Business management IB

MINI RESEARCH PROJECT

STARBUCKS CASE

Project of the second evaluation of Business Management

Written by Inés Oliveros Oguro from 1ºBACH E

Starbucks is a Variable Capital Corporation. Founded and directed by Howards Schultz. It is a

company specialized in coffee beans, with various varieties (coffees, teas, frappuccinos, mochas,
smoothies...). It was created in 1971 by three partners, who in 1987 sold the company for $3.8 million
to Schultz. In terms of sales, Starbucks is positioned in the market leader position which offers high
quality coffees. From the very beginning, the company has focused on customer support and the
services they provide. Starbucks is world renowned and has locations all over the world.

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Business management
SWOT MATRIX1
INTERNAL ASPECTS
WEAKNESSES
- Profitability depends on the price of
coffee beans.
- Prices higher than the competition.
- Little publicity.
- Lack of market research.
- In Mexico, 100 branches have closed
in January.
- The Frappuccino was once the
company's specialty but is now
known as an everyday drink.
- Non-standard premises.
- Limited menu (only allows you to
customize your drinks in the US).
STRENGTHS
- Number one on the market.
- Experience.
- Employee management.
- High quality coffees.
- Image of the company concerned
about the environment.
- Great variety of coffees.
- Comfortable environment to work
on the premises.
- The logo expresses several things.
CONCEPTS OF THE SUBJECT IN THE BUSINESS CASE2
CONCEPTS
1
Personal fulfillment
2
Personal fulfillment
IB
EXTERNAL ASPECTS
THREATS
- The competition sells for lower
prices.
- supply interruption
- Saturation in the US.
- Coronavirus pandemic.
- economic crisis
- Climate change.
- Increase in the price of coffee and
dairy products.
- Inflation (Recession).
- The value of its shares has been
trending down for two years.
OPPORTUNITIES
- Sale of proportional packages.
- Brand value, opportunity to grow in
other countries.
- Extend the provider network.
- Expansion to emerging economies.
- The expansion of retail sales.
- Strategic alliances in other countries
- I+D+i.
- Worldwide recognized brand.
- Growth of coffee consumption.
- Add new products to their markets.
EC ANALYSIS
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Business management IB

CHANGE - LHave 100% coffee certified or verified by an independent third party

- environmental leadership
- Turn your cafeterias into the ideal environment through places that attract customers
- custom products
- Annual revenues amounted to 23,518 million dollars
- 26% annual growth between 1992 and 2018

CULTURE - Close relationship with your customers

- Internationally recognized company
- Scholarship programs for workers 100% covered by the company
- Model of Drive-Thru stores made from recycled containers
- 16 years in a row being number one in the market
- eco-friendly

ETHIC - Commitment to integrity and to acting honestly and ethically

- They believe in transparent advertising for all their products.
- Starbucks promotes the idea of ​a free market
- Starbucks stock price is currently listed on the Nasdaq Global Select Market and is
included in the calculation of the Nasdaq 100 stock index.
- International expansion strategy
- Products are not protected by patents
- high price policy

GLOBALIZATION - Exponential growth

- It operates more than 20,000 stores in dozens of countries.
- Starbucks shares are currently trading at around 25 times projected 2015 earnings
- rapid expansion
- Select local partners who are local business leaders. From there both partners work on
adapting to the traditions of the local market.
- It has become one of the favorite targets of anti-globalization campaigns.

INNOVATION - innovative capacity

- A comprehensive experience faithful to its beginnings
- Lead the market with identity pride
- Respond to popular demands wherever they occur
- They take training and personal growth seriously
- Establish Foundations such as “Starbucks Foundation” or “My Starbucks Idea”
- It is mainly based on three factors: high quality of its products, cordiality of its staff and
cozy spaces.
- They care about the environment and the community

STRATEGY - Merchandising
- Transparent advertising (marketing)
- open capital company
- 4 P: product, price, advertising and distribution channels (marketing)
- Bet on a positioning based on customer satisfaction (position)
- The number of Starbucks is directly related to the level of economic activity and traffic in
the cities where you decide to settle (location).
- Men and women ages 25 to 40 are the primary shoppers Starbucks appeals to this age
group of consumers through contemporary design and works to maintain its current
products as status symbols.
- Distribution channels: coffee shops, the sale of specialty coffee, wholesale channels, the
direct sales business and supermarkets (distribution)

PORTER'S 5 COMPETITIVE FORCES

THREAT OF NEW
COMPETITORS

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Business management IB

BARGAINING POWER OF DEGREE OF RIVALRY OF BARGAINING POWER OF

SUPPLIERS COMPETITORS CUSTOMERS

3
4 5
THREAT FROM SUBSTITUTE
PRODUCTS

1-Threat of substitute products:Much of the menu offered by Starbucks can be easily

substituted, as it consists mainly of teas and coffees, plus pastries.

