by R. Hake

Created on: January 03, 2009

I believe Starbucks' success is undoubtedly due to their focus on what customer service and employee satisfaction really means. A book I've read about this company, The Starbucks Experience, explains in great detail the foundation for this company's management strategies and how it's made them the success that they are today. In this company, the employees and customers are held much higher than in most organizations. According to a Hewitt Associates Starbucks Partner View Survey, Starbucks employees have an 82% job satisfaction rate. This percentage is staggering compared to the industry average of 50%. However, this company is seeing some decline in profits with the current state of the economy. I think that although this organization probably still maintains the same ethics they did in the past, they are probably focusing much more on their profitability now that businesses are facing a sink-or-swim market.

Although this company is still popular today, they are not doing as well in today's economy as they were at the time this book was published. According to an article published by the Wall Street Journal on November 11, 2008, Starbucks has reported that fiscal fourth-quarter earnings have dropped 97%. Starbucks has recently had to close 600 company-operated stores due to profit losses in the past year. Consumers are cutting back on extra expenses with the rise in living costs, which is directly reflecting on Starbucks' earnings.

Howard Schultz is the chairman, president, and CEO of Starbucks. He graduated from Northern Michigan University. He began his career as the manager of U.S. operations for Hammerplast, which made Swedish drip coffeemakers that were selling to Starbucks stores, which had then only been a coffee product store and not a restaurant. Schultz originally joined Starbucks as the director of marketing and operations in 1982. After visiting coffee bars in Italy that served espresso and were a staple in the entire culture of that are, he tried to convince Starbucks that they should do the same. His idea was rejected and he decided to quit, and opened up his own coffeehouse. This was a very profitable move, and one year later he bought Starbucks for $3.8 million, turning it into the success that it has become today.

One of Starbucks' biggest competitors is Dunkin Donuts. McDonald's is also one of Starbucks' international competitors, especially in recent months now that they have introduced a new McCaf menu that includes espresso drinks as well as pastry items. Although this could be a devastating blow to Starbucks' sales as consumers are tightening their budgets, many will still opt to pay more for thier coffee because of the service and atmosphere they receive at their local Starbucks.

This company's history is a great reference for anyone considering a career in management. Starbucks succeeded in standing out among the rest of the competition, not only to customers but also to their employees and stockholders.

Learn more about this author, R. Hake.
Click here to send this author comments or questions.