Starbucks in the UK - Essay Example

? Starbucks in the UK Imagine getting a cup of coffee just the way you like it. You take a sip and you find out it is creamy and delicious or it is strong and soothing. You enjoy a cup of coffee with a scone or a muffin, and with good friends. The atmosphere is friendly, the music is good and you can spend as much time as you want in the coffee shop. You can also find a gift for a friend or a family member who also enjoys coffee. This is the atmosphere that Starbucks has created across the world. Starbucks has been a popular place for coffee around the world. In the UK, it has become popular for its coffee and expert customer service. Starbucks has been in the UK since 1998 when they purchased 65 Seattle Coffee stores that were already located in the UK. The reason that Starbucks bought these companies was because they shared a common culture. Both companies had a commitment to create customised coffee, they had similar values, a mutual respect for their customers, their employees, and they had a commitment to the environment. This information prompted them to buy Seattle Coffee as a way to reach out to the UK community (Starbucks Coffee Company, 2011a). Overview of the Business Starbucks actually began in 1971 when they were a roaster and a retailer for whole bean, ground coffee, and tea and spices. At that time, they owned one store in Pike Place Market in Seattle, WA, USA. They were a private company at that time and did not become a public company until 1992 and 1993. At that time, they decided to look for locations in large cities so that they would have a 'hub' store with smaller stores around in these locations. They hired what they called 'zone presidents' to oversee the new stores; each zone president had many years of experience in marketing chain stores (Thompson and Gamble, 1997). Starbucks was able to easily identify those retail sites that would be best for theirs stores. They hired a real estate team who was versed in the coffee bar industry and they instituted a 'sophisticated system' that allowed them to identify the locations that would be best for their stores. They were able to track each area in such a way that they also found attractive city blocks where they could start their stores (Thompson and Gamble, 1997). Today, they have 17,000 companies in 50 countries and they continue to grow (Starbucks Coffee Company, 2011a). Starbucks took its name from the book, Moby Dick by Herman Melville. Starbucks was the name of the first mate in the story. They boast that they have millions of customers world wide and they enjoy serving them the best coffee possible. Starbucks has 700 stores across the UK (Farrell, 2010). Every business must start with a mission and Starbucks mission is 'to inspire and nurture the human spirit – one person, one cup and one neighbourhood at a time' (Starbucks Coffee Company, 2011b, p.1). With this mission, they know exactly what they want to do when they go into each new country or new city. Processes and Systems Starbucks has been able to institute specific processes and systems in their company that worked. They have used the same system in each of the countries they moved into because it worked. Food and beverages purchasing Starbucks purchases coffee from farmers around the world. They basically have four brands that they sell all of their beverages under. These brands are: 'Starbucks Coffee, Seattle’s Best Coffee, Tazo Tea, and Torrefazione Italia Coffee' (Starbucks Coffee Company, 2011b, p.2). In the UK, Starbucks has only introduced a few of its products which include: Via, a new instant coffee that people can purchase at Tesco stores Starbucks Whole Bean Coffees, Starbucks Discoveries Chilled Coffees, and Starbucks Doubleshot Expresso drinks (Puget Sound Business Journal, 2010). Dave Olsen who is Starbucks' senior vice president for coffee, travelled around the world to coffee growing companies and talked to farmers to find the richest quality coffee beans that would produce the best flavour. Starbucks bought the beans above the price that they would get from the commodities market and were able to negotiate a price that depended on supply and demand (Thompson and Gamble, 1997). Starbucks also helps farmers with loans to improve their business. They do this in order to make sure that the farmers are producing quality products and they are concerned that their coffee beans are 'responsibly grown and ethically traded' (Starbucks Coffee Company, 2009). Coffee beans area also purchased through the Coffee and Farmers Equity (C.A.F.E.) practices which are a comprehensive list of ' social, economic, environmental, and quality guidelines developed in collaboration with Conservation International' (Starbucks Coffee Company, 2009). Starbucks is committed to working with the environment instead of against it and they want to make sure that they purchase their coffee beans from reliable and ethical farmers. Starbucks has a variety of products that they sell beyond coffee in the UK and around the world. There are pastries and confections, Italian styled expresso drinks, and