History of Starbucks
Starbucks is a multinational company that has its headquarters located in Seattle, Washington. Starbucks was founded in the year 1971 by Zev Seigl, Gordon Bowker and Jerry Baldwin. The organisation started its saga like a single store that offered coffee beans and coffee makers. The distribution channel of the company was later expanded and it included restaurants, various retail outlets as well as coffee bars (Starbucks. 2022). Starbucks popularized the genre of speciality coffee and grew into licensing and distribution. The company at present has 33,250 stores in approximately 78 nations.
Starbucks is dependent on the business strategy of product differentiation. Strategy of differentiation is the delivery of quality services or products that are perceived to be special as well as valued by the customers. Product differentiation is primarily a strategy of marketing that provides encouragement to the customers for choosing one particular brand or product in a crowded field of rivals. Product differentiation is the core strategy of the company for gaining a sustained competitive advantage (W?sowska, 2020). Starbucks provides differentiation with the help of an excellent customer service as well as best quality of coffee. the experience of Starbucks is achieved by it well designed stores that has good ambience as well as staffs who are trained really well. The stores of Starbucks offer more welcoming interiors with some friendlier baristas in comparison to some independent coffee houses. The company seek to differentiate the products offered by them from the rivals with some attributes which will attract a huge range of customers (Starbucks. 2022). This strategy is used by Starbucks for gaining a Sustained Competitive Advantage. Starbucks has performed extraordinarily well in the creation of a concept in which every person can have a great experience of drinking in an amazing ambience. The company has a customer centric culture.
Starbucks consist of a network of stores which are operated through the organisations or licensed stores. The microenvironment environment in which Starbucks operates in is characterised through the ongoing international economic recession, that has dented the power of purchasing of the customers (Rogers, 2020). Starbucks can leverage the buying power of the customers in a way which would provide it a significant advantage over its rivals through providing cheaper alternatives.
The total number of employees working in Starbucks in the year 2021 was 138,000 which was a 60.46% decline from 2020. Starbucks is among the biggest brand of restaurants in the entire world. the highly trained dealers of career need to mater the recipes’ of drinks, cope up with the long lines., decipher inventive interpretation of the menu and never losing the smile on the face while they do it. The employees of Starbucks are called partners and not baristas. The term is meant for fostering a sense of commitment as well as professionalism and it even has a financial meaning(Starbucks. 2022).. they are referred to as partners as a year into employment they get a small percentage in the organisation so they are called the stock partners.
Product Differentiation and Business Strategy
Starbucks generally sell premium items of food. It provides different kind of beverages like hot drinks, cold drinks, teas and its exclusive products of coffee like Frappuccino. Among the other items of food, it provides different sweets and snacks, yogurt and oatmeal, donuts, sandwiches and many others.
The clients ofStarbucks are the white-collar professionals. The White-collar employees are well known for earning high average salary performing some skilled workers not just performing manual labour at the work (Hasan, 2018). These workers historically have been the set of shirt and tie who are defined through office jobs as well as management and not getting their hands dirty. The target demographic is affluent and urban, generally go with the white-collar professional searching for taking their caffeine fix with them to the office. Starbucks considers its main customers to be educated with an average age of 42 and an average salary of $90,000. Starbuck have high end customers. the company concentrates on the demographics through opening the stores in upscale neighbourhood, making servicing the customers an important priority through paying above average wages for the restaurant industry as well as providing certain advantages such as health insurance as well as tuition reimbursement (Birkinshaw, 2018).
There has been a battle for the top spot as the coffee king of the world for a few years now in between Starbucks and its competitors, McDonalds as well as Dunkin’ Donuts. McCafé and Dunkin Donuts are the biggest competitors of Starbucks, though Starbucks will be trailed by both of them in market share by the year 2023. Some of the other key competitors of Starbucks are Costa Coffee, Tim Hortons, Café Nero, Maxwell House as well as Folgers. The competition even comes through the locally owned business like Peet’s coffee and neighbourhood shops of coffee in certain areas (Davis, 2018).
The shareholders of the company are the individuals as well as organisation who makes investment in the share of the company and share the benefits or losses of ownership.
Following is a list of stakeholders of Starbucks:
Customers- They is the most significant stakeholders of the company. Customers purchase products and offer revenue which drives the coffee giant (Beck, & Frame, 2018). They also provide feedback of the things they want from the experience of Starbucks.
