INDIRAN MBS141104
LEE YEW HOONG MBS141102
CHONG KUEN SOON MBS1133
CHIA WI PEAW MBS141106
MOHD FAIZAL MBS141114
SEM I 2015/2016
UBSE1123 Session 01
International Business School, UTM
Lecturer Name: Dr Harcharanjit Singh
Submission Date: 05th Dec 2015
OD Implemented in Starbucks
Table of Contents
1.0 Introduction ............................................................................................................................... 3
1.1 Problem Statement ............................................................................................................... 3
1.2 Challenges ............................................................................................................................ 4
1.3 Opportunities ........................................................................................................................ 5
2.0 Industry Background ................................................................................................................. 5
2.1 Relevant to Issue .................................................................................................................. 6
3.0 Organization Background ......................................................................................................... 7
3.1 Historical Background ......................................................................................................... 7
3.2 Branches & Location............................................................................................................ 8
3.3 Products and Services .......................................................................................................... 8
3.4 Customer/ Clients Description ........................................................................................... 10
3.5 Employee............................................................................................................................ 11
3.6 Management ....................................................................................................................... 12
4.0 Challenges and Opportunities Faced by the Organization ...................................................... 13
4.1 How it Started .................................................................................................................... 13
4.2 The Social Entrepreneurship with Starbucks. .................................................................... 13
4.3 Responsibility as an Organization to Reduce Global Warming. ........................................ 14
4.4 Contribute to Mother Nature and Restoring the Eco-system. ............................................ 14
4.5 Creating an Ethical Supply Chain from the Seed to Distribution ...................................... 15
4.6 Creating Pathways to Opportunities and Employment in Global Communities................ 16
5.0 Conclusion .............................................................................................................................. 17
6.0 References ............................................................................................................................... 18
OD Implemented in Starbucks
1.0 Introduction
This paper discusses about what Starbucks has done on the organizational development to
achieve its goals and objectives. Starbucks established in 1971 in Seattles Pike Place Market,
Washington. Starbucks has become the biggest coffeehouse company and also one of the leading
retailers in the world. Starbucks headed by Howard Schultz as CEO of the organization and the
organizational development plus its strategic direction come from its mission statement and
vision statement influences. In order to have sustainable development, Starbucks has an
environmental mission statement and organizational mission statement. The organizational
mission statement is inspiring and nurturing the human spirit with one person, one cup and one
neighborhood at a time. Under the environmental mission statement, Starbucks has to commit to
a role of environmental leadership to all its business. Secondly, Starbucks has to understand the
environmental issue and share the information with their employees. Thirdly, recognizing that
financial responsibility is a needs to the environmental future and instilling environmental
responsibility as a corporate value. Fourthly, developing innovative and flexible solution to bring
the changes and encouraging its employees to share in the mission. Lastly, is to strive for buying
and selling environmentally friendly products.
OD Implemented in Starbucks
5. Starbucks to purchase renewable energy equivalent to 100 percent of the electricity used
in its global company stores by year 2015.
6. Starbucks to reduce water consumption by 25 percent in its stores by year 2015.
7. Starbucks to ensure 100 percent of its coffee is ethically sourced by year 2015.
8. Starbucks to invest in farmers and their communities by increasing farmer loans to & 20
million by year 2015.
9. Starbucks to improve farmers access to carbon market and help them to generate
additional income while protecting the environment.
10. Starbucks to mobilize its employees and customers to contribute 1 million hours of
community service per year by year 2015.
11. Starbucks to engage a total of 50,000 young people to innovate and take action in their
communities by year 2015.
12. Starbucks to build and to achieve LEED certification to all its new stores.
1.2 Challenges
Starbucks water consumption manages to decrease more than 17% since year 2008 but in
year 2011 the water used by Starbucks increased to 5% over the year. Starbucks knew the root
cause was due to higher sales of beverage and the increase was driven by the change in the
rinsing process of blender pitcher. Besides that, Starbucks struggling to meet the goal it set on
recycle cups to 5% from existing figure which is 25% of the beverages sale. Starbucks has
finished the installation of energy management system in its stores but the energy improvement
only improved 4.6% over its baseline level. The low improvement was due to the increase in
energy requirement in supporting its expanded food platform. Starbucks faces challenge on its
recycling program with its stores located in the area that do not provide recycling infrastructure
and landlords who do not provide recycling services. Starbucks certified LEED international
stores face technical challenges due to the US based LEED certification program is still
developing.
