Starbucks has made a global brand name and continues to grow further by using innovative ideas that differentiate them from the rest. This gives the company a secure position in the world. Starbucks gained this success by plotting out a strategy management process for the company to abide by. By prioritizing customers’ satisfaction as their priority, the company built up a strategy to give the best of products to their consumers. By doing this on the other end, the company gained the centricity of their consumers which helped them build a good relation between themselves and their reliable customers. Their strategy formulation also took into consideration their employees and how they could make the company work in an efficient manner. The company achieved a position in the global market due to their up-to date strategic plan and also an effectively maintained management which formulated and implemented their strategic plan in a successful manner.
For any company to make sure they are on the right path to success, an effective strategy is a must so that the company can abide by this plan. Planning out a strategy for a company will put the right course of action that the company can follow through. Strategy formulation is a calculative process which assists in deciding and choosing the best way to meet the standards of the company and to achieve their goals. This process is an essential part of the strategic management process.
Starbucks formulated their strategy by evaluating their strengths, weakness, opportunities and threats. The management takes into consideration the essential features and formulates various strategies and alternatives and choose the best one among them to achieve the set goals and missions of Starbucks. While doing the same, Starbucks considered the changing environment in terms of the external pressure, growing market, etc. This is formulated keeping in mind to maximize the return on investment. Key components of strategy formulation of Starbucks are:
- Constructing objectives for the organization: this involves setting up long term goals for the company to achieve with time in years.
- Analyse the environment of the organization: this mainly involves the critical or SWOT analysis that Starbucks formulated to understand their features. This takes into consideration the economic stability and the growing competitions around them.
- Setting up targets: the company sets up targets for the company to achieve in long-term and short-term.
- Objectives for every department: the company sets up targets for every department to make sure they work in coherence.
- Analyse the performance: this is a comparative factor to see the variation of the performance from the actual one to the established.
- Strategy selection: the best strategy is selected for implementation
While formulating the strategy, Starbucks took into consideration significant factors such as their past and future possible growth in the market, new entries into the global market, threats the company might face in the growth process, market size and also the profitability in the competitive environment.
Starbucks used the three levels of strategy formulation that are shown below:
- Corporate level strategy: consists of stability strategies, expansion strategies, retrenchment strategies and combination strategies depending on the type of outcome required. It outlines what the company needs to achieve and what business needs to enter the market in regard to business.
- Business level strategy: this assists the company on how it is going to compete with the global market. This is essential for companies which consist of smaller units of business.
- Functional level strategy: this level mainly concentrates on helping the growth of the organization. It involves the day to day actions the company needs to encounter and deliver the required and allocated results.
Strategy implementation is an essential step in the strategy management process. This step plans out and puts across the best strategy formulation chosen into action. This in turn leads the organization to achieve the goals set by them. Starbucks having chosen the best strategic plan, executed it in an effective manner to bring out the company’s success and reach the desired position foreseen by them as an institution. Once the company begins to implement the strategic plan, it should make sure to consider the reports of progression and the reviews for the plan to be implemented in the right direction. Strategy implementation is put into action after intense consideration of the environment around the organization, the critical analysis and factors that might affect the growth and development of the organization.
The strategy formulation of Starbucks mainly focused on the opportunities and threats the organization might face and this was the external analysis that was made. The strategy formulation basically showed the company as to how this needs to be put into action and who is responsible to perform the assigned tasks and when will it be conducted and also the frequency of execution of a particular activity. Having done the significant steps, the company was sure on achieving the desired goals.
Starbucks did not only frame new strategy plans, but they also took into consideration the strategic plans in the past which yielded the best of results for them. Putting into action the previous plans was also a major turnover in their strategy implementation process.
The basic steps for strategy implementation of Starbucks are as follows:
- Establishing the target of the organization annually
- Formulating the strategy for its execution
- Allocating the required resources for the implementation
- Performing these set up tasks
- Controlling and reassuring the performance of these activities and tasks at different levels
While performing the above steps during implementation, the company might come across further need of accurate planning and alterations of the existing plan for a smoother operation of the business, and Starbucks were open to such changes. Strategic implementation involves the participation of the entire institution. Strategy formulation process is handled by the management team of the institution, whereas the strategy implementation process is undertaken by the entire organization, mainly the workforce to execute it by the guidance and assistance from the leads of the institution.
