the keys of starbucks’s success are the franchise’s excellent customer service and “third place” concept which is demonstrated by thoughtful

Therefore, this paper will analyze issues and challenges that Starbucks Vietnam might be facing when it comes to contemporary management aspects such as diversity, technology, and global

I Introduction

With more than 33,000 stores worldwide, hardly can we visit a country without seeing the iconic twin-tailed siren of the Seattle-based coffee brand - Starbucks Starbucks is the most successful coffee franchise in the history of the industry At Starbucks, customers can enjoy a wide variety of beverages, from whole-bean coffee, microground instant coffee, espresso, caffe latte, full and loose-leaf teas, juices, Frappuccino beverages, pastries, and snacks (Wikipedia 2021) Yet, the keys of Starbucks’s success are the franchise’s excellent customer service and “third-place” concept which is demonstrated by thoughtful, relaxing, welcoming in-store experiences Moreover, Starbucks’ organizational structure and operation philosophy has been the role model for customer-oriented fields (Daszkowski 2019)

However, Starbucks still faces great obstacles in countries regardless of the franchise’ years

of experience in operating internationally Therefore, this paper will analyze issues and challenges that Starbucks Vietnam might be facing when it comes to contemporary management aspects such as diversity, technology, and global market thriving In the end, there are proposals for management practices for Starbucks Vietnam to conquer these obstacles

II Change and Knowledge Management.

a Diversity in Workplace

Diversity refers to all kinds of differences, including race/ethnicity, age, gender, religion, etc (Roberson 2019) Diversity management is a process of creating a harmonious work environment where similarities and differences of individuals are valued Effective diversity management can broaden managerial decision-making, maximize employee potential, and increase customer satisfaction, resulting in increased revenue later on (Patrick & Kumar 2012), which is why it has been pursued by many large companies lately

● Company policy:

Starbucks realizes the benefits of diversity and truly leverages it to gain a competitive advantage That is reflected from the company's commitments and policies to ensure

inclusion, diversity, and equity that are wide-spreading across the company's workplace, customers, and suppliers (Starbucks 2020) An example from Starbucks Vietnam in diversity management is that employment opportunities are equally distributed to those interested in coffee regardless of their differences, physically or in the background (Starbucks 2016)

Nevertheless, it is hard to change one’s bias and prejudice ultimately Although racism is uncommon in Vietnam, the concern is class discrimination One incident that led to the controversy was when a Grab driver was treated poorly when buying drinks at Starbucks (Nguoi Dua Tin 2019) This goes against Starbucks' commitment to diversity, creating a 'third' location that serves coffee to all (Nguyen 2020) In addition, the selection of expensive and luxurious locations to build Starbucks stores has invisibly formed a misconception among Vietnamese customers, that Starbucks is only for the rich (Thanh Nien 2019) If this misconception continues, it will shrink their customer base and ultimately affect performance

● Sexual orientation:

According to Singh (2008), when leaders set examples for workers in a company, they directly impact the way their business approaches knowledge management procedures and practices Additionally, knowledge management is not implemented at all company levels, beginning with the top; it is doubtful that knowledge management initiatives will ever gain traction or become successful (Singh 2008)

One thing that made Starbucks Vietnam flourish is the former CEO Howard Schultz’s breakthrough ideas to prosper customer experience Mainly when supporting LGBT, despite the objections from shareholders, Schultz still made a strong impression as a leader by openly advocating for a social issue with no regard for profits The CEO claimed that his perspective

is based on people's and therefore aims to bring diversity to Starbucks's 200,000 employees (Dailymail 2013) According to the Washington Post, support for same-sex marriage has increased to 58%, a complete change within ten years (Allen 2013) Hence, an open-minded leader who always keeps up with social changes would permanently operate the company sustainably than a one who is old-fashioned But in Vietnam, LGBTQIA is still a sensitive topic, so this might cause a controversial wave and affect the business reputation

b Digital Transformation

Howard Schultz has shifted traditional strategic management into digital form after suffering from a global financial crisis due to the expansion of competitors like Mc Donal and Dunkin Donut in 2008 Specifically, the technological investment includes Digital Flywheel,

