The Caffeine Connection and More: A Proposal For Structure of the Expanding Company

Executive Summary

Company Description

Market Analysis

External Environments

SWOT

Porter’s Five Forces

Organizational Goals

Year One Strategic Goals

Key Success Indicators

Operations Management

Recommendations

Market Recommendations

Product Development Plans and Strategies

Value Proposition Statement

Strategies for Branding

Service Quality Strategies

Distribution Channel

Communication Plan

Recommendation for future research

Business and Ethics Recommendations

Corporate Governance

Code of Ethics

Internal Ethics Program

Confidentiality

Corporate Social Responsibility Recommendations

References

The Caffeine Connection and More: A Proposal For Structure of the Expanding Company

Company Description

The Caffeine Connection is a growing coffee and tea corporation led by a group of four CEOs from Michigan, California, Virginia, and Florida. We are currently looking to expand into other states.  As the decision-makers are so geographically removed from one another, extensive planning and coordination is necessary to give The Caffeine Connection the opportunity to expand profitably.

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Knowing that a change of this magnitude can become a strain and detriment to the company, we are looking to the model of one of our largest competitors, Starbucks, to see what could be applicable to our company. Starbucks is not only a nationwide corporation, it is now a multinational entity with expansive and varied offerings. In this paper, we seek to explore the products and services, organizational structure, as well as the mission, vision, and values of this wildly successful enterprise.

Starbucks’ Mission is “ to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.” This statement defines how every employee and consumer is meant to feel while working or procuring Starbucks products.  (Starbucks, 2019) Their Values are a more in-depth look at what it is like to walk into a Bistro and understand and see the expectations that they have for themselves, their customers, employees as well as the companies that grow their coffee. “With our partners, our coffee and our customers at our core, we live these values: Creating a culture of warmth and belonging, where everyone is welcome. Acting with courage, challenging the status quo and finding new ways to grow our company and each other.  Being present, connecting with transparency, dignity and respect.              Delivering our very best in all we do, holding ourselves accountable for results.  We are performance driven, through the lens of humanity. Starbucks vision statement encompasses their mission and value statements. “ (Starbucks, 2019)“Starbucks Coffee’s corporate Vision is “to establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow” (GREGORY, 2018).  The vision is a company that wants to ensure that the communities and people that they serve feel warmth and belonging where everyone feels welcomed” (Starbucks, 2019) is at the center of the compass that show the direction in which the company is trying to maintain and exceed. 

We at Caffeine Connections strive to provide excellent customer service while maintaining a diverse atmosphere and welcoming place for all those that need that special connection.  Our vision, once we began our company, was to create a place where people can go, be themselves and enjoy a nice cup of coffee.  Different backgrounds and financial abilities would not be a factor. Every cup served, sip taken would allow our customers to have a sense of belonging. When you come into Caffeine Connections everyone’s the same, coming in to seek a piping hot beverage that cultivates an atmosphere where everyone is accepted.

Caffeine Connection’s Mission is “Every cup served, sip taken invites our customers to have a sense of belonging.” This statement defines how every employee and consumer is meant to feel while working or procuring Caffeine Connection products. 

Our Values are demonstrated by what it is like to walk into our  Bistro and understand and see the expectations that we have for ourselves, our customers, our employees as well as the companies that grow and supply our coffee and goods.  Creating a culture of warmth and belonging, where everyone is welcomed by:

Respecting the different personalities and backgrounds of  our customer without being biased and judgemental

Ensuring that every cup served comes with personalized service and an experience that is like no other, while holding each employee responsible for our outcomes

We are customer compelled and seek the consistent performance results to continue to exceed customer expectations.

