“How do you get big but stay small?” Starbucks CEO, Howard Schultz, recently discussed the keys to the immense success and growth of the company. Focusing on operating with the goals of the small, 100 employee company that Starbucks began as is essential, no matter how large the scope of the company gets. Sometimes success can come from the simplest of goals; Schultz discloses that the secret to “getting big while staying small” is focusing on customers as individuals, one cup of coffee at a time.
When it comes to strategy and operations decisions, Starbucks is obviously not competing for cost leadership. Every time I grab a latte and see that my total is $5.14, I flinch a little at the cost. Then when my coffee is handed to me, I breathe it in, take a sip, and say, “Oh, but it’s so worth it.” Hence, their success, for the quality and product differentiation of a Starbucks cup of coffee is what keeps loyal customers coming back day after day. With suppliers of the highest grade coffee from 30 different countries, Schultz provides that Starbucks’ greatest goal is “to stay committed to our coffee core.” Not only do they maintain the best quality coffee by doing this, but they also ensure that their each and every action is sensitive to the needs of both the environment and the farmers. Treating the farmers as partners supports one of Starbucks’ most fundamental missions, to maintain the importance of every employee as an asset to the company. Further considering the environment, the recycling efforts and introduction of reusable cups are constantly improving.
With companies that have such continued success as Starbucks, I often assume that they got big and then just stayed that way. But, in reality, a commitment to innovation as well as social perception is essential to truly growing as a company. Starbucks has no shortage of either; with more product lines, global expansion, and ethical efforts than virtually any other coffee supplier, the company ensures that they provide they next best thing before anyone else. From K-cups to the newly released Vismo system, VIA ready brew coffee to the new Veranda blend, customers always have a fresh taste to try. In addition to trying these coffees, thousands of customers also tried a new way to purchase it. The Starbucks mobile app allows for purchases and account management.
Whether the motivation is impeccable quality or the convenience of a store being located on every corner, the numbers prove that customers think very highly of Starbucks. With global revenues of $13.3 billion in 2012, reflecting a 14% increase from the prior year, Starbucks is hitting record highs in sales.
If you are a Starbucks addict, do you take into consideration the ease of mobile technology or the benefits of the loyalty program when buying coffee? Or do you remain loyal simply because the coffee tastes that good? If you steer clear of Starbucks, would the environmental or social efforts have the ability to make you reconsider?
Starbucks CEO Schultz on Digital Innovation: http://www.usatoday.com/story/money/business/2013/04/24/starbucks-howard-schultz-innovators/2047655/
Starbucks: FY 12 Annual Report: http://investor.starbucks.com/phoenix.zhtml?c=99518&p=irol-irhome
11 thoughts on “Starbucks: Getting Big but Staying Small”
I buy starbucks roughly 3-4 times per week so I’m an avid customer but when I buy coffee I buy starbucks. I buy starbucks because I know with the price I pay, I know I’m getting a quality cup of coffee and I’m paying a company that cares about its employees. If I’m not mistaken I’m pretty sure, most, if not all, employees get some type of health coverage for basically working at a coffee shop, which is unheard of when it comes to most of it’s competitors. I also like starbucks because at almost every location, they try to create an atmosphere that makes you want to stay there. If you look at most fast food restaurants, they are designed to get you your food and get out. The chairs are usually hard plastic and with the fluorescent lighting, they do not create an environment that makes you want to stay there and make a repeat purchase. Starbucks was smart and not only do they care about their employees but also about their customers.
Starbucks is an extremely smart company. At the end of the day, they know what customers want and they know what to spend more money on and where to cut costs. They stay local by being extremely friendly and giving back to the community despite the immense growth. This company is truly unique despite it not uses franchises to grow like Dunkin Donuts. It’ll be that unique place where my parents generation will always be loyal to and the place my generation will always go for good coffee and great service.
I avoid Starbucks as a personal choice of mine, and no amount of environmental or social efforts on their part will change my mind. Simply put I’m too much of a cheap person to spend any amount close to that on coffee. Clearly it seems Starbucks’ approach is on differentiation, and places like McDonald’s are going for the cost like you mentioned. In the end I’ve never really had a bad experience with Starbucks, but given the opportunity I feel like I’d try to support a smaller chain that relies more heavily on customer satisfaction rather than a multi-billion dollar beast.
