Question: One of the biggest fears of a

One of the biggest fears of a food service company manager has to be the hepatitis A virus, a highly contagious virus transmitted by sharing food, utensils, cigarettes, or drug paraphernalia with an infected person. Food service workers aren’t any more susceptible to the illness than anyone else, but an infected employee can easily spread the virus by handling food, especially cold foods. The virus, which is rarely fatal, can cause flulike illness for several weeks. There is no cure for hepatitis A, but a vaccine can prevent it. Jim Brady, manager of a restaurant, is facing a serious dilemma. He recently learned one of his cooks could have exposed as many as 350 people to hepatitis A during a five-day period when he was at work. The cook was thought to have contracted the virus through an infant living in his apartment complex. Because children usually show no symptoms of the disease, they can easily pass it on to adults. Jim has a decision to make. Should he go public with the information, or should he only report it to the local health department as required by law?
A boss who says, “We can try that,” means the proposal has been dismissed in Japan, but the same statement means the idea is fully supported in Germany. Mexican managers who conduct business in the US find American managers to be less relationship-oriented than they are. In Mexico, doing business with someone means getting to know them personally, while American managers often want to “get down to business” without establishing a relationship first. A vice president for engineering at a major US chip manufacturer, who found one of his projects running more than a month late, felt that perhaps the company’s Indian engineers “didn’t understand the sense of urgency” in getting the project completed. And the manager of a team of employees from around the world didn’t realize how some members had to speak in a style that was not culturally comfortable for them in order to be heard. It’s not easy being a successful global manager, especially when it comes to dealing with cultural differences. Those cultural differences have been described as an “iceberg,” of which we only see the top 15 percent, mainly food, appearance, and language. Although these elements can be complicated, it’s the other 85 percent of the “iceberg” that’s not apparent initially that managers need to be especially concerned about. What does that include? Workplace issues such as communication styles, priorities, role expectations, work tempo, negotiation styles, nonverbal communication, attitudes toward planning, and so forth. Understanding these issues requires developing a global mindset and skill set. Many organizations are relying on cultural awareness training to help them do just that. Discuss the following questions in light of what you learned in
Part 2:
• What global attitude do you think would most encourage, support, and promote cultural awareness? Explain.
• How might legal, political, and economic differences play a role as companies design appropriate cultural awareness training for employees?
• Is diversity management related to cultural awareness? Discuss.
• Pick one of the countries mentioned above and do some cultural research on it. What did you find out about the culture of that country? How might this information affect the way a manager in that country plans, organizes, leads, and controls?
• What advice might you give to a manager who has little experience globally? 1
Continuing Case
STARBUCKS—BASICS OF MANAGING IN TODAY’S WORKPLACE
As managers manage in today’s workplace, they must be aware of some specific integrative issues that can affect the way they do their job. What are these integrative managerial issues, and how does Starbucks accommodate and respond to them? In this part of the Continuing Case, we’re going to look at Starbucks’s external environment/organizational culture, management in a global environment, diversity, and social responsibility/ethical challenges. Starbucks—Defining the Terrain: Culture and Environment Managers must be aware of the terrain or broad environment within which they plan, organize, lead, and control. The characteristics and nature of this “terrain” will influence what managers and other employees do and how they do it. And more importantly, it will affect how efficiently and effectively managers do their job of coordinating and overseeing the work of other people so that goals— organizational and work-level or work-unit—can be accomplished. What does Starbucks’s terrain look like, and how is the company adapting to that terrain?
