leads in coffee retail business, not only in America, but globally as well. The company’s mission is “to inspire and nurture the human spirit - One person, one cup, and one neighborhood at a time.” A culture of quality products and exceptional service is prominent in the company. The retailer’s goal is to serve the best quality of coffee, ensure that its coffee is grown under high standards, and maintain ethical sourcing processes that ensure that only the best quality in coffee beans are selected.
The company’s headquarters is located in Seattle, Washington. Their stocks are traded on NASADAQ using the symbol SBUX. Starbucks revenue reached about 16.45 billion U.S dollar in the year 2015 (Statistica par 1). The firm deals with coffee blends, tea, ready-to-drink beverages, fresh food, and merchandise such as mugs, espresso machines, and other accessories.
The coffee company targets coffee lovers of both genders aged between 25 and 40 years. Nearly half (49%) of the total customer base comprises of this age group. Starbucks attracts the college crowd by creating an environment where young adults can study, write assignments, and socialize. Young people (18-24 years) account for around 40% of the total Starbucks’ sales. Teenagers (13-17 years) constitute only 2% of the total sales. Mostly, parents buy various products for their kids.
Starbucks’ success and global leadership can be attributed to the expert use of the four P’s marketing strategy. The firm has focused on innovative new products, expansions of stores in the USA and beyond while maintaining a healthy relationship with customers. The retail stores guard their customer relationship by maintaining quality products and excellent services. The coffee house has ventured into the African market via its new store in Johannesburg, South Africa (Wexler par 1).
Human Resource Challenges
Affordable healthcare
At Starbucks, full-time as well as part-time employees get a comprehensive health cover for themselves and their families. According to C.E.O Howard Schultz, Starbucks will continue to support its staff in accessing affordable medical services, thus, giving them peace of mind.
Workers who put in a minimum of twenty hours per week are eligible for one of the two health plan available at Starbucks. The company takes care of 70% of the premiums and 100% of preventive services. In 2014, the firm began to cover the female preventive services entirely (Starbucks par 2). According to Howard Schultz, Starbucks spends an approximate value of $300 million on employee health care (Ignatius par 14). This poses a big fiscal challenge for a consistently growing business.
The medical care benefits offered by Starbucks are exceptional and relevant in the USA where the health care system has seen several overhauls in the past few decades. However, the company’s policy does not illustrate the health benefits that are available to employees in other countries other than the USA. To maintain a culture of diversity and fairness the company needs to assure its workers outside America that their needs are also important and valued by the administration.
Health Consciousness and Obesity
In the recent years, Starbucks has been putting a lot of effort in ensuring that its product range is attractive to the health-conscious individuals. The obesity crisis in the USA and the consequent consumer demands led to changes and expansion of the product choices offered at retail stores. For instance, the firm started using real pumpkin in the pumpkin spice latte and stopped using artificial caramel in various drinks (Lyon par 1). This health awareness calls for the coffee giant to introduce and maintain healthy meal and drinks options.
The shift to healthy living is a challenge to the human resource department. The department is expected to keep an employee pool that is health conscious and is aware of the needs and issues posed by consumers who keep an eye on what they consume.
Minimum Wage Increases
Several cities in the USA such as San Francisco, Los Angeles, and New York have been raising the minimum wage to $15. This move by Seattle to raise the minimum wage was followed by an outcry from coffee shops such as Dunkin’ Donuts and McDonalds. Starbucks maintains that the increase has not affected the company so far (La Monica par 7). Though the company has absorbed the pay hike well, the increase will affect the hiring process as the firm strives to keep the human resource costs down
Substitutes and Competitive Rivalry
Starbucks faces stiff competition from other big coffee retailers such as McDonalds and Dunkin’ Donuts. Although Starbucks is king in the coffee market, it needs to be innovative and sensitive to market changes to maintain that position. The human resource department is not immune to this challenge; it has to keep the employees happy and sustain a competitive edge above other stores.
Recommendations
Affordable Healthcare
The store chain needs to come up with healthcare plans equivalent to those in the USA for its workers (‘partners’). This move will be supportive of the trust and fairness culture that is the foundation of the company. Every staff member needs to feel valued as a Starbucks ‘partner’ despite the country he or she is working from.
Health Consciousness and Obesity
Minimum Wage Increase
As the minimum wage moves up in Cities across America, Starbucks is faced with the challenge of maintaining their hourly wage above the other competitors. It would be prudent for the company to preserve its trend to sustain staff satisfaction. However, strict guidelines should govern new recruitments to ensure that they do not exceed the standard number for efficient service delivery. Quarterly audits and evaluation are necessary for indicating the financial status of a company as well as its ability to give competitive wages to employees.
Substitutes and Competitive Rivalry
Competitors in the coffee markets (McDonalds and Dunkin’ Donuts) are rising steadily. As such, the human resource department at Starbucks needs to maintain a culture of trust, care, and commitment towards their ‘partners’ are not poached by the other coffee shops. Random spot checks are a good source of information about staff satisfaction and the intention to leave.
Summary
Starbucks is a leading stakeholder in the coffee market. The company has continued to grow and expand steadily into the global market. This steady growth can be attributed to a company culture that values quality and great customer experiences. Having coffee stores in over 70 countries is testament to the Starbucks global presence
The Starbucks commitment to its employees has been remarkable over the years. However due to the dynamic shifts in the market, the human resource section of the company needs to stay vigilant to ensure that the staff is motivated. There is a need to formulate health plans for workers outside America that are equivalent to those provided for American ‘partners. Continuous training is necessary for workers to ensure that they are well equipped to offer satisfactory products and services to the increasingly health-conscious target market. Finally, the coffee company needs to maintain staff satisfaction by maintaining its wages above its competitors as well as promoting its culture of trust, care, and commitment.
Works Cited
Ignatius, Adi. “The HBR Interview: “We Had to Own the Mistakes.” Harvard Business Review July-August (2010). Web. 22 Apr. 2016.
La Monica, Paul. Minimum Wage Hikes Don’t Hurt Starbucks. CNN, 24 Jul. 2015. Web. 22 Apr. 2016. < http://money.cnn.com/2015/07/24/investing/starbucks-earnings-minimum-wage-dunkin/>
Lyon, Jennie. Starbucks Gets Real: Real Food for a Healthy Planet. The Keeper Inc. Web. 22 Apr. 2016. < http://keeper.com/starbucks-gets-real-real-food-for-a-healthy-planet/>
Starbucks. Starbucks Company Profile. Starbucks, Jan 2016. Web. 22 Apr. 2016. <http://globalassets.starbucks.com/assets/7482B40667BC48D7ABED0D9A3A487757.pdf>
Starbucks. Our Commitment to Comprehensive Health Care. Web. 22 Apr. 2016. <https://news.starbucks.com/views/health-care>
Statistica. Revenue of Starbucks worldwide from 2003 to 2015 (in billion U.S. Dollars). Web. 22 Apr. 2016. <http://www.statista.com/statistics/266466/net-revenue-of-the-starbucks-corporation-worldwide/>
Wexler, Alexandra. “Starbucks Opens First Store in South Africa.” The Wall Street Journal 21 Apr 2016. Web. 22 Apr. 2016. <http://www.wsj.com/articles/starbucks-opens-first-store-in-south-africa-1461239313>