I totally agree that Starbucks focuses on the quality of their products and how to serve their customers in better ways, which makes it one of the largest coffeehouse in the world. Another advantage is that Starbucks locations are much more than any other coffee places, which makes it more accessible to customers. Also, I found that each store has its own unique design, which makes you feel that you’re experiencing something new but in reality its Starbucks.
I agree Starbucks has best coffee. I know is expensive but you know once you buy the coffee is worth paying the money. For me their regular coffee is little strong for me but I am big fan of their frappuccino. If I compare Starbucks with any other coffee shops I don’t think they as close to as Starbucks customer service. They know what customers are and what customer needs from Starbucks; they would never make any customer get upset. I had experience that I have got upset with other coffee shop and they didn’t care about their customer but Starbucks even when it comes to give free coffee because you coffee didn’t taste right they will do it to keep that customer.
If I am a Starbucks addict, I will remain loyal simply because the coffee tastes that good. I think that reusable cups or Starbucks are just coffee supplements because Starbucks coffee have good quality and taste, it worth more than other products in Starbucks. For me, I won’t care about their cups or reusable cups. I am only concern their coffee.
I don’t get Starbucks simply because I don’t value the quality of coffee enough to pay $5 a cup for it. To me, the free Keureg coffee at my work with powdered creamer tastes just as good as a cup from Starbucks. Maybe my palate isn’t refined enough, but I could just never balance the costs to its benefits. Their whole green approach is cool and all, but a lot of companies are into that now, so it’s not really setting them apart from the rest. The thing I like most about Starbucks in comparison to other coffee chains is how they treat their employees.
I do not consider myself a Starbucks addict, or even a fan of coffee for that matter. However, I do prefer Starbucks coffee over other coffee because of my previous overall experience. I love its implementation of mobile technology and benefits of the loyalty program. The first time I visited Starbucks was a result of receiving a gift card. The aspect that influenced my decision to return the second time was that the employees were friendly, fast service, and most importantly, the quality. The company’s treatment of its employees and customers was appealing because it is crucial for its survival and growth. Starbucks’ biggest competitors are McDonald’s, Panera, and Dunkin’ Donuts, but Starbucks fights back it smart strategies. I believe that the success was contributed by an increase in overall demand for coffee, and specific initiatives made by Starbucks which have allowed the firm to hold its shares in the market. Lastly, environmental sustainability measures and community efforts both have strong impact on the way consumers view the company and influence their decisions to purchase their products.
I also do not consider myself a Starbucks addict. I barely drink any coffee, but if I was to buy coffee, it would be from Starbucks. I do not use the mobile device. I have seen people use it. I used to have a free coupon from Starbucks for free the new Macciato? If that is how you spell it. I offered it to one of my classmates, and he said that he wants to buy coffee from Starbucks with money because he wants to collect more points. Maybe because they get benefits such as coupons and such. I wouldn’t know. Maybe some people just get the mobile app for fun. I would just get it to not have to bring cash with me, if that’s how it works.
AS a Starbucks loyal customer myself, i would certainly be interested in having their app on my mobile and join their loyalty program.
The main thing i would like to see Starbucks doing is getting into home machines and capsule based ones, similar to Nespresso. As much as i enjoy the Starbucks experience i sometime prefer to have their coffee at the comfort of my home.
I think this should arise a good competition between them which will benefit us consumers at the end.
I truly am a Starbucks addict and although I don’t participate in its the mobile technology and loyalty program, I enjoy not only taste and quality of Starbucks’ coffee but also the special ambience of the coffee shop itself. It has a relaxed, chilled atmosphere and smells incredible.
Also, I admire the company’s efforts in treating farmers as partners and not just part of the downstream process. Also, the use of reusable cups is a great environmental initiative that I personally respect.
These examples demonstrate to me that Starbucks doesn’t just operate for profit but also for leaving a responsible footprint on the community.
Therefore, yes if I did steer clear of it, its social and environmental initiatives would definitely make me reconsider.