TOTAL QUALITY MANAGEMENT

A Term Paper submitted to

MS. EASTER JOY VILLANUEVA, CPA

Instructor of Andres Bonifacio College, School of Business Management Education

(SBME) Department

In Partial Fulfillment of the requirements of

ELEC 423 – OPERATIONS AUDITING

By
RJ KRISTINE C. DAQUE
I. EXECUTIVE SUMMARY

Starbucks Corporation, headquartered in Seattle, Washington, is an

American global coffeehouse and roastery business. It is the largest coffeehouse
chain in the world. The corporation had 33,833 outlets in 80 countries as of
November 2021, with 15,444 of them in the United States. Jerry Baldwin, Gordon
Bowker, and Zev Siegl founded Starbucks, which opened its first location in 1971
near Seattle's famous Pike Place Market. The three Starbucks founders shared
two traits: they all came from a background in academia and they all enjoyed
coffee and tea. They invested and borrowed money to create the first Starbucks
in Seattle, which they called after Herman Melville's classic novel Moby Dick's
first mate, Starbuck.

The story begins in 1971 along the cobblestone streets of Seattle’s historic
Pike Place Market. It was there where Starbucks opened its first store, offering
fresh-roasted coffee beans, tea and spices from around the world for their
customers to take home. Their name was inspired by the classic tale, “Moby-Dick,”
evoking the seafaring tradition of the early coffee traders. Ten years later, a young
New Yorker named Howard Schultz would walk through those doors and become
captivated with Starbucks coffee from his first sip. After joining the company in
1982, a different cobblestone road would lead him to another discovery. It was on
a trip to Milan in 1983 that Howard first experienced Italy’s coffeehouses, and he
returned to Seattle inspired to bring the warmth and artistry of its coffee culture to
Starbucks. By 1987, they swapped their brown aprons for green ones and
embarked on their next chapter as a coffeehouse.

Starbucks Corp is a roaster, marketer and retailer of specialty coffee with

operations in approximately 84 markets around the world. The Company has
over 34,300 Company-operated and licensed stores. It operates through three
segments: North America, which includes the United States and Canada;
International, which includes China, Japan, Asia Pacific, Europe, Middle East,
Africa, Latin America and the Caribbean; and Channel Development. North
America and International operations sell coffee and other beverages,
complementary food, packaged coffees, single-serve coffee products and a
focused selection of merchandise through Company-operated stores and
licensed stores. Channel Development segment is engaged in sale of packaged
coffee, tea and ready-to-drink beverages to customers outside of its Company-
operated and licensed stores. The Company also sells goods and services under
various brands, including Teavana, Seattle’s Best Coffee, Evolution Fresh,
Ethos, Starbucks Reserve and Princi.
 They are energetic purveyors of espresso and all the other things that
goes with a compensating café experience. They additionally offer a choice of
premium Tazo teas, fine cakes and other luscious treats to satisfy the taste buds.
Also, the music you hear in store is picked for its masterfulness and allure.

From the farmers who tend to the red-ripe coffee cherries to the expert
roasters who coax the most from every bean to the barista who serves it with
care, it takes many hands to make the perfect cup of coffee. They are dedicated
to the highest levels of quality and service, honoring our history while innovating
to provide you new and exciting experiences. They like to say that they're not in
the coffee industry to serve people, but rather the coffee business to serve
people. The Starbucks experience revolves around their staff, whom they refer to
as partners. They are dedicated to making their partners proud by investing in
their health, well-being, and success, as well as fostering a welcoming culture for
all.
Starbucks continues to improve its corporate social responsibility practices
to address the concerns of different stakeholder groups. The following are the
main stakeholders in Starbucks Coffee’s business: Employees (baristas,
partners), Customers, Suppliers (supply firms, coffee farmers), Environment,
Investors, Governments

The report framed the inward and outer issues that Starbucks faced. The
external included (1) rivalry, (2) financial elements, and (3) innovative elements
while the internal difficulties included (1) absence of work production culture
among the employees, and (2) lessening organization values. These issues
actually lead to the major issue of Starbucks which is the quality of the service
and products it provides to the market.