2-Threat of new competitors: local businesses tend to have a closer relationship with the
consumer, which leads to better service.

3-Bargaining power of customers:if customers put demands on drink prices, maybe the
prices will be lowered. Until a few months ago the prices were reasonable, but all customers
have noticed a price increase thanks to the crisis.

4-Bargaining power of suppliers:The company is working on the implementation of

measures so that the quality of life and work of the suppliers improves.

5-Degree of rivalry of the competitors:There are thousands of coffee shops that have much
lower prices than Starbucks. Today, the Starbucks company has the highest prices in the
coffee market, which means that loyal customers get tired and stop buying their products.

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 Business management IB

STEEPLE MODEL3

S(social) T(technologic E(economic) E(ecological P(political) L(legal) E(ethical)

al) )

Change in Facilitates Development Plantation Policies and Contracts Concern

daily coffee of the and laws impact with for your
routine production emerging production sales. employees well-being.
economy through and
ecological respect
processes. the laws.

SOCIAL: The business creates a relationship of loyalty between it and the consumer
through a personal approach, which gets the customer to buy routinely at the store and
change their consumption habits. It has achieved an evolution in the modalities of
work, worrying about its employees and their working conditions.

TECHNOLOGICAL:it uses its resources to research and help its coffee farmers
grow and produce the best coffee beans on the market. They have research centers
where they analyze the fertile soil, the quality of the coffee and carry out analyzes
from which they can obtain information that can help the coffee grower to improve.

ECONOMIC:With their high prices, they provide financial aid to the country so that
the development of the emerging economy of that place can be carried out more
quickly. They also have their extensive customer loyalty, which contribute to the
improvement of the economy. Currency exchange benefits because of the value of
each type.

https://www.google.com/search?q=analisis+steeple+starbucks&rlz=1C1ONGR_esES976ES976&source=lnms&
tbm=isch&sa=X&ved=2ahUKEwjRuMD_4vj1AhXsvKQKHWT2BEoQ_AUoAnoECAEQBA&biw=1344&bih
=736&dpr=1.25#imgrc=Z4wBNFFV72LZjM

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Business management IB

ECOLOGICAL:In relation to technology, innovative ways of planting and

processing those grains are developed in a more ecological way and contributing as
little as possible to the pollution of the planet and the environmental carbon footprint.

POLITICAL:As they have offices all over the world, they have to adapt to the
financial policies of each country. They have to take into account the rules and
restrictions of the place and the level of political stability if they are to obtain the
maximum benefit.

LEGAL: Related to the previous section, the laws and the rights of the worker must
be taken into account so that a contract can be agreed that benefits both parties. You
also have to look at the environmental norms and rules so as not to infringe any, since
the coffee industry contributes on a large scale to the ecological footprint.

ETHICAL: By caring so much about the customer, you gain a distinct advantage
over your competitors. In addition, thanks to its campaigns related to the environment,
it manages to give a good image and gains a reputation in society. On the other hand,
it cares about its workers, paying for their medical assistance in case of need and
offers scholarships to its school/university workers as an incentive to improve and
keep going.

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Business management IB

BUSINESS GROWTH

The Starbucks brand began as a simple coffee shop in Pike Place Market in Seattle,
Washington, established by four partners. Years later, the market was innovatedselling
machines and coffee beans in their stores. Subsequently, Howards Schultz joins the company,
buys it for USD 3.8 million and then merges his own coffee chain with it. Thereafter the
growth and expansion of the company begins. Expands its headquarters and manages to
establish more than 84 stores4, going from being a small company to a medium-sized
company. In a range of 10 years it manages to become a macro company, having more than
1600 workers and 80 million clients per week5.

To achieve its expansion, it makes use of various strategies. The most important ones are:

- The differentiation strategy:Despite the fact that its products can be obtained in
other competing stores, the Starbucks product has made the customer pay more for the
brand than for the product because it is considered unique and exclusive by society.
This behaves as if there were a monopoly, being more loyal to the brand and being
less sensitive to the exaggerated price of the product. The clearest example is the
cream or coffee Frappuccino offered by the brand.