‘Personalization,’ ‘Reward,’ ‘Payment, and ‘Ordering’ via mobile to increase customer experience and accessibility As a result, the number of physical stores in 2019 ascended more than in 2008 when there were 16,680 outlets (figure 1); net profits across the globe also went up from $10.4 billion USD (2008) to $26.5 billion USD (2019) (Lee 2020) (figure 2)

Everything has two sides, so there might be certain potential problems when implementing digital operation In fact, there are significant concerns from the survey about risks from this transformation involving security problems, shortage of interaction with existing IT systems, and control limitations (Schwertner 2017) Securing consumer data alongside cyber security issues is the significant difficulties old-fashioned one most industries have to deal with recently (Schwertner 2017) Its serious impact could cause revenue loss to decrease share prices, scrutiny in regulatory investigation, remediation, fraud, and litigation costs are also often more significant In detail, for Digital Flywheel on Starbucks mobile app is related to customer data, there is an assumption that the firm might confront cyber security matters and threats

II Thriving in the Global Work Environment

Despite the undisputed dominance of Starbucks worldwide in the beverage industry, Vietnam and Australia put up significant barriers against the Seattle-based brand In Australia’s 6-billion coffee market, Starbucks falls behind since the chain accumulated losses of $105 million in the first 7-year period (Turner 2018)

Meanwhile in Vietnam, a 1-billion market for specialty coffee and tea shops (Haigh 2019), with patient R&D in Vietnamese's customer preference, coffee culture, only 63 stores in four cities after seven years still secure the international coffee brand to gain $33.6 million in revenue and ranked #3 behind two national competitors (Nguyen 2019) (Figure 3) Moreover, Starbuck has received considerable media coverage, interaction, standing at #4 and surpassing popular local brands like Trung Nguyen, Cong Coffee (YouNet Media 2020) (Figure 4) However, with the rapid fluctuation in Vietnamese consumers' demands and intense waves of competitors, Starbucks has to be highly aware of Vietnam's coffee culture and prepare for fastidious actions to grasp the competitive edges

a Vietnamese Preferences

In recent years, the Vietnamese coffee palate has gradually shifted toward Arabica, the signature ingredient for Starbuck coffee as it requires a more complicated process to grow and is very mild in flavor By contrast, traditional Robusta beans are sharper, more robust, effective in energy boosting, and prioritized by Viet-consumers Customers from 20-30 love bizarre experiences and are willing to afford higher prices for specialty coffee shops (DAM Global 2021) However, Starbucks seems to undergo a limitation in menu for the reason that local cafes can serve latte and cappuccino like Starbucks but with premium, unique variations

of local beans Additionally, for 20 years, the coffee chain has been importing ingredients from America weekly to ensure flavor consistency and only introduced one collaboration with local delicacy: famous Cầu Đất beans in Da Lat (Coffee Roasters Vietnam 2020) This leads to inefficiency owing to the fact that Vietnam is already a powerhouse of coffee

b In-store Experiences and Vietnam-influenced Supplementary Starbucks’s critical competitive advantages are in-store experience, and vibrant, collectible merchandise Notwithstanding, most local competitors have already applied excellent customer services and potentially outperformed Starbucks in the supplementary activities For example, local coffee shops’ designs are more diverse in concept, which is followed by Gen Z’s Instagram-friendly environment To attract Vietnamese customers, the coffeehouse should be on one hand consistent in customer service but on the other hand creative to facilitate pleasures (Tran, Dang & Tournois 2019) Besides, Starbuck has not put much effort into integrating home-country image (Nguyen, Dao, & Heidt 2018) whilst products that slightly contain “Viet-element” can create a remarkable footprint in the local community