To address the issue, it is recommended to use the Total Quality

Management (TQM). Other alternatives were also encouraged to solve other
issues if circumstances speak so, in which that the organization ought to set up
outer correspondence strategy, smooth out the administration cycle and put a
component to guarantee productivity in the inventory network.
II. ENVIRONMENTAL STUDY
A study of business environment is essential to take full advantage of opportunities
for gain hidden in the business environment. Hence, business managements must study
business environmental factors so as to be aware of changes in input supplies, changes
in social factors like consumer behavior, state of competition in industry etc. to ensure
smooth functioning of their business cycles.
II.1. INTERNAL ENVIRONMENT
Starbucks has worked as a spot among homes and workplaces for their objective
clients. There is an atmosphere where individuals can unwind, meet companions and
colleagues, and surf the Internet. These days, most of individuals acknowledge that
each time they see a green mermaid they realize it is the logo of Starbucks and they
might want to purchase the items and partake in the climate in there. Starbucks pay
attention on the high quality of their products. Their coffee is famous for delicious flavor
and aroma.
The business resources, its capabilities and competencies make up the
internal environment of the organization. The company should have the ability to identify
and determine the competitive power of their resources and capabilities to create
competitive advantage. Business resources are anything and everything that helps a
company operate and do business. Starbucks is the main coffee brand of the world. It
has a broad worldwide presence. The brand is referred to for its top-notch quality items
as well as incredible client care and in-store climate. The organization has obtained an
initiative status in the espresso business through its reliable spotlight on nature of items,
client care as well as great production network on the board. Items and administration of
Starbucks are all around separated from its rivals and over the long haul the brand has
constructed amazing standing and notoriety as well as a huge client base all through
the globe. It has assembled a solid upper hand in the espresso business. For any
opponent to have the option to match its assets would be truly troublesome on the off
chance that certainly feasible. For this reason, the brand has reliably been developing
beneficially. Here are the significant resources and capabilities that have assisted
Starbucks with building a solid and feasible upper hand in the espresso business:
BRAND EQUITY
Brand equity is a significant center strength of any brand. It is a benefit which
separates your image from the opposition. How your clients see your image? How much
your client experience separated from different players? This large number of elements
influence your image value. Solid brand value is likewise fundamental to support the
other cutthroat qualities of a brand. In the event that you have the wide range of various
factors right however have not had the option to expand solid brand value, then, at that
point, it is an indication of more fragile client association. Starbucks is known as a client
driven brand. It is a brand that clients trust. There are a few factors that have
empowered Starbucks to fabricate a separated and solid brand value. Nonetheless,
Starbucks has the general picture right and the outcome is more appeal and more
grounded client dedication. The client centricity of Starbucks is the fundamental
explanation that it has developed solid value. At the same time, it didn't rely upon
advertising to push clients however rather great item quality and client assistance in
order to pull clients to its stores.
GLOBAL PRESENCE
The broad worldwide presence of Starbucks is likewise a significant strength. It is
likewise a wellspring of higher income and has assisted the organization with procuring
a bigger client base than the contenders. The all-out number of Starbucks stores in the
year 2017 was higher than 27K. Biggest number of these stores are situated in the
Americas. Of the all out 27,339 stores, the organization had 16,559 in the Americas.
Nonetheless, the brand has additionally kept a great presence in the Asia pacific and
Middle East. The quantity of Starbucks stores in the Asia Pacific toward the finish of
2017 was 7,479. US is the essential market of Starbucks. Number of organizations
possessed stores in US in 2017 was 8,222 and that of authorized stores was 5,708.
CUSTOMER LOYALTY
Rivalry in the business has continued to rise. The contending brands are
additionally focusing in on quality, client assistance and showcasing to develop their
client base. Nonetheless, Starbucks has generally put resources into better items and
focused in on client support. These things have assisted it with prevailing upon the
clients and accomplish higher client faithfulness. The outcome is quicker development,
better deals, and higher income
SUPPLY CHAIN
Starbucks generally brings best quality items for its clients. It sources its cocoa
from probably the best providers on the planet. The renowned Arabica espresso is
obtained solely from ranches situated at higher elevations. Aside from that the
organization has laid out a dependable production network and sources from capable
providers just who offer incomparable nature of espresso beans. The organization
additionally attempts to enable its providers and assist them with supporting their nature
of crude items. Because of its solid and stable inventory network, the organization has
had the option to reliably offer its clients superb quality items.
PRODUCT QUALITY
Product quality is the focal attractions of Starbucks' contributions. It has brought
a huge scope of item contributions in coffee and snacks classes. Premium quality is
additionally among the essential drivers of interest of the brand. Its top-notch quality
items have assisted it with building an unmistakable and separated picture in the
business. Starbucks items have a place with the superior cost range. In any case, the
 interest for its items is as yet solid as is client dependability in light of consistent
spotlight on item quality.
CUSTOMER SERVICE
Starbucks is a client driven brand and hence keeps up with the most significant
level of spotlight on client assistance. Elevated degree of spotlight on client care has
held clients in bigger numbers and assemble solid dedication. Client experience has
become central to accomplishing most noteworthy client faithfulness as well concerning
compelling showcasing and higher deals. While most brands are zeroing in on client
support, for Starbucks it has likewise stayed a significant technique for promoting its
image. Aside from engaging the clients and being more comprehensive, the
organization has prepared its staff to give the best quality client support. This has
reinforced the organization's standing and made it the pioneer brand in the coffee
business.

