Classical Theories And Crime Prevention Criminology Essay

Classical Theories And Crime Prevention Criminology Essay Crime is one of the greatest challenges the world is experiencing today. Crime rates have continually shot up at the same time taking new dimensions. People faced by the challenges of accomplishing their responsibilities under various economies, environmental situations and mental psychology often end up in committing crime. The society in response to this has stipulated several lawful mechanisms to arrest the situation, punishment being the utmost resolved means. Punishing the criminals without identifying the root cause of the crime does not necessary solve the vice, more approach is directed towards establishment of the why question the individual ended in committing crime. Societies have therefore formulated various criminological theories intended to gauge crime and criminals in passing out sound judgments. Each theory is applied in accordance to its relevance to a particular case since different criminological theories base their arguments on a different societal set up and var ied environmental/social conditions. This paper examines the application of classical choice theories in crime prevention. Introduction Classical choice theory dates back the 18th century and probably forms the bases of other theories too. This school of thought find it context by basing an argument that people are at liberty in decision making and therefore will behave in a manner that best suits their desires (Ambroise, 2006). The theory attributes that crime can be curbed to greater extent if there is a mobilization in societies to avert from getting influenced by their desires and pleasures in taking an action course. Crime can be contained by ensuring that punishment outweighs the pleasures derived from the crime committed (Siegel, 2008). This concept therefore, is a framework that tries to understand the behavior of people, the reasons that drives them in committing crime and various approaches to prevent a person in making choices that leads to crime. This theory was first developed in the 18th century by European philosophers who were criticizing the corrupt and authoritative arbitrary nature of their legal system. The ideas about people and the criminal behavior in determining crime came up when these philosophers were changing the legal system thus referring it as choice theory. On the other hand classical theory is based on arguments that the law should not be discriminative and should be applied equally amongst all (Cullen Agnew, 2006). The other aspect of the classical and choices theory is ground to the fact that human beings have the capacity to control these choices. The fear to the confrontation of the consequences resulting from their behaviors governs their mode of conduct and therefore refrains from criminal activities. Human beings have the ability to analyze situations with regard to their positive outcomes and their potential negatives. If the risks involved in engaging in certain behavior are much less than the benefits, then an individual is likely to commit that crime(Siegel, 2004). According to the philosophers, people act in a rational manner and choose towards their actions that gives them the greatest pleasure and least pain. The concept is equally applicable to the individuals who are involved in criminal activity. The classical theory holds that Delinquent behavior is a rational choice made by a motivated offender who perceives the chances of gain outweighs any perceived punishment or loss (Siegel Senna, 2004, p. 61). It is therefore an individuals choice to commit a crime after considerations of the benefits and possible consequences outcome. The characteristics traits of the offender, nature of the offence, specific factors and situation may affect his/her decision to a point. Psychological state of an individual in relation to emotions, strain and other external pressures is thus considered a contributory factor towards an individual committing a crime (Verma, 2007, p. 2020). The theory advocates that an individual is encouraged to commit a crime on opportunity availability. The classical theory helps to understand demographics, victimization and lifestyle of a process whereby the offender and the victim come into contact with one another. Researchers have identified aspects like being unmarried, male, leading an active lifestyle and frequenting bars can raise the risk of crime committing (Verma, 2007, p. 2020). People can opt to use illegal means in acquiring what they want to achieve if the consequences are not severe compared to the benefits associated with the crime. The society has to ensure that punishments accorded to criminals are severe if it is to achieve tangible results in trying to discourage criminal activities (Adler, Mueller, Laufer, 2004, p. 59). In relation to this, penalties for committing criminal acts must be known to the public, the punishment handed down must be swift and certain (Cullen Agnew, 2006). In the early 1700s, the Europe legal system was in disarray. The laws were open to interpretation and vague where the judges were accorded with a lot of power which they misused in interpreting laws to suit their interests. A penalty for a particular crime varied depending on who was at the receiving end. Equality in law application did not apply: Some criminals could go unpunished for a crime committed while others received a life sentence for the same (Cullen Agnew 2006). It had become the order of the day for the societies in the upper class bribing the judges to go free for offences committed while the poor with no resources to bribe their way out received unconditional harsh punishments. Petty offences like theft resulted to stiff punishments amounting to torture, life imprisonment or murder (Cullen Agnew, 2006). These legal shortcomings fueled a new wave targeting radical reforms in the mid 18th century. In the year the year 1740, Fredric II of Prussia terminated torture to inmates and death sentence for burglary offences in the year 1743 (Ambroise, 2006), a move that was welcomed by many European philosophers. Hobbes, a philosopher believed that people naturally pursue their own interest and in the course harm one another. Further, he asserted that rational individuals give up some freedom to the state willingly so that laws could be established which placed limits in order to prevent this harm from occurring (Cullen Agnew, 2006): A philosophical thought that led changes to criminal justice. Many criminology experts have contributed towards development of the classical and choice theories to make stand relevant to the ever-growing challenges surrounding the field. Much debate has rested on the measure of punishment a particular offence should hold. The purpose of punishment is crime deterrence, not social revenge. Certainty and swiftness rather than severity in punishment best secures this goal (Clear Cole, 2003, p. 33). The level scale of punishment should correspond to the nature of crime, in a proportionate system. This is because criminals are rational in the sense that they calculate the benefits and costs a behavior before action before deciding the action. The notion of Beccarias proportionate punishment is based upon this assumption and indeed this forms the basis of our current criminal justice system (Verma, 2007, p. 202). Classical choice theory emphasizes on the utilization of the resources available to reduce possible crime occurrence by advocating direct solutions to the problem arising from crimes. The verdict applied to the offender is meant to discourage further engagement in similar or associated crimes. By upsetting the balance between the benefits vs. costs, crime occurrence is found to reduce (Campie, 2003). Classical and choice theory application to crime This theory finds application up to date. The current approach is more focused on crime prevention. Policy makers still develop more approaches particularly those that have grounds with evidence and are results based which includes: policing initiatives, gun control tactics, increased incarceration and youth substance abuse and violence reduction strategies (Schuck, 2005, pp. 448-49).The following are some examples where this theory finds application. In an article entitled Giving students what they need, internal and external motivation approaches in the classroom are examined. Â   Student motivation is one of the input most needed for success. Educators wish for their students to be motivated since motivated students perform better. Â   Failure to this, students will possibly do poor work or no work at all, learn little, and frequently show reckless or unruly behaviors. There are two types of motivation-external and internal. Â   External motivation, the proverbial carrot, and stick approach predominates not only in most classrooms but also in the world (Erwin, 2003, p. 20). Â   Nonetheless, this approach is not as successful as internal motivation since it encourages students to work hard only for rewards. The promised reward has to increase once a behavior is achieved. Students do not fight to excel for the right reasons. Â   Internal motivation is a wiser choice for educators to use with students since it helps to fulfill some of the students basic needs. Â   Choice theory by William Glasser explores internal motivation and its impact on relationships. Â   According to Choice Theory, five basic needs constitute the source of internal motivation and guide all behavior (Erwin, 2003, p. 21). Â   Â   Â   Survival is one of the basic needs that our students need to have met. Â   The importance of having the survival need fulfilled is that it allows individuals to feel a sense of order and security. Â   Educators can help fulfill this need in the classroom by developing structured and consistent classroom procedures, allowing students to have snacks and drinks, and creating rules that allow a safe and respected environment (Erwin, 2003, p. 21). Choice theories are among the fastest growing theories in social science today. Many sociologists and political scientists defend