Effects of Starbucks on Other Shops essay

The process of business operations requires that a business becomes beneficial to its customers by acting as a model of business activities. The purpose of this paper involves an examination of business practices that result into impacts that ensures success of subsidiary businesses. It involves an examination of effects that a supplier can bring to its customers to benefit them in a similar manner to the levels of its success. This paper provides information on the benefits that can accrue to small businesses that are supplied with products from successful businesses. It acts as a reminder that it is possible to attain high levels of success by adopting operation principles of suppliers, as the taste and preferences of consumers are the same in both cases. Starbucks coffee manufacturers are chosen to serve as an illustration of a company that was able to transform the outcome of operations of its customer’s by improving their economic, cultural and innovative development in the sales of coffee. The main focus of this paper is to provide the impacts that resulted from the sales of coffee to small and medium businesses in the US and England.

Background of Starbucks

Starbucks was opened as a single coffee store in Seattle in 1971, when it provided some of the world’s finest fresh coffee beans. The brand was popular in romantic environments and coffee traders were interested in selling coffee from the company (Segal-Hor & Faulkner, 2008). In 1981, the popularity of coffee from Starbucks spread to other regions of the world, such as Italy, with high popularity of the product as being inspiring to human spirit as well as bringing a feeling of connection.

Currently, there are about 17000 stores in 55 countries where Starbucks is considered the main supplier of coffee. The company purchases high quality beans that bring taste satisfaction to its customers. It has also created a culture of love for coffee among people in the US and other countries operating (Michelli, 2007). Apart from the sales of coffee, the company also participates in the sales of pastries, and other delectable treats that are pleasing to its customers. Other products that are sold by the company include beverages, kids’ drinks and chocolate beverages, ice creams, sandwiches, Panini and wraps.

However, the practices of the company have led to its popularity in the sales of beverages. One of the beverages that have been successful in small-scale enterprises is coffee. The popularity of coffee from Starbucks has resulted into popularity of small-scale businesses where the company distributes its beverages. These companies have been successful in the same manner as Starbucks. In this paper, a study is conducted in small and medium enterprises in the US and England where the company has its branches. This paper provides the impacts that Starbucks has brought in these companies.


Economical Effects

Starbucks has focused on maximizing its profits by making profitability one of its core values in the US, but it has not been considered the most important condition for sustainability and good performance (Kurtz  & Boone, 2011). The company has focused on responsible business conduct as a significant factor. They have ensured that members are committed to provision of outputs that are satisfying to shareholders. The company has also gained popularity by investing in Nasdaq stock exchange under trading symbol SBUX. This has resulted into opening of stores in various parts of the USA as well as expansion into countries such as Japan and Singapore. This has resulted into a worldwide recognition of the company and the popularity of its coffee (Griffin, 2011). The company has also added locations where new products have been introduced while joint ventures and partnerships have also been created and the retail operations have resulted into increase in Starbucks revenues by 85 per cent, while the remaining revenues have been obtained from special operations. The table below shows a revenue summary for the period of 2001 - 2003.

Table 1

Starbucks Revenues From the Year 2001 to 2003

Characteristics/ Year




Net Earnings

$180.3 million

$212.6 million

$ 260.4 million

Earnings per share


$ 0.56

$ 0.65

Total income taxes

$107.7 million

$ 125.8 million

$ 164.8 million

Shareholder’s Equity

$ 1.4 million

$ 1.8 million

$ 2.2 million

Number of partners




Cultural Effects

Starbucks promotes empowerment of employees by introducing a culture of creating benefits for employees, a plan for empowering the employees through provision of training to employees. The employees are given 24 hour training and classes which range from  the history of coffee to the workshop consisting of five classes that are required to be completed by the employees in the first weeks when operating with the company. The company also ensures it provides benefits packages to both full-time and part-time employees. This involves medical provision and creation of visions for their organizations (Gilbert, 2008). The employees are also provided with paid vacation, free holidays and chemical or dependency benefits; they are also assisted by provision of savings programs as well as stocks options plan. Stocks options have also been used to create high turnover. This practice has made Starbucks the only company to provide stock options unilaterally t most of its workers.

Production and Design Innovation

Multiple channel distribution created by Starbucks involves provision of stand-alone stores setting up of cafes and carts in hospitals, banking institutions, offices and shopping centers. The company has also entered into a distribution agreement that involves coffee suppliers, hotel owners and airline companies. Coffee market has realized that office coffee market is an integral part of the market (Fellner, 2008). The use of Associated Services ensures that Starbucks provides coffee to a number of businesses in the US. The company has also entered into deals with airlines such as United Airlines to assist in providing Starbucks with provision of services to 76 million travelers each year. The company has also entered into a licensing agreement with coffee grocery stores in the US.

Effects of Starbuck on Small Coffee Shops in England

Economical Effects

The outlets in England have opted to go public by gaining access to funds that enable the growth from 500 coffee shops to 16000 shops around various parts of the world. At this state, it has been possible to create a number of initiatives such as engaging in ventures such and joint ventures with other companies such as Pepsi Co., which also produces cold coffee drinks and assisted in opening of more stores and outlets in various towns in England (Segal-Horn  & Faulkner, 2008). The company has entered into deals with community organizations with the aim of identifying staffs, opening branches and deals with the suppliers in England which results into reduction of impact on the environment. The company has also invested in areas where responses to public pressure are addressed. The advertisement process has been focused on the use of posters and employment of marketers, who sell the products to new market situations.