There are five significant features or variables which determine how successful the strategy implementation process will be and these are as follows:
- Structure of the organization
- Workforce selection, training and development
- The reward systems
- Task design
- Different varieties of information and information systems
Strategic Human Resource Management, also known as SHRM in short is a management sector which deals with development of regulations and policies, projects and also events related to the human resources. These are then made to resonate with the strategy of the organization in order to achieve the set goals and aims. The main motive of the SHRM is to enhance the overall performance of the institution and to retain the environment and work culture which provides constant support and encouragement towards innovation and brings about a continuous positive change to gain advantage competitively. The main advantage of strategic human resource management is that it practices the above said tasks and also examines the external factors for threats and opportunities which might be relevant to the business.
SHRM is a proactive management which aligns the HR policies and strategies in a manner to get the efforts of the workforce to move towards the goal of the organization. SHRM mainly centres the attention to the long-term goals and end result of the business. SHRM has a direct accountability over the reward system, the selection and development of workforce and also the design of the task. It not only shows responsibility over this, but also can affect its concern over the types of information systems and the organizational structure.
For the success of the strategy implementation, firstly the activities and tasks that need to be completed must be structured and allocated as the jobs to the right group in order to be efficient and effective. This can be done through design and analysis of the job under the job criteria. Secondly, the HR domain must have taken into consideration the right set of people who have the accurate knowledge and skill to execute their task and show effective performance in the strategy implementation process. This is categorized under the recruitment and selection of the employees. Thirdly, the same sector must come up with award systems and manage the team so that the task can be completed in time by the employees. This is done by providing constant support and encouraging them to bring about innovations and promote the achievement of strategic plan goals of the institution. Considering the above factors, SHRM also has five major roles such as strengthening the engagement of the employees, introduction of stronger work practices, conducting research in order to introduce new HR equipment and culture, enhance the effectiveness of the HR systems and to share the research they have made over the previous considerations.
Human resource management is a significant sector in any organization as it deals with managing the workforce and maintaining the equilibrium of the organization. The major role of a human resource manager is recruiting the staff, maintaining and looking over the benefits and compensations of the employees and planning the work outline for them. By considering the above important responsibilities of the human resource manager, it can be said that the HR management domain mainly focuses on maximizing the productivity of the institution and bringing about changes and alterations for the betterment and smooth running of the company. As Edward L. Gubman observed in the Journal of Business Strategy, “the basic mission of human resource will always be to acquire, develop, and retain talent; align the workforce with the business; and be an excellent contributor to the business. Those three challenges will never change.”
Not only do the well-established organizations face issue relating to the human resource department, but the smaller companies that are trying to develop from a small resource also face the same and are in need of a management sector which helps them guide through this phase. Though the human resources requirements are not as much as that of the bigger institutions, with whatever is the availability, the management of the human resource still face issues which adversely affect the company’s business.
The basic and significant practices of human resource management are:
- Recruitment of staff
- Management of performance of the staff
- Maintaining industrial relations
- Job analysis
- Selection for efficient running of business
- Designing the pay structure
- Job design
- Employee learning and development
- Planning incentives
- Introducing benefits for the employees
Human resource practices are influenced by human resource needs, human resource capabilities and human resource action. When taking into account the needs, focus is paid to the skills, behaviours and the culture of the staff being recruited. This plays a major role as it upholds the requirements of the job structure. The human resource capabilities consider the skills, abilities and knowledge. The productivity, quality and profitability of the firm is influenced by the actions such as behaviour and outcomes which include productivity, absenteeism and turnover of the sector.
Having a view on the above factors, human resource managers play a vital role in making the business successful for any organization. Apart from the basic and generic functions, the other roles that the HR management domain fulfils are as below:
- The human resource management focuses on building skillset for the future endeavours of the organization. In this, the HR professionals work along with the company’s managers to build the skills of all the hired employees. The staff is trained to be flexible and adapt to any changes that might occur in the future for the company’s business. This is planned strategically to keep the staff motivated about the job throughout the entire time of the existence.