- cost leadership strategy goes hand in hand with the one just explained. Thanks to
that pedestal on which the company has positioned the brand, it achieves that the
company obtains a benefit from a very high commercial margin.

- The focus strategy It is carried out applying the two previous strategies. It focuses on
a homogeneous type of product, that is, there is a lot of supply and demand, but
thanks to the strategies, segmented differentiation is achieved. With this, it is possible
to create a widely striking added value that entails standing out in the market,
becoming the market leader.

4
https://my.visme.co/view/01y73yz9-starbucks
5
https://www.merca20.com/infografia-los-numeros-de-starbucks-en-el-mundo/

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 Business management IB

- growth strategy It is another strategy that has been taken into account when seeking
business success, where the location of the headquarters, the size of the company,
internal and external growth of this company are taken into account.6.

1. Business location: will be explained below.

2. The size of the company: the maximum production capacity is considered,
which in the case of this, consists of 21.63% productivity per person7.
3. The internal growth of this chain consists mainly in the specialization of
products, coffees and teas and the diversification of this, expanding and
diversifying the product by making complementary products. To further
analyze internal growth, the Ansoff matrix is ​used, also known as the
product/market matrix or growth vector. The following will explain the case of
Starbucks:

PRODUCTS

CURRENT NEW

Its products are present in hotels, Salads, fruits, organic drinks, Starbucks
CURRENT supermarkets, gas stations, offices and even cards
airlines.

They have expanded their headquarters in
MARKETS
new countries such as in Cairo, Egypt have
NEW established their first stores.
Brand products such as reusable straws,
notebooks, CD's, cups of various sizes; that
is, merchandising and business
diversification.

4. External growth consists of the acquisition and control of foreign companies,

merging later. An example is the acquisition of the company Tazo de tés8 and
in this case it is a merger by absorption, that is, Starbucks completely buys the
brand, which has full control of Tazo.
BUSINESS LOCATION

6
Textbook "Business Economics" for 2nd Baccalaureate, Mc Graw Hill edition, page 95, 96 and 97.
7
https://www.merca20.com/infografia-los-numeros-de-starbucks-en-el-mundo/
8
https://www.tazo.com/us/en/

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Business management IB

The location of a headquarters or its premises depends on various factors such as

market demand, the supply of raw materials, the labor market to find employees,
communications with customers in terms of transportation, costs, etc.

Starbucks is governed above all by business location9 due because by having a direct
customer service, they are interested in establishing their stores in urban centers or in places
of great agglomeration (agglomeration economies) and that is why a person can find various
stores in a range of small dimensions. With this, market demand is a very influential factor in
the establishment of premises. It must be analyzed if there is interest in the product or local
competition in the region where the company wants to be installed, as well as the economic
development of the area. For example, in an area with a low economic level, fewer stores will
be established than in a high-level one.

When choosing the country where you want to internationalize, you must take into
account the legislation in the chosen country, the factors that influence investment and
financing, competition, the possibilities of obtaining benefits, the culture and religion that is
governs the country and the main consumption trends of potential customers; Apart from
having a clear internationalization strategy10.

On the other hand, the company takes into account the industrial location11 of their
production facilities. To do this, you must assess the amounts of materials and supplies,
which in your case is the arabica coffee plant12, the coffee tree, the cost and the ease of
obtaining them. In addition, it seeks to analyze the market and the job offer in addition to the
costs that it entails. This is why plantation fields are usually established in underdeveloped
countries, because labor is cheaper. Lastly, transportation and the cost of the coffee beans
grown must be taken into account.

9
Textbook "Business Economics" for 2nd Baccalaureate Mc Graw Hill edition page 68.
10
Textbook "Business Economics" for 2nd Baccalaureate, Mc Graw Hill edition, page 72.
11
Textbook "Business Economics" for 2nd Baccalaureate, Mc Graw Hill edition, page 68.
12
https://www.starbucks.es/coffee/sourcing/coffee-quality

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Business management IB

CLASSIFICATION CRITERIA

It is a large company, making profits of about 8.1 billion US dollars in the year 202113
(according to statista) and has approximately 2,000 employees. It has total assets of 28,833.9
and total liabilities of 37,291.1 in millions of USD14.

It is considered a company in the tertiary sector thanks to the offer of goods and
services to the consumer; although it also understands the primary and secondary sectors due
to the cultivation of coffee trees and the transformation processes to the well-known coffee
bean, and even the quaternary sector thanks to its activities linked to the development of new
technologies to minimize the environmental footprint.