Capability Valuable Rare Inimitable Organized Result

Brand equity Yes Yes Yes Yes Competitive advantage

Global Presence Yes No No Yes Temporary advantage

Customer loyalty Yes Yes No Yes Temporary advantage

Supply chain Yes Yes No Yes Temporary advantage

Premium Product quality Yes Yes Yes Yes Competitive advantage

Customer service Yes Yes No Yes Temporary advantage

 Sources:
 Starbucks Annual Report 2018
 On the other hand, The core competency of Starbucks has been its capacity to
use their foundation item actually separation procedures by offering a superior item
blend of excellent refreshments and tidbits. Starbuck's brand value is based on selling
the best quality coffee and related items, and by giving every client an extraordinary
"Starbucks Experience", which is gotten from preeminent client assistance, perfect and
all around kept up with stores that mirror the way of life of the networks in which they
work, in this way assembling a serious level of client faithfulness with a faction following.
Its other center capability is its human asset the executives' values based approach for
building extremely impressive inward and outer associations with providers, which
drives the fruitful organization of its business methodology of natural venture into global
business sectors, level coordination through brilliant acquisitions and partnerships that
keeps up with their drawn out essential goal being the most perceived and regarded
brands on the planet.

II.2. STAKEHOLDER PREFERENCES

EMPLOYEES

Starbucks focuses on employees in its corporate social obligation endeavors. As

stakeholders, employees ordinarily want for better working circumstances, job stability
and higher wages. Starbucks' hierarchical culture underscores the employees first
disposition.
CUSTOMERS
Starbucks considers customers as among its top stakeholder. The interests of
this stakeholder bunch are top notch administration and products, like coffee and
related refreshments. As the world's most famous specialty café chain, Starbucks really
addresses this interest. The organization additionally incorporates clients as significant
partners by stretching out the Starbucks culture to clients at its bistros. For instance,
warm and cordial relations are stressed inside the organization and in how baristas
connect with clients. Accordingly, Starbucks Coffee's corporate social obligation
endeavors satisfy the interests of this stakeholders’ group.
SUPPLIERS
Starbucks providers are made out of discount supply firms and espresso
ranchers. The principle interest of this partner bunch is pay and a developing interest
from Starbucks. Ranchers mean to increment espresso respect produce more incomes.
Starbucks tends to the interests of these partners through various corporate social
obligation programs. For instance, the company's provider variety program guarantees
that more providers from around the world are remembered for the production network.
Likewise, Starbucks' Coffee and Farmer Equity (CAFE) program requires
straightforwardness among discount providers to guarantee that espresso ranchers are
appropriately paid. Accordingly, Starbucks' corporate social obligation endeavors
extensively address the interests of this partner bunch.
ENVIRONMENT
Starbucks has corporate social responsibility programs for environmentally sound
business. The company’s CAFE program has led to higher biodiversity and shade
quality in certified coffee farms. Currently, 90% of Starbucks’ supply is from CAFE-
certified farms. This significant figure shows that Starbucks is effective in addressing its
corporate social responsibility to this stakeholder group, although there is room for
improvement.
INVESTORS
As in any business, Starbucks should address financial backers as partners.
Investors have interests in high monetary execution of the organization. Starbucks'
worldwide extension and proceeded with strength in the café business demonstrates
high monetary execution.
GOVERNMENTS
Starbucks should address the interests of various legislatures as partners,
thinking about the organization's worldwide presence. By and large, Starbucks agrees
with rules and guidelines.
II. 2.a. ANALYSIS OF STARBUCSK’S CSR PERFORMANCE FOR STAKEHOLDERS
Starbucks has high corporate social performance execution in tending to the
interests of a large portion of its partners. The organization fulfills the greater part of the
worries of partner bunches like clients, workers, providers, the climate, and financial
backers. Notwithstanding, Starbucks needs to further develop its CSR execution to
arrive at a 100 percent CAFE-affirmed production network to expand ecological
advantages. Starbucks can likewise further develop its CSR execution in addressing the
government all over the planet by further developing its expense consistence. Also, the
firm can further develop youth rates/wages to guarantee fulfillment of youth laborers in
certain business sectors. These are the three primary scopes where Starbucks can
change to help its corporate social obligation execution to fulfill partners.
II.3. EXTERNAL ANALYSIS
The external environment consists of forces and factors that affect the business
and its operations both directly and indirectly. It also plays a critical role in shaping the
future of entire industries and those of individual businesses. To keep the business ahead
of the competition, companies must continually adjust their strategies to reflect the
environment in which their businesses operate. So, it is crucial to analyze the external
environment to gain a better understanding of factors that influence the company’s
operations and forces that can hinder successful strategy implementation.
The PESTEL/PESTLE analysis framework indicates the external influences on
Starbucks based on the characteristics of the remote or macro-environment of the
business. To maintain its industry position, Starbucks must continuously monitor this
external environment. The PESTEL/PESTLE analysis model can be used to satisfy this
need. By effectively addressing the external factors identified in the PESTEL/PESTLE
analysis of its remote/macro-environment, Starbucks Corporation can expect further
long-term success despite the negative external forces impacting the business.