- HR team also takes responsibility in developing the trust and commitment between the employees and the institution. They make sure their staff is committed to their job and also are placed in the right positions to make them feel they are aligned with their qualifications.
- The HRM team assists the company to develop a growing business with its competitive partners by studying the environment and culture of economy around the business and make sure to deliver a unique and reliable set of products to their customers. Their role is to not only hire the workforce but also help them grow in the institution.
- Human resource management also pays keen attention to the changing needs of the global market and the staff due to the shifting of business market in the outside world. The team must provide benefits to their staff such as incentives, retirement schemes, flexible work hours, etc.
Human resource management has a set of policies and procedures that need to be aligned with the organization for efficient and smooth business proceedings. A well-planned policy will ensure the organization to move in the right path and helps the staff to understand their pivot role individually. A generic documented policy will not hold good for all the institutions, whereas an explicit set of policies and procedures is required for the company respectively for the company depending upon their expectations and goals to be achieved. This mainly involves detailed research on the standards of the company and the responsibilities that would be considered for the designing of this document. By preparing a well-documented policy, the company is less likely to face major challenges for the future and this can minimize the risks of the organization.
The human resource management’s policy and procedure must include the basic policies for the employees such as:
- Providing equal and fair employment opportunity to all classes of people
- Detailed and strict rules against bullying
- Establishing ground for anti-harassment issues
- Providing basic amenities like internet and promoting use of social media in a positive manner
- Strict procedures for health and safety in the occupational sector
- Detailed information on drug and alcohol abuse and usage
- A return to work policy
- Establish a code of conduct for the employees
- Provide gifts and favours to motivate the staff
- Provide provision for leaves and holidays to keep the workforce motivated throughout the year
The human resource management’s policy and procedure also includes the guidelines and procedures for the managers of the institution as below:
- Selection and recruitment of staff and employees
- Providing detailed information on the job role and also providing clarification of the same
- Efficient way of handling complaints and any issues that might come up
- Taking care of promotions and transfers in an effective manner
- Handling of terminations if necessary
- Detailed induction and performance guidelines for the management
CHALLENGES FOR HUMAN RESOURCE MANAGEMENT IN THE FUTURE
Companies and organizations are working in a competitive and risky environment and the human resource management sector is bound to encounter challenges in the growth process. These barriers that the company might face is mainly due to the widely expanding technologies related to the internet and the outbreak of the economy globally. In the future, it is said that due to this reason the companies will face issues related to the human resource. Another major issue the human resource is most likely to encounter is to keep up with the workforce and their expectations. This will cause a downfall unless and until the company is able to retain their staff domain. Managing the leadership, confidence and talent features will be another challenge for the human resource sector to be able to cope with. This is because these qualities are descending with time.
It is observed that lately, maintaining the staff in the multinational companies has become a big task for the human resource management sector as the employees do not tend to stick around in the same company for a longer time. Taking this into consideration, acknowledging and respecting the emotional state of the employees has become a significant challenge for the HR sector. As a solution to this, large companies try to recruit staff and talent pool from overseas and assimilate different cultures into the organizations to make it more stable in the business environment. The staff tend to make changes in their job choices taking into account their family considerations and other internal factors. Hence, it is seen from the above that the human resource department is bound to encounter crucial challenges regarding improvement of leadership quality development, managing and taking consistent care of the staff talent and the management of work and life balance.
Another key challenge the human resource domain will face in the future includes the following:
- Managing the change in cultural environment
- Managing the transformation of global market
- Managing the demographics
- Managing the globalization
The internet has made it easy for a common man to get job anywhere in the world if he/she has the right set of skill set for the respective job. This is done using platforms like Facebook and LinkedIn. By opening up the job opportunities to the world, it has become a challenge for the HR team to get their hands on the most accurate set of staff before being filtered out into other organizations. The HR team must also focus on creating the right environment for the employees that keep them motivated and open to innovation. This will be a major challenge for the management team to establish due to the wide diversity of staff in a particular organization. Hence, these are a few of the challenges that the human resource management might face in the future.
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