the claim that rational choice theory can provide the basis for a unified and comprehensive theory of social behavior. Rational choice theory is distinguished from other theories because it emphasise on the fact all actions are calculative and rational. All social action can be seen as rationally motivated, as instrumental action, however much of it may appear to be irrational or non-rational. Choice Theory would be most beneficial in the reduction or control of crime. According to the Choice Theory, law-violating behavior should be viewed as an event that occurs when an offender decides to risk violating the law after considering his or her own personal situation (need for money, personal values, learning experiences) and the subsequent consequences. Other factors a potential criminal would consider includes: how well a target is protected, how affluent the neighborhood is and how efficient the local police happen to be. Before choosing to commit a crime, the reasoning criminal evaluates the risk of apprehension, the seriousness of the expected punishment, the value of the criminal enterprise, and his or her immediate need for criminal gain (Erwin, 2003). The Choice Theory shift attention to deviant activity or the act of engaging in criminal. The issue becomes, what can be done to make the act of crime or deviance less attractive to an individual, and how can crime or deviant behavior be prevented? The theory claims that crime prevention or at least crime reduction may be achieved through policies that convince criminals to disengage from criminal activities, delay their actions, or avoid a particular target. Strategies that are relevant to this perspective includes: target hardening, deadbolts, self-defense skills, neighborhood and watching programs that are illegal (Siegel, 2008). The theory is among the least complicated explanations for any action and involves a simple cost-benefit analysis. A violent individual gains some benefit from either threatening violence or acting out violently. If he or she does not receive, or fear receiving, some significant punishment, then he or she is more likely to act on his or her drive to act out in a violent manner (Ferguson, 2009). Crime is seductive and opens the door of opportunity. People may rationally choose crime because it provides them with psychological and social benefits and can help them solve problems. Choice Theory roots are based on the classical school of criminology, by Ceasare Beccaria, who viewed that crime is rational and can be prevented by punishment that is swift, certain and severe enough to deter crime. This has lead to a more contemporary version of classical theory, based on intelligent thought processes and criminal decision-making; today this is referred to as the rational choice approach to crime causation (Siegel, 2007). This theoretical perspective suggests that: people have free will to choose criminal or conventional behaviors; people choose to commit crime for reasons of greed or personal need; and crime can be controlled only by the fear of criminal sanctions (Siegel, 2007). Offenders choose crime after considering both personal-money, revenge, thrills, entertainment-and situational factors, such as target availability, security measures and police presence (Siegel, 2007). The choice theorists view crime as offense- and offender-specific; and that a number of personal factors condition people to choose crime; and the decision to commit crime regardless of its substance, is structured by where it occurs and the circumstances revolving the offender and the environment (Siegel, 2007). New and tougher laws are now being put in place to bring the crime rate down. With this reflection, the U.S public policy of 1980 created a mandatory prison sentences for drug offenders. Surprisingly, the prisons population swelled up with minors constituting a considerable figure (Schmallager, 2006). Despite liberal anguish, conservative view of crime control shaped criminal justice for a lengthy period. Most Americans that were passionate opponents of abortion on the ground that it takes human life, became ironically ardent supporters of the death penalty (Siegel, 2008) The tough attitude measures was overwhelmingly supported owing the fact that while the prisons were getting overcrowded, crime was on the other hand was noted to be on the decline. These developments saw the classical theories take another advanced dimension. The newer approach is based on intelligent thought processes and criminal decision making. Experts in criminology ascertain that the choice theory is in a way different from the original classical theory which posed criminals as individuals who maximized their pleasure and minimized pain. These experts suggest that if individuals are caught while committing crime, it is because they are slow thinkers and are not perfect in their decision making. The causative factors influencing a crime are therefore extended to thought and emotion processes. Social relationship, environmental characteristics, individual traits and capabilities have also been found to impact criminals in decision making. Human behavior in making their choices is therefore willful and determined (Schmallager, 2006). The latest developments have described criminals as people who share profile and ambitions just as the normal citizens but have opted to use shortcuts in achieving their goals. They possess conventional citizens values strive for success, material attainment and work hard. Phillipe Bourgois in his study towards crack dealers in Harlem found that criminal lead a life where they were mobile, and struggling to make their ends meet: They only commit crime as a choice to use an illegal path in obtaining their goals that were deemed elusive using the legal way (Siegel, 2008). Crime has become attractive when an individual believes that its results is more beneficial compared to the cost. Their is a tendency for individuals engaging in a crime when they have a prior information that other who committed a similar crime made considerable achievements and are successful owing a crime previous committed. It is common that crime does not pay. Small but significant subsets of criminals earn as much as $50,000 yearly on crime. Such success is an encouraging factor to potential criminals. Offenders are however less likely to be inclined to committing crime if they perceive that their future earnings from criminal acts will be low and legal opportunities that can generate income are available. In this sense, rational choice is a function of a persons perceptions of conventional alternatives and opportunities (Siegel, 2008). The various authorities therefore have to keep tracking the employment level demands and creating more opportunities with considerable remunera tions. The job offers should be attractive so that it captures many individuals who would possibly engage in crime if there were no such offers. Criminals tend to adapt the rational choice of time and place of their crimes. Burglars for example prefer working between 9A.M and 11A.M and in the mid afternoon, when parents are either working or dropping off or picking their kids from school. They avoid Saturdays when most families are at home, and the morning hours of Sunday. Church hours are considered the best for weekend burglaries. Criminals are known to identify their targets hobbies so as to strike when the families are out for such outdoor hobbies. These activities are meant to create the least possible chances of being caught (Siegel, 2008). Family living in close neighborhoods can limits the access to their homes by disconnecting the subdivision from the adjacent ones and install walkways to locations safe to pedestrians, and to create bounds for them. Evidence of rational choice may also be found in the way criminals choose their targets locations. It has been noted that thieves avoid free standing buildings as there is likelihood of police surrounding them. They select targets that often do cash business like bars, supermarkets and restaurants. Burglars appear to monitor car and pedestrian traffic and avoid busy streets. Instead, they choose corner homes mostly those located near traffic lights, or those surrounded by wooded areas. Most burglars choose their neighborhood where they are conversant with the terrain and access roads. New location is only chosen when the target is worth and the law enforcers are not perceived to be very vigilant (Siegel, 2008). It is recommended that residents adopt the method of natural surveillance that advocates that: door is fully illuminated from outside and windows to be laced strategically for good visibility. If proper lighting system is placed along sidewalks and the entire yard in generals, thieves and burglars would lack the opportunity of striking in unnoticed. Commercial areas can be designed such a way that, check-out counters are located in front of the stores visible from the outside enabling the employees to view outside activities. Public entrances can be marked with a landscape, architecture and graphic to designate sidewalks, parking areas and design loading zones separately with designated delivery hours. Conclusion Classical choice theories concludes that the choice to engage in a criminal behavior is based on the offenders own interests. It is therefore in position to assert that most offenders act rationally and in their personal best interests. With this understanding of the decision making mechanism behind committing crime and in relation to criminal justice, professionals may be able to reduce crime level to a grater extent. This can only be achieved by making crime less attractive and the punishment more severe, swift to justice so that potential criminals get discouraged in engaging with the acts. Crime prevention can be used to propel the agencies responsible in enforcing city and county codes to help identify problem areas and properties that are crime risks or could become future crime risks. Factors that attract crime and violence like improper zoning, trash accumulation should be eliminated to reduce future victimization.

