Starbucks Corporation“One Cup at a Time”

Presented by

Sneha Kanitkar 925

Arpi Shah 948

STARBUCKS:HRM

POLICIES AND

GROWTH CHALLENGE

ABSTRACT OF THE CASE

Abstract-Jan 2005- Starbucks was rated second

in “Best companies to work for.”

Highlights- Starbucks trainingBenefits to employeesSalaryOther programs.

STARBUCKS CORPMarch 30, 1971 – original Starbucks is opened in

Seattle, Washington.(Gordon Bowker, Jerry Baldwin and zev seigl)

The turning point in 1981-Howard schultz became interested in starbucks.

April 1986 - Schultz left SB and started the Il Giornale coffee bar chain.

1987 – Baldwin, Siegal, and Bowker sell Starbucks to Schultz.

The logo is also inspired by the sea – featuring a twin-tailed siren from Greek mythology.

Ctd.By 1990s starbucks had 110 stores.

Starbucks is known all over the world for its unique brands.

The company sells a line of premium products viz-tea, coffee, cookies etc.

First international outlet in 1996, Tokyo.

“To inspire and nurture the human spirit – one person, one cup, and one neighborhood at a time.”

Starbucks Today- Total stores 16,706 (as of Dec. 27, 2009)

8,850 Company-operated stores.

7,856 Licensed stores.

Operating in more than 50 countries

Revenue of $9.8B

More than 25 million cups served per week in the U.S.

Starbucks Corporation’s common stock is listed on

NASDAQ, under the trading symbol SBUX.

Argentina, Aruba , Australia, Austria, Bahamas, Bahrain,

Belgium, Brazil, Bulgaria, Canada, Chile, China etc

Q1

Starbucks was one of the fastest growing companies in the world. Discuss the growth over the years and the company’s expansion plans.

Starbucks grew slow in 1981-only four stores.

1983 schultz opened a sixth store in seattle.

1987 SB was sold off to schultz for $3.7Mn.

SB expanded to 125 locations by 1990s.

The firm started looking for new avenues viz- ariports, mail order catalogues etc.

1992 SB issued shares($17).

SB then expanded overseas to Japan & Singapore.

Strategy used was partly setting up its own stores and partly through licensing.

SB extended brand through strategic alliances.

SB strategy was to blanket a region with its new stores.

1999 Schultz resigned as the CEO.

In 2004 the company had the revenue of $5.24 mn and a growth of 30% over the last year.

By the end of 2004 there were 8900 stores in 35 countries.

Q2

Positive HRM policies play an important role in keeping employees motivated and aid retention. Critically discuss SB’s HR policies. What role does culture play in enhancing employee motivation.

SB realised early that motivated and committed workforce was a key success to retail business.

“Starbucks experience” differentiated them from the competitors.

It was important to have “right people hiring the right people.”

Competencies sought for were, adaptability, dependability and team work.

Starbuck experience-

The Starbucks experience is about these 3 P’s:

People- the baristas and their connection with customers. 

Place - the physical stores, their design and aroma

Product – the beverages, food, and merchandise

Training-Sb’s invested in training to all class of employees.

24 hour training program called “first impression”

The program included, basics of retail business, coffee making skill and create positive customer experience.

Three star skills taught to the employess- Maintain and enhance self esteem Listen and acknowledge Ask for help

Training was different for managers and non-frontline employees.

Salary-Wages paid were among the highest in

the industry.

The pay per hour exceeded the minimum wage stipulated by state regulations.

The total pay pack was called as, “your special blend”

Benefits-Employees covering minimum 20 hours a week and 90

days of service were entitled to get health insurance

coverage.

Company paid 75% of premium.

Dental and vision insurance.

Re-imbursment for alternative treatments was done.

The benefits programs had its roots in the philosophy,

“treat people like family and they will be loyal and give

their all.”

Employees were called partners.

Bean stock plan was allowed to employees who had

completed six months.

This was first company to give stock options to part-

timers.

SB also conducted several programs for well being

of the employees viz- childcare,fitness etc.

SB conducted surveys to monitor the effectiveness

of the benefits programs.

These programs were designed to attract and retain

employees.

The culture-The culture had its roots in the mission

statement and reflected the companies values.

SBs put employees welfare before any factor.

The objective, “provide a great work environment

and treat each other with respect and dignity.

The mission review program.

SBs maintained equality regardless of the rank

employees were called partners.

All were eligible for stock options.

Mission statementProvide a great work environment and treat each

other with respect and dignity.

Apply highest standards of excellence to purchasing, roasting and fresh delivery of coffee.

Develop enthusiastically satisfied customers all of the time.

Contribute positively to out communities and to our environment.

Recognize that profitability is essential to our future success.

They tried not to capitalise the job titles. “ceo” rather than “CEO”.

SBs tried to maintain small company atmosphere and encourage the entrepreneurial spirit in employees.

Informality and camaraderie was a part of the culture.

Employee‘s ideas were implemented.They gave away awards like “spirit of

starbucks”

Q3

What were the HR challenges that starbucks faced in the early 2000s? Was the company ‘s stand towards its HR costs justified? Do you think starbusks will be able to find the right kind and number of people for its future expansion?

THANK YOU!!