Research Paper on "Management and Leadership: Starbucks Differentiate"

Research Paper 6 pages (1953 words) Sources: 6

[EXCERPT] . . . .

Management and Leadership: Starbucks

Differentiate between management and leadership

Management is often described as the day-to-day operations of a business. Leadership, in contrast, is creating an organizational vision that inspires and motivates people. "Leadership is setting a new direction or vision for a group…a leader is the spearhead for that new direction. Management controls or directs people/resources in a group according to principles or values that have already been established" (Leadership and management, 2011, Team Technology). Starbucks has attempted to fuse these two notions, and tries to exercise quality control when there is a discrepancy between its management and leadership. Occasionally, a divergence between the two is inevitable in such a large organization, but Starbucks has always been able to regroup and redefine itself.

For example, when Starbucks believed that the quality of its coffee was being compromised by poor training of baristas, it instituted a widely-publicized nationwide store shut down. This was beneficial for Starbucks for two reasons. First of all, as a non-discount retailer, a certain level of quality is necessary for Starbucks to maintain, otherwise consumers will turn to other sources for their morning 'cup of Joe.' Secondly, the company was founded upon the principle that it would provide a unique, customized experience to all consumers for coffee.

The failure of management to exercise proper quality control was identified and remedied. Managers were not adhering to the company's core vision, and a highly-publicized effort enabled Starbucks to gain positive PR, despite the losses incurred by the shut down. The store announced: "Among the various lessons that will be re-taught include how to wipe the steamer wands and remembering to rinse the pitchers and shot glasses every time" (Starbucks closing stores, 2011, The Huffington Post).

The store shut-down was part of a wider retrenchment of the company's core policies, and an attempt to return to its fundamental principles of leadership. Company shares dropped 42% in 2007, before the retraining. "Investors were alarmed by figures showing a 1% fall in the average number of transactions per store" (Starbucks closing stores, 2011, The Huffington Post). Starbucks cut 600 jobs, introduced free wireless internet connection and eliminated "hot breakfast sandwiches, which were criticized for interfering with the aroma of coffee" (Starbucks closing stores, 2011, The Huffington Post).

Having both management and leadership is essential for a company like Starbucks to continue to grow. "Leadership without management sets a direction or vision that others follow, without considering too much how the new direction is going to be achieved" (Leadership and management, 2011, Team Technology). Leadership must be grounded in knowledge of the practical realities of the marketplace. Management without leadership "controls resources to maintain the status quo or ensure things happen according to already-established plans" but often in such a technocratic, data-driven manner that the vision of the organization is lost in the wake of market changes. (Leadership and management, 2011, Team Technology). For example, cost-cutting at Starbucks diluted -- literally and figuratively -- the corporate brand (Leadership and management, 2011, Team Technology).

Early on, Starbucks was said to epitomize both good management and leadership. The company began as a relatively small enterprise, based in Seattle. It only began to grow after the current CEO, Howard Schultz, began to fuse his vision of leadership and practical managerial experience with Starbucks' unique brand of coffee: "Starbucks stood not just for good coffee, but rather for the dark-roasted flavor profiles that the founders were passionate about. Top-quality, fresh-roasted, whole-bean coffee was the company's differentiating feature and a bedrock value" (Starbucks case study, 2011, McGraw-Hill).

Starbucks began to expand strategically during its early days, focusing upon critical demographic segments. It stressed urban locations in its expansion plans and then spread out into nearby suburbs, using a 'hub and spoke' model as 'buzz' about the coffee grew. Much of the approach that Starbucks took defined conventional norms and expectations about 'correct' managerial behavior, however. Schultz "would open another Starbucks just across the street & #8230;the new cafe lured the business set while the original drew a hipper clientele. And both groups turned up in droves" (Clark 2008).