P - The Political Landscape (Political Factors Affecting Starbucks Coffee’s Business)

This piece of the PESTEL/PESTLE examination structure distinguishes the effect
of states and related strategies on the café business. Starbucks encounters the
accompanying political outside factors in its remote or macro-environment:

1. Integration and disintegration of markets (opportunity and threat)

2. Improving governmental support for infrastructure (opportunity)
3. Bureaucratic red tape in developing countries (threat)

Political integration and disintegration of local business sectors are an outside factor
that presents valuable open doors and dangers to Starbucks and its worldwide
development. Joining works with local market entrance (opportunity), while deterioration
makes boundaries (danger) to the café organization's development. Likewise,
administrative approaches for further developing foundation sets out open doors for
Starbucks to get to additional clients and providers. Nonetheless, administrative
formality endures in numerous nations. This political outer component is a danger since
it hinders the espresso organization's business development, while perhaps inclining
toward nearby contenders that have broad political associations. Subsequently, this part
of the PESTEL/PESTLE investigation presents valuable open doors for Starbucks
Coffee, yet additionally brings up political impediments in developing the business.

E - The Economy (Economic Factors Important to Global Coffeehouse Chains)

This part of the PESTEL/PESTLE examination model alludes to the financial
circumstances and patterns that influence the coffee and food administration business.
Starbucks faces the accompanying financial outside factors in the remote or large scale
climate:

1. Growth of developing countries (opportunity)

2. Declining unemployment rates in the long term (opportunity)
3. Rising labor cost in coffee suppliers’ countries (threat)

The development of non-industrial nations and the declining joblessness rates

set out open doors for Starbucks to acquire incomes from different business sectors all
over the planet. In any case, the rising work cost in agricultural nations is an outer
element that compromises Starbucks on the grounds that it expands the organization's
spending for fixings. The firm sources quite a bit of its coffee beans from agricultural
nations. Hence, this piece of the PESTEL/PESTLE examination presents for the most
part open doors for Starbucks Coffee, despite the fact that supply solidness could be an
issue.

S - Social Influences (Sociocultural Factors in Starbucks Coffee’s External Environment)

This aspect of the PESTEL/PESTLE analysis framework shows the social
conditions and trends influencing consumers and the coffeehouse business. Starbucks
must address the following social/sociocultural external factors in its remote or macro-
environment:

1. Growing coffee culture (opportunity)

2. Growing middle class (opportunity)
3. Increasing health consciousness (opportunity)
4. Independent coffeehouse movements (threat)

Starbucks has opportunities to increase its revenues based on increasing

demand for specialty coffee, which is due to a growing coffee culture and growing
middle class populations around the world. Also, the company can widen its array of
more healthful products to attract health-conscious consumers to its coffeehouses and
merchandise. Despite these opportunities, Starbucks faces threats linked to
independent coffeehouse movements, which are sociocultural movements that favor
small independent coffeehouses instead of large multinational chains. This threat is also
identified in the SWOT Analysis of Starbucks Corporation. Thus, the social external
factors in this PESTEL/PESTLE analysis present opportunities, but also a considerable
threat that could reduce the coffeehouse chain’s revenues.

T - Technologies (Technological Factors in the Coffeehouse Business Environment)

In this part of the PESTEL/PESTLE analysis model, technologies and related
trends are identified, pertaining to their effects on the coffeehouse chain. Starbucks
experiences the following technological external factors in the remote or macro-
environment:
 1. Increasing adoption of mobile technology for online purchases (opportunity)
2. Technology transfers to coffee farmers (opportunity)
3. Rising availability of specialty coffee machines for home use (threat)

Starbucks has opportunities to improve its mobile apps and linked services to
gain more revenues through mobile purchases. The company can also improve its
supply chain efficiency based on recent technologies that coffee farmers use. However,
the rising availability of home-use specialty coffee machines threatens Starbucks by
increasing the availability of substitutes to the company’s products. Thus, the
technological external factors in this PESTEL/PESTLE analysis shows the importance
of Starbucks products that effectively compete while addressing new and emerging
technologies affecting the industry.

E - Ecological Factors
This part of the PESTEL/PESTLE analysis model recognizes the impacts of
natural or ecological circumstances and patterns on the café business. Starbucks faces
the accompanying biological/natural outer variables in its remote or full scale climate:

1. Increasing availability and adoption of sustainable processes in businesses

(opportunity)
2. Growing access to responsibly sourced materials or ingredients (opportunity)
3. Rising support for environmentally friendly products (opportunity)

The increasing availability of sustainable business processes is a trend that gives

Starbucks the opportunity to enhance its sustainability standards and implementations.
This enhancement can strengthen the company’s brand image and attract more
customers to its foods and beverages. In relation, responsible sourcing
emphasizes corporate social responsibility, such as in Starbucks’s supply chain. The
coffee company has opportunities to enhance its performance in these areas. The
corporation can continue to improve its existing responsible sourcing policies, such as
for its coffee supply and procurement. Moreover, Starbucks can innovate to make its
products more environment-friendly. 

