Organization Development Implemented in Starbucks

1. Organization Development
Implemented in Starbucks
Indiran MBS141104
Mohd Faizal MBS141114
Chia Wi Peaw MBS141106
Lee Yew Hoong MBS141102
Chong Kuen Soon MBS141133

2. Introduction
• To identify Organizational Development (OD)
process that implemented by Starbucks to
accomplish successful organization change
and performance.
– Solving problems and managing future change.

3. Industry Analysis
• Operates within the Specialty Eateries Industry.
• Company that sells specialty and premium food
products
– Baked bread, doughnuts, ice cream
– Non-alcoholic beverage like coffee, tea and chocolate
• The industry has grown steadily as rising
disposable income levels and higher consumer
spending.

4. Coffee Shops
•Starbucks
•Tully’s
•Peet’s Coffee
Doughnut Stores
•Dunkin
•Krispy Kreme
•Tim Hortons
Ice Cream Parlor
•Cold Stone
•Dairy Queen
•Baskin Robbin
Smoothies Stores
•Jamba Juice
•Smoothies King
Bakery Stores
•Auntie Anne’s
•Cinnabon
Major
Players in
Specialty
Eateries
Industry

5. Industry Value Chain
Cultivation Processing Preparing Consuming Disposal
• Resources are used along the process.
• Energy and fuel used produced carbon emission, ultimately
contributes to climate change and global warming.
• The impact of climate change on the agriculture sector has also
increase the pressure on the industry.
• They see the need to be sustainable in order to be more climate-
resilient.

6. Historical Background
• 30 March 1971
• 2000 Western Avenue, Seattle,
Washington

7. • Founded by Zev Siegl, Jerry
Baldwin and Gordon Bowker

9. • Moved to 1912 Pike
Place Market in
1976

10. • 1984: Peet’s share
was bought by the
other three
owners

11. • 1987: Howard Schultz became the sole
owner
 expansion of Starbucks

12. How does the name Starbucks
come?
• A character in
Herman Melville’s
Moby Dick (a classic
American novel on
19th century
whaling industry)

13. • Brainstorming
session: word
begins with “St”
• old mining map of
Cascade Range with
mining town
“Starbo”

14. Starbucks Logo
• twin-tailed mermaid, or siren (Greek
mythology)
• 1971-1986 : Starbucks siren was topless
and had a fully visible double fish tail,
likened to a melusine
• 1987-1991: breasts covered by hair,
primary colour changed from brown to
green
• 1992 - 2011: and only vestiges remain of
the fish tails
• 2011 till now: removing the Starbucks
wordmark around the siren, enlarging
the siren image, and making it green

15. Branches and Locations
• 1987: Waterfront Station, Vancouver, British
Colombia and Chicago, Illinois

16. • 1996: Tokyo, Japan
• Malaysia: 17 December 1998
• 17 November 2015: 200th branch
Kosmo! 10 December 2015

17. • As of September 2015…..
3
6
11
23
26
2

18. Products available in Starbucks
Drinks Food
• Bottled drinks • Smoothies  Bakery
• Freshly brewed coffee • Cold brew coffee  Bistro boxes
• Ice coffee • Blended beverages  Hot breakfast
• Espresso beverages • Kids’ drinks & others  Yogurt and fruits
• Chocolate beverages • Tea beverages  Starbucks petites
• Fizzio handcrafted
sodas
• Evolution fresh  Sandwiches, pannis &
salads
• Frappuccino blended
beverages

19. • Gift cards, Gift sets
• Tumblers, Cup and mugs
• Bookmarks, card holders
• Machines: coffee maker, grinder teapots & kettles
• Festive collection

20. Customers
• No.4 for best customer experience by Global
Customer Experience Management Survey in
2011

21. Employee
• All qualified applicants will receive consideration for
employment
• Starbucks College Achievement Plan allows employee
complete degree through Arizona State University

22. Management Team
• Good governance practice ensures business and affairs
accomplished according to stated goals and objectives, long
term interests of shareholder are obliged
• Independence requirements of the National Association of
Securities Dealers Automated Quotations (NASDAQ®) and U.S.
Securities and Exchange Commission

23. Board of Directors

24. SWOT Analysis
Strengths
•Diverse product portfolio
•Knowledgeable employees
•Brand Image and presence in other distribution channels
•Customer bond through value-added services

25. SWOT Analysis
Opportunities
•Entry into the health food market
•Emerging international retail markets
•Expanding in the single-serve coffee market

26. SWOT Analysis
Weaknesses
•High Prices
•Weakening US segment
•Brand image affected recalls
•Negative Publicity

27. SWOT Analysis
Threats
•Direct Competition
•Rising prices of supplies and commodity
•Economic state of US

28. Problem Statement
• For the business sustainability, Starbucks committed towards
the social responsibility & initiates to be more
environmentally friendly

29. Environmental Mission Statement
• Starbucks is committed to a role of environmental leadership
in all facets of our business.
• Understand environmental issues and share information with
our partners.
• Develop innovative and flexible solutions to bring about
change.
• Strive to buy, sell and use environmentally friendly products.

30. Environmental Mission Statement
• Recognise that fiscal responsibility is essential to our
environmental future.
• Instil environmental responsibility as a corporate value.
• Measure and monitor our progress for each project.
• Encourage all partners to share in our mission.

31. Problem Statement Cont.…
• Set goal to the areas of concern in Leadership in Energy
and Environmental Design (LEED) Certified Stores,
Recycling & Reducing Waste, Water & Energy
Conservation & Climate Change

32. Problem Statement Cont.…
• To develop a comprehensive recycling solution for its paper
and plastic cups by year 2012.
• To implement front of store recycling in its stores by year
2015.
• To serve 5 percent of beverages made in its stores in personal
tumblers by year 2015.
• To reduce energy by 25 percent in its company stores by year
2015.

