Company Analysis - Globalisation of Starbucks - Essay Example

?Company Analysis: Globalisation of Starbucks Introduction Globalisation brought notable cultural shifts in organisational performance, industrial sectors, and in consumer behaviour. Globalization refers to the process through which national economies and cultures are integrated into an international economy so as to enhance international trade, direct foreign investment, migration, and technology sharing. This paper conducts an ethnographic study on Starbuck Coffee Company UK Ltd in the context of globalisation. Focusing on the market positioning of the cafe and the buying habits of its customers, this paper will analyse the potential of this firm to create a coffee culture across the United Kingdom. The paper will also explore the impacts of globalisation on the firm’s organisational culture. The ethnographic study This ethnography study focuses on Starbucks Coffee Company UK Ltd which is located in the city of Westminster in the United Kingdom. Starbucks Corporation is a Washington based company having coffeehouse chain globally. The company achieved an incredible growth rate in a short period and now it has spread across more than 55 countries. The Starbucks Coffee Company UK Ltd was founded in 1971 and now operates as a subsidiary of Starbucks Coffee Holdings (UK) Limited (Bloomberg Businessweek). In order to analyse varying taste preferences of customers regarding the coffee culture in UK, interviews were conducted with several customers. Starbucks has long years’ operation experience in United Kingdom. Despite the store closure challenges and increasing competition issues, Starbucks profitably operated in Westminster. This Starbucks cafe in Westminster also resembled the traditional infrastructure of Starbucks buildings. The interior decoration of the cafe reflected the integration of modernism with the traditional culture. Although the cafe is situated in city, customers are not affected by noise because of the cafe’s infrastructural characteristics. The firm mainly dealt with food products like drip brewed coffee, coffee beans, salads, snacks, pastries, espresso-based hot drinks, and other hot and cold drinks. It seemed that most of the customers visited this cafe in morning and evening. Since there are numbers of tourist places in the Westminster including the palace of Westminster and the Abbey’s western facade, thousands of people daily visited the city of Westminster. This situation is notably a competitive advantage to Starbucks, for it promoted the overall business of the firm. In addition to tourists, people from different parts of the globe visited the Westminster for different purposes. Hence, the customers constitute people from different religions, races, and countries. One of the major features of this Starbucks cafe is that it has several potential customer groups. From the observation, the frequent visitors to the Starbucks cafe mainly included youngsters between 20 and 25 years old. Families were another potential customer group of the cafe. They mainly visited the cafe evening and night. The customers aged between 20 and 30 generally wore casual dresses and carried book bags. Workers from nearby offices also seemed to be the regular customers of the coffee cafe. Most of the customers purchased beverages while a few wished to buy only eatables. Undoubtedly, coffee items were the most demanded products at the Starbucks Coffee Company UK Ltd. Most of the employees of the cafe seemed below the age of 35 who wore the company uniform and provided excellent customer service. Evidently, the firm gives extra care for maintaining cleanliness and appealing ambiance. Separate rooms for families and luxury rooms improved its infrastructural value. In total, the customers were found very comfortable with the cafe’s setting. Based on my observation, I group the customers as follows. 1. Youngsters: This group includes students who consider taking coffee a fashion and a reasonable means of enjoyment. 2. Working people: They mainly visit the coffee cafe in order to reduce their work stress. 3. Families: To this group, taking coffee meant mental relief and leisure. Globalisation: A brief overview This case study clearly indicates how globalisation impacted developed economies along with notable shifts in organisational culture. The outcomes obtained from the ethnographic study have to be evaluated to determine whether globalisation could bring an improved coffee culture in United Kingdom. The concept of globalization greatly contributes to effective and rapid circulation of ideas, languages, and cultural ideologies. With intent to enhance foreign investment and cross-border trade for international business expansion, nations have liberalised cross border trade regulations. As Slaughter & Swagel (1997) point out, the removal of trade barriers promote import and export activities by which a government acquires foreign investments (IMF). According to Devetak and Hughes (2008, p.34), globalisation connects nations through a global network, and it assists a nation to get access to foreign markets and customers. As a result of globalisation, international organisations introduced ranges of structural changes and integrations within the firm. Such changes and adaptations were mainly introduced with the objective cost minimisation which is an effective tool to sustain profitability (Thinking made easy). Globalisation brought significant changes in customer requirements too. In addition, globalisation totally changed the concept of cultural sensitivity. In the opinion of Archibugi and Pietrobelli (2002), the fruitful elements of globalisation contributed to the development of a new technological era that restructured the living standards and business concepts of the modern world. The tremendous development in technology was the central element that led to industrial revolution. The industrial revolution notably changed the structure of families, communities, and worksite environment. In the view of Narasaiah (2003), in order to take advantages of increased employment opportunities, population concentrated near to factories and other worksite areas. The result was the emergence of urbanization which plays a crucial role in developing metropolitan cities (pp.19-21). The explosive growth of information technology is one of the major outcomes of globalisation and industrial revolution. For instance, the introduction of the internet and related facilities has restructured the way people communicate. In modern days, more people tend to relocate in order to be closer to family or to find a change in living environment. Even though the ultimate cause of immigration is not globalisation, this concept has considerably increased the number of immigrants (Migration and globalization). Before the beginning of 21st century, the main intention of migrants was simply to leave home country to become a member of another country’s community. Those days, traveling from one’s home country to other foreign destination was expensive and time consuming. As reported by The University of Iowa Center for International Finance and Development (n.d.), after the introduction of globalisation, several countries allowed immigrants to have dual citizenship (Immigration & Globalization). These