Market Analysis

External Environments

The growths of coffee consumption in the United States have grown tremendously over the years with coffee shops going and the availability of coffee at our gas station. Starbucks is among the growing coffee shop industry. The American population favor well brewed gourmet coffee and excellent service. Starbucks object is to build a loyal customer base by offering one of the best tasting coffees to its customers. Starbucks objective is to reach the working class who may not be able to make a cup of coffee before leaving the house and that they must be Able to grab and go on their way to work or if they are on a break at their workplace. These shop or coffee bars are place strategically in areas were the customers will go more for a gourmet coffee, since coffee consumption is universal across the different categories of income and depends largely on the educated population. As mentioned earlier Starbucks caters to the consumers who want to get a daily taste of a top graded coffee in a relaxed and comfortable environment, the targeted market varies in age , therefore Starbucks will have shops in high end business districts and on or near major university campuses, because of the student and faculty, who may meet in  an area to meet to study or have group discussion and  what better place to do over a cup of grommet coffee. This eventually builds on the clientele loyalty. According to the Coffee Market – Growth, Trend and Forecast (2018), coffee is the highest consumed beverage in the United States and they are expecting a growth of 5.5% over the next year. Starbuck therefore invested in expanding its market in and around university campuses to attract the millennial. Other factors such as flavors and brewing style are taken into consideration when expanding the market, because of the competing market for ready to go, or on the go coffee shops, such as Dunkin Donuts.

SWOT

Strengths

Weakness

Smaller company more personalized service offers different perspective of establishment

Inability to change menu as often due to limited kitchen space

Has a positive rapport with customers, making them come back

Small company, learned through word of mouth

Opportunities

Threats

Can open up additional coffee shop

Big coffee companies, such as Starbucks, are competition

More aware of the needs of its customers and can sell more products to address their needs

Laws and regulations make it more difficult sell different products

Porter’s Five Forces

Organizational Goals

Year One Strategic Goals

Since the incorporation of Caffeine Connections, each founder has agreed upon a common goal: to increase profits through our interpersonal connections with every consumer and vendor.  In order to sustain and meet this goal, our store must continue to improve in 3 key factors:1.       Number of Customers served -increase number of customers served by 10% by the end of the 4th quarter2.       Profit Percentages-gradually improve profits by 5% by end of the fiscal year using suggestions of the front line staff 3.       Opening of new stores-successfully open fully operational and functional store by beginning of the next fiscal year Meeting or excelling in these factors, will demonstrate Caffeine Connections ability to sustain itself and grow against the leading competitions.

Key Success Indicators

1.       Shown profit increase2.       Returning customers3.       Customer Satisfaction increased4.       Employees satisfaction increased5.       Ordering of More inventory6.       Positive reviews from Secret Shoppers 

Operations Management

Recommendations

Market Recommendations

Product Development Plans and Strategies

While “Starbucks Coffee’s corporate vision is “to establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow” (GREGORY, 2018).  The vision is a company that wants to ensure that the communities and people that they serve feel warmth and belonging where everyone feels welcomed” (Starbucks, 2019) Communities are at the center of the “compass” that show the direction in which the company is trying to maintain and exceed.

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Starbucks, a coffee company that started in 1971, connects with more than a million customers every day in over 24,000 stores. Starbucks sells a variety of items from beverages to water bottles. However, the company specializes in various teas, coffees and coffee blends. Their coffee and tea products include: Whole bean and ground coffee (Starbucks and Seattle’s Best Coffee brands), Starbucks VIA® Instant, Starbucks® Coffee K-Cup® pods, Starbucks® and

beverages, they offer appetizing breakfast and lunch choices as well. Their fruit cups, baked Teavana® Verismo® pods, Tazo® tea filter bags, and Tazo ® tea latte concentrates. Their ready-to-drink bottled beverages include: Starbucks® bottled Frappuccino® coffee drinks, Starbucks Discoveries® chilled cup coffees, Starbucks Discoveries Iced Café Favorites®, Starbucks Iced Coffee, Starbucks Doubleshot® espresso drinks, Starbucks Doubleshot® Energy Coffee drinks; Starbucks Refreshers® beverages, Evolution Fresh™ bottled juices, Tazo® bottled iced and juiced teas. Not only does Starbucks provide its customers with exceptional pastries, salads, sandwiches, salad and grain bowls, but offer oatmeal and yogurt parfaits to round off the company’s simply extensive menu.

 At Caffeine Connection, the menu is admittedly more limited.  Mainly consisting of varied espresso beverages and tea lattes, what separates our company from competition is the attention to detail, locally sourcing items wherever possible, and being not only conscientious of but inclusive of allergies and sensitivities.  While two-thirds of our drinks menu is caffeinated, as the name suggests, we are the only company to offer coffee alternatives in a retail setting for those that are sensitive to acidic foods or caffeine. At the present time The Caffeine Connection offers a number of pre-packaged food items such as cookies, bars, nuts, and crackers. Moving towards the future, within the next five years, the company plans to roll out fresh baked goods and sandwiches.

