Starbucks Case Study

19.03.2020 in Case Study
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There can be very many different managing strategies that help companies to succeed, and there are many different approaches to successful businesses. It does not matter what type of project management a company uses as long as it makes it successful and allows it to satisfy customers’ needs. On the other hand, there are some companies that do better than the others because they use their resources in a more effective way. Starbucks coffee company can be a great example of such success. It is a company that succeeds and leaves its competitors far behind because of its original and intelligent planning as well as a business strategy.

There are many different reasons why Starbucks is so popular and successful. One of them is that Starbucks works for the people. It means that the main goal of this company is not simply to make a profit, but also to make people happy. The interesting thing is that it makes happy, not only customers, as the company also cares about its workers greatly. The original idea of creating Starbucks was that the company would be loved by its employees. It means that people would feel happy to work there and would be proud to go to work every day. This is a very good managing technic because this way people are advertising their company themselves; they make it look like a very important brand. If people love their job, they try to do it as well as possible; but if they love the company they work for, they would also try to make it look presentable and interesting for the rest of the people. If Starbucks workers enjoy their work, they try to promote their company by making other people interested in it. This way, they make the company look like a wonderful place to work in; which makes it look even more attractive to customers.

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Another interesting feature used by Starbucks was creating shared values for all the employees. It is directly connected to Michael Porter’s model because he emphasizes it; on the other hand, Starbucks managers’ views and Porter’s idea of shared values are very different. According to Starbucks’ policy, shared values mean that the company can only work successfully when the workers have similar values and views on the company’s future.

Starbucks has created shared values for the workers and made their working place as comfortable as possible. According to the Starbucks company ideology, the main idea is to make workers enthusiastic and eager to work, because this way the whole business process will improve greatly. Another feature, which is important to Starbucks Company, is about creating a healthy environment both for the workers and the customers. This also is strongly connected to Michael Porter’s model because of its main goals of running a successful and profitable business supported both from outside and from within. According to Starbucks ‘ goals, the company does a lot of things for social benefits. These things are included in the corporate social responsibility program. The company gives a lot of money back to the countries where the products were purchased, but its special focus is on the countries which are developing. This way, Starbucks makes it not only about the business but also about the social responsibility and necessity to give to communities. It is a great example of socially responsible business. On the other hand, it is also quite useful to the financial side of the matter. By giving money, Starbucks can get certain donations from the government or simplifications of certain rules; this way it is much easier to do business. Although, the financial side in this matter is still underdeveloped.

On the other hand, developing certain communities is also quite a smart technique, because it is great self-promotion and free advertisement. Another advantage is that the company can gain by contributing to certain communities is the fact that people in these communities would get more possibilities to buy its products.

Giving away money is not the only thing that is included in Starbucks’ corporate social responsibility program. It also includes treating employees as partners by giving them chances to contribute to the company’s well-being as much as possible. Another example is that the company does a lot of projects to decrease illiteracy and promote environmental issues to the public eye. These programs are both great advertisements as well as big steps to improve the company from within, which makes it more united and strong.

It is also linked to Michael Porter’s model because of its social impact. Michael Porter speaks about profits involving social purpose. According to Porter, these profits represent the higher form of capitalism. This is why they should be strongly valued both by the government and society. An example set by Starbucks is something that other companies should follow. This example, according to Porter, creates a healthy atmosphere in the community; it also fastens the business process by intensifying economic movement and developing successful business relations.

It can be seen that corporate social responsibility is very similar to creating shared values, which is important for Michael Porter’s model. Ironically, it is something that divides these two cases. As it was mentioned before, Starbucks does a lot to create shared values between its customers and workers. It includes connecting quality work with financial successes. The same can be seen with the corporate social responsibility implemented by the company. It includes many important projects which are not clearly beneficial in a financial way, but they have a lot of positive impact on the company’s image. These things are very good for business, and they are quite successful and useful for the company. This is why there are clear connections to Porter’s model.

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On the other hand, the vision on shared values Porter is quite different from Starbucks’ interpretation. In Porter’s view, corporate social responsibility is good, but not good enough for the modern world with its competitiveness and fast development. According to Porter, corporate social responsibility works and focuses on social projects only; it is very good for the workers and the communities in which these projects take place. On the other hand, these projects have very little connections to the business and profits which are crucial for companies nowadays. For this reason, it is hard to make these projects work for a long period of time because the company does not see positive financial results. This is why Porter considers corporate social responsibility to be out of time because it does not meet the main requirements of modern business, which are profits.

As an alternative, Porter suggests shared values but not in the way Starbucks views those. In Porter’s view, shared values emphasize social projects, but connect those to financial matters. The corporate social responsibility policy cared mostly about doing good things for the communities without gaining any money from it, and the shared values program is about connecting these two things. It means that the goal of helping others is great, but the company would only keep on doing that as long as the cost is worth it in the end.