III Recommendations

a Inclusion and Technology

● Contemporary company nature:

Starbucks came to Vietnam through a license entry provided by Hong Kong Maxim’s Group subsidiary (Global Coffee Report 2013), ergo, they cannot strictly control the licensee, and errors in the licensee's activities will harm the brand as a whole Therefore, Starbucks should include additional terms in the license agreement to ensure adopting an inclusive and diverse culture in creating welcoming places for employees and customers, from top managers to junior employees across the organization With that in mind, Starbucks can enhance diversity training for all levels of management, from here further fostering the diversity climate of Starbucks and improving customer service with more openness to differences (Mujtaba 2014)

● In 4.0 era:

Starbuck should build and maintain the cyber security system sustainability to tackle customer information security issues Specifically, the cyber security department should grasp four main management steps: preparing, setting the bar, getting the fundamental right, and personal protection (Deloitte 2014) (Figure 3) Furthermore, it is more important for employees to increase their knowledge of these subjects Nevertheless, there will be more and more different types of equipment connected to the network, which will make these risks even worse Many of these risks may be managed only by significant investment in human resource development, as a large portion of cybersecurity hazards are attributable to careless human conduct Consumers will take a greater interest in and concern about cybersecurity concerns and will want technologically advanced solutions that do not threaten their data protection As envisioned by van Rest, privacy by design will be a critical standard in the process of building technical solutions (Almeida, Santos & Monteiro 2020)

Expanding and updating new digital strategic management is necessary to catch up with contemporary trends and meet the customer demand Hence, the manager should access the latest contemporary knowledge that will develop business strategic management about

digitalization to take advantage of business Currently, LGBT is one of the contemporary knowledge that Starbuck manager should bring new digital applications to connect and attract LGBT consumers A study has explored that the digital in social networking sites would stimulate and create a virtual community for LGBT to comfortably communicate about hormonsexual with each other (Gudelunas 2012)

● The Campaign: "LGBT: Who are we?"

From personal data collection, Starbucks can cooperate with media companies to make some short videos about LGBT community, specifically conveying a supportive message about them to everyone, so they will have a new perspective on the LGBT community The target segment is young people or LGBT's supporters, who are open to absorb new knowledge and easily understand the meaningful message behind LGBT that Starbucks wishes to transmit This event will be held one month before Pride Month - the time of honoring LGBTQIA Additionally, Starbucks may collaborate with a technology company to add in a function into their current app for LGBT community, allowing users to identify whether individuals nearby are also a part of LGBTQIA, similar to Grindr (Gudelunas 2012), Blued or Facebook Dating Eventually, it is an effective way for the LGBT community to connect with each other Also, Starbucks can offer couples who date through this app a 10% discount to encourage more people to utilize their application

b Working in a Global Society

Modernization is a vastly unstoppable process, yet, culture remains indifferently from generations to generations, which manifests failing to comprehend individuals’ expectations from a new culture might lead foreign companies to a scenario of becoming weaker than national competitors (Thomas & Inkson 2017) There is a validity that Starbucks has not prioritized cultural intelligence to be adaptable

to the Vietnam market nor flexible with social tendencies.As evidence suggested, the business’s barricade to such complicated cess relates to cross-cultural understanding because impossible victories root from a weak perception in decisions conducted, especially when Vietnam has a high-context culture (McGinnes 2020) in which personal lifestyles are complicatedly unique

To optimally go further, the American coffee chain shall invest in R&D to improve beans or products that can somewhat leverage American spirits but simultaneously suit Vietnamese nature It can be similar to the fusion of America-Vietnam drink “Dolce Misto” carried out in