L - Legal Factors in the Café Industry

The legal factors in the PESTEL/PESTLE analysis model are laws and
regulations that impose requirements on the coffee business. Starbucks must address
the following legal external factors in its remote or macro-environment:

1. Product safety regulations (opportunity)

2. Developing GMO regulations (opportunity and threat)
3. Increasing employment regulations (opportunity and threat)
 Starbucks has opportunities to improve its performance by satisfying product
safety regulations. Similarly, the company can enhance its supply chain to address
regulations on ingredients from genetically modified organisms (GMOs). Starbucks is
already performing well in these aspects, but further improvements help boost business
performance. Also, employment regulations, especially in developing countries, threaten
Starbucks Coffee’s access to the labor market and competitively priced coffee beans.
This external factor also impacts the coffee business through increased spending for
human resources. Nonetheless, the company can implement new strategies to improve
human resource management. Thus, in this aspect of the PESTEL/PESTLE analysis of
Starbucks, the identified legal external factors present opportunities as well as threats
that influence the business as it continues its multinational growth.

IV. ISSUES TO ADDRESS

Despite the fact that Starbucks is known for its superiority in the coffee
industry, it is still a challenge for the admins on how to continuously maintain in the
spotlight. Many aspects need to be considered just to maintain the status quo. On the
internal and external factors mentioned above that help Starbucks get the upper hand,
internal and external matter keeps on intervening, that causes a hindrance to the major
issue which is the quality of Starbuck’s services and products. Internal and external
challenges are as follows:
INTERNAL
(1) Absence of work production culture among the employees, and
(2) Lessening organization values
EXTERNAL
(1) rivalry,
(2) financial elements, and
(3) innovative elements
One of the most alarming aspects of a toxic business culture is employee health.
Different results of negative culture incorporate meddling, low worker commitment,
higher paces of non-appearance and presenteeism, an absence of sympathy, an
absence of adaptability and high representative turnover. Without organizational values,
organization members will, by default, follow their individual value systems. These may
or may not promote behavior that the organization finds desirable. The original
Starbucks’ company values were no longer cherished by the staff.

Other difficulties Starbucks facing is sorting out how the chain will keep on
remaining pertinent to their customers, since rivalry is just around the corner that keeps
on pushing upwards. Financial variables have a direct impact on a company's
operations. The economy was deteriorating. This had an impact on the company's
operating costs and its ability to keep its staff. This impacted the income of the
organization. Also, Starbucks faced the challenge of technology. The company had not
put yet enough resources into innovation that could match the requirements of the
upgrading years. For instance, Mobile orders are causing chaos for employees and
customers. Because of an absence of innovation or more satisfying system put on the
mobile app of Starbucks, the advanced framework permits an excessive number of
requests to come through without a moment's delay, causing a bottleneck that
representatives couldn't really deal with as soon as possible. For another, the versatile
application considers interminable beverage customizations, deferring the course of
drink-production further. The absence of social association stage with its clients
impacted its essential situating.

V. ACUMEN TO THE ISSUE

The core principle of Total Quality Management is being acumen to address the
major issue as stated. As for the internal and external issues, the McKinsey 7-S
Framework was used when dealing change process to overcome these challenges.
V.1. OVERCOMING THE INTERNAL AND EXTERNAL ISSUES
To conquer the outer and inside challenges, techniques should be set up to
reestablish the esteem of the business. It is quite important that elevated degrees of
performance can be improved by a reasonable comprehension of the serious place in
the business. For this matter, change process was undertaken and this can be best
understood by the use of the McKinsey 7-S Framework.
McKinsey 7S model is a tool that examines a company's organizational design by
examining seven important internal elements: strategy, structure, systems, shared
values, style, staff, and skills, to see if they are properly aligned and allow the company
to meet its goals. The goal of the model was to show how 7 elements of the company
can be aligned together to achieve effectiveness in a company. The key point of the
model is that all the seven areas are interconnected and a change in one area requires
change in the rest of a firm for it to function effectively. The McKinsey model, which
depicts the linkages between seven domains and splits them into 'Soft Ss' and 'Hard
Ss,' is presented below. The model's form emphasizes the elements' connection.
 The model can be used in a variety of scenarios and is a useful tool when it
comes to determining organizational design. The framework is most commonly used for:
 To facilitate organizational change.
 To help implement new strategy.
 To identify how each area may change in a future.
 To facilitate the merger of organizations.

