| ent"> | | | | organization, expectations or guidelines which, prescribe |
| Introduction | | | | suitable types of conduct by employees in certain |
| In today’s business world, business development | | | | situations and organize the conduct of organizational |
| process is increasingly becoming important in the | | | | employees towards each other. Kottler (1992) |
| running any business. As business enterprises continue | | | | observers that, organization behaviour is the main |
| to intensify their efforts in reducing the costs and | | | | motivating force that ensures the success of an |
| improving quality and service. Business development | | | | organization. (Katter, 1992) Culturally, Starbucks is long |
| process in business is concerned with product | | | | term oriented has one of its guiding principle is caring |
| production and service, and it entails the task of | | | | for the environment and the community which are long |
| ensuring the development of a product or services are | | | | term aspects. To assist in defining its culture Starbucks |
| effective and efficient. Business development process | | | | has outlined six main principles. |
| also involves managing products, distribution of | | | | The six main principles of Starbucks are stated as |
| products and services to clients and the examination | | | | (starbucks.com) |
| of the queue systems. Armstrong (2006) describes | | | | |
| business development process as the field of study | | | | 1. Provide the best work environment and treat on |
| that focuses on the effective planning, scheduling, use | | | | another with dignity and respect. |
| and control of a manufacturing or service organization | | | | 2. Appreciate diversity as an indispensable element in |
| through the study of concepts that affects the | | | | the manner we do business. |
| organization. (Armstrong, 2006) | | | | 3. Relate the utmost standards of quality when making |
| This business report presents an analytical analysis of | | | | a purchase, roasting and delivering of our coffee. |
| Starbucks’ business in terms in business | | | | 4. Develop passionately satisfied customers at all the |
| development process, evaluation of the impact of the | | | | time. |
| economic and business development process, and the | | | | 5. Make a positive contribution to our environment and |
| obstacles which may hinder the business development | | | | our communities. |
| process in the company. The report will then give a | | | | 6. Identify that profitability is vital to future success. |
| conclusion on the basis of the findings. | | | | (Fortune.com, 2002) |
| Corporation selected | | | | Organizational structures |
| Starbucks Corporation is a big multinational coffee and | | | | Setting up a suitable organizational structure requires a |
| coffeehouse chain/outlet company which is based in | | | | strategic planning and objective of the specific |
| United States. Starbucks currently is the biggest | | | | organization by taking into consideration the aspired |
| coffeehouse company in the whole world, with a | | | | organization culture, determining on proper organization |
| record number of 15,011 stores located in 42 countries. | | | | structure and recognizing the crucial activity areas in |
| (Starbucks Corporation, 2007) | | | | the organization. This is a vital fist step in developing |
| From where it was established in Seattle, Washington, | | | | organization structure and leadership. Campbell, et al |
| as only a local coffee bean roaster and seller, | | | | (1970) To Campbell, et al (1970) Organization structure |
| Starbucks has rapidly expanded. In the 1990s, the | | | | is a way of representing relations in an organization; it |
| corporation was establishing a new store each | | | | shows how groups are interrelated in organization. In |
| workday, a tempo which continued into the 2000s. | | | | many cases organization structure is depicted in an |
| However domestic expansion has ever since slowed | | | | organizational structure chart. Organization structure of |
| down, although Starbucks continues to spread out in | | | | an organization show the current management, |
| foreign markets. As at November 2007, Starbucks | | | | communication channels of the organization and how |
| Corporation had 8,505 company-owned coffeehouse | | | | they are coordinated. The vision of an organization can |
| outlets global: 6,793 of them located in the United | | | | be displayed in the organization structure. Starbucks |
| States while 1,712 are located in other countries and | | | | management structure is a divisional type of structure |
| the U.S. territories. Besides, the Starbucks has 6,506 | | | | which allows the corporation to be management to be |
| joint-venture or licensed outlets, and 3,891 of them are | | | | divided in to department that manages their own |
| in United States and 2,615 are in some other countries | | | | activities through formulation their own objectives and |
| or in U.S. territories. This thus brings the total number of | | | | goals. This creates internal accountability and |
| locations (as at November 2007) to 15,011 worldwide. | | | | competitiveness. However the main office monitors |
| (Starbucks Corporation, 2007) | | | | and supervises all the business operations in individual |
| Critically examining the business development process | | | | stores to ensure that all conform to a particular |
| A central part of any successful and efficient of | | | | standard. Each coffee store headed by a manager, |