An organization’s culture is a mix of written and unwritten values, beliefs, and codes of behavior that influence the way work gets done and the way people behave in organizations. And the distinct flavor of Starbucks’s culture can be traced to the original founders’ philosophies and Howard Schultz’s unique beliefs about how a company should be run. The three friends (Jerry Baldwin, Gordon Bowker, and Zev Siegl) who founded Starbucks in 1971 as a store in Seattle’s historic Pike Place Market district did so for one reason: They loved coffee and tea and wanted Seattle to have access to the best. They had no intention of building a business empire. Their business philosophy, although never written down, was simple: “Every company must stand for something; don’t just give customers what they ask for or what they think they want; and assume that your customers are intelligent and seekers of knowledge.” The original Starbucks was a company passionately committed to world-class coffee and dedicated to educating its customers, one-on-one, about what great coffee can be. It was these qualities that ignited Howard Schultz’s passion for the coffee business and inspired him to envision what Starbucks could become. The company’s mission and guiding principles (which you can find at www.starbucks.com) are meant to guide the decisions and actions of company partners from top to bottom. They also have significantly influenced the organization’s culture. For instance, Starbucks’s culture emphasizes keeping employees motivated and content. Howard Schultz cared about the relationships he had with his employees, and Kevin Johnson has continued that sense of caring. Johnson calls his employees “partners”; as he says, “As CEO, I serve the 330,000 Starbucks partners around the world who proudly wear the green apron, a purpose that brings me joy.” He understands how Starbucks depends on relationships with both employees and with customers. As he puts it, “I believe our success is defined by how we enhance the human experience not just for ourselves, but for others as well.” Starbucks’s employees worldwide serve millions of customers each week. That’s a lot of opportunities to either satisfy or disappoint the customer. The experiences customers have in the stores ultimately affect the company’s relationships with its customers. That’s why Starbucks has created a unique relationship with its employees. Starbucks provides a set of generous employee benefits, referred to as “Your Special Blend,” to all employees who work more than twenty hours a week: healthcare benefits, paid sick leave, and a compensation plan that includes stock options. Starbucks’s employees also can earn a bachelor’s degree from Arizona State University’s online course offerings at company expense. In 2018, Starbucks shared some of its savings from tax cuts to give employees raises, additional stock, and increased benefits. Johnson explained this employee-centered approach by saying, “Investing in our partners has long been our strategy.” Starbucks is known for providing employees with higher pay and better benefits than many restaurants and retail companies. Schultz described this approach as, “what sets us apart and gives us a higher-quality employee, an employee that cares more.” It’s clear that Starbucks cares about its employees. For instance, when Hurricanes Harvey and Irma hit in 2017, Starbucks paid employees even though they had to close 700 stores in Puerto Rico and 400 stores in Texas. Hurricane Irma affected more than 10,000 Starbucks employees. As another example, Starbucks has begun installing safe-needle disposal boxes in restrooms in some of their stores where employees have expressed concerns about being poked by needles that were thrown away by drug users. Other examples of the company’s concern: Starbucks is committed to hiring 10,000 veterans by 2020 and has offered to reimburse any fees employees face as part of the “Dreamers” immigration program. As a global company with revenues of $24.7 billion, Starbucks’s executives recognize they must be aware of the impact the environment has on their decisions and actions. Starbucks actively lobbies legislators in Washington, DC on issues including global trade policies, health care costs, and tax breaks. It’s something that Schultz didn’t really want to do, but he recognized that such efforts are important to the company’s future. Global Challenges You could say that Starbucks has been a global business from day one. While on a business trip in 1983 to Milan, Howard Schultz (who worked in marketing for Starbucks’s original founders) experienced firsthand Italy’s coffee culture and had an epiphany about how such an approach might work back home in the United States. Now, almost forty years later, Starbucks stores are found in seventy-seven countries, including stores from China and Australia to the Netherlands and Switzerland. Doing business globally, as Chapter 4 points out, can be challenging. With Starbucks stores already established on what might seem like every neighborhood corner in the US, Starbucks depends on growing globally in countries like China, Uruguay, and Italy. Starbucks was a “first mover” in China and has grown to 3,700 stores as of 2019. That makes China Starbucks’s second-largest market in the world! Other companies have been