2015 (WOWWEEKEND 2020), however, should be able to hold an ultimate movement to refashion the outdated models and make a great hit to organically pull consumers Plus, instead of wasting logistics costs, qualified local farmers can be sustainable suppliers, which would inevitably reinforce the relationship between the two countries On the other hand, redesigning the physical outlets based on “instagramability” characteristic to build a servicescape with aesthetic vibes (Johnson 2019) to vitalize the atmosphere is reasonable since customers visit the cafes also for entertaining dates besides beverages (Saini 2020) Moreover, fascinating emotions happen when customer experience reaches beyond expectations This creates a credible assertion to align Vietnamese behaviors with the business goal because cultures influence feelings (Shao, Doucet & Caruso 2014)

IV Conclusion

“Human” is the most vital resource for a company's success, obviously Nowadays, the definition of “Human” toward brands does not only stand for employees or board of directors but also customers, partners, and communities surrounding Howard Schultz has emphasized

“We are not in the coffee business serving people, but in the people business serving coffee”

In such a competitively and rapidly changing landscape, only genuine, understanding customer-brand relationships can initiate a loyal, engaged relationship that significantly contributes to the brand's final goal (Coelho, Rita & Santos 2018)

Accordingly, international or national enterprises should invest in contemporary management and specifically in technology acumen, global market intelligence, and diverse, equal, inclusive-orientation Because these interdependent factors will help alleviate employee’s stress, turnover, and push productivity Moreover, with thoughtful implications on mentioned sectors, brands can elevate their products, in-store experiences, and marketing image to create beyond supplement experience for customers and grasp the competitive edge

Acknowledging the contemporary management practices’ necessity, this paper has included detailed research and insightful case studies to provide Starbucks - a fruitfully quintessential brand and their strategic approaches to the compelling, yet challenging market like Vietnam Via digital applications, LGBTQIA support, and Vietnam Coffee culture, we, Generation Z, have conducted adequately fastidious observations to highlight the circumstance

In conclusion, despite the report’s limitation to fully cover the brand’s perseverance and constant innovations, it is undeniable that Starbucks Vietnam will be well-prepared to thrive

in the digital economy, also in such contemporary challenges based on brand’s wide coverage

in social media (Figure 3), continuous development in technology integration for superior customer experience (Sokolowsky 2019), and the brand’s philosophy “Employee first” (Moore 2017)

V References

Wikipedia Contributors 2021, Starbucks, Wikipedia, Wikimedia Foundation,

<https://en.wikipedia.org/wiki/Starbucks>

DASZKOWSKI, D 2019, Learn About the Starbucks’ Corporate Structure, The Balance Small Business, <https://www.thebalancesmb.com/is-starbucks-a-franchise-1350973>

Singh, S 2008, 'Role of leadership in knowledge management: a study further fostering Starbucks’ diversity climate Journal of Knowledge Management, vol.12, no.4, pp.3-15

Allen, F 2013, 'Howard Schultz to Anti-Gay-Marriage Starbucks Shareholder: 'You Can Sell Your Shares',Forbes,22 May,

<https://www.forbes.com/sites/frederickallen/2013/03/22/howard-schultz-to-anti-gay-marriag e-starbucks-shareholder-you-can-sell-your-shares/?sh=483c418743fa>

Almeida F, Santos J & Monteiro J 2020, ‘The challenges and opportunities in the digitalization of Companies in a Post-Covid-19 World’, IEEE Engineering Management Review, vol.48, no.3, pp.97-103

< https://ieeexplore.ieee.org/abstract/document/9153093/metrics#metrics >

Daily Mail Reporter 2013, 'Caught on camera: Moment Starbucks CEO Howard Schultz defends company's stance on same-sex marriage to anti-gay activist',Daily Mail, 25 March,

<https://www.dailymail.co.uk/news/article-2298637/Howard-Schultz-Starbucks-CEO-video-defending-company-anti-gay-activist.html>

Lee, S 2020, ‘Study on Digital Transformation Strategies: Starbuck Case Study’, Journal of Digital Contents Society, vol.21, no.10, pp.1809-1806

Schwertner, K 2017, ‘Digital Transformation of Business’, Trakia Journal of Science, vol.15, pp.388-393