Starbucks was established in 1971 in with the aim to provide coffee to restaurants and nearby surrounding bars in Seattle’s Pike Place Market. The company operated just a single store from a narrow storefront. The coffee that Starbucks offered was made with fresh and premium whole coffee beans. In 1982 company recruited Howard Schultz who brought his expertise from Italy and applied that to Starbucks. Shultz was operating his own store called Il Giornale which offered Italian food and Starbucks coffee. Schultz vision was to expand the Coffee bar business across the world. Schultz also led the marketing and the retail team of Starbucks. Geornale took over the Starbucks in 1987 and all its assets came to its possession. The Company name was also changed to Starbuck Corporation. The company expanded its operations in Chicago and Vancouver and had 17 stores operating by the end of the year. Company reached a staggering 3300 stores in the year 2000. It has opened its store in China, England and Australia.

Currently Starbucks is a big name in coffee business. It operates more than 24000 stores internationally and 15149 stores in United States. Starbucks vision to become a global brand seems to be working and company is also attracting the attention of investors. Currently Starbucks is operating its stores all around the world which include Canada, Australia, Hong Kong, Bahrain, Israel, Japan, Lebanon, Kuwait, New Zealand, Oman, China, Saudi Arabia, Malaysia, Qatar, Switzerland, Singapore, South Korea, Taiwan, Thailand, Philippines and also recently entered in India, Brazil and Russia. Starbucks Café offers premium quality of teas and pastries as well. They are offering multiple flavours of coffee to cater to different taste of customers. The store also offers good ambience for customer and people come to Starbucks to meet, work or just chit chat. Starbucks is a staple coffee brand in the United States and people from all walk of life enjoy their coffee.

Human Resource Structure of Starbucks

Starbucks is now one of the biggest brands in the world and maintaining the brand and hiring new people is a big challenge for company. Starbucks organizational culture is based on inclusion, belongingness and diversity. Starbucks considers its employees as partners of the organization. They are given special trainings to understand about the company’s products and how to brew coffee and serve it to people. Partners are assigned duties by their shift managers and can take decisions for the betterment of their store. Partners are evaluated based on their performance and given promotions to motivate them. The company strategy is to hire right kind of people and retain them and train them. Starbucks invests heavily on training of its partners to enhance their skills so they can perform their job efficiently. Starbucks is an equal opportunity employer and does not use forced labour practises. Starbucks provides a safe environment for work which is free from bullying, harassment and discrimination. All partners teat each other with respect and dignity. Starbucks also embraces diversity in its workplace, and it is one of the competitive advantages of Starbucks. In 2005 Starbucks Coffee Company was nominated as second-best company to work for by Fortune magazine. Starbucks follows wage and hour laws and regulations to ensure that partners are compensated properly for their work. Starbucks employees are also offered additional benefits if they work over 20 hours a week in the form of stock dividends. It gives a sense of ownership to the partners and it motivates them to work in the best interest of the company. Starbucks carefully developed human resource policies is what makes it distinguish itself from other brands. It values its partners and gives them incentives. It provides a culture of inclusion and diversity which creates a pleasant working environment for its employees (Tikson, 2018).

Starbucks Products and Services

Starbucks offers a range of products which include coffee, handcrafted beverages, merchandise and baked items. Starbucks offers more than 30 blends of Coffees and also single origin primum coffees as well. Hand crafted beverages include freshly brewed coffee, hot and iced espresso beverages, Iced coffee, cold brew, Nitro coffee, Frappuccino coffee, non-coffee blended beverages, Starbucks refreshers and Teavana teas. Starbucks also offers its own branded merchandise which include Coffee and tea brewing items, mugs and accessories, packaged items, books and gifts. Company also offers fresh food items which include baked pastries, cold and hot sandwiches, salads, salad and grain bowls, oatmeal, yogurt parfaits and fruit cups. Starbucks also provides take out services and dine in services. It also offers birthday celebration services. Starbucks employees are trained with customer needs in mind and they provide best in class order taking services. Starbucks products can also be found on convenience stores and gas stations.

Starbucks Five Forces Model Analysis

Starbucks manages its portfolio through effectively managing five forces in the global coffee industry. The Porter’s Five forces analysis model helps in analysing the competitive environment of the industry. The five forces include competitive rivalry, bargaining power of customers or buyers, bargaining power of suppliers, threat of substitution and threat of new entrants. Starbucks faces strong competition from other coffee houses and fast food brands. The competitors of the company include Dunkin Donuts, McDonald’s, Wendy’s, Burger King and Subway. The company needs to strengthen its core competencies to be able to remain competitive in the market (Greenspan, 2019).

Starbucks is operating in a market which is highly competitive and there are external forces which contribute towards the strong competition. Starbucks not only faces competition form coffee houses but also from fast food chains as well. All these competitions intensify company’s rivalry. According to Porter’s Five Forces Model the factors that contribute towards strong bargaining power of customers include low switching cost, high substitute availability and small size of individual buyers. Bargaining power of suppliers is a weak force. This represents that suppliers influence on the company. The factors that contribute to weak bargaining power of suppliers include moderate size of individual suppliers, high variety of suppliers, large overall supply network.

Starbucks faces a strong force regarding threat of substitution. It shows the impact of substitutes or services on the business and its external environment. The external factors that pertains strong threat against Starbucks in relation to substitutes include high substitute availability, low switching costs, high affordability of substitute products. Threat of new entrants shows a moderate force according to Porter’s model. This tells us that how the business will be affected in case of a new entrant in the market. The forces that contribute towards moderate threat include moderate cost of doing business, moderate supply chain cost, high cost of brand development. The moderate cost is associate with the business model of the company. For a small coffee shop the cost will be lower as compared to the business that is operating large number of coffee house chains. Smaller coffee houses do not have to deal with large costs of dealing with suppliers. These factors enable small coffee houses to compete with Starbucks. Brand development cost is also a major factor. Small coffee houses do not have resources to compete with Starbucks. Starbucks achieved its brand recognition through years of development and process improvement which small brands can not do. We can say that the threat of substitution is not a big problem for the company, and it should focus on its core competencies to remain competitive in the market.

Conclusion and Recommendations of the Starbucks Company

Starbucks has achieved its brand recognition through years of development and investing in its employees. The company is now a considered a global brand. It has a large network of coffee houses across the globe and it is managing them with effective human resource strategies. Starbucks values its employees and consider them partners. The company although has strong commitment towards its employees and values them there are still some areas where the company can improve its HR strategy. Here are some recommendations that company can include in its business model and HR strategy to increase its performance;

· Design the incentive package according to the age of employees and offer benefits according to their performance and also keeping their needs in mind.

· The monetary awards should also be given in addition to motivation and appreciation. Monetary awards motivate employees and has long term effects and they remain loyal to company.

· Managers and supervisors should not be changed frequently, and they should be given promotion and also decision-making rights to effectively manage the coffee house.

· Audit of the stores should be performed and the stores that are not performing well should be closed to reduce costs.

· Company should also widen its range of products to cater to changing taste and needs of the customers.

· Company should follow practises that should not be controversial and work in the best interest of the customers.

References of the Starbucks Company

Greenspan, R., 2019. Starbucks Coffee Five Forces Analysis (Porter’s Model) & Recommendations. [Online]
Available at: http://panmore.com/starbucks-coffee-five-forces-analysis-porters-model
[Accessed 21 April 2020].

Tikson, S., 2018. Human Resource Policies and Work Culture: A Case of Starbucks. Jurnal Bisnis, Manajemen dan Informatika, 15(1).