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Unit 21 Strategic Management of Human Resources Assignment
Diploma in Business
Unit Number and Title
Unit 21 Strategic Management of Human Resources
Starbucks is an American coffee company that has formed a chain of coffee houses all over the globe. The company was founded in Seattle, Washington in 1971 by Gordon Bowker, Jerry Baldwin and Zev Siegl. Currently is operating in 23,768 locations worldwide. Starbucks is a profit oriented company. It is famous for its hot and cold beverages along with other bakery products. This Strategic management of human resources assignment is focuses on the analysis of the internal and the external environment for the organization and the human resources management and policies of the company. The recruitment process is also explained here along with the barriers to implementation of any strategy in the company (Starbucks, 2016).
Task – 1
For analysis of the internal and external environment for the organization, three models are required to be analyzed. For internal environment, Porter’s five forces model and SWOT analysis model is used. For the external environment, PESTEL model is analyzed. Porter’s five forces model evaluates the competitive intensity and position of a business organization in a market. There are five competitive forces that determine what are the strengths and weaknesses of any company. The five forces are:
- Threat of new entrants-The threat of new entrants in the market is quite moderate because the cost of doing small business and to develop a supply chain is moderate and affordable so an organization can be setup but the cost of brand development is very high. Thus new comers can be there in the market but it cannot affect the brand value of Starbucks.
- Bargaining power of buyers- The bargaining power of buyers is quite high because a buyer can switch from Starbucks to any other brand because it is affordable and substitute products are also available at different restaurants (Starbucks Report, 2013).
- Bargaining power of suppliers- This is relatively low because a large number of suppliers exist in the market and the buyers have a variety of options to choose from according to their suitability.
- Rivalry among existing competitors–This is quite low because due to a moderate investment is needed to start this business, a large number of firms are available in the market with the same products hence buyer can go anywhere.
- Threat of substitute products-This force is very strong because establishing a company with same products is affordable in this case so buyer has too many choices. The buyer can also switch because the products offered in the restaurants are cheaper than Starbucks.
SWOT Analysis is a market analysis strategy that determines the future growth aspects in reference to the existing measures taken by the company. The acronym stands for:
- Strengths- It is very efficient in the services it provides and is ethical in nature. The company treats all its employees with respect no matter what position they hold in the company.
- Weakness- The hefty price of some products makes the buyer hesitant in buying the product. Moreover the products are provided by other firms also that creates competition and lowers the profit.
- Opportunity- Starbucks has expanded its utility stores all over the world that has multiplied the profit. It has the opportunity to team up with other reputed brands to increase its productivity.
- Threats- Starbucks is facing fierce competition from Dunkin Donuts, McDonald’s etc that are providing the products same as Starbucks but at a cheaper cost. (SWOT analysis, 2016)
PESTLE strategy analysis tool which is very helpful in realizing the impact of external factors on the growth and the success of the company. It is an extended version of Pest model. The acronym stands for:
- Political- The major factor is the sourcing of the raw material. The government wants to stick to the environmental norms that also provide fair trade prices. The company also has to follow all the rules and regulations of the country from where the raw materials are being purchased. Rule imposed for the tax payment and the employment also have to be followed otherwise a legal action can be taken against the company.
- Economic- The most effective factor is the local currency exchange rates for example US dollars. Business market and the norms of taxation payment keeps changing that make it a considerable characteristic in this context.
- Social- Changing family and work patterns, drastic change in lifestyle play a crucial role in enhancing the market. On the contrary customer preferences and concern towards the health is resulting in the lesser consumption of the products.
- Technological- Starbucks has its own mobile application and a well designed website for the customers. Its partnership with Apple provides discount coupons that makes it customer interactive. It also provides internet facility within its outlets.
- Legal- Company must take care that it should not violate any law while buying the raw material or while selling the manufactured products in any country.
- Environmental- In this context, even consumers have raised their voices regarding the exploitation of environmental rules and regulations. The countries that are producing coffee beans are experiencing environmental disasters and as a result of global warming have been increasing.(PESTLE analysis, 2016)
Task - 2
Human Resources Management (HRM) can be described as the process of recruiting and hiring the best employees for the company and providing them with the facilities, training, handsome salary and with all the benefits they require to be a successful employee within the company. Another term, Strategic Human Resource Management has one additional feature to the human resource management that is it provides a goal or an objective to the employees that make their working efficient. (Boxall and Purcell, 2011)
There are a large number of concepts and models of human resource management that include a variety of human resource policies and procedures. For example balance score card model is used to measure the overall performance of an employee and accordingly a pay scale is decided. Another one is the recruitment model which involves the complete procedure of hiring the employees in an organization. The company demands full proof efficiency in work but in return it is the responsibility of the company to take care of the working environment inside the company. Some examples are explained below:
Balance Scorecard model is a performance management tool that is used extensively in various organizations. In Starbucks it is used for 360 degree assessment of an employee. The 360 degree assessment means the employee is analyzed on the basis of his/her relation with the seniors and the colleagues, with the customers etc. The main focus is on the organizational objective of the company. The assessment of an employee begins since the first day of the job. The criteria for the assessment depend on various aspects of the employee. For instance he/she can be analyzed on the basis of the relationship that he/she maintains with the company as well as the clients, the overall performance and the employee has certain expectations from the organization as well like a good pay scale, job satisfaction etc.
