Executive Summary

執行摘要
 

To be effective and achieve its goals, an organization must successfully respond to environmental factors. How can the effectiveness of an organization be measured? Various models of determining organizational effectiveness exist because organizations face different environments, they produce different products, their organizational members are made up of different kinds of people, and the organizations are at different stages of development. Each model is most useful to an organization having a particular combination of these environmental and organizational attributes. Here is an analysis on Starbucks to obtain experiences in establishing an effective organization for Waitrose’s international expansion as a reference.

 

Introduction
引言

 

Organizational effectiveness is high on the agenda of every chief executive. As the pace of change quickens, and as organizations become flatter, organizational effectiveness has become a competitive weapon. Possession of it is a major strategic advantage; the lack of it is a potentially career-ending weakness.

 

This report is intended to give a reference to Waitrose for establishing an effective organization in the process of its international expansion. Firstly it presents a framework of organizational effectiveness; then takes Starbucks as an example to analysis those factors affecting organizational effectiveness one by one. Finally this paper gives some recommendations for Waitrose’s establishing an effective organization.

 

 

A framework of organizational effectiveness#p#分頁標題#e#

 

Organizations are living organisms with an ecosystem all of their own. Every element of the organization, whether positive or negative, has evolved for a purpose and plays a role. Changes must be thought through from the perspective of the overall system.

 

Solving for one element of an organization is rarely effective.

 

 

An integrated framework and approach are essential. There are five things to get right, and organizational effectiveness is as strong as the weakest link. They are:

 

1. Provide sustained leadership; 2.drive effective decisions; 3. Focus people on performance; 4. Align the front line; 5. Drive a high performance culture

 

See Fig1 in Appendix for reference.

 

 

Beacon-on-the-Hill

 

As with all complex issues, it helps to have a clear picture in mind from the outset of what success looks like. Call this the Beacon-on-the-Hill, which includes the following 10 specific items:

 

1. Values and goals; 2.leadership behaviors; 3.decision making; 4.management processes; 5.talent; 6.measures and incentives; 7.customer-facing frontline; 8.frontline support; 9.performance culture; 10.capacity to change.

 

See Fig.2 in Appendix for reference.

 

Starbuck analysis
星巴克分析
 

Starbucks has consistently been one of the fastest growing companies in the United States. Over a 10-year period to $3.3 billion starting in 1992, the company’s net revenues increased at a compounded annual growth rate of 20%, in fiscal 2002. Net earnings have grown at an annual compounded growth rate of 30% to $218 million in fiscal 2002, which is the highest reported net earnings figure in the company's history (See Exhibit 1).

 

How Starbucks does achieve organization effectiveness in its development, especially in the process of global expansion? And specifically which drivers are those making Starbucks organization effective and succeed? Through investigation and analysis based on the above framework of organization effective, findings are put forward here for reference to Waitrose in its global expansion.#p#分頁標題#e#

1.Cultural value in Starbuck

There are links between organizational culture and organizational effectiveness. this is proved by Starbuck case, and Starbuck is a good example of this.

 

Starbucks provides a seductive atmosphere with Jazz or opera music plays softly in the background. Its stores are distinctive and sleek, yet comfortable. Though the sizes of the stores and their formats vary, most are modeled after the Italian coffee bars where regulars sit and drink espresso with their friends. Many customers are attracted to here just for experience it and enjoy it.

 

Starbuck not only creates a cultural atmosphere but also teach employees as well as customers how to make full flavor of coffee and about coffee knowledge.

 

Roasting the coffee bean is close to an art form at Starbucks. The coffee is roasted in a powerful gas-fired drum roaster for 12 to 15 minutes while roasters use sight, smell, hearing and computers to judge when beans are perfectly done. The color of the beans is even tested in an Agtron blood-cell analyzer, with the whole batch being discarded if the sample is not deemed perfect.

 

In this way, Starbucks puts its unique value and culture into its brand and make it differentiation. Starbucks’ goal is for Starbucks to have a ubiquitous image as one of the most respected brands in the world.

 

Starbucks is well on its way to becoming a global brand. According to Business Week:

 

The Starbucks name and image connect with millions of consumers around the globe. It was one of the fastest-growing brands in a Business Week survey of the top 100 global brands published August 5 [2002]. At a time when one corporate star after another has crashed to earth, brought down by revelations of earnings misstatements, executive greed, or worse, Starbucks hasn't faltered.