Starbucks is a company that began as a local company but as time went by, it has
become a multinational company since they have more than 15,000 stores in 50 countries.15It
is a private company that has for-profit purposes, but is listed on the stock market16. Sells
shares and trades primarily on NASDAQ17. Finally, it is an open capital company with an
individual legal form, being a one-person Limited Company.

Starbucks is a supervening company, originally founded by several partners but

eventually reduced to a single partner, only today, there is a community of partners who own
certain shares. These partners do not respond with their personal assets.

13
https://es.statista.com/estadisticas/634548/ingresos-trimestrales-mundiales-de-starbucks-corporation-2009/
14
https://es.investing.com/equities/starbucks-corp-balance-sheet
15
https://www.starbucks.es/about-us/our-heritage
16
https://stories.starbucks.com/wp-content/uploads/2019/01/FY14_GR_Report_Spanish_Translation.pdf
17
https://www.nasdaq.com/market-activity/stocks/sbux

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Business management IB

DISTRIBUTION CHANNELS

Including the ownership of the distribution channel of the products that the company
offers, it can be said that they have a mainly their own or direct distribution channel.18.
Baristas offer the product and service directly to the consumer. He goes to the store, orders
and buys the product.

On the other hand, after the start of the SARS-COV 19 pandemic, it began to provide
home delivery of its products through the Ubereats or delivery applications. This case is
considered an external or foreign distribution channel19, because the product that is the
Starbucks barista does not offer the product directly, there is an intermediary, called a retailer.

In addition, the company has begun to produce its products in a ready-made way so
that the consumer can find the most common products in various places without having to
find a Starbucks location (franchise20).

18
Textbook "Business Economics" for 2nd Baccalaureate, Mc Graw Hill edition, page 194.
19
Textbook "Business Economics" for 2nd Baccalaureate, Mc Graw Hill edition, page 194.
20
Textbook "Business Economics" for 2nd Baccalaureate Mc Graw Hill edition page 196

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Business management IB

CORPORATE SOCIAL RESPONSIBILITY.

Starbucks cares about the well-being of its environment and believes in pure transparency.
That is why on their own website, they have a section dedicated to responsibility where they
are dealt with:

Responsibility towards the community: They carry out activities such as community
service so that the environment in which we all live is taken care of. They strive to care for
and bring people together as well as making a positive change in everything they are capable
of doing21.

Responsibility towards the environment: They have already launched a campaign to

reduce their environmental footprint, which consists of a 40% discount for each drink in
which they do not have to use cardboard or plastic to serve their drinks, but instead use
reusable containers.22. Ha creado Starbucks™ Shared Planet™23 which is constituted by the
personal commitment of the company in which they are governed to operate in ways that are
as positive as possible for both people and the environment.

Responsibility in ethical sourcing: They care a lot about the well-being of their customers,
taking into account the quality of the products they offer. They care about cultivation
according to practices and ethical trade24. They have help centers for the farmer where studies
of fertile soil are provided, grains are examined and advice for improvement is offered. Both
the company and the coffee farmer25 they benefit.

As a testimony that they carry out each operation taking CSR into account, since 2001 they
have taken this into account and have been integrating reports and reports on responsibility
on their website. An example of this is the 2010
report:https://www.starbucks.es/media/spain-pdf-starbucks-shared-planet_tcm31-10745.pdf
The time line of personal fulfillment will be attached
below:https://my.visme.co/view/01y73yz9-starbucks
21
https://www.starbucks.es/responsibility
22
https://www.starbucks.es/responsibility
23
https://www.starbucks.es/responsibility/learn-more/starbucks-shared-planet
24
https://www.starbucks.es/responsibility
25
https://www.starbucks.es/coffee/sourcing/coffee-quality

