Organization Development Implemented in Starbucks

Indiran MBS141104Mohd Faizal MBS141114 Chia Wi Peaw MBS141106 Lee Yew Hoong MBS141102Chong Kuen Soon MBS141133

Introduction

• To identify Organizational Development (OD) process that implemented by Starbucks to accomplish successful organization change and performance.– Solving problems and managing future change.

Industry Analysis

• Operates within the Specialty Eateries Industry.• Company that sells specialty and premium food

products– Baked bread, doughnuts, ice cream– Non-alcoholic beverage like coffee, tea and chocolate

• The industry has grown steadily as rising disposable income levels and higher consumer spending.

Coffee Shops

•Starbucks•Tully’s •Peet’s Coffee

Doughnut Stores

•Dunkin•Krispy Kreme•Tim Hortons

Ice Cream Parlor

•Cold Stone•Dairy Queen•Baskin Robbin

Smoothies Stores

•Jamba Juice•Smoothies King

Bakery Stores

•Auntie Anne’s•Cinnabon

Major Players in Specialty Eateries Industry

Industry Value Chain

Cultivation Processing Preparing Consuming Disposal

• Resources are used along the process.• Energy and fuel used produced carbon emission, ultimately

contributes to climate change and global warming.• The impact of climate change on the agriculture sector has also

increase the pressure on the industry.• They see the need to be sustainable in order to be more climate-

resilient.

Historical Background

• 30 March 1971• 2000 Western Avenue, Seattle,

Washington

• Founded by Zev Siegl, Jerry Baldwin and Gordon Bowker

• Moved to 1912 Pike Place Market in 1976

• 1984: Peet’s share was bought by the other three owners

• 1987: Howard Schultz became the sole owner

expansion of Starbucks

How does the name Starbucks come?

• A character in Herman Melville’s Moby Dick (a classic American novel on 19th century whaling industry)

• Brainstorming session: word begins with “St”

• old mining map of Cascade Range with mining town “Starbo”

Starbucks Logo• twin-tailed mermaid, or siren (Greek mythology)

• 1971-1986 : Starbucks siren was topless and had a fully visible double fish tail, likened to a melusine

• 1987-1991: breasts covered by hair, primary colour changed from brown to green

• 1992 - 2011: and only vestiges remain of the fish tails

• 2011 till now: removing the Starbucks wordmark around the siren, enlarging the siren image, and making it green

Branches and Locations• 1987: Waterfront Station, Vancouver, British

Colombia and Chicago, Illinois

• 1996: Tokyo, Japan• Malaysia: 17 December 1998• 17 November 2015: 200th branch

Kosmo! 10 December 2015

• As of September 2015…..

3

6

11 23 26

2

Products available in Starbucks

Drinks Food

• Bottled drinks • Smoothies Bakery

• Freshly brewed coffee • Cold brew coffee Bistro boxes

• Ice coffee • Blended beverages Hot breakfast

• Espresso beverages • Kids’ drinks & others Yogurt and fruits

• Chocolate beverages • Tea beverages Starbucks petites

• Fizzio handcrafted

sodas

• Evolution fresh Sandwiches, pannis &

salads

• Frappuccino blended

beverages

• Gift cards, Gift sets• Tumblers, Cup and mugs • Bookmarks, card holders• Machines: coffee maker, grinder teapots & kettles • Festive collection

Customers

• No.4 for best customer experience by Global Customer Experience Management Survey in 2011

Employee• All qualified applicants will receive consideration for

employment • Starbucks College Achievement Plan allows employee

complete degree through Arizona State University

Management Team• Good governance practice ensures business and affairs

accomplished according to stated goals and objectives, long term interests of shareholder are obliged

• Independence requirements of the National Association of Securities Dealers Automated Quotations (NASDAQ®) and U.S. Securities and Exchange Commission

Board of Directors

SWOT Analysis

Strengths

•Diverse product portfolio

•Knowledgeable employees

•Brand Image and presence in other distribution channels

•Customer bond through value-added services

SWOT Analysis

Opportunities

•Entry into the health food market

•Emerging international retail markets

•Expanding in the single-serve coffee market

SWOT Analysis

Weaknesses

•High Prices

•Weakening US segment

•Brand image affected recalls

•Negative Publicity

SWOT Analysis

Threats

•Direct Competition

•Rising prices of supplies and commodity

•Economic state of US

Problem Statement

• For the business sustainability, Starbucks committed towards the social responsibility & initiates to be more environmentally friendly

Environmental Mission Statement

• Starbucks is committed to a role of environmental leadership in all facets of our business.

• Understand environmental issues and share information with our partners.

• Develop innovative and flexible solutions to bring about change.

• Strive to buy, sell and use environmentally friendly products.

Environmental Mission Statement

• Recognise that fiscal responsibility is essential to our environmental future.

• Instil environmental responsibility as a corporate value.

• Measure and monitor our progress for each project.

• Encourage all partners to share in our mission.

Problem Statement Cont.…

• Set goal to the areas of concern in Leadership in Energy and Environmental Design (LEED) Certified Stores, Recycling & Reducing Waste, Water & Energy Conservation & Climate Change

Problem Statement Cont.…• To develop a comprehensive recycling solution for its paper

and plastic cups by year 2012.

• To implement front of store recycling in its stores by year 2015.

• To serve 5 percent of beverages made in its stores in personal tumblers by year 2015.

