Control Mechanisms and the Starbucks Corporation The purpose of this paper is to identify four types of control mechanisms, feed-forward, concurrent, feedback, and financial, and their application in the Starbuck Corporation. The control mechanisms are compared and contrasted along with determining the effectiveness of these control mechanisms, and examining the positive and negative reactions. Finally, students will explain how these controls affect the four functions of management.
Control Mechanisms
Every business needs to have controls in place to remain competitive and survive in business. Without controls, the company would operate in chaos for a short period before the business collapses. When operating a business, a
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The information gained from concurrent controls enables Starbucks to keep a pulse on the heart of their business. Today, Starbucks is second only to Caribou in market capitalization (Yahoo, 2010).
Feedback control happens after every event and helps Starbucks stay within acceptable standards. Starbucks takes pride in their ability to use feedback to be creative, innovative, and responsive to their stakeholders. For example, management noticed the need for health benefits in the late 1980s for their employees. Feedback also brought the introduction of Wi-Fi, which helped make their coffee shops a community gathering place. Most recently, Starbucks revamped its food offerings to items made without artificial flavors, trans-fats, dyes, and high-fructose corn syrup (Starbucks, 2010). The effectiveness of Starbucks feedback controls allows them to try new ways of doing business and helps secure their success.
Financial controls have been another key component to Starbucks’ success. They monitor the individual cash flow from each store all the way up to the CFOs of Starbucks. Store managers can determine the stores needs based on proper information from the financial controls. An effective illustration of this is Starbucks’ more than 550 specialty cafes and kiosks in North America (Starbucks, 2010). The kiosks serve freshly brewed coffee to the public and provide instant
Overall Strength: in general, the article provides structure to a concept that is very intangible by: (a) describing the nature and the functions of control; (b) segregating the MCS into categories: core control system, organizational structure, and organizational culture; (c) illustrating how to apply the control model (satisfied my approach) (d) provides a basis for designing and evaluating the system. The manner, in which the model is presented, with its use of figures, further emphasizes the structure of the model. See below on further emphasis on parts (a) -(c).
* Starbucks has a reputation for new product development and creativity. However, they remain vulnerable to the possibility that their innovation may falter over time.
Starbucks is dominant coffee brand in North America, which also is well-known worldwide. Established in 1971 as coffee shop oriented to a niche of coffee purists, in late 1980’s it turned to be a constantly growing chain of stores that sold whole-beans and premium-priced coffee to mostly affluent, well-educated customers. In years 1992-2002 company was showing at least 5% annual growth. And by 2002 Starbucks was serving already 20M customers in 5886 stores (both operated and licensed) around the globe, had $3.3 billion net revenues and was opening 3 new stores a day in average.
Since Starbucks entered the coffee retail business, the company has made many trade-off business decisions. The first major trade-off was made when Howard Schultz wanted to acquire present day Starbucks from three entrepreneurs Baldwin, Siegel and Bowker. Therefore, Schultz prior to the acquisition made the trade-off to open his own coffee bar in 1986 instead of staying at Starbucks as the manager of retail sales and marketing. A bold feat, Schultz was able to replicate success and was offered to buy Starbucks for $4 million. At the time of the acquisition, many investors, including the former Starbucks owners, would not expect that the American consumer would pay a premium for coffee products. Schultz, after calculating the opportunity cost, was convinced that Starbucks would become a large coffee chain not only in the United States but internationally too. Reflecting this approach, Schultz’s trade-off worked. Starbucks, according to our book has revenue exceeding $13 billion and nearly 200,000 employees. The company has also expanded to 40 countries with 17,000 stores (Hill et al., 2015).
Starbucks is rated as the number one World’s leading coffee distributor. Customers satisfactions are always be in the center of their business and the company works consistently to maintain it as customer look forward to a unique experience when visiting one of Starbuck stores. With over 12,000 stores worldwide, Starbucks has always aimed at achieving and maintaining competition in the industry. Starbucks success reside in many factors : the company is admire and respected worldwide,employees are recognized and respected for what they contribute to the success of the company. Open communication
Starbucks uses a variety of organizations and resources to help ensure that the company remains one of the world’s most popular companies. There are process that are put into place within and outside of the company that focus on what can help improve the already business savoy corporation.
starbucks Corp., an international coffee and coffeehouse chain based in Seattle, Washington, has expanded rapidly since its opening in 1971. These outrageous success was due to its well-developed strategy vision which lay out the company's strategic course in developing and strengthening its business. Starbucks is a global corporation that sells authentic coffee in 30 countries, reporting revenues of nearly $5.1 billion in 2006. The main goal of Starbucks is to embrace diversity by applying the highest standards of excellence. Starbucks strives to perfect the relationship with the working class by making the service as fast as possible because they believe that every customer has their own personal rate. One
Starbucks financial statements were analyzed for the fiscal year ended September 27, 2015. Like all public companies, annual and quarterly financial statements are required to allow regulators and other interested parties to analyze the financial status and management decision making of the company. This analysis focuses on the results of Starbucks most recent published annual report containing their balance sheets, statement of earnings and cash flows. These statements will be analyzed against the results of one of its competitors, Dunkin Donuts, to investigate how the two companies compare to each other. It was noted that Starbucks and Dunkin Donuts do not have corresponding fiscal year ends. The data therefore is not directly comparable since the reports do not reflect the same time period of data but should provide additional insight. The paper will attempt to provide a brief analysis of Starbucks operations in terms of its liquidity, leverage, activity, profitability and growth ratios used by analysts in the industry.
My example of a company that utilizes most, if not all the controls listed in chapter 5 is Pep Boys Automotive Retail. The Pep Boys business is one of the premier automotive retailers with stores located throughout the United States. Given their volume, I believe Pep Boys execs strictly enforces the company’s policies with their management staff to ensure an internally structured environment. One of the most important control methods that Pep Boys should use is to hold their managers accountable for financial profitability,
Controlling is monitoring the performance of the organization, identifying deviations between planned and actual results, and taking corrective action when necessary. With all these four functions that are involved in the process of management, if all are followed correctly the organization will be properly ran and will have few complications.
The purpose of this paper is to analyze a case study related to issue of control and how organizations can utilize different approaches of control in order to improve quality and performance in all arenas, domestic and global. The focus of this case revolves around Lincoln Electric, an Ohio based company that has set the bar for how to develop and implement a successful management system. This paper will use the Lincoln Electric case analysis to present recommendations on how managers can use control methods to enhance employee performance, increase employee participation and empowerment, and improve organizational quality in
Starbucks’ shares have grown more than 1500% over the past decade. Financially, it has been an oak tree in an ever changing economy with customers that have ever changing demands. However, there has been increased concern for the financial viability of the coffee shop a recently announced plan to close down over 600 stores that were said to be underperforming domestically. That means that more than 1,000 jobs will be eliminated. As scary as that is on the local front to top management, the executive staff feels that it is the only way to recover from it’s shocking $108.7M loss for the 2nd quarter this fiscal year.
business model may seem, there is plenty of hard work invested and financial risks taken to grow
In general the coffeehouse industry in the United States was experiencing an increase in coffee consumption per capita due to the “Starbucks effect”. At this time Starbucks was operating approximately 20,000 stores in the United States and was living a fast expansion strategy worldwide.
A good control system provides timely information to the manager which is very much useful for taking various decisions. Control simplifies supervision by pointing out the significant deviations from the standards of performance. It keeps the subordinates under check and brings discipline among them.