Expert answer:Starbucks (Integrated system)
Solved by verified expert:Based on the milestone 2 and milestone 3. Need to complete the below. It should not be more then 3 pages.Starbucks (Integrated system)Recommendations: After submitting your analysis memorandum, your CEO has decided that your business needs the additional resources that Jack Harris and his firm Crisis Consulting can provide. Time is of the essence, and so Jack has called a meeting of the team that will work on this project next week. While Jack is familiar with your business, due to your overview, the rest of his team is not. Your CEO has asked you to provide a memorandum to Jack that he can distribute to his team that will be assisting your business. Do not assume that the team knows anything about your business or the government action it faces. In addition, the CEO has asked you to include your recommendations for addressing the situation the business is facing. A. Business Project Teams: Based on your evaluation of the internal resources that are available to the company, how can business project teams be efficiently engaged to obtain the most favorable results for the company? B. Communication: Based on your assessment of the business’s public image, recommend communication approaches or strategies designed to mitigate the impact of negative information about the business. C. Solution: Based on the courses of action and their impacts that you previously described, determine an effective solution for the business in the situation it is facing. How does the solution address the governmental action(s) or political challenge(s) faced by the business? D. Political Influence: Based on your evaluation of external resources, how should the company utilize outside resources and approaches to advocate for the business and influence the political process?
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Running Head: STARBUCKS INTEGRATED SYSTEM
Starbucks Integrated System
Name
Instructor
Institutional Affiliation
Date
1
STARBUCKS INTEGRATED SYSTEM
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Business Profile
Starbucks Company is an American coffee corporation and deals with the production and
marketing of coffee and other related products and services. The company was established in
1971 in Seattle, Washington by Jerry Baldwin and two other partners. Typically, the company is
regarded the major illustrative of ‘second wave coffee,’ originally differentiating itself from other
coffee-serving facilities in the country by quality, taste, and customer service delivery. Since its
inception in over four decades ago, Starbucks has grown to be the market leader in the coffee
shop industry. Currently, the company has over 23,700 coffee shops and outlets across the globe.
Starbucks is a publicly traded company and it’s listed on NASDAQ. Starbucks deals with not
only coffee, but also other products such as baked goods, tea, smoothies, and sandwiches.
Starbucks current CEO is Kevin Johnson. Johnson took the role of CEO on April 2017, after the
former CEO Howard Schultz resigned.
Market Share and Competitors
The coffee shop industry is amongst the competitive industries in the United States and
the world in general. However, unlike most industries, this industry is typically a small sect of
the vast beverage and food industry. Starbucks faces stiff competition from other established and
large-sized rivals that compete with it. In the coffee house industry, Starbucks holds
approximately 10% of the total market share. The remaining portion of the market share is
divided amongst other competitors. Some of the company’s stiff competitors include but not
limited to Dunkin’ Donuts, McDonald’s, Chipotle Mexican Grill Inc., Wendy’s Co, and Yum
Brands among others (Doppelt, 2017).
STARBUCKS INTEGRATED SYSTEM
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Opportunities and Threats
Starbucks is among the largest and leading coffee shop companies in the United States
and the world in general. However, the company faces a number of opportunities and threats that
tend to enhance and limit its growth, success, and overall expansion. Starbucks operates in a
fluctuating business environment that provides not only opportunities but also threats. These
opportunities and threats are as a result of the changing environment, and thus the company has
no control and influence over them.
Opportunities
I.
Global expansion
One of the opportunities presented to the company is global expansion. Starbucks has the
opportunity to expand its operations and businesses to other foreign markets. Typically, the
company has the opportunity to expand to Asian countries and well as African countries.
Economic growth and development in these regions provide an opportunity for the company to
tap those untapped and underutilized resources (Steiner, Steiner, 2012).
II.
Diversification of products
Diversification of products and services is also another opportunity presented to
Starbucks. To gain a competitive advantage to surpass its rivals and gain a broader customer
base, the company offers a range of products and services to its customers. In addition to coffee,
the company also provides baked goods, tea, smoothies, and sandwiches. Diversified products
allow the company to meet and exceed customers’ expectations and thus attract new customers at
the same time retain the existing ones.
STARBUCKS INTEGRATED SYSTEM
III.