This blend of caution and daring was also manifest during Starbuck's initial international expansion into Japan. Starbucks carefully researched the market environments of the nations into which it was considering expanding. Europe already had an established coffee culture. However, Japan did not, but did have an appetite for American-branded franchises. "At the opening ceremony, Shinto priests blessed the new store and prayed for harmony between Starbucks and the forces of nature, while Schultz and other executives sipped sake and washed their hands in spring water" (Clark 2008). Schultz ignored naysayers who criticized him for banning smoking in the cafes, despite the popularity of the habit in Japan.

After establishing itself within Japan, Starbucks gradually began to refine its image and also the offerings it provided to consumers. Its menu expanded to include a wider variety of teas and meals rather than focusing on pastries, given the Japanese have less of a 'sweet tooth' than Americans and are more apt to eat out than buy takeaway, given the smallness of Japanese living quarters. After an initial success, customers began to turn away, which Starbucks responded to with an immediate overhaul of the management. "In the beginning, the company imported most of its food items into Japan from the U.S. "The food wasn't good -- the items were too big and the texture was dry…Since those days, the company has worked to revise recipes," including offering seasonal recipes and specialty pastries like the Sakura steamed bun, filled with red bean paste, to commemorate locations or holidays in Japan (Sanchanta 2011). Once again, Starbucks stayed true to the leadership vision of quality, even while it had to refine its technical, managerial approaches. Starbucks similarly caused a shift balancing a coherent organizational vision with acknowledgement of local tastes in taste in the United Kingdom, another nation of tea-drinkers. "Starbucks has sparked a huge shift in British tastes. Over the past five years, UK tea sales have plunged while coffee sales have soared, which has brought about a stunning result: Britons now spend more on coffee each year (£738m) than they spend on tea (£623m)" (Clark 2008).

Starbucks' vision was to create a neighborhood coffee house. But unlike other major American food companies, it did not franchise its stores out -- it retained control over the presentation of the product. It tailored its product to different neighborhoods and nations yet carefully specified the quality of the product, presentation of the product, and training of its baristas in a highly concentrated fashion. "In markets outside the continental United States (including Hawaii), Starbucks' strategy was to license a reputable and capable local company with retailing know-how in the target host country to develop and operate new Starbucks stores" (Starbucks case study, 2011, McGraw-Hill). The managerial strategy was thus to retain oversight and joint partnerships rather than franchising. This strategy was not selected in an arbitrary fashion, but to satisfy a specific ideal the company was attempting to serve. Starbucks has even begun to make inroads into France and Italy, the nations whose coffee shop and food cultures inspired the original store in Seattle. The store has come to embody all that is desirable about America.

However, some allege that Starbucks has begun to lose its discipline, and its expansion plans and mission grew less focused in recent years. It has been forced to close many underperforming stores, while once it proudly boasted about the number of enterprises located door-to-door. "following a deep retrenchment in the U.S. In the past year, which involved Starbucks closing hundreds of underperforming stores and shaving nearly $600 million of costs" (Sanchanta 2011).

Roles and responsibilities: Organizational managers and leaders

Starbucks has created an organizational culture with a singularity of vision, as embodied in Howard Schultz, even while it values individual contributions and is willing to listen to the suggestions of employees at every level of the organization. For example, in the wake of the recent recession, there was a great deal of pressure at the company to reduce the healthcare benefits offered to employees. Schulz believed that Starbucks had a moral obligation to offer these benefits first and foremost, and that the company had 'branded' itself successfully as an ethical, fair trade company that supported employees at every level of the organization. It could not afford to ignore this tradition.

Organizational leaders set the tone for a company as a whole. Schultz has set a policy stressing the need to obey certain organizational protocols in a manner that 'trickles down' throughout the organization. Starbucks places a strong emphasis on training store baristas and managers, given that the service of its coffee is such as critical component of the customer experience. Every barista receives 24 hours of training in coffee history, drink preparation, coffee knowledge (four hours), customer service, and retail skills, and every manager attends classes from 8 to 12 weeks (Starbucks case study, 2011, McGraw-Hill). Starbucks' emphasis on respect for… READ MORE

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