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Business management IB

Bibliography 1:
1. Personal fulfillment.
2. Personal fulfillment.
3. Analysissteeple starbucks - Google Search. (s.f.). Steeple starbucks review. Retrieved
February 12, 2022,
fromhttps://www.google.com/search?q=analisis+steeple+starbucks&rlz=1C1ONGR_esES976
ES976&source=lnms&tbm=isch&sa=X&ved=2ahUKEwjRuMD_4vj1AhXsvKQKHWT2BE
oQ_AUoAnoECAEQBA&biw=1344&bih=736&dpr=1.25#imgrc=Z4wBNFFV72LZjM
4. Starbucks. (2021, July 21). starbucks timeline. Retrieved February 13, 2022,
fromhttps://my.visme.co/view/01y73yz9-starbucks
5. Gonzalez, F. (2019, April 9). Infographic: The numbers of Starbucks in the world. Merca2.0
Magazine. Retrieved February 13, 2022,
fromhttps://www.merca20.com/infografia-los-numeros-de-starbucks-en-el-mundo/
6. Alfaro, J. (2022). The Sb Business Economics 2 Bach. Mc Graw Hill Inter-American, pages
95, 96 and 97.
7. Gonzalez, F. (2019, April 9). Infographic: The numbers of Starbucks in the world. Merca2.0
Magazine. Retrieved February 14, 2022,
fromhttps://www.merca20.com/infografia-los-numeros-de-starbucks-en-el-mundo/
8. mug. (s.f.). mug. Retrieved February 14, 2022, fromhttps://www.tazo.com/us/en/
9. Alfaro, J. (2022). The Sb Business Economics 2 Bach. Mc Graw Hill Inter-American, page
68.
10. Alfaro, J. (2022). The Sb Business Economics 2 Bach. Mc Graw Hill Inter-American, page
72.
11. Alfaro, J. (2022). The Sb Business Economics 2 Bach. Mc Graw Hill Inter-American, page
68.
12. Cafés | Starbucks. (s.f.). Starbucks coffee. Retrieved February 15, 2022,
fromhttps://www.starbucks.es/nuestro-cafe
13. Statesman. (2022, March 24).Starbucks Corporation: Worldwide Quarterly Revenue
2014–2021. Retrieved February 16, 2022,
fromhttps://es.statista.com/estadisticas/634548/ingresos-trimestrales-mundiales-de-starbucks-
corporation-2009/
14. Balance de Starbucks (SBUX) - Investing.com. (s.f.). Investing.com Spanish. Retrieved
February 16, 2022, fromhttps://es.investing.com/equities/starbucks-corp-balance-sheet
15. About Us | Starbucks. (s.f.). about us - starbucks. Retrieved February 17, 2022,
fromhttps://www.starbucks.es/sobre-nosotros

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Business management IB

16. Statista. (2022, March 24). Starbucks Corporation: Worldwide Quarterly Revenue 2014–2021.
Retrieved February 16, 2022,
fromhttps://es.statista.com/estadisticas/634548/ingresos-trimestrales-mundiales-de-starbucks-
corporation-2009/
17. Nasdaq. (s.f.). Nasdaq. Retrieved February 18, 2022,
fromhttps://www.nasdaq.com/market-activity/stocks/sbux
18. Alfaro, J. (2022). The Sb Business Economics 2 Bach. Mc Graw Hill Inter-American, page
194.
19. Alfaro, J. (2022). The Sb Business Economics 2 Bach. Mc Graw Hill Inter-American, page
194.
20. Alfaro, J. (2022). The Sb Business Economics 2 Bach. Mc Graw Hill Inter-American, page
196.
21. Our Responsibility | starbucks. (s.f.). starbucks responsibility. Retrieved February 19,

2022, fromhttps://www.starbucks.es/nuestra-responsabilidad

22. Our Responsibility | starbucks. (s.f.). starbucks responsibility. Retrieved February 19,

2022, fromhttps://www.starbucks.es/nuestra-responsabilidad

23. Our Responsibility | Starbucks. (s.f.-b). responsibility. Retrieved February 19, 2022,

fromhttps://www.starbucks.es/nuestra-responsabilidad

24. Our Responsibility | starbucks. (s.f.). starbucks responsibility. Retrieved February 19,

2022, fromhttps://www.starbucks.es/nuestra-responsabilidad

25. Cafés | Starbucks. (s.f.-b). Starbucks. Retrieved February 19, 2022,

fromhttps://www.starbucks.es/nuestro-cafe

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Business management IB

INTERNAL ORGANIZATION FUNCTIONS

The main organizational functions of the Starbucks company encompasses the

planification, organization, management and control. Normally, they are usually divided into
two phases: the mechanical and dynamic phase. These differ because mechanics is known as
the "theoretical part" and dynamics as "theory applied to practice"26. In the mechanical phase,
what must be done is established, that is, it lays the foundations for the social organism to
function properly.27. From this phase, two subphases can be distinguished, planning and
organization. In relation to the company to be studied, the planning subphase would consist
of the strategies, procedures, purposes or objectives. It is worth noting the differentiation
strategy that it uses thanks to its concern for well-being, comfort and presentation to the
client28.