4
Consumer packaged goods
The corporation has been dividing its retail activities in order to steer profitability.
Consumer packaged products; entailing coffee beans and packaged single-serve coffee provide a
thrilling opportunity. In other words, in addition to offering coffee to customers, Starbucks also
provides consumer packaged goods. This additional product and service give the company an
opportunity to outsmart its competitors and be able to gain customer and brand loyalty.
Threats
I.
Competition
As mentioned earlier, competition is very stiff in the coffee shop industry. Typically,
Starbucks faces stiff competition from other rivals who are competing for the same market share.
Competition in the industry is as a result of a minimum barrier to entry in the coffee shop
industry. Some of the company’s stiff competitors are McDonald’s, Dunkin’ Donuts, and
Wendy’s. Stiff competition has resulted in reduced number of customers as other competitors are
also striving to entice customers away from Starbucks (Steiner, Steiner, 2012).
II.
Imitation
Instances of imitation also pose a threat to the company. In order to remain competitive in
the market, Starbucks’ competitors attempt to imitate some of the products and services offered
by Starbucks. In addition to imitating the company’s products and services, other companies
have gone ahead to imitate Starbucks brand name. For instance, a Palestinian company branded
its name as Stars and Bucks.
STARBUCKS INTEGRATED SYSTEM
III.
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Coffee price volatility
Volatility in the prices of coffee is also another threat that affects the company
negatively. Typically, coffee beans are one of the main raw materials of Starbucks. However,
suppliers of these coffee beans tend to increase their prices. Ultimately, these costs are factored
in the overall prices of the company’s output-coffee.
Governmental Action
Starbucks operates in a fluctuating business environment. There are several internal and
external factors affecting the business. These factors ted to provide opportunities at the same
time pose threats to Starbucks. The company’s external factors occur outside the organization
and hence cannot be controlled by Starbucks. Some of the external factors facing the company
are political, economic, technological, socio-cultural, and legal factors. These elements not only
promote the perspectives of the company but also inhibit some of the company’s operations and
activities.
Political factors entail the governmental actions that might inhibit or steer the company’s
innovative attempts and overall operations. The following are the potential governmental action
that will affect the company;
I.
Outsourcing raw materials and resources
One of the major political challenges that Starbucks will likely encounter is the issue of
outsourcing materials and resources from other regions, particularly from foreign countries
(Steiner, Steiner, 2012). Typically, Starbucks plans to develop and implement an integrated
system that will facilitate and enhance its customer service delivery. The company values its
STARBUCKS INTEGRATED SYSTEM
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customers and acknowledges their respective roles in making the company grow and expand in
the coffee shop industry. The integrated system will enable Starbucks to retain its existing
customers at the same time attract new ones. Nonetheless, the company faces a political
challenge regarding outsourcing materials and resources from other regions.
To effectively develop a functional system, Starbucks is required to outsource materials
from other places, particularly foreign countries. In this case, the company will have to outsource
raw materials and physical and human resources from China and India. However, political
restrictions in the United States and in these two countries will inhibit the company’s plan. The
major political element that affects Starbucks is regarding sourcing the raw materials. This issue
has resulted in various attentions from political leaders from the source countries. In this case,
therefore, Starbucks has to comply with environmental, social, and legal norms in these
countries. For instance, the company has to ensure that the supplier companies adhere to all the
set guidelines and policies about ethical and legal practices.
II.
Taxation
Another potential governmental action that Starbucks is (will be) subjected to is the issue
of tax policy. Typically, Starbucks operates in numerous foreign countries and thus is subjected
to the countries’ tax policy. The company’s operations and activities are taxed by the
government of the host country. For instance, in the United States, Starbucks is taxed by the
federal government. Similarly, Starbucks in Canada, the United Kingdom, China, and South
Africa is also taxed by the respective government. Although taxation is a company’s obligation
to the government, it tends to pose a threat to the company, particularly in multinationals like
Starbucks. Most foreign countries have different taxation policies, and some of these policies
STARBUCKS INTEGRATED SYSTEM
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tend to have adverse effects on the company’s overall success and profits. Furthermore,
Starbucks is exposed to thorough and extensive scrutiny by the governments of the foreign
countries to ensure that the company complies with all the taxation policies put in place.