OD Implemented in Starbucks
1.3 Opportunities
Starbucks invests in its people, environment and community gives the positive image to
the consumers and its employees. Studies show that companies support social and environmental
issues will give the 93% consumers positive mindset on the organizational. Employees in the
organizational will continue serve and work in the organizational where data proven less
turnover and employees become support to the organizational.
Starbucks builds the future workforces by attracting people who share the same mission
and value to join the organizational. Starbucks supported the baristas training program to help
them developing customer service skills. Starbucks social responsibility gives the organizational
competitive advantage to enter to global market easily and to secure the fair trade market share
for coffee.
OD Implemented in Starbucks
macroeconomic factors that affect the growth in household disposable income where during the
recession, the revenue and profitability margins in the industry will highly impact due to the
decline in household disposable income.
OD Implemented in Starbucks
mandates together and their supply chain or partner requirements are also needed to be drivers
for companies in this industry to start to manage carbon emission. If these companies reduce
their emissions by just 5%, the total reduction of 50,000 tons of carbon can be achieved annually
and ultimately save $20M in operating costs.
OD Implemented in Starbucks
Peet, only later the company purchased directly from the coffee bean planters. In fact, during this
early period, the stores only sell roasted coffee, but not brew the coffee for selling. The brewed
coffee was reserved for free samples only. By 1986, the store number has increased to six in
Seattle and began to diversify its product by selling espresso coffee.
In 1984, Jerry Baldwin with the other owners of Starbucks purchased Peets share in the
company. However, in 1987, former employee of Starbucks, Howard Schultz has bought the
retail chain after being the employee since 1982. Schultz has also rebranded his own Giornale
coffee outlets as Starbucks. The greatest impact done by Schultz was being the architect of
Starbucks, lead the expansion of Starbucks not only outside of Seattle, but successfully ventured
and marketed the products to become a worldwide business as what we observed today.
OD Implemented in Starbucks
menus such as salads and baked goods in the shop. The table 2.0 below summarizes the products
available in most Starbucks branches.
Azerbaijan
Asia
Europe
North
America
South
Bahrain
Brunei
South
Hong
Saudi
Korea
Kong
Arabia
Cyprus
India
Indonesia
Japan
Jordan
Kuwait
Lebanon
Malaysia
Oman
Philippines
Qatar
Sri Lanka
Singapore
China
Macau
Taiwan
Thailand
Turkey
UAE
Vietnam
Austria
Belgium
Bulgaria
Guernsey
Denmark
Finland
France
Germany
Greece
Hungary
Ireland
Monaco
Netherlands
Norway
Poland
Portugal
Romania
Russia
Spain
Sweden
Switzerland
United
Czech
Kingdom
Republic
Aruba
Bahamas
Canada
Costa Rica
Curaao
Guatemala
Mexico
United
Puerto
Panama
States
Rico
Brazil
Chile
Argentina
Bolivia
Australia
New
America
Oceania
Zealand
Africa
Egypt
Morocco
South
Africa
Colombia
El Salvador
Peru
OD Implemented in Starbucks
Bottled drinks
10
Freshly brewed
Iced coffee
coffee
Frappuccino
Blended beverages
others
Fizzio handcrafted
Evolution fresh
Espresso
beverages
Smoothies
Chocolate
Tea beverages
Drinks
sodas
Bakery
beverages
Sandwiches, Pannis
Bistro boxes
Hot breakfast
& Salads
Food
Yogurt and Fruits
Starbucks petites
Table 2.0: Menu in Starbucks Stores
Starbucks has utilized the technology to enhance the services they provide. To enhance
the ambience, unlimited free Wi-Fi Internet access is usually available in the coffee houses. Ports
for charging mobile devices are made available for customer convenience. The customers can
even buy the drink wares and beverage making equipment as gifts or for personal use. In some
stores, the customers may choose their drink combinations via automated touch screen machine.
To further ease those who are in a hurry, they can make their orders and pay through mobile
applications, then drop by the shop just to pick up orders.
OD Implemented in Starbucks
11
theme in Starbucks. For example, Starbucks collaborates with the coffee planters to keep the
standard of coffee beans identical. This is reflected by the fact that regardless where the coffee
house is located, the ambient and the taste of the drinks that Starbucks presents to the customers
remain similar.
3.5 Employee
In the first place, the Starbucks policy statement has ensured that all qualified applicants
will receive consideration for employment without regard to age, race, color, religion, sex,
national origin, disability, sexual orientation, status, gender identity or expression, or any other
basis protected by local, state or federal law. The policy applies in all aspects of ones
employment which encompasses the process of hiring, transfer, promotion, compensation,
eligibility for profits and termination.