competing with Starbucks in China, including the local brand Luckin Coffee. Luckin has been opening up to 300 stores per month, which is a rate that would surpass the current number of Starbucks stores in China by the end of 2019. Starbucks is countering with plans to open a store in China every fifteen hours until 2022. Luckin understands Chinese preferences—like how much delivered coffee is appreciated—and has allocated half of its stores to coffee delivery and “pick up and go” coffee outlets. Expanding Starbucks’s delivery options in China to compete with Luckin has not been easy. Not only does coffee delivery cut into Starbucks’s profit margins, but it involves challenges like using more durable foam lids on top of drinks to keep the beverage intact after a delivery scooter ride darting through traffic. Between Luckin and the plans of global competitors like Dunkin Brands and McDonald’s to expand on a large scale in China, Starbucks has its work cut out for them. In China and all of its global markets, Starbucks must be cognizant of the economic, legal-political, and cultural aspects that characterize those markets. For instance, in Europe—the “birthplace of café and coffee house culture”—Starbucks experienced years of slowing sales. Starbucks sold its stores in four European countries (France, Netherlands, Belgium, and Luxemburg) to a partner company, Alesea, in 2018. In the same year, Starbucks opened its first store in Italy. The Starbucks in Milan, Italy, is one of the company’s Reserve Roastery locations, which are high-end “experiential coffee palaces.” The Milan store has heated marble counters, a 21-foot bronze cask suspended in the air to store coffee, and a bar serving signature Starbucks cocktails. Ironically, Milan is where Howard Schultz famously drank his first cappuccino that sparked his ideas about how to grow the company. If Starbucks can sell the “Starbucks experience”—not just coffee— with Reserve Roasteries in global locations like Milan, Shanghai, and Tokyo, some think that will be the recipe for success. Shanghai’s Reserve Roastery has become a sort of “Willy Wonka for coffee” tourist destination. Customers in Shanghai can use augmented reality tools for an enhanced experience of coffee roasting right in front of them and can participate in an online/offline scavenger hunt using their phones within the store. The Shanghai location is beautifully adorned with 1,000 hand-engraved traditional Chinese stamps that tell the story of Starbucks and coffee making while offering three restaurants inside, including a pizzeria. Starbucks is hoping to figure out just how to appeal to the vast array of tastes and preferences around the world. So, as Starbucks continues its global expansion, it has to pay close attention and respect to cultural differences.
Managing Diversity and Inclusion
Not only does Starbucks attempt to be respectful of global cultural differences, it is committed to being an organization that embraces and values diversity in how it does business. The company-wide diversity strategy encompasses four areas: customers, suppliers, partners (employees), and communities. Starbucks’s attempts to make the Starbucks experience accessible to all customers and to respond to each customer’s unique preferences and needs. Starbucks’s supplier diversity program works to provide opportunities for developing a business relationship with women and minority-owned suppliers. As far as its partners, the company is committed to a workplace that values and respects people from diverse backgrounds. The most current company diversity statistics available show that 45 percent of employees are minorities and 67 percent are women. And Starbucks aims to enable its partners to do their best work and to be successful in the Starbucks environment. The company supports employee resource groups (which they call “partner networks”). Some of the current ones include Starbucks Access Alliance, a forum for partners with disabilities; Starbucks Armed Forces Support Network, which supports veterans and those currently in the armed forces and their families; and the Starbucks Black Partner Network, which strengthens relationships and connections among partners of African descent. In 2018, Starbucks achieved its goal of increasing the number of women in senior leadership by 50 percent two years earlier than forecast. The company set another goal—this time, for women to be half of all senior leaders by the end of 2020. Starbucks also is making strides toward their goal of a 50 percent increase in minority representation in senior leadership positions by 2020. Finally, Starbucks supports diversity in its local neighborhoods and global communities through programs and investments that deepen its ties in those areas. To create job opportunities and a community presence, Starbucks made good on its pledge to open fifteen cafes in underserved communities by the end of 2018. Starbucks also purposefully set out to hire young people between the ages of 16 and 24, who are unemployed and not in school, as part of its Opportunity Youth program. Between 2015 and January 2019, 165,000 opportunity youth were hired at Starbucks. Starbucks has sometimes met with challenges while attempting to embrace diversity. There were threats of a Starbucks boycott and the company’s Buzz score (a measure of consumer perceptions) fell by two-thirds after Starbucks announced that it would hire 10,000 refugees. In another instance, Starbucks was criticized for closing restrooms in three cafes in Los Angeles located near homeless populations in 2016. Starbucks claimed that their restrooms were being used as showers, which made the restrooms difficult for other guests to use. But then, new criticisms arose after Starbucks implemented a company-wide policy in 2018 welcoming unpaying guests into their stores. After that guest policy update, critics voiced their concerns that some Starbucks stores would turn into destinations for both the homeless and drug users. Social Responsibility and Ethics Starbucks takes its social responsibility and ethical commitments seriously. In 2001, the company began issuing an annual corporate social responsibility report, which addresses the company’s decisions and actions in relation to its products, society, the environment, and the workplace. These reports aren’t simply a way for Starbucks to brag about its socially responsible actions, but are intended to stress the importance of doing business in a responsible way and to hold employees and managers accountable for their actions. Starbucks focuses its corporate responsibility efforts on three main areas: ethical sourcing (buying), environmental stewardship, and community involvement. Starbucks approaches ethical sourcing from the perspective of helping the farmers and suppliers who grow and produce their products use responsible growing methods and helping them be successful, thus promoting long-term sustainability of its supply of quality coffee. The company views this as a win-win situation. The farmers have a better (and more secure) future, and Starbucks is helping create a long-term supply of a commodity they depend on. Environmental stewardship has been one of the more challenging undertakings for Starbucks, especially considering the number of disposable containers generated by the more than 85 million customers each week across the globe. And front-of-the-store waste is only half the battle. Behind-the-counter waste is also generated in the form of cardboard boxes, milk jugs, syrup bottles, and, not surprisingly, coffee grounds. Even with recycling bins provided, one wrong item in a recycle bin can make the whole thing unrecyclable to a hauler. Despite this, the company has made significant strides in recycling. Starbucks has the largest number of “green stores” (energy efficient involving sustainable materials) in its industry and was the first to include post-consumer fiber in its hot cups. They introduced a more recyclable cup lid in 2017 and have plans to stop using plastic straws worldwide by 2020. Even so, 6 billion of Starbucks’s single-use cups end up in landfills each year. They have pledged to double the recyclability of their cups by 2022 and have pilot tested a paper cup charge in London. Finally, Starbucks has always strived to be a good neighbor by providing a place for people to come together and by committing to supporting, financially and in other ways, the communities where its stores are located. Partners (and customers) are encouraged to get involved in volunteering in their communities. In addition, the Starbucks Foundation, which started in 1997 with funding for literacy programs in the United States and Canada, now makes grants to a wide variety of community projects and service programs. Starbucks is also very serious about doing business ethically. In fact, it was named to the 2018 list of World’s Most Ethical Companies, as it has been for twelve years in a row. From the executive level to the store level, individuals are expected and empowered to protect Starbucks’s reputation through how they conduct business and how they treat others. And individuals are guided by the Standards of Business Conduct, a resource created for employees in doing business ethically, with integrity and honesty. These business conduct standards cover the workplace environment, business practices, intellectual property and proprietary information, and community involvement. Despite the thorough information in the standards, if partners face a situation where they’re unsure how to respond or where they want to voice concerns, they’re encouraged to seek out guidance from their manager, their partner resources representative, or even the corporate office of business ethics and compliance. The company also strongly states that it does not tolerate any retaliation against or victimization of any partner who raises concerns or questions.2