Value Proposition Statement

Strategies for Branding

Service Quality Strategies

 As Parker Davis asserts in a 2017 article for Business 2 Communities, a company must provide several methods for consumer feedback and monitor them extensively. It is not enough to facilitate discussion, the company must show empathy for the client, make an attempt at resolution, then follow up with the client to verify their view of the resolution and service following. At The Caffeine Connection, customers can post or message the company’s Facebook page, Twitter, or even Instagram.  All managers have permissions and access to reply to private messages or make postings.  The company’s traditional email address and phone number are clearly denoted on each website, and the complaint policy is to have a resolution within two business days and follow up a week from the resolution.

To uphold the highest standard of service extensive employee training is required.  Beyond “mere” client satisfaction, this metric promotes employee satisfaction as well. Employees feel more confident with a secure knowledge of processes. Customers deal with fewer issues, and the front of house staff is empowered through their training to address most minor issues. J.A. Molina and R Ortega discuss this phenomenon in a 2003 article in Applied Economics Letters by looking at a company’s market value of tangible resources divided by the cost of replacing financial and corporeal assets.  They conclude that “high training firms are able to translate higher employee satisfaction and lower turnover into higher customer loyalty… higher levels of training are indeed associated with significant benefits which can increase firm performance.”

Distribution Channel

Communication Plan

One of the things that make the Starbucks model so successful is the matrix structure of organizational management.  According to The Fundamentals of Management by Robbins, Coulture, and DeCenzio, this format “assigns specialists from different functional departments to work on projects led by a project manager” (P 179)  This structure benefits a company in allowing multiple sets of unique yet synergetic projects while engaging the economic benefits of keeping occupational groups together. Any given employee will, in essence, have two managers which McPhail asserts allows “multiple perspectives (which) can be expected to improve decision quality.” (P 58) A matrix framework allows employees to shift from one project to another that may not be in the same functional group without being tied down to the concept that they belong in a singular unit. Starbucks, in particular, divides their corporate structure in a very particular fashion (Meyer 2018) functional hierarchy, geographic divisions, product-based divisions, and finally teams.  The functional portion of the hierarchy is the bare bones of what many other managerial structures are in their totality.  This grouping separates management segments into business functions such as human resources, finances, marketing, et al. 

At Starbucks’ current scale, the next movement of the matrix is their geographic divisions.  Simply put, the company is so extensive that in order to respond promptly to local situations and effectively to differing cultures, many functional managerial positions need to have separate divisions in each locality. Product based divisions specialize in different commodity branding and teams are the sum of each store location.

While The Caffeine Connection is growing and developing, a modified form of the matrix structure, the “project structure” should suit the company’s needs better than the complex full framework. The pared down format will allow the flexibility to promptly respond to internal and external issues that arise without the complication of competing managers.  Under many circumstances, the main disadvantage of this setup is the complexity of assigning personnel. However, this is negated at the company’s current size.  A full matrix construction will also be beyond the current personal abilities and business needs but will give a framework to expand into in the next five years.

Recommendation for future research

Business and Ethics Recommendations

Corporate Governance

Board of Directors, that must meet and have the qualifications, character and background experiences to make decisions that will achieve the company’s stated goals and expectations. “The fundamental responsibility of the Company’s Board of Directors is to promote the best interests of the Company and its shareholders by overseeing the management of the Company’s business and affairs.”   Starbucks sets strict standards that the Board of Directors must follow, having a representative from the different aspects of government regulations to make sure that all requirements from the Nasdaq Stock Market are upheld. Board member and the chair vote on which directions the company will go in, keeping in mind the basis in which the company was founded and no personal interests. They meet 5 times a year with one meeting just to discuss the next move for the company going forward.

Code of Ethics

Like any great business, the principals of the company are derived from the mission and values that the organization follows, ensuring that everyone that works for the company understands the expectations that must be followed. “A code of ethics is a guide of principles designed to help professionals conduct business honestly and with integrity.” (KENTON, 2018) Caffeine Connections, even with being a small company will encompass our code of ethics as the law in how employees, as well as vendors, are to operate. This is information is vital to the survival of the company is the basis of how everyone should conduct themselves. Having this guideline will act as a “ conscience and provide employees with a common ethical reference point” (Collins, 2009). Although there will be different dilemmas that occur employees will understand how best to handle the situation and keep in line with the company’s work expectation.