Employees- These are the internal stakeholders of Starbucks. These people can be found as working as baristas, managers of the store or the area’s executive. The employees can affect the way Starbucks is doing their work as well as offering inputs into the decisions which goes in the creation of products as well as services needed by the customers.
Suppliers- the Company works with various suppliers all across the world. The suppliers consist if the farmers, roasters as well as traders. Starbucks have a long-termcommitment to the practices of sustainablefarming of coffee and it is even committed to pay a fair price for the beans.
Government- the Company is even affected through the government of the nation in which it operates. Starbucks should follow the rules, regulations, tec along with other relevant problems.
Employee Culture and Premium Products
The organizational development change in Starbucks is related to the adoption of new strategy of marketing with technology. The employees of Starbucks are treated as their partners and the company proved the truthfulness of this statement that was made on their websites in many ways (Valuiskaya, 2019). In the year 2014, Starbucks had introduced their plan of college achievement for the creation of an opportunity for their partners for the acquisition of a college degree without bearing any kind of cost. The environmental effect has been identified by the company and they have chosen to decrease the impact in many ways like making use of recycled cups, reducing the consumption of energy, reducing the carbon footprints, the re-designing of operations, redesigning store for reducing the usage of water, setting up goals for further enhancement in the reduction of the environmental impact. Starbucks had planned to establish a comprehensive solution of recycling for its plastic as well as paper cups by the year 2012. The company was going to implement front of the store recycling in its stores by 2015. The company is to serve 5% of the beverage produced in the store in personal tumblers. The company needs to reduce energy by 25% in their stores. Starbucks is going to purchase renewable energy equal to 100% of the used electricity in its international company stores. The company is looking forward to reduce the consumption of water by 25% in its stores. The company ensured the 100% ethical sourcing of its coffee. It also made investment in farmers along with their communities through increasing the loans of the farmers to 20 million (Wilkof & Wilson, 2018). The organisation had a stellar year in 2019. Starbucks was already the third biggest chain of restaurant in the entire world. But even having that huge size, the company had successfully managed to add 1900 more locations in the year 2019 for 7% growth of unit. Th reason behind the success is Deep Brew which is a set of AI initiative across the organisation.
The company was also looking forward to enhance the access of the farmers to the carbon market as well as help them in the generation of additional income while securing the environment. The company was to mobilize the customers as well as employees for making a contribution to million hours of community service every year (Clements, 2019).
In the year 2017, Starbucks had revealed its new strategy of digital transformation : the “Digital Flywheel” developed across the four pillars which are- rewards, payment, order and personalisation, the main aim was to merge the physical customers touchpoints with the digital for not only driving premium outcome of the business in the short term on the basis of rewards, personalization as well as ordering, but the organisation also makes it extremely challenging for the digital companies for outmanoeuvring them in the physical world. . The new location of Starbucks is very carefully selected after the examination of the realms of data, the support of Artificial Intelligence for the models of store planning economic factors about a location (Chen, 2021). This comprises of the level of income, competitor presence, population as well as traffic. The company make use of this for forecasting the revenue, profits along with some other aspects of economic performance.
Competitors and Market Share
Following are some of the factors that cause the ODC events in Starbucks:
Competitive advantage- The competitive advantage of Starbucks is on the basis of its strategy of product differentiation; this makes the brand stand out from all of its competitors. Strategies as such comprises of the concept of third place environment, premium quality products, constant innovation with new items on menu and the utilisation of technology for connecting with the customers (Tikson, 2018). Starbucks have a direct connection with the suppliers as well as growers for the maintenance of the quality control.
Customer satisfaction- One of the best features provided by the company for improving its customer satisfaction is through the provision of the Starbucks mobile application. It makes it very easy to make the payment as well as keep a track of the records. The loyalty program provides the users rewards as well as lets them redeem the rewards for drinks. The application is a valuable data mine for the company for understanding the trends as well as customer preferences.
