Part Five Continuing Case: Starbucks

Controlling

Once managers have established goals and plans and organized a structure to pursue those goals,

the managers job isnt done. Quite the opposite! Managers must now monitor work activities to

make sure theyre being done as planned and correct any significant deviations, make

adjustments as necessary, and look for new opportunities.

Controlling the Coffee Experience

At the heart of Starbuckss success is its ability to provide customers with a unique product of

high quality delivered with exceptional service. Everything that each Starbucks partner does,

from top level to bottom level, contributes to the companys ability to do that efficiently and

effectively. Managers need controls in place to help monitor and evaluate whats being done and

how its being done. At Starbucks these controls include transactions controls, security controls,

employee controls, and organizational performance controls.

A legal recruiter stops by Starbucks on her way to her office in downtown Vancouver and orders

her daily tall caf mocha. A construction site supervisor pulls into the drive-through line at the

Starbucks store in Fort MacMurray for a cinnamon chip scone and Tazo tea. In Montreal its

11:00 p.m., and needing a break from studying for her next-days management exam, a student

heads to the local Starbucks for a tasty caffeinated treata Raspberry Pomegranate Starbucks

Refresher. Now shes ready again to tackle that chapter material on managerial controls.

Every week, an average of 60 million transactions take place at a Starbucks store. Measuring and

evaluating the efficiency and effectiveness of these transactions for both walk-in customers and

customers at drive-through windows is important. As Starbucks added more drive-through

windows, the focus of the transaction was on being fast (as well as on quality)a different

metric than for walk-in transactions. For instance, digital timers are placed where employees can

easily see them to measure service times; order confirmation screens are used to help keep

accuracy rates high; and additional pastry racks have been conveniently located by the drivethrough windows.

Keeping company assets (such as people, equipment, products, financial information, and so

forth) safe and secure requires security controls. The company is committed to providing all

partners with a clean, safe, and healthy work environment. All partners share the responsibility to

follow all safety rules and practices; to cooperate with officials who enforce those rules and

practices; to take necessary steps to protect ourselves and other partners; to attend required safety

training; and to report immediately all accidents, injuries, and unsafe practices or conditions.

Managers receive ongoing training about these issues and are expected to keep employees

trained and up-to-date on any changes. And at any time, any partner can contact the Partner &

Asset Protection Department for information and advice.

One security area that has been particularly important to Starbucks has been with its gift cards.

There are many opportunities for unethical employees to steal from the company through the

gift card scheme. Detecting such fraud can be difficult because its often not apparent from an

operations standpoint. However, Starbucks uses transactional data analysis technology to detect

multiple card redemptions in a single day and has identified other telltale activities that

pinpoint possible fraud. Investigators have found individuals at stores who confessed to stealing

as much as $42 000. Usually, smaller amounts are noted and the individuals are sent letters

asking them to explain. Many employees who have been so notified will quit.

Starbuckss part-time and full-time hourly partners are the primaryand most important

source of contact between the company and the customer. Partners are encouraged to strive to

make every customers experience pleasant and fulfilling and to treat customers with respect and

dignity. Partners are trained in and are required to follow all proper procedures relating to the

storage, handling, preparation, and service of Starbucks products. In addition, partners are told to

notify their managers immediately if they see anything that suggests a product may pose a

danger to the health or safety of themselves or of customers. Partners also are taught the warning

signs associated with possible workplace violence and how to reduce their vulnerability if faced

with a potentially violent situation. In either circumstance where product or partner safety and

security are threatened, store managers have been trained on the appropriate steps to take if such

a situation occurs.

The final types of control that are important to Starbucks managers are the organizational

performance and financial controls. Starbucks uses the typical financial control measures but

also looks at growth in sales at stores open at least one year as a performance standard. One

continual challenge is trying to control store operating costs. Theres a fine balance the company

must achieve between keeping costs low and keeping quality high. However, there are steps the

company has taken to control costs. For instance, new thinner garbage bags were expected to

save the company half a million dollars a year.

In addition to the typical financial measures, corporate governance procedures and guidelines are

an important part of Starbuckss financial controls, as they are at any public corporation thats

covered by Sarbanes-Oxley legislation. The company has identified guidelines for its board of

directors with respect to responsibilities, processes, procedures, and expectations.

Starbucks Value Chain: From Bean to Cup

The steaming cup of coffee placed in a customers hand at any Starbucks store starts as coffee

beans (berries) plucked from fields of coffee plants. From harvest to storage to roasting to retail

to cup, Starbucks understands the important role each participant in its value chain plays.

Starbucks offers a selection of coffees from around the world, and its coffee buyers personally

travel to the coffee-growing regions of Latin America, Africa/Arabia, and Asia/Pacific in order

to select and purchase the highest-quality arabica beans. Once the beans arrive at any one of the

five roasting facilities in the United States and three global facilities, Starbuckss master

professional roasters take over. These individuals know coffee and do their magic in creating

the companys rich signature roast coffee in a process that brings balance to all of its flavour

attributes. There are many potential challenges to transforming the raw material into the

quality product and experience that customers have come to expect at Starbucks. Weather,

shipping and logistics, technology, political instability, and so forth all could potentially impact

what Starbucks is in business to do.

Discussion Questions Reference material Module 11

1. What control criteria might be useful to a retail store manager? To a barista at one of Starbuckss walk-in only retail stores? How about for a store that has a drive-through?

2. What red flags might indicate significant deviations from standard for (a) an hourly partner; (b) a store manager; (c) a district manager; (d) the executive vice president of finance; and (e) the CEO? Are there any similarities? Why or why not?

write answer in two three pages

write ans in two three pages