Organization and Teams
Starbucks utilizes a matrix organizational structure that entails a combination of several
features and characteristics of the fundamental forms of organizational structure. The following
are the company’s organizations, divisions, and teams;
I.
Functional structure
The functional structure element of the company’s organizational structure entails to
grouping founded on business function. For instance, Starbucks has a finance department, a
human resource department, an accounting department, and a sales and marketing department.
Typically, these departments are manifested at the company’s top-level structure; particularly in
the company’s headquarter. This element is related with the hierarchy in the company’s overall
structure. In a nutshell, the functional structure element of Starbucks organizational structure
promotes top-down control, with the CEO at the topmost.
II.
Geographic divisions
The company’s organizational structure also entails geographic divisions. Currently,
Starbucks has three regional sects for the international market: Americas, Asia, and Europe,
Russia, Middle East, and Africa. Moreover, in the company’s US market, the organizational
structure has additional sects such as Northwest, Western, Northeast, and Southeast. Each
geographic sect has a vice president. Typically, the geographic division steers effective
STARBUCKS INTEGRATED SYSTEM
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managerial support for geographic requirements. Each sect head is provided with a high level of
flexibility in modifying policies and approaches to align with specific market needs and
circumstances (Doppelt, 2017).
III.
Product-based divisions
The company also utilizes product-based sect in its organizational structure. These sects
address the different product segments. For instance, Starbucks has a segment for coffee and
related commodities, a sect for merchandise goods, and another sect for baked products. This
element of Starbucks organizational structure promotes focus of specified product segments. In
this manner, the company can effectively and efficiently create and develop its products with the
assistance of this organizational structure.
IV.
Teams
Teams are adopted in various parts of the company’s organizational structure.
Nonetheless, teams are most distinguished at the lowest organizational levels, especially in the
company’s stores and outlets. In each store, Starbucks has teams organized to provide products
and services to clients. This element of the company’s organizational structure facilitates the firm
to offer quality and effective services to customers.
Starbucks stable and effective teams have significantly assisted the company to address
several issues and challenges posed by the external elements. For instance, the company’s legal
department comprises of lawyers and attorneys that assist Starbucks to respond to government
regulations effectively. The company’s lawyers have in the past responded to government
regulations by filing numerous lawsuits and appeals in courts of law and other entities in the
legal system.
STARBUCKS INTEGRATED SYSTEM
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Stakeholders
Stakeholders refer to individuals and parties that have interest in a particular business.
Typically, the company’s stakeholders have some element of interest in its operations and
activities and thus are directly and/or indirectly affected by the company’s decisions. Starbucks
stakeholders comprise of both internal and external stakeholders. The internal stakeholders
operate within the premises of the company, whereas, external stakeholders operate outside the
company’s premises (Carroll, Buchholtz, 2014).
Starbucks internal stakeholders include but not limited to the employees, the
management, the subsidiaries, and the shareholders. On the other hand, the company’s external
stakeholders include but not limited to customers, suppliers, Starbucks union, business partners,
and the public in general. These stakeholders play a critical role in ensuring that the interests and
welfare of the business are considered by the government and other political processes. For
instance, the management in conjunction with the company’s legal department advocate for the
company’s interests through the legal process. Furthermore, the employees in their respective
unions influence the political processes through strikes and boycotts. The customers and the
general public also use strikes and campaigns to influence the political process and advocate for
the business’s interests.
Current Environment
The current business environment of Starbucks comprises of the macroeconomic
elements such as the political, economic, and socio-cultural factors. The political factors
affecting Starbucks entails governmental policies regarding the company’s outsourcing of raw
materials as well as the taxation policies set by the government. The initial position taken by
STARBUCKS INTEGRATED SYSTEM
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political players was to set stringent guidelines and policies that limit the company’s ability to
outsource locally and globally. Nonetheless, Starbucks initial reaction to the situation was to
comply with all the set policies and regulations (Cavusgil, et al, 2014).
The primary economic factor that affects the company is the current global economic
recession. This has prompted the external stakeholders, particularly the customers to shift to
cheaper alternatives. The company’s initial reaction to this situation was to reduce its overall
production costs and the costs of raw materials and ultimately reduce the prices of its goods and
services. The cultural differences, particularly in foreign countries are an example of the sociocultural factors. To respond to this issue, the company produces and markets products that are in
line with these cultures. The customers in these foreign markets responded to this by continuing
purchasing products from Starbucks as it aligns with their cultural values and beliefs.