Differentiate the quality of services- Starbucks have been defined on various occasions as a technology company, a data organisation and also a bank. There has never been a description of the organisation as a chain of coffeehouse. Every aspect of Starbucks is permeated through technology like the customer experience, design of the store, development of beverage, finance, supply chain and location (Kaur, Arora & Bali, 2020). Deep Brew will help in further driving the personalization engine of Starbucks, help reducing the allocation of labour and help in the management of inventory in the stores. If these objectives are achieved, it would free up a lot of time for the staff for actively connecting with the customers as well as offering that significant personal touch. The mission statement of the organisation is to provide inspiration as well as nurture the human spirit and if that is the thing which helps the customers connecting with the organisation, then anything which is done by the company for cultivating makes perfect sense.
The technology integration was not just adopted by Starbucks. There were many other companies whose intention was the delivery of effective services. It resulted in the competitive firms to integrate technology for helping in the enhancement of services as well as provide customer satisfaction (Luo, 2020). Technology was taken in consideration as the aided set of tools for the companies to bear competence with respect to the maintenance of efficiency of the products as well as services.
Starbucks rides on an AI based tool which is Deep Brew, for keeping effective operations, freeing up some time for the partners, enhancing the customers as well as enhancing the sales. The organisation is not only short on data. It has around 30,000 outlets all across the world and completes approximately 100 million transactions every week. The Chief Executive Officer, Kevin Johnson had spent more than 30 years in the industry of technology prior to joining Starbucks. This is the reason why the company has been at the forefront of the application of data as well as analytics for the creation as well as capturing of value for the partners as well as customers while making its operations effective at the same time. The organisation had a stellar year in 2019 (Motala, 2018). Starbucks was already the third biggest chain of restaurant in the entire world. But even having that huge size, the company had successfully managed to add 1900 more locations in the year 2019 for 7% growth of unit. Th reason behind the success is Deep Brew which is a set of AI initiative across the organisation.
Stakeholders of Starbucks
The new location of Starbucksis very carefully selected after the examination of the realms of data, the support of Artificial Intelligence for the models of store planning economic factors about a location. This comprises of the level of income, competitor presence, population as well as traffic. The company make use of this for forecasting the revenue, profits along with some other aspects of economic performance. The location-based analytics make use of the GIS technology and it is applied for making a decision of new location. This helped the organisation in reducing the impact of cannibalization and make sure that the new outlets are being able to capture the critical mass of people which flow across some areas.
For the customers, the program of digital flywheel makes immense value as well as helped the organisation in capturing the value (Hsiao, et al., 2019). There were approximately 19 million users of loyalty program in the early 2020. Knowing the order preferences of the individual customers along with the patterns of buying allows Starbucks in providing a radically personalised as well as warm experience. Making use of artificial Intelligence in the application of Starbucks or in the drive thru menu can offer the customers some thoughtful as well as personalised options on the basis of their own preferences and also things such as the weather and the time of the day. With the immense popularity of mobile ordering as well as service of delivery, the company is looking at the way in which AI can aid baristas making beverages in an order which takes the entire picture into account. Along with it, Starbucks make use of data arising through the habits of buying across the large base of customers and across various channels. This provided the firms a strong base for making a decision of which product has to target the home drinker, the way of dynamically changing the item son the menu to the delight of customers. but this might over complicate things and can be extremely tricky to scale.
The average bill of Starbucks is a relatively small amount and therefore maintenance of a good customer all throughout is very important for the success of the store. Thebreakdown of a machine can significantly destruct the operations. Someconventional approaches would require partners for the gathering of data about the parameters of machine, repairs needed and so on. This would consume their valuable time that would have been spend with the customers for some better service (Starbucks. 2022). Artificial Intelligence can help in forecasting the failures as well as maintenance of needs. One of the examples of the way in which this technology can be made use is by a new range of Masterna super automatic machines of espresso. The machines have sensors so each and every shot is logged as well as analysed centrally for the examination of potential areas for tuning. This Interest of Things (IoT) is integrated with Deep Brew for providing a prediction of which machines needs maintenance and at what time.
Deep Brew will help in further driving the personalization engine of Starbucks, help reducing the allocation of labour and help in the management of inventory in the stores. If these objectives are achieved, it would free up a lot of time for the staff for actively connecting with the customers as well as offering that significant personal touch. The mission statement of the organisation is to provide inspiration as well as nurture the human spirit and if that is the thing which helps the customers connecting with the organisation, then any thing which is done by the company for cultivating makes perfect sense.