jackie robinson Essay -- essays research papers

The grandson of a slave, Jack Roosevelt Robinson was born on January 31, 1919, in Cairo, Georgia; he was the youngest of five children. Jackie grew up very poor, but little did he know that his athletic ability would open the doors for his future. After his father deserted the family when Jackie was six months old, his mother, Mallie Robinson, moved the family to California in search of work. California also subjected blacks to segregation at that time, but to less of a degree than in the Deep South. The young Jackie defused his anger over this prejudice by immersing himself in sports. He displayed extraordinary athletic skills in high school, excelling at football, basketball, baseball, and track. After helping Pasadena Junior College win the Junior College Football Championship, Robinson took his athletic ability to the University of California at Los Angeles and became a top collegiate running back in 1939. Having used up his athletic eligibility, as well as having some financial trouble, Robinson left UCLA before graduating. After college he held a job with the National Youth Administration work camp until the camp was closed due to the onset of World War II. In the fall of 1941 he joined the Honolulu Bears professional football team. In 1942, Jackie Robinson was drafted into the U.S. Army. He was accepted into Officer Candidate School in Ft. Riley, Kansas and was commissioned a 2nd Lieutenant in January 1943. While stationed at Fort Riley in Kansas, Robinson worked with heavyweight champion Joe Louis to eradicate unfair treatment of blacks in the military. However, inequities would persist in the armed forces for decades to come. He was later transferred to Ft. Hood, Texas where an incident in which he refused to move to the back of the bus found Court Martial charges brought up against him. He was found innocent, but was honorably discharged in 1944 on the grounds that his ankles had been weakened during his years of playing football. Robinson joined the Kansas City Monarchs of the Negro League in 1945 for a reported $450 a month. Although he soon became one of the league's top players, he was not fond of the low pay and relentless traveling and apparently had no intention of making baseball a career. That attitude was changed due to the efforts of Brooklyn Dodger president Branch Rickey. Starting in 1943, Rickey had been searching for a black playe... ...ckie Robinson’s debut. On that day, Major League Baseball announced that the number forty two would be retired throughout the Major League, an event that was symbolic of the impact that Robinson had on baseball. Jackie Robinson always went his own way, answering to his own instincts and refusing to be swayed by those who objected to his choices. He never took for granted his role as a trailblazer in the integration of sports and the opening of opportunities for blacks in the United States. By being a man with incredible physical skills, mental fortitude, and competitive fire who arrived in the right place and at the right time in history, Robinson had a major impact on the black struggle for equality in the twentieth century. Jackie Robinson's signing with the Brooklyn Dodgers was the most significant event to occur in baseball since World War II. Although Robinson may not have been the best athlete in the Negro Leagues it was his overall character, education, and social upbringing that appealed to Branch Rickey. Collectively, they paved the way for integrating the game, allowing some of the greatest players to participate who had previously been restricted to their own league.

Starbucks Case Study

Starbucks in 2004: Driving for Global Dominance Strategic Management STRA 703 Assignment Prepared by: Sherif Hendi (M1100758) Presented to: Dr. Gamal Shehata Questions Q. NO. 1 What are the key elements of Starbucks strategy as of 2004? (What is the store concept, the customer offerings and differentiators? The expansion strategy? The financial strategy? The personnel management and social responsibilities? Conduct a five forces analysis? ) Q. No. 02 What was the original strategic vision and objectives and how did they evolve? What is your opinion of Starbucks’ mission statement? What grade would you give Howard Schultz for his job as the CEO Starbucks and why? Q. No. 3 What is your assessment of Starbucks financial performance during years 1998-2003? (Growth rates, profitability, control of major cost categories, financing, ROE, and P/E ratio? ) Q. No. 04 What were the key issues faced by Starbucks in 2004? Q. No. 05 What recommendations would you make to Howard Schultz to sustain the company growth and support strong financial performance in the years ahead? Q. NO. 1 What are the key elements of Starbucks strategy as of 2004? ANS: Key Elements of Starbucks’ Strategy Starbucks adopted a lot of innovative strategies throughout its journey from 1971 to 2004. These strategies in brief are as follows:- * The restaurant/store concept * The offering of Innovative product line * Differentiation from competition * National and international expansion * Distribution channels (Pepsi partnership/online store/Dreyer partnership) * Efficient Financial management (Centralized Information Systems) * Capitalizing on enhancing the people element * Engaging in social responsibility programs (CARE). Competitive Advantages or Differentiators Their differentiating elements are as follows:- They were the pioneers to introduce espresso bar idea in USA * Mail order sales * Word of mouth marketing * Employee motivation strategies to attain improved employee commitment * Convenient distribution channels * Introducing chemical free cultivation process. Q. No. 02 What grade would you give Howard Schultz for the job he has done as CEO of Starbucks? Be prepared to support you r answer based on how well (or not so well) he has performed the five tasks of strategic management discussed in Chapter 2. ANS: Howard Shultz gets a grade of 95% in his Strategic Management approach. In my opinion Howard Shultz just didn’t do perfect in the area of marketing as he did not spend adequate budgets on advertising and product innovation. Last but not the least is that he did not attempt to study the environment properly while entering into new geographical areas e. g. he opened a store down street in Chicago which was not a good idea due to cold weather conditions. Other than that, he made a great task of performing all the five tasks of Strategic Management Q. No. 3 What was Howard Schultz’s original strategic vision for Starbucks? Is his present strategic vision for Starbucks different from the one he had in the 1980s? How many times has his strategic vision changed? Is his present strategic vision likely to undergo further evolution? ANS: Howard Shultz original Strategic Vision â€Å"To establish Starbucks as the most recognized and respected brand in the world. † Strategic Objectives * They wanted to have 15,000 stores by the year-end 2005. * They aimed to provide a great work environment and treat each other with respect and dignity. * They believed in taking on diversity as an essential component in the way they do business. * To apply the highest standards of excellence to the purchasing, roasting and fresh delivery of coffee. To develop loyal and satisfied customers all of the time. * To contribute positively to their communities and environment, and recognize that profitability is essential to future success of business. How did they evolve? At the earlier stages they promised themselves that they will not leave even a single stone unturned to make Starbucks the most recognized and re spected brand in the world. Therefore, they thought that this could only be possible if they will develop these strategic objectives because these are basis to earn the respect and fame for any business. Q. No. 3 What is your assessment of Starbucks financial performance during years 1998-2003? (Growth rates, profitability, control of major cost categories, financing, ROE, and P/E ratio? ) Growth Rate| Years| 1998| 1999| 2000| 2001| 2002| 2003| Growth rate| 0| 0. 2889| 0. 29095| 0. 2164| 0. 2415| 0. 2391| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Profitability| Years| 1998| 1999| 2000| 2001| 2002| 2003| Operating profit margin | 8. 34| 9. 29| 9. 4| 10. 57| 9. 6183| 10. 42| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ROE| Years| 1998| 1999| 2000| 2001| 2002| 2003| Return on equity| 8. 6| 1. 58| 8. 23| 13. 1| 18. 35| 12| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Price Per Earning Share| Years| 1998| 1999| 2000| 2001| 2002| 2003| Price Per Earning Share| 0. 19| 0. 27| 0. 24| 0. 46| 0. 54| 0. 67| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Control of Major Cost Categories In this portion we have analyzed that how Starbucks controlled its fixed cost. If we talk about the locations, it was very expensive to purchase land and then develop it as a store, so to overcome this problem Starbucks started leasing the land for long term periods. In our opinion, it was a quit impressive move to cut down its fixed cost. Secondly they observed that to get the license was too costly for them, so they made contracts with the partners who had license with them. Financing For the financing, Starbucks instead of taking loans preferred raising the equity. It was a better idea to generate capital because they did not have to pay any short term and long term interests against the borrowings. Q. No. 04 What were the key issues faced by Starbucks in 2004? Every company faces major challenges, even companies that are as successful as Starbucks. Although they have an outstanding reputation, have won many awards like top sustainable retail store award and most ethical company award etc, and even give back to their community, they are still facing challenges like any other company. Following are the most obvious challenges that Starbucks is dealing with:- * Schultz was overflowing with the ideas for the company, early on he noticed that first-time customers sometimes felt uneasy in the stores because of their lack of knowledge about fine coffees and because store employees sometimes came across as a little arrogant or superior to coffee beginner. Howard Schultz when came back from Italy shared his ideas for modifying the format of Starbucks’ store with Baldwin and Gordon Bowker. But instead of winning approval for trying out some of his ideas, Schultz encountered strong resistance but after a year Schultz succeeded in winning the approval from Baldwin and Bowker. * After sometime Baldwin and Bowker again went against th e ideas of Schultz so he became so frustrated and left Starbucks in late 1985 to open his own separate Espresso Bars in high-traffic down town locations. Schultz acquired Starbucks in 1987 and after the 20 months of acquiring, some employees felt unappreciated that there was a feeling of prior management had abandoned them. So, Schultz decided to make building a new relationship of mutual respect between employees and management. * Starbucks lost its money when it expanded market to Chicago because in Chicago that was the first downtown store opened on to the street rather than into the lobby of the building where it was located; in the winter months, customers were hesitant to go out in the wind and cold to acquire a cup of coffee. It was expensive to supply fresh coffee to the Chicago stores from Seattle warehouse. * The challenge to Starbucks, in Schultz view, was how to attract, motivate, and reward store employees in a manner that would make Starbucks a company that people would want to work for and that would generate enthusiastic commitment and higher level of customer service. * A values and principles â€Å"crisis† arose at Starbucks in 1989 when customers starting requesting nonfat milk in making Cappuccinos and lattes (an espresso coffee with frothy steamed milk) So, Starbucks started selling both fat milk and nonfat milk Cappuccinos and lattes. They were facing the issue of Wi-Fi (wireless internet service) in 2002, the number of accesses was in the millions by T-Mobile; internal research showed that the average connection last approximately 45 minutes So, in October 2003, Starbucks announced that they will expand Wi-Fi capability to additional locations and would have 2700 stores equipped wit h wireless Internet access by year end. * They were also facing challenges from their competitors. In 2003 there were an estimated 14000 specialty coffee outlets in the United States but they were not competent enough to exert pressure at Starbucks. Q. No. 05 What recommendations would you make to Howard Schultz to sustain the company growth and support strong financial performance in the years ahead? Recommendations After analyzing the whole case study, we became able to give few suggestions to Howard Schultz which can be handy to sustain the growth and support strong financial performance in the forthcoming years:- * He should spend more budgets on advertisement of products. He should bring innovations in his products because we saw in this case study that he was inspired by espresso bars so he imitated the whole theme of Italian espresso bars and the idea of dark roasted bean was an older one as well. * Before entering to any new geographical region he should study the market environment of that particular region as we saw that at Chicago there was an issue of cold weather and his store was at down-town-street. Furthermore, the labor rates and rents of building were higher as well. * At the stores Starbucks’ technique to teach customers about how to make coffee was not a good idea ecause it does not support their business model. Therefore, it should be avoided in future. Above elaborated things were having details about the strategies of Starbucks which drove it for the Global dominance till 2004. Starbucks is in fact the recognized and respected brand in the world and if it can overcome the shortcomings which we identified then nobody can create bother for it to be successful and there will be no point left as a mistake on its part. Reference www. starbucks. com Case Study â€Å"Starbucks in 2004: Driving for Global Dominance† written by Arthur A. Thompson, Amit J. Shah and Thomas F. Hawk. Starbucks Case Study Conner A Intro to Business 3/26/2013 Case Study Consumer Behavior in the Coffee Industry Did you know one franchise alone dominated an entire payment-processing market in just one year? You might have heard of this giant company by the name Starbucks. Howard Schultz, CEO of Starbucks, had a significant role in the company’s growth. Starbucks has steadily dominated the coffee market and has even extended to being a 3rd home for many of its consumers. Based in Seattle, Starbucks had significant competition when it opened its first store in the Pike Place market in Seattle, yet still managed to become superior.Starbucks used new advertising tactics and presented a unique experience for its customers, all of which was a game changer in the business world. Starbucks was created when three friends opened a small store to sell coffee beans and roast in 1971[1]. Jerry Baldwin, Gordon Bowler and Zev Siegl opened their store in the heart of the unique open air market in downtown Seattle . Located just off the harbor, Pike place market was the optimal location and attracted many residents and tourists.After ten years of incredible growth, Jerry Baldwin hired Howard Schultz as head of management. When Schultz first started, he slowly learned the coffee industry and helped made subtle but significant changes. For example, Schultz noticed that â€Å"first-time customers sometimes felt uneasy in the stores†[2] so he developed â€Å"customer-friendly sales skills and produced brochures that made it easy for customers to learn about fine coffees†2 Schultz had the vision of making Starbucks a coffee lounge versus a bar after being inspired by eastern traditions.Even though he did not agree with the new direction, Baldwin allowed Schultz to open one espresso bar and in 2 years, Schultz was able to buy out Baldwin and equity owners with the help of investors in 19921. Howard Schultz initially saw the power of consumer behavior early on when he realized Starbuck s began to be a social gathering mecca for people instead of just an espresso stand. When Schultz first noticed the ‘seismic change in consumer behavior,’ he adopted a free-Wi-Fi service and mobile payment service and noticed that Starbucks began to attract people as if it was a third home for coffee enthusiasts.Although he jokes about not getting rent from consumers, it allowed Starbucks to create an online-experience in their ‘3rd home’ which was unique to the coffee scene in the United States. With scheduled deliveries and privatized ad networking, Starbucks was maximizing its profits and allowing an experience for coffee enthusiasts that did not make them feel locked-into paying. This shift in consumer behavior was in response to the cultural need for a place between home and work. As social beings, humans thrive for an excuse to hang out and socialize or participate in a community environment.This amazing experience that Starbucks supplied needed to be fine-tuned like any business plan. Like any business, Starbucks had challenges, such as their management of spending. In an interview entitled Business Brilliant, Schultz said that too much was focused on the customer instead of the infrastructure. To improve this, Schultz developed a unique experience in the store with the