33. Problem Statement Cont.…
• To purchase renewable energy equivalent to 100 percent of
the electricity used in its global company stores by year 2015.
• To reduce water consumption by 25 percent in its stores by
year 2015.
• To ensure 100 percent of its coffee is ethically sourced by
year 2015.
• To invest in farmers and their communities by increasing
farmer loans to & 20 million by year 2015.

34. Problem Statement Cont.…
• To improve farmers’ access to carbon market and help them
to generate additional income while protecting the
environment.
• To mobilize its employees and customers to contribute 1
million hours of community service per year by year 2015.
• To engage a total of 50,000 young people to innovate and
take action in their communities by year 2015.
• To build and to achieve ‘LEED’ certification to all its new
stores.

35. Challenges
• Struggling to meet the goal it set on recycle cups to 5% from
existing figure which is 25% of the beverages.
• Manages to decrease more than 17% since year 2008 but in
year 2011 the water used by Starbucks increased to 5% over
the year
• Completed the installation of energy management system in
its stores but the energy improvement only improved 4.6%
over its baseline level

36. Challenges
• Certified LEED international stores face technical challenges
due to the US based LEED certification program is still
developing.
• Stores located in the area that do not provide recycling
infrastructure and landlords who do not provide recycling
services.

37. Opportunities
• Gives the positive image to the consumers and its employees
• Studies show that companies support social and
environmental issues will give the 93% consumers positive
mindset on the organizational
• Employees in the organizational will continue serve and work
in the organizational where data proven less turnover and
employees become support to the organizational.

38. Opportunities
• Longterm marketing strategy for the Brand Image
• Attracting people who share the same mission and value to
join the organizational.
• Starbucks social responsibility gives the organizational
competitive advantage to enter to global market easily and to
secure the fair trade market share for coffee.

39. Model & Theory – Burke-Litwin Model
Transactional Change
OD intervention directed
towards structure,
management practices &
system (policies)
Transformational Change
OD intervention directed
towards mission &
strategy, leadership &
organization culture.
1st
Order Change
2nd
Order Change
Warner Burke

40. Action Plan
(Challenges & Opportunities)
• 5 Transactional & Transformational OD
Strategy was initiated by Schultz
1) The Social Entrepreneurship with Starbucks
2) Responsibility as an Organization to Reduce
Global Warming
3) Contribute to Mother Nature and Restoring the
Eco-system
4) Creating an Ethical Supply Chain from the Seed
to Distribution
5) Creating Pathways to Opportunities and
Employment in Global Communities

41. Social Entrepreneurship
• What is SE in Starbucks
– address Social or Environmental problem through
business
• How is SE implemented by Starbucks
– enforce all stores to practice and built by implementing
LEED ( Leadership in Energy & Environmental Design)
status
• efficiently utilize water(23% savings) and power (45%
savings)
• usage of energy saving LED
• design of venting airflow to reduce usage of air condition
• usage of customize paint, coatings materials to increase heat
dissipation
• usage of recycled wood for furniture created by convicts
Result : OD 1st
order change – management practice & policy

42. Organization to Reduce Global Warming
• How is it implemented in
Starbucks
– Invest in renewable energy
• restructuring their purchasing
practice
• purchase energy from wind
and solar source rather than
coal burning generators
• This also encouraged
renewable energy producers
to expand their wings
– Reduce greenhouse gas
emission
• control & measure on each
process of supply chain
– manufacturing plants
– store operation
– company-owned vehicles
Result : OD Transactional change – intervention towards struc

43. To Mother Nature & Ecosystem
• How is it implemented in Starbucks
– Cultivate recycling program
• tri-color bins - municipal to baristas
• discount and rebates for customer
– who do does not use Starbucks paper cups
– who uses own mugs and tumblers
• manage waste of milx box, syrups and juices in orderly manner
– Develop technology to produce recycled paper fibre as
packaging box
Result : OD 2nd
order change – change of structure & policy

44. Ethical Supply Chain
How is it implemented in Starbucks
Developed in collaboration with Conservation International (CI), C.A.F.E.
create a long-term supply of high-quality coffee and positively impact the lives
and livelihoods of coffee farmers and their communities.
Farmer Support Centers support farmers in creating farm management and work
plans to achieve their goals.
Result:
- Committed to 100% Ethically Sourced

45. Opportunity Youth
How is it implemented in Starbucks
•Statrbuck assist young peoples gain a skill throught training.
•Free tuitions fees for bachelor’s degree from Arizona State University (online
learning).
•Provide learining of customer servicing skills and hands-on experience for
cafeteria setup.
Result : With 73% of its store partners under the age of 24, Starbucks
committing 10% of all store hires to Opportunity Youth

46. Commitment to Community
How is it implemented in Starbucks
•Starbucks Foundation was founded to supported communities around the globe.
•In 2014, Starbucks gave USD11.4M for community projects, including Global Fund
through the partnership with RED
•Result:
-Nearly 60,000 volunteers participated from across 30 countries on continents
-More than 1,400 community service projects completed
-More than 156,000 hours of service contributed in just 30 days (that’s equivalent to
76 people working full-time for a year)
- Approx. $3.3 million (USD) of financial value invested in communities through service

47. Conclusion
• OD is a field of research, theory, and practice dedicated to
expanding the knowledge and effectiveness of people- to accomplish
more successful organizational change and performance.
• OD is a process of continuous diagnosis, action planning,
implementation and evaluation - with the goal of transferring knowledge and
skills to organizations to improve their capacity for solving problems and managing future
change.
• Starbucks illustrate the power of developing a company in a way
that consistent with the Organizational Development.
• An organization that positioned to be sustainably successful.