7s factors
In McKinsey model, the seven areas of organization are divided into the ‘soft’ and
‘hard’ areas. Strategy, structure and systems are hard elements that are much easier to
identify and manage when compared to soft elements. On the other hand, soft areas,
although harder to manage, are the foundation of the organization and are more likely to
create the sustained competitive advantage.
Hard S Soft S
Strategy Style
Structure Staff
Systems Skills
Shared Values
Strategy. Is a plan developed by a company to achieve a sustainable and sufficiently
competitive advantage in the market. Overall, a solid strategy is a well-designed, long-
term strategy that helps achieve competitive advantage and is supported by a strong
vision, mission, and values. But it is difficult to say whether such a strategy aligns well
with other factors when analyzed alone. So the key to the 7s model is not looking at
your business to figure out its strategy, structure, systems, etc., but rather to see if it
matches the other factors. For example, a short-term strategy is often a bad choice for a
business, but when aligned with the other six factors, it can yield good results.
Structure. Represents how divisions and business units are organized and includes
information about who reports to whom. In other words, structure is the organizational
chart of the business. It is also one of the most visible and modifiable elements of the
framework.
Systems. Are the company's processes and procedures, which reveal the day-to-day
operations of the company and how decisions are made. Systems is the area of the
business that determines how business is conducted and should be the primary focus of
managers during organizational change.
Skills. Are abilities that company employees perform very well. They also include
abilities and skills. During organizational change, the question often arises as to what
skills a company will really need to underpin its new strategy or new structure.
Staff. Related to the type and number of employees an organization will need and how
they will be recruited, trained, motivated, and rewarded.
Style. Represent how the company is run by top managers, how they interact, the
actions they take, and their symbolic values. In other words, it is the management style
of the company leaders.
Shared Values. Is the focus of the McKinsey 7s model. These are the rules and
standards that guide employee behavior and corporate actions and thus form the
foundation of any organization.
In support of this model, Tracey and Blood (2012) showed that all businesses
face different environmental challenges. Therefore, it is necessary to devise strategies
to improve competitiveness and sustainability. As such, the 7S framework provides the
foundation for a great starting point in determining what a business needs to be
successful. In addition, to overcome the challenges, top management used a leadership
style that emphasized shared values. During organizational change, key factors are
affected, as enumerated in the McKinsey model, including skills, staff, style, systems,
structure, and strategy. The leadership style is about communicating his story and value
proposition to shareholders and executives. Another measure is to reduce the rate of
rapid store opening. The management went against the company's established culture
and closed several stores. In the process, there is also a strategy of innovation and
integration of new products that enhance the Starbucks experience. An example is VIA
instant coffee. Other measures include restructuring the supply chain and overall
organizational structure. In the process of implementing the change, problems arose
such as lack of a social media presence and as a result the company took advantage of
this and created platforms that could resolve the relationships. customer interest. Other
problems in the process of change are the economic difficulties that are happening in
the United States. The company had to lay off employees to stay competitive.

V.2. ADDRESSING THE MAJOR ISSUE

The company has positioned itself as the preferred coffee destination in most
countries owing to its ambient locations and a wide variety of coffee-related products.
Many consumers visit Starbucks to experience exclusivity as offered by the firm. People
are willing to pay slightly more for a cup of coffee in Starbucks than for other the same
product in other stores/ restaurants.
Although Starbucks excels in its products and services, they do not appreciate its
strategic ability to strengthen their business to sustain and avoid future risks. The coffee
market is a volatile business and can have many competitors. It is hard to maintain the
consistency of the quality of one’s products and services where in Starbucks is not an
exemption where in the company also experience the dilemma of negative feedback
about their products and services. Goods and services of Starbucks do not meet market
demand. Starbucks is more concerned about the increase in the number of stores. It
has failed to satisfy customers and they do not consider customer satisfaction as
important in the course of their business. Some customers have complained about
coffee leaking from their cups. Others argue that the company is not listening to their
proposal because it does not work to improve the coffee product. Another concern with
Starbucks is the lack of customer service. Customer service is inconsistent at similar
branches in one country. The customer relationship is not working.
For this matter, the core principle of Total Quality Management (TQM) is a big
help in improving the managing style of the company in order to improve the quality of
its products and services. Customer satisfaction is the extent to which a product's
perceived performance matches buyers' expectations. The key to successful and
profitable business rests with identifying the needs and wants of the customer and
providing goods and services to satisfy these needs and wants. Total Quality
Management helps to improve customer satisfaction by having a customer focus and
consistently meeting customer expectations.  Customers are almost always satisfied
when their expectations are met. When they expect a certain product or service, and it
has been delivered without problems, solid customer relationship rises.
V.2.a. ASCERTAINMENT OF THE CORE PRINCIPLE OF TOTAL QUALITY
MANAGEMENT
Although people often view quality differently because of differences in their roles
in the production-marketing-consumption chain and their expectations for the production
or services, the ultimate test of a quality product or service is whether the product or
service meets or exceeds customers’ expectation.
As abruptly describe by Procter and Gamble, “ Total Quality (management) is the
unyielding and continually improving effort by everyone in an organization to
understand, meet and exceed the expectation of customers.” This description of TQM
points out that the core principles of TQM are processes that:
 Focus on satisfying the customer
 Strive for continuous improvement
 Involve fully the entire work force
 Support and involve top management actively
 Use clear and measurable objective
 Recognize quality achievements in a timely manner
 Providing training on TQM continuously

1. Focus On the Customer

TQM begins by identifying the firm’s customers, external and internal;
determining their needs, requirements, and expectations; and then doing whatever it
takes to satisfy them. Focusing on the customer puts the company in a better position
to honestly help customers. The customers will feel and see that the management is
going the extra mile to understand their situation and truly understand them to help
them get what they want to in a better way.
By focusing on the customer, Starbucks management will discover that not only
they feel satisfied with what they do and how they work, but they'll also be more likely to
sleep better (knowing that they're not taking advantage of others, in this case the
customer). and - possibly - most importantly, at least from a sales standpoint - they will
likely be more successful than their competition. In fact, it's unlikely that "the situation
will turn" and they will be contacted more often than before by customers who want their
product. The power of word of mouth should not be underestimated.

