Starbucks - Corporate Strategy

Corporate

Strategy

Table of Contents

Question 1 3

1.1 Introduction 3

1.2 Howard Schultz's performance in the five tasks of strategic management 3

1.2.1 Developing a strategic vision 3

1.2.2 Setting the objectives as standards for measuring the company's performance and evolution 5

1.2.3 Crafting a strategy to achieve the desired outcomes 6

1.2.4 Implementing and executing the chosen strategy efficiently and effectively 6

1.2.5 Monitoring developments and initiating corrective adjustments in the company's long-term direction 6

1.3 Conclusion 7

Question 2 8

2.1 Howard Schultz's strategy to list Starbucks as a private company 8

2.1.1 Introduction 8

2.1.2 The Strategy 8

2.1.3 Conclusion 9

2.2 The steps Shultz took to improve working conditions at Starbucks 10

2.2.1 Introduction 10

2.2.2 Discussion of the steps Shultz took to improve working conditions at Starbucks 10

2.2.3 Conclusion 11

Question 3 12

3.1 Introduction 12

3.2 Schultz's strategy for diversification 12

3.3 Conclusion 13

Question 4 14

4.1 Introduction 14

4.2 Schultz's vision of entering into joint ventures with other companies 14

4.3 Conclusion 16

Bibliography 18

Question 1

1.1 Introduction

Thompson, Strickland and Gamble (2005: 17) define the five tasks of strategic management as follows:

1. Developing a strategic vision of where the company needs to go and what its future product-customer-market-technology focus should be.

2. Setting the objectives as standards for measuring the company's performance and evolution

3. Crafting a strategy to achieve the desired outcomes and move the company along the strategic course that management has employed.

4. Implementing and executing the chosen strategy efficiently and effectively.

5. Monitoring developments and initiating corrective adjustments in the company's long-term direction Monitoring developments and initiating corrective adjustments in the company's long-term direction, objectives, strategy, or implementation in the light of the company's actual performance, changing conditions, new ideas, and new opportunities.

This chapter will define how Howard Schultz performed in each task as mentioned above with specific indication to the case study.

1.2 Howard Schultz's performance in the five tasks of strategic management

1.2.1 Developing a strategic vision

Jones and George (2003: 9) defines strategic vision as organizing goals into a vision with identifying a cluster of decisions about what actions to take, what outcome to pursue, and how to use resources to achieve these goals. Thompson, et al (2005: 18) also compares the vision to a roadmap that indicates the route a company wants to take in developing and strengthening its business. Howard Schultz had a vision of becoming a Fortune 500 company and he dreamed from day one, and he dreamed big.

Through the original setback of not being hired, he continued pursuing the notion of Starbucks expanding beyond the four shops in Seattle. When he eventually got hired he kept on with this notion and was overflowing with new ideas for the company. He always felt that there is so much more to the coffee business than selling beans and getting people to appreciate grinding their own beans and brewing fine coffees at home. He wanted to open espresso bars in high traffic downtown locations, serve espresso drinks and coffee by the cup, and try to emulate the friendly, energetic atmosphere he had encountered in Italian espresso bars.

After acquiring Starbucks, Schultz indicated to a group of employees that he wanted Starbucks to become a national company with values and guiding principles that employees could be proud of. Schultz was also very precise in he's vision by indicating the opening of 125 stores in the next five years. This vision proofed valid as Starbucks had 1500 stores opened by 1997.

Fuller and Green (2006) feel that the vision and value statements need not to be complicated. Howard Schultz earns high marks, according to them, for bringing Starbucks to where it is today: a vibrant, growing, hugely profitable company with global brand recognition. He has developed and promoted a strategic vision from the beginning: to make Starbucks "the most respected brand name in coffee and for the company to be admired for its corporate responsibility." Two key values that supported this vision were "to build a company with a soul" and to pursue "the perfect cup of coffee." Simple phrases, but they have given direction to a highly successful enterprise!

1.2.2 Setting the objectives as standards for measuring the company's performance and evolution

Thompson, et al (2005: 26) states that the managerial purpose of setting objectives is to convert the strategic vision into specific performance targets - results and outcomes the management wants to achieve - and then use these objectives as yardsticks for tracking the company's performance and progress.

When Schultz became CEO of Starbuck's they had a total of nine stores. He's objectives included opening 125 new stores in five years - 15 in year one, 20