An underlying change is occurring in the way businesses are being conducted today, primarily owing to a number of market forces that are fundamentally shifting the whole paradigm of business.
Behind these forces there is one basic assumption – in the future there is going to be an unprecedented demand for consumption coming from the current developing world of Asian and African countries as the population swells to 9 billion plus strong.
Taking Starbucks coffee as an example, let us examine what are some of those important market forces impinging this company:
Rise of social connections
The opportunities and the risks associated with increasing inter-connectedness of people around the world through social media is one of the strongest forces companies today have to deal with. The power of social media is changing the way game is played.
‘Starbucks Challenge’ started by a student was one such example. She invited people on her blog network around the world to validate the company’s fair trade coffee claims in stores in their respective cities. It gained a lot of traction and Starbucks had to respond and verify.
More than 21 million people ‘Like’ the company’s Facebook page. Starbucks is successfully using social media, networks and communities to promote its CSR objectives – ‘My Starbucks Idea’ lets people share their ideas and join in the discussion.
And this calls for forming strategic partnerships with key players in the market, which could be the NGO’s, fair trade and governmental agencies and those Facebook, Twitter, Diggit stakeholders so as to be completely transparent in their role as a responsible corporate citizen.
Rise of community and environmental concern
Deforestation is a huge factor for Starbucks, especially because of its dependence on water and trees for coffee growing and paper cups.
From its ‘Café Practices’ of ethical sourcing to ‘The Shared Planet’ program, Starbucks has taken steps to be a responsible company. It is not only greening its own operations but is also making efforts to green its supply chain – which means interacting with farmers directly in Africa and other parts of the world.
Willard Hay, VP-Supply Chains, believes that by paying premium prices to farmers and helping them grow quality coffee and providing loans, is a way to weave sustainability deep down its value chain.
Rise of the emerging markets and the Base of Pyramid (BOP) population
Companies will eventually have to enter the emerging economies because of the rising standards of living of the populace and because that will be main driver for continued growth. Starbucks has been moderately successful in Eastern Europe and China, but it is relatively a tiny fraction of what it can achieve if the company cracks the code of entering, serving and capturing the emerging markets.
Rising diversity of the workforce
Starbucks’ nature of work demands that it reach into places with diverse cultures and backgrounds. It becomes a business imperative to include a wide cultural mix of employees in its workforce to better take root and establish it sef locally. The company supports a number of organizations like Human Rights Campaign and Black Partner Network among many others.
Starbucks coffee has been a tremendous success story until now. But what is sustainable today will not be sustainable tomorrow with 9 billion people. There are a number of other forces that are affecting the way the company looks to the future – market competition, social equity issues, socio-political shifts in power of different economies.
Ultimately, Starbucks will have to define itself in terms of offering solutions and not just coffee, as Willard Hay says – ‘We are in the people business serving coffee and not the other way round’.
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