The planning subphase is intended to establish objectives or goals to obtain and

achieve. The Starbucks company has to be realistic with its objectives, which it is being, and
it follows the theory accurately. For example, a short period of time ago, it launched an
awareness campaign so that a 40% discount will be offered to those customers who use a
reusable container; with the aim of highlighting the importance of caring for the environment,
in addition to the fact that if more reusable containers are used, the company reduces its
annual carbon footprint. This case would be a long-term business strategy.

The other subphase is the organization, which is intended to divide the jobs, establish
the hierarchy and departmentalization in the company and even the description of the
functions. In summary, it analyzes how the administration of the company is going to be
carried out. Starbucks is mainly made up of 7 areas29.It is worth highlighting the area of
​operations. The baristas who offer the product directly to the customer are part of this area,
supervised and controlled by a supervisor.

26
Textbook "Business Economics" for 2nd Baccalaureate Mc Graw Hill edition page 83
27

https://www.gestiopolis.com/fase-mecanica-del-proceso-administrativo/#:~:text=La%20fase%20mec%C3%A1n
ica%20del%20proceso,recursos%20de%20los%20 and%20dispone.
28
https://www.foodnewsnews.com/starbucks/starbucks-proceso-planificacion/
29
https://es.scribd.com/document/282779403/Estructura-Starbucks

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Business management IB

On the other hand, the dynamic or operational phase is disclosed. As previously

mentioned, it is the one in which the normal operation of the company is fully developed.30.
Like the planning phase, of this, two ramifications called subphases can be distinguished,
which correspond to management or direction and control.

The management subphase, or also called management, is the third stage of the
administrative process. Normally, it is the participation of a team or a manager. It is about
keeping the staff motivated, as well as ensuring its coordination and instructing and helping
members who need it. In the case of Starbucks, a group of managers are in charge of all
decision-making, transmitting communications and facilitating the working conditions of the
staff.

Finally, the administrative process ends in the control subphase. In it, it is about
establishing the relationships between the objectives and the results by means of the
comparison between the results obtained and those planned in the first phase. In this phase,
the data is evaluated and it is also observed if the other functions of the process have been
productive and effective. Note is taken of the productive results to apply them in the errors
committed, correcting them.

ORGANIZATIONAL STRUCTURE MODEL.

Starbucks, being a large company, in order to avoid the case of lack of control, it was
decided to follow a formal organization model. Speaking of the organizational structure, the
company divides its workers into departments. Normally, this division is influenced by the
specialization that Starbucks chooses, by the geographical areas where the facilities are
installed, by the products to be produced or sold, and by the phases that are carried out in the
establishment of the final good.

The organization is visualized as the set of phases and procedures put into practice to
order, control and direct an organizational structure through its departments, in order to

30
https://www.gestiopolis.com/fase-dinamica-del-proceso-administrativo/

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Business management IB

achieve its goals and objectives outlined in advance through prior planning.31. To analyze and
study the organizational functions of an organization internally, it is necessary to classify and
identify Starbucks by means of an organization chart. In economic terms, an organization
chart is the graphical representation of the hierarchical and functional structure of an
organization, allowing it to be quickly understood visually.32. The companies elaborate their
own organization charts so that the main characteristics of these are disclosed.

Using as a reference the organizational chart prepared byMaricielo Contreras

Condori33, we will proceed to study the division of functions. For example, this business
representation consists of a vertical type organization chart. There are four types of
organization charts: vertical, horizontal, radial or divisional. In this case, the vertical
organization chart tries to highlight the command hierarchy. Authority goes from ascending
to descending position. In addition, it is worth noting the direct and indirect relationships of
subordination.

In the diagram, the authority is the managers, who control the company from the
central facility. Then, the work is divided into various sectors, departments or areas. These
are: the operations area, the accounting area, the marketing area, the sales area, the finance
area, the logistics area and finally the HR area.

Although it does not go into detail, it is a clear simplification of the entire company.
Of two areas, the supervisors are distinguished, the substitutes to the managers in operations
and secondary management. Last but not least, at the bottom of the company hierarchy, are
the baristas. These are the ones in charge of offering the product directly to the consumer.
They employ the business strategy mentioned above and earn the trust of the customers. If it
weren't for them, much of business productivity would plummet and brand legitimacy would
plummet.

