CASE STUDY: STARBUCKS (HTH668)

1. What are the greatest challenges in the broad environment that Starbucks will face when expanding into the Chinese market? What should Starbucks do to overcome these challenges?

According to Enz (2010), the broad environment will be define as forms the context in which the firm and its operating environment exist, including socio-cultural influence, global economic influences, political or legal influences and technological influences. Due to the Starbucks case, the greatest challenges in the broad environment that Starbucks will face when expanding into the Chinese market are socio-cultural influences, economic influences, technological influences and political influences.

The first challenge is in the socio-cultural influence, which are the influences and trends that come from groups of individuals who make up a particular geographic region. The greatest challenge that Starbucks will be facing when expanding into Chinese market is the attitude of the people in the China. The Chinese people prefer to drinks tea than coffee. So, the challenge that Starbucks here is how they want to change the attitude of people and attract them to drinks and try to consuming coffee. This is important to Starbucks to ensure that customer preferences could not shift from coffee to the other beverages. In order to overcome this challenge, Starbucks should do the maximizing the market penetration and offer high quality of products. Starbucks also do research and studies the socio-cultural of Chinese market first before enter the market. The studies found that, Chinese people also prefer to drinks coffee with foods such as curry puff or other pastries. Michael Wu, 34, the managing director of Maxim’s Caterers, Starbucks’ joint venture partner in Hong Kong, Macau and southern China, supported this statement.

The second challenge is in the economic influences, which are the influences, and trends that associated with domestic and global economies. The greatest challenges that Starbucks will face when expanding into Chinese market are changes in the disposable income of market could influence purchase levels of coffee and if the economic conditions is not good such as during recession or inflation may make consumers unwilling to pay high prices. This is because the price of Starbucks product is high relative to competition with other brand or organization. Therefore, Starbucks will reduce their price of product depends on the economic conditions or by reducing the cost of production in order to attract consumer to buy their products. They also will do the marketing strategies such as advertisement and offer good quality of service and product to ensure that customer will loyal with their products brand.

The third challenge is in technological influences, which are influences and trends related to the development of technologies both domestically and internationally. The greatest challenges in the technological influence that Starbucks will face are new products and new production process that they want to develop should be accept with the local market that is Chinese consumer. They should refer to the customer preferences or target market before do the new product development. Other than that, Starbucks has a reputation for new product development and creativity. However, they remain vulnerable to the possibility that their innovation may falter over time. In order to solve this problem, Starbucks will do the current process-research effort and current product-research effort to ensure that the product will accept by the customer. They also will use other technologies such as machine for brewer the coffee and try to maintain the quality of coffee to ensure the operational efficiencies will be improve.

The last challenge is in political or legal influence, which is influence and trend associated with China government and other political or legal entities and political forces. The greatest challenges in the political influence that Starbucks should facing when enter the Chinese market is international pacts and treaties which are Entry, Country Development and Global Integration. The first phase challenge in political influence is Entry, this need Starbucks to determine the right business model to use and establish presence in the Chinese market or based on the China country. The second is Country Development that is Starbucks need develop their market by expanding to several localities, and build brand awareness with customer based on knowledge and research conducted during the Entry period. The last phase is Global Integration, which needs Starbucks to align with the management and goals of the parent company or China country. In order to overcome these challenges, Starbucks should follow all the legal regulations and law of the Chinese market itself. The Starbucks Company also must well know about the ‘One Face to China’ principle in which foreign companies reconcile their company goals with the goals of their host country.

As a conclusion, Starbucks Company must have good analysis of the broad environment that they will face when enter the Chinese market. This is important to them in order to gain profit and become the first well-known company that produce coffee product to the Chinese customer. All the challenges that they are facing must have ways and strategies to overcome it from influence the business operation.

2. Identify and how could Starbucks make its competitive advantages sustainable overtime?

What is the definition of competitive advantage? According to Enz (2010), the competitive advantage is exists when a firm has a long-lasting business advantaged compared to rival firms that is a significant edge over the competition. In the other words, the firms will do something competitors cannot do. Starbucks apply many competitive advantages in the Chinese market such as strong brand name recognition, large retail distribution system, quality product, extensive product list, good supplier relationships, strong financial history and strong human resources.

The first point is brand name recognition. Starbucks is a well-known branding of coffee product company. According to Venkatraman and Nelson (2008), Starbucks is an iconic emotional brand. These emotional brands become meaningful in part because they become interwove with the narratives of people’s lives. Starbucks create their brand name with offer good environment of store’s which is captured by four themes such as “Starbucks as Home;” “Starbucks as a Constellation of Personal Spaces;” “Starbucks as Exotic;” and “Starbucks as a Bridge between Cultures” (Venkatraman & Nelson, 2008). These entire themes will create good brand name within the customers.