paired pastry-drinks and released free Wi-Fi for customers. In addition to free-Wi-Fi, mobile payments allowed consumers to avoid lines and continue their private work in the confines of the lounge.Soon Starbucks was thriving and announced that â€Å"the opening of 150 new stores in five years significantly exceeded the 1987 business plan’s objective of 125†[3]. Like every company, Starbucks faced unique issues in their business which slowed down growth initially which in effect slowed down growth in the long run. Schultz attributed the biggest hold-back in the long run to not investing in the supply chain, technology or manufacturing. Although Sta rbucks was marketing their franchise extremely well, they did not invest ahead of the growth curve and the infrastructures became under-par.In the Business Brilliant, Schultz candidly admitted that Starbucks â€Å"solely accelerated growth of the company. † Moreover, Schultz said the issue was that Starbucks â€Å"needed competency well beyond the size of the company and needed the kind of capability they didn’t have. † Since their infrastructure’s efficiency in the short run was hindered by technological limitations coupled with access to capital, the entire store chains needed to be shut down. Schultz defined the event as a need to redesign their image and retrain their employees.Starbucks was losing grip on the customers and their loyalty because the experience of Starbucks was losing its unique features. All of these internal and external issues that Starbucks was facing were all connected with values and company image according to Schultz. Schultz wa s so specific with the Starbucks experience that when he smelt burning cheese in a store he decided to ask the workers and they told him â€Å"So what, profits are up! † Soon after this, Schultz decided to close down and retrain all stores and employees. He sent out a press release admitting that Starbucks was misrepresenting itself.Although no one had accused or criticized Starbuck’s prior to his declaration, it was a bold move which negatively impacted the financial strength of the Company. However, the action proved loyal to the consumer and enhanced brand loyalty for Starbuck-addicts. This root issue of misrepresentation in the Starbuck’s experience and the company vision was so significant to Schultz that he needed rework his company from the ground up. This road block of ‘conserving the core businesses’ and ‘pushing for relevant innovation’ made Schultz tweak and adjust the Starbucks experience constantly but effectively.While Sch ultz attributes the root issue for Starbucks to be company image and adapting core values, could it be possible that the vision and image were not correctly portrayed because of unwise funding? Schultz does admit the funding issues contributed to the core issue of misrepresentation of company image and values, but he does not see the two issues in separate environments. Schultz assigns the core issue to misrepresentation and the surface symptoms to be funding. However, more funding or a different funding plan with more focus in infrastructure would have changed the outcome.The core issue was funding and the symptoms of the core issues were misrepresentation because of resource allocation. While their short term fixed costs of infrastructure and labor were solved, their reserved and recurring allocation towards the upgrades of their infrastructure lacked significantly. If properly funded before and seen ahead of the curve, their growth could have been anticipated. This is evident thr ough the need to shut down and retrain employees. It’s clear that the total fixed and variable costs exceeded their revenue initially.Like all companies, there was a start-up curve but when the curve was dealt with, resource allocation was not the focus. The best plan of action ideally would start with addressing resource allocation. Starbucks was able to stay in business and have great growth so it’s clear the management was able to properly allocate their average variable costs and fixed costs for the most part. Nevertheless, it would have been best if the costs were optimized and revenue was set aside for changes in infrastructure. Funding should have been directed at things which would have produced stability in the long run.This would have lowered their total costs and properly funded their infrastructures for the long run and short run. Schultz should have looked at the management immediately after buying out the company and properly hired people with skills that would be able to guide Starbucks through significant growth. Investment in infrastructure to avoid long-term costs would have saved Starbucks from funding issues at later times. In addition to optimizing their infrastructure for the long run, Starbucks needed to invest more in manufacturing and supply chain for the success in the long run.For example, Starbucks should have initially allocated more funding towards small upgrades in their infrastructure such as ovens versus microwaves to avoid unpleasant scents in the customer’s experience. This also connects to Schultz’s emphasis on hiring employees and affiliates based on similar values. If the decision to hire those employees would have initially been more focused on similar values in addition to management skills, the variable costs to upgrade the infrastructure in the long run would have been lower because the management would have been more motivated to deal with the issue before the CEO had to see the symptoms.Fi nally, the management of Starbucks needed to choose their employee’s more wisely from the start. If Schultz would have chosen his employee’s based on the similarity of their values and the company vision, little issues such as smell in the customer’s experience would have been dealt with more efficiently. This connects to optimizing their infrastructure but focuses on the employees instead of the technology. It’s important to treat both with separate solutions because Schultz reminded us that the employees can only work with the assets they are provided with.This small change in the focus of the start-up of the company could benefit the image of Starbucks very efficiently and in a cost-productive way. Schultz jokes about not getting rent from Starbucks admirers yet he also notes that the potential to plug into the social media of the internet and create the environment was more beneficial than the issue of customers hanging out inside the store. The evolv ing Starbucks experience caused consumers to have incredible brand loyalty over alternatives such as Pete’s Coffee and Tea and Tullies.Yet the quick and agile response of technology was exactly what Starbucks needed to put it ahead of the ‘growth curve’ in social media while its competitors struggled behind. Schultz’s solutions were effective in the short run but he still realized his long run potential was limited by resource allocation. The problem with Starbucks and consumers was not the shift in demand for coffee consumers but it was resource allocation and initial planning. Howard Schultz’s plan of action was headed in the right direction apart from the minor mix-up between the surface symptoms and the core issue.In addition to new work practices, Schultz integrated new management and had to let go many of the people he knew were limited to the knowledge of the short-term. This new resource allocation towards what Schultz called ‘the back side’ of the company, allowed the company to finally resolve its funding and allocation issues. The new plan of action consisted of hiring new employees and investing in infrastructure to anticipate growth and new forms of technology; the poor management habits of the past from would not hinder Starbucks in the future.Similar to my suggested plan of action, Schultz’s initiative consisted of new employee’s, new technology and investing in the short term. If Schultz’s would have put more funding towards infrastructure to bring stability in the long run, he would have been able to manage the shift in consumer behavior and maintain profit without the need to close down the stores for retraining. The issue for Starbucks is not losing customers but how to accurately represent the company’s values. Moreover, if the employees were chosen correctly and the infrastructure was properly optimized, Schultz plan would have worked perfectly.All in all, every comp any in any industry is going to face challenges and have limited resources to meet them in an efficient manner. Howard Schultz used the resources he had to best manage Starbucks and handled the big issues he had efficiently and creatively. The future of Starbucks all depends on its management and commitment to adhering to the company vision and values. After experiencing the 2000-2008 period, one can see that the values will inevitably shift with changes in management. 