First Generation – The first generation design of a balanced scorecard consists of four perspective approaches that are
- Financial– Analyzes how the employee is taking care of the financial matters of the company like related to shareholders etc.
- Customer- it involves how the needs of the customers are being handled for example on time delivery, preferences to regular customers etc.
- Internal business processes – it involves the growth objective of any employee and how he/she is contributing towards the success of the organization.
- Learning and growth – it analyzes how an employee is creating a value for the company and his efforts towards innovation that reflects the level of interest in the growth of the company.
Second Generation– In this improved version, the criterion for analysis is based on the set of ‘strategic objectives’ plotted on a ‘strategy map’ (Geereddy, 2012). In this better design of the balanced scorecard, the managers choose a few strategic objectives in case of each of the four perspectives and after that describes the chain of cause and effect for these objectives and then draws a link between the dots and prepares the ‘strategic linkage model’. This modified version of the balanced scorecard provides more justified analysis and this is convenient to work with for the managers.
Third Generation – In late 1990s an improved version of second generation balanced score card evolved. There was a drawback in second generation in which plotting the casual links amongst a large number of strategic dots was an absolute abstract activity. In the second generation it was not allowed to make a change which was not a real time practice.
The hiring model explains the steps involved in the process of recruitment at Starbucks. The local managers act as the main recruiters in a particular area. Initially the interested applicants have to submit their CV with all their details and then the potential candidates are called for an interview process (Starbucks, 2014).The local managers are given the responsibility of recruitment because they best know the requirements of the local people and during the interview they would be the best to analyze the candidate’s characteristics and will be able to relate them to the nature of the customers of the local customer demographics. Simultaneously it is the responsibility of those managers to take care of the working environment, the safety of the employee that is to look after that the employee is being treated well and not facing any problems such as harassment issues etc.
Task – 3
Starbucks is a very large scale organization and is a well known company all over the world. It is famous for its unique nature and the quality of products. A large number of employees are contributing their efforts towards the growth and success of Starbucks. The organization supports diversity and inclusion that is a great advantage for its future growth. Additionally, the company provides all the possible perks and benefits to the employees. The major attraction for any candidate to become an employee in Starbucks is the Starbucks College Achievement Plan according to which all the eligible partners that are the people who are working 20 hours or more in a week; from US can complete the bachelor’s degree with full tuition reimbursement for every year of the degree in college Arizona State University’s top rated degree programs that are offered online (Starbucks, 2016). Moreover the eligible partners are offered with a wide range of benefits, perks and assistance. The working culture as well as the customer and employee support provided by the company is remarkably nice but implementing innovative ideas for the betterment of the company and making changes accordingly is always a good option. The new approaches that can be adopted by Starbucks to attract more and more employees to work for the organization can be:
- A handsome amount of salary is always a good source of attraction for any candidate. A good salary is all that anyone aspires for because it is one of the most important requirements for a good lifestyle, to fulfill all the desires etc.
- The working environment of the organization must be good enough to make an employee stress free thus producing a better output. A better and positive working environment makes an employee stronger, better decision maker than ever and more employees get strength and inspiration to work in an efficient manner (Jianfei, 2014).This will increase the productivity of the company.
- Performance appraisal is also very important to enhance the working quality of an employee. It is a known human nature that one desire appreciation from his seniors and colleagues for any good work done. Appreciating the work of any employee makes him focused and responsible towards the work. The employee wishes to produce better output.
- The nature of work must be acceptable by the family of the employee as well. The company can take some efforts in order to satisfy the family of the employee like it can organize social gatherings such as picnics, sports events etc where families of the employees can interact with each other.
- The company can encourage the employee by complementary benefits like rewarding them with family holiday trip, giving them bonus on regular basis etc.
- A very important factor of accommodation is also a big issue that can be resolved by the company by providing accommodation facilities for the family of the employee. Moreover, entertainment centers, gardens, sports clubs, parking facilities can also be provided in the residential area of the employees.
- The company must consider the necessity of motivational atmosphere within the company. The employees should always be motivated and as a result of this the overall growth of the company as well as of the individual employee will increase to a great extent.(Benefits , 2016)
- An employee who has children is always worried about the proper education facilities. The company can also provide such facilities like constructing a school for the children of the employees so that before joining the company education for children do not create an issue. Additionally, discount can also be offered in the fee structure of the school.
- The most important factor is the security of the employee in the organization. The company must ensure that the employee is not being harassed by any means. The employee can be tortured in any way like harassment by the colleague or the harassment of a junior by the senior member of the organization, mental harassment by overburdening the workload, politics within the organization etc. If the employee performs under stress then his performance will deteriorate and will result in an unsatisfied manner.