coffee related accessories such as mugs, coffee grinders and so forth (Superbrands, 2011). Storage To understand how Starbucks's storage process it is important to look at their supply chain. They use a Integrated-Make-to-Stock Model that tracks what customers are using in 'real time' so that the company can be certain of what to produce and where to send it. Starbucks is able to use several distribution channels so that they receive the greatest return on their investments. Beyond selling its coffee drinks to individuals, they also sell beans and ground coffee to several businesses that include supermarkets, department stores, ice-cream makers and various airlines ("Types"). Starbucks uses Oracle for their automated information system so that it can control everything from distribution planning to manufacturing and scheduling. This information system allows them to have a flow of information back and forth between the warehouse and the individual stores about storage capacity, about the demand for certain products, the inventories and it executes the transportation schedule ('Types'). Production and Service Production is handled by a warehouse that is responsible for roasting the coffee and then distributing it throughout the UK. The plant also has a tasting room and houses equipment and the operations for the company. Starbucks chose the Netherlands as the place to build the roasting plant after a three year search because the location allowed Starbucks to get their coffee across 'the EMEA region' quickly so that the freshness and the quality of the coffee would not be compromised. Also, geographically, the Netherlands already had a 'well-established and mature logistics infrastructure' that was in alignment with Starbucks's need to ship and distribute their products. Also, Dutch people have a long history of dealing with coffee products and they are a known supplier of coffee in the UK (Netherlands Foreign Investment Company, 2003). Starbucks prides itself in customer service. They expect that customers will have a positive experience each time they come into any store. Starbucks Baristas are available to make coffee in the way that each person likes it. They also will go the extra mile and heat baby bottles, and they offer free refills for customers who spend time in the stores. When a customer brings their own mug into the store, they also enjoy a 25p discount on their beverage purchase (Starbucks Coffee Company, 2011a). Customer connection is what Starbucks wants to see with their customers because they know if people feel connected, they will continue to come back to a business. In order to achieve this, customers have been able to watch as their coffee beverage was made and they are able to talk with the baristas as they are making the beverage. The staff always appears friendly and genuinely interested in the needs of each customer (Schwartz, 2008). The aroma of the coffee also wafts through the store when an individual enters the store, which is part of its attractiveness. Originally, Starbucks had an atmosphere that felt like the neighbourhood coffee house. They have changed some of this for some of the stores and it has lost its homey feel for some people (Schwartz, 2008). However, many people still go because it does offer free WIFI, a change to sit and chat with friends, or an opportunity for students to get together and do homework. Starbucks has also started social networking to give customers and employees an opportunity to give ideas about how they could improve their services and products. They started with a 'My Starbucks Ideas' page and developed their site from that position. They also developed a presence on Twitter (Tom, 2010). Today, they use the site to promote local events and they have developed a UK site as well. Environment/Sustainable Policy and Implementation Starbucks is very active in living their environment/sustainable policy. They began with their 'Shared Planet' initiative that is geared towards providing 'the highest quality, ethically sourced and responsibly grown coffee' (Starbucks Coffee Company, 2011a). There are several ways that they promote this process. Starbucks makes sure that they only sell the best coffee and they purchase coffee from local farmers and growers of coffee in each area. They have committed to only purchasing ' responsibly grown and ethically traded coffee' (Starbucks Coffee Company, 2009, p. 3). In doing this, they purchase coffee from ' third-party verified or certified' growers who adhere to the Coffee and Farmer Equity (C.A.F.E.) practices or the standards of Conservation International. Starbucks also provides technical assistance to farmers to help them develop high standards of performance for their businesses and they provide loans to farmers who do one or all of three things: 1) finance pre-harvest activities, 2) make operational improvements or 3) cover export costs (Starbucks Coffee Company, 2009). In collaboration with Conservation International, Starbucks has created programs to help farmers deal with climate change, reduce carbon emissions and helps them to