 

Just in this way, Starbucks is actively changing the way the people of the world—view and consume coffee, and its success has attracted global attention.

 

2.Clear goal and its thorough implementation

2.清晰的目標，它徹底的實現
 

If an organization lacks clarity on its goals and objectives, it can’t go well and get success. A blurred vision is a fatal factor in damaging one organization performance and it affects organizational effectiveness. From Starbucks case, a clear goal and its thorough implementation is found to be very important in achieving organizational effectiveness:

 

Howard Schultz’s goal is to: “Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining uncompromising principles as we grow.” The company’s 25-year goal is to: “become an enduring, great company with the most recognized and respected brand in the world, known for inspiring and nurturing the human spirit.” The company’s mission statement articulates several guiding principles to measure the appropriateness of the firm’s decisions. In describing Starbucks’s unique approach to competition. (See Exhibit 2)#p#分頁標題#e#

 

Starbucks’s first non-North American store was opened in 1996 in Tokyo. In reflecting on this early step in internationalizing the chain, Schultz notes:

 

Two years prior to opening up in Japan, we hired this blue-chip consulting firm to guide us to succeed here. Basically, they said we would not succeed in Japan. There were a number of things they told us to change. [They said] we had to have smoking, but that was a non-starter for us. They also said no Japanese would ever lose face by drinking from a cup in the street. And third, they said that given the [high] rent, stores couldn't be larger than 500 square feet, our no-smoking policy made us an oasis in Japan. As for our to-go business, you can't walk down a street in Tokyo today and not see someone holding a cup of Starbucks coffee. And our store size in Japan is identical to our store size in the U.S., about 1,200 to 1,500 square feet. It just shows the power of believing in what you do. And also that Starbucks is as relevant in Tokyo, Madrid, or Berlin as it is in Seattle.

 

The leadership group is always implementing its decision consistently, even though it meets resistance or any other obstacles.

 

3. Excellent leadership and quick decision-making

3.優秀的領導能力和快速決策
 

it is well known that excellent leadership and quick decision making is important for improving organizational effectiveness. Starbuck has an excellent leadership group and quick decision-making:

 

Starbucks also has a well-seasoned management team. Schultz, 49, stepped down as chief executive in 2000 to become chairman and chief global strategist. Orin Smith, 60, the company's numbers-cruncher, is now CEO and in charge of day-to-day operations. The head of North American operations is Howard Behar, 57, a retailing expert who returned last September, two years after retiring. The management trio is known as H2O, for Howard, Howard, and Orin. (From A recent article in Business Week).

Starbucks’ organizational efficiency and quick action can be seen in international expansion process from what Horwat said in global expansion process:

 

First, we look for extremely visible sites in well-trafficked areas and focus on three major factors: demographics, branding potential, and financials. Second we categorize sites on an A to D scale. ‘A’ sites are ‘signature’ sites tat are qualitatively superior to all other sites within the trade area. We rarely take a ‘C’ or ‘D’ store. Third, we ask our international Market Business Unit (MBU) to send in the ‘site’ submittal package with quantitative and qualitative measures, such as how the site meets Starbucks’ established criteria and the partner’s agreed-upon criteria. This package is reviewed by a number of functional units--operations, finance, and real estate--within the International Group. Fourth, we move into the design phase, which is done in Seattle using information provided by the partner. Next we negotiate the lease with landlord and initiate the construction when the appropriate permits are obtained. Finally, we turn over the store to operations. The whole process takes about 13-16 weeks from start to finish.”#p#分頁標題#e#

 

4. Personnel incentives

4.人才激勵機制
 

Human Synergistic and Deakin University have studied a major retail chain store and found positive links between culture and staff satisfaction, staff turnover, absenteeism and customer service. A store can increase the probability of success by fostering constructive cultures. More specifically, by fostering a culture that is strongly oriented towards achievement and Humanistic-Encouraging styles, a store can drastically increase its ability to succeed.

 

The policy at Starbucks towards employees is laid-back and supportive. They are encouraged to think of themselves as partners in the business. Schultz (Starbucks’ CEO) believes that happy employees are the key to competitiveness and growth:

 

“We can't achieve our strategic objectives without a work force of people who are immersed in the same commitment as management. Our only sustainable advantage is the quality of our work force…” (Inc., January, 1993)

 

On a practical level, Starbucks promotes an empowered employee culture through generous benefits programs, an employee stock ownership plan, and thorough employee training, each employee must have at least 24 hours of training. Classes cover everything from coffee history to a seven-hour workshop called “Brewing the Perfect Cup at Home.” This workshop is one of five classes that all employees must complete during their first six weeks with the company.