How to become customer focused?

As research on adaptive two-loop selling (Viio and Nordin, 2017) has shown, customer
focus can also be understood to occur at two levels: behavioral and mindset. Of course,
these two things are related. So the management have to work on both levels.
Customer-oriented mindset
First, management needs to switch on the mindset of focusing on the customer. This
involves letting go of Starbucks own priorities – and ego. Let go of focusing on their own
needs and wants, and focus on those of their customer.
They can train and practice their customer focus skills in reverse: when being in a
situation where they are the customer, work on their senses and reflection. Ask
themselves how the seller or service provider makes them feel. Is the representative
interested in their needs, wants, priorities, situation, and desires? Or, is the
representative more interested in just making a sale. Does the service and attention that
they receive from the seller or service provider increase or decrease their level of
satisfaction and wellbeing?
Customer-oriented behavior
When it comes to improving their customer-focused behavior, Starbucks can also work
the opposite way. When the management of Starbucks see themselves as the
customers, think about what a salesperson or service provider does that makes them
feel what they're doing. How do they behave, what do they do and how do they do it?
Analyze what they can do better, how they can improve their performance? Think about
what the management would do in their situation that could increase the level of
satisfaction, appreciation, and happiness they experience. Train the management to be
customer focus by making the most of service encounters in everyday situations, big or
small.
Combining mindset and behavior
When selling or serving customers, Starbucks management should focus on both their
thoughts and their behavior. Ask themselves whether their mindset is designed to
primarily help their customers and whether they are acting in the customer's best
interest. Be honest, be sincere. Otherwise, the customer will perceive their dishonesty
and lack of sincerity. Focus on their customers and act in their best interests.

2. Strive For Continuous Improvement

The most successful companies are never satisfied with the status quo. They
constantly have their eye on the next innovation, the next level of performance. They
know the importance of continuous improvement in all areas of the business.
Even if things are going really well, people at successful organizations are looking at
what could be improved upon so that they can perform better. They are finding ways to
work smarter, not harder, in order to be more efficient and profitable. The most
successful companies are always innovating and developing new ways to deliver top-
notch quality to their customers.
Starbucks management must communicate the value and importance of continuous
improvement and build it into every aspect of the business as a disciplined strategy.
They must train their employees to study internal processes and create ways to make
them more efficient. They must study their successes and failures regarding their
customers and act based on those learnings to go above and beyond customer
satisfaction. In today’s fast-moving and competitive landscape, this is a critical factor of
most leading companies.
3. Full Involvement of The Entire Workforce
Any breakdown in the process no matter how insignificant can lead to a defective
product or service and unsatisfied customers. Top management of Starbucks must
encourage everyone in the firm, from the lowest level to upper echelon professionals
and managers, to be actively involved and to participate in the firm’s efforts to
continuously improve quality.
Much like worker bees keep the hive going strong, employees in Starbucks keep
their quality management plans on track. That is, of course, if they are invested in
management’s strategies and 101% on board with the objectives being introduced by
the management. Plenty has been said about the importance of employee involvement.
From creating a culture of continuous improvement, to competency training, incentives
and even leadership nurturing, the company is only as good as the people they employ.
Beyond just being an investment, their employees are the soldiers who go out every day
onto the battlefield (or sales floor, which can be just as brutal) and help their business
thrive. Underestimating the importance of involvement can have the total opposite effect
– to such a degree in fact that it could cause the business to fail. So with that in mind,
it’s not surprising that this involvement is essential when Starbucks want to succeed in
quality management. Aside from empowering them to provide insight that could help the
business grow, involvement equips them with the chance to contribute at a far deeper
level than their monthly paycheck.
4. Active Support and Involvement of Top Management
Most companies have found that successful implementation of TQM requires
unwavering and active leadership from the CEO and senior manager. However, the
CEO or top management alone cannot bring forth all the desired benefits of TQM. Only
with support from all managers in the top echelon can TQM attain the most desirable
results. Also, they need to demonstrate their dedication to total quality to employees at
every level, all vendors, and suppliers to the firm, all the customers and the community
at every opportunity so that everyone is aware of the primary importance of total quality
in every aspect of the firm’s operations.
In addition, the success of an organization is when top management are fully
involved in work process, with follow-ups and free flow of information or communication.
With that being said, Starbucks Management role in quality management has been
highlighted as one of the crucial requirements for a successful quality improvement
implementation. The degree of support that management takes in the implementation of
a total quality environment is very critical to the success of TQM implementation and
TQM cannot be fully implemented if there is lack of commitment from top management
of Starbucks. Commitment of top managers in TQM implementation will enable the
employees to follow their direction and way of working.
Quality leadership by top management of Starbucks is the basis for proper
implementation of TQM in order to achieve customer satisfaction, quality product,
continuous improvement, and job satisfaction. In order to achieve total quality, it is
imperative that the top managers of Starbucks should clearly define the quality goals
and as well treat quality as an important aspect. They are expected to set quality as a
priority while allocating adequate resources to continuous quality improvement and
evaluating employees based on their performances
TQM initiatives consistently emphasize the importance of top management as
the primary driver of TQM activities. Priorities should be set by Starbucks top
management to ensure that commitment to TQM Principles exists in all parts of their
organization. When top management is involved in TQM implementation, surely,
Starbucks will help improves employee empowerment, teamwork, training, and
employee job satisfaction.
5. Use Clear and Measurable Objectives
Progress can easily be seen if objectives are clear. Measurable objectives forge
efforts toward the common goal. To ensure success of Total Quality Management, a
firm must set unambiguous and measurable objectives. Effective measurement can
help to ensure and facilitate quality improvements and supporting system.
As part of the quality management process, employees of Starbucks must be
given clear instructions on what they should do to consistently meet or exceed quality
standards. Ideally, each task should have measurable performance metrics so the
business can measure progress and quickly see when certain goals have been met.
6. Timely Recognition of Quality Achievement
Quality achievement of people and subunits when recognized timely is the best
way to emphasize the firm’s continuous struggle for better quality and to ensure efforts
towards total quality at every level. Efforts and progress will most likely be short-lived if
the firm makes no change to its compensation/ appraisal/ recognition system.
If Starbucks don’t acknowledge immediately the efforts of its employees, The
consequences of delayed recognition also mean that employees may not understand
the impact of their actions or behavior. With timely recognition, employees now
understand expectations and know what you want them to achieve or repeat. With this
knowledge and appreciation for their efforts, employees will be more willing and able to
repeat desired behaviors and actions more often. Starbucks should know the most
important factor for employee motivation is making progress in meaningful work. Top
management of Starbucks must not delay recognition until completion of a major
accomplishment. It’s important to recognize the people involved as they make progress
along the way, achieve key milestones, or demonstrate desired behaviors in line with
core values as the push to reach the end goal. Appreciation is certainly an essential
human need that should never be discounted, as employees will respond positively to
any sort of appreciation that comes their way. When their work is valued by others it
means their satisfaction rises and productivity increases too. In order to create a thriving
workplace, praise and recognition are going to be fundamental elements. As long as
people are respected for their efforts and contribution, they will feel a sense of
achievement and keep striving to reach this in every task they undertake.