• To reduce energy by 25 percent in its company stores by year 2015.

Problem Statement Cont.…• To purchase renewable energy equivalent to 100 percent of

the electricity used in its global company stores by year 2015.

• To reduce water consumption by 25 percent in its stores by year 2015.

• To ensure 100 percent of its coffee is ethically sourced by year 2015.

• To invest in farmers and their communities by increasing farmer loans to & 20 million by year 2015.

Problem Statement Cont.…• To improve farmers’ access to carbon market and help them to

generate additional income while protecting the environment.

• To mobilize its employees and customers to contribute 1 million hours of community service per year by year 2015.

• To engage a total of 50,000 young people to innovate and take action in their communities by year 2015.

• To build and to achieve ‘LEED’ certification to all its new stores.

Challenges• Struggling to meet the goal it set on recycle cups to 5% from

existing figure which is 25% of the beverages.

• Manages to decrease more than 17% since year 2008 but in year 2011 the water used by Starbucks increased to 5% over the year

• Completed the installation of energy management system in its stores but the energy improvement only improved 4.6% over its baseline level

Challenges• Certified LEED international stores face technical challenges

due to the US based LEED certification program is still developing.

• Stores located in the area that do not provide recycling infrastructure and landlords who do not provide recycling services.

Opportunities• Gives the positive image to the consumers and its employees

• Studies show that companies support social and environmental issues will give the 93% consumers positive mindset on the organizational

• Employees in the organizational will continue serve and work in the organizational where data proven less turnover and employees become support to the organizational.

Opportunities• Longterm marketing strategy for the Brand Image

• Attracting people who share the same mission and value to join the organizational.

• Starbucks social responsibility gives the organizational competitive advantage to enter to global market easily and to secure the fair trade market share for coffee.

Model & Theory – Burke-Litwin ModelTransactional Change

OD intervention directed towards structure, management practices & system (policies)

Transformational ChangeOD intervention directed towards mission & strategy, leadership & organization culture.

1st Order Change

2nd Order Change

Warner Burke

Action Plan(Challenges & Opportunities)

• 5 Transactional & Transformational OD Strategy was initiated by Schultz1) The Social Entrepreneurship with Starbucks2) Responsibility as an Organization to Reduce

Global Warming3) Contribute to Mother Nature and Restoring the

Eco-system4) Creating an Ethical Supply Chain from the Seed

to Distribution5) Creating Pathways to Opportunities and

Employment in Global Communities

Social Entrepreneurship• What is SE in Starbucks– address Social or Environmental problem through

business• How is SE implemented by Starbucks– enforce all stores to practice and built by implementing

LEED ( Leadership in Energy & Environmental Design) status

• efficiently utilize water(23% savings) and power (45% savings)

• usage of energy saving LED• design of venting airflow to reduce usage of air condition• usage of customize paint, coatings materials to increase heat

dissipation• usage of recycled wood for furniture created by convicts

Result : OD 1st order change – management practice & policy

Organization to Reduce Global Warming• How is it implemented in

Starbucks– Invest in renewable energy

• restructuring their purchasing practice

• purchase energy from wind and solar source rather than coal burning generators

• This also encouraged renewable energy producers to expand their wings

– Reduce greenhouse gas emission

• control & measure on each process of supply chain

– manufacturing plants– store operation– company-owned vehicles

Result : OD Transactional change – intervention towards structure

To Mother Nature & Ecosystem• How is it implemented in Starbucks

– Cultivate recycling program• tri-color bins - municipal to baristas• discount and rebates for customer

– who do does not use Starbucks paper cups– who uses own mugs and tumblers

• manage waste of milx box, syrups and juices in orderly manner

– Develop technology to produce recycled paper fibre as packaging box

Result : OD 2nd order change – change of structure & policy

Ethical Supply ChainHow is it implemented in StarbucksDeveloped in collaboration with Conservation International (CI), C.A.F.E.

create a long-term supply of high-quality coffee and positively impact the lives and livelihoods of coffee farmers and their communities.

Farmer Support Centers support farmers in creating farm management and work plans to achieve their goals.

Result:

- Committed to 100% Ethically Sourced

Opportunity Youth

How is it implemented in Starbucks•Statrbuck assist young peoples gain a skill throught training.•Free tuitions fees for bachelor’s degree from Arizona State University (online learning).•Provide learining of customer servicing skills and hands-on experience for cafeteria setup.

Result : With 73% of its store partners under the age of 24, Starbucks committing 10% of all store hires to Opportunity Youth

Commitment to CommunityHow is it implemented in Starbucks•Starbucks Foundation was founded to supported communities around the globe.•In 2014, Starbucks gave USD11.4M for community projects, including Global Fund through the partnership with RED

•Result:-Nearly 60,000 volunteers participated from across 30 countries on continents -More than 1,400 community service projects completed -More than 156,000 hours of service contributed in just 30 days (that’s equivalent to 76 people working full-time for a year)- Approx. $3.3 million (USD) of financial value invested in communities through service

Conclusion

• OD is a field of research, theory, and practice dedicated to expanding the knowledge and effectiveness of people- to accomplish more successful organizational change and performance.

• OD is a process of continuous diagnosis, action planning, implementation and evaluation - with the goal of transferring knowledge and skills to organizations to improve their capacity for solving problems and managing future change.

• Starbucks illustrate the power of developing a company in a way that consistent with the Organizational Development.

• An organization that positioned to be sustainably successful.