The Code of Ethics will be based on 5 fundamentally necessary statements:

Professional Behavior-acting in accordance with laws and regulations, not causing any negative imaging representing the company

Honesty and Integrity-upholding and respecting our consumers and coworkers in all aspects of a professional and business relationship, not engaging in any activity that could be misleading or falsely representing the company

Personal Responsibility-owning one’s accountability for upholding the standards and practices of the company

Neutrality-not being biased or influenced by outside information, remaining neutral regarding company business and affairs

Competence-maintain a professional capability and commitment to handle company affairs within a professional realm depending on job description. 

Internal Ethics Program

Confidentiality

Corporate Social Responsibility Recommendations

There are two components to the Caffeine Connection’s Corporate Social Responsibility programme.  The first is to involve local schools to teach business and sustainability. Up to two students per semester and four over the summer are allowed to intern at Caffeine Connection.  Internships can be in the fields of employee management, marketing, or sustainability in supply chain management.  This program is aimed at juniors and seniors in high school. To involve younger children, sixth through tenth grade during the school year and elementary aged with parents over the summer, the Caffeine Connection hosts a community garden along with a smaller onsite kitchen garden. In addition to teaching sustainability, the company strives to model the philosophy in every manner possible.  In a 2018 article by Barbara Ocicka, Marta Raźniewska in the Scientific Journal of logistics, they explain that almost one and a half billion tonnes of food per year are wasted around the globe.  This comes to a massive thirty percent of food production. Caffeine Connection has found two ways to combat this in their locations. Modeling Tesco in the United Kingdom, the company communicates through a forum with local agencies and charities to distribute food that did not sell by the best-by date.  Then, tying back into the community garden facilitated with the local schools, the remaining food waste is composted.

References

Behar, H. (2007). It’s not about the coffee: Leadership principles from a life at Starbucks. Penguin.

Collins, D. (2009). Essentials of business ethics: Creating an organization of high integrity and superior performance (Vol. 47). John Wiley & Sons.

Davis, P. 7 Simple strategies for improving your customer service quality. (n.d.). Retrieved from https://www.business2community.com/customer-experience/7-simple-strategies-improving-customer-service-quality-01789314

GREGORY, L. (2018, August 27).Starbucks coffee vision and mission statement. www.panmore.com. Retrieved from Panmore Institute: www.panmore.com/starbucks-coffee-vision-statement-mission-statement

Gulati, R., Huffman, S., & Neilson, G. (2002). The barista principle: Starbucks and the rise of relational capital. Strategy and Business, 58-69.

Johnson McPhail, C. (2016). From tall to matrix: Redefining organizational structures. Change: The Magazine of Higher Learning 48(4), 55. Retrieved from: https://doi.org/10.1080/00091383.2016.1198189

KENTON, W. (2018, January 20). Code of Ethics. Retrieved from Investopedia: https://www.investopedia.com/terms/c/code-of-ethics.asp

Meyer, P (2018) “Starbucks coffee’s organizational structure & its characteristics” Retrieved from: http://panmore.com/starbucks-coffee-company-organizational-structure

Mordor Intelligence (2018) Coffee market – Growth, trends and forecasts (2019 – 2024) March 2018. Retrieved on February 6, 2019 from: https://www.mordorintelligence.com/industry-reports/coffee-market 

Ocicka, B., & Raźniewsk, M. (2018). Food waste reduction as a challenge in supply chains management. LogForum, 14(4), 549. Retrieved from http://proxy.devry.edu/login?url=http://search.ebscohost.com/login.aspx?direct=true&AuthType=url,cookie,ip,uid&db=edb&AN=132493246&site=eds-live

Robbins, S. P., De Cenzo, D. A., & Coulter, M. (10th Ed.). Fundamentals of management: Essential concepts and applications (10th Ed.). Upper Saddle, NJ: Pearson.Retrieved from https://devry.vitalsource.com/#/books/9781323782279/

Starbucks. (2019). “Mission statement”. Retrieved January 18, 2019 from: https://www.starbucks.com/about-us/company-information/mission-statement

Starbucks. (2019) “Starbucks Company Profile: The Starbucks Story”. Retrieved January 18, 2019 from https://www.starbucks.com/about-us/company-information/starbucks-company-profile