favorable practices have evidently intensified the rate of migration across the globe. As per US immigration policy (Bush & McLarty 2009), those immigrants who bring skilled labor or specialised knowledge are the valuable assets of any country because their potentials can be effectively employed to increase the productivity of the nation. Since organisations had widely employed the skilled foreign workers, the immigration played a significant role in restructuring the organisational culture too. In total, organisations began to deviate from the traditional way of doing business. Homogenisation thesis (as cited in Steele, 2008) tells that globalisation added to cultural convergence; whereas hybridisation thesis argues that globalisation facilitated blending diverse cultures that transferred through cross border exchange. Globalisation was a main contributory factor that led to ‘McDonaldization’ which was a process of rationalisation. The rampant growth of the concept consumerism can also be attributed to globalisation to a large extent. In order to take advantages of the favorable market situation which emerged as a result of globalisation, organisations redesigned their policies. The late 20th century witnessed notable changes in consumer behaviour as well as organisational culture (United Nations). Organisations expanded their business markets and engaged in large scale production. Similarly, many organisations transplanted their business to foreign countries in order to take advantages of cheap raw materials and labour. Although the concept of globalisation got world wide popularity, it caused the collapse of small scale industries as domestic traders could not effectively confront with global corporate giants. Effective cultural integration was one of the fruitful advantages of globalisation. Since people from different countries engaged in workforce under the same organisation, they were compelled to communicate each other. Firms were also willing to integrate their business interests with host country’s cultural notions. Undoubtedly, cultural integration significantly promoted international business expansion. Analysis Westminster is an area of central London in England. This city situates on the north bank of the River Thames and southwest of the City of London. England was highly successful and stable economy even before the emergence of globalisation. However, the globalisation changed the face of England especially, the country’s megacities like London. Prior to the emergence of globalisation, working people were the main users of coffee and they regularly took coffee to escape from their world of work. However, globalisation completely rewrote the coffee culture, for the coffee consumption became an integral part of life in Westminster. “Post-modern work and lifestyles demand convenience, comfort and the mass consumption of popular culture and the branded coffee house perfectly facilitates the perpetuation of all three aspects” (Scott, 2006). Likewise, the whole Europe adapted to a different coffee culture. The Leverhulme Trust reveals that the European Union constitutes 21% of total worldwide coffee consumption (Leverhulme Trust). Hence, evidently globalisation created fruitful opportunities for the Starbucks Coffee to establish its subsidiary in Westminster. Since Starbucks is a global company, it heeds higher attention to geographical variances, cultural differences, and market conditions for the establishment and expansion of its branches. As discussed earlier, globalisation led to urbanisation which was the central element in the emergence of an entirely different coffee culture in United Kingdom. To reduce the stress related to busy modern life, more people tend to rely on coffee these days. Coffee contains a stimulant called caffeine which makes people more active. Starbucks got access to cheap raw materials and labour as a result of globalisation and this situation assisted the firm to set lower prices for its coffee products. Since globalisation promoted technological innovation, Starbucks could use improved technology in production, storage, and distribution of goods. Globalisation assisted Great Britain to create ranges of employment opportunities in manufacturing sector (London Skills and Employment Board). Increased employment opportunities coupled with liberal immigration policies greatly aided the country to attract highly skilled employees from various parts of the globe. Obviously, higher immigration flow made notable changes in the country’s population structure since immigrant workers tended to concentrate in megacities (near their workplaces). Moreover, this concept caused the assimilation of different cultures over the main cities of the country. It must be emphasised that most of the immigrants were from underdeveloped and developing countries where regular coffee consumption is a custom. Hence, this situation, especially in Westminster, greatly benefited the Starbucks coffee cafe. Financial reports show that London’s economic growth may overcome the New York over coming years (London.gov.uk). Globalisation has played an inevitable role in lifting the city to world’s top position. Large number of coffee cafes commenced their operations in London during the last decade. This clearly points to the changing coffee culture of the United Kingdom. Since most of the residents of Westminster are financially stable, they always give first preference to luxury and branded products. As the Starbucks is a global giant which has subsidiaries across more than 55 countries, it has attained a good stature among the people. Hence, the Starbucks Coffee Company UK Ltd has not faced many difficulties to establish the firm in Westminster. Similarly, elimination of cross border regulations and other regulative business policies assisted the Starbucks to easily launch its venture in Westminster and several other parts of the UK. Conclusion In total, UK has a distinct coffee culture which is evidently attributed to globalisation. Most of the customers responded to the interview that they had not been familiar with coffee before five-six years. Many customers visited the Starbucks Coffee Company UK Ltd several times in a week while some others did not like to visit the cafe more than once a week. Despite the mounting popularity, majority suggested that the cafe should lower its prices. However, all customers opined that they were satisfied with the overall facilities provided by the Starbucks cafe. From the study, it is also observed that the cafe could attract customers of different ages, races, and income levels using its reputation in the market. The majority of customers were frequent visitors and it indicated the cafe’s effective customer services. The ethnographic study reflects that youngsters are the most potential customer group of the cafe. References Slaughter, M. J and P. Swagel. (1997). ‘Does globalization lower wages and export jobs?’, International Monetary Fund, available at http://www.imf.org/external/pubs/ft/issues11/. Accessed 8 Aug 2011. Devetak, R and C. W. Hughes. (2008). The Globalization of Political Violence: Globalization’s Shadow, Routledge: Taylor & Francis Group, Abingdon. ‘Migration and globalization: Globalization 101’, (2009). 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