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Starbucks Case Analysis Table of Contents I. Executive Summary II. Company Profile III. Marketing Analysis IV. Competition V. Company Product and Services VI. Recommendations/Conclusion I. Executive Summary In 1971, three young entrepreneurs began the Starbucks Corporation in Seattle Washington. Their key goal was to sell whole coffee beans. Soon after, Starbucks began experiencing huge growth, opening five stores all of which had roasting facilities, sold coffee beans and room for local restaurants. In 1987, Howard Schultz bought Starbucks from its original owners for $4 million after expanding Starbucks by opening three coffee bars. These coffee bars were based on an idea that was originally proposed to the owner who recruited him into the corporation as manager of retail and marketing. Overall, Schultz strategy for Starbucks was to grow slow. Starbucks went on to suffer financial losses and overhead operating expenses rose as Starbucks continued its slow expansion process. Despite the initial financial troubles, Starbucks went on to expand to 870 stores by 1996. Sales increased 84%, which brought the corporation out of debt. With the growing success, Starbucks planned to open 2000 stores by year 2000. II. Company Profile Starbucks recognizes its employees for much of its success. This is due mostly to maintenance of a great and proven work environment for all employees. The company does not have a formal organizational chart; sot employees are permitted by management to make decisions without a management referral. Moreover, management trust and stands behind the decision of the employees and it is this that allows for employees to thinks for themselves as a part of the business, so as to make them feel as a true asset and not as just another employee. In addition to being best-known supplier of the finest coffee and promising only the highest quality products, Starbucks emphasizes firm values, provides guidelines to enhance employee self-esteem. This is to ensure continued customer satisfaction. Moreover, diversity has become a priority to providing an inviting environment to all consumers. Starbucks continues to abide by a strict, slow growth policy in which they set out to dominate a market before moving on to expand, thus history has shown this strategy to be successful for Starbucks, making them one the fastest growing companies nationwide. III. Marketing Analysis As we know, Starbucks has made a name for itself making and selling coffee and specialty coffee drinks. It has made its biggest impression by becoming the espresso expert and public educator of how to make the perfect espresso; "Roasters" of the company are trained for one year.
The company started its activity in 1971 as small coffee shop located in Seattle specialized in selling whole arabica coffee beans. After being taken over by Howard Schultz in 1982, following a rapid and impressive growth, by mid 2002 the company was the dominant specialty-coffee brand in North America, running about 4,500 stores, 400 international stores and 930 licenses.
According to Harvard Business Review, written by Leinwand and Davidson (2016), “Starbucks culture is powerful because it is tightly linked to the company’s distinctive capabilities.” Aside from its delicious treats and fancy beverage combinations, Starbucks has also been known for its warm, welcoming ambiance that is constant in every store around the globe. This is evident in the kind of customer service that each employee provides. From warm greetings to delightful farewells, a customer can definitely feel the unique kind of experience that sets Starbucks apart from its competitors. This is because of the type of environment and culture that every employee is accustomed to.
In 1971, the original Starbucks opened in Pike Place Market in Seattle, Washington by three partners named Jerry Baldwin, Zev Siegal, and Gordon Bowker. Their focus was to sell coffee beans and equipment. They purchased green coffee beans from Peet’s, a specialty coffee roaster and retailer, during their first year of operation. Later, they began buying coffee beans directly from the growers. In 1983, an entrepreneur by the name of Howard Schultz joined the company; Schultz felt that the company should sell coffee and espresso drinks as well as coffee beans. The partners felt that selling coffee and espresso drinks would take away from their primary focus of selling coffee beans. Since the idea did not work, Schultz started his own company called II Giornale coffee bar chain in 1985. In 1987, the original owners of Starbucks sold their chain to Schultz’s II Giornale. Schultz changed II Giornale outlets to Starbucks chains and quickly began to expand.
Starbucks is a leading company of the finest coffee in the world. Starbuck uses high quality whole bean coffee, and sells a variety of pastries, other unique beverages, and coffee-related accessories and equipment. As a part of their mission, Starbucks strives to provide a work environment treating the customer, as well as employees, with respect and dignity. Furthermore, the company embraces diversity as a major component in the way Starbucks does business. In addition, Starbucks subscribes to the highest standards of excellence to the purchasing, roasting and fresh delivery of their coffee. Starbucks believes that the company should satisfy customers every time they serve a cup of coffee and contribute to the communities and the environment while recognizing that profitability is essential to their success (Starbucks.com, 2008).
In conclusion, Starbucks Coffee Company is an example of a firm whose success and profitability has been fueled by morally conscious business decisions and practices. Actually, Starbucks has remained successful by focusing on consumers, employees, and the environment. One of the major effects of these decisions and practices on the company is that they contribute to the improvement of its bottom line results. However, Starbucks needs to adopt measures that focus on consumers in a equal manner at it focuses on employees and the environment. These measures include developing a customer experience strategy and customizing marketing offers.
Starbucks is known as the premier company of the finest coffee in the world. They purchase and roast high quality whole bean coffee, sells them with fresh, rich-brewed Italian style espresso beverages, pastries, confections and coffee-related accessories and equipment. Starbucks provides a work environment treating others with respect and dignity. The company embraces diversity as an essential component in the way Starbucks does business. Starbucks also applies the highest standards of excellence to the purchasing, roasting and fresh delivery of their coffee. Starbucks believes that the company should enthusiastically satisfied customers all the time and contribute positively to our communities and our environment and recognize that profitability is essential to our future success (Starbucks.com, 2008).