7. Continuing Education and Training

Employee training programs serves as a communication link to convey

management commitment to total quality and provide employees with necessary skills
to achieve total quality. Mandatory continuing education and training of employees at all
levels is necessary to achieve the culture change and continuous focus required in a
TQM environment.
Training, learning and education in general have become an issue this decade
due to the rapid pace of technological development and innovation. Starbucks
managers have to deal with new work environments, increased competition, and the
pursuit of greater market share. This situation creates a need to not only upgrade the
skills of their employees and update their competencies- technical, managerial, etc. as a
driving force for them to improve their overall educational attainment. It is through
training that these competencies are imparted to achieve results; however, the learning
process also plays a very important role in acquiring these competencies; it is therefore
very important, when training and education are part of a business strategy, to
understand how the learning process takes place.

VI. CONCLUSION

Organizational change plays a critical role in the strategic positioning of a

company, given the fact that it will have great impact on how the quality of service and
products of Starbucks will be reviewed and judge by customers and in the market. The
case of Starbucks has shown the importance of an inclusive leadership style where the
key stakeholders are involved in the leadership process. It has exemplified the need for
designing a change process and putting in place measures to lobby for internal support
to ensure an effective change process.

Also, the case has shown the importance of communication during the change
process. All of these assessments also show the importance of quality that must be
maintained in nature of business where Starbucks is venturing. The customer focuses
more on the services and products provided to them. Therefore, by implementing
appropriate service recovery strategies and focusing on both fundamental and
complementary factors, the problem of service marketing can be minimized.
VII. RECOMMENDATION

The PESTEL/PESTLE analysis shows that the vast majority of the outer
elements in Starbucks Corporation's remote or large-scale climate present
opportunities. Nonetheless, the organization should attempt to address the recognized
dangers, for example, the danger of replacement connected to the expanded
accessibility of home-use specially prepared espresso machines. Likewise, further
developing tasks and business cycles to expand on the recognized open doors can add
to the satisfaction of Starbucks' corporate statement of purpose and vision
proclamation. A comprehensive key methodology in light of these open doors and
dangers can guarantee the organization's drawn-out initiative in the café business. By
and large, the PESTEL/PESTLE examination system shows that Starbucks Coffee has
a lot of space for additional worldwide development and improvement.

Starbucks also needs to work on improving quality. Here, the company must
focus on the essential conditions of the quality of products and services. The company
should create a culture of fixing these errors as soon as they happen, or soon after if
that's not possible. Three characteristics must govern the improvement of the
company's coffee quality. It has to meet the specifications for the customer to get the
taste they are looking for. In addition, the coffee must be compatible with all Starbucks,
no matter where they are located in the world.
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