| business development is following a procedure of how | | | | and about 15 baristas. (Hoovers.com, 2007) |
| a company will evaluate a business suggestion or | | | | |
| concept, deciding if to continue with the concept and | | | | Systems and risk management. |
| create a business after deciding to go ahead. The five | | | | Starbucks’ strategy of expanding into |
| stages below assist formulate a straightforward | | | | international markets |
| process one can pursue. The stages are not a strict | | | | Starbucks expansion to international market is |
| arrangement to pursue. But they offer important issue | | | | because of the need to gather and increase the |
| that a company needs to address when developing | | | | company’s market share and increase its |
| the business. | | | | financial base. Advancement in technology including |
| The Company Background and business idea | | | | communication efficiency and better international |
| The beginning of an innovative business idea or | | | | relations has contributed to the promotion of |
| proposal can originate from different sources. The idea | | | | international trade. Increasing competition is another |
| may originate from a manager, the board room or a | | | | aspect that has enhanced the Starbuck’s |
| set of producers having a meeting. In spite of | | | | international expansion. Through its international |
| circumstances the idea can be assessed and | | | | marketing approaches Starbucks has been able to |
| evaluated to determine how valuable it is. For | | | | meet its objectives. Starbucks management has had |
| Starbucks the idea came as a sells and marketing | | | | an obligation to further propel the company forward |
| manager on a leisurely The company was started in | | | | thus able to create and maintain a healthy international |
| 1971 by three Seattle business entrepreneurs; Gordon | | | | marketing culture within itself. (The Wall Street Journal, |
| Bowker, Jerry Baldwin and Zev Siegl, and began selling | | | | 2001) |
| coffee as a whole-bean in Seattle's Market. The store | | | | |
| was named as Starbucks. At 1982, the venture had | | | | Staying away from a franchising strategy |
| developed to five coffee stores, a wholesale venture | | | | Generally, franchising transfers the financial risks from |
| selling coffee mainly to area the restaurants and a | | | | the Starbucks to an individual business. Subsequently a |
| small coffee roasting facility. During the same period, | | | | benefit of Starbucks Corporation franchising would be |
| Howard Schultz who was working as a Vice | | | | opening many more new stores which will have less |
| President of USA for a Swedish house-ware, | | | | risk to Starbucks Corporation, and make more profits |
| Hammarplast Company in New York, selling coffee to | | | | through doing so. More so the company would have |
| various retailers which included Starbucks. By selling | | | | little research and improvement costs since the |
| coffee to Starbucks Company, Howard was then | | | | franchisee is having greater familiarity of the local |
| introduced to Starbucks founders, who later recruited | | | | market where the store is opening in relation to |
| Howard to bring to the Starbucks Company marketing | | | | disadvantage of franchising is that Starbucks would |
| savvy Howard Schultz was only 29 and freshly | | | | have to give up some amount of management over |
| married joined the company as the retail sales and | | | | the store, and also the manner it operates. Regardless |
| marketing manager. After one year, Schultz travelled | | | | of the high number of rules and directives that |
| to Italy Verona, for his first occasion on coffee buying | | | | Starbucks Corporation would theoretically have in |
| tour. | | | | position for a franchisee, each one of the store would |
| As Howard leisurely walked through Milan pizzas on | | | | be managed slightly different. In addition, in franchising |
| one day, he became motivated with a vision, as he | | | | there is a danger of various stores omitting some of |
| observed that coffee drink was an essential element | | | | the menu to its standards, and instead picking and |
| of the passionate culture of the Milan people. He saw | | | | selecting what products (coffee equipment, music, |
| that the Italians began their day by taking Italian coffee | | | | books) to avail to the customers. Through keeping |
| at a coffee bar, after which they return later in the | | | | every one the stores corporately owned Starbucks is |
| evening with their friend for more coffee. His research | | | | able to manage and monitor all locations and |
| revealed that there were around 1,500 coffee bars in | | | | operations and to ensure high employee relationships |
| Milan alone and over 200,000 in the entire Italy. | | | | and good customer care via steady management, |
| Howard believed then that given an opportunity, | | | | good store operation, and good location environments. |
| Americans could pay a premium price for a first-class | | | | (The Wall Street Journal, 2001) |
| cup of coffee coupled by a trendy, romantic | | | | |
| surrounding to leisurely take it. Excited about this idea | | | | The obstacles that may slow the future development |
| or thought, Howard went back to inform Starbucks' | | | | of the company |
| proprietors of his idea for a nationwide coffee store | | | | Competition from imitators |
| chain of modelled on the Italian style. However the | | | | Starbucks’ present and direct competitors in |