 

Starbucks is the only private company to offer stock options unilaterally to all employees.

 

Starbucks’s concern for employee welfare extends beyond its retail outlets to coffee producers. The company’s guidelines call for overseas suppliers to pay wages and benefits that “address the basic needs of workers and their families”. And to allow child labor only when it does not interrupt required education. This move has set a precedent for other importers of agricultural commodities.

 

Stock options and the complete benefits package increase employee loyalty and encourage attentive service to the customer.

 

5. Capability to change-align the front line

5.能力改變前線
 

Capability to change-align the front line- is very important in global expansion for achieving performance. Let’s see how Starbucks does in this dimension:

 

From beginning to today, Starbucks is always changing in many aspects to align the front line:

 

At first, Starbucks only provides high quality of fresh-brewed coffees and then Schultz added espresso and cappuccino of Italian favor to expand business.#p#分頁標題#e#

 

In 1995, Starbucks launched a line of packaged and prepared teas in response to growing demand for teahouses and packaged tea.

 

Starbucks coffee is also making its way onto grocery shelves via a carefully planned series of joint ventures. An agreement with PepsiCo Inc. brought a bottled version of Starbucks Frappuccino (a cold, sweetened coffee drink) to store shelves in August of 1996. In another 50-50 partnership, Dreyers’ Grand Ice ream Inc. distributes seven quart-products and two bar-products of Starbucks coffee ice cream.

 

Other partnerships by the company are designed to form new product associations with coffee. For instance, the company’s music subsidiary, Hear Music, regularly releases CDs, some in collaboration with major record labels that are then sold through Starbucks retail stores.

 

And also in international expansion process, in order to cater for the local people’s culture and customs and other differences, Starbuck does a lot of market investigation and makes accordingly alters in its products supply and services, e.g.:

 

Starbucks does adapt its food to local tastes. In Britain, it won an award for its mince pie. In Asia, Starbucks offers curry puffs and meat buns. The company also fits its interior decor to the local architecture, especially in historic buildings.

 

6. Global expansion way—finding local business partners in foreign markets
6.全球擴張的方式，尋找當地的商業伙伴在國外市場

 

When venturing overseas, there is a Starbucks way. The company finds local business partners in most foreign markets. As Kathy Lindemann, SVP of Operations for Starbucks International describes it:

 

“Our approach to international expansion is to focus on the partnership first, country second. We rely on the local connection to get everything up and working. The key is finding the right local partners to negotiate local regulations and other issues. We look for partners who share our values, culture, and goals about community development. We are primarily interested in partners who can guide us through the process of starting up in a foreign location. We look for firms with: (1) similar philosophy to ours in terms of shared values, corporate citizenship, and commitment to be in the business for the long haul, (2) multi-unit restaurant experience, (3) financial resources to expand the Starbucks concept rapidly to prevent imitators, (4) strong real-estate experience with knowledge about how to pick prime real estate locations, (5) knowledge of the retail market, and (6) the availability of the people to commit to our project.”

 

For Starbucks, in an international joint venture, it is the partner that chooses store sites. These are submitted for approval to Starbucks, but the partner does all the preparatory and selection work.#p#分頁標題#e#

 

It is a good reference for Wait rose in international expansion.

 

Recommendation

建議
 

1.Establish an unique cultural value and brand, educate and guide customers to accept it;

2.Keep clear goals and its thorough implementation;

3.Set up an excellent leader group and make quick decision and response;

4.Build effective personnel incentives;

5.Keep capability to change-align the front line;

Finding local business partners in foreign markets is a quick and effective global expansion way.

Conclusion
結論
 

This report is intended to give a reference to Waitrose for establishing an effective organization in the process of its international expansion. Firstly it presents a framework of organizational effectiveness; then takes Starbucks as an example to analysis those factors affecting organizational effectiveness one by one. Finally this paper gives some recommendations for Waitrose’s establishing an effective organization.

 

 

Reference
參考文獻

 

Suresh K. & Debra G. (2003). Starbucks Corporation: Competing in a Global Market. Planet Starbucks, Business Week, September 9, 2002, p. 100-110.

 

Irem D. & Talat Birgonul M. (2005). Prediction of organizational effectiveness in construction companies. Journal of construction engineering and management, Feb. 2005, p. 253-261.