Starbucks
Term Paper:
Starbucks corporation has decided to establish a greater presence on Kava. The island seems to be a great location for the company’s new production facility. Among the island’s main resources are coffee, cocoa, spices, bananas, sugar, as well as inexpensive, quality labor. Isn’t it a perfect combination for a Starbucks coffee plant?
Before such an important decision is made, the company has to weight all advantages and possible risks of operating a plant in Kava. The main goals of building Starbucks plant on Kava are to support company’s operations as well as help the island improve its social problems.
Let’s start with discussing possible difficulties that should be taken into consideration. Establishing a business on an island in the Pacific Ocean where everything looks like a mess and people are overwhelmed with their tragedy seems like a big challenge. A business needs many suppliers and services to operate smoothly – good internet connection, telephone lines, delivery services, transportation, to name but a few. Availability and level of all these supporting services is questionable on a small island near Fiji, at the same time, a big Starbucks plant may attract various companies to the island. As they say, demand often creates supply.
Production at such remote location will increase importance of transportation and logistics planning. Luckily, sugar, coffee and cacao are durable goods and can be transported by water. Sea transportation is less expensive than air freight, but often takes weeks. To have the products on time in a specific location, the company will be forced to elevate the importance of sales forecasts and logistics planning. The drawback of long-lasting transportation by sea is having working capital tied-up in the goods for several weeks. Only well-done forecasts and reduces warehouse costs can reduce expenses connected with transportation. Set up a local logistics team will be one of the first steps.
The island is prone to all kinds of natural disasters. Humans have not learned to prevent them yet, but we already can carefully predict tornadoes and hurricanes. Many companies might be reluctant to establish a business on the island mainly because of the high risk of natural disasters. However, it is possible to minimize the risk. Obviously, Starbucks will have to build all its facilities rigidly and invulnerable to earthquakes, hurricanes and tornadoes. The company will also invest into local meteorological station to make sure it has the most modern equipment to predict possible natural cataclysms. These two measurements will benefit both company and local population. Having well-equipped meteorological station on a small Pacific island is a necessity to be able most probably to save many lives. Having safe working place is a great advantage, but people want to feel safe also in their homes. In the future, Starbucks will provide loans and help its employees to finance building their earthquake-proof dwellings.
The island has a very diverse population offering cheap labor force. Only this fact alone is a great advantage for a company that wants to build a plant. At the moment, the island does not have many foreign companies offering employment possibilities, which eliminates competition for good workers. The population is predominantly young, which promises even more employees in the future.
The education system on the island is not exactly well-developed. Starbucks will provide training and education courses for its potential employees. It is even possible to create a Starbucks academy on the island in order to train young people who will later join Starbucks’ workforce. The corporation has all chances to become the biggest employer on the island and an investment in local education will definitely bring positive results and good returns. Talking about education, I mean not only company-related courses, but also school buses, for example. The company needs to create a positive image and help local community so that joining Starbucks will become an aspiration for many young people.
A significant percentage of population speaks English, which will make hiring process much easier. Before Starbucks will be able to grow local executives, the company will have to bring many executives from overseas. For Starbucks is important to maintain high standards of its goods, for this reason skilled and well-trained work force are of vital importance, as well well-executed quality control and management system.
As Starbucks is planning to create facilities on the island to grow, process and pack coffee, cacao and sugar, agriculture of the island will have a major impact on the business. Starbucks will bring the most recent agricultural know-how’s to the island and learn as much as possible from the local practices. Organic and bio products are among the major trends on food and beverage market. Kava seems like a perfect place to grow bio and organic products.
Relying on modern technologies, Starbucks should not overlook knowledge of indigenous people who have been working on the land for centuries. Kava is not only a name of the island, it is also a drink very popular on Fiji. Learning more about local traditions will enable Starbucks to diversify its product line and maybe include kava drink into its regular product offering all over the world.
Starbucks constantly tries to grow its business and introduces many new products to its coffee shops. In addition to coffee, cacao and sugar business, Starbucks will establish on Kava a plant producing various souvenirs and mugs under Starbucks brand. Production on Kava will allow saving significant amount of money on labor costs.
Cheap and young labor force is a great resource the island can provide, however, in order to take advantage of this offer, the company also needs to invest in the local community. One of the very important areas the company will consider is local health care. The health care system on the island is far from perfect. If the company wants to be productive, it needs to make sure that its employees are healthy and don’t miss working days. Investment in the health system of Kava will be a crucial step Starbucks has to make if it is to operate successfully on the island.
The island has significant percentage of HIV infected people. This is one of the big issues that need to be addressed both by the local community and the company that wants to work on the island. Developing health care of the island is to become one of the main Starbucks’ long-term projects.
Fiji is an offshore zone which gives numerous taxation benefits to the companies. The islands of Fiji lie the middle of the Pacific Ocean and has an Exclusive Economic Zone. The government of the country is trying to attract foreign investments to the country and offers many incentives to open a business on Fiji. Registering a business is simplified and Fiji has all chances to become in the future an important business hub of the Pacific Region.
Starbucks will bring many working places to the island, develop its infrastructure, create opportunities for other businesses and improve welfare, health care system and education of the local population. At the same time, the company should not forget that establishing a business on this remote island, it will forever change the life of the local population – it will bring modern technologies and Western values, influence local culture and traditions. As Sturbucks proclaims, “The bottom line We always figured that putting people before products just made good common sense.” The same approach should be valid for company’s operations on Kava. Starbucks will try to be sensitive to the local values and traditions while helping the community to become more sustainable.
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