4] The future of Starbucks is highly dependent on how long Howard Schultz continues to be an active part of the company and in shaping its vision. If affiliates and employees are chosen intelligently and have values matched properly with the company’s mission, Starbucks’s vision should be passed down effectively through each generation of new management. Nevertheless, the rise and fall of competitors in a market is inevitable and time will tell if Starbucks will eventually be surpassed by a competitor. S tarbucks will be a primary educational focus for many business programs.It is one of the best managed franchises in history and will remain one of the most successful for a long period of time. Like any business, Schultz received criticism for extreme responses yet these responses excelled the growth of the company. Much like my suggestions, Schultz acted quickly and made extreme changes which were crucial to repairing the infrastructure. Unlike most companies, Starbucks’s major focus is promoting the company image and values instead of putting profits first. Works Cited I. Schiff, Lewis. â€Å"Starbucks CEO Howard Schultz Coming to NYC. Inc. com. INC, 18 Mar. 2011. Web. 25 Mar. 2013. II. â€Å"Starbucks Corporation History. † History of Starbucks Corporation – FundingUniverse. Funding Universe, n. d. Web. 25 Mar. 2013. III. McGraw Hill. â€Å"Starbucks Corporation. † Starbucks Case Study. MHHE. com, n. d. Web. 25 Mar. 2013. ———†”———– [1] Funding Universe, Starbucks Corporate History [2] McGraw Hill, Starbucks Case Study, Starbucks Corporate History [3] McGraw Hill, Starbucks Case Study, Starbucks Corporate History [4] Funding Universe, Starbucks Corporation History Starbucks Case Study Starbucks in 2004: Driving for Global Dominance Strategic Management STRA 703 Assignment Prepared by: Sherif Hendi (M1100758) Presented to: Dr. Gamal Shehata Questions Q. NO. 1 What are the key elements of Starbucks strategy as of 2004? (What is the store concept, the customer offerings and differentiators? The expansion strategy? The financial strategy? The personnel management and social responsibilities? Conduct a five forces analysis? ) Q. No. 02 What was the original strategic vision and objectives and how did they evolve? What is your opinion of Starbucks’ mission statement? What grade would you give Howard Schultz for his job as the CEO Starbucks and why? Q. No. 3 What is your assessment of Starbucks financial performance during years 1998-2003? (Growth rates, profitability, control of major cost categories, financing, ROE, and P/E ratio? ) Q. No. 04 What were the key issues faced by Starbucks in 2004? Q. No. 05 What recommendations would you make to Howard Schultz to sustain the company growth and support strong financial performance in the years ahead? Q. NO. 1 What are the key elements of Starbucks strategy as of 2004? ANS: Key Elements of Starbucks’ Strategy Starbucks adopted a lot of innovative strategies throughout its journey from 1971 to 2004. These strategies in brief are as follows:- * The restaurant/store concept * The offering of Innovative product line * Differentiation from competition * National and international expansion * Distribution channels (Pepsi partnership/online store/Dreyer partnership) * Efficient Financial management (Centralized Information Systems) * Capitalizing on enhancing the people element * Engaging in social responsibility programs (CARE). Competitive Advantages or Differentiators Their differentiating elements are as follows:- They were the pioneers to introduce espresso bar idea in USA * Mail order sales * Word of mouth marketing * Employee motivation strategies to attain improved employee commitment * Convenient distribution channels * Introducing chemical free cultivation process. Q. No. 02 What grade would you give Howard Schultz for the job he has done as CEO of Starbucks? Be prepared to support you r answer based on how well (or not so well) he has performed the five tasks of strategic management discussed in Chapter 2. ANS: Howard Shultz gets a grade of 95% in his Strategic Management approach. In my opinion Howard Shultz just didn’t do perfect in the area of marketing as he did not spend adequate budgets on advertising and product innovation. Last but not the least is that he did not attempt to study the environment properly while entering into new geographical areas e. g. he opened a store down street in Chicago which was not a good idea due to cold weather conditions. Other than that, he made a great task of performing all the five tasks of Strategic Management Q. No. 3 What was Howard Schultz’s original strategic vision for Starbucks? Is his present strategic vision for Starbucks different from the one he had in the 1980s? How many times has his strategic vision changed? Is his present strategic vision likely to undergo further evolution? ANS: Howard Shultz original Strategic Vision â€Å"To establish Starbucks as the most recognized and respected brand in the world. † Strategic Objectives * They wanted to have 15,000 stores by the year-end 2005. * They aimed to provide a great work environment and treat each other with respect and dignity. * They believed in taking on diversity as an essential component in the way they do business. * To apply the highest standards of excellence to the purchasing, roasting and fresh delivery of coffee. To develop loyal and satisfied customers all of the time. * To contribute positively to their communities and environment, and recognize that profitability is essential to future success of business. How did they evolve? At the earlier stages they promised themselves that they will not leave even a single stone unturned to make Starbucks the most recognized and re spected brand in the world. Therefore, they thought that this could only be possible if they will develop these strategic objectives because these are basis to earn the respect and fame for any business. Q. No. 3 What is your assessment of Starbucks financial performance during years 1998-2003? (Growth rates, profitability, control of major cost categories, financing, ROE, and P/E ratio? ) Growth Rate| Years| 1998| 1999| 2000| 2001| 2002| 2003| Growth rate| 0| 0. 2889| 0. 29095| 0. 2164| 0. 2415| 0. 2391| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Profitability| Years| 1998| 1999| 2000| 2001| 2002| 2003| Operating profit margin | 8. 34| 9. 29| 9. 4| 10. 57| 9. 6183| 10. 42| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ROE| Years| 1998| 1999| 2000| 2001| 2002| 2003| Return on equity| 8. 6| 1. 58| 8. 23| 13. 1| 18. 35| 12| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Price Per Earning Share| Years| 1998| 1999| 2000| 2001| 2002| 2003| Price Per Earning Share| 0. 19| 0. 27| 0. 24| 0. 46| 0. 54| 0. 67| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Control of Major Cost Categories In this portion we have analyzed that how Starbucks controlled its fixed cost. If we talk about the locations, it was very expensive to purchase land and then develop it as a store, so to overcome this problem Starbucks started leasing the land for long term periods. In our opinion, it was a quit impressive move to cut down its fixed cost. Secondly they observed that to get the license was too costly for them, so they made contracts with the partners who had license with them. Financing For the financing, Starbucks instead of taking loans preferred raising the equity. It was a better idea to generate capital because they did not have to pay any short term and long term interests against the borrowings. Q. No. 04 What were the key issues faced by Starbucks in 2004? Every company faces major challenges, even companies that are as successful as Starbucks. Although they have an outstanding reputation, have won many awards like top sustainable retail store award and most ethical company award etc, and even give back to their community, they are still facing challenges like any other company. Following are the most obvious challenges that Starbucks is dealing with:- * Schultz was overflowing with the ideas for the company, early on he noticed that first-time customers sometimes felt uneasy in the stores because of their lack of knowledge about fine coffees and because store employees sometimes came across as a little arrogant or superior to coffee beginner. Howard Schultz when came back from Italy shared his ideas for modifying the format of Starbucks’ store with Baldwin and Gordon Bowker. But instead of winning approval for trying out some of his ideas, Schultz encountered strong resistance but after a year Schultz succeeded in winning the approval from Baldwin and Bowker. * After sometime Baldwin and Bowker again went against th e ideas of Schultz