- The promotion of an employee is a crucial part in one’s working career. The company must promote the employee to higher post or designation if he is performing really well in the company.
If the company is able to supplement these factors then this will be an ideal growth for the company but implementing is not an easy task to do. There a lot of hurdles in the pathway of implementing these facilities and perks for the employees. Some of the barriers to implementation of these human resource policies are mentioned below:
- Cultural diversity is one of the greatest barriers to the implementation of these ideas like diversity in the range of ages in the office that can have cultural issues between the coworkers and this can have a negative effect on the productivity. The other cultural barriers can be related to the people from different nations working together, people having different status and designation in the company etc.
- The set of laws and regulations imposed by the government of different nations create problems while introducing new products, laws regarding the tax payment also vary from one country to another etc.(Bey, McAloone and Hauschild, 2013)
- In the present scenario, people have become very concerned towards their health as a result the amount of intake of caffeine and sugar has lowered down to a great level. This has resulted in decrease in the sales and has lowered the profit in the market.
- Hefty price of the products is also an issue for the customer. The customer feels hesitant in buying the product due to the heavy price imposed.
- The products provided by Starbucks are limited to a specific market that eventually limits the customers also. This is also a setback because the company is not reachable to all of the people.
- The Gun policy of the company according to which the customers with loaded weapons are also allowed in the utility stores is not acceptable by the common people because they feel afraid to visit the store.
- The tax avoidance scandal in 2012 ruined the reputation of the company to a great extent. In this scandal company did not pay the tax for years and then had to pay a large sum of money at once that contaminated the image of the company. Although in long term strategy adopted by the company this flaw has been recovered.
Starbucks is a well known brand in today’s business market. The company produces hot and cold beverages along with some bakery products. The company is very efficient in its services and the products provided by the company are of a very reliable quality. Over the years, company has faced a lot of ups and downs but the performance of the company has always been consistent. The balanced scorecard model contributes in the proper analysis and helps in the overall growth of the company. The hiring process of the company ensures that the best candidates are employed in order to handle the customer needs in a proper way and make them satisfied. The company takes full responsibility of the employees and provides them with variety of perks and benefits on the basis of their performance in the organization. The focus of the company is to create a healthy work environment for the employees as well as to provide them full assistance regarding their families. The company also rewards employees for their performance in the company. Starbucks has proved itself to be a good choice for a candidate with high aspirations and managerial skills.(Michelli, 2006)
Starbucks is functioning at its best in the current scenario but a bunch of recommendations can still be put on. An employee can be provided with increment in his salary if the performance is appreciable. Moreover funding in travel assistance can be provided that is cabs can be provided to the employees that can help them to go from home to work and then back. Special discounts can be given to the employees because they are a part of Starbucks. Regarding the gun policy, it can be removed so as to increase the number of customers. The unique and new products can be introduced so as to attract more number of customers. Moreover some events can be organized on special occasions that will attract the people from various age groups and diverse backgrounds (Starbucks, 2016). Various competitions can also be organized.
July, 2014 "Starbucks Company Profile" (PDF) (PDF). Starbucks Coffee Company.
Starbucks, 2016 (online) available at http://www.starbucks.com/careers/working-at-starbucks last accessed on 6/11/2016
Starbucks,2016 ‘College Achievement Plan’ (Online) available at http://www.starbucks.com/responsibility/community/college-plan last accessed on 6/11/2016
SWOT analysis (online) available at http://pestleanalysis.com/swot-analysis-of-starbucks/ last accessed on 2/11/2016.
PESTLE analysis (online) available at http://pestleanalysis.com/pestle-analysis-of-starbucks/ last accessed on 2/11/2016.
Geereddy, N. (2012). Strategic Analysis of Starbucks Corporation. P. 87-99
"STARBUCKS CORP 2013 Q1 Quarterly Report Form (10-Q)" (XBRL). United States Securities and Exchange Commission. January 28, 2014 P.5-8
Starbucks, 2016 (online) available at http://www.starbucks.com/responsibility/community/diversity-and-inclusion last accessed on 7/11/2016
Jianfei, X., 2014. Analysis of Starbucks Employees Operating Philosophy. International Journal of Business and Social Science, 5(6).
Boxall, P. and Purcell, J., 2011. Strategy and human resource management. Palgrave Macmillan.
2016 ‘Benefits’ (Online) available at http://www.aol.com/article/2016/03/02/company-of-the-week-5-killer-perks-of-working-at-starbucks/21321716/ last accessed on 7/11/2016
Michelli, J.A., 2006. Starbucks experience. Tata McGraw-Hill Education.
Bey, N., Hauschild, M.Z. and McAloone, T.C., 2013. Drivers and barriers for implementation of environmental strategies in manufacturing companies. CIRP Annals-Manufacturing Technology, 62(1), pp.43-46.