Another difference between Starbucks ideology and Porter’s model is that the first one was oriented mostly on philanthropy and donations while organizing the projects for the communities. Porter disagrees with such principles; he states that communities and companies should work together, meaning that they share costs as well as profits. According to Porter, no company does social projects on its own; these projects are the results of pressure from society. Companies do social projects, so other companies feel obliged to do the same; because there is no profit out of the projects, companies try to get at least as much publicity as possible so there would be some positive aspects to the projects. Porter states that such a situation can only lead to unsuccessful projects because there is no internal motivation. According to Porter, this situation should be changed as quickly as possible because the business must be highly motivating and competitive. According to Porter, everything that companies do should be profitable. This is why social projects should also be profitable in the end. This way the workers would be highly motivated to implement these projects and make those as effective as possible. This way, both the company and the community would benefit.

Another aspect that Porter has found important is using the budget of the entire company. In Starbucks Company, there are specific budgets for specific projects. It is very risky to have one big budget and use it for one purpose. Obviously, the company would profit greatly if the program is successful; but in case not, it means not only losing a huge amount of money and even possible bankruptcy. This is why Starbucks usually works with smaller budgets instead of using one big budget. Porter disagrees with that stating that the company should cooperate on one budgeting level by throwing all of its resources into one direction, but doing it wisely. It is quite different from Starbucks’ policy because the company is effective thanks to its small cooperatives which work properly.

Further, Starbucks’ model and model of Michael Porter have many connections; in some ways, these are very similar, and in some ways, these are quite different. Despite Starbucks’ expectations being different from Porter’s ones, the company is very successful which proves that Porter’s model is not the only effective one. Porter says himself that not everything can be solved by using his shared values policy, but that it does a lot to improve the business situation. On the other hand, the different views on certain policies such as shared values are the ones which separate Starbucks’ model and Michael Porter’s views.

Starbucks questions the corporate social responsibility policy sometimes. Whenever starting big new projects, managers have to plan ahead and predict the possible consequences of these projects. It is hard to perform these tasks when it comes to social projects which may have no profits but expenses only. This way, managers and financiers may see no future for projects in the first place. Porter’s model seems more suitable, as the one which carries the positive results above all. Porter states that creating shared values is the new stage of capitalism, and if Starbucks’ wants to fit into this new era, it should follow it.

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The importance of this case also lies in its duration. Porter’s model focuses on long-term projects. It looks forward into the future where companies can get a lot of money, but this money would be received after considerable time and effort. This way, the companies would have to plan for a long time in advance; they would use many resources, prepare budgets and always keep an eye on the project. This model includes a lot of hard work, but it is also something that will be worth it in the end.

On the other hand, because corporate social responsibility policy does not emphasize the financial side, it is rather something that the company does once in a while without constantly repeating it. It means that social projects are usually short-term tasks because the company feels pressure since it cannot profit out of it. This is why these projects do not usually have a future because they happen only once in a certain period of time.

According to Porter, society nowadays needs another form of capitalism with social benefits being its main goal. It is not to say that Porter forgets about other goals of businesses; one of them being profits. Porter understands that social good is impossible if the company does not make enough money since the companies can only invest parts of what they make into certain social projects. On the other hand, Porter thinks that it is only logical to unite the financial and social side, so they both work for and with each other.

Self-interested behavior is not something viewed as a bad thing in this case; it is rather something worth the company’s work. According to Porter, looking for short-term benefits is like reaping out of society which would not do any good to a company. This is why companies should plan ahead for the future which is one of the main ideas of Porter’s model.

Starbucks, as a fast-growing company, would definitely like to achieve the successes promised by Porter’s model. It would likely want to expand and gain more money to make the business even more effective. In order to do that, the company would have to analyze its work and the main results to see the faults and the miscalculations. This way, the company’s managers would be able to see what was done well and what was not. Social projects and programs should be analyzed and treated with special concern and attention because they require a thoughtful and original approach. Starbucks’ managers were already doing a lot of analyzing work which could be seen by their evaluation of the Chiapas project. This is why the managers should continue their analyzing work to improve the company’s situation.

As it can be seen, Starbucks’ model is very close to Michael Porter’s model despite some important differences between them. The reason for it is the fact that Starbucks is actually a successful company with many profits. On the other hand, Starbucks’ corporate social responsibility policy does not fit with creating shared values as viewed by Porter. This is why there are still some differences that may be eliminated or reduced for the company to prosper.

Nevertheless, Starbucks is a great example of success. Combining it with Porter’s model, it has many chances to achieve even better results than before. Porter’s model, too, should pay more attention to the practical side of many modern businesses because their achievements and successes often go beyond certain models. 

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