so he became so frustrated and left Starbucks in late 1985 to open his own separate Espresso Bars in high-traffic down town locations. Schultz acquired Starbucks in 1987 and after the 20 months of acquiring, some employees felt unappreciated that there was a feeling of prior management had abandoned them. So, Schultz decided to make building a new relationship of mutual respect between employees and management. * Starbucks lost its money when it expanded market to Chicago because in Chicago that was the first downtown store opened on to the street rather than into the lobby of the building where it was located; in the winter months, customers were hesitant to go out in the wind and cold to acquire a cup of coffee. It was expensive to supply fresh coffee to the Chicago stores from Seattle warehouse. * The challenge to Starbucks, in Schultz view, was how to attract, motivate, and reward store employees in a manner that would make Starbucks a company that people would want to work for and that would generate enthusiastic commitment and higher level of customer service. * A values and principles â€Å"crisis† arose at Starbucks in 1989 when customers starting requesting nonfat milk in making Cappuccinos and lattes (an espresso coffee with frothy steamed milk) So, Starbucks started selling both fat milk and nonfat milk Cappuccinos and lattes. They were facing the issue of Wi-Fi (wireless internet service) in 2002, the number of accesses was in the millions by T-Mobile; internal research showed that the average connection last approximately 45 minutes So, in October 2003, Starbucks announced that they will expand Wi-Fi capability to additional locations and would have 2700 stores equipped wit h wireless Internet access by year end. * They were also facing challenges from their competitors. In 2003 there were an estimated 14000 specialty coffee outlets in the United States but they were not competent enough to exert pressure at Starbucks. Q. No. 05 What recommendations would you make to Howard Schultz to sustain the company growth and support strong financial performance in the years ahead? Recommendations After analyzing the whole case study, we became able to give few suggestions to Howard Schultz which can be handy to sustain the growth and support strong financial performance in the forthcoming years:- * He should spend more budgets on advertisement of products. He should bring innovations in his products because we saw in this case study that he was inspired by espresso bars so he imitated the whole theme of Italian espresso bars and the idea of dark roasted bean was an older one as well. * Before entering to any new geographical region he should study the market environment of that particular region as we saw that at Chicago there was an issue of cold weather and his store was at down-town-street. Furthermore, the labor rates and rents of building were higher as well. * At the stores Starbucks’ technique to teach customers about how to make coffee was not a good idea ecause it does not support their business model. Therefore, it should be avoided in future. Above elaborated things were having details about the strategies of Starbucks which drove it for the Global dominance till 2004. Starbucks is in fact the recognized and respected brand in the world and if it can overcome the shortcomings which we identified then nobody can create bother for it to be successful and there will be no point left as a mistake on its part. Reference www. starbucks. com Case Study â€Å"Starbucks in 2004: Driving for Global Dominance† written by Arthur A. Thompson, Amit J. Shah and Thomas F. Hawk. Starbucks Case Study Conner A Intro to Business 3/26/2013 Case Study Consumer Behavior in the Coffee Industry Did you know one franchise alone dominated an entire payment-processing market in just one year? You might have heard of this giant company by the name Starbucks. Howard Schultz, CEO of Starbucks, had a significant role in the company’s growth. Starbucks has steadily dominated the coffee market and has even extended to being a 3rd home for many of its consumers. Based in Seattle, Starbucks had significant competition when it opened its first store in the Pike Place market in Seattle, yet still managed to become superior.Starbucks used new advertising tactics and presented a unique experience for its customers, all of which was a game changer in the business world. Starbucks was created when three friends opened a small store to sell coffee beans and roast in 1971[1]. Jerry Baldwin, Gordon Bowler and Zev Siegl opened their store in the heart of the unique open air market in downtown Seattle . Located just off the harbor, Pike place market was the optimal location and attracted many residents and tourists.After ten years of incredible growth, Jerry Baldwin hired Howard Schultz as head of management. When Schultz first started, he slowly learned the coffee industry and helped made subtle but significant changes. For example, Schultz noticed that â€Å"first-time customers sometimes felt uneasy in the stores†[2] so he developed â€Å"customer-friendly sales skills and produced brochures that made it easy for customers to learn about fine coffees†2 Schultz had the vision of making Starbucks a coffee lounge versus a bar after being inspired by eastern traditions.Even though he did not agree with the new direction, Baldwin allowed Schultz to open one espresso bar and in 2 years, Schultz was able to buy out Baldwin and equity owners with the help of investors in 19921. Howard Schultz initially saw the power of consumer behavior early on when he realized Starbuck s began to be a social gathering mecca for people instead of just an espresso stand. When Schultz first noticed the ‘seismic change in consumer behavior,’ he adopted a free-Wi-Fi service and mobile payment service and noticed that Starbucks began to attract people as if it was a third home for coffee enthusiasts.Although he jokes about not getting rent from consumers, it allowed Starbucks to create an online-experience in their ‘3rd home’ which was unique to the coffee scene in the United States. With scheduled deliveries and privatized ad networking, Starbucks was maximizing its profits and allowing an experience for coffee enthusiasts that did not make them feel locked-into paying. This shift in consumer behavior was in response to the cultural need for a place between home and work. As social beings, humans thrive for an excuse to hang out and socialize or participate in a community environment.This amazing experience that Starbucks supplied needed to be fine-tuned like any business plan. Like any business, Starbucks had challenges, such as their management of spending. In an interview entitled Business Brilliant, Schultz said that too much was focused on the customer instead of the infrastructure. To improve this, Schultz developed a unique experience in the store with the paired pastry-drinks and released free Wi-Fi for customers. In addition to free-Wi-Fi, mobile payments allowed consumers to avoid lines and continue their private work in the confines of the lounge.Soon Starbucks was thriving and announced that â€Å"the opening of 150 new stores in five years significantly exceeded the 1987 business plan’s objective of 125†[3]. Like every company, Starbucks faced unique issues in their business which slowed down growth initially which in effect slowed down growth in the long run. Schultz attributed the biggest hold-back in the long run to not investing in the supply chain, technology or manufacturing. Although Sta rbucks was marketing their franchise extremely well, they did not invest ahead of the growth curve and the infrastructures became under-par.In the Business Brilliant, Schultz candidly admitted that Starbucks â€Å"solely accelerated growth of the company. † Moreover, Schultz said the issue was that Starbucks â€Å"needed competency well beyond the size of the company and needed the kind of capability they didn’t have. † Since their infrastructure’s efficiency in the short run was hindered by technological limitations coupled with access to capital, the entire store chains needed to be shut down. Schultz defined the event as a need to redesign their image and retrain their employees.Starbucks was losing grip on the customers and their loyalty because the experience of Starbucks was losing its unique features. All of these internal and external issues that Starbucks was facing were all connected with values and company image according to Schultz. Schultz wa s so specific with the Starbucks experience that when he smelt burning cheese in a store he decided to ask the workers and they told him â€Å"So what, profits are up! † Soon after this, Schultz decided to close down and retrain all stores and employees. He sent