Starbuck Strategic Human Resource Managment

Table of contents 1. 2. 3. 4. 5. 6.

7. 8. 9. Executive Summary Introduction Problem/Issue statement Data analysis Key decision criteria Alternatives analysis Recommendations Action and Implementation Plan References 2 2 3 4 6 6 7 7 8 Executive Summary The purpose of this report was to examine the four problems that Starbucks is facing and then find out a way to solve these problems.

By analyse these issues, the business’ strategies and the processes of the company will be evaluated.Starbucks’ way of operatiing and how its operation produces the desired outcome will be analysed, in order to find out the company’s major problems and looking for ways to solve these problems. Finally, based on the analysis, recommendations about the strategic change will be given to enhance the performance of the company. In the end, this report will make an action and implementation plan. IntroductionOrganisation needs to implementing strategic changes within the organisation to conform the outside environment.

Business organisations should be perpared to change at all the times to stay active and remain alive (Abrahamson 2000). Every company should adapt this realisty no matter which industry they are involved in. Starbucks has been the leader in the coffee industry for a decade, however, it still facing some problems that need to be improved. Problem/Issue statementThere appears four major problems in Starbucks which are: firstly, when the company expanded its size rapidly, it started to have financial strength due to its policies and high human resource costs; secondly, the company’s reputation has decreased as there were some saying that the company had stopped taking care of its employees, and one example is that Starbucks was anti-union and forbid any employee union activities; thirdly, there were complaints about Starbucks’ benefits programs as the company was not benefits its employees which can be seen as it did not covering the costs of employees’ work related injuries and the low raises (60 cents per hour); Finally, the company is facing threats from other competitors if they do not consider their future recruiting prospects, then the company may lose some good employees. The immediate issues that can be addressed here are the first three problems showed above and the last one the bigger issue which need to be addressed in the future.The first and the third problem are more urgent than the fourth problem, because the first one has already effected on the company’s profitablility as it started to experiencing financial strength and the second and the third problems are about strategic directions of the company and the morale of its employees, if the company do not solve these peoblems immediately, the company might facing some difficulties from its people; whereas the fourth problem are relatively less urgent as the first three problems as it depends on the future development of the company.

The issues are relavant to strategic human resource management as SHRM is about systematically linking people with the organisation and more specifically it is about the integration of HRM strategies into corporate strategies (The Aston Centre for Human Resources 2006, p. 14). Therefore, why did Starbucks’ profit decline? What happened to its operational model? How did these happen? All of these are the questions that need to be solved. Data analysis The issues stated aboved are caused through three components: its products, employees the company hired and the processes which the company use to conduct its services.First of all, Starbucks’ expansionism of its own principle is one of the reason for its decline, which can be seen as its overpriced coffee products. Starbucks’ chain stores are becoming more likely to be fast food chains which shifted its customers to its competitors who sell the same products as lower prices.

Secondly, Starbucks is facing financial strength as the company spent more on its human resources than the actual profits it can make, for instance, 60% of the employees are part-timers and these employees still reveive the same benefits with its full-timers, which increases the cost of the company, for importantly, the company cannot make any changes about this, as it will rise a new problem about the morale issues within the company.Lastly, for the process issues, the company’s strategies and precesses need to be examined. In these issues, the employees of Starbucks will be affected most, as in Starbucks, nearly all of its employees (include part-timers) can buy its shares since the ‘Bean Stock Plan’ in 1999 and the company calls its employees as partners, therefore, any decisions to be made inside the company would affect all of its employees consequently. There are some constraints related to its resources like the cost of its materials, such as the coffee beans, the rent of its coffee shops when the company considered to open more shops and wages of its part time employees.When we look at Starbucks’ income statement, an evidence showed that there was a steady growth in the Starbucks’ revenue and net income from 2002 to 2004, meanwhile, the company has also received an increasing flow from the stock market, such the investors include both its employees who have brought the shares and the outsiders had made good profits from the company. During this period, the company is able to satisfy its employees and grow constantly which is due to its proper operation and management.

When we look at the table of benefits to part-time workers and full-time works in US and compare it to what Starbucks has offered to its employees, we can easily see that the company has provide high benefits to its part-timers and it is due to its benefits program with the high proportion of part-timers the company has hired. Alternatives: 1.The company can reduce its financial strength by operating less stores, as the copmany has expanded rapidly by opening nearly three stores each day around the world, which resulted the downward development of the company. Therefore, opening less stores each day can be one of the alternatives. 2. The company could improve its benefits program while continuing opening stores rapidly, for instance, the company should pay attendation to employees’ needs, such as work-related injuries and their raises.

3. It could shifting its strategies by using less part-timers, which can cut the costs and making more profits, as part-timers are more easily to turnover. Key decision criteria (KDC)Maintain profitability Increase sales and market shares Maintain customer satisfaction and company’s reputation Can be consistent with the company’s mission Within current capabilities Easy implementation Employee morale and turnover Minimize environmantal impact Alternatives analysis Alternativs KDC Maintain profitability Increase sales and market shares operating less stores Met Not met improving using less employees’benefits part-timers Not met Met Met Met Not met Not met Maintain customer satisfaction Not met and company’s reputation Consistenting with the company’s Not met mission Within current capabilities Easy implementation Employee morale and turnover Minimize environmantal impact Met Met Met MetMet Not met Not met Met Met Met Met Not met Not met Not met Recommendations As shown above in the table, it is easy to see that improving employees’ benefits would be the best way for Starbucks to solve the problem, as it mets the most key decision criterias. Although it is a challenge to the company, as this alternative might not be the most profitable way for the company in the short run, but in the long run, it will be the best way for the company to make a constant and stable growth.

Action and Implementation Plan Starbucks should focus more on its employees’ benefits as making more specific rules about employee safety and their pay raises.It is highly recommended that Strabucks should improving its benefits program to its employees within the organisation in order to consolidate the company’s status and maintain its industry leadership, in this way the organisation will achieve strategic compatitiveness. References The Aston Centre for Human Resources(2006) Strategic Human Resource Management: Building Reasearch-Based Practice, Chartered Institute of Personnel and Development, London. Starbucks website http://www. starbucks. com Abrahamson, E.

2000, ‘Change Without Plan’, Harvard Business Review, July-Aug Moore, A. 2007, ‘Starbucks cut to sell on slow growth, higher costs’, Market Watch http://www. marketwatch. com/story/starbucks-downgraded-to-sell-shares-slip? siteid=yhoof Starbucks Corporation 2008, ‘Annual Report Fiscal 2008’, http://www. starbucks.

com/ accessed on 8th April 2010