The newly appointed employees will be provided with adequate training, in both how to
be personable with customers and knowledge of the product offering in order to provide a
superior experience to the clients. In regard to welfare, comprehensive health coverage is made
available to all eligible full time and part-time employees. Benefits-eligible employees are
further endowed with wide ranges of perks which include bonuses and discounted stock purchase
options.
In addition, the employees in Starbucks are treated as partners rather than workers. Being
a Starbucks partner means having an enormous opportunity for self-development. It is parallel
with the leadership pipeline culture that embedded in the organization. The employee is expected
to develop as a person, in the career and to be a leader in the future. Starbucks College
Achievement Plan is available to allow the employee to pursue their study in Arizona State
University and they will be provided with total tuition reimbursement. The military service
members and veteran partners can extend this benefit to their spouse, domestic partner, or child
to achieve their dreams.
In cultivating and preserving ethical behaviors and conducts among partners, Standards
of Business Conduct of Starbucks are made available for reference. It consists of companys
expectations of partners as how to conduct the business, in line with the mission, guiding
OD Implemented in Starbucks
12
principles and core values. It also serves as a resource for partners to make appropriate decisions
at work.
3.6 Management
Starbucks leaderships are committed to maintain good governance practices with the aim
of warranting the business and affairs are accomplished according to its stated goals and
objectives, together to serve the long term welfare of the shareholders. This is established by the
Starbucks Corporation, corporate governance principles and practices of the Board Directors
policy statements which were updated on 23 June 2015. Besides, a majority of the Board
Directors meets all the independence requirements of the National Association of Securities
Dealers Automated Quotations (NASDAQ) and U.S. Securities and Exchange Commission.
Furthermore, the CEO, COO, CFO and Finance Leaders in Starbucks are required to sign an
undertaking letter of the Code of Ethics.
Below are the lineup of the latest Board Director of Starbucks, in which majority of them
are the distinguished personnel in the industry:
1) Howard Schultz (Chairman & CEO)
3) Robert M. Gates
4) Mellody Hobson
6) Olden Lee
9) Clara Shih
Howard Schultz believes that a happy employee would lead to higher customer
satisfaction, which is the ultimate success of an organization, but it needs a concerted effort from
the superiors with ethical leadership to begin. This notion is comparable to Job Characteristics
Model as coined by Hackman and Oldham. The success of Starbucks as an international coffee
retail chain, the always friendly Starbucks employees and the marvelous services that we obtain
in the stores are conforming to the model.
OD Implemented in Starbucks
13
OD Implemented in Starbucks
14
integrated green construction tactics to exercise energy-efficient appliances and fixtures, natural
lighting at any possible corners and utilizing a better aerodynamic ventilation system to reduce
the amount of heating and cooling consumption. Even though with these initiatives, the
improvement was only a small figure to be compared to the investment of the new installation
and replacement of old appliances, it did not de-motivate Starbucks to set an ethical footprint.
By 2014, 64% of Starbucks stores comply with LEED standards.
OD Implemented in Starbucks
15
recycling programs brings a fair value of challenges too, from the infrastructure to influencing
the traditional mindset.
Starbucks promoted discounts to customers who bring in their personal cup or tumbler.
As time passes, Starbucks baited customers to support this initiative with a higher discounted
price on sale of every cup of coffee and progressively witnessed improvements.
As much as Starbucks intend to roll out the go-green campaign by promoting and
educating on waste management, waste is often handled by store owners; adjunct with
differences between the culture of a country and the enforcement made, not many outlets
practices recycling. To overcome the challenge, a dynamic process from the top of the supply
chain has to play a strong character commitment in both material and recycling.
In 2006, Starbucks took the extra mile to support this initiative by developing the
technology to produce recycled paper fiber and went further to use it as cups to packaging to
boxes. On top of that, Starbucks also practices recycling modes facing customers by providing
sufficient recycling benefits.
OD Implemented in Starbucks
16
responsibility to ensure the safety and rights of workers so it is in a humane and in living
condition complying with the minimum wage requirement and labor enactments such as the
child and forced labor are prohibited and environmental leadership evaluates the suppliers
economies of scale from energy conservation, water and waste management, and amount of agro
chemical used.
A dynamic and continuous process of improvement has been implanted in supporting and
educating the supply chain in encouraging the plan for a long-term productivity of coffee
innovation. Starbucks opts for open-source approach in improving their organizations in terms of
supply chain and coffee source.
