Compensation and Management Development

In November 2007, the board amended the company’s bylaws to include majority voting to allow shareholders to play a more meaningful role in the election of directors. Director nominees must receive more “for” than “against” votes to be elected in an uncontested election. Additionally, the term of a nominee who does not receive a majority of the votes cast will end on the earliest of either: (1) 90 days after the date election results are certified; (2) the date the director resigns; or (3) the date the board of directors fills the position.

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This change demonstrates Starbucks ongoing commitment to strong corporate governance practices. Shareholders and partners (employees) can provide recommendations and feedback to the board through the Business Conduct Helpline and the Audit line. In addition, written correspondence can be sent to the board, an individual director or to any of Starbucks independent board committees. Committee charters, governance principles, director nominations policy (including criteria for board membership) and profiles on each board member are available in the corporate governance section of Starbucks.

com. Starbucks formed a Policy Governance Council in fiscal 2006 to oversee and approve governance tools at the global enterprise level, and to ensure they are well-defined, consistent with each other, current, stored for easy retrieval, and effectively communicated to partners. The Council is comprised of company leaders who represent multiple business units and functions, and is supported by Starbucks Policy Office and staff.

Starbucks stakeholders include partners (employees), customers, suppliers, farmers, shareholders, governments, community members, environmental groups, activists and many others. The company engaged them to be able to understand their concerns and gain their input on topics of mutual importance. External Environment: Opportunities and Threats Starbucks international operation was one of the major aspects of their success. , in the mid 1990s, with the market reaching saturation, Starbucks could no longer depend on the U.

S. market for growth. To maintain its growth rates and to boost revenues, Starbucks had to venture abroad. Starbucks international presence is now in more than 25 countries and the United States of America. This presence is formed in three modes in entry that are Joint venture, licensing and wholly owned subsidiaries. This became a burden on the mother company in a later stage. That those types of entry moods need a lot of training, supervising, management assistance and technology transfer for the partner.

This is along with inability to engage in global strategic coordination. However, the success of Starbucks is not only to its aggressive expansion but also to its product innovation. Starbucks came out with new products to attract customers on different periods. Also diversification was one of the factors that Starbucks started to apply even on a small initiated base. That along with serving coffee, Starbucks also sold merchandise. In 1995, it started selling CDs of its famous in-house music program.

It also entered into alliances with various players such as Canadian Airlines, United Air Lines, Starwood Hotels, and Barnes ; Noble, Inc. , to serve Starbucks coffee. Michael Porter defines five forces impacting a firm’s competitiveness- threat of substitutes, threat of new entrants in the industry, bargaining power of suppliers, bargaining power of customers, and the intensity of competition within the industry. A firm’s strategic decisions to respond to these five forces are a source of risk also.

The company is facing a real threat of substitution from many other companies that producing the same product that is satisfying the same need. This is in its domestic market and even in the international market specially Europe and Middle East. Also Starbucks is facing a real problem of rival competition due to its uncompetitive price all over the world and even in its domestic market. Also the taste of Coffee had been judged by customers as an artificial taste especially in Japan.

Suppliers bargaining power is really represent a threat for Starbucks. That they decided to deal with a 51% women or minority owned suppliers. Also they are not dealing with suppliers who don’t follow the same environmental ethics that are for Starbucks. This may lead them to lose a good opportunity or deal with a supplier that they will not deal with him. Also dealing with small suppliers instead of dealing with limited number of big power full suppliers is not giving them real good deals for facilities and prices.