31
https://www.euroinnova.edu.es/blog/que-es-organizacion-en-el-proceso-administrativo
32
Nirian, P.O. (2020, April 14). Organization chart. Economipedia. Retrieved April 21, 2022,
fromhttps://economipedia.com/definiciones/organigrama.html
33
https://es.scribd.com/document/282779403/Estructura-Starbucks

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Business management IB

FORMS OF COMMUNICATION, DEPARTMENTALIZATION AND THE TYPE OF

ORGANIZATION CHART.

Communication is a determining factor when it comes to achieving greater

productivity thanks to organization. Starbucks uses a direct communication technique that
consists of the exchange of dialogue between the customer and the barista (in stores), the
partners that are considered as advertising media as well as social networks. Internally, the
form of communication is mainly vertical, due to the hierarchy of power in the company, but
there are also cases of horizontal communication in department meetings with each
representative, or exchanges of ideas between stores in different locations. There are also
times when cross communication occurs, where people from different hierarchical levels
communicate with different departments.

Normally, in the case of Starbucks, there are mainly linear relationships, that is, one
person exercises hierarchical power over another and the latter obeys; relations ofstaff, where
for example, before leaving as baristas, new employees go through a counseling and
specialization course; Lastly, in functional relationships, a specialist commands an entire
department. The division of labor is divided by departments, which in economic terms is
known as departmentalization. The company that is being studied divides its employees
depending on their job functions (baristas, managers, heads of departments, accountants...),
depending on their location (country, town, city...), by the products to offer (drinks, cups ,
food…) and finally, according to the phase of the production chain where they are
specialized.

As previously mentioned, it is a company with a formal, vertical organization chart,

which highlights the importance of hierarchical levels.

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Business management IB

MANAGEMENT STYLE AND BUSINESS THEORIES ON MANAGEMENT

STYLES (XY THEORY, Z THEORY).

Starbucks managers employ a management style called transformational34. The

management style is part of the management or direction subphase of the administrative
process. In it, it is about efficiently directing the staff so that each one of them efficiently
performs their work. Normally, there are three levels of management consisting of the senior
management level, the intermediate level and the lowest level. It usually has a great
resemblance to a vertical organization chart due to its similarity in the business hierarchy,
where the peak is more powerful and the base is less.

Leadership is a limiting factor when managing, because without a good leader,

productivity tends to be low. To understand these terms more accurately and effectively, the
case can be related to two leadership theories: Theory Y, established by Douglas McGregor,
and Theory Z, established by William Ouchi.

Theory Y It is understood that it is the responsibility and task of management to

create the right conditions for the employee's qualities to be exercised, meeting their personal
needs while contributing to the organization's objectives, thus satisfying both parties. They,
being comfortable in their environment, do not need someone to supervise and command
them during the entire working day. They tend to be highly motivated and their main
objective is to perfect their mistakes, looking for responsibilities to exercise, that is, they seek
self-realization. It is characterized by the democratic leadership style. In the Starbucks
company, they are exposed to motivating factors that achieve the happiness and comfort of
the employees in the company.

On the other hand,the z-theoryaccurately describes leadership in the company

because many of its characteristics are consistent with the company. The liberal leadership
style stands out. It is established that every important employee in the company, where their
contributions are recognized, reconciliation is sought and above all, productivity is sought35.
HR MANAGEMENT

34
https://reviews.tn/es/wiki/what-is-starbucks-leadership-style/
35
Textbook "Business Economics" for 2nd Baccalaureate Mc Graw Hill edition page 99

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Business management IB

It is understood that human resources are the workforce, that is, human capital. They
are the differential fact and the main source of competitive advantage. Without capital and
human value, the company would not be profitable or productive.

HR management is the set of decisions, policies and actions that define competencies.
In the field of internal organization of any company, the presence of the human resources
department or also called the personnel department is mandatory. These have to fulfill a
series of functions and objectives. The main functions are: favor the motivation and
satisfaction of the workforce, increase productivity and competitiveness; and the objectives,
whose importance is very remarkable: select and train new members, provide the necessary
means for their well-being and self-realization and try to ensure that each person meets their
needs. Large amounts are often invested in human capital.

Starbucks has a section on its website where it discloses its method for choosing
itspartners36. Being a large company, the department is very complex and is made up of
various sections, where each one is in charge of a part of the process that HR management
entails. To begin, new candidates must be selected through the selection process. The lucky
ones then go through an intensive training course, usually for baristas, where they are taught
the method of making each item on the menu. Finally, performance is assessed and whether
he is suitable for the position. Once hired, the necessary means of the new employee (in the
case of the barista: an apron with an identification plate) must be promoted in addition to
trying to satisfy the needs of the worker.