out a press release admitting that Starbucks was misrepresenting itself.Although no one had accused or criticized Starbuck’s prior to his declaration, it was a bold move which negatively impacted the financial strength of the Company. However, the action proved loyal to the consumer and enhanced brand loyalty for Starbuck-addicts. This root issue of misrepresentation in the Starbuck’s experience and the company vision was so significant to Schultz that he needed rework his company from the ground up. This road block of ‘conserving the core businesses’ and ‘pushing for relevant innovation’ made Schultz tweak and adjust the Starbucks experience constantly but effectively.While Sch ultz attributes the root issue for Starbucks to be company image and adapting core values, could it be possible that the vision and image were not correctly portrayed because of unwise funding? Schultz does admit the funding issues contributed to the core issue of misrepresentation of company image and values, but he does not see the two issues in separate environments. Schultz assigns the core issue to misrepresentation and the surface symptoms to be funding. However, more funding or a different funding plan with more focus in infrastructure would have changed the outcome.The core issue was funding and the symptoms of the core issues were misrepresentation because of resource allocation. While their short term fixed costs of infrastructure and labor were solved, their reserved and recurring allocation towards the upgrades of their infrastructure lacked significantly. If properly funded before and seen ahead of the curve, their growth could have been anticipated. This is evident thr ough the need to shut down and retrain employees. It’s clear that the total fixed and variable costs exceeded their revenue initially.Like all companies, there was a start-up curve but when the curve was dealt with, resource allocation was not the focus. The best plan of action ideally would start with addressing resource allocation. Starbucks was able to stay in business and have great growth so it’s clear the management was able to properly allocate their average variable costs and fixed costs for the most part. Nevertheless, it would have been best if the costs were optimized and revenue was set aside for changes in infrastructure. Funding should have been directed at things which would have produced stability in the long run.This would have lowered their total costs and properly funded their infrastructures for the long run and short run. Schultz should have looked at the management immediately after buying out the company and properly hired people with skills that would be able to guide Starbucks through significant growth. Investment in infrastructure to avoid long-term costs would have saved Starbucks from funding issues at later times. In addition to optimizing their infrastructure for the long run, Starbucks needed to invest more in manufacturing and supply chain for the success in the long run.For example, Starbucks should have initially allocated more funding towards small upgrades in their infrastructure such as ovens versus microwaves to avoid unpleasant scents in the customer’s experience. This also connects to Schultz’s emphasis on hiring employees and affiliates based on similar values. If the decision to hire those employees would have initially been more focused on similar values in addition to management skills, the variable costs to upgrade the infrastructure in the long run would have been lower because the management would have been more motivated to deal with the issue before the CEO had to see the symptoms.Fi nally, the management of Starbucks needed to choose their employee’s more wisely from the start. If Schultz would have chosen his employee’s based on the similarity of their values and the company vision, little issues such as smell in the customer’s experience would have been dealt with more efficiently. This connects to optimizing their infrastructure but focuses on the employees instead of the technology. It’s important to treat both with separate solutions because Schultz reminded us that the employees can only work with the assets they are provided with.This small change in the focus of the start-up of the company could benefit the image of Starbucks very efficiently and in a cost-productive way. Schultz jokes about not getting rent from Starbucks admirers yet he also notes that the potential to plug into the social media of the internet and create the environment was more beneficial than the issue of customers hanging out inside the store. The evolv ing Starbucks experience caused consumers to have incredible brand loyalty over alternatives such as Pete’s Coffee and Tea and Tullies.Yet the quick and agile response of technology was exactly what Starbucks needed to put it ahead of the ‘growth curve’ in social media while its competitors struggled behind. Schultz’s solutions were effective in the short run but he still realized his long run potential was limited by resource allocation. The problem with Starbucks and consumers was not the shift in demand for coffee consumers but it was resource allocation and initial planning. Howard Schultz’s plan of action was headed in the right direction apart from the minor mix-up between the surface symptoms and the core issue.In addition to new work practices, Schultz integrated new management and had to let go many of the people he knew were limited to the knowledge of the short-term. This new resource allocation towards what Schultz called ‘the back side’ of the company, allowed the company to finally resolve its funding and allocation issues. The new plan of action consisted of hiring new employees and investing in infrastructure to anticipate growth and new forms of technology; the poor management habits of the past from would not hinder Starbucks in the future.Similar to my suggested plan of action, Schultz’s initiative consisted of new employee’s, new technology and investing in the short term. If Schultz’s would have put more funding towards infrastructure to bring stability in the long run, he would have been able to manage the shift in consumer behavior and maintain profit without the need to close down the stores for retraining. The issue for Starbucks is not losing customers but how to accurately represent the company’s values. Moreover, if the employees were chosen correctly and the infrastructure was properly optimized, Schultz plan would have worked perfectly.All in all, every comp any in any industry is going to face challenges and have limited resources to meet them in an efficient manner. Howard Schultz used the resources he had to best manage Starbucks and handled the big issues he had efficiently and creatively. The future of Starbucks all depends on its management and commitment to adhering to the company vision and values. After experiencing the 2000-2008 period, one can see that the values will inevitably shift with changes in management. 4] The future of Starbucks is highly dependent on how long Howard Schultz continues to be an active part of the company and in shaping its vision. If affiliates and employees are chosen intelligently and have values matched properly with the company’s mission, Starbucks’s vision should be passed down effectively through each generation of new management. Nevertheless, the rise and fall of competitors in a market is inevitable and time will tell if Starbucks will eventually be surpassed by a competitor. S tarbucks will be a primary educational focus for many business programs.It is one of the best managed franchises in history and will remain one of the most successful for a long period of time. Like any business, Schultz received criticism for extreme responses yet these responses excelled the growth of the company. Much like my suggestions, Schultz acted quickly and made extreme changes which were crucial to repairing the infrastructure. Unlike most companies, Starbucks’s major focus is promoting the company image and values instead of putting profits first. Works Cited I. Schiff, Lewis. â€Å"Starbucks CEO Howard Schultz Coming to NYC. Inc. com. INC, 18 Mar. 2011. Web. 25 Mar. 2013. II. â€Å"Starbucks Corporation History. † History of Starbucks Corporation – FundingUniverse. Funding Universe, n. d. Web. 25 Mar. 2013. III. McGraw Hill. â€Å"Starbucks Corporation. † Starbucks Case Study. MHHE. com, n. d. Web. 25 Mar. 2013. ———†”———– [1] Funding Universe, Starbucks Corporate History [2] McGraw Hill, Starbucks Case Study, Starbucks Corporate History [3] McGraw Hill, Starbucks Case Study, Starbucks Corporate History [4] Funding Universe, Starbucks Corporation History

Technology and the Inevitable Effect - 1460 Words

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