Gordon Bowker, Jerry Baldwin and Ziv Siegl founded Starbucks in 1971. Their goal was to sell the finest quality whole beans and ground coffees (Starbucks timeline and history, 2004). In 1982, Starbucks had grown to five stores and started serving coffee to restaurants and espresso bars. Harold Schultz was employed as the director of retail operations and marketing. Harold Schultz convinced the founders of Starbucks to open a downtown Seattle coffee bar, which opened in 1984. With the success of Seattle coffee bar, Schultz left Starbucks to start his own company named Il Giornale. In 1987, Il Giornale acquired Starbucks retail operations for 4 million dollars. In addition, Il Giornale changed its name to Starbucks Corporation and opened locations in Chicago and Vancouver, B.C. (Starbucks timeline and history, 2004).
Starbucks Coffee Company was founded in 1971 in Seattle’s Pike Place Market (Starbucks Company Profile). The original name of the company was Starbucks Coffee, Tea and Spices, later changed to Starbucks Coffee Company. Starbucks was named after the first mate in Herman Melville’s Moby Dick is the world’s leading retailer, roaster and brand of specialty coffee with coffeehouses in North America, Europe, Middle East, Latin America and the Pacific Rim. Worldwide, approximately 35 million customers visit a Starbucks coffeehouse each week (Starbucks Comapy Profile). The first founders of Starbucks were founded by English teacher Jerry Baldwin, history teacher Zev Siegel, and writer Gordon Bowker. The three were inspired by Alfred Peet, whom they knew personally, to open their first store in Pike Place Market. The store originally focused more on the sale of beans and equipment than on selling prepared coffee. After that first year, they bought their beans direct from farmers before roasting them. The company remained small and regional for years and there was not much of a specialty coffee market nationwide. The original Starbucks location was at 2000 Western Avenue from 1971-1976. That store then moved to 1912 Pike Place where it is still open. During their first year of operation, they purchased green coffee beans then began buying directly from growers (Jerry Baldwin Bio).
Since its' 1992 IPO, Starbucks has continually focused on growth. Initially, the growth was targeted to enable Starbucks to achieve their goal of becoming the leading North American retailer of specialty coffee. The early success they achieved resulted in Starbucks expanding their original goal to that of becoming the most recognized and respected coffee brand in the world.
Starbucks’ mission statement outlines how the company ties together all aspects of its operations into a single inclusive package. It starts with providing a quality product and experience to its customers. This includes the people who work for the company called partners. Starbucks views its employees as an integral part of the organization that provides the conduit between the customer and their experience. The company sees its product not only as coffee and food, but as an event involving its goods, its environment, and the interaction between people. This approach to business, along with its social awareness, makes Starbucks what it is today.
Starbucks is a worldwide company, known for is delicious brews of coffee and seasonal varieties of tasty drinks for any occasion. Starbucks opened with two main goals, sharing great coffee with friends and to help make the world a little better. It originated in the historic Pike Place Market of Seattle, Washington in 1971 by Jerry Baldwin, Zev Siegl and Gordon Bowker. The creation of Starbucks’ name came from the seafaring tradition of early coffee traders and the romance evoked from Moby Dick. At the time, this individual shop specialized in the towering quality of coffee over competitors and other brewing services enabling its growth to becoming the largest coffee chain in Washington with numerous locations. In the early 1980s, the current CEO Schultz saw an opportunity for growth in the niche market. After a trip to Italy he brought back the idea of a café style environment of leisure and social meetings to the United States we now see in Starbucks locations today. Schultz ultimately left Starbucks to open his own coffee shop, Il Giornale which turned out to be a tremendous success. Fast forward a year later, Schultz got wind that Starbucks was going to sell all their components of Starbucks including their stores and factories, he immediately acquired the funds to buy Starbucks and linked both operations. Within five years he was able to open more than 125 stores starting in New England, Boston, Chicago, and gradually entered California. He wanted Starbucks to be a franchise system based on the mission of telling the truth and emphasize the quality,
In March of 1971, Starbucks opened its first location in Seattle Washington’s Pike Place Market. The owners Jerry Baldwin, Zev Siegel, and Gordon Bowker had no intentions of serving coffee but a place to sell coffee beans and coffee machine equipment. After ten years of selling beans and machines, Howard Schultz was hired as Director of Retail Operations. He decided it was best to start selling and serving coffee. The owners had not been convinced on selling and serving coffee, so Howard decided to leave and start his own business called II Giornale (a chain of coffee bars) in 1986 (Coffee, n.d.).
Starbucks primary business is that of selling high premium coffee. They have been able to cater a specific product to a specific demographic. Specialization allows for the Starbucks company to deliver great quality and continue to maintain their customer base. Although there is a great amount of coffee flavors the coffee bean is still the constant ingredient in the great tasting coffee.
Starbucks is an international coffee house and it was created in 1971 when they opened the first store in Seattle, Newcastle. Currently, they own 21,000 stores in 65 different countries of the world, and their passion for the great coffee, excellent service and community interaction exceeds cultures and languages (Starbucks, 2014). This company is the number 1 brand coffeehouse chain in the world due to the best roaster, marketer and seller of speciality coffee. Its main slogan: “Our mission: to inspire and nurture the human spirit – one person, one cup and one neighbourhood at a time” (Jurevicius, 2013).
With clear core values towards providing quality coffee, the best service, and atmosphere, Starbucks has enjoyed great success since it was founded 30 years ago. The company has being doing very well for last 11 years with 5% or more store sales increase, even with the rest economy still reeling from the post-9/11 recession. However recent research, conducted to Starbucks, have showed some concerns regarding company’s problem meeting customers’ expectations.