The second point is large retail distribution system. Nowadays, Starbuck is one of the companies that expand their business to the other country such as in China. It becomes the first mover in the coffee business in China market. This situation will create competitive advantage for Starbucks because they were the first company that successful for enter the coffee business market in the China. The large retail distribution system also helps Starbucks increase their revenue and profit. They do the franchising their company to the other country over the world.

The third point is quality of product. All of products that Starbucks offer to the customer have high quality of item. Starbucks establish their own Total Quality Management System in order to provide and control the quality of product that they sell to the customer. They also have corporate headquarters that exercises controls over individual sites. Other than that, they also have internal controls for the store that is managing by the manager.

The fourth point is extensive product list. This is one of the competitive advantage of Starbucks because the product that they produce is always be consumed by the customer. This is because the demand for food and beverages is constant. Therefore, the extensive product list of Starbuck will help them to compete with other company that in the same business.

The next point is good supplier relationship. This is important to Starbucks in order to produce their product. Starbucks is one of company that cooperates with the other company in order to receive raw material for their products. They have lack of their own coffee farms. Therefore, to ensure that all the raw materials for their production are being supply, they build good relationship with their supplier. Therefore, this will overcome their problem.

Besides that, Starbucks also is a company who has strong financial company. This is because Starbucks was starts operated in many years ago and has good financial management and strategies. They will achieve strong financial in company because they have largest market share in the industry. They also expand their business to the other country and do joint venture with local business partners to help recruit talented individuals and maintain financial control.

The last point is strong human resources who is the employee and staff that working in their company has good skills such as production skills, marketing skills, managerial skills and others. The most important skills in Starbucks is people skills and drink preparation ability. In order to maintain and control the quality that product that they produce, all the employees will give training to learn about products, brewing methods and sales techniques. They also giving rewards to their staff in order to encourage them work in a good performance.

As a conclusion, there are many competitive advantage that Starbucks have for competed with other company. Nevertheless, the most important things are they must have a good missions and visions of their company that lead them to achieved good performance in business. They also must create positive value with their customer to ensure that customer will loyal with their products.

3. What strategies (at business and corporate level) could Starbucks implement in China considering the income discrepancies of that country?

What is the meaning of strategy? Strategy is a plan for pursuing the mission and achieving objectives. Business strategies is the direction and scope of an organization over the long-term which is to achieves advantage for the organization through its configuration of resources with challenging environment, to meet the needs of markets and to fulfill stakeholder expectations. The business level strategy is the plan for managing one line of business. While corporate level strategy is the plan for managing multiple lines of business.

There are many strategies that Starbucks will implement in China considering the income discrepancy of that country. They will use corporate level strategy which is growth strategies. Starbucks should be concerned with the overall purpose and scope of the business to meet stakeholder expectations. This is the most important level because its will influenced investors in the business to invest. In order to growth their market, they should be well in mission statements. The corporate level of company must establish good mission statement and planning for the future of company. This will be guide to others members in the company to achieved and followed.

Starbucks expand their business to the foreign country because of the reason to growth. This is because in United States coffee bar market was saturation. So, they believe that there have been some consolidations as bigger players snap up some of the smaller bar competitors. They also note that Starbucks store base is maturing, leading to the slowdown in the growth of their unit volume and the firm’s profitability. This led them to enter the foreign markets for continued growth.

The other strategy is business strategies. Starbucks’ strategy is simple which is blanket an area completely even if the stores cannibalize one another’s business (Anonymous, 1996). The approach that they apply is “Starbucks-everywhere” which is they cuts down on delivery and management costs, shortens customer lines at individual stores, and increases foot traffic or all the stores in an area. According to Zhang (2006), even in down economy, Starbucks store traffic has risen between 6% and 8% a year. So, these types of strategy also will be implementing in the China country whether the income in the country is discrepancies.

Other than that, Starbucks also will implement joint venture and licensing strategy in China country. The joint venture will help Starbucks to exercise greater control over the growth strategy in that country. Starbucks also will focus on their target market of their product. They will provide the products that meet the customer preference, needs and wants. Therefore, these strategies will help them attract the customer to buy their product or menu items. The income discrepancies in China will not influence their business if they implement this strategy.

The last strategy for business that Starbucks will implement is offer the good and quality service experience to the customer. People do not go Starbucks for the coffee but for the different experience. So, in order to deliver the good service to the customer, Starbucks should focusing on the development of employees such as giving service training to ensure they will deliver the service in a good way. As conclusion, Starbucks have better strategies in business level and corporate level. Therefore, they must maintain the performance in provide the good service and product to customer.