generate more income. Starbucks is also very committed to the communities where they have stores. They work with customers and partners to make an impact in their communities in some way. They have provided grants for young people to encourage them to get involved with their 'Shared Planet' initiatives (Starbucks Coffee Company, 2009). Starbucks is also aware of their interaction with the environment. They lead a consortium of suppliers, business partners, local governments and others who were concerned with climate change and how it would effect business. They conserve water and energy as well as looking for ways to decrease their environmental footprint. They are active in recycling in all of their stores and have taken strides to make their cups and other containers more environmentally friendly. On this level, they have committed to making their cups 100% recyclable or reusable by the year 2015. On a global level, they have worked to protect tropical forests that are carbon-absorbing and they continue to work through initiatives that allow for progressive climate policies and to this end, they began a group called Business for Innovative Climate and Energy Policy (BICEP). Conclusions and Recommendations Starbucks is a thriving company that has created opportunities for many countries to experience the neighbourhood coffee but it has had many challenges in the last few years. There has been heavy criticism about the company in the UK. As an example, some people feel that the coffee is too expensive and not very good. Other critiques state that Starbucks does not always live up to their policies. Starbucks answers with the idea that no company is perfect and therefore they can make mistakes. However, Starbucks listens to its customers and makes an attempt to do something about the issues as they happen (Smale, 2008). Starbucks is a company that is known around the world at this point and they have done a great deal for the community and for the farmers and their partners. Some say that they have expanded too quickly. In an article by Smale (2008) the company founder, Howard Shultz, admitted that they had expanded too quickly in the United States and this was bad for sales. The rapid expansion across the world has also put them into a position that created challenges to sales in every area. Some of the recommendations for Starbucks that this research has include stopping the rapid expansion. They have enough Starbucks at this point and they could make them better. They could also bring back some of the older ways of doing things, like letting people watch their coffee drinks being made. In some of the stores, they have stopped this opportunity. They could also cut back on some of the sandwiches because many consumers feel that the breakfast sandwiches are not very good (Perez-Fox, 2008). It seems that Starbucks needs to concentrate on providing good coffee and good pastries because this is what they have always done well. They also should take a look at their decor in some of their stores and go back to the homier feel. This would allow people to want to stay longer. Starbucks is a company that has its ups and downs when looking at their stock, but they continue to strive in the market. Word Count 2, 201 References Netherlands Foreign Investment Company. (2003). 'Starbucks Corporation: The Netherlands: Setting the Stage for Starbucks European Expansion'. Available from . [10 May 2011]. Perez-Fox, P. (24 January 2008). 'Starbucks gets burned by UK critics'. Perez-Fox Blog post. Available from < http://www.perezfox.com/2008/01/24/starbucks-gets-burned-by-uk- critics/> [10 May 2011] Puget Sound Business Journal. (12 July 2010). 'Starbucks takes products to U.K., Japan' Puget Sound Business Journal. Available from [10 May 2011] Schwartz, P. (7 February 2008). 'What IS the Starbucks Customer Experience?' CustomerU Blog. Available from < http://customeru.wordpress.com/2008/02/07/what-is-the- starbucks-customer-experience/> [10 May 2011] Smale, W. (1 February 2008). 'Why Starbucks' sales have gone cold' BBC News. Available from . [11 May 2011]. Starbucks Coffee Company. (2009). Global responsibility report: Year in review: Fiscal 2009. Available from Starbucks Coffee Company. (2011a). 'The story of Starbucks'. Available from5353 [10 May 2011] Starbucks Coffee Company. (2011b). 'Starbucks company profile'. Available from < http://assets.starbucks.co.uk/assets/aboutus-companyprofile-q1-2011-final-3-8-11.pdf> [10 May 2011] Superbrands. (2011). 'Consumer superbrands 2011: Starbucks. Available from < http://www.superbrands.uk.com/Pages/DocumentManager/Case-study_Starbucks.pdf> [10 May 2011]. Thompson, A. A. and Gamble, J.E. (1997). 'Starbucks corporation: Case study'. Available from < http://www.mhhe.com/business/management/thompson/11e/case/starbucks-2.html> [10 May 2011] 'Types of Supply Chains' (n.d.). Wiley Knowledge for Generations. Available from Tom. (16 August 2010). 'How has Starbucks become the most popular brand on Facebook?' Zulu Creative, weblog, Available from < http://www.lc.unsw.edu.au/ onlib/ref_elec2.html#elec17> [10 May 2011] Read More