Cultural Effects

Starbucks outlets in England have been able to create employee loyalty by provision of the right amount of salaries that promote the working spirits of their customers. For instance, they have been provided with better pay. This has resulted into loyalty of employees to the organization and they have been able to serve customers with commitment, which in its turn has resulted into loyalty of customers to Starbucks coffee. Small scale enterprises in England have also ensured that they implement Starbucks business principle of listening to customers demands. For instance, when customers create conflicting conditions by preferring to use high-quality coffee in the shelves, the companies have to ignore their interests and opt to implement the requirements of customers.

Design and Innovation

Small scale enterprises in the supply chain consisting of 14 managers are located in various towns in London. Currently, this subsidiary has resulted into provision of experienced services to employees and the services provided by the experienced staffs that are able to come up with solutions to difficulties experienced in the organizations (Kurtz & Boone, 2011). Small-scale businesses in the supply chain have learnt customer satisfaction solutions that assist in making their customers loyal to their businesses. The group of employees has been innovative and able to come up with methods of developing merchandising approaches, provision of training and development of international management approaches.

Conditions have also been created where the designs of distribution outlets are able to create an air of excitement and novelty that gives the customers feeling of relax and get refreshment (Griffin, 2011). This has acted as a major boost in attracting the customers in the process of taking relaxation in these places.

Effects of Starbucks on Mid Sized Enterprises in England and USA

Effects on USA Small and Mid Sized Enterprises


Midsized companies such as restaurants in the US that are supplied with coffee and other products have been successful in obtaining the right market for their coffee such as high demand for their tea. This has led to high profitability and high chances of expansion into a variety of other operations such as venturing into other areas of business (Griffin, 2011). This has been attributed to reputation that relates these companies to Starbucks.

The operating principles used by Starbucks to reduce cost of operation have also been implemented by these companies. Consequently, costs of operation have been reduced and these companies have been able to get high profits.


Midsized companies have developed a culture of investing in the people by providing the best services at high standards of efficiency. This culture has been acquired from Starbucks which supplies them with coffee and other beverages that they use to produces other products for consumption (Fellner, 2008). These companies have also developed a culture of training their employees to serve their customers better. The training culture has been developed from Starbucks which is their main business associate. There has also been a culture of allowing employees to have vacations and leaves whenever they wish. These benefits to employees have been inspiring and they have always remained loyal to their companies.

Design and Innovation

The design of operations at Starbucks has influenced the design and operations of midsized enterprises in the US in a number of ways. It has been observed that these enterprises have designed their stores in a similar manner to that of Starbucks. For instance, restaurants have created customer’s lounge in a similar appearance to that of Starbucks. This has resulted into association of these enterprises to Starbucks and the outputs of these enterprises have always been high.

Effects on Mid Sized Enterprises in England


Due to their association with Starbucks as their supplier of beverage products, they have been able to get credit for expansion of their business by loans and financial assistance from Starbucks to improve their activities (Kurtz  & Boone, 2011). Expansion strategies used by Starbucks have also been implemented in expansion of small and midsized enterprises in England. This has resulted into high revenues from their operations in comparison to costs of operation.


Midsized companies in England have learnt that employee-managers relationship at Starbucks is one the factors that have led to its success. Consequently, most of these enterprises are currently using these strategies to relate with their employees. Despite their low experience in managing this kind of relationship, they have observed certain changes that are positive towards the success of their businesses.

Design and Innovation

The driver of sales growth through design and proper innovation of products and service ideas of Starbucks has been applied in a number of ways by small and medium sized enterprises in England to their advantage (Gilbert, 2008).  These include product and service development as a driver for sales growth. These companies have learnt to use competitive service strategies focused on custom technologies used by Starbucks they have also ensured that the client needs are understood.


There are certain actions that need to be taken by organizations to assist their small-scale customers build an adaptive capacity, and ensure a more resilient supply of chains is delivered.

One of the actions that companies can take is to raise awareness on the need to create an effort of understanding and evaluating customers and the changes that are need to be implemented to improve business performance. This involves raising awareness in board members and adaptation of integrated for core business processes. Small businesses should ensure that ‘champions’ are developed which ensures executive development is sustained. Engagement of external experts and enterprises can be considered as a component of this success.

It is also significant to ask producers about the current operating conditions, trends and impacts. Following the development of a complete understanding of threat to the supply chain, companies need to determine, whether producers are experiencing any changes in operating conditions. In some cases, organizations need to start dialogues with suppliers on mitigation and it is regarded a significant point of entry, due to the direct connection to producers.

It is also important to build stronger relationship with suppliers. It has been observed that the most crippling matter for small-scale companies is that the customers can move away to new suppliers. Companies need to protect security of supply and construct relationships with producers based on trust and allowing producers to be the suppliers in the subsequent times. This serves as is an indication that producers consider economic and secure source of raw materials.

Companies also need to ensure they support development and improve sustainability of the environment.

There is also the need for communities to support communities to enhance their skills to ensure they are able to adapt to the market conditions as well as capable of develop knowledge in the supply and purchase environment.

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