REFERENCES

Anonymous. (1996). ‘Starbucks rides the caffeine wave: Brooke McCurdy’ , Chain Store Age, 72 (4), 2. About us-Starbucks Coffee Company. (n.d.) Retrieved September 7, 2003, from http://www.starbucks.com/aboutus/default.asp

Dess, G.G., Anil, G., Hennart, J., & Hill, C. W. L. (1995). Conducting and integrating strategy research at the international, corporate, and business levels: Issues and directions. Journal of Management, 32 (3), 357-393.

Enz, C. A. (2010). Hospitality Strategic Management: Concepts and Cases (2^nd Ed). New Jersey: John Wiley & Sons, Inc.

Venkatraman, M., & Nelson, T. (2008). From Servicescape to Consumptionscape: A Photo-Elicitation Study of Starbucks in the New China. Journal of International Business Studies, in press.

Zhang, Z. (2006). International Expansion of Starbucks under the Background of Global Tourism Development. Canadian Social Science Journal, 2 (1), 17-21.

TERM PAPER (Bel 442) :The negative effect of disabled employee in company over the world

1.0       INTRODUCTION

Defining people with disability is not a simple task, and it is attractive clear that not only one definition can cover all disabilities (Government of Canada, 2002). According to Oxford Advanced Learner’s Dictionary (2005), disabled is refer to people with permanent illness or mental impairment that substantially limits one or major activities for that people. Therefore, disabled employee will define as a person who works with limited duties than non disabled employee.

According to Human Resources Development Canada (2003), there are three key classification systems to define disability issue as well as the impairment, functional and ecological perception. Stone and Colella (1996) classify six different categories of disabilities which are physical conditions, mental conditions, sensory impairments, learning disabilities, neurological conditions and additive disorders. Thus, there are many types of disabilities that feel by disabled employee.

Employee is a person who is hired by another person or company for a salary or fixed compensation in exchange for personal services. According to UNIESCAP (2000), the entire figure of disabled people in the world is more than 500 million. Due to the increasing number of disabled person over the world, there is certain organization or company would like to hire this people as their employee.

Are there any negative effects of disabled employee in company that hire them? What are the negative effects of disabled employee in company? Disabled employee can give the negative effect on job qualification or performance concern, cost associated in the company and reactions or responses of others.

2.0       JOB QUALIFICATION

The first negative effect of disabled employee is job qualification or performance concerns. According to The American Heritage Dictionary (2000), job qualification will define as a quality or condition of a person that makes them suitable for a particular task. Disabled employee may lack appropriate career qualifications (Millington & Reed, 1997). In “Empowering the disabled,” (2008), postgraduate degrees and professional qualifications fail to impress when the recipient is perceived as being "different" from others. Many employers strongly resist employing people with disabilities, believing they are not cost-effective and will be unable to perform their jobs.

They do not have the necessary knowledge, skills, abilities and other characteristics for job performance such as production skills, socialization skills, trainability, dependability and motivation. This is because there is a lower percentage of disabled employees that have bachelor’s degrees or higher levels of education in contrast to people without disabilities. According to “Rehabilitation Research and Training” (2005, as cited in Lengnick-Hall, Gaunt, and Mukta, 2008), show that a greater percentage of people without disabilities had bachelor’s degree or more (30.1%) in comparison to people with disabilities (12.8%). Thus, the employer in many companies may feel worry and fear in order to hire them for a certain job that need skills and good abilities to perform.

Other than that, disabled employee also cannot achieve challenging duties (Colella, 1994). Most of them do not reach or fulfill their potential in the workplace. They have certain limits in doing their work tasks because of disabilities. In other word, disabled employee has more weakness than normal employee. Besides that, the disabled employee will be fewer productive than non disabled workers. This effect also comes from their disabilities which makes them difficult to do the jobs easily and quickly in order to achieve the productivity of work. The productivity here means proper job fit such as suitable menial or repetitive tasks for disabled employee to perform. For example, in transport industry needs employee achieved certain target of trip. So, disabled employees do not achieve this level of performance because of their disabilities.

3.0       COST ASSOCIATED IN THE COMPANIES

The second negative effect of disabled employee is cost associated in the companies. The cost that associated comes from health care expenses, accident and safety cost and facilities cost. Disabled employees deserve higher health care expenses than those without disabilities. They need more health care benefits because of the illness and injury that they deserve before. The injury or illness makes them less immune and easy to get sickness than normal employee.