OD Implemented in Starbucks
17
supported communities around the globe in all possible ways. In 2014 Starbucks Corporation
gave USD11.4 million money, including USD1.9 million to the Starbucks Foundation. Starbucks
Corporation is granting funds for community building projects, including the Global Fund
through the partnership with (RED) and other efforts and USD38.8 million in real
contributions.
5.0 Conclusion
Collaborative and future-oriented is the keyword for the successful organizational
development. The organization can achieve goals and improve effectiveness, capacity building
and innovatively manage challenged and changes through an organizational development.
The four main elements which are focusing develop by OD experts are structures,
systems, processes, and human within the organization through a several programs which
including organizational assessments, executive and employee improvement
and coaching,
mediation and conflict management, operational review and process improvement, retired
planning and assistance, vital and operational planning, team improvement and assistance,
several special training.
In order to have sustainable development, Starbucks has an environmental mission
statement and organizational mission statement. The organizational mission statement is
motivating and sustaining the human spirit with another individual, one cup and one
neighborhood at once. Under the environmental mission statement, Starbucks needs to focus on a
mission of environmental leadership to all its business. Secondly, Starbucks needs to recognize
the environmental issue and share the information with their partners. Thirdly, understand that
financial responsibility is required to the environmental future and fostering environmental
responsibility as a corporate value. Fourthly, developing innovative and flexible solution to bring
the changes and encouraging its employees to share in the mission. Last but not least, to strive
for buying and selling environmentally friendly products.
OD Implemented in Starbucks
18
6.0 References
1. http://www.termpaperwarehouse.com/essay-on/Starbucks-Case-Analysis/118130
2. http://www.termpaperwarehouse.com/essay-on/Saving-Starbucks-Soul/191378
3. http://www.termpaperwarehouse.com/essay-on/Organization-Development-AndChange/238231
4. http://www.termpaperwarehouse.com/essay-on/4-P-s-Of-Marketing-For-Starbucks/209151
5. http://www.termpaperwarehouse.com/essay-on/Organization-Behavior/25609
6. http://www.termpaperwarehouse.com/essay-on/Starbucks/35872
7. http://www.termpaperwarehouse.com/essay-on/Starbucks-Case/71851
8. http://www.termpaperwarehouse.com/essay-on/Strategic-Audit-Of-Starbucks/41307
9. http://www.slideshare.net/asfawm/starbuckscasestudy
10. http://smallbusiness.chron.com/starbucks-its-organizational-design-12857.html
11. https://books.google.com.my/books?hl=en&lr=&id=UPJljWE62AYC&oi=fnd&pg=PA1&d
q=starbucks+organizational+change&ots=Xb9R9G3inQ&sig=C8Y2umfnZ9Jm27wV5QnYk6LWlE&redir_esc=y#v=onepage&q=starbucks%20organizational%20change&f=false
12. http://www.yai.org/resources/r-c/resources/organizational-culture-and-how-starbucks-savedmy-life.html?referrer=https://www.google.com/
13. https://starbucks.taleo.net/careersection/1000222/jobdetail.ftl?job=150002878
14. http://www.newdirectionsconsulting.com/leadership-engagement/the-starbucks-wayrediscovering-your-mission-purpose-value-in-a-bad-economy-2/
15. http://www.ukessays.com/essays/business/starbucks-business-development.php
16. http://www.nytimes.com/2009/01/29/business/29sbux.html?_r=0
17. https://hbr.org/2010/07/the-hbr-interview-we-had-to-own-the-mistakes
OD Implemented in Starbucks
18. http://www.starbucks.com/responsibility/global-report
19. http://www.starbucks.com/responsibility/sourcing
20. http://www.starbucks.com/responsibility/sourcing/coffee
21. http://www.starbucks.ie/about-us/company-information/mission-statement
22. http://www.whywhisper.co/the-blog/2015/9/24/corporate-social-responsibility-howstarbucks-is-making-an-impact
23. https://bizgovsoc4.wordpress.com/2012/11/11/starbucks-how-ethical-behavior-can-boostbusiness/
24. http://www.thegreenmarketoracle.com/2012/04/starbucks-sustainability-journey.html
25. http://www.greenretaildecisions.com/news/2012/03/29/starbucks-reveals-sustainabilityprogress-and-challenges
26. How Starbucks got its name Seattles Big Blog. Seattle Post-Intelligencer. October 21,
2015.
27. Melissa Allison (March 9, 2008). Starbucks co-founder talks about early days, launching
Redhook and Seattle Weekly, too. Business and Technology
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