STARBUCKS INTEGRATED SYSTEM
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References
Carroll, A., & Buchholtz, A. (2014). Business and society: Ethics, sustainability, and stakeholder
management. Nelson Education.
Cavusgil, S. T., Knight, G., Riesenberger, J. R., Rammal, H. G., & Rose, E. L.
(2014). International business. Pearson Australia.
Doppelt, B. (2017). Leading change toward sustainability: A change-management guide for
business, government and civil society. Routledge.
Steiner, J., & Steiner, G. (2012). Business, government, and society: A managerial perspective
(13th ed.). New York, NY: McGraw Hill Companies, Inc.
Running Head: IMPACT OF GOVERNMENT ACTION
Impact of Government Action
Name
Instructor
Institutional Affiliation
Name
1
IMPACT OF GOVERNMENT ACTION
2
Abstract
Starbucks is among the leading and largest coffee shop companies in the United States
and the world in general. The company operates in a fluctuating business environment where it’s
exposed to external elements that provide opportunities as well as threats. The governmental or
political factors and among the major factors that affect the company and tend to have a
significant influence on its overall operations. Governmental elements such taxation laws,
minimum wage laws, labor laws, and environmental laws impact Starbucks financial position
and its business sustainability. For instance, an increase in corporate tax rates negatively impacts
the company’s financial decisions and business sustainability. Nonetheless, a decrease in the tax
rate positively impacts Starbucks financial status and its sustainability. The threats and
opportunities presented by the governmental action will be effectively addressed by the
company’s internal resources that include human, physical, and natural resources, capabilities,
and core competencies. Since the policies imposed by the government to the company are
stringent, Starbucks has the options of complying with the policy, challenging it in the court of
law, or defying them and move on. However, irrespective of the decision, the company is likely
to face ethical, legal, operational, and financial repercussions.
IMPACT OF GOVERNMENT ACTION
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Business Environment
Starbucks Inc. operates in a very competitive environment, and it’s subjected to both
internal and external elements. One of the major external elements that significantly influence
the company is governmental action or political factors. Typically, these factors have a
substantive effect on the overall operations of the company both from a production perspective
as well as from the financial perspective. Indeed, political actions affect the company’s financial
operations and situations and these effects pose a threat and also offer an opportunity to the
company. For instance, one of the political factors identified was taxes. The federal government
imposes corporate taxes to the company, and this subsequently results in a decrease in the
company’s overall financials.
Almost all companies are required by the federal government through the Internal
Revenue Service (IRS) to pay a corporate income tax. Moreover, different states have different
approaches when it comes to charging taxes to companies that operate in those states. Although
corporate taxes are similar to personal income taxes in the sense that all corporations must pay
them, it’s crucial to note that these corporate taxes imposed by the government directly impact
the financial policies and decisions of these companies. One of the ways that these corporate
taxes might negatively impact Starbucks Inc. is when they are levied at a significant rate that it
substantively limits the company’s financial operations.
Taxes are levied on Starbucks gross income and thus impact its overall net income and
profit margin. Typically, when the government imposes a very high tax rate on the company, it
means that Starbucks net income will decline as it will have to pay more taxes to the
government. As a result, the profit margin of the company will decline and consequently affects
IMPACT OF GOVERNMENT ACTION
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its financial operations and situations. The primary objective of any company, in this case,
Starbucks, is to increase its profitability. Therefore, high tax rates imposed by the government to
the company will inhibit its chances of attaining the above-stated goals. In other words, an
increase in corporate taxes rate will negatively affect the company’s financial position hence a
threat (Bernstein, 2015).
In addition to taxes, another governmental action that will impact Starbucks financial
position and operations is the imposition of the minimum wage. Typically, when the federal
government enacts a minimum wage, companies like Starbucks will not be allowed to pay less
than the stipulated amount. Even though minimum wage policy has a direct effect on the
unemployment rate, inflation rate, and the labor market, companies also tend to feel its ripple
effects. The imposition of minimum wage means that the company will have to pay more salaries
and wages to its employees. As a result, Starbucks expenses will increase which will
consequently r …
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