Besides that, disabled employee also has extra accidents and poses more safety trouble than non disabled employee. This problem will occur during the operation or working time. Disabled employees that have less skills in production operation will contribute to accident. Therefore, the employer needs to provide more safety equipment and safety program in order to overcome this problem and these will cost them much.

According to Schartz, Hendricks, & Blanch (2006), reasonable facilities are complicated and expensive to implement. These expensive accommodations and other funds are necessary in order to hire and sustain employee with disabilities and balance productivity. According to Mitchell, Alliger, and Morfopoulos (1997) found that the most common accommodations include special equipment (18%), scheduling of breaks or flextime (16%), task substitute (11%), office redesign (10%), computer software (10%) and increased access (10%). Thus, the employer bears more money in order to hire disabled employee as one of their workers.

  4.0       REACTION OR RESPONSE OF OTHERS

The third negative effect of disabled employee is reaction or response of others. According to Lengnick-Hall et al., (2008), they found that co-workers may respond pessimistically to work with disabled employee. This negative respond occurs when mental and emotional disabilities of disabled employee are involved (Greenwood & Johnson, 1987). There are three possibilities co-workers respond pessimistically with disabled employee which are they may fear a negative effect on work-related, personal and interpersonal outcomes.

Besides that, clients also may react badly to disabled employee and will affect the company’s bottom line. For work related outcomes, customers may fear that employees with disabilities do not produce high-quality products or are incapable of delivering the same level of service as workers without disabilities (Lengnick-Hall et al., 2008). This respond will come from customers who do not have disabilities because they feel discomfort and awkwardness when interact with disabled employees.

Lastly the negative effect is a fear of the unfamiliar in working with disabled employee such as how to communicate with them. Co-worker may feel awkward, discomfort, ambivalence, and guilt about how they should interact with disabled employee. This reaction will result in avoidance behavior and exclusion of disabled employee from formal and informal workgroups. 

5.0       CONCLUSION

As a conclusion, employers may choose not to hire people with disabilities because they concern all of the negative effect that disabled employee will contribute to their companies. However, the employment of people with disabilities should be improving because every person in the world must work to obtain income, to support themselves and their families, to acquire the fulfillment that can be resulting from a job and career and to make contributions such as profit and revenue to the organization.

Other than that, the society could save much in benefits payments alone if more people with disabilities were employed. This result comes from the ability of disabled employee that able to pay taxes, have more income to purchase goods and services and reduce their dependency on taxpayer-supported assistance programs. So, they also will make contributions to the society. Lastly, disabled person should improve and fulfill themselves with all the criteria that employer needs to ensure that they are being employed in the company.

 REFERENCES

Colella, A. (1994). Organization socialization of employees with disabilities: critical issue and implications for workplace interventions. Journal of Occupational Rehabilitation, 4 (2), 87-106.

Empowering the disabled. (2008, April 25). Find article at BNET. News Strait Times. Retrieved from http://findarticles.com/new-articles/new-strait-times.

Government of Canada, (2002). Advancing the orientation of persons with disabilities. Canada.

Greenwood, R, & Johnson, V. A. (1987). Employer perspectives on workers with   disabilities. Journal of Rehabilition, 53, 37-45.

Human Resources Development Canada, (2003). Defining Disability: A Complex Issue. Gatineau, Quebec.

Lengnick-Hall, M. L., Gaunt, P. M., & Mukta, K. (2008). Overlooked and underutilized, people with disabilities are an untapped human resource. Human Resource Management, 47 (2), 255-273.

Maimuna Aminuddin, (2008). Human Resource Management : Principle and Practices. New York: Oxford.

Millington, M. J., & Reed, C. A. (1997). Employment expectation in rehabilitation counseling: Factors in employment selection. Rehabilitation Counseling Bulletin, 40, 215-227.

Mitchell, K. W., Alliger, G. M., & Morfopolous, R. (1997). Toward an ADA-appropriate job analysis. Human Resource Management Review, 7, 5-26.

Oxford Advanced Learner’s Dictionary: International Student’s Edition. (2005). (7^th ed). Oxford, New York: Oxford Press.

Schartz, H., A., Hendrick, D., J., & Blanck, P. (2006). Workplace accommodations : Evidence based outcomes. Work. 27, 345-354.

Stone, D., & Collela, A. (1996). A model of factors affecting the treatment of disabled individuals in organizations. Academic of management Review, 21 (2), 352- 401.

The American Heritage Dictionary of the English Language. ( 4^th ed). (2000). Boston: Houghton Mifflin Company.

UNIESCAP. (2000). Conditions to promote barrier-free tourism for people with disabilities and older persons paper presented at the National Workshop on Sustainable Tourism Development, Tianjin, China.