| proprietors were not eager and were not interested in | | | | America are Diedrich Coffee, and Einstein/Noah Bagel |
| having a cafe business. | | | | Corporation (Hoovers.com). The rivalry, however, is not |
| Unconcerned, Howard formulated a business plan of | | | | evenly balanced. Diedrich Coffee runs 370 |
| his idea, videotaped various Italian espresso bars, and | | | | coffeehouses located in 37 states and in 11 countries |
| then started searching for financiers. By 1985 April, | | | | (hoovers.com). Einstein/Noah Bagel Corporation runs |
| Howard had established his initial coffee bar, Il | | | | 460 bagel cafes in America (hoovers.com) Where as |
| Giornale, where Starbucks coffee was served. | | | | Starbucks has got over 4,709 coffeehouse locations in |
| After the success Il Giornale's, Howard established | | | | more than 20 countries (Hoovers.com). Thus it is |
| another coffee cafe in Seattle, later he opened a third | | | | apparent that Starbucks has hardly any key |
| one in Vancouver. The owners of Starbucks agreed in | | | | competitors, and the rivalry has nowhere near |
| 1987 to sell the stores to Howard In 1987 for $4 million, | | | | Starbucks’ volume of its operations. Starbucks |
| the Il Giornale coffee bars were then renamed | | | | Corporation is the leading coffee retailer, coffee |
| as Starbucks. | | | | roaster and brand of specialty coffee in the whole |
| Having a conviction that Starbucks one day would be | | | | world. However smaller competitors, pose possible |
| in each neighbourhood in the USA, Howard put his | | | | threats to the company, and may derail the expansion |
| focus on growth. Howard entered Chicago in 1987 and | | | | plan of the company. (Hoovers.com, 2007) |
| four years afterwards he established a store in Los | | | | Capital hold up in Expansions to global markets |
| Angeles, Howard continued with his ambitious | | | | In its plan entering foreign markets, Starbucks has |
| expansion program opened a store in District of | | | | been using (Foreign Direct Investment) FDI market |
| Columbia in 1993. He later moved to global markets | | | | entry which is the direct ownership of processing, |
| starting with Canada and then followed with other | | | | manufacturing or assembling facilities in a target |
| countries. | | | | country by a Starbucks company. Hollensen (2004) |
| The financial challenges and Business operation | | | | explains that in FDI organizations can transfer |
| Initially the company did not make any profits and its | | | | resources to a developing country which has a good |
| losses nearly was double reaching $1.2 million in 1990 | | | | customer base and then set up branches in any other |
| fiscal year from 1989 since overhead costs and | | | | regions or areas of the country the resources include; |
| operating expenditures swell with the expansion that | | | | technology, personnel and capital. However, the |
| was taking place. Starbucks made losses for three | | | | disadvantage of this market entry strategy is that it |
| years straight, and the pressure was tough on | | | | shifts the financial risk from the individual to the |
| Howard. However, he kept his confidence of not | | | | corporation. Thus holding up more financial resources |
| sacrificing long-term integrity and values for | | | | the Starbucks would have used to open up more |
| short-term profit. By 1991 Starbucks sales rose by | | | | stores, not forgetting that the financial risk is squarely |
| 84 %, and Starbucks turned very profitable. Come1992 | | | | placed on the corporation. Another setback is that joint |
| Howard placed the company to the public offering $17 | | | | ventures require a lot of market research and |
| for a share. However, as at present the company has | | | | development expenses since Starbucks do not have |
| made a lot of profits over the years and its financial | | | | enough information of the new markets. This has seen |
| base has tremendously improved, thus finance may | | | | the company investing a lot of many in setting up new |
| not be a limiting factor as for now. | | | | braches in foreign countries an aspect that can slow |
| Starbucks sells brewed coffee, espresso-based hot | | | | its expansion. (Kamm, et al, 2004) |
| drinks, hot and also cold drinks, snacks and products | | | | Increasing product line |
| for instance mugs and coffee beans. Starbucks has | | | | Initially the company only sold coffee but over the |
| an entertainment division and Hear Music brand, | | | | years Starbucks as increased its product mix as a |
| Starbucks also markets music, books and film. A lot of | | | | way of spreading risks and increasing sales. Currently |
| these items are seasonal or specific to the locality of | | | | the company has an entertainment division and Hear |
| the store. Some grocery stores sell Starbucks | | | | Music brand, Starbucks also markets music, books and |
| branded ice cream and coffee. The corporation image | | | | film. |
| is one of the main elements to its current success. | | | | |
| Starbucks has recognized that individuals don’t | | | | Chart 1: Starbucks vs. Industry |
| just come for to take coffee; they come for the | | | | The Chart compares Starbucks stock against the |
| ambience. People come to socialize, study, read or just | | | | average Special Eateries Industry. As shown in the |
| to enjoy the music as they drink their coffee. | | | | graph, Starbucks has clearly been a central force of |
| Understanding this, Starbucks try to make its coffee | | | | the industry, since the industry average follow precisely |