36
https://starbuckspartners.es/nuestro-canal-empleo-starbucks

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Business management IB

FORMS OF WORK ORGANIZATION (application of management by competences and

emotional intelligence)

Normally, the company to be studied divides the work into teams, supervised by a
department head. This generates what is called synergy, that is, the work done together
exceeds the work that each member could do. There are also times when collaborative work
is carried out, which means sharing each knowledge, idea or contribution in order to help
each other to improve. For example, when offering the product to their customers, many
employees exchange tips to meet consumer needs more effectively.

In developing countries where Starbucks has headquarters, work is carried out by

projects and objectives. Most have a moral, ethical and environmental purpose. Thanks to
teamwork between the members of the company and external personnel,freelance, the goal is
achieved much faster. Both parties obtain benefits: the company has achieved its objective
and goal and the freelance obtains capital or even ethical-moral benefits. For example, in
2020 an article starbucks stories was published that discusses his project in collaboration with
C.A.F.É. Practices:Starbucks Approach to Ethically Sourcing Coffee”37.

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https://stories.starbucks.com/press/2020/cafe-practices-starbucks-approach-to-ethically-sourcing-coffee/

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Business management IB

HR ORGANIZATION

The human resource management process follows a certain process. In them, there are
numerous cases where strategies are applied for external HR management in Starbucks,
which consist of:

- outsourcing, or also calledOutsourcing, where a business function is run and

managed on an ongoing basis by a third-party provider of goods and services. In order
for jobs to be matched, the subcontracting company must relinquish a portion of
administrative control to the company being subcontracted. At Starbucks, this
happens through outsourcing from Unisys Corporation.38. Of course, it must be
clarified that not all contracting of external services is subcontracting. They are
specific cases that follow certain characteristics.
- The great advantage of this strategy is that the general management costs are
usually lower. There is also a tendency towards relocation (establishing a
subsidiary in foreign countries).
- It should be noted that in subcontracting, workers are not paid by the main
company. This consequently makes workers not entirely loyal to the brand and
causes a great disadvantage in management.
- There are also cases in which outsourcing occurs, directly delegating a limited
portion of the business to another.
- offshoring, also known asOffshoring, as previously mentioned, generally tries to
establish its own subsidiary in countries other than the original one. It can also be the
case of external contracting, where instead of establishing a subsidiary, services are
contracted to an independent company, located in a different country. In the case of
Starbucks, it has thousands of stores around the world, most of them relocated and
managed by subsidiaries.
- The Relocation, also calledReshoring OBackshoring, consists of the reverse process
of relocation, that is, returning to the country of origin of the production processes.
Normally, you tend to lose benefits when you relocate. There has been the case of the
relocation of a store but nothing more.

38

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to-internacional/13005

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Business management IB

THEORIES OF MOTIVATION OF WORKERS

The Starbucks company, in order to achieve the well-being and motivation of its
employees to be able to perform fully, uses and applies the theory of work motivation,
established by Stacy Adams in 1965, the Equity Theory. According to Economipedia, the
term of equity theoryIt is understood by the set of academic postulates that seeks to
understand how the perception of fair or unfair rates or distributions influence the links
between people, particularly in the workplace, having an impact on motivation39.

This theory is applied above all in the psychological analysis of people. For example,
emphasizing the company under study, the managers of each store treat each and every
worker equally. When it comes to wages, everyone receives the same amount, except
themanagers clearly, because they all work the same business hours. In many companies, this
causes great displeasure on the part of the workers since many times there are cases in which
some work and contribute more in carrying out tasks than others, but this is not the case. Like
any other company, Starbucks takes note of the hours that each one works. If it were the case
that some worked more than others, overtime will be demanded from those who do not meet
the requested average.

In this way, knowing that the great effort and performance they put into their work is
not taken for granted, workers become self-motivated thanks to self-actualization, the call for
recognition and consideration by the company, and they tend to demand more of themselves
so that are considered a promotion.

ORGANIZATIONAL CULTURE - THEORETICAL MODELS (HANDY THEORY,

SCHEIN THEORY).

(I don't understand)

39
https://economipedia.com/definiciones/teoria-de-la-equidad.html

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Business management IB

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Business management IB

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