Organizational Analysis Profile - Starbucks

Organizational Analysis Profile - Starbucks

The political, economic, and social realities facing Starbucks are not nearly as influential as in many other businesses, at least at first glance. They are a coffee house, so it would seem they have little impact in other matters. However, Starbucks has rewritten the way the world drinks coffee, and it has rewritten many corporate functions, as well. In fact, in many areas Starbucks is rewriting how companies do business and are responsible in the communities they serve. Economically, the company is in good financial shape. They have increased earnings every year since 1995, and not surprisingly, have increased their stores from 165 global locations in 1992 to 13,168 in the first quarter of 2007 (Editors, 2007). Politically, Starbucks in a concerned partner with many diverse suppliers. They support working with women-owned businesses along with using third world coffee suppliers and treating them fairly and with respect. They make donations and support communities where they do business, and are committed to corporate social responsibility in all their dealings with suppliers and communities. Their corporate responsibility is often used as a model for other businesses to emulate.

The macro environmental conditions Starbucks must function in are rather restrictive for the company, because they rely on such a small product line. They have not diversified into lunch or dinner type items, although some stores are serving limited hot breakfast items such as souffles and wraps. Thus, their business survives in a small, niche market that has grown incredibly fast in the past 10 to 15 years. The environment and business model they serve is restrictive, but they have made it work by offering a consistently high-quality product, and continually adding new menu items to their menu to keep customers from getting bored with their offerings. They compete with local coffee houses and coffee shops, but offer a different environment and service, so they are relatively unique in their environment as well.

The firm's principal products and services are coffee-related beverages and breakfast type food items, such as muffins and croissants. These offerings are positioned quite well in the traditional product life cycle, because they are consistently consumed on a regular basis, thus, there is always need for new product. In addition, the company consistently rolls out new products, such as latte flavors for the holidays, which give the product life cycle new life. Thus, the company avoids a deep product life cycle curve with the public becoming bored with basic coffee offerings. Instead, by consistently offering new flavors, roasts, and food items, the product life cycle remains balanced.

While the traditional product life cycle is usually considered a marketing tool, it can also help Starbucks analyze what items are popular and what items are not, so they can adjust their menu and their new offerings accordingly. Thus, Starbucks offering are positioned today at the upswing of the traditional product life cycle curve; they have not yet begun the downward part of the life cycle curve.

Perhaps the most distinctive aspect of Starbucks is its commitment to the environment and the suppliers they deal with, often in third-world countries. It is a distinctive competency that helps many upscale customers identify with the company, and has earned their loyalty. In addition, the company employs its corporate resources in many civic-minded ways, earning even more loyalty from employees and customers. Starbucks believes in supporting communities where they do business in many ways, from purchasing from local providers to supporting Earth Day activities and literacy programs (Editors, 2007). In addition, they have taken a relatively narrow niche market and expanded it to be extremely successful around the world. Essentially, they sell coffee and snack items, and yet they are consistently growing, opening new stores, and increasing revenue each year. The fact that they are so successful is an extremely important aspect of their competency and business model. Not everyone could make such a success out of coffee, so obviously, management at Starbucks, while concerned socially, is also extremely perceptive when it comes to business and business planning.

While the company is committed to social responsibility, they are also an extremely successful company, which means their organizational competencies are working. They provide a variety of beverages and foods that appeal to their customers and offer good customer service that keeps them coming back. Thus, they have developed a model that works and a loyal following of customers because of their service and social awareness.