| stores unique in one way or another which will | | | | the same pattern, just a little below Starbucks, in past |
| generate an appealing ambience. Starbucks also has a | | | | five years (2001-2006) |
| distinctive setting for its locations; Starbucks focus on | | | | |
| having a lot of cosy seating to make people sense | | | | (Source: hoovers.com) |
| welcomed for them to stay more than they may have | | | | Conclusion |
| planned to. (Fortune.com, 2002) | | | | Business development involves stating an idea and |
| | | | developing it to a business venture if the idea is viable. |
| Business development techniques that assisted the | | | | Mainly there are five stages that such an idea can go |
| building of their flexible strategy | | | | though to successful be implemented. Overall, |
| | | | Starbucks appears to be a well-built and well-rounded |
| The competitive advantage of Starbucks comes from | | | | company, as a leader in the industry, Starbucks was |
| the fact that, Starbucks positions its products based | | | | built from a simple idea and it developed to attest how |
| upon quality and its image. Starbucks Corporation | | | | valuable and feasible that idea was. The company has |
| created the coffee shop revolution in America, and it | | | | built a very strong brand name which has assist |
| has had the capacity to be the public instructor on | | | | Starbucks to gain a substantial greater share of the |
| espresso coffee. Starbucks coffeehouse chain is the | | | | total market in contrast to its competitors. The |
| leading specialty of coffee retailer in the America, with | | | | management has revealed to have ability to forecast |
| many locations in around the globe. Starbucks | | | | market trends and variations in consumer behaviours. |
| Corporation positions its products on a comparatively | | | | Starbucks Management in addition has fashioned a |
| simple strategy. They sole centre on quality and | | | | corporate culture which promotes soaring productivity |
| experience, instead of price. An evaluation of specialty | | | | levels through their proficient employees. Financially, |
| drinks compared to its competitors discloses very | | | | Starbucks Corporation is stable in spite of its rapid and |
| small differences. (Fortune.com, 2002) | | | | unremitting growth strategies. Starbucks Corporation |
| The corporation image is one of the main elements to | | | | has done extremely well in establishing reliable, |
| its current success. Starbucks has recognized that | | | | long-term relations with its suppliers. For most part, as it |
| individuals don’t just come for to take coffee; | | | | has been indicated, Starbucks is reasonably very |
| they come for the ambience. People come to socialize, | | | | capable in most aspects of its business. In parts where |
| study, read or just to enjoy the music as they drink | | | | Starbucks Corporation does perhaps need expertise, |
| their coffee. Understanding this, Starbucks try to make | | | | competencies, or skills, it has formed strategic pacts |
| its coffee stores unique in one way or another which | | | | with companies which are more effective and efficient. |
| will generate an appealing ambience. Starbucks also | | | | Reference: |
| has a distinctive setting for its locations; Starbucks | | | | Armstrong. M. (2006): Handbook of Human Resource |
| focus on having a lot of cosy seating to make people | | | | Management Practice, 10th edition, (Kogan Page) |
| sense welcomed for them to stay more than they | | | | London, |
| may have planned to. (Fortune.com, 2002) | | | | Campbell, J, et al (1970): Managerial behaviour; |
| In addition Starbucks positions each one of its store | | | | Performance and effectiveness New York: |
| individually in accordance to the definite location it is | | | | McGraw-Hill. |
| located. This flexibility approach has contributed greatly | | | | Findingdulcinea (2008): Starbucks: Out with the New, In |
| to the success of the Starbucks in the past years. | | | | with the Old." "Finding Dulcinea" January 12, 2008 ( ) |
| Another significant aspect of Starbucks locations is | | | | accessed on 8/2/2008 |
| that they are usually environmentally friendly. Though | | | | (2002); Best Companies to Work For; Retrieved 10 |
| other retailers locate themselves in related ways, none | | | | Feb., 2008 on the World Wide Web: |
| of them focuses to the level at which Starbucks has. | | | | (2007) Retrieved 10 February, 2008 on the World |
| Currently consumers appear to respond to those | | | | Wide Web: |
| companies that are environmentally friendly who | | | | Hollensen, S. (2004): Global Marketing, a |
| appear to really care about the world. (Puget Sound | | | | Market-Responsive Approach, 2nd Edition, Essex, and |
| Business Journal, 1999) | | | | Pearson Education |
| | | | Kamm, J.B., Frederick, R.E. and Petri, E.S. (2004): |
| The impact of the economic and business | | | | International marketing strategies, Connecticut |
| development process on the company | | | | Kauser, S & Shaw, V (2004): The Influence of |
| The business culture of Starbucks | | | | Behavioural and Organizational Characteristics on the |
| Organization culture consists of ideas and beliefs about | | | | Success of International Strategic Alliances. |
| what types of aspirations members should employ to | | | | International Marketing Review 21, no. 1 |
| attain these aspirations. Culture also entails values of | | | | Kotler, P. |
| an organization, values define the norms of the | | | | |