Innovation, Innovation Starbucks has always thought “outside the box.” From the beginning, it took the concept of the corner coffee shop and totally revamped the coffee experience. And the company has always had the ability to roll out new products relatively quickly. Starbucks invests heavily in research and development. It has received an Outstanding Corporate Innovator (OCI) Award for its commitment to innovation as a strategy to grow their businesses. Starbucks’s System to Accelerate Results (STAR) process has enabled the company to test and measure new products and measure customer interest. Fast Company ranked Starbucks as a “Most Innovative” company in 2018 within the magazine’s social good award division for donating 100 percent of its daily leftovers to community groups for combating hunger. Also, Starbucks was recognized by Forbes magazine as one of the 100 most innovative companies in the world in 2015. Some of the areas where you can see Starbucks innovations are products, technology, and new roasteries. The popularity of energy drinks led the company to create a line of “natural” energy drinks called Refreshers. These fruity carbonated drinks are high in antioxidants and get their energy boost from unroasted green coffee extract. In 2018, the Mango Dragon fruit Refresher came on the scene with its highly “Instagram able” bright color. The Unicorn Frappuccino drink that Starbucks rolled out for a short time in April 2017 made a splash for the company. The bright blue and purple drink that changed colors when stirred increased customer traffic into stores and also resulted in hoped-for social media attention. Since the Unicorn drink reveal, traditional Frappuccino sales at Starbucks have declined so that they make up 3 percent less of company revenue relative to a year earlier. Some industry experts say that customers want healthier drinks, while others say that Starbucks needs to show more innovation in their drink options. Meanwhile, Starbucks has been innovating in the area of technology by streamlining mobile ordering and making Wi-Fi access in its stores easier. Starbucks also has been experimenting with ways to eventually use “smart” (self-monitoring) equipment in its stores. For example, in Starbucks’s Seattle Reserve SODO store, they are pilot testing a drink-making machine called Clover X that grinds beans and brews coffee one cup at a time on demand in just 30 seconds. Starbucks also is working on refining a Digital Order Manager that allows customers to track progress on orders and to let them know when their order is ready. Starbucks has entered a partnership with Microsoft to advance in the technology realm as it relates to improving the customer experience. Finally, Starbucks’s Reserve Roasteries—now located in Seattle, New York City, Milan, Shanghai, and Tokyo, with another on its way in Chicago—are a testament to the company’s commitment to innovation due to their transformation of the customer experience beyond coffee.3

Discussion Questions:
P2-1. Do you think Howard Schultz and Kevin Johnson have viewed their roles more from the omnipotent or from the symbolic perspective? Explain.
P2-2. What has made Starbucks’s culture what it is? How is that culture maintained?
P2-3. Does Starbucks encourage a customer-responsive culture? An ethical culture? Explain.
P2-4. Describe some of the specific and general environmental components that are likely to impact Starbucks.
P2-5. How would you classify the uncertainty of the environment in which Starbucks operates? Explain.
P2-6. What stakeholders do you think Starbucks might be most concerned with? Why? What issue(s) might each of these stakeholders want Starbucks to address?
P2-7. If Starbucks wanted to increase the adaptability of its organizational culture due to the tough competition it is facing, what are some examples of how Starbucks could encourage more innovation and experimentation among its employees?
P2-8. What types of global economic and legal-political issues might Starbucks face as it does business globally?
P2-9. Pick one of the countries mentioned as an important target for Starbucks. Make a bulleted list of economic, political-legal, and cultural characteristics of this country and how it might affect Starbucks’s operation.
P2-10. What workforce challenges might Starbucks face in China in regard to its partners?
P2-11. With more than 330,000 partners worldwide, what challenges might Starbucks face in making sure its diversity values are practiced and adhered to?
P2-12. Kevin Johnson is quoted on the Starbucks website as saying, “We aspire to be a place of inclusion, diversity, equity and accessibility.” Explain what you think this means. How are these four concepts different from one another?
P2-13. What are specific ways in which Starbucks has shown top-management commitment to diversity? In what ways could Starbucks become even stronger in the area of diversity?
P2-14. Go to the company’s website, www.starbucks.com, and find the latest corporate social responsibility report. Choose one of the key areas in the report (or your instructor may assign one of these areas). Describe and evaluate what the company has done in this key area.
P2-15. What do you think of Starbucks’s goal to stop using plastic straws worldwide by 2020? What challenges might it face in meeting that goal? Is this merely a “public relations” promotion? P2-16. Which of the approaches to “going green” does Starbucks utilize? Explain your choice.
P2-17. What do you think the company’s use of the term partners instead of employees implies? What’s your reaction to this? Do you think it matters what companies call their employees? (For instance, Walmart calls its employees associates.) Why or why not?
P2-18. Would you classify Starbucks’s environment as more calm waters or white-water rapids? Explain. How does the company manage change in this type of environment?
P2-19. describe which innovation variables are already a part of Starbucks? To stimulate more innovative, which innovation variables could they consider adding more of?