Due to the Organisational Development change, there was an incorporation of the Artificial Intelligence technology which provided scope for the customers in making certain personised choices on the basis of the preferences.The main objective is to increase the satisfaction of the customer and enhance the customer experience. New initiative has been launched through the organisation such as Mobile order and pay which makes it very easy to make the payment as well as keep a track of the records. The new feature helps the customers in buying items without needing to get into the line (Starbucks. 2022). The company was led for encouraging the ideas and adopting some forward-thinking solutions. The ODC provided opportunity to the company for making some amazing contributions to the digital landscape. The integration of technology helped Starbucks in encouraging ideas and adopting some forward-thinking solutions.
- 2010 –Social technology
- 2017 – AI and Data Science
- Continued in present
Whenever people enter a store of Starbucks, they would find espresso shots as well as latte cups being offered just like the way it is done in anu other coffee house, the coffee being grounded and the customer having a conversation with Baristas while customising their orders of coffee. Serving even more than 100 million customers’ occasions across the 78 markets all across the planet, in the fast-changing conditions of market, needs the giants of coffee to have a perfectly orchestrated procedure as well as make technological innovations which changes Starbucks from a supplier of beverage to a data driven company of technology. Deep Brew is one of the successfully created AL- driven platforms which drives the personalisation of the engine of the brand, reduces the allocation of the store labours as well as driving the store’s inventory management (Starbucks. 2022). The transformation of Starbucks had started much before the launch of Deep Brew in the year 2019. The ODC helped in the optimization of the labour allocation in various stores. The incorporation of the advanced automated technology has increased the efficiency of the organisation. It has helped the brand in delivering some personalized recommendations by its mobile application. Deep Brew will help in further driving the personalization engine of Starbucks, help reducing the allocation of labour and help in the management of inventory in the stores. If these objectives are achieved, it would free up a lot of time for the staff for actively connecting with the customers as well as offering that significant personal touch. The mission statement of the organisation is to provide inspiration as well as nurture the human spirit and if that is the thing which helps the customers connecting with the organisation, then anything which is done by the company for cultivating makes perfect sense. There was delivery of personalized recommendation by its mobile application and drive thru outlets. The ODC helped in enhancing the customer experience with providing suggestions to the customers with the items.
Increase in competition has been one of the biggest disadvantages of the ODC event in Starbucks. Deep Brew resulted in the competitive firms to integrate technology for helping in the enhancement of services as well as provide customer satisfaction. Technology was taken in consideration as the aided set of tools for the companies to bear competence with respect to the maintenance of efficiency of the products as well as services. Another challenge for the company would be the provision of consistent experience at scales across all of its outlets all across the world. There is a huge difference in the culture across different regions (Starbucks. 2022). The tools as well as systems might not work as intended because of the issues of technology adoption.
Artificial intelligence has a huge range of uses in the world of business, comprising of the streamlining process as well as aggregation of the data of business. AI is linked with science-fiction dystopias through many individuals but the trait is waning as AI establishes as well as turns out to be more commonplace in the daily lives of people. In the present era, artificial intelligence is the name of a household and at times also a household presence. While the acceptance of it in the mainstream community is a new phenomenon, it isn’t a new concept. The artificial intelligence’s modern field had come into existence in the year 1956, but it had taken many years of work for making some vital progress towards the development of a system of AI and turning it into a technological reality. Artificial intelligence has immense use in the world of business. Most of the people interact with AI in some way or the other on a regular basis (Starbucks. 2022). AI is disrupting every proof of business in a virtual manner. As the technologies of artificial intelligence proliferate, they are turning out to be imperative for the maintenance of competitive edge.
Instead of serving like a replacement of the human intelligence as well as ingenuity, AI is commonly seen as a supportive tool, even though AI at present has a hard time in the completion of some common-sense work in the practical world, it is good at analysing as well as processing bulk data much faster than a human brain. The software of AI can then return with some synthesized action course and present them to the human user. All these traits make AI extremely valuable throughout most of the industries, whether it is just aiding the staffs as well as visitors in making their way around a corporate campus in an effective manner or carrying out a work as complicated as keeping a track of wind turbine for predicting when it needs repair. The resulting impact of the ODC would just have been the same with respect to the political, social, economic as well as business factors of the environment. The outbreak of COVID-19 has drove down and brough recession in the economy in the commercial markets along with the demand for the commodities as well as services. With the help of technology, there would still have been some sustainability in the business. There would be a creation of digitalised business which would have increased access to different segments of the customers.
The paper focuses on understanding the way in which organizational change and development affects the flow of business in an organisation. The study has selected the multination chain of coffee of Starbucks. The paper aimed to find out a change and therefore understand the way it affected the organisation. The technological integration was denoted as the relevant change with the enhancement of the experience of customers. The resulting effect of the change results in generation of revenue with the organisationattracting some more customers with its efficient services. The word change means any alteration in a system that can be physical, social or biological. It can be said that environmental change is the changes in the environment of work in the organisation. Organisational change is a continuous process. Process Starbucks popularized the genre of speciality coffee and grew into licensing and distribution. Organisational change is a continuous process. Starbucks was founded in the year 1971 by Zev Seigl, Gordon Bowker and Jerry Baldwin. The organizational development change in Starbucks is related to the adoption of new strategy of marketing with technology.
Starbucks has a relevant example of the way in which manifesting technology can impact the flow of delivery of service as well as increase satisfaction. the event of organisational change as well as development can be signified through important improvements for Starbucks for the generation of more satisfied customers. It can therefore be sated that a change can arise because of necessity as well as a result for the enhancement of the business framework. With respect to this, it can either be relevant with enhancement in the quality of product or the flow of service. Starbucks popularized the genre of speciality coffee and grew into licensing and distribution. Organisational change is a continuous process. Starbucks was founded in the year 1971 by Zev Seigl, Gordon Bowker and Jerry Baldwin. The organizational development change in Starbucks is related to the adoption of new strategy of marketing with technology. In 2014, Starbucks had introduced their plan of college achievement for the creation of an opportunity for their partners for the acquisition of a college degree without bearing any kind of cost. The environmental effect has been identified by the company and they have chosen to decrease the impact in many ways like making use of recycled cups, reducing the consumption of energy, reducing the carbon footprints, the re-designing of operations, redesigning store for reducing the usage of water, setting up goals for further enhancement in the reduction of the environmental impact. Deep Brew is one of the successfully created AL- driven platforms which drives the personalisation of the engine of the brand, reduces the allocation of the store labours as well as driving the store’s inventory management. The new location of Starbucks is very carefully selected after the examination of the realms of data, this support of Artificial Intelligence for the models of store planning economic factors about a location. This comprises of the level of income, competitor presence, population as well as traffic. The company make use of this for forecasting the revenue, profits along with soe other aspects of economic performance. the location-based analytics make use of the GIS technology and it is applied for making a decision of new location. This helped the organisation in reducing the impact of cannibalization and make sure that the new outlets are being able to capture the critical mass of people which flow across some areas. The transformation of Starbucks had started much before the launch of Deep Brew in the year 2019. For the customers, the program of digital flywheel makes immense value as well as helped the organisation in capturing the value. There were approximately 19 million users of loyalty program in the early 2020. knowing the order preferences of the individual customers along with the patterns of buying allows Starbucks in providing a radically personalised as well as warm experience. Making use of artificial Intelligence in the application of Starbucks or in the drive thru menu can offer the customers some thoughtful as well as personalised options on the basis of their own preferences and also things such as the weather and the time of the day. With the immense popularity of mobile ordering as well as service of delivery, the company is looking at the way in which AI can aid baristas making beverages in an order which takes the entire picture into account.The ODC helped in the optimization of the labour allocation in various stores. The incorporation of the advanced automated technology has increased the efficiency of the organisation. It has helped the brand in delivering some personalized recommendations by its mobile application. Artificial intelligence has a huge range of uses in the world of business, comprising of the streamlining process as well as aggregation of the data of business. AI is linked with science-fiction dystopias through many individuals but the trait is waning as AI establishes as well as turns out to be more commonplace in the daily lives of people. Instead of serving like a replacement of the human intelligence as well as ingenuity, AI is commonly seen as a supportive tool, even though AI at present has a hard time in the completion of some common-sense work in the practical world, it is good at analysing as well as processing bulk data much faster than a human